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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 2000
REGISTRATION NO. 333- ______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
CABOT INDUSTRIAL TRUST
(Exact name of registrant as specified in its charter)
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MARYLAND 04-3397866
(State of organization) (I.R.S. Employer Identification No.)
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):
Copies to:
JAMES R. WALTHER
MAYER, BROWN & PLATT
350 SOUTH GRAND AVE., 25TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 229-9500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the Registration Statement becomes effective.
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, 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 of 1933, please check the following box
and list the Securities Act of 1933 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 of 1933, check the following box and list the Securities Act
of 1933 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.[ ]
-------------------------
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CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Shares of Beneficial Interest,
par value $0.01 per share 927,448 $18.71875 $17,360,667.25 $4,583.22
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Preferred Share Purchase Rights 927,448 N/A N/A N/A
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(1) Estimated solely for purposes of determining the registration fee.
________________________
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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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Prospectus
SUBJECT TO COMPLETION DATED DECEMBER 5, 2000
CABOT INDUSTRIAL TRUST
927,448 Common Shares of Beneficial Interest
The shareholders of Cabot Industrial Trust named in this prospectus may offer
and sell up to 927,448 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 New York Stock
Exchange on December 4, 2000 was $19.5625 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 3 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 December 5, 2000.
<PAGE>
You should rely only on the information contained in this prospectus or in the
other documents referred to herein under the heading "Where You Can Find More
Information." We have not authorized anyone to give you 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 an 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, on a later date.
TABLE OF CONTENTS
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Page
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<S> <C>
Risk Factors......................................................................................3
We may not be able to maintain our shareholder distributions at their
current level................................................................................3
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.................................................................3
We would incur adverse tax consequences if we fail to qualify as a REIT.......................3
We can change our financing, investment, distribution and other business
policies without your approval...............................................................4
Our business consists primarily of acquiring and operating real estate and
is therefore subject to real estate investment and operating risks...........................4
There are potential conflicts of interest in our operations...................................6
Increases in market interest rates may adversely affect the market price
of our common shares.........................................................................7
Shares that become available for future sale may adversely affect the
market price of our common shares............................................................7
We are subject to real estate financing risks.................................................7
Our use of interest rate hedging agreements may increase our interest and
financing costs, may result in losses and may present other risks............................8
Where You Can Find More Information...............................................................9
Forward-Looking Statements........................................................................9
Cabot Industrial Trust...........................................................................10
Use of Proceeds..................................................................................10
Selling Shareholders.............................................................................10
Plan of Distribution.............................................................................12
Description of Common Shares.....................................................................12
Summary of Terms.............................................................................12
Shareholder Rights Plan......................................................................13
Restrictions on Transfer.....................................................................13
Shareholder Liability........................................................................15
Indemnification of Trustees and Officers.....................................................15
Transfer Agent and Registrar.................................................................15
Federal Income Tax Considerations................................................................15
Taxation of Cabot Trust......................................................................16
Tax Aspects of Our Investments in Partnerships...............................................20
Taxation of Shareholders.....................................................................21
Other Tax Considerations.....................................................................22
Legal Matters....................................................................................23
Experts..........................................................................................23
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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 that is
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 of Trustees. Our Board 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."
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 beginning with our taxable year ended December 31, 1998
and that our actual and proposed method of operation that we have described to
our counsel will enable us to continue to satisfy the requirements for REIT
qualification. Our
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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 1999, this would have resulted
in our net income of $49.0 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.
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% (or
90% for taxable years beginning after December 31, 2000) of our annual net
taxable income, excluding any net capital gain, to our shareholders. In
addition, 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
distribution of taxable income test described above 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 the total liquidation value of all outstanding preferred
partnership units of Cabot L.P. and total consolidated and unconsolidated debt,
but excluding all nonrecourse consolidated debt in excess of our proportionate
share of that debt and excluding all nonrecourse unconsolidated debt of
partnerships in which we are a limited partner.
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 97% of our income from rental operations during 1999. 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.
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.
4
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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
5.2% of our total leased rental space will expire in the fourth quarter of 2000
and leases covering approximately 15.0% of our total rental space will expire in
2001, 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 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 13% of the properties owned by us as of September 30, 2000 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.
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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 losses 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 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 September 30, 2000, all of our 80 properties
located in California are covered by earthquake insurance. We currently maintain
blanket earthquake insurance coverage for all properties located outside
California in amounts we believe to be reasonable.
Equity real estate investments are relatively illiquid. The relative illiquidity
of our real estate investments may limit our ability to adjust our property
portfolio to respond to market changes. 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 the following:
. 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 $27.2 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
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1.6% of our total assets at September 30, 2000. 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 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 March
8, 2000 our senior management beneficially owned approximately 4.0% of our
outstanding common shares, assuming the exchange of all Cabot L.P. partnership
units not held by Cabot Trust for common shares, but excluding shares issuable
pursuant to the exercise of options and dividend equivalent units issued under
our long-term incentive compensation plans. At the same date, the IBM Retirement
Plan Trust, the New York State Teachers' Retirement System and the Pennsylvania
Public School Employees' Retirement System beneficially owned approximately
22.9%, 13.6% and 12.6%, respectively, of our outstanding common shares, as
calculated on the same basis. 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 ownership
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 September 30, 2000, we had 40,624,833 outstanding common
shares. This prospectus also covers resales of a total of 927,448 additional
common shares that are issuable on conversion of Cabot L.P. partnership units or
exercise of warrants. We have also reserved a total, as of September 30, 2000,
of 6,366,833 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 plans, of which 4,262,526 shares are subject to options
and other awards that have been granted through September 30, 2000, of which
4,041,139 and 91,115 are subject to four-year and one-year vesting schedules
respectively and 130,272 vest only upon a change of control. In addition, we may
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
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
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$325 million (which may increase to $375 million under certain circumstances)
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, may result in losses and may present other risks.
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 rate collar and interest rate cap agreements, which are intended to
limit our exposure to increases in interest rates on our variable rate
borrowings. They also include "Treasury lock agreements" that are entered into
for the purpose of hedging the interest rates of fixed interest rate
indebtedness that we expect to incur in future periods. Interest rate hedging
agreements involve the risks described in the following paragraphs:
Hedging agreements may increase our interest and financing costs. Since
interest rate hedging agreements are intended to have the effect of fixing
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. We may also pay fees and incur other transaction costs in connection
with entering into these agreements.
Hedging agreements present credit risks. The counter parties in our hedging
agreements may become financially unable to perform their obligations under
the agreements. In that case, we would not receive the protection against
changes in interest rates that we had intended and we may also not be able
to recover fees or others costs incurred by us in entering the hedging
agreement.
Hedging agreements may present "basis risks." The interest rate index or
other basis of the hedging agreement may not change with the same frequency
or in the same magnitude as the interest rates that we are seeking to
hedge. This possibility, which is commonly referred to as "basis risk", may
result in unexpected costs and losses.
Deferral of gains and losses under hedge accounting principles may become
inappropriate for specific hedging arrangements. In general, and prior to
the implementation of Statement of Financial Accounting Standards (SFAS)
No. 133, Accounting for Derivative Instruments and Hedging Activities, in
the first quarter of 2001, we intend that the amounts we are required to
pay to or that we receive from the counter parties under our hedging
agreements will be reflected in our financial statements using "hedge
accounting" principals. Under hedge accounting principles the amounts of
such losses and gains are added to or credited against our interest expense
over the life of the related borrowing rather than being reported as
current gain or loss. Hedge accounting may cease to be appropriate for a
particular hedging agreement if the agreement ceases to be sufficiently
correlated with the indebtedness being hedged. This may occur as a result
of basis risk or it may occur because the borrowing to which the hedge
agreement relates is not completed in the form or within the time frame
contemplated when the hedging agreement was executed or if the related
borrowing is terminated prior to maturity.
Effective January 1, 2001 the Company will implement SFAS No. 133, which
will change the underlying accounting for derivative instruments that
qualify as hedges. Under the provisions of SFAS No. 133, the amounts we are
required to pay to or that we receive from the counter parties under our
hedging agreements will be accounted for as cash flow hedging instruments
and reflected in our financial statements, at fair value, as either assets
or liabilities depending on the rights or obligations under the agreements.
The effective portion of the changes in fair value of a derivative
instrument designated and qualifying as a cash flow hedging instrument
shall be reported as a component of other comprehensive income (outside
earnings) and reclassified into earnings in the same period or periods
during which the hedged forecasted transaction affects earnings. The
remaining change in fair value of the derivative instrument, if any, shall
be recognized currently in earnings. Reporting of changes in fair value as
a component of other comprehensive income may cease to be appropriate for a
particular hedging agreement if the agreement ceases to be highly effective
in offsetting the corresponding change in the cash outflows or inflows of
the hedged transaction. Loss of effectiveness could result in the net
change in fair value in accumulated other comprehensive income to be
immediately reclassified into earnings. This may again occur as a result of
basis risk or it may occur because the borrowing to which the hedge
agreement relates is not completed in the form or within the time frame
contemplated when the hedging agreement was executed or if the related
borrowing is terminated prior to maturity.
Treasury lock agreements may result in substantial losses if market interest
rates change significantly. 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. The amount, if any, that we may be required to pay to our counter
party, or that the counter party may be required to pay to us, under the
Treasury lock agreement depends on the direction and magnitude of any change in
the relevant Treasury market yields between the contract initiation date and the
contract settlement date. Accordingly, if we enter into additional Treasury lock
agreements in the future we will be subject to potential increases in interest
expense or immediate loss recognition that will fluctuate with movements in
Treasury market yields and that may be substantial.
Interest rate hedging agreements may not be enforceable in some cases. The
enforceability of interest rate hedging agreements may depend on compliance by
the parties with applicable statutory and other legal requirements. They may not
be enforceable if they were not authorized or appropriate for a counter party or
if the related documentation has not been prepared and executed properly.
Substantial income from hedging activities could adversely affect our ability to
comply with the REIT qualification requirements of the Tax Code. There are
limits on the amount of income resulting from hedging 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--The 95% test."
8
<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 our
common shares described in this prospectus under the Securities Act of 1933. The
registration statement contains additional information about us and our common
shares. 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............................... Year ended December 31, 1999, filed on
March 30, 2000
Quarterly Reports on Form 10-Q........................... Quarters ended September 30, 2000 filed
on November 14, 2000 (as amended by
Form 10-Q/A filed on December 5, 2000),
June 30, 2000 filed on August 14, 2000
and quarter ended March 31, 2000 filed
on May 15, 2000
Periodic Reports on Form 8-K........................... September 11, 2000
Description of common shares
contained in Registration Statement
on Form 8-A, as amended................................ Filed on January 27, 1998
Certain Audited Financial Statements included
in our Registration Statement on Form S-11
(Registration No. 333-61543)........................... Filed August 14, 1998
All subsequent documents filed by
Cabot Trust pursuant to Sections
13(a), 13(c), 14 or 15(d) of the After the date of this prospectus and
Exchange Act........................................... prior 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
9
<PAGE>
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.
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 September 30, 2000, we had a portfolio
of 353 industrial buildings located in 22 states throughout the United States
and containing approximately 41.8 million rentable square feet. These properties
were approximately 98% leased to 721 tenants at that date, with no single tenant
accounting for more than 2.1% 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 93.0% partnership interest in Cabot L.P. as of
September 30, 2000. 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 20 years of industry 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
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.
Share and unit ownership shown is as of September 30, 2000.
10
<PAGE>
<TABLE>
<CAPTION>
Common
Shares
that may
Common Common Be Held
Shares Shares Following
and Units Percent of that May Sales of All
Beneficially Outstanding Be Sold Shares
Selling Shareholder Owned Shares and Units Hereunder Hereunder
------------------- ----- ---------------- --------- ---------
<S> <C> <C> <C> <C>
Industrial Ventures, L.P. (1) 750,000 * 750,000 --
PH Trust I............. 41,790 * 41,790 --
Margaret E. Kinney..... 27,860 * 27,860 --
Paul Hemmer, Jr........ 26,120 * 26,120 --
Hemmer Family L.P...... 26,118 * 26,118 --
Dr. Robert Hemmer...... 16,456 * 16,456 --
Robert Sathe........... 8,725 * 8,725 --
Bruce E. Kinney........ 6,501 * 6,501 --
Paul Hemmer, Sr........ 5,015 * 5,015 --
Mary Hemmer............ 4,441 * 4,441 --
Michael Hemmer......... 3,135 * 3,135 --
Charles Goering........ 2,560 * 2,560 --
C. Goering Charitable Trust 2,560 * 2,560 --
James Viox............. 1,724 * 1,724 --
Maryann Curtin......... 1,568 * 1,568 --
Thomas Powers.......... 1,306 * 1,306 --
Frederick Boerger...... 1,045 * 1,045 --
Jon Hemmer............. 524 * 524 --
</TABLE>
* Less than 1% of the common shares and units.
(1) Such holder will receive common shares upon the exercise of a common share
warrant. The warrant entitles the holder to purchase 750,000 common shares at an
exercise price of $27.00 per share. The exercise price is subject to adjustment
in certain circumstances. The warrant may be exercised at any time during the
period commencing on September 5, 2000 and ending on September 5, 2005.
We have agreed to bear all expenses, other than underwriting discounts, fees or
selling commissions, and expenses of counsel to the selling shareholders,
relating to the registration and sale of the common shares issued to the Selling
Shareholders listed in this prospectus and certain of their transferees.
11
<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.
Cabot Trust will not receive any proceeds from the offering by the selling
shareholders.
Any brokers or dealers used in sales of the common shares may receive
compensation in the form of discounts, concessions or commissions 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 paid 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.
To the extent required, we will set forth in a prospectus supplement
accompanying this prospectus, or, if appropriate, in a post-effective amendment,
the following information: (i) the amount of the shares of common stock to be
sold; (ii) purchase price; (iii) public offering prices; (iv) the names of any
agents, dealers or underwriters; and (v) any applicable commissions or discounts
with respect to a particular offer.
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 September 30, 2000, we had 40,624,833 common
shares and no preferred shares oustanding.
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.
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."
12
<PAGE>
Holders of common shares have no conversion, redemption, preemptive or exchange
rights to subscribe for any securities of Cabot Trust.
Shareholder Rights Plan
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-hundredth of a share of a series of
participating preferred shares, par value $.01 per share at a price of $85.00
per 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.
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, (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."
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<PAGE>
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.
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 such 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.
All certificates representing our common or preferred shares are required to
bear a legend referring to the limitation described above.
14
<PAGE>
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.
All certificates representing our common or preferred shares are required to
bear a legend referring to the restrictions described above.
Transfer Agent and Registrar
BankBoston, N.A. has been appointed as transfer agent and registrar for the
common shares.
FEDERAL INCOME TAX CONSIDERATIONS
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 & Platt's opinion is based on assumptions relating
to the organization and operation of Cabot Trust,
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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 & 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.
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:
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(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.
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, 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
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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;
(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 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, 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 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 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" or 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
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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, and any gain from the sale or other disposition of these
instruments, are treated as qualifying income for purposes of the 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 (or 90% for taxable years
beginning after December 31, 2000), 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% (or
90% for taxable years beginning after December 31, 2000), 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% (or 90% for taxable years beginning after December 31, 2000)
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 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% (or 90% for taxable years beginning after December
31, 2000) 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"
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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 and will not be permitted to deduct any distributions
made to shareholders. 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
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 Cabot Trust--General" and "Taxation of Cabot
Trust--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 Cabot
Trust--Annual Distribution Requirements" and "--Taxation of Cabot Trust--Asset
Tests."
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
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 as a "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
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income from a prohibited transaction that is subject to 100% penalty tax. See
"--Taxation of Cabot Trust--General" and "Taxation of Cabot Trust--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 you on December 31 of the year as long as we actually
pay the dividend during January of the 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
21
<PAGE>
standards set forth in Section 860D of the Tax Code.
We believe we are currently a "pension-held REIT." 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 real estate investment trust may constitute unrelated business taxable
income. For these purposes, a "pension-held REIT" is defined as a real estate
investment trust which would not have qualified as a real estate investment
trust but for (1) the provisions of the Tax Code which look through such a
qualified pension trust in determining ownership of shares of the real estate
investment trust and (2) as to which at least one qualified pension trust holds
more than 25% by value of the interests of the real estate investment trust or
one or more qualified pension trusts, each owning more than a 10% interest by
value in the real estate investment trust, hold in the aggregate more than 50%
by value of the interests in the real estate investment trust.
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 or Internal Revenue Service Form W-8 ECI. Under
applicable Treasury regulations, foreign shareholders must generally provide the
Internal Revenue Service Form W-8 ECI in lieu of Internal Revenue Service Form
4224 beginning January 1, 2000 and every three years thereafter unless the
information on the form changes before that date. An Internal Revenue Service
Form 4224 existing on January 1, 2000 will continue to be effective until
December 31, 2000.
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, 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.
In this connection, Congress has recently passed and the President has signed
the Ticket to Work and Work Incentives Improvement Act of 1999 (the "1999 Act")
which contains several provisions affecting real estate investment trusts. One
provision under the 1999 Act will prohibit a real estate investment trust from
holding securities representing more than 10% of the vote or value of the
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<PAGE>
outstanding securities of any corporation other than a qualified real estate
investment trust subsidiary, another real estate investment trust or
corporations known as "taxable REIT subsidiaries" (the "Taxable REIT Subsidiary
Provision"). In addition, under the 1999 Act, not more than 20% of the value of
a real estate investment trust's total assets may be represented by securities
of one or more taxable REIT subsidiaries. Taxable REIT subsidiaries will be
subject to full corporate level taxation on their earnings, but will be
permitted to engage in certain types of activities, such as those performed by
Cabot Advisors, which cannot currently be performed by real estate investment
trusts or their controlled subsidiaries without jeopardizing their real estate
investment trust status. Taxable REIT subsidiaries will be subject to
limitations on the deductibility of payments made to the associated real estate
investment trust, which could materially increase the taxable income of the
taxable REIT subsidiary, and will be subject to prohibited transaction taxes on
certain other payments made to the associated real estate investment trust.
Under the Taxable REIT Subsidiary Provision, Cabot Trust and Cabot Advisors will
be allowed to jointly elect to treat Cabot Advisors as a "taxable REIT
subsidiary" for taxable years beginning after December 31, 2000. It is currently
anticipated that a taxable REIT subsidiary election will be made for Cabot
Advisors. Assuming such election is made, the Taxable REIT Subsidiary Provision
is not expected to have a material adverse effect on Cabot Trust.
As noted under "--Taxation of Cabot Trust - Annual Distribution Requirements",
another provision of the 1999 Act amends certain real estate investment trust
distribution requirements to conform such requirements to the regulated
investment company rules under the Internal Revenue Code. These amendments are
also effective for taxable years beginning after December 31, 2000.
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.
LEGAL MATTERS
The validity of the common shares offered pursuant to this prospectus has been
passed upon for Cabot Trust by Mayer, Brown & Platt. 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, and Prudential Properties
Group, incorporated by reference in this registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto and are 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, incorporated by reference in this prospectus, have been
incorporated by reference in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
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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.
Amount
------
SEC Registration Fee.............................. $ 4,583
Legal Fees and Expenses........................... 5,000
Accounting Fees and Expenses...................... 25,000
Printing and Engraving............................ 10,000
Miscellaneous Expenses............................ 15,000
------
Total......................................... $ 59,583
= ======
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 in any arrangement shall be conclusive, and such
insurance or other arrangement shall not be subject to
II-1
<PAGE>
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.
(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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrants
certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on their behalf by the undersigned, thereunto duly
authorized, in the City of Boston, State of Massachusetts, on the 5th day of
December 2000.
CABOT INDUSTRIAL TRUST
/s/ Robert E. Patterson
-----------------------
Robert E. Patterson
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints jointly and severally, Ferdinand
Colloredo-Mansfeld, Robert E. Patterson, Franz Colloredo-Mansfeld, and Neil E.
Waisnor and each of them, his true and lawful attorney-in-fact and agent, each
with the power of substitution, for him in any and all capacities, to sign any
and all amendments to this Registration Statement (including post-effective
amendments), and to sign any registration statement for the same offering
covered by this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto, and any and all other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact and agents, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name and Signature Title Date
------------------ ----- ----
<S> <C> <C>
/s/ Ferdinand Colloredo-Mansfeld Chairman of the Board, Chief December 5, 2000
------------------------------------ Executive Officer, Trustee
Ferdinand Colloredo-Mansfeld (Principal Executive Officer)
/s/ Robert E. Patterson President, Trustee December 5, 2000
------------------------------------
Robert E. Patterson
/s/ Franz Colloredo-Mansfeld Chief Financial Officer, December 5, 2000
------------------------------------ (Principal Financial Officer)
Franz Colloredo-Mansfeld
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Neil E. Waisnor Senior Vice President-Finance, December 5, 2000
------------------------------------ Treasurer, Secretary (Principal
Neil E. Waisnor Accounting Officer)
/s/ George M. Lovejoy, Jr. Trustee December 5, 2000
------------------------------------
George M. Lovejoy, Jr.
/s/ Christopher C. Milliken Trustee December 5, 2000
------------------------------------
Christopher C. Milliken
/s/ Maurice Segall Trustee December 5, 2000
------------------------------------
Maurice Segall
/s/ W. Nicholas Thorndike Trustee December 5, 2000
------------------------------------
W. Nicholas Thorndike
/s/ Ronald L. Skates Trustee December 5, 2000
------------------------------------
Ronald L. Skates
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
-------
Number Exhibit
------ -------
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 6, 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 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
Form S-11.
4.2 Form of indenture by and among Cabot L.P., Cabot Trust and Bank of New
York as trustee. Incorporated by reference to Exhibit 4.11 to Cabot
Trust's and Cabot L.P.'s Form S-3 Registration Statement (File No.
333-71585).
4.3 Form of Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement of Cabot L.P., as borrower, for the benefit of
Teachers Insurance and Annuity Association of America, as lender, used in
connection with mortgage loans. Incorporated by reference to Exhibit 4.3
to Cabot Trust's Annual Report on Form 10-K for the year ended December
31, 1998.
4.4 Form of Promissory Note of Cabot L.P., as borrower, in favor of Teachers
Insurance and Annuity Association of America, as lender, used in
connection with mortgage loans. Incorporated by reference to Exhibit 4.4
to Cabot Trust's Annual Report on Form 10-K for the year ended December
31, 1998.
4.5 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Cabot Industrial Properties, L.P., dated April 29, 1999.
Incorporated by reference to Exhibit 4.5 to Cabot Trust's Annual Report
on Form 10-K for the year ended December 1999.
4.6 Articles Supplementary, 1,300,000 Shares of 8.625% Series B Cumulative
Redeemable Preferred Shares, dated April 29,1999. Incorporated by
reference to Exhibit 4.6 to Cabot Trust's Annual Report on Form 10-K for
the year ended December 31, 1999.
4.7 Second Amendment to Second Amended and Restated Agreement of Limited
Partnership of Cabot Industrial Properties, L.P., dated September 3,
1999. Incorporated by reference to Exhibit 4.7 to Cabot Trust's Annual
Report on Form 10-K for the year ended December 31, 1999.
4.8 Articles Supplementary, 2,600,000 Shares of 8.625% Series C Cumulative
Redeemable Preferred Shares, dated September 3, 1999. Incorporated by
reference to Exhibit 4.8 to Cabot Trust's Annual Report on Form 10-K for
the year ended December 31, 1999.
4.9 Third Amendment to Second Amended and Restated Agreement of Limited
Partnership of Cabot Industrial Properties, L.P., dated September 27,
1999. Incorporated by reference to Exhibit 4.9 to Cabot Trust's Annual
Report on Form 10-K for the year ended December 31, 1999.
4.10 Articles Supplementary, 200,000 Shares of 8.375% Series D Cumulative
Redeemable Preferred Shares, dated September 27, 1999. Incorporated by
reference to Exhibit 4.10 to Cabot Trust's Annual Report on Form 10-K for
the year ended December 31, 1999.
4.11 Fourth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Cabot Industrial Properties, L.P., dated December 9, 1999.
Incorporated by reference to Exhibit 4.11 to Cabot Trust's Annual Report
on Form 10-K for the year ended December 31, 1999.
4.12 Articles Supplementary, 200,000 Shares of 8.375% Series E Cumulative
Redeemable Preferred Shares, dated December 9, 1999. Incorporated by
reference to Exhibit 4.12 to Cabot Trust's Annual Report on Form 10-K for
the year ended December 31, 1999.
4.13 Fifth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Cabot Industrial Properties, L.P., dated December 22,
1999. Incorporated by reference to Exhibit 4.13 to Cabot Trust's Annual
Report on Form 10-K for the year ended December 31, 1999.
4.14 Articles Supplementary, 1,800,000 Shares of 8.5% Series F Cumulative
Redeemable Preferred Shares, dated December 22, 1999. Incorporated by
reference to Exhibit 4.14 to Cabot Trust's Annual Report on Form 10-K for
the year ended December 31, 1999.
4.15 Sixth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Cabot Industrial Properties, L.P., dated March 23, 2000.
<PAGE>
4.16 Articles Supplementary, 600,000 Shares of 8.875% Series G Cumulative
Redeemable Preferred Shares, dated March 23, 2000.
4.17 Seventh Amendment to Second Amended and Restated Agreement of Limited
Partnership of Cabot Industrial Properties, L.P., dated May 25, 2000.
4.18 Articles Supplementary, 1,400,000 Shares of 8.95% Series H Cumulative
Redeemable Preferred Shares, dated May 25, 2000.
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.
23.1 Consent of Independent Public Accountants
23.2 Consent of Independent Public Accountants
23.3 Consent of Independent Auditors
23.4 Consent of Mayer, Brown & Platt (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on signature page to this registration
statement)
