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As filed with the Securities and Exchange Commission on April 9, 1999.
Registration No. 333-61543
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT No. 2
ON FORM S-3 TO
REGISTRATION STATEMENT
ON FORM S-11
UNDER
THE SECURITIES ACT OF 1933
CABOT INDUSTRIAL TRUST
(Exact name of registrant as specified in its governing instruments)
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Maryland 04-3397866
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(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
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Two Center Plaza, Suite 200
Boston, Massachusetts 02108
(617) 723-0900
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Robert E. Patterson
President
Cabot Industrial Trust
Two Center Plaza, Suite 200
Boston, Massachusetts 02108
(617) 723-0900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
James R. Walther, Esq.
Mayer, Brown & Platt
350 South Grand Avenue
Los Angeles, California 90071-1503
(213) 229-9597
Approximate date of commencement of proposed sale to the public: From time
to time after this amendment becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please 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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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Prospectus
CABOT INDUSTRIAL TRUST
Common Shares of Beneficial Interest
The shareholders of Cabot Industrial Trust named in this prospectus may offer
and sell up to 1,012,988 of their Cabot Trust common shares as described in this
prospectus.
We will not receive any proceeds from sales of the common shares covered by this
prospectus.
Our common shares are listed on the New York Stock Exchange under the symbol:
"CTR." The last reported sale price of our common shares on the NYSE on April 6,
1999 was $18.5625 per share.
To maintain our qualification as a real estate investment trust for federal
income tax purposes, we restrict ownership of more than 9.8% in number or value
of our outstanding common shares by any single shareholder, with limited
exceptions that are described herein. See "Description of Shares of Beneficial
Interest -- Restrictions on Transfer."
See "Risk Factors" beginning on page 5 for descriptions of material risks
relevant to an investment in the common shares.
_________________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined that this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
_________________________
The date of this prospectus is April , 1999.
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You should rely only on the information contained in this prospectus or in the
other documents referred to herein under the caption "Where You Can Find More
Information." We have not authorized anyone to provide you with any different
information.
This prospectus is neither an offer to sell nor a solicitation of an offer to
buy our common shares in any jurisdiction in which such offer or sale would be
unlawful. You should not assume that the information contained in this
prospectus is correct on any date after the date of this prospectus stated at
the bottom of the cover page hereof, even though this prospectus is delivered,
or the selling shareholders offer or sell the common shares described to herein,
on a later date.
Table of Contents
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Page
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Risk Factors.......................................................................... 1
We may not be able to maintain our shareholder distributions at their
current level............................................................ 1
Provisions of our Declaration of Trust and Bylaws, and our Shareholder
Rights Plan, may discourage acquisition proposals and attempts to
change our Board of Trustees............................................. 1
We would incur adverse tax consequences if we fail to qualify as a
REIT..................................................................... 2
We can change our financing, investment, distribution and other
business policies without your approval.................................. 2
Our business consists primarily of acquiring and operating real estate
and is therefore subject to real estate investment and operating risks... 3
There are potential conflicts of interest in our operations.................
Increases in market interest rates may adversely affect the market price of
our common shares........................................................
Shares that become available for future sale may adversely affect the market
price of our common shares...............................................
We are subject to real estate financing risks............................... 6
Where You Can Find More Information................................................... 14
Forward-Looking Statements............................................................ 14
Cabot Industrial Trust................................................................ 15
Use of Proceeds....................................................................... 15
Selling Shareholders.................................................................. 15
Plan of Distribution.................................................................. 17
Description of Common Shares.......................................................... 17
Summary of Terms............................................................ 24
Shareholder Rights Plan..................................................... 24
Restrictions on Transfer.................................................... 25
Shareholder Liability....................................................... 27
Indemnification of Trustees and Officers.................................... 27
Transfer Agent and Registrar................................................ 27
Federal Income Tax Consequences....................................................... 21
Taxation of Company......................................................... 22
Tax Aspects of the Company's Investments in Partnerships.................... 27
Taxation of Shareholders.................................................... 28
Other Tax Considerations.................................................... 30
Legal Matters......................................................................... 32
Experts............................................................................... 32
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RISK FACTORS
Investing in the common shares described in this prospectus involves various
risks. You should carefully consider the following material risks that we and
our investors face and should read this entire prospectus before purchasing
our common shares.
We may not be able to maintain our shareholder distributions at their current
level.
While we expect to maintain or increase our current level of distributions
over time, we cannot guarantee that we will be able to do so. We base the level
of our cash distributions to shareholders on numerous assumptions and
projections that we make regarding our future performance, any of which may
prove to be incorrect, and our own decisions to reinvest rather than distribute
available cash. Our assumptions and projections relate, among other things, to:
. property occupancy and the profitability of tenants,
. the amount of future capital expenditures and expenses relating to our
properties,
. the level of leasing activity and future rental rates at our properties,
. the strength of the industrial real estate market in the areas in which
we own properties, and
. competition and the costs of compliance with environmental and other
laws.
Provisions of our Declaration of Trust and Bylaws, and our Shareholder Rights
Plan, may discourage acquisition proposals and attempts to change our Board of
Trustees.
Our Declaration of Trust generally prohibits owning more than 9.8% of our
outstanding shares. To remain qualified as a real estate investment trust for
federal income tax purposes under the federal Tax Code, five or fewer persons
cannot own or be deemed to own more than 50% in value of our outstanding shares
at any time during the last half of any taxable year, other than our first
taxable year. To preserve our qualification as a REIT, our Declaration of Trust
provides that, subject to specified exceptions, no person may own more than
9.8% in number or value of our issued and outstanding shares of beneficial
interest. Our Board of Trustees has the power to exempt a proposed transferee
from this ownership limit based on an Internal Revenue Service ruling, an
opinion of counsel or other satisfactory evidence that the proposed ownership
of common shares by the transferee would not result in the termination of our
REIT status. If the proposed transfer would violate the ownership limit, the
transfer will be void. This ownership limit may delay, defer or prevent a
transaction or a change in control which could involve an offer for your shares
above the then prevailing market price or that you may for other reasons
consider to be in your best interest.
Staggered elections of Trustees lengthen the time needed to elect a majority
of our Board. Our Board of Trustees is divided into three classes, with only
one class being elected each year. These staggered terms may lengthen to two
years the time needed to change a majority of the members of our Board of
Trustees and may thereby reduce the possibility of an attempt to acquire
control of Cabot Trust.
Additional share issuances may dilute the ownership and voting power of
existing shareholders. Our Board of Trustees can, without shareholder approval,
increase or decrease the aggregate number of shares of beneficial interest of
any class that we have authority to issue, issue additional shares of
beneficial interest, classify or reclassify any unissued common shares and
preferred shares and set the rights, preferences and other terms of those
shares. Under the Maryland law governing our operations, you will have no
preemptive right to acquire any of our equity securities. Accordingly, to the
extent we issue additional equity securities, the voting power of existing
shareholders may be diluted.
Our Shareholder Rights Plan may deter acquisitions of control of Cabot Trust.
We have adopted a shareholder rights plan that could delay, defer or prevent a
change in control of Cabot Trust that is not approved by our Board of Trustees.
See "Description of Common Shares--Shareholder Rights Plan."
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We would incur adverse tax consequences if we fail to qualify as a REIT.
If we fail to qualify as a REIT we will incur substantial additional tax
liabilities. We intend to operate so as to qualify as a REIT for federal income
tax purposes, but we do not intend to request a ruling from the Internal
Revenue Service that we do in fact qualify as a REIT. We have received an
opinion from our legal counsel that we are organized in conformity with the
requirements for qualification as a REIT as of the taxable year ended December
31, 1998 and that the actual and proposed methods of operation that we have
described to our counsel satisfy the requirements for REIT qualification. Our
counsel's opinion, however, is not binding on the Internal Revenue Service and
is based on our representations as to factual matters and on our counsel's
review and analysis of existing law, which includes no controlling precedent.
If we were to fail to qualify as a REIT for any taxable year, we would not
be permitted to deduct the amount we distribute to shareholders from our
taxable income and we would have to pay federal income tax, including any
alternative minimum tax, at regular corporate tax rates. In 1998, this would
have resulted in our net income of $21.8 million, for which, based on our
assumed qualification as a REIT, no taxes have been provided in our financial
statements being taxed at regular corporate income tax rates. Unless entitled
to relief under Tax Code provisions, we also would be disqualified from
treatment as a REIT for the four taxable years following the year during which
our REIT qualification was lost. As a result, cash available for distribution
to our shareholders would be reduced for each of the years involved. Our Board
of Trustees is authorized to revoke our REIT election at any time in response
to future economic, market, legal, tax or other considerations.
Our management has limited experience in maintaining REIT qualification. Our
continued qualification as a REIT depends on our ability to meet various
requirements concerning, among other things, the ownership of our outstanding
shares, the nature of our assets, the sources of our income and the amounts we
distribute to shareholders. The relevant requirements are detailed and complex.
Our management did not have experience in operating in compliance with these
requirements prior to the commencement of our operations in our current form in
February 1998.
We may need to borrow funds to meet our REIT minimum distribution
requirements. To qualify as a REIT, we are generally required to distribute at
least 95% of our annual net taxable income, excluding any net capital gain, to
our shareholders. If we fail to meet this requirement we will have to pay a 4%
nondeductible excise tax on the amount, if any, by which the distributions we
make are less than the sum of (1) 85% of our ordinary income for that year, (2)
95% of our capital gain net income for that year and (3) 100% of our
undistributed taxable income from prior years.
We derive our income primarily from our share of Cabot L.P.'s income and the
cash available for distribution to our shareholders comes primarily from cash
distributions from Cabot L.P. We may have to borrow funds to meet the 95% of
net taxable income distribution requirement and thereby avoid being required to
pay the nondeductible excise tax referred to above. This is due to differences
in timing between when we actually receive cash income and pay deductible
expenses and when the income and expenses are included in our taxable income.
We can change our financing, investment, distribution and other business
policies without your approval.
Our Board of Trustees establishes our financing, investment, distribution
and other business policies based on management's recommendations and the
Board's evaluation of business and general economic conditions and other
relevant factors. The Board may change these policies without your consent.
Among other policies, it is our current policy to limit our debt-to-total
market capitalization ratio to 40%, but our organizational documents do not
limit the amount of indebtedness that we may incur without shareholder approval
and this policy could therefore be changed by the Board at any time. Our "debt-
to-total market capitalization ratio" is the ratio of our total consolidated
and unconsolidated debt as a percentage of the sum of the market value of all
of our outstanding common shares and all outstanding partnership units of Cabot
L.P. that we do not own plus total consolidated and unconsolidated debt, but
excluding all nonrecourse consolidated debt in excess of our proportionate
share of the debt and all nonrecourse unconsolidated debt of partnerships in
which we are a limited partner.
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Our business consists primarily of acquiring and operating real estate and is
therefore subject to real estate investment and operating risks.
Tenant defaults and bankruptcies may reduce our income and cash flow. We
derived more than 98% of our income from rental operations during 1998. If a
significant number of tenants fail to meet their lease obligations, our
revenues and cash flow will decrease and we may be unable to make expected
distributions to our shareholders. We have not to date experienced any
significant tenant defaults and none were experienced by our organizer and
sponsor, Cabot Partners Limited Partnership, with respect to the investments of
its advisory clients. There is no assurance, however, that this favorable
experience will continue.
Defaulting tenants may seek bankruptcy protection, which could result in
payment delays or in the rejection and termination of the tenants' leases. This
would reduce our income, cash flow and amounts available to distribute to our
shareholders. In addition, a tenant may suffer business losses which may weaken
its financial condition and result in the failure to make rental payments when
due.
We may be adversely affected by increases in real estate operating costs. If
our properties do not generate revenues sufficient to meet our operating
expenses, including debt service, tenant improvement costs, leasing commissions
and other capital expenditures, we may have to borrow additional amounts to
cover our fixed costs, and our cash flow and ability to make distributions to
shareholders may be adversely affected.
Commercial properties are subject to increases in operating expenses such as
cleaning, electricity, heating, ventilation and air conditioning and
maintenance, insurance and administrative costs, and other general costs
associated with security, landscaping, repairs and maintenance. If operating
expenses increase, competition in the local rental market may limit the extent
to which rents may be increased to meet increased expenses without decreasing
occupancy rates. While our current tenants are generally obligated to pay a
portion of increases in operating costs, there is no assurance that our
existing tenants will agree to pay all or any portion of those costs upon
renewal of their leases or that new tenants will agree to pay those costs.
We may encounter significant delays in reletting vacant space and resulting
losses of income. When leases of space in our properties expire, the leases may
not be renewed, the related space may not be relet promptly or the terms of
renewal or reletting, including the cost of required renovations, may be less
favorable than the terms of the expiring leases. Leases covering approximately
15.7% of our total leased rental space will expire in 1999 and leases covering
approximately 12.1% of our total rental space will expire in 2000, based on
annualized base rent.
In formulating our annual business plans, we make estimates of renovation
and reletting costs that take into consideration our views of both current and
expected future business conditions in our markets. Our estimates may prove to
be inaccurate. If we are unable promptly to relet or renew the leases for all
or a substantial portion of our space, if the rental rates upon the renewal or
reletting are significantly lower than expected rates or if our cost estimates
prove inadequate, then our cash flow and ability to make expected distributions
to shareholders may be adversely affected.
We may not be able to meet our targeted levels of leasing activity,
acquisitions and development due to the highly competitive nature of the
industrial property markets. Numerous industrial properties compete with our
properties in attracting tenants to lease space and additional properties can
be expected to be built in the markets in which our properties are located. The
number and quality of competitive industrial properties in a particular area
will have a material effect on our ability to lease space at our existing
properties or at newly acquired properties and on the rents charged.
The industrial real estate investment market is also highly competitive.
There are a significant number of buyers of industrial property, including
other publicly traded industrial REITs, many of which have significant
financial resources. This has resulted in increased competition in acquiring
attractive industrial properties. Accordingly, we may not be able to meet our
targeted level of property acquisitions and developments, which would have an
adverse effect on our expected growth in funds from operations.
We may incur significant environmental remediation costs or liabilities. As
an owner and operator of real properties, we are subject to various federal,
state and local environmental laws, ordinances and regulations
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that impose liability on current and previous owners and operators of real
property for the costs of removal or remediation of hazardous or toxic
substances on, under or in the property. Some of these laws impose liability
whether or not the owner or operator knew of, or was responsible for, the
presence of the hazardous or toxic substances. Persons who arrange for the
disposal or treatment of hazardous or toxic substances may also be liable for
the costs of removal or remediation of hazardous substances at the disposal or
treatment facility, whether or not the facility is or ever was owned or
operated by the person. In addition, the presence of hazardous or toxic
substances, or the failure to remediate the property properly, may adversely
affect the owner's ability to borrow using the real property as collateral.
Environmental laws and common law principles could be used to impose
liability for release into the air of and exposure to hazardous substances,
including asbestos-containing materials, and third parties may seek recovery
from owners or operators of real properties for personal injury or property
damage associated with exposure to the released hazardous substances. As an
owner of real properties, we could be liable for these types of costs.
Phase I environmental site assessment reports were obtained by our original
contributing investors in connection with their initial acquisition of the
properties, or were obtained by us in connection with the transactions
resulting in our formation as a publicly traded company. In accordance with our
acquisition policies, we have also obtained Phase I's for all of the properties
that we have acquired since the date of our formation. The purpose of Phase I's
is to identify potential sources of contamination for which we may be
responsible and to assess the status of environmental regulatory compliance.
The earliest of the Phase I's for our properties were obtained in 1988 and
Phase I's on approximately 19% of the properties owned by us as of December 31,
1998 were obtained prior to 1995. Commonly accepted standards and practices for
Phase I's have evolved to encompass higher standards and more extensive
procedures over the period from 1988 to the present.
The Phase I's obtained for our properties have not revealed any
environmental liability that we believe would have a material adverse effect on
our business, assets or results of operations, nor are we aware of any material
environmental liability. It is possible, however, that the Phase I's relating
to the properties do not reveal all environmental liabilities. Moreover, future
laws, ordinances or regulations may impose material environmental liability or
our properties' current environmental condition may be affected by tenants, by
the condition of land or operations in the vicinity of the properties or by
third parties unrelated to us.
We may be adversely affected by changes in laws. Our properties are subject
to various federal, state and local regulatory requirements, including state
and local fire and life-safety requirements. Failure to comply with these
requirements could result in the imposition of fines by governmental
authorities or awards of damages to private litigants. We believe that our
properties are in material compliance with all current regulatory requirements.
However, new requirements may be imposed that would require us to make
significant unanticipated expenditures and that could have an adverse effect on
our cash flow and ability to make expected distributions to shareholders.
We could be adversely affected if hazard losses on our properties exceed the
amount of our insurance coverage or are not covered by insurance. We carry
commercial general liability insurance, standard "all-risk" property insurance,
flood, earthquake and rental loss insurance with respect to our properties with
policy terms and conditions customarily carried for similar properties. We
believe that our current insurance coverage is adequate. However, our insurance
is subject to normal limitations on the amounts of coverage and some types of
losses, such as from wars or from earthquakes for properties located in
California, may be uninsurable or may only be insurable at a cost that we
believe outweighs the value of obtaining insurance. Should an uninsured loss or
a loss in excess of the amount of our insurance coverage occur, we could lose
the capital invested in a property, as well as the anticipated future revenue
from that property, and we would continue to be obligated on any mortgage
indebtedness or other obligations related to the property.
In light of the California earthquake risk, California building codes have
since the early 1970s established construction standards for all new buildings
and also contain guidelines for seismic upgrading of existing
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buildings that are intended to reduce the possibility and severity of loss from
earthquakes. The construction standards and upgrading, however, do not
eliminate the possibility of earthquake loss. It is our current policy to
obtain earthquake insurance if available at acceptable cost. As of December 31,
1998, all of our 50 properties located in California are covered by earthquake
insurance. Seismic upgrading has been completed on 11 of the California
properties. Seismic upgrading is expected to be completed on ten additional
California properties within nine months from the date of this prospectus. We
currently maintain blanket earthquake insurance coverage for all properties
located outside California in amounts we believe to be reasonable.
The relative illiquidity of our real estate investments may limit our
ability to adjust our property portfolio to respond to market changes. Equity
real estate investments are relatively illiquid. In addition, the Tax Code
limits a REIT's ability to sell properties held for fewer than four years,
which may affect our ability to sell properties without adversely affecting
returns to common shareholders. These factors will tend to limit our ability to
vary our portfolio promptly in response to changes in market or general
economic or other conditions.
We may suffer losses from our acquisition, development and construction
activities. We intend to acquire existing industrial properties to the extent
that they can be acquired on advantageous terms and meet our investment
criteria. These acquisitions will entail the risk that investments will fail to
perform as expected, the risk of unexpected liabilities and the risk that
necessary property improvement costs may be greater than we estimated in
deciding to acquire a property.
We also intend to grow through the selective development and construction of
industrial properties, including build-to-suit properties and speculative
development, as suitable opportunities arise. The risks associated with real
estate development and construction activities include:
. we may find it necessary to abandon development project activities after
expending significant resources to determine their feasibility;
. the construction cost of a project may exceed original estimates;
. occupancy rates and rents at a newly completed property may not be
sufficient to make the property profitable;
. financing may not be available on favorable terms for development of a
property;
. the construction and lease up of a property may not be completed on
schedule, resulting in increased debt service and construction costs; and
. we may fail to obtain, or may experience delays in obtaining, necessary
zoning, land-use, building occupancy and other required governmental
permits and authorizations.
There are potential conflicts of interest in our operations.
Our Chief Executive Officer may incur adverse tax consequences if properties
contributed by him are sold. As a holder of partnership units in Cabot L.P.,
Ferdinand Colloredo-Mansfeld, who is our Chief Executive Officer and the
Chairman of our Board of Trustees, has unrealized taxable gains associated with
his interests in approximately $27.6 million in net book value of properties
that he contributed to Cabot L.P. in connection with its formation. These seven
contributed properties represented approximately 2.5% of our total assets at
December 31, 1998. Because he may incur different and more adverse tax
consequences than would our other investors upon the sale of those properties
he may have different views regarding the appropriate pricing and timing of any
sale of these properties. While the full Board of Trustees has the ultimate
authority to determine whether and on what terms to sell our properties, Mr.
Colloredo-Mansfeld could have an incentive to discourage sale of the properties
even though the sales might be financially advantageous for Cabot Trust and its
other shareholders as a whole.
Our duties to our shareholders may conflict with our duties to the partners
of Cabot L.P. As the general partner of Cabot L.P., Cabot Trust owes fiduciary
duties to Cabot L.P.'s limited partners. Discharging
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these fiduciary duties could conflict with its shareholders' interests.
Pursuant to Cabot L.P.'s limited partnership agreement, the limited partners
have acknowledged that Cabot Trust is acting both on behalf of its shareholders
and, in its capacity as general partner of Cabot L.P., on behalf of the limited
partners. The limited partners have further agreed in the partnership agreement
that we are under no obligation to consider the separate interests of the
limited partners in deciding whether to cause Cabot L.P. to take, or to decline
to take, any actions.
We have significant shareholders who could control our operations. As of
December 31, 1998 our senior management beneficially owned approximately 3.8%
of our outstanding common shares, assuming the exchange of all Cabot L.P.
partnership units not held by Cabot Trust for common shares. At the same date,
the IBM Retirement Plan Trust, the New York State Teachers' Retirement System
and the Pennsylvania Public School Employes' Retirement System beneficially
owned approximately 23.6%, 13.7% and 12.7%, respectively, of our outstanding
common shares, assuming the exchange of all Cabot L.P. partnership units not
held by Cabot Trust for common shares. These holders were each original
investors in Cabot Trust. They are permitted to hold their respective
beneficial ownership percentages of our shares pursuant to an exception to the
above-described general ownership limit of 9.8% set forth in Cabot Trust's
Declaration of Trust in recognition of the fact that, because of their status
as retirement plans, their share ownership is disregarded for purposes of some
of the REIT qualification requirements of the Tax Code and is instead attributed
to their plan participants. These investors could have a significant influence
on our operations and the outcome of matters submitted to a shareholder vote and
could, were they to agree to act in concert with each other, exercise effective
control over our affairs.
Increases in market interest rates may adversely affect the market price of our
common shares.
One of the factors that influence the market price of our common shares is
the annual rate of distributions that we pay on the common shares, as compared
with market interest rates. An increase in market interest rates may lead
purchasers of REIT shares to demand higher annual distribution rates, which
could adversely affect the market price of the common shares unless we are able
to increase our distributions on outstanding common shares and elect to do so.
Shares that become available for future sale may adversely affect the market
price of our common shares.
Substantial sales of common shares, or the perception that substantial sales
of common shares may occur, could adversely affect the prevailing market prices
of the common shares. At December 31, 1998, the Company had 9,625,000
outstanding common shares that were not subject to contractual restrictions on
transfer, including the common shares covered by this prospectus that are held
by the institutional investors named herein and 8,625,000 common shares that
were issued to the public in the Company's initial public offering. A total of
31,661,648 additional common shares, including 8,961,764 common shares
outstanding at December 31, 1998 and 22,699,884 common shares that are issuable
on conversion of limited partnership units that were outstanding at that date,
that were subject to an initial one-year contractual prohibition on transfer,
with certain exceptions, become transferable free of such prohibition on
February 4, 1999, but will remain subject to certain more limited restrictions
on the volume or manner of resales of such shares for an additional one-year
period. A total of 2,154,036 additional common shares issuable on conversion of
outstanding Cabot L.P. partnership units will not be transferable, with
exceptions for transfers to related parties, donative transfers and bona fide
pledges of shares, until February 4, 2000. We have also reserved a total, as of
December 31, 1998, of 4,347,500 common shares for issuance pursuant to options
and other stock awards to be granted to employees, officers and Trustees under
our long term incentive compensation plan, of which 3,215,999 shares are subject
to options and other awards that have been granted through December 31, 1998,
subject to four-year vesting schedules. We further expect to acquire additional
properties in exchange for units of limited partnership interest in Cabot L.P.
that will be exchangeable for our common shares unless we exercise our right to
purchase the units for cash instead of issuing our common shares. We are not
able to assess the extent to which perceptions of possible future sales of any
of the above described common shares have affected the prevailing market prices
of the common shares to date or may do so from time to time in the future.
We are subject to real estate financing risks.
Potential adverse effects of the costs of and possible difficulties in
obtaining debt financing may adversely affect our cash flows and distributions
to shareholders. As a result, among other things, of the annual income
distribution requirements applicable to REITs under the Tax Code, we rely to a
significant
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extent on borrowings to fund acquisitions, capital expenditures and other items
and expect to continue to do so. We are therefore subject to real estate and
general financing risks, including changes from period to period in the
availability of financing, the risk that our cash flow may not cover both
required debt service payments and distributions to our shareholders, and the
risk that we will not be able to refinance existing indebtedness or that the
refinancing terms will be unfavorable. If we do not make mortgage payments, the
property or properties subject to the mortgage indebtedness could be foreclosed
upon by or transferred to the lender.
Rising interest rates will generally increase our borrowing costs. We have a
bank credit facility that permits us to borrow up to $325 million for property
acquisitions and other purposes that provides for interest at variable rates,
and we may incur additional variable rate indebtedness in the future. Variable-
rate debt creates higher debt service requirements if market interest rates
increase, which would adversely affect our cash flow and the amounts available
to distribute to our shareholders. While we have entered into hedging
arrangements that are intended to reduce our exposure to rising interest rates
and may enter into additional arrangements for that purpose in the future,
changes in interest rates will still affect our business and results of
operations.
Our use of interest rate hedging agreements may increase our interest and
financing costs and could result in losses. To reduce our exposure to changes
in market interest rates, we have from time to time entered into various types
of interest rate protection, or "hedging", agreements with investment grade
financial institutions. These agreements include interest rate collar and
interest rate cap agreements, which are intended to limit our exposure to
increases in interest rates on our variable rate borrowings. We have also
entered into transactions, commonly called "Treasury lock agreements", for the
purpose of hedging the interest rates of proposed fixed interest rate
borrowings. Treasury lock agreements involve the sale by us to an institutional
counter party, on a future delivery basis, of Treasury securities having
maturities comparable to that of our proposed future debt issuance. In general,
the amounts we are required to pay to or that we receive from the counter
parties under our hedging agreements are added to or credited against our
interest expense over the life of the related borrowing. There are limits on
the amount of income resulting from these activities that may be counted in
determining our compliance with one of the REIT qualification requirements
under the Tax Code relating to the nature of our income. See "Federal Income
Tax Consequences--Taxation of Cabot Trust--REIT Qualification Requirements--
Gross Income Tests."
Since interest rate hedging agreements are intended to have the effect of
fixing the underlying variable component of the interest rates that we pay
within a specified range or at a specified level, they may have the effect in
declining interest rate environments of increasing our interest costs over what
those costs would otherwise have been. Interest rate hedging agreements also
present other risks, including (1) the credit risk of nonperformance by our
counter parties, (2) the risk that losses incurred on individual hedging
transactions could exceed the levels contemplated in deciding to enter into
them, (3) the risk that the interest rate index or other basis of the hedge
agreement may not change in the same frequency or magnitude as the interest
rates that we are seeking to hedge and (4) the risk that a hedging agreement's
cost, or a portion thereof, may be required to be written off immediately
because the borrowing to which it relates is not completed in the form or
within the time frame contemplated when the hedge agreement was executed. For
example, we entered into a Treasury lock agreement in July 1998 involving the
future sale of $100 million of 10-year Treasury securities in contemplation of
a possible future fixed rate debt issuance. At the March 31, 1999 contractual
settlement date of the agreement we paid the counter party $2.5 million,
reflecting the change in yield on the securities sold between the contract
initiation date and the settlement date. We expect to reflect the amount paid
as a loss in 1999 because a debt issuance of the type contemplated has not been
completed to date. If we enter into additional Treasury lock agreements in the
future we will be subject to potential changes in interest costs or loss
exposures that will fluctuate with movements in Treasury market yields and that
may be substantial.
In addition to the risks described above, the enforceability of agreements
underlying derivative transactions may depend on compliance with applicable
statutory and other legal requirements. Derivative transactions may involve the
risk that they are not enforceable if (1) they were not authorized or
appropriate for a counterparty, (2) the documentation has not been properly
executed or (3) the executed agreement is not enforceable against a particular
counterparty.
11
<PAGE>
Where You Can Find More Information
Cabot Trust is subject to the reporting requirements of the Securities
Exchange Act of 1934, and is required to file annual, quarterly and special
reports with the SEC. Cabot Trust also files proxy statements and other
information with the SEC. You may read and copy any of these documents at the
SEC's public reference rooms at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the SEC's regional offices at Seven World
Trade Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may telephone
the SEC at 1-800-SEC-0330 for further information on the SEC's public reference
facilities. The SEC also maintains a computer site on the World Wide Web
(http://www.sec.gov) that contains the reports, proxy and information statements
and other information that we and other registrants file electronically with the
SEC. You can also inspect reports and other information we file at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
A registration statement on Form S-3, of which this prospectus is a part, has
been filed by Cabot Trust with the SEC to register offers and sales of
the common shares described in this prospectus under the Securities Act of 1933.
The registration statement contains additional information about us and the
securities. You may read the registration statement and the exhibits thereto
without charge at the office of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, or on the SEC's World Wide Web site, and you may obtain copies of it
from the SEC at prescribed rates.
The SEC allows us to provide information about our business and other
important information to you by "incorporating by reference" the information we
file with the SEC, which means that we can disclose that information to you by
referring in this prospectus to the documents we file with the SEC. Under the
SEC's regulations, any statement contained in a document incorporated by
reference in this prospectus is automatically updated and superseded by any
information contained in this prospectus, or in any subsequently filed document
of the types described below.
We incorporate into this prospectus by reference the following documents
filed by Cabot Trust with the SEC, each of which documents should be considered
an important part of this prospectus:
<TABLE>
<CAPTION>
SEC Filing (File No. 1-13829) Period Covered or Date of Filing
----------------------------- --------------------------------
<S> <C>
Annual Report on Form 10-K, as amended by Year ended December 31, 1998, filed on
Form 10-K/A................................. April , 1999
Current Reports on Form 8-K.................. Filed on January 29, 1999, March 22, 1999 and
April 1, 1999
Description of common shares contained in
Registration Statement on Form 8-A, as
amended..................................... Filed on January 27, 1998
Audited financial statements included in
Registration Statement on Form S-11
(Registration No. 333-61543)................ Filed on August 14, 1998
All subsequent documents filed by Cabot Trust
pursuant to Sections 13(a), 13(c), 14 or After the date of this prospectus and prior
15(d) of the Exchange Act................... to the termination of the offering
</TABLE>
To receive a free copy of any of the documents incorporated by reference in
this prospectus telephone or write Cabot Trust, Two Center Plaza, Suite 200,
Boston, MA 02108, Attention: Secretary; telephone: 617/723-0900. Exhibits to
the documents will not be provided unless they are specifically incorporated by
reference therein.
Forward-Looking Statements
Some of the information included or incorporated by reference in this
prospectus contains forward-looking statements, such as those pertaining to our
portfolio performance and future results of operations, market conditions and
prospects. The pro forma financial statements and other pro forma information
incorporated by reference in this prospectus also contain forward-looking
statements. You can identify forward-looking statements by their use of forward-
looking terminology such as "believes," "expects," "may," "will," "should,"
"seeks," "intends," "plans," "pro forma," "estimates" or "anticipates" or the
negative of these words and phrases or similar words or phrases. Discussions of
strategy, plans or intentions also include forward-looking statements.
Forward-looking statements inherently involve risks and uncertainties and you
should not rely on them as predictions of future events. The factors, described
above under the heading "Risk Factors", as well as changes in the industrial
real estate market and the general economy, could cause future events and actual
results to differ materially from those set forth or contemplated in the
forward-looking statements.
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<PAGE>
Cabot Industrial Trust
Cabot Trust is a real estate company formed to continue and expand the
national industrial real estate business of Cabot Partners Limited Partnership.
We commenced operations in our current form upon the completion of our initial
public offering on February 4, 1998. At December 31, 1998, we had a portfolio
of 206 industrial buildings located in 21 states throughout the United States
and containing approximately 28.0 million rentable square feet. These
properties were approximately 97% leased to 414 tenants at that date, with no
single tenant accounting for more than 4.0% of our total annualized base rent.
We own and operate a diversified portfolio of bulk distribution, multitenant
distribution and workspace properties and have a significant presence in
targeted markets across the United States. We believe that our geographic and
property diversification and our substantial presence in multiple markets is a
strategic advantage that allows us to serve industrial space users with
multiple site and property type requirements, to compete more effectively in
our chosen markets and to respond quickly to acquisition opportunities across
the country.
Substantially all of our assets, including our interests in our properties,
are held by and our operations are conducted through Cabot Industrial
Properties, L.P. Cabot Trust is Cabot L.P.'s sole general partner and thereby
controls its operations. Cabot Trust held a 42.7% partnership interest in Cabot
L.P. as of December 31, 1998. Cabot L.P. receives substantially all of the
economic benefit of the real estate investment management business carried on by
Cabot Advisors, Inc. by virtue of its ownership of all of Cabot Advisors'
outstanding preferred stock. Cabot Trust was formed as a Maryland real estate
investment trust on October 10, 1997.
The seven individuals who comprise our senior management team have an
average of approximately 19 years of experience in the real estate industry.
They have worked together since 1987 as executive officers of Cabot Partners
Limited Partnership prior to the formation of Cabot Trust and, previously, as
executive officers of Cabot, Cabot & Forbes Realty Advisors, Inc. Realty
Advisors was an affiliate of Cabot, Cabot & Forbes Company, a nationwide real
estate development, investment, construction and management firm that pioneered
the development of large-scale planned industrial parks.
Our executive offices are located at Two Center Plaza, Suite 200, Boston,
Massachusetts 02108 and our telephone number is (617) 723-0900.
Use of Proceeds
We will not receive any of the proceeds from sales of common shares covered by
this prospectus.
Selling Shareholders
The following table lists the selling shareholders and the maximum number of
common shares that each may sell pursuant to this prospectus. Each selling
shareholder listed below may sell all, some or none of the shares listed. The
number of shares listed constitutes all the common shares currently held by each
shareholder. The selling shareholders may also purchase common shares from time
to time. No estimate can be made of the number of common shares that may be sold
by each of the selling shareholders or of the number of common shares that will
be owned by them at the completion of sales of common shares pursuant to this
prospectus.
<TABLE>
<CAPTION>
Common Common Shares
Percent of Shares that May Be Held
Common Shares Outstanding that May Be Following Sales of
Selling Shareholder Owned Shares and Units Sold Hereunder All Shares Hereunder
- ------------------- ------------- ---------------- -------------- --------------------
<S> <C> <C> <C> <C>
Robert M. Angland(1) 12,988 * 12,988 --
Morgan Stanley Dean Witter & Co. 1,016,200 2.3% 1,000,000 --
</TABLE>
- --------------------------
* Less than 1%.
13
<PAGE>
- --------------
(1) Mr. Angland retired from his position as an officer of Cabot Partners, which
was the sponsor and organizer of the Company, in December 1997.
The common shares covered by this prospectus were sold by us to the selling
shareholders in private placement transactions pursuant to Purchase Agreements
dated December 1997 and February 1998 or, in the case of Mr. Angland, were
issued upon exchange of units issued in connection with the Company's
formation and initial public offering that was completed on February 4, 1998. We
agreed, among other things, to bear all expenses (other than underwriting
discounts, selling commissions, fees and expenses of counsel to the selling
shareholders and transfer taxes) in connection with the registration and sale
of the common shares sold to the selling shareholders pursuant to the Purchase
Agreements.
14
<PAGE>
Plan of Distribution
The selling shareholders may sell common shares covered by this prospectus from
time to time in transactions on the New York Stock Exchange, in underwritten
offerings, in negotiated transactions or otherwise. They may conduct their sale
transactions directly or through underwriters, dealers or agents. The common
shares may be sold at fixed prices which may be changed from time to time, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Any brokers or dealers used in sales of the common shares may receive
compensation in the form of discounts, concessions or commissions of the common
shares from the selling shareholders or the purchasers of the common shares for
whom such brokers or dealers may act as agent or to whom they may sell as
principal, or both. The compensation to a particular broker or dealer may exceed
customary brokerage commissions.
Any brokers, other agents or dealers that participate in sales of common shares
may be deemed to be "underwriters" within the meaning of the Securities Act,
and any commissions they receive or any profit they realize on the resale of
common shares may be deemed underwriting commissions or discounts under the
Securities Act.
The selling shareholders may enter into hedging transactions through or with
brokers or dealers, and the brokers or dealers may engage in short sales of the
common shares in the course of hedging the positions they assume with the
selling shareholders. The selling shareholders may engage in short sales of the
common shares and deliver the common shares to close out their positions. The
selling shareholders also may enter into option or other transactions through or
with brokers or dealers that involve the delivery of common shares to the
brokers or dealers, who may then resell or otherwise transfer such common
shares. The selling shareholders also may loan or pledge common shares to a
broker or dealer and the broker or dealer may sell the common shares so loaned
or may foreclose upon and sell or otherwise transfer the pledged shares.
We have agreed to indemnify the selling shareholders and the underwriters of
their shares, if any, against certain liabilities, including liabilities arising
under the Securities Act.
Description of Common Shares
Summary of Terms
Our Declaration of Trust provides that we may issue up to 150,000,000 shares
of beneficial interest, which may consist of common shares and any other types
or classes of shares that the Trustees may create and authorize from time to
time, including preferred shares. At December 31, 1998, we had 18,586,764
common shares and no preferred shares outstanding.
Our Board of Trustees has the right, without needing to obtain the approval
of our shareholders, to amend the Declaration of Trust to increase or decrease
the aggregate number of shares or the number of shares of any class or series
of shares of beneficial interest that Cabot Trust has authority to issue. Any
such additional shares, including common shares, will generally be available
for issuance without shareholder approval, unless action by the shareholders
is required by applicable law or the rules of any stock exchange or automated
quotation system on which Cabot Trust's securities may be listed or traded.
Acting pursuant to this authority, the Board has authorized the issuance of a
new class of preferred shares in connection with its adoption of the
shareholder rights plan described below under the heading "--Shareholder Rights
Plan."
Our issued and outstanding common shares are fully paid and, except as
described under the heading "--Shareholder Liability," non-assessable.
Subject to the provisions of the Declaration of Trust regarding "excess shares"
that are described below under the heading "Restrictions on Transfer," each
outstanding common share entitles the holder thereof to one vote on all matters
requiring a vote of shareholders, including the election of Trustees. Holders
of common shares do not have the right to cumulate their votes in the election
of Trustees. As a result, the holders of a majority of the outstanding common
shares can elect all of the Trustees then standing for election.
Holders of common shares are entitled to such distributions as may be declared
from time to time by our Board of Trustees out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
affairs of Cabot Trust, the holders of our common shares are entitled to share
ratably in the assets of Cabot Trust remaining after provision is made for the
payment of all liabilities to creditors and payment of liquidation preferences
and subject to the rights of holders of other series of preferred shares, if
any. The rights of holders of the common shares are subject to the rights and
preferences established by our Board of Trustees for any series of preferred
shares which may subsequently be issued by Cabot Trust, including any preferred
shares issued under the Shareholder Rights Plan. See "--Shareholder Rights
Plan."
Holders of common shares have no conversion, redemption, preemptive or
exchange rights to subscribe for any securities of Cabot Trust.
Shareholder Rights Plan
On June 11, 1998, our Board of Trustees declared a dividend of one preferred
share purchase right for each common share outstanding, payable to common
shareholders of record at the close of business on July 15, 1998. The holders
of any additional common shares issued after that date and before the
redemption or expiration of the purchase rights are also entitled to receive
one purchase right for each additional common share issued. Each purchase right
entitles the holder, under some circumstances, to purchase one one-hundredth of
a share of a series of participating preferred shares, par value $.01 per share
at a price of $85.00 per one one-hundredth of a participating preferred share,
subject to adjustment.
The purchase rights will become exercisable if an acquiring person or group
of acquiring persons:
(1) acquires 15% or more of our outstanding common shares; or
(2) announces a tender offer or exchange offer for 15% or more of our
outstanding common shares; or
(3) files a document with a governmental agency regarding any transaction
or series of transactions that would result in the acquiring person or
persons becoming the beneficial owner of 15% or more of our outstanding
common shares.
15
<PAGE>
Some of the existing holders of common shares specified in the Rights Agreement
referred to below as "grandfathered persons," and who may be deemed to have
beneficially owned 15% or more of our outstanding common shares as of the date
of the initial distribution of the purchase rights, will not be deemed to be
acquiring persons unless they become the beneficial owner of an additional 1%
or more of our outstanding common shares without our prior written approval.
The terms of the purchase rights are set forth in a Rights Agreement, dated as
of June 11, 1998, as amended and restated as of September 10, 1998, between
Cabot Trust and BankBoston, N.A., as Rights Agent.
If any person or group of affiliated or associated persons becomes an
acquiring person, each purchase right that is not held by the acquiring person
will entitle the holder to purchase, at the purchase right's then current
exercise price, a number of common shares having a market value equal to twice
the purchase right's exercise price. If we are acquired pursuant to a merger or
other business combination, or if 50% or more of our consolidated assets or
earning power is sold after any person or group has become an acquiring person,
the purchase rights will entitle each holder to purchase, at the purchase
right's then current exercise price, a number of the acquiring company's common
shares having a market value equal to twice the purchase right's exercise
price. The purchase rights will expire on June 11, 2008 and, prior to the time
they become exercisable, are subject to redemption in whole, but not in part,
at a price of $.01 per purchase right payable in cash, common shares or any
other form of consideration determined by our Board of Trustees. In addition,
we have the right under some circumstances to exchange each purchase right that
has become exercisable for one newly issued common share.
Restrictions on Transfer
To qualify as a REIT under the Tax Code, we must meet requirements concerning
the ownership of our outstanding shares of beneficial interest. In general, not
more than 50% in value of our outstanding shares of beneficial interest may be
owned, taking into account ownership attribution rules under the Tax Code, by
five or fewer individuals, at any time during the last half of any taxable year,
following the first year we elected to be taxed as a REIT. In addition, 100 or
more persons must be beneficial owners of our shares during at least 335 days of
a taxable year of twelve months or during a proportionate part of a shorter
taxable year.
To assist us in meeting the Tax Code requirements, the Declaration of Trust
provides, subject to the exceptions described below, that no person may own, or
be deemed to own by virtue of the ownership attribution provisions of the Tax
Code, more than 9.8% in number or value of our issued and outstanding shares.
Any transfer of common shares or preferred shares will be null and void if it
(1) would result in any person owning more common shares or preferred shares
than permitted by this ownership limit, or (2) would result in our common shares
and preferred shares being owned by fewer than 100 persons, as determined
without reference to any special rules of ownership attribution under the Tax
Code, or (3) would result in Cabot Trust being "closely held" within the meaning
of Section 856(h) of the Tax Code, will be null and void. In any of such cases,
the intended transferee will acquire no rights in the common or preferred shares
so transferred.
Subject to the exceptions described in the following paragraph, if any
purported transfer of common or preferred shares would result in any person
owning more common or preferred shares than permitted by the ownership limit
described above, or would result in our common shares being owned by fewer than
100 persons, or would result in Cabot Trust being "closely held" within the
meaning of Section 856(h) of the Tax Code, the common or preferred shares
exceeding the ownership limit will be designated as "excess shares." Any such
excess shares will be deemed to be automatically transferred to a share trust
effective as of the close of business on the business day before the purported
transfer of the excess common or preferred shares. The record holder and
purported transferee of the common or preferred shares that are designated as
excess shares will have no rights in the shares except as described below. We
will designate a trustee of the share trust that will not be affiliated with
us. We will also name one or more charitable organizations as beneficiaries of
the share trust.
16
<PAGE>
The ownership limit will not generally apply to the acquisition of common
shares or preferred shares by an underwriter that participates in a public
offering of the shares. In addition, the Board of Trustees, upon receipt of a
ruling from the Internal Revenue Service or an opinion of counsel and upon such
other conditions as the Board may establish, may exempt a person from the
ownership limit under some circumstances. However, the Board may not grant an
exemption from the ownership limit to any proposed transferee whose ownership
of shares exceeding the ownership limit would result in the termination of our
REIT status.
Excess shares will retain their status as issued and outstanding common or
preferred shares and will be entitled to the same rights and privileges as all
other shares of the same class or series. The share trust for the excess shares
will receive all dividends and distributions on the excess shares and will hold
the dividends and distributions in trust for the benefit of the beneficiary of
the trust. The share trustee will vote all excess shares.
At our direction, the share trustee will be required to transfer the shares
held in the excess share trust to a person whose ownership of the shares will
not violate the ownership limit. The transfer must be made within 60 days after
the later of the date of the transfer that resulted in the excess shares and the
date that our Board of Trustees determines in good faith that a transfer
resulting in excess shares has occurred, if we do not receive notice of the
transfer. Upon such a transfer, which is subject to our waiving our purchase
right described below, the purported transferee generally will receive from the
share trustee the lesser of (A) the price per share the purported transferee
paid for the common or preferred shares that were designated as excess shares
or, in the case of a gift or devise, the market price per share on the date of
the transfer and (B) the price per share received by the share trustee from the
sale of the excess shares. Any amounts received by the share trustee in excess
of the amounts to be paid to the purported transferee will be distributed to the
beneficiary.
The excess shares will be deemed to have been offered for sale to us, or our
designee, at a price per share equal to the lesser of (A) the price per share
in the transaction that created the excess shares or, in the case of a gift or
devise, the market price per share on the date of the transfer, and (B) the
market price per share on the date that we accept, or our designee accepts, the
offer. We will have the right to accept the offer for a period of 90 days after
the later of the date of the purported transfer which resulted in the excess
shares and the date we determine in good faith that a transfer resulting in the
excess shares occurred.
"Market price" means the last sales price reported on the NYSE for a
particular class of shares on the trading day immediately preceding the relevant
date, or if not then traded on the New York Stock Exchange, the last reported
sales price for the class of shares on the trading day immediately preceding the
relevant date as reported on any exchange or quotation system on or through
which the class of shares may be traded, or if not then traded on or through any
exchange or quotation system, then the market price of the class of shares on
the relevant date as determined in good faith by our Board of Trustees.
Any person who acquires or attempts to acquire common shares or preferred
shares in violation of the foregoing restrictions, or any person who owned
common or preferred shares that were transferred to a share trust, will be
required to give us immediate written notice of the event or, in the event of a
proposed or attempted transfer, must give at least 15 days prior written notice
of the event, and will be further required to provide to us other information
as we may request in order to determine the effect, if any, of the transfer on
our REIT status.
The Declaration of Trust requires all persons who own, directly or
indirectly, more than 5%, or such lower percentage as may be required pursuant
to the regulations adopted under the Tax Code, of the number or value of the
outstanding common and preferred shares, within 30 days after January 1 of each
year, to provide to us a written statement of the name and address of the
direct or indirect owner, the number of common and preferred shares owned
directly or indirectly by the person and a description of how the shares are
held. In addition, each direct or indirect shareholder must provide to us
additional information as we may request in order to determine the effect, if
any, of the ownership on our REIT status and to ensure compliance with the
ownership limit.
The share ownership limit in our Declaration of Trust could have the effect
of delaying, deferring or preventing a transaction or a change in control that
might involve a premium price for the common shares or that might for other
reasons be considered by shareholders to be in their best interest.
17
<PAGE>
All certificates representing our common or preferred shares are required to
bear a legend referring to the limitation described above.
Shareholder Liability
Under both the Maryland law governing real estate investment trusts
organized under the laws of that state and our Declaration of Trust, no
shareholder of Cabot Trust may be personally liable for any obligations of
Cabot Trust, other than the obligation to pay to Cabot Trust the consideration
for which shares were or are to be issued, solely by virtue of his status as a
shareholder. The Declaration of Trust further provides that Cabot Trust must
indemnify each shareholder against claims or liabilities to which the
shareholder may become subject by reason of his being or having been a
shareholder. Cabot Trust is also required to reimburse each shareholder for all
legal and other expenses reasonably incurred in connection with any of those
claims or liabilities, unless, in either case, the claims or liabilities arise
out of the shareholder's bad faith, willful misconduct or gross negligence. In
either case, the shareholder must give prompt notice as to the claims or
liabilities and must take such action as will permit Cabot Trust to conduct the
defense thereof.
In addition to the above described provisions of Maryland law and our
Declaration of Trust, it is our policy to include a provision in our contracts
stating that shareholders assume no personal liability for obligations
entered into on behalf of Cabot Trust. However, with respect to tort claims,
contractual claims where shareholder liability is not so negated, claims for
taxes and statutory liability, a shareholder may, in some jurisdictions, be
personally liable to the extent that the claims are not satisfied by Cabot
Trust. Cabot Trust carries public liability insurance which it considers
adequate. For this reason, Cabot Trust believes that any risk of personal
liability to shareholders is limited to situations in which Cabot Trust's
assets plus its insurance coverage are not sufficient to satisfy the claims
against Cabot Trust and its shareholders.
Indemnification of Trustees and Officers
Maryland law permits a Maryland REIT to include a provision in its
declaration of trust limiting the liability of its trustees and officers to the
trust and its shareholders for money damages. Such provisions are not
permitted, however, to apply to liabilities resulting from actual receipt of an
improper benefit or profit in money, property or services or from active and
deliberate dishonesty established by a final judgment and that is material to
the cause of action. Our Declaration of Trust contains a provision of this type
conforming to Maryland law.
Under our Declaration of Trust we are required to indemnify each trustee,
officer, employees and agents to the fullest extent permitted by Maryland law.
This provision applies to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, that
arises by reason of the fact that a person was a trustee, officer, employee or
agent of Cabot Trust. It also applies if the person is or was serving at the
request of Cabot Trust as a director, trustee, officer, partner, employee or
agent of another foreign or domestic corporation, partnership, other enterprise
or employee benefit plan. It applies to claims and liabilities to which the
person may become subject by reason of service in any of the listed capacities
and includes a requirement to pay or reimburse the reasonable expenses, as they
are incurred, of each trustee in connection with the proceedings.
Additionally, Cabot Trust has entered into indemnity agreements with each of
its executive officers and Trustees that require Cabot Trust to indemnify them
to the fullest extent permitted by Maryland law in connection with any
threatened, pending or completed litigation to which they may become subject as
a result of their positions with Cabot Trust.
Transfer Agent and Registrar
BankBoston, N.A. has been appointed as transfer agent and registrar for the
common shares.
18
<PAGE>
Federal Income Tax Consequences
We intend to operate in a manner that permits us to satisfy the
requirements for taxation as a REIT under the applicable provisions of the
Internal Revenue Code. We can give no assurance, however, that the requirements
of the Tax Code will be met. The following summarizes the federal income tax
considerations for Cabot Trust and our shareholders with respect to our
treatment as a REIT. The information below, to the extent that it constitutes
matters of law, summaries of legal matters or legal conclusions, is based on the
opinion of Mayer, Brown & Platt. Mayer Brown & Platt has served as counsel to
Cabot Trust regarding the material federal income tax consequences relevant to
purchasers of the common shares.
Based on the matters described below, in the opinion of Mayer, Brown &
Platt, we have been organized in conformity with the requirements for
qualification as a REIT, beginning with our taxable year ended December 31,
1998, and our actual and proposed method of operation, as we have represented
them to Mayer, Brown & Platt, will enable us to continue to satisfy the
requirements for this qualification. Mayer, Brown and Platt's opinion is based
on assumptions relating to the organization and operation of Cabot Trust, Cabot
L.P. and Cabot Advisors. These assumptions include: (1) that the transactions
that resulted in our formation in our current form were consummated in
accordance with the operative documents therefor, (2) that the documents
accurately reflect the material facts of the transactions, (3) that Cabot Trust,
Cabot L.P. and Cabot Advisors will each be operated in the manner described in
its applicable organizational documents and in representations we have given to
Mayer, Brown & Platt, and (4) that all terms and provisions of those documents
will be complied with by all parties involved. Mayer, Brown and Platt's opinion
is also conditioned upon certain representations made to them in reference to
factual matters relating to our organization. In addition, their opinion is
based on current law.
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<PAGE>
Our Board of Trustees currently believes that we have operated and will
operate in a manner that permits us to elect, and that we will timely and
effectively elect, REIT status for our taxable year ended December 31, 1998 and
in each taxable year after that. Our qualification and taxation as a REIT will
depend on compliance with the law existing and in effect on this date and as the
same may be later amended. Our qualification and taxation as a REIT will further
depend upon our ability to meet, on a continuing basis through actual operating
results, asset composition, distribution levels and diversity of share
ownership, the various qualification tests imposed under the Tax Code discussed
below. Our legal counsel will not review compliance with these tests on a
continuing basis and no assurance can be given that we will satisfy the tests on
a continuing basis.
In brief, a corporation that invests primarily in real estate can claim a
tax deduction for the dividends it pays to its shareholders as long as it meets
the REIT provisions of the Tax Code described below. Such a corporation
generally is not taxed on its "REIT taxable income" to the extent such income is
currently distributed to shareholders. This substantially eliminates the "double
taxation," at both the corporate and shareholder levels, that generally results
from an investment in a corporation. However, as discussed in greater detail
below, the entity remains subject to tax in some circumstances even if it
qualifies as a REIT. Further, if the entity fails to qualify as a REIT in any
year, it will not be able to deduct any portion of the dividends it paid to its
shareholders. Thus it would be subject to full federal income taxation on its
earnings, thereby significantly reducing or eliminating the cash available for
distribution to its shareholders. See "--Taxation of Cabot Trust--General" and
"--Taxation of Cabot Trust--Failure to Qualify."
The following summary is based on the Tax Code, its legislative history,
administrative pronouncements, judicial decisions and United States Treasury
Department regulations. Subsequent changes to any of these may affect the tax
consequences described here, possibly on a retroactive basis. The following
summary neither exhausts all possible tax considerations, nor gives a detailed
discussion of any state, local, or foreign tax considerations, nor discusses all
of the aspects of federal income taxation that may be relevant to a prospective
shareholder in light of his or her particular circumstances or to some types of
shareholders, such as insurance companies, tax-exempt entities, financial
institutions, broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States, that may be subject to special
treatment under the federal income tax laws.
Taxation of Cabot Trust
General. In any year in which we qualify as a REIT, we will generally not
be subject to federal income tax on that portion of our REIT taxable income or
capital gain which is distributed to shareholders. We may, however, be subject
to tax at normal corporate rates upon any taxable income or capital gain not
distributed. Under recently enacted legislation and to the extent we elect to
retain and pay income tax on our net long-term capital gains, shareholders are
required to include their proportionate share of our undistributed long-term
capital gain in income. However, they receive a credit for their share of any
taxes paid on the gain by Cabot Trust.
Notwithstanding our qualification as a REIT, we may also may be subject to
taxation in some other circumstances.
If we fail to satisfy either the 75% or the 95% gross income test discussed
below, but otherwise maintain our qualification as a REIT, we will be subject to
a 100% tax on the greater of the amount by which we fail either the 75% or the
95% test, multiplied by a fraction intended to reflect our profitability. We
will also be subject to a tax of 100% on net income from any "prohibited
transaction" as described below.
If we have net income from the sale or other disposition of "foreclosure
property," which is held primarily for sale to customers in the ordinary course
of business, or other non-qualifying income from foreclosure property, we will
be subject to tax on the income from foreclosure property at the highest
corporate rate. In addition, if we fail to distribute during each calendar year
at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of
our REIT capital gain net income for the year and (3) any undistributed taxable
income from prior years, we will be subject to a 4% excise tax on the excess of
the required distribution over the amounts actually distributed. To the extent
that we elect to retain and pay income tax on our net long-term capital gains,
the retained amounts will be treated as distributed for purposes of the 4%
excise tax. We may also be subject to the corporate alternative minimum tax, as
well as to tax in situations not presently contemplated. Cabot Advisors will be
taxed on its income at regular corporate rates. We will use the calendar year
both for federal income tax purposes, as is required by a REIT, and for
financial reporting purposes.
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REIT Qualification Requirements. To qualify as a REIT, we must meet, among
others, the following requirements:
Share Ownership Tests. Our common shares must be held by at least 100
persons for at least 335 days in each taxable year or a proportional number of
days in any short taxable year. In addition, at all times during the second
half of each taxable year, no more than 50% in value of our outstanding common
shares may be owned, directly or indirectly and including the effects of
constructive ownership rules, by five or fewer individuals, which for this
purpose includes tax-exempt entities. However, for purposes of this test, any
common shares held by a qualified domestic pension or other retirement trust
will be treated as held directly by its beneficiaries in proportion to their
actuarial interest in the trust rather than by the trust. These share ownership
requirements need not be met until the second taxable year of Cabot Trust for
which a REIT election is made. As we have represented to Mayer, Brown & Platt,
we have satisfied and will continue to satisfy these requirements.
In order to comply with the foregoing share ownership tests, we have placed
restrictions on the ownership and transfer of common shares. This should
prevent additional concentration of stock ownership. Moreover, to show evidence
of compliance with these requirements, Treasury regulations require us to
maintain records which disclose the actual ownership of our outstanding common
shares and the regulations impose penalties against us for failing to do so. In
fulfilling our obligations to maintain records, we must and will demand written
statements each year from the record holders of designated percentages of our
shares of beneficial interest. The statements must disclose the actual owners
of the shares of beneficial interest. A list of those persons failing or
refusing to comply with the demand must be maintained as part of our records. A
shareholder failing or refusing to comply with the written demand must submit
with his tax return a similar statement,
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disclosing the actual ownership of shares of beneficial interest and other
information. In addition, our Declaration of Trust provides restrictions
regarding the ownership and transfer of our common shares that are intended to
assist us in continuing to satisfy the share ownership requirements. See
"Description of common shares--Restrictions on Transfer."
Asset Tests. At the close of each quarter of our taxable year, we must
satisfy two tests, relating to the nature of our assets. First, at least 75% of
the value of our total assets must be represented by interests in real
property, interests in mortgages on real property, shares in other REITs, cash,
cash items, government securities and qualified temporary investments. Second,
although the remaining 25% of our assets generally may be invested without
restriction, securities in this class may not exceed:
(1) in the case of securities of any one non-government issuer, 5% of
the value of our total assets (the "value test"); or
(2) 10% of the outstanding voting securities of any one issuer (the
"voting stock test").
As we have represented to Mayer, Brown & Platt, we have and will satisfy the
75% asset test, the value test, and the voting stock test at the close of each
quarter of our taxable years ended 1998 and afterwards. When we invest in a
partnership such, as Cabot L.P., we will be deemed to own a proportionate share
of the partnership's assets. The partnership interest does not constitute a
security for purposes of these tests. See "--Tax Aspects of Our Investments in
Partnerships General." Accordingly, our investment in properties through our
interest in Cabot L.P. is treated as an investment in qualified assets for
purposes of the 75% asset test.
Cabot L.P. owns 100% of the non-voting preferred stock of Cabot Advisors. By
virtue of our partnership interest in Cabot L.P., we are deemed to own
initially a pro rata share of the non-voting preferred stock. Because Cabot
L.P. owns none of the voting common stock of Cabot Advisors, and because the
non-voting preferred stock's approval right is limited to some fundamental
corporate actions that could adversely affect the preferred stock as a class,
we believe the voting stock test should be satisfied.
Based upon the analysis of the estimated value of the stock of Cabot
Advisors owned by Cabot L.P. relative to the estimated value of the total
assets owned by Cabot L.P., we believe that our pro rata share of the stock of
Cabot Advisors held by Cabot L.P. does not exceed on the date of this
prospectus 5% of the value of our total assets. In rendering its opinion as to
our qualification as a REIT, Mayer, Brown & Platt is relying on our
representations to the effect with respect to the value of the stock and
assets.
The value test must be satisfied at the end of any quarter in which we
increase our interest in Cabot Advisors or acquire other property. If any
limited partner exercises its conversion option to exchange partnership units
for common shares, we will thereby increase our proportionate indirect
ownership interest in Cabot Advisors. This will require us to meet the value
test in any quarter in which the conversion option is exercised. A similar
result will follow in the case of any exchange of partnership units by
employees of Cabot L.P. or Cabot Advisors that they received pursuant to our
long term incentive compensation plan. We plan to take steps to ensure that the
value test is satisfied for any quarter in which retesting is to occur.
However, we cannot give assurance that the steps will always be successful and
will not require a reduction in Cabot L.P.'s overall interest in Cabot
Advisors.
Gross Income Tests. There are two separate percentage tests relating to the
sources of our gross income which must be satisfied for each taxable year. For
purposes of these tests, where we invest in a partnership, we will be treated
as receiving our share of the income and loss of the partnership. The gross
income of the partnership will retain the same character in our hands as it has
in the hands of the partnership. See "--Tax Aspects of Our Investments in
Partnerships--General" below. The two tests are separately described below:
The 75% Test. At least 75% of our gross income for the taxable year must be
"qualifying income." Qualifying income generally includes:
(1) rents from real property, except as modified below;
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(2) interest on obligations secured by mortgages on, or interests in,
real property;
(3) gains from the sale or other disposition of interests in real
property and real estate mortgages, other than gain from property
bought primarily for sale to customers in the ordinary course of
our trade or business ("dealer property");
(4) dividends or other distributions on shares in other REITs, as well
as gain from the sale of the shares;
(5) abatements and refunds of real property taxes;
(6) income from the operation, and gain from the sale, of property
acquired at or in lieu of a foreclosure of the mortgage secured by
the property ("foreclosure property"); and
(7) commitment fees received for agreeing to make loans secured by
mortgages on real property or to purchase or lease real property.
Rents received from a customer will not, however, qualify as rents from real
property in satisfying the 75% gross income test or the 95% gross income test
described below if we own or are deemed to own, or an owner or deemed owner of
10% or more of us owns, directly or constructively 10% or more of the customer.
If the portion of any 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, the portion of the rent will not qualify as rents
from real property. Moreover, an amount received or accrued will not qualify as
rents from real property or as interest income for the 75% and 95% gross income
tests, if it is based, in whole or in part, on the income or profits of any
person. However, an amount received or accrued generally will not be excluded
from "rents from real property" solely by reason of being based on a fixed
percentage, or percentages, of receipts or sales. Finally, for rents received
to qualify as rents from real property or as interest income for the 75% and
95% gross income tests, we generally must not operate or manage the property,
or furnish or render services to customers other than through an "independent
contractor" from whom we derive no income, except that the "independent
contractor" requirement does not apply to the extent that the services provided
by us are "usually or customarily rendered" in connection with the rental of
space for occupancy only, or are not otherwise considered "rendered to the
occupant for his convenience" of the amounts received with respect to the
services do not exceed 1% of all amounts received or accrued, directly or
indirectly, by us during the taxable year with respect to the property.
We monitor our operations in the context of these standards so as to satisfy
the 75% and 95% gross income tests and have represented to Mayer, Brown & Platt
that we have and will satisfy these tests for our taxable years ended 1998 and
afterwards. Cabot L.P. provides services at the properties that it owns and may
provide the services at any newly acquired properties of it. We believe that
for purposes of the 75% and 95% gross income tests, the services provided at
our properties are or will be of the type, which is usually or customarily
rendered in connection with the rental of space for occupancy only and not
those rendered to the occupant for his convenience. We believe this is also
true for any other services and amenities provided by Cabot L.P. or its agents.
Mayer, Brown & Platt, in rendering its opinion as to our qualification as a
REIT, is relying on our representations to that effect. We intend that
independent contractors will perform services that cannot be provided directly
by Cabot L.P., Cabot Advisors or other agents. We anticipate that the dividend
income on our indirect investment in Cabot Advisors will not cause us to fail
the 75% gross income test.
The 95% Test. In addition to deriving 75% of our gross income from the
sources above, at least 95% of our gross income for the taxable year must be
derived from the above-described qualifying income or from dividends, interest,
or gains from the sale or other disposition of stock or other securities that
are not dealer property. Dividends and interest on any obligations that are not
collateralized by an interest in real property are included for purposes of the
95% test, but not for purposes of the 75% gross income test. In addition,
payments to us under an interest rate swap, cap agreement, option, futures
contract, forward rate agreement or any similar financial instrument entered
into by us to hedge our indebtedness incurred or to be incurred, including and
any gain from the sale or other disposition of these instruments, are treated
as qualifying income for purposes of the
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95% gross income test, but not for purposes of the 75% gross income test. We
closely monitor our non-qualifying income and anticipate that non-qualifying
income from other activities will not result in our failing to satisfy either
the 75% or 95% gross income test.
To determine whether we comply with the 75% and the 95% gross income tests,
gross income does not include income from prohibited transactions. In general,
a sale of dealer property, excluding foreclosure property, is a "prohibited
transaction." However, a sale of property will not be a prohibited transaction
if we hold the property for at least four years and additional requirements,
relating to the number of properties sold in a year, their tax bases, and the
cost of improvements made thereto, are satisfied. See "--Taxation of Cabot
Trust--General" and "--Tax Aspects of Our Investments in Partnerships--Sale of
Properties."
We believe that, for purposes of both the 75% and the 95% gross income
tests, our investment in properties through Cabot L.P. in major part gives rise
to qualifying income in the form of rents. We also believe that gains on sales
of the properties, or of our interest in Cabot L.P., generally will also
constitute qualifying income.
Even if we fail to satisfy one or both of the 75% and 95% gross income tests
for any taxable year, we may still qualify as a REIT for the year if we are
entitled to relief under provisions of the Tax Code. These relief provisions
will generally be available if:
(1) our failure to comply is due to reasonable cause and not to willful
neglect;
(2) we report the nature and amount of each item of our income included
in the tests on a schedule attached to our tax return; and
(3) any incorrect information on this schedule is not due to fraud with
intent to evade tax.
If these relief provisions apply, however, we will nonetheless be subject to a
100% tax on the greater of the amount by which it fails either the 75% or 95%
gross income test, multiplied by a fraction intended to reflect our
profitability.
Annual Distribution Requirements. In order to qualify as a REIT, we are
required to distribute dividends to our shareholders each year in an amount at
least equal to:
(1) the sum of (x) 95% of our REIT taxable income which is, computed
without regard to the deduction for dividends paid and Cabot
Trust's net capital gain, plus (y) 95% of the after-tax net income,
if any, from foreclosure property, minus
(2) the amount of our items of non-cash income.
We must pay the distributions in the taxable year to which they relate, or in
the following taxable year, if they are declared before we timely file our tax
return for the year and if they are paid on or before the first regular
dividend payment after the declaration. To the extent that we do not distribute
all of our net capital gain or distribute at least 95%, but less than 100%, of
our REIT taxable income, as adjusted, we will be subject to tax on the
undistributed amount at regular capital gain or ordinary corporate tax rates,
as the case may be.
We intend to make timely distributions sufficient to satisfy the annual
distribution requirements, as described in the first sentence of the preceding
paragraph. We have represented to Mayer, Brown & Platt that we have and will
satisfy these distribution requirements for our taxable years ended 1998 and
afterwards. In this regard, the partnership agreement authorizes us in our
capacity as general partner to take the steps as may be necessary to cause
Cabot L.P. to distribute to its partners an amount sufficient to permit us to
meet the distribution requirements. It is possible that we may not have
sufficient cash or other liquid assets to meet the 95% distribution
requirement. This may be due to timing differences between the actual receipt
of income and actual payment of expenses on the one hand and the inclusion of
the income and deduction of the expense used to compute our REIT taxable income
on the other hand. Additionally, this may be due to Cabot L.P.'s inability to
control cash distributions from any properties over which it does not have
decision making control, or
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for other reasons. We will closely monitor the relationship between our REIT
taxable income and cash flow and, if necessary, borrow funds or cause Cabot
L.P. or other affiliates to borrow funds to satisfy the distribution
requirement. However, we cannot assure that the borrowing would be available at
the time.
If we fail to meet the 95% distribution requirement as a result of an
adjustment to our tax return by the Internal Revenue Service, we may
retroactively cure the failure by paying a "deficiency dividend" plus
applicable penalties and interest within a specified period.
Failure to Qualify. If we fail to qualify for taxation as a REIT in any
taxable year, and the relief provisions do not apply, we will be subject to
tax, including any applicable alternative minimum tax, on our taxable income at
regular corporate rates. Distributions to shareholders in any year in which we
fail to qualify as a REIT will not be deductible by us, nor will they generally
be required to be made under the Tax Code. In this event, to the extent of
current and accumulated earnings and profits, all distributions to shareholders
will be taxable as ordinary income and subject to limitations in the Tax Code.
Also, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief under specific statutory provisions, we
also will be disqualified from re-electing taxation as a REIT for the four
taxable years following the year during which qualification was lost.
Tax Aspects of Our Investments in Partnerships
General. We hold a partnership interest in Cabot L.P. In general, a
partnership is a "pass-through" entity which is not subject to federal income
tax. Rather, partners are allocated their proportionate shares of the items of
income, gain, loss, deduction and credit of a partnership, and are potentially
subject to tax thereon, without regard to whether the partner received a
distribution from the partnership. We will include our proportionate share of
the foregoing partnership items for purposes of the various REIT gross income
tests and in the computation of our REIT taxable income. See "--Taxation of
Us--General" and "--Gross Income Tests."
Each partner's share of a partnership's tax attributes is determined in
accordance with the partnership agreement although, the allocations will be
adjusted for tax purposes if they do not comply with the technical provisions
of Tax Code Section 704(b) and the regulations under Tax Code Section 704(b).
Cabot L.P.'s allocation of tax attributes are intended to comply with these
provisions. Notwithstanding these allocation provisions, for purposes of
complying with the gross income and asset tests discussed above, we will be
deemed to own our proportionate share of each of the assets of the partnership
and will be deemed to have received a share of the income of the partnership
based on our capital interest in Cabot L.P. Accordingly, any increase in our
REIT taxable income from our interest in Cabot L.P., whether or not a
corresponding cash distribution is also received from Cabot L.P., will increase
our distribution requirements. However, this will not be subject to federal
income tax in our hands if we distribute an amount equal to the income to our
shareholders. Moreover, for purposes of the REIT asset tests, we will include
our proportionate share of assets held by Cabot L.P. See "--Taxation of Us--
Annual Distribution Requirements" and "--Taxation of Us--Asset Test."
Entity Classification. Based on our representations that Cabot L.P. will
satisfy the conditions to avoid classification as a "publicly traded
partnership" under the Tax Code, in the opinion of Mayer, Brown & Platt under
existing federal income tax law and regulations, Cabot L.P. will be treated for
federal income tax purposes as a partnership, and not as an association taxable
as a corporation. The opinion, however, is not binding on the Internal Revenue
Service.
Tax Allocations with Respect to the Properties. Pursuant to Section 704(c)
of the Tax Code, income, gain, loss and deductions attributable to appreciated
or depreciated property that is contributed to a partnership in exchange for an
interest in the partnership (such as some of the properties or interests
therein) must be allocated in a manner such that the contributing partner is
charged with, or benefits from, respectively, the unrealized gain or unrealized
loss associated with the property at the time of the contribution. The amount
of
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the unrealized gain or unrealized loss is generally equal to the difference
between the fair market value of the contributed property at the time of
contribution, and the adjusted tax basis of the property at the time of
contribution. The difference is referred to herein as "book-tax difference."
The allocations are solely for federal income tax purposes and do not affect
the book capital accounts or other economic arrangements among the partners.
The formation of Cabot L.P. included contributions of appreciated property.
Consequently, the partnership agreement requires some allocations to be made in
a manner consistent with Section 704(c) of the Tax Code.
In general, some of the limited partners of Cabot L.P. as contributors of
some of the properties or interests therein will be allocated lower amounts of
depreciation deductions for tax purposes and increased taxable income and gain
on sale by Cabot L.P. on the contributed assets. This will tend to eliminate
the book-tax difference over the life of Cabot L.P. However, the special
allocation rules of Section 704(c) do not always entirely rectify the book-tax
difference on an annual basis or with respect to a specific taxable transaction
such as a sale, and accordingly variations from normal Section 704(c)
principles may arise, which could result in the allocation of additional
taxable income to us in excess of corresponding cash proceeds in some
circumstances.
Treasury regulations under Section 704(c) of the Tax Code provide
partnerships with a choice of several methods of accounting for book-tax
differences. Those determinations could have differing timing and other effects
on us.
Properties acquired by Cabot L.P. in taxable transactions will in general
have a tax basis equal to their fair market value. Section 704(c) of the Tax
Code will not apply in these cases.
Sale of Properties. Our share of any gain realized by Cabot L.P. on the sale
of any "dealer property" generally will be treated as income from a prohibited
transaction that is subject to 100% penalty tax. See "--Taxation of Us--
General" and "--Gross Income Tests--The 95% Test." Under existing law, whether
property is dealer property is a question of fact that depends on all the facts
and circumstances with respect to the particular transaction. We intend to
hold, and, to the extent within our control, to have any joint venture to which
Cabot L.P. is a partner hold, properties for investment with a view to long-
term appreciation, to engage in the business of acquiring, owning, operating
and developing the properties, and to make the occasional sales of our
properties and other properties acquired subsequent to the date hereof as are
consistent with our investment objectives. Based upon our investment
objectives, we believe that overall, our properties should not be considered
dealer property and that the amount of income from prohibited transactions, if
any, will not be material.
Taxation of Shareholders
Taxation of Taxable Domestic Shareholders. As long as we qualify as a REIT,
distributions made to our taxable domestic shareholders out of current or
accumulated earnings and profits, and not designated as capital gain dividends,
generally will be taxed to the shareholders as ordinary dividend income and
will not be eligible for the dividends received deduction for corporations.
Distributions of net capital gain that we designate as capital gain dividends
will be taxed to the shareholders as long-term capital gain, to the extent they
do not exceed our actual net capital gain for the fiscal year, without regard
to the period for which the shareholder has held its shares of beneficial
interest. However, corporate shareholders may be required to treat up to 20% of
capital gain dividends as ordinary income.
To the extent that we make distributions in excess of current and
accumulated earnings and profits, the distributions will be treated first as a
tax-free return of capital to you, reducing the tax basis of your common shares
by the amount of the excess distribution, but not below zero, with
distributions in excess of your tax basis being taxed as capital gains if your
common shares are held by you as a capital asset." In addition, any dividend
that we declare in October, November or December of any year, which is payable
to a shareholder of record on a specific date in any of the three months, must
be treated as both paid by us and received by the shareholder on December 31 of
the year as long as we actually pay the dividend during January of the
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following calendar year. You may not include our net operating losses in your
individual income tax returns. Federal income tax rules may also require that
minimum tax adjustments and preferences be apportioned to you.
We are permitted under the Tax Code to elect to retain and pay income tax on
our net capital gain for any taxable year. If we so elect, you must include in
income your proportionate share of our undistributed capital gain for the
taxable year. You also will be deemed to have paid your proportionate share of
the income tax we pay with respect to the undistributed capital gain. The tax
would be credited against your tax liability and subject to normal refund
procedures. In addition, your basis in your shares would be increased by the
amount of undistributed capital gain included in your income, but reduced by
the tax we paid.
The Internal Revenue Service Restructuring and Reform Act of 1998 provides
that gain from the sale or exchange of some investments held for more than one
year is taxed at a maximum capital gain rate of 20%. Pursuant to Internal
Revenue Service guidance, we may classify portions of our capital gain
dividends as gains eligible for the 20% capital gains rate discussed above or
as unrecaptured Tax Code Section 1250 gain taxable at a maximum rate of 25%.
In general, any loss upon a sale or exchange of common shares by a
shareholder who has held the common shares for six months or less will be
treated as a long-term capital loss, to the extent distributions from Cabot
Trust were required to be treated by the shareholders as long-term capital
gains.
Backup Withholding. We will report to our domestic shareholders and to the
Internal Revenue Service the amount of dividends paid for each calendar year,
and the amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a shareholder may be subject to backup withholding at a rate
of 31% with respect to dividends paid unless the shareholder is a corporation
or comes within some other exempt categories and, when required, demonstrates
this fact or provides a taxpayer identification number, certifies as to no loss
of exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A shareholder that does not
provide us with its correct taxpayer identification number may also be subject
to penalties imposed by the Internal Revenue Service. Any amount paid as backup
withholding is available as a credit against the shareholder's income tax
liability. In addition, we may be required to withhold a portion of capital
gain distributions made to any shareholders who fail to certify their non-
foreign status to us. See "--Taxation of the Shareholders--Taxation of Foreign
Shareholders" below.
Taxation of Tax-Exempt Shareholders. The Internal Revenue Service has issued
a revenue ruling in which it held that amounts distributed by a REIT to a tax-
exempt employees' pension trust do not constitute unrelated business taxable
income. Subject to the discussion below regarding a "pension-held REIT," based
upon that ruling and the statutory framework of the Tax Code, distributions by
us to a shareholder that is a tax-exempt entity should not constitute unrelated
business taxable income, provided that the tax-exempt entity has not financed
the acquisition of its shares with "acquisition indebtedness" within the
meaning of the Tax Code, that the shares are not otherwise used in an unrelated
trade or business of the tax-exempt entity, and that we, consistent with our
present intent, do not hold a residual interest in a real estate mortgage
investment conduit that is an entity or arrangement that satisfies the
standards set forth in Section 860D of the Tax Code.
If any pension or other retirement trust that qualifies under Section 401(a)
of the Tax Code holds more than 10% by value of the interests in a "pension-
held REIT" at any time during a taxable year, a portion of the dividends paid
to the qualified pension trust by the REIT may constitute unrelated business
taxable income. For these purposes, a "pension-held REIT" is defined as a REIT
which would not have qualified as a REIT but for (1) the provisions of the Tax
Code which look through such a qualified pension trust in determining ownership
of shares of the REIT and (2) as to which at least one qualified pension trust
holds more than 25% by value of the interests of the REIT or one or more
qualified pension trusts, each owning more than a 10% interest by value in the
REIT, hold in the aggregate more than 50% by value of the interests in the
REIT.
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We do not believe we are currently a pension-held REIT. However, pension
funds hold significant amounts of partnership units, which may, subject to some
limitations, be exchanged for common shares. In addition, pension funds may
purchase common shares in the market. As a result, we may in the future be
deemed to constitute a pension-held REIT as a result of exchanges of
partnership units for common shares or market purchases of common shares by
pension funds.
Taxation of Foreign Shareholders. The rules governing United States federal
income taxation of non-resident alien individuals, foreign corporations,
foreign partnerships and other foreign shareholders are highly complex and may
be affected by other considerations. The following is only a summary of those
rules. Prospective Non-U.S. Shareholders should consult with their own tax
advisors to determine the impact of federal, state and local income tax laws
with regard to an investment in our common shares, including any reporting
requirements.
We will qualify as a "domestically-controlled REIT" so long as less than 50%
in value of our common shares are held by foreign persons such as non-resident
aliens, foreign corporations, partnerships, trusts and estates. We currently
anticipate that we will qualify as a domestically-controlled REIT. Under these
circumstances, gain from the sale of our common shares by a foreign person
should not be subject to United States taxation, unless the gain is effectively
connected with the person's United States trade or business or, in the case of
an individual foreign person, the person is present within the United States
for more than 182 days during the taxable year. However, notwithstanding our
current anticipation that we will qualify as a domestically-controlled REIT,
because our common shares will be publicly traded no assurance can be given
that we will so qualify.
Distributions of cash generated by our real estate operations, but not by
the sale or exchange of properties, that are paid to foreign persons generally
will be subject to United States withholding tax at a rate of 30%, unless an
applicable tax treaty reduces that tax and the foreign shareholder files with
us the required form evidencing the lower rate, or the foreign shareholder
files an Internal Revenue Service Form 4224 with us claiming that the
distribution is "effectively connected" income.
Distributions of proceeds attributable to the sale or exchange of United
States real property interests by us are subject to income and withholding
taxes pursuant to the Foreign Investment in Real Property Tax Act of 1980, and
may also be subject to branch profits tax in the hands of a shareholder which
is a foreign corporation if it is not entitled to treaty relief or exemption.
We are required by applicable Treasury regulations to withhold 35% of any
distribution to a foreign person that could be designated as a capital gain
dividend. This amount is creditable against the foreign shareholder's tax
liability.
Other Tax Considerations
Cabot Advisors. The income of Cabot Advisors will be subject to federal and
state income tax at full corporate rates. Cabot Advisors cannot claim a
deduction for the dividends it pays to its shareholders, including Cabot L.P.
To the extent that Cabot Advisors pays federal, state or local taxes, it will
have less cash available to distribute to its shareholders, thereby reducing
cash available for us to distribute to our shareholders. Cabot Advisors will
attempt to minimize the amount of the taxes, but there can be no assurance
whether or the extent to which the measures it takes to minimize taxes will be
successful.
Possible Legislative or Other Actions Affecting Tax Consequences. You should
recognize that the present federal income tax treatment of an investment in us
may be modified by legislative, judicial or administrative action at any time
and that the action may affect investments and commitments previously made. The
rules dealing with federal income taxation are constantly in review by persons
involved in the legislative process and by the Internal Revenue Service and the
Treasury Department resulting in revisions of regulations and revised
interpretations of established concepts as well as statutory changes. No
assurance can be given as to the form or content or effective dates of any tax
legislation which may be enacted. Revisions in federal tax laws and
interpretations thereof can adversely affect the tax consequences of your
investment in Cabot Trust.
28
<PAGE>
State and Local Taxes. We and our shareholders may be subject to state or
local taxation. We and Cabot L.P. may be subject to state or local tax
withholding requirements in various jurisdictions, including those in which we
or they transact business or reside. The state and local tax treatment of us
and our shareholders may not conform to the federal income tax consequences
discussed above. Consequently, you should consult your tax advisor regarding
the effect of state and local tax laws on an investment in common shares.
You should consult your tax advisor regarding the specific tax consequences
to you of the purchase, ownership and sale of any of the securities described in
this prospectus, including the federal, state, local, foreign and other tax
consequences of the purchase, ownership, sale and election and of potential
changes in applicable tax laws.
29
<PAGE>
LEGAL MATTERS
The validity of the common shares offered pursuant to this prospectus has
been passed upon for Cabot Trust by Mayer, Brown & Platt. Mayer, Brown & Platt
has relied on the opinion of Ballard Spahr Andrews & Ingersoll, LLP as to
matters of Maryland law. The description of federal income tax consequences
contained in this prospectus under the heading "Federal Income Tax
Considerations" is based upon the opinion of Mayer, Brown & Platt.
EXPERTS
The audited financial statements and schedules, if applicable, of Cabot
Industrial Trust, Cabot Partners Limited Partnership, Existing Investors
Property Group, Knickerbocker Properties, Inc. II, Prudential Properties Group,
West Coast Industrial, LLC, The 4B's, Seefried Properties Group, Prudential
Properties Group II, DFW Trade Center I, L.P., Buildings 1, 2 and 3, 1055
Dornoch Court, San Diego, CA, Hampden I and II Properties Group, South Royal
Associates Properties Group, Joseph A. Leroy Family LP Property, Raco/Melaver,
L.L.C., TLI/Cahill Partnership--Spiral Drive, Terraden/Ontario, I L.P., Kojo
Building Property Group, Everest Investments Limited Partnership Property Group,
The Phoenix Group, Arizona Property, Hemmer Properties Group and Rushmore
Properties Group incorporated by reference in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as of and
for the periods indicated in their reports and are included or incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
The combined financial statements of Pennsylvania Public School Employes'
Retirement System Industrial Properties Portfolio as of December 31, 1997 and
1996 and for each of the two years ended December 31, 1997 and the period from
July 6, 1995 (date of acquisition) to December 31, 1995 and the related
schedule as of December 31, 1997, and the combined statement of revenue and
certain expenses of the Stayton Drive and Corridor Properties for the year
ended December 31, 1998, all incorporated by reference in this prospectus, have
been incorporated by reference in reliance upon the reports of KPMG LLP,
independent certified public accountants, incorporated by reference herein and
upon the authority of said firm as experts in accounting and auditing.
The historical cost basis combined statements of assets and liabilities of
Orlando Central Park and 500 Memorial Drive as of December 31, 1997 and 1996
and the related historical cost basis combined statements of income, changes in
net assets, and cash flows for each of the three years in the period ended
December 31, 1997, have been incorporated by reference in this prospectus from
the registration statement of Cabot Industrial Trust on Form S-11 (No. 333-
61543) in reliance on the report of PricewaterhouseCoopers LLP, independent
auditors, given on the authority of that firm as experts in accounting and
auditing.
The historical cost basis balance sheet of Knickerbocker Properties, Inc. II
as of December 31, 1996 and the related historical cost basis statements of
operations, stockholder's equity and cash flows for each of the two years in
the period ended December 31, 1996, have been incorporated by reference in this
prospectus from the registration statement of Cabot Industrial Trust on Form S-
11 (No. 333-61543) in reliance on the report of PricewaterhouseCoopers LLP,
independent auditors, given on the authority of that firm as experts in
accounting and auditing.
30
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth estimates of the expenses that will be incurred
by Cabot Trust in connection with the issuance and distribution of the common
shares being registered.
<TABLE>
<CAPTION>
Amount
------
<S> <C>
SEC Registration Fee............... $ 6,074
Legal Fees and Expenses............ 100,000
Accounting Fees and Expenses....... 200,000
Printing and Engraving Expenses.... 75,000
Miscellaneous...................... 68,926
--------
Total ....................... $450,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers
Article 9, Section 1 of Cabot Trust's Declaration of Trust provides as
follows with respect to the limitation of liability for Trustees and officers
and indemnification:
"To the maximum extent that Maryland law in effect from time to time permits
limitation of the liability of trustees and officers of a REIT, no trustee or
officer of the Trust shall be liable to the Trust or to any shareholder for
money damages. Neither the amendment nor the repeal of this Section 1, nor the
adoption or amendment of any other provision of this Declaration of Trust
inconsistent with this Section 1, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption. In the absence
of any Maryland statute limiting the liability of trustees or officers of a
Maryland REIT for money damages in a suit by or on behalf of the Trust or by
any shareholder, no trustee or officer of the Trust shall be liable to the
Trust or to any shareholder for money damages except to the extent that (a)
the trustee or officer actually received an improper benefit or profit in
money, property or services, for the amount of the benefit or profit in money,
property or services actually received or (b) a judgment or other final
adjudication adverse to the trustee or officer is entered in a proceeding
based on a finding in the proceeding that the trustee's or officer's action or
failure to act was the result of active and deliberate dishonesty and was
material to the cause of the action adjudicated in the proceeding."
Article 9, Section 3 of Cabot Trust's Declaration of Trust provides as
follows with respect to the indemnification of Trustees and officers:
"Notwithstanding any other provisions of this Declaration of Trust, the
Trust, for the purpose of providing indemnification for its Trustees and
officers, shall have the authority, without specific shareholder approval, to
enter into insurance or other arrangements to indemnify all Trustees and
officers of the Trust against any and all liabilities and expenses incurred by
them by reason of their being Trustees or officers of the Trust, whether or
not the Trust would otherwise have the power under this Declaration of Trust
or under Maryland law to indemnify such persons against such liability.
Without limiting the power of the Trust to procure or maintain any kind of
insurance or other arrangement, the Trust may, for the benefit of persons
indemnified by it, (a) create a trust fund, (b) establish any form of self-
insurance, (c) secure its indemnity obligation by grant of any security
interest or other lien on the assets of the Trust, or (d) establish a letter
of credit, guaranty or surety arrangement. Any such insurance or other
arrangement may be procured, maintained or established within the Trust or
with any insurer or other person deemed appropriate by the Board regardless of
whether all or part of the stock or other securities thereof are owned in
whole or in part by the Trust. In the absence of fraud, the judgment of the
Board as to the terms and conditions of insurance or other arrangement and the
identity of the insurer or other person participating
II-1
<PAGE>
in any arrangement shall be conclusive, and such insurance or other
arrangement shall not be subject to voidability, nor subject the Trustees
approving such insurance or other arrangement to liability on any ground,
regardless of whether Trustees participating and approving such insurance or
other arrangement shall be beneficiaries thereof."
Cabot Trust has entered into indemnity agreements with each of its officers
and Trustees which provide for reimbursement of all expenses and liabilities of
the officer or Trustee, arising out of any lawsuit or claim against the
officer or Trustee due to the fact that the person was or is serving as an
officer or Trustee, except for the liabilities and expenses (a) the payment of
which is judicially determined to be unlawful, (b) relating to claims under
Section 16(b) of the Securities Exchange Act of 1934 or (c) relating to
judicially determined criminal violations.
It is expected that forms of underwriting agreements that may be filed in
connection with this Registration Statement will provide for reciprocal
indemnification by the underwriters, and their respective directors, officers
and controlling persons, against liabilities under the Securities Act.
Item 16. Exhibits.
See the Exhibit Index which is incorporated herein by reference.
Item 17. Undertakings
The undersigned registrant 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 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 20 percent change in the maximum-aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(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)(i) and (a)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(b) 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.
II-2
<PAGE>
(c) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
II-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 Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, State of Massachusetts, on
April 8, 1999.
CABOT INDUSTRIAL TRUST
By: /s/ Neil E. Waisnor
--------------------------------
Neil E. Waisnor
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
Name and Signature Title Date
------------------ ----- ----
<S> <C> <C>
/s/ Ferdinand Collaredo-Mansfeld*
- -------------------------------- April 8, 1999
Ferdinand Colloredo- Chairman of the Board,
Mansfeld Chief Executive Officer,
Trustee (Principal
Executive Officer)
/s/ Robert E. Patterson*
- -------------------------------- April 8, 1999
Robert E. Patterson President, Trustee
/s/ Franz Colloredo-Mansfeld*
- -------------------------------- April 8, 1999
Franz Colloredo-Mansfeld Chief Financial Officer
(Principal Financial
Officer)
/s/ Neil E. Waisnor
- -------------------------------- April 8, 1999
Neil E. Waisnor Senior Vice President -
Finance, Treasurer and
Secretary (Principal
Accounting Officer)
/s/ Christopher C. Milliken*
- -------------------------------- April 8, 1999
Christopher C. Milliken Trustee
/s/ W. Nicholas Thorndike*
- -------------------------------- April 8, 1999
W. Nicholas Thorndike Trustee
/s/ Maurice Segall*
- -------------------------------- April 8, 1999
Maurice Segall Trustee
/s/ Ronald L. Skates*
- -------------------------------- April 8, 1999
Ronald L. Skates Trustee
*by /s/ Neil E. Waisnor
----------------------------- April 8, 1999
Neil E. Waisnor
As Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- -------
Number Exhibit
- ------ --------------------------------------------------------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Declaration of Trust, dated January 26, 1998, of Cabot Trust. Incorporated by reference
to Exhibit 3.1 to Cabot Trust's Form S-11 Registration Statement (File No. 333-38383) (the "Form S-11").
3.2 Amended and Restated Bylaws. Incorporated by reference to Exhibit 2 to Cabot Trust's Current Report on Form 8-k filed
on September 16, 1998.
3.3 Form of Registration Rights and Lock-Up Agreement, dated as of February 4, 1998, between Cabot Trust and
various other persons identified therein (included as Exhibit B to Exhibit 4.1).
3.4 Second Amended and Restated Agreement of Limited Partnership of Cabot L.P., dated February 4, 1998.
Incorporated by reference to Exhibit 3.5 to the Form S-11.
4.1 Contribution Agreement relating to the Capitalization of Cabot Industrial Trust, dated as of October 10, 1997,
among Cabot Trust, Cabot L.P., Cabot Partners Limited Partnership and various contributors and title
holding entities identified therein. Incorporated by reference to Exhibit 4.1 to the Form S-11.
5.1 Opinion of Mayer, Brown & Platt as to the legality of the common shares.*
8.1 Opinion of Mayer, Brown & Platt as to certain tax matters.*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Arthur Andersen LLP
23.3.1 Consent of KPMG LLP
23.3.2 Consent of KPMG LLP
23.4.1 Consent of PricewaterhouseCoopers LLP
23.4.2 Consent of PricewaterhouseCoopers LLP
23.5 Consent of Ballard Spahr Andrews & Ingersoll (included in the opinion filed as Exhibit A to Exhibit 5.1).*
23.6 Consent of Mayer, Brown & Platt (included in the opinions filed as Exhibits 5.1 and 8.1).*
24 Power of Attorney (included on the signature page hereto as originally filed).
</TABLE>
* Previously filed.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
covering the audited historical financial statements of Knickerbocker
Properties, Inc. II, dated July 20, 1998 and The Phoenix Group, dated August 12,
1998, incorporated by reference into Post-Effective Amendment No. 2 on Form S-3
to Registration Statement No. 333-61543 on Form S-11 of Cabot Industrial Trust
and to all references to our firm included in Post-Effective Amendment No. 2 to
this registration statement.
Arthur Andersen LLP
New York, New York
April 7, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
covering the audited historical financial statements of Cabot Industrial Trust,
dated February 9, 1999 (except with respect to the matters discussed in Note 13,
as to which the date, is March 8, 1999), Cabot Partners Limited Partnership,
dated March 27, 1998, Existing Investors Property Group, dated July 13, 1998,
Prudential Properties Group, dated July 13, 1998, West Coast Industrial, LLC,
dated June 30, 1998, The 4 B's, dated August 3, 1998, Seefried Properties Group,
dated June 30, 1998, Prudential Properties Group II, dated June 30, 1998, DFW
Trade Center I, L.P., Buildings 1, 2 and 3, dated June 30, 1998, 1055 Dornoch
Court, San Diego, CA, dated June 30, 1998, Hampden I and II Properties Group,
dated June 30, 1998, South Royal Associates Properties Group, dated June 30,
1998, Joseph A. Leroy Family LP Property, dated June 30, 1998, Raco/Melaver,
L.L.C., dated June 30, 1998, TLI/Cahill Partnership--Spiral Drive, dated June
30, 1998, Terraden/Ontario, I L.P., dated June 30, 1998, Kojo Building Property
Group, dated June 30, 1998, Everest Investments Limited Partnership Property
Group, dated July 10, 1998, Arizona Property, dated January 28, 1999, Hemmer
Properties Group, dated January 28, 1999 and Rushmore Properties Group, dated
March 30, 1999, incorporated by reference into Post-Effective Amendment No. 2 on
Form S-3 to Registration Statement No. 333-61543 on Form S-11 of Cabot
Industrial Trust and to all references to our Firm included in Post-Effective
Amendment No. 2 to this registration statement.
Arthur Andersen LLP
Boston, Massachusetts
April 7, 1999
<PAGE>
EXHIBIT 23.3.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees of
Cabot Industrial Trust:
We consent to incorporation by reference herein of our report dated July 2,
1998, relating to the combined balance sheets of the Pennsylvania Public School
Employes' Retirement System Industrial Properties Portfolio as of December 31,
1997 and 1996, and the related combined statements of operations, owner's
equity, and cash flows for the years ended December 31, 1997, 1996 and the
period from July 6, 1995 (date of acquisition) to December 31, 1995, and the
related schedule as of December 31, 1997, incorporated by reference herein, and
to the reference to our firm under the heading "Experts" in Post-Effective
Amendment No. 2 to this registration statement on Form S-3 of Cabot Industrial
Trust.
KPMG LLP
Chicago, Illinois
April 7, 1999
<PAGE>
EXHIBIT 23.3.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees of
Cabot Industrial Trust:
We consent to incorporation by reference herein of our report dated March 29,
1999, with respect to the combined statement of revenue and certain expenses of
the Stayton Drive and Corridor Properties for the year ended December 31, 1998,
incorporated by reference herein, and to the reference to our firm under the
heading "Experts" in Post-Effective Amendment No. 2 to this registration
statement on Form S-3 of Cabot Industrial Trust.
KPMG LLP
Los Angeles, California
April 7, 1999
<PAGE>
EXHIBIT 23.4.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Post-Effective Amendent No.
2 to this registration statement of Cabot Industrial Trust on Form S-3 of our
report dated July 1, 1998 on our audits of the historical cost basis combined
financial statements of Orlando Central Park and 500 Memorial Drive as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 which report is included in Cabot Industrial Trust's
registration statement on Form S-11 (No. 333-61543). We also consent to the
reference to our firm under the caption "Experts."
PricewaterhouseCoopers LLP
New York, New York
April 7, 1999
<PAGE>
EXHIBIT 23.4.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Post-Effective Amendment
No. 2 to this registration statement of Cabot Industrial Trust on Form S-3 of
our report dated April 25, 1997 on our audits of the historical cost basis
financial statements of Knickerbocker Properties, Inc. II as of December 31,
1996 and 1995, and for each of the two years in the period ended December 31,
1996 which report is included in Cabot Industrial Trust's registration statement
on Form S-11 (No. 333-61543). We also consent to the reference to our firm under
the caption "Experts."
PricewaterhouseCoopers LLP
Atlanta, Georgia
April 7, 1999
