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REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TARRAGON REALTY INVESTORS, INC.
(Exact name of registrant as specified in governing instruments)
Nevada
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(State or other jurisdiction of incorporation or organization)
94-2432628
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(IRS Employer Identification No.)
280 Park Avenue, East Building, 20th Floor
New York, New York 10017
(212) 949-5000 o (212) 949-8001 (Fax)
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(Address of principal executive offices)
William S. Friedman, Esq.
280 Park Avenue, East Building, 20th Floor
New York, New York 10017
(212) 949-5000 o (212) 949-8001 (Fax)
(Name and address of agent for service)
With a Copy to:
Steven C. Metzger, Esq.
Prager, Metzger & Kroemer PLLC
2626 Cole Avenue, Suite 900
Dallas, Texas 75204
(214) 969-7600 o (214) 523-3838 (Fax)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this registration statement becomes effective.
If the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
452(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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Title of Each Class of Amount to be Proposed maximum Proposed maximum Amount of
Securities to be registered offering price per unit aggregate offering registration
Registered price fee
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<S> <C> <C> <C> <C>
Tarragon Realty
Investors, Inc. common 1,947,987 $10.3125(2) $20,088,615(2) $5,584.64
stock, par value $0.01 shares
per share(1)
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</TABLE>
(1) Tarragon common stock is being offered for the account of
pledgees, donees, transferees, and other successors-in-interest of Tarragon and
Lucy N. Friedman.
(2) Pursuant to Rule 457(a), the proposed Maximum Offering Price Per
Unit and Proposed Maximum Aggregate Offering Price have been calculated as the
market value upon the basis of the average of the bid and asked price of
Tarragon common stock on August 30, 1999, which was $10.3125.
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 SEC, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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PROSPECTUS
TARRAGON REALTY INVESTORS, INC.
The Issuer
TARRAGON REALTY
INVESTORS, INC.
280 PARK AVENUE,
EAST BUILDING,
20TH FLOOR
NEW YORK, NY
10017
(212) 949-5000
Tarragon is a fully integrated real estate investment trust,
controlling approximately 16,000 apartment units and 2.3 million square feet of
retail and office space located throughout the continental United States, with
principal concentrations in Florida, Texas, Connecticut, California and
Colorado.
1,947,987 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
The Offering
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS DISCUSSED BEGINNING ON PAGE 3 OF
THIS PROSPECTUS.
Up to 1,947,987 shares of Tarragon common stock may be offered for
sale from time to time by pledgees, donees, transferees or other
successors-in-interest of Tarragon or Lucy N. Friedman. These shares may be
sold through ordinary brokerage transactions in the over-the-counter markets,
in negotiated transactions or otherwise, at prices and on terms that will be
fixed at the time of sale. The specific terms of sale, and the names of
underwriters, if any, will be set forth in a prospectus supplement.
These shares are being registered to facilitate their placement as
collateral for loans and in margin accounts. Neither Tarragon nor Mrs. Friedman
intend to sell any of the shares at this time. Tarragon will receive none of
the proceeds of the sale of the shares if and when such a sale occurs, except
to the extent the proceeds of any sale are applied to reduce outstanding
indebtedness of Tarragon.
Tarragon's common stock is traded on the NASDAQ National Market System
under the symbol "TARR." On August 30, 1999, the closing price of Tarragon's
common stock on the NASDAQ was $10.25 per share.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED THAT
THIS PROSPECTUS IS ADEQUATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 1999
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that
we have filed with the Securities and Exchange Commission. This prospectus does
not contain all of the information contained in the registration statement. You
should read this prospectus and any supplement together with the additional
information contained in the registration statement and in the other documents
incorporated by reference into this prospectus.
Whenever we refer in this prospectus to "Tarragon," "the Company,"
"we," "us," or "our," we mean Tarragon Realty Investors, Inc., a Nevada
corporation, and its predecessors and subsidiaries.
ABOUT THE COMPANY
Tarragon is a fully integrated real estate development, acquisition
and management company, operated as a real estate investment trust for federal
income tax purposes. We control approximately 16,000 apartment units and 2.3
million square feet of commercial space throughout the United States. Our
primary business is investing in and developing income-producing real estate
directly and through partnerships and joint ventures.
Our acquisition strategy is opportunistic, but focuses on acquiring
properties that add to the efficiency of our real estate portfolio. We often
acquire older or troubled properties that are not considered of institutional
quality. We have a policy of continuously improving and upgrading these
properties, in order to increase revenues and achieve stockholder value. We
also intend to invest increasing amounts in new construction or development
projects, either directly or in partnership with others.
We have financed acquisitions, development and capital improvements
largely through mortgages and internally generated funds, as well as through
property sales. We expect property sales, financing and refinancing to provide
the bulk of funds available for investment in the future, so the availability
and cost of long-term mortgage funds are key factors in our ability to continue
to make new investments without additional equity offerings.
We were incorporated in Nevada on April 2, 1997. We are the ultimate
successor in interest to Vinland Property Trust, a California business trust
originally established in July, 1973, and National Income Realty Trust
("NIRT"), also a California business trust, organized in October, 1978.
In November, 1998, we merged with NIRT, with Tarragon as the surviving
entity. In the merger, NIRT shareholders received 1.97 shares of our common
stock for each share of beneficial interest of NIRT they held. Immediately
following the merger, we acquired Tarragon Realty Advisors, Inc., our advisor
since March, 1994 and NIRT's advisor since April, 1994, from William S.
Friedman and his wife, Lucy N. Friedman, for 100,000 shares of our common stock
and options to acquire 350,000 additional shares at prices ranging between $13
and $16 per share. Mr. Friedman also received options to acquire an additional
450,000 shares at prices ranging between $12 and $15 per share in connection
with his employment agreement with us. Mr. Friedman is our President, Chief
Executive Officer, and a member of our Board of Directors.
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RECENT DEVELOPMENTS
Prior to the merger of NIRT and Tarragon on November 24, 1998, NIRT
shares of beneficial interest were listed on the NASDAQ National Market under
the symbol "NIRTS." At that time, and for several years preceding that event,
our common stock was listed on the NASDAQ SmallCap Market under the symbol
"VIPT." Following the merger, we applied for and obtained the listing of our
common stock on the NASDAQ National Market as a successor to NIRT, under the
symbol "TARR." The listing was effective May 3, 1999.
RISK FACTORS
You should carefully consider the risk factors described below before
investing in our common stock. These or other unanticipated circumstances could
impair our business and financial condition, or otherwise have a material
adverse impact on our future operations and stock price.
WE ARE HIGHLY LEVERAGED, AND MAY NOT BE ABLE TO MEET OUR DEBT SERVICE
OBLIGATIONS.
We had total indebtedness at June 30, 1999 of approximately $274.6
million. Substantially all of our assets have been pledged to secure debt.
These borrowings increase our risk of loss because they represent a prior claim
on our assets and require fixed payments regardless of profitability. To
service this debt, we will have to use cash flow from operations, which would
otherwise be available for investment. Our highly leveraged position makes us
more vulnerable to changes in economic conditions and may limit our ability to
capitalize on significant business opportunities in the future.
We require substantial cash flow to meet our debt service obligations.
If we are unable to generate sufficient cash flow from operations to satisfy
these obligations, or if we are required to make any substantial principal
repayments, we may have to refinance some or all of our debt or sell assets. We
cannot predict whether additional sources of financing for these purposes will
be available in the future or the cost of such financing. Nor can we predict
whether there will be a market for our assets in the time period we desire or
need to sell them, or that we will be able to sell them at a price that will
allow us to fully recoup our investment. If we default on secured indebtedness,
the lender may foreclose and we could lose our investment in the asset securing
the loan.
WE MAY NOT BE ABLE TO OBTAIN CAPITAL TO MAKE NEW INVESTMENTS.
We depend primarily on external financing to fund the growth of our
business. This is because one of the requirements of the Internal Revenue Code
of 1986, as amended, for a REIT is that it distribute 95% of its net taxable
income, excluding net capital gains, to its stockholders. Our access to debt or
equity financing depends on banks' willingness to lend and on conditions in the
capital markets. Although we believe that we will be able to finance any
investments we wish to make in the foreseeable future, we may not be able to
secure additional sources of financing on acceptable terms.
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THE INTEREST RATES ON OUR VARIABLE RATE MORTGAGE DEBT MAY INCREASE, WHICH WOULD
RESULT IN A REDUCTION OF FUNDS AVAILABLE TO FINANCE OUR OPERATIONS OR TO PAY
DIVIDENDS TO STOCKHOLDERS.
As of June 30, 1999, we had approximately $101.5 million of variable
rate mortgage debt. We may incur additional variable rate indebtedness in the
future. Accordingly, increases in interest rates could increase our interest
expense, which could adversely affect our results of operations, financial
condition, and ability to pay expected dividends to stockholders.
WE ACQUIRE NEW PROPERTIES FROM TIME TO TIME, AND THOSE ACQUISITIONS MAY REDUCE
THE VALUE OF YOUR INVESTMENT.
We regularly consider acquiring additional properties. Acquisitions
involve several risks, including the following:
o Acquired properties may not perform as well as we expected
before acquiring them.
o Improvements to the properties may cost more than we had
estimated.
o The costs of evaluating properties that are not acquired cannot
be recovered.
WE DEVELOP NEW APARTMENT COMMUNITIES FROM TIME TO TIME, AND THESE ACTIVITIES
MAY REDUCE THE VALUE OF YOUR INVESTMENT.
We plan to continue developing new apartment communities as
opportunities arise in the future. Development and construction activities
entail a number of risks, including the following:
o We may abandon a project after spending time and money
determining its feasibility.
o Construction costs may exceed the original estimates.
o The revenue from a new project may not be enough to make it
profitable.
o We may not be able to obtain financing on favorable terms for
development of a property.
o We may not complete construction and lease up on schedule,
resulting in increased costs.
o We may not be able to obtain, or may be delayed in obtaining,
necessary governmental permits.
o Even successful projects require a substantial portion of
management's time and attention.
WE COULD LOSE OUR QUALIFICATION AS A REIT, WHICH WOULD RESULT IN A REDUCTION OF
FUNDS AVAILABLE TO DISTRIBUTE TO STOCKHOLDERS.
To maintain our status as a REIT, we must continually meet specified
criteria concerning, among other things, our common stock ownership, the nature
of our assets, the sources of our income, and the amount of distributions we
make to stockholders. If we fail to qualify as a
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REIT, we would not be allowed a deduction for distributions to stockholders in
computing our taxable income and would be taxed on our income at regular
corporate tax rates. If our status as a REIT were terminated, we might not be
able to elect to be treated as a REIT for the following five-year period.
Therefore, if we lose our REIT status, the funds available for distribution to
you could be reduced substantially for each of the years involved.
BECAUSE THE TAX LAWS REQUIRE US TO DISTRIBUTE MOST OF OUR TAXABLE INCOME, WE
MAY HAVE TO BORROW ADDITIONAL FUNDS OR FORGO OTHER USES OF OUR CAPITAL.
To qualify as a REIT, we generally are required each year to
distribute to our stockholders at least 95% of our taxable income, excluding
any net capital gains. In addition, we are subject to a 4% nondeductible excise
tax on the amount, if any, by which distributions paid with respect to any
calendar year are less than the sum of:
o 85% of ordinary income for that year,
o 95% of capital gain net income for that year, and
o 100% of undistributed taxable income from prior years.
We may have to borrow funds on a short-term basis to meet the 95%
distribution requirement and to avoid the nondeductible excise tax. The
requirement to distribute a substantial portion of our net taxable income could
cause us to distribute amounts that otherwise would be spent on future
acquisitions, capital expenditures, or repayment of debt. In that event, we
might have to borrow funds or sell assets to fund the costs of such items.
THE REGIONAL CONCENTRATION OF OUR ASSETS MAY INCREASE THE EFFECTS OF ADVERSE
TRENDS IN THOSE MARKETS.
A substantial portion of our assets are located in Florida, Texas,
Connecticut, California, and Colorado. Due to this geographic concentration,
any deterioration in economic conditions in these markets could adversely
affect the value of your investment.
WE HAVE A LIMITED OPERATING HISTORY AS A COMBINED ENTITY.
Prior to the effective date of our merger with NIRT, Tarragon and NIRT
were operated as separate, independent entities. While Tarragon and NIRT were
engaged in similar businesses, and were under common management, we were only
recently combined and the integration of our businesses to obtain economies of
scale is not yet complete.
Our merger with NIRT was accounted for as a reverse acquisition of
Tarragon by NIRT using the purchase method of accounting. As a result, the
historical balances and operations found in documents filed after November 24,
1998 are those of NIRT. These historical financial statements are not
necessarily indicative of what the actual results of operations of the combined
entity would have been or what the future results of operations of the combined
entity will be.
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THE ISSUANCE OF A LARGE VOLUME OF NEW SHARES OF OUR COMMON STOCK COULD RESULT
IN A DEPRESSION OF OUR STOCK PRICE.
Sales of a substantial number of new shares of our common stock in the
public market after this offering could adversely affect the market price of
our stock. Although contractual and statutory protections and prohibitions may
apply, there are a substantial number of our shares eligible for sale in the
public market pursuant to Rule 144 under the Securities Act of 1933, or which
will become eligible in the near future. In addition, we have issued options
for a substantial number of shares to our officers, directors and principal
stockholders. We may in the future register the resale of at least 306,900
shares of our common stock issuable upon the exercise of options granted to our
officers and employees under our Incentive Share Option Plan and options
granted to our directors under our Independent Director Option Plan, under the
Securities Act of 1933. Options covering an additional 800,000 shares are
presently exercisable by Mr. and Mrs. Friedman.
We cannot predict the timing or amount of any sale of the shares
covered by this prospectus, or any subsequently filed registration statements.
However, the simultaneous offering for public sale of a significant portion of
these shares could have a depressive effect on the market price of our common
stock.
FUTURE ISSUANCE OF SPECIAL STOCK COULD ADVERSELY AND MATERIALLY EFFECT THE
RIGHTS OF COMMON STOCKHOLDERS.
Our Articles of Incorporation authorize the issuance of up to
10,000,000 shares of special stock by action of the Board of Directors, without
stockholder approval. This special stock may be issued in one or more series
with such preferences, limitations and rights as our Board of Directors may
determine. In the event that we issue special stock in the future, your rights
as a holder of our common stock may be adversely and materially affected.
OUR PRINCIPAL SHAREHOLDERS MAY CONTROL CORPORATE ACTIONS.
Williams S. Friedman, our President, Chief Executive Officer and a
member of our Board of Directors, and his wife, Lucy N. Friedman, our principal
stockholder, together control approximately 35% of our outstanding common
stock. Accordingly, Mr. and Mrs. Friedman and their family may elect a number
of the members of our Board of Directors and have substantial influence over
our management and affairs. In addition, they effectively have veto power over
a limited number of corporate actions requiring a vote of stockholders, under
certain provisions requiring more than a simple majority vote presently
contained in our Articles of Incorporation, as set forth below.
OUR GOVERNING DOCUMENTS CONTAIN ANTI-TAKEOVER PROVISIONS THAT MAY MAKE IT MORE
DIFFICULT FOR A THIRD PARTY TO ACQUIRE TARRAGON.
Our Articles of Incorporation contain provisions designed to
discourage attempts to acquire control of Tarragon by merger, tender offer,
proxy contest, or removal of incumbent management without the approval of our
Board of Directors. As a result, a transaction which
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otherwise might appear to be in your best interests as a stockholder could be
delayed, deferred or prevented altogether, and you may be deprived of an
opportunity to receive a premium for your shares over prevailing market prices.
The safeguards against acquisition of Tarragon contained in our Articles of
Incorporation include:
o the requirement of an 80% vote to make, adopt, alter, amend,
change or repeal Tarragon's Bylaws or certain key provisions of
Tarragon's Articles of Incorporation that embody, among other
things, the aforementioned acquisition-related safeguards;
o the requirement of a two-thirds super-majority vote for the
removal of a director from the Board of Directors, and certain
extraordinary transactions; and
o the inability generally of stockholders to call a meeting of
stockholders.
In light of the fact that our Board of Directors and management
control approximately 35% of our outstanding common stock, these
acquisition-related safeguards could help entrench the Board of Directors and
may effectively give our management the power to block any attempted change in
control of Tarragon.
WE ARE IN A COMPETITIVE BUSINESS.
The real estate business is highly competitive, and we compete with
numerous entities engaged in real estate activities, with investment objectives
similar to those of ours, which have greater financial resources and are better
known than we are. This competition may result in increased prices for suitable
investments and may impair our ability to make future acquisitions on favorable
terms in the future.
REAL ESTATE INVESTMENTS ARE ILLIQUID.
Tarragon is subject to all the risks incident to ownership of real
estate, many of which relate to the general illiquidity of real estate
investments. These risks include
o changes in general or local economic conditions;
o changes in interest rates and availability of permanent mortgage
financing that may render the sale or refinancing and the
acquisition of a property difficult or unattractive and that may
make debt service more burdensome;
o changes in real estate and zoning laws;
o increases in real estate taxes;
o federal or local economic or rent control;
o floods, earthquakes and other similar acts.
Because of the illiquidity of real estate investments generally, our
ability to respond quickly to changing circumstances may be impaired.
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SOME OF OUR POTENTIAL LOSSES MAY NOT BE COVERED BY INSURANCE.
In the opinion of our management, the real property we own is
adequately covered by insurance; however, certain types of losses (generally of
a catastrophic nature) may be uninsurable or not economically insurable. These
excluded risks generally include war, earthquakes, floods, environmental
liabilities and punitive damage judgments. If any of these kind of losses occur
and are not covered by insurance, we might suffer a loss of capital invested in
a property, as well as any profits that might have been anticipated from it.
OUR PROPERTIES MAY HAVE ENVIRONMENTAL CONTAMINATION, WHICH COULD REDUCE THE
VALUE OF YOUR INVESTMENT.
Various federal, state, and local environmental laws, ordinances, and
regulations subject property owners or operators to liability for the costs of
removal or remediation of hazardous or toxic substances on the property. These
laws often impose liability without regard to whether the owner or operator
knew of, or was responsible for, the presence of the hazardous or toxic
substances. The presence of, or the failure to properly remediate, such
substances may adversely affect our ability to sell or rent the property or to
borrow using the property as collateral.
SELLING STOCKHOLDERS
Tarragon has pledged 1,201,000 shares of common stock as collateral
for a $6,000,000 line of credit with SouthTrust Bank, National Association. The
shares pledged to SouthTrust Bank are treasury stock issued for that purpose,
or were acquired on the open market through our share repurchase program, and
would not otherwise be offered for sale.
Proceeds of the SouthTrust Bank loan were used to pay off two existing
loans from SouthTrust Bank, which were also secured by shares of our common
stock. In addition, Tarragon received net cash proceeds at closing of $2.2
million, which was used for working capital. The loan bears interest at the 30
day LIBOR plus 1.75% per annum. We are required to make monthly payments of
interest only, with the principal due on October 16, 1999, upon maturity of the
loan. The fair market value of the shares pledged to secure the loan must
always equal or exceed 200% of the maximum loan amount.
Pursuant to the terms of our promissory note, we are required to
register 545,000 shares of treasury stock pledged to SouthTrust Bank as
collateral before October 16, 1999, the first maturity date of the loan. In the
event that these shares have been registered by October 16, and assuming that
there are no other events of default under the loan, SouthTrust Bank will
extend the maturity of the loan for an additional 18 months, until April 16,
2001.
But for the requirement set forth in the loan documents, we would not
be seeking to register any of the shares pledged to SouthTrust Bank. Because it
is treasury stock, we do not have the right to vote these shares. However, in
the event that these shares are offered for sale by SouthTrust Bank pursuant to
this prospectus, the purchaser(s) will acquire sole voting and investment power
over the shares they acquire, which will then be fully outstanding. If all of
the shares pledged to SouthTrust Bank are sold, those shares will represent
more than 10% of our outstanding common stock.
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Lucy N. Friedman has requested that we register 746,987 shares of
Tarragon common stock, which she has pledged or may pledge as collateral for
borrowing pursuant to standard margin account arrangements with Bear Stearns
Securities Corp. Mrs. Friedman has sole voting and dispositive power over
1,963,359 shares of common stock and shared voting and dispositive power over
another 799,685 shares, all of which together constitute approximately 35% of
our total issued and outstanding common stock. Mrs. Friedman is the wife of
William S. Friedman, a director, our President and Chief Executive Officer.
Mrs. Friedman's margin account arrangements involve loans secured by
margin securities of up to a specified percentage of the market value of the
securities, bear interest at varying rates and contain standard default
provisions, the operation of which do not give Bear Stearns immediate voting or
investment power over the securities pledged. If any or all of the shares
covered by this prospectus are sold by Bear Stearns, that sale by itself would
not result in a change in control of Tarragon.
USE OF PROCEEDS
Neither Tarragon nor Mrs. Friedman have any present intention to sell
the shares covered by this prospectus. However, the shares may be offered from
time to time for the account of pledgees, donees, transferees or other
successors-in-interest of Tarragon or Mrs. Friedman, including SouthTrust Bank
and/or Bear Stearns, at prices and on terms which will be fixed at the time of
sale. The specific terms of such a sale, and the names of the underwriters, if
any, will be set forth in a prospectus supplement.
Tarragon will not receive any proceeds from the sale of the shares by
pledgees, donees, transferees or other successors-in-interest of Tarragon or
Lucy N. Friedman. However, Tarragon may receive some benefit in the event of a
sale of the shares pledged to SouthTrust Bank, as the proceeds of such a sale
should reduce Tarragon's outstanding indebtedness, described in detail under
"Selling Stockholders."
PLAN OF DISTRIBUTION
All of the shares registered under this prospectus may be sold from
time to time by pledgees, donees, transferees or other successors-in-interest
of Tarragon or Mrs. Friedman. Sales may be made on the NASDAQ at prices and on
terms dictated by the then current market price of the shares or in negotiated
private transactions. The shares may be sold by any one or more of the
following methods:
o A block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell
a portion of a block as principal to facilitate the transaction;
o Purchases by a broker or dealer as principal, and resale by such
broker or dealer, for its own account pursuant to this
prospectus;
o Ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and/or
o Privately negotiated transactions.
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The pledgees, donees, transferees or other successors-in-interest of
Tarragon or Mrs. Friedman may sell the shares to or through brokers or dealers.
Such brokers or dealers will receive compensation in the form of discounts or
commissions from the seller and they may also receive commissions from the
purchasers of the shares for whom they may act as agents. Such discounts or
commissions from the pledgees, donees, transferees or other
successors-in-interest of Tarragon or Mrs. Friedman or such purchasers are not
expected to exceed those customary in the types of transactions involved.
Tarragon and Mrs. Friedman will each pay their pro rata share (based
on number of shares) of all fees and expenses incident to registration of the
shares other than any underwriting discounts, any selling commissions payable
in respect of sales of the shares or any expenses incurred by the holder to
retain any counsel, accountant or other adviser; all of which will be paid by
the applicable holder. It is estimated that total fees and expenses (excluding
registration fees) incurred in connection with the registration of the shares
will not exceed $16,000.
In the event the shares are offered to the public by pledgees, donees,
transferees or other successors-in-interest of Tarragon or Mrs. Friedman, such
parties, as well as any broker-dealer selling the shares as agent for one of
them and any broker-dealer purchasing or reselling the shares for its own
account, may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, in which case any commissions received by such parties,
and any profit on the resale of the shares purchased by them, may be deemed to
be underwriting commissions or discounts under the Securities Act.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a Form S-3 registration statement with the SEC relating
to the shares discussed in this prospectus. This prospectus does not contain
all of the information set forth in the registration statement, and so we
strongly urge you to read the registration statement in its entirety.
Tarragon also files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may obtain a copy of the
registration statement or any other information we file with the SEC at the
SEC's public reference facilities at 450 Fifth Street, N.W., Washington, D.C.
20549 as well as at the SEC's regional offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 or 7 World Trade Center, Suite 1300,
New York, New York 10048. You may also obtain copies of these materials from
the SEC at prescribed rates by writing to the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public from
the SEC web site at www.sec.gov.
Our common stock is quoted on the NASDAQ National Market under the
symbol "TARR" and the information that we file with the SEC may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., Reports Section, at 1735 K Street, Washington, D.C. 20006.
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INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information
contained in documents that 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 a part of this
prospectus. Information in this prospectus updates and supersedes information
contained in documents incorporated by reference that we filed with the SEC
before the date of this prospectus, while information that we file later with
the SEC will automatically update and supersede this information. To the extent
that there is a discrepancy between a statement made in this prospectus or a
document referred to in this prospectus, and a document which we subsequently
file with the SEC, you should rely only on the statement contained in the later
filed document.
We incorporate by reference the following documents, which we have
previously filed with the SEC (File No. 0-8003):
1. Tarragon's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.
2. Tarragon's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1999 and June 30, 1999.
3. Description of Tarragon's Common Stock set forth in a
registration statement on Form 8-B, filed with the SEC on
August 20, 1997 (File No. 000-22999).
In addition, we incorporate by reference all documents which we file
with the SEC after the date of this prospectus and prior to the termination of
the offering of the shares described in this prospectus, pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934.
You may request a copy of these filings, at no cost to you, by writing
or telephoning us at:
Tarragon Realty Investors, Inc.
Attn: Investor Relations
280 Park Avenue
20th Floor, East Building
New York, NY 10017
Telephone: (212) 949-5000
You are strongly urged to review the information and financial
statements (including notes to financial statements) for Tarragon appearing in
the documents which we have incorporated by reference in this prospectus.
11
<PAGE> 13
SPECIAL NOTE ON FORWARD LOOKING STATEMENTS
We have made forward-looking statements in this prospectus, and in the
documents incorporated by reference in this prospectus. We may also make
forward-looking statements in our periodic reports to the SEC, and in our press
releases. Forward-looking statements are expressions of our current beliefs and
expectations, based on information currently available to us, estimates and
projections about our industry, and certain assumptions made by our management.
These statements are not historical facts. We use words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions to identify our forward-looking statements.
Because we are unable to control or predict many of the factors that
will determine our future performance and financial results, our
forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties, and assumptions. Our future results could differ
materially from those expressed in the forward-looking statements contained in
this prospectus and in the documents incorporated by reference in this
prospectus. Many of these risks and uncertainties are described in this
prospectus under "Risk Factors" and in the documents incorporated by reference
in this prospectus.
We believe that our forward-looking statements are reasonable.
However, you should not place undue reliance on these forward-looking
statements. They only reflect our view and expectations as of the date of this
prospectus. We undertake no obligation to publicly update or revise any
forward-looking statement in light of new information, future events or
otherwise.
LIMITATION ON DIRECTOR'S LIABILITY
Our Articles of Incorporation and Bylaws provide for indemnification
of our officers and directors to the fullest extent authorized or permitted by
Chapter 78 of the Nevada Revised Statutes and other applicable laws.
In general, Nevada law permits Tarragon to indemnify its officers and
directors so long as they act in good faith and in a manner which they
reasonably believe to be in, or not opposed to, the best interests of Tarragon.
Under the Management Liability Provision of the Articles of
Incorporation, our directors do not have personal liability to Tarragon or to
you, its stockholders, for monetary damages for any breach of their fiduciary
duties as directors (including, without limitation, any liability for gross
negligence in the performance of their duties), except
o for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law or
o for the payment of dividends in violation of NRS 78.300.
By precluding personal liability for certain breaches of fiduciary
duty, including grossly negligent business decisions made in connection with
evaluating takeover proposals to acquire Tarragon, the Management Liability
Provision supplements indemnification rights afforded under Tarragon's Articles
of Incorporation and Bylaws.
12
<PAGE> 14
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling Tarragon under the foregoing provisions, we have been informed that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
LEGAL MATTERS
We are being advised on the legality of the common stock offered by
this prospectus by Prager, Metzger & Kroemer PLLC, Dallas, Texas. Prager,
Metzger & Kroemer PLLC will rely as to all matters of Nevada law on Lewis and
Roca LLP, Las Vegas, Nevada.
EXPERTS
The consolidated balance sheets as of December 31, 1998 and 1997 and
the related consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1998,
incorporated by reference in this prospectus and elsewhere in the registration
statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.
13
<PAGE> 15
===============================================================================
THIS PROSPECTUS CONTAINS INFORMATION CONCERNING TARRAGON REALTY
INVESTOR'S, INC. AND ITS COMMON STOCK. IT DOES NOT CONTAIN ALL OF THE
INFORMATION SET FORTH IN THE REGISTRATION STATEMENT WHICH WE HAVE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
About this Prospectus......................................2
About the Company..........................................2
Recent Developments........................................3
Risk Factors...............................................3
Selling Stockholders.......................................8
Use of Proceeds............................................9
Plan of Distribution.......................................9
Where you can find more information.......................10
Incorporation of Documents by Reference...................11
Special Note on Forward-looking Statements................12
Limitation on Director's Liability........................12
Legal Matters.............................................13
Experts...................................................13
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS,
THE REGISTRATION STATEMENT, AND THE OTHER DOCUMENTS WE HAVE INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
ANY ADDITIONAL OR DIFFERENT INFORMATION. THE INFORMATION CONTAINED IN THIS
PROSPECTUS, AND THE OTHER DOCUMENTS THAT WE HAVE REFERRED YOU TO, IS FULL,
COMPLETE AND ACCURATE AS OF THE DATE OF THIS PROSPECTUS. HOWEVER, BECAUSE
CHANGES IN OUR AFFAIRS MAY OCCUR AFTER THIS DATE, WE CANNOT REPRESENT THAT THIS
INFORMATION REMAINS ACCURATE AS OF ANY SUBSEQUENT DATE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
===============================================================================
1,947,987 SHARES
TARRAGON REALTY
INVESTORS, INC.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
-----------------------------
PROSPECTUS
-----------------------------
_____________________, 1999
===============================================================================
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
ITEM APPROXIMATE
AMOUNT
<S> <C>
SEC Registration Fee................................................ $ 5,584.64
Blue Sky Fee and Expenses (including legal fees)*(a)................ $ 2,000.00
Legal Fees and Expenses*............................................ $ 9,625.00
Accounting Fees and Expenses*....................................... $ 1,200.00
Printing and Engraving Expenses*.................................... $ 900.00
Trustee, Transfer Agent and Registrar Fees*......................... $ 500.00
Miscellaneous Fees and Expenses*.................................... $ 1,000.00
-----------
TOTAL...................................................... $ 20,809.64
===========
</TABLE>
*Estimated
(a) includes filing fees paid and to be paid
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Tarragon's Articles of Incorporation provide that it "shall indemnify
to the fullest extent authorized or permitted by law. . . any person made or
threatened to be made a party or witness to any action, suit or proceeding
(whether civil, criminal or otherwise) by reason of the fact that such person
is or was a director, officer, employee or agent" of Tarragon. Further,
Tarragon's Bylaws provide that "[e]ach officer, director or employee . . .
shall be indemnified . . . to the full extent permitted under Chapter 78 of the
Nevada Revised Statutes . . . and other applicable law."
Pursuant to the NRS, a corporation may indemnify persons for expenses
related to an action, suit or proceeding, except an action by or in the right
of the corporation, by reason of the fact that such person is or was a
director, officer, employee or agent, if such person acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful. The expenses indemnified against in this provision include attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with the action, suit or proceeding. The NRS further
provides that a corporation may indemnify persons for attorneys' fees related
to an action, suit or proceeding by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person is or
was a director, officer, employee or agent, if such person acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation. A corporation may also indemnify directors
for amounts paid in judgments and settlements in such a suit, but only if
ordered by a court after determining that the person is "fairly and reasonably"
entitled to indemnity.
Under the Management Liability Provision of Tarragon's Articles of
Incorporation, directors do not have personal liability to Tarragon or to its
stockholders for monetary damages for any breach of their fiduciary duties as
directors (including, without limitation, any liability for gross negligence in
the performance of their duties), except
o for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law or
o for the payment of dividends in violation of NRS 78.300.
By precluding personal liability for certain breaches of fiduciary
duty, including grossly negligent business decisions made in connection with
evaluating takeover proposals to acquire Tarragon, the Management Liability
Provision supplements indemnification rights afforded under Tarragon's Articles
of Incorporation and Bylaws which provide, in substance, that Tarragon shall
indemnify its directors, officers, employees and agents to the fullest extent
permitted by the NRS and other applicable laws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling Tarragon under the foregoing provisions, we have been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than for the
payment by Tarragon of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
II-1
<PAGE> 17
is asserted against Tarragon by any director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
ITEM 16. EXHIBITS.
(i) The following exhibits are filed as a part of this
registration statement:
EXHIBIT
DESIGNATION DESCRIPTION
4.9 Indenture Agreement dated September 15, 1993 between Vinland
Property Trust and American Stock Transfer and Trust Company
(incorporation by reference is made to Exhibit 4.7 to
registration statement No. 33-66294 on Form S-11).
*5.1 Form of opinion of Prager, Metzger & Kroemer PLLC as to the
legality of the securities.
*5.2 Form of opinion of Lewis and Roca LLP as to the legality of
the securities.
23.1 Consent of Prager, Metzger & Kroemer PLLC (included in
Exhibit 5.1)
23.2 Consent of Lewis and Roca LLP (included in Exhibit 5.2)
*23.3 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on page II-4)
* Filed with this registration statement.
ITEM 22. UNDERTAKINGS.
Tarragon hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
this 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 this registration
statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in this registration
statement or any material change to such
information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by
those paragraphs is contained in periodic reports
filed by Tarragon pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(b) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement 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.
II-2
<PAGE> 18
(c) To remove from the registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
Tarragon hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of our annual report
pursuant to Section 13(a) or Section 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 this 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.
Tarragon hereby undertakes to deliver or cause to be delivered with
the prospectus to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Tarragon
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing a Form S-3 and has duly caused this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in New York, New York, on August 31, 1999.
TARRAGON REALTY INVESTORS, INC.
By: /s/ William S. Friedman
--------------------------------------
William S. Friedman, President,
Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below on this registration statement constitutes and appoints each of
William S. Friedman and Erin D. Davis his true and lawful attorney-in-fact and
agent, with full power of substitution and re-substitution for him or her and
in his or her name, place and stead, in any and all capacities (until revoked
in writing) to sign any and all amendments (including post-effective amendments
thereto) to this registration statement of Tarragon Realty Investors, Inc. and
to file same, with all exhibits thereto, and other documents in connection
therewith with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agents, or any of them, or their or his or her substitute
or substitutes full power and authority to do and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Carl B. Weisbrod Chairman of the Board of Directors August 7, 1999
- --------------------------------------- and Director
Carl B. Weisbrod
/s/ William S. Friedman President, Chief Executive Officer and August 31, 1999
- --------------------------------------- Director (Principal Executive Officer)
William S. Friedman
/s/ Erin D. Davis Executive Vice President and Chief August 31, 1999
- --------------------------------------- Financial Officer (Principal Financial
Erin D. Davis and Accounting Officer)
/s/ Chester Beck Director August 10, 1999
- ---------------------------------------
Chester Beck
/s/ Willie K. Davis Director August 15, 1999
- ---------------------------------------
Willie K. Davis
/s/ Sally Hernandez-Pinero Director August 9, 1999
- ---------------------------------------
Sally Hernandez-Pinero
/s/ Lance Liebman Director August 10, 1999
- ---------------------------------------
Lance Liebman
/s/ Lawrence G. Schafran Director August 15, 1999
- ---------------------------------------
Lawrence G. Schafran
/s/ Raymond V.J. Schrag Director August 19, 1999
- ---------------------------------------
Raymond V. J. Schrag
/s/ Michael E. Smith Director August 19, 1999
- ---------------------------------------
Michael E. Smith
</TABLE>
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
DESIGNATION DESCRIPTION
----------- -----------
<S> <C>
4.9 Indenture Agreement dated September 15, 1993 between Vinland
Property Trust and American Stock Transfer and Trust Company
(incorporation by reference is made to Exhibit 4.7 to
registration statement No. 33-66294 on Form S-11).
*5.1 Form of opinion of Prager, Metzger & Kroemer PLLC as to the
legality of the securities.
*5.2 Form of opinion of Lewis and Roca LLP as to the legality of
the securities.
23.1 Consent of Prager, Metzger & Kroemer PLLC (included in
Exhibit 5.1)
23.2 Consent of Lewis and Roca LLP (included in Exhibit 5.2)
*23.3 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on page II-4)
</TABLE>
* Filed with this registration statement.
<PAGE> 1
[PRAGER, METZGER & KROEMER PLLC LETTERHEAD]
August 31, 1999
EXHIBIT 5.1
Tarragon Realty Investors, Inc.
280 Park Avenue
East Building, 20th Floor
New York, New York 10017
RE: Tarragon Realty Investors, Inc. - up to
1,947,987 shares of Common Stock, par value
$0.01 per share
Ladies and Gentlemen:
We have acted as counsel for Tarragon Realty Investors, Inc., a Nevada
corporation (the "Company" or "Tarragon") in connection with the preparation by
the Company of a Registration Statement on Form S-3 (the "Registration
Statement") to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended covering the delayed future possible offer
and sale of up to an aggregate of 1,947,987 shares of the Company's Common
Stock, par value $0.01 per share (the "Shares") that may be offered for sale
from time to time by pledgees, donees, transferees or other
successors-in-interest of the Company or Lucy N. Friedman.
As counsel rendering the opinions hereinafter expressed, we have been
furnished with and examined the originals or copies certified or otherwise
identified to our satisfaction of the following documents and have made no
independent verification of the factual matters set forth in such documents:
A. Articles of Incorporation of the Company;
B. Bylaws of the Company;
C. Officers Certificate dated August 30, 1999,
certifying to the matters stated therein;
<PAGE> 2
Tarragon Realty Investors, Inc.
August 31, 1999
Page 2
D. The Registration Statement and any and all
exhibits thereto; and
E. Such other documents we have deemed necessary
for the expression of the opinions contained
herein.
In making the foregoing examinations, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to various questions of fact
material to this opinion, where such facts have not been independently
established, we have relied, to the extent we deem reasonably appropriate, upon
representations or certificates of directors, officers or employees or other
authorized representatives of the Company, public officials and others without
independent check or verification of their accuracy.
Based upon the foregoing and having due regard for such legal
considerations as we have deemed relevant, we are of the opinion that:
1. A total of 745,000 shares of Common Stock covered by such
Registration Statement have been duly and validly authorized and
issued by Tarragon as Treasury Stock, which 745,000 shares are
fully-paid and non-assessable, with no personal liability attaching to
the ownership thereof;
2. A total of 456,000 shares of Common Stock covered by such
Registration Statement were originally issued by Tarragon pursuant to
that certain Agreement and Plan of Merger dated July 24, 1997, between
Vinland Property Corporation and the Company (the "Vinland Merger
Agreement") and have been duly and validly authorized and issued in
connection therewith and all of such shares are fully-paid and
non-assessable, with no personal liability attaching to the ownership
thereof, but have been subsequently acquired by the Company as
Treasury Stock; and
3. A total of 746,987 shares of Common Stock covered by such
Registration Statement have been duly and validly authorized and were
issued in connection with the Vinland Merger Agreement or in
<PAGE> 3
Tarragon Realty Investors, Inc.
August 31, 1999
Page 3
connection with that certain Agreement and Plan of Merger dated June
5, 1998, between the Company and National Income Realty Trust (the
"NIRT Merger Agreement") and are outstanding, fully-paid and
non-assessable, with no personal liability attaching to the ownership
thereof.
The members of this firm are admitted to practice only in the State of
Texas and are not licensed to practice law in the State of Nevada. Our opinions
expressed herein may address certain matters of Nevada law. With respect to
opinions involving or based upon the interpretation of the laws of the State of
Nevada, we have relied upon, and our opinion is subject to, the limitations and
assumptions set forth in the opinion of Lewis and Roca LLP dated August 31,
1999, and addressed to the Company and our firm upon which we are authorized to
rely (and which will be filed as Exhibit 5.2 to the Registration Statement). We
have made no independent examination of the laws of the State of Nevada.
This opinion has been furnished to the Company at its request, is
rendered solely for its use and may not be relied upon by any other person or
for any other purpose without our prior written consent and is rendered as of
the date hereof. We do not undertake, and hereby disclaim any obligation to
advise anyone of any changes in or new developments which might affect any
matters or opinions set forth herein. No member of this firm is an officer or
director of the Company.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
come into the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
PRAGER, METZGER & KROEMER PLLC
By: /s/ STEVEN C. METZGER
----------------------------
Steven C. Metzger, Manager
<PAGE> 1
[LEWIS AND ROCA LLP LAWYERS LETTERHEAD]
August 31, 1999
EXHIBIT 5.2
Tarragon Realty Investors, Inc.
280 Park Avenue
East Building, 20th Floor
New York, New York 10017
Re: Tarragon Realty Investors, Inc. - up to 1,947,987 shares of
Common Stock, par value $0.01 per share
Ladies and Gentlemen:
We have acted as special Nevada counsel for Tarragon Realty Investors,
Inc., a Nevada corporation (the "Company" or "Tarragon") in connection with the
Company's Registration Statement on Form S-3 (the "Registration Statement") to
be filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended covering the delayed future possible offer and sale of up
to an aggregate of 1,947,987 shares of the Company's Common Stock, par value
$0.01 per share (the "Shares") that may be offered for sale from time to time
by pledgees, donees, transferees or other successors-in-interest of the Company
or Lucy N. Friedman.
As counsel rendering the opinions hereinafter expressed, we have been
furnished with and examined the originals or copies certified or otherwise
identified to our satisfaction of the following documents and have made no
independent verification of the factual matters set forth in such documents:
A. Articles of Incorporation of the Company;
B. Bylaws of the Company;
C. Secretary's Certificate dated August 30, 1999, certifying to
the matters stated therein; and
D. The Registration Statement and any and all exhibits thereto.
In our examination, we have assumed that each Document will be duly
completed (where blanks appear), duly executed and duly delivered, as may be
required. We assume the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all copies. We
<PAGE> 2
August 31, 1999
Page 2
assume the legal capacity of all natural persons who signed or who will sign
Documents, or documents necessarily contemplated by the transactions related
hereto. We assume that the Documents are the only material documents governing
the transaction and the affairs of the Company in relation to the
above-described transaction.
We assume that any documents necessary to consummate the transactions
contemplated by the Documents have been legally authorized by parties who have
the power to do so, and have been properly executed and delivered by such
parties. We further assume that the Documents are legal, valid, binding and
enforceable obligations of any party other than the Company. We assume that the
Documents have not been amended, modified, or rescinded in any manner
whatsoever as of the date of this opinion letter. As to various question of
fact, we have relied upon statements of the Company, various public officials
and others. We have not independently verified any of the factual matters set
forth in any certificate or other document provided to us in connection with
this matter and upon which we may have relied.
Based upon the foregoing legal considerations as we have deemed
relevant, we are of the opinion that:
1. A total of 745,000 shares of Common Stock covered by such
Registration Statement have been duly and validly authorized and issued by
Tarragon as Treasury Stock, which 745,000 shares are fully-paid and
non-assessable, with no personal liability attaching to the ownership thereof;
2. A total of 456,000 shares of Common Stock covered by such
Registration Statement were originally issued by Tarragon pursuant to that
certain Agreement and Plan of Merger dated July 24, 1997, between Vinland
Property Corporation and the Company (the "Vinland Merger Agreement") and have
been duly and validly authorized and issued in connection therewith and all of
such shares are fully-paid and non-assessable, with no personal liability
attaching to the ownership thereof, but have been subsequently acquired by the
Company as Treasury Stock; and
3. A total of 746,987 shares of Common Stock covered by such
Registration Statement have been duly and validly authorized and were issued in
connection with the Vinland Merger Agreement or in connection with that certain
Agreement and Plan of Merger dated June 5, 1998, between the Company and
National Income Realty Trust (the "NIRT Merger Agreement") and are outstanding,
fully-paid and non-assessable, with no personal liability attaching to the
ownership thereof.
We are admitted to the bar of the State of Nevada. In rendering our
opinions stated above, we have relied upon the applicable laws of the State of
Nevada as those laws presently exist, and as they have been applied and
interpreted by courts having jurisdiction within the State of Nevada. We
express no opinion as to the laws of any
<PAGE> 3
August 31, 1999
Page 3
other jurisdiction, or of the interpretation of Nevada law by courts outside of
the state of Nevada, or of the laws of the United States of America.
The opinions expressed herein are effective as of the date hereof. We
disclaim any responsibility to update this opinion at any time following the
date hereof. No extensions of this opinion may be made by implication or
otherwise. We express no opinion other than as expressly set forth herein. This
opinion is solely for the benefit of the addressee and may be relied upon by
Prager, Metzger & Kroemer PLLC with regard to the issuance of its opinion in
this matter.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
come into the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
/s/ LEWIS AND ROCA LLP
LEWIS AND ROCA LLP
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of our report, dated April
12, 1999, on the consolidated balance sheets as of December 31, 1998 and 1997
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1998 of
Tarragon Realty Investors, Inc. and to all references to our firm included in or
made part of this Registration Statement.
Dallas, Texas,
September 1, 1999
