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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1999
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PHILIPS INTERNATIONAL REALTY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MARYLAND 13-3963667
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
</TABLE>
417 FIFTH AVENUE
NEW YORK, NEW YORK 10016
(212) 545-1100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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MR. PHILIP PILEVSKY
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
417 FIFTH AVENUE
NEW YORK, NEW YORK 10016
(212) 545-1100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies To:
JONATHAN A. BERNSTEIN, ESQ.
BLAKE HORNICK, ESQ.
PRYOR CASHMAN SHERMAN & FLYNN LLP
410 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 421-4100
(212) 326-0806 (FACSIMILE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as possible after the Registration Statement becomes effective.
If the only Securities being registered on this form are being offered
pursuant to reinvestment plans, check the following box. / /
If any of the Securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than Securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this form is filed to register additional Securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT OF SHARES PROPOSED PROPOSED
TITLE OF SHARES TO TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED PRICE PER UNIT* OFFERING PRICE* REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock ($.01 par value)....................... 2,559,097 $14.53125 $37,186,878 $11,268.75
</TABLE>
* Estimated solely for the purpose of calculating the registration fee and
computed in accordance with Rule 457(c) under the Securities Act of 1933, upon
the basis of the average of the high and low prices reported in the
consolidated reporting system as of February 8, 1999.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1999
PROSPECTUS
2,559,097 SHARES
PHILIPS INTERNATIONAL REALTY CORP.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
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Philips International Realty Corp., a Maryland corporation, is a
self-advised real estate investment trust that manages and conducts its business
through Philips International Realty, L.P., a Delaware limited partnership. The
persons listed as selling shareholders of Philips International Realty Corp. in
this prospectus are offering and selling up to 2,559,097 shares of our common
stock. We may issue these shares of our common stock to such selling
shareholders to the extent they exchange their units of limited partnership
interests in Philips International Realty, L.P. for an equal number of shares of
our common stock. All net proceeds from the sale of the shares of common stock
offered by this prospectus will go to the selling shareholders. We will not
receive any proceeds from such sales.
The selling shareholders may offer their shares of common stock through
public or private transactions in the over-the-counter markets, on any exchanges
on which our common stock is traded at the time of sale, at prevailing market
prices or at privately negotiated prices. The selling shareholders may engage
brokers or dealers who may receive commissions or discounts from the selling
shareholders. We will pay substantially all of the expenses incident to the
registration of such shares, except for the selling commissions.
Our common stock is listed on the New York Stock Exchange under the ticker
symbol "PHR." The closing price of our common stock on February 8, 1999, was
$14.375 per share.
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SEE "RISK FACTORS" AT PAGE 4 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN
MATERIAL FACTORS WHICH YOU SHOULD CONSIDER BEFORE INVESTING IN THE COMMON STOCK
OFFERED BY THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR HAS DETERMINED IF
THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is February , 1999
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AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-732-0330 for further
information on the operation of such public reference room. You also can request
copies of such documents, upon payment of a duplicating fee, by writing to the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 or obtain copies of such documents from the Securities and Exchange
Commission's web site at http://www.sec.gov.
We have filed with the Securities and Exchange Commission a registration
statement (of which this prospectus is a part) under the Securities Act of 1933,
as amended, with respect to the securities being offered. This prospectus does
not contain all of the information set forth in the registration statement. We
have omitted certain portions as permitted by the rules and regulations of the
Securities and Exchange Commission. Statements contained in this prospectus as
to the contents of any contract or other document are not necessarily complete,
and in each instance we refer you to the copy of such contract or other document
filed as an exhibit to the registration statement. Each such statement is
qualified in all respects by such reference and the exhibits and schedules to
the registration statement. For further information regarding us and the
securities being offered, please read the registration statement and such
exhibits and schedules which may be obtained from the Securities and Exchange
Commission at its principal office in Washington, D.C. upon payment of the fees
prescribed by the Securities and Exchange Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information we incorporate by reference is considered to be part of this
prospectus and information that we file later with the Securities and Exchange
Commission automatically will update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the Securities and Exchange Commission under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended:
(1) Annual Report on Form 10-K (File No. 0-23463) for the fiscal year ended
December 31, 1997;
(2) Quarterly Reports on Form 10-Q (File No. 1-14095) for the fiscal
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998;
(3) Current Report on Form 8-K (File No. 1-14095), dated July 31, 1998; and
(4) The description of our common stock and the description of certain
provisions of the laws of the State of Maryland and our articles of
incorporation and bylaws, both contained in our registration statement
on Form 8-A dated May 6, 1998.
You may request a copy of these filings (including exhibits to such filings
that we have specifically incorporated by reference in such filings), at no
cost, by writing or telephoning our executive offices at the following address:
Philips International Realty Corp.
Office of the President
417 Fifth Avenue
New York, NY 07016-3510
(212) 545-1100
You should rely only on the information provided or incorporated by
reference in this prospectus or any related supplement. We have not authorized
anyone else to provide you with different information. The selling shareholders
will not make an offer of these shares in any state that prohibits such an
offer. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other than the date on the cover page of
such documents.
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All references in this prospectus to "common stock" refer to our common
stock, par value $.01 per share, and all references to "preferred stock" refer
to our preferred stock, par value $.01 per share. All references in this
prospectus to " units," refer to the units of limited partnership interest in
Philips International Realty, L.P.
INFORMATION ABOUT PHILIPS INTERNATIONAL REALTY CORP.
We, Philips International Realty Corp., are a self-advised real estate
investment trust formed to continue and expand the shopping center business of
certain affiliated companies owned or controlled by Philip Pilevsky known as the
Philips Group. We own, acquire for redevelopment, and develop neighborhood and
community shopping centers predominantly located in two major, densely
populated, east coast metropolitan regions: (i) the New York, northern New
Jersey, Long Island and Connecticut consolidated metropolitan statistical area
(the "New York CMSA") and (ii) the Miami-Fort Lauderdale consolidated
metropolitan statistical area (the "Miami CMSA").
Philip Pilevsky, Chairman of the Board of Directors and Chief Executive
Officer, leads our management team whose executive officers have an average of
approximately 16 years experience in acquiring, redeveloping and developing
retail properties. The Philips International Realty Corp. and Philips Group have
acquired, redeveloped and/or developed a total of 70 retail properties
encompassing over 5.4 million square feet within the New York CMSA and Miami
CMSA markets. Mr. Pilevsky and the other executive officers and directors
beneficially own, in the aggregate, approximately 22.6 percent of our
outstanding common stock (or units redeemable therefor).
On May 13, 1998, we completed a primary public stock offering of 7,200,000
shares of common stock at $17.50. Our common stock is listed on the New York
Stock Exchange under the ticker symbol "PHR."
Our strategy is to acquire for redevelopment and develop quality
neighborhood and community shopping centers, located in demographically strong,
under-stored markets which serve the daily needs of the surrounding community.
Twenty-one (21) of our properties are anchored by national or regional
supermarkets or discount department stores such as Publix Supermarkets, Inc.,
Winn-Dixie Stores, Inc., Wauldbaum/APW Supermarkets, Inc. and Kmart. Our
portfolio consists of interests in 26 properties encompassing 3.8 million square
feet of gross leasable area. Approximately 70 percent of our gross leasable area
is located in the New York CMSA and the Miami CMSA markets. We believe the
strength of these grocery and discount retailers, as well as other key anchor
tenants, provide our properties with consistent consumer traffic and enables us
to attract additional quality anchor retailers, as well as quality national,
regional and local non-anchor retailers. As of December 31, 1998, our properties
were 94 percent leased to 392 tenants.
To ensure that we qualify as a real estate investment trust, the transfer
of shares of our capital stock including the common stock, is subject to certain
restrictions. Ownership of capital stock by any single person is limited to 8.0
percent of the value of such capital stock, subject to certain exceptions. Our
articles of incorporation provide that any purported transfer in violation of
the above-described ownership limitations shall be void ab initio.
All of our interests in our properties are held by, and our operations are
conducted through, Philips International Realty, L.P., a Delaware limited
partnership. As of December 31, 1998, we were the beneficial owners of
approximately 74.8 percent of Philips International Realty, L.P., and are its
sole general partner.
We were incorporated in Maryland on July 16, 1997. Our executive offices
are located at 417 Fifth Avenue, New York, New York 10016, and our telephone
number is (212) 545-1100.
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RISK FACTORS
An investment in our common stock involves various risks. You should
carefully consider the following risk factors and other information in this
prospectus before deciding to invest in our common stock.
DEPENDENCE ON CERTAIN MARKET REGIONS AND PROPERTIES.
Dependence on Certain Market Regions. Thirteen of our properties are
located in either of the following major east coast metropolitan regions:
(1) the New York, northern New Jersey, Long Island and Connecticut metropolitan
market area or (2) the Miami-Fort Lauderdale metropolitan market area. As of
December 31, 1998, the total weighted average annualized base rent due under
leases with tenants at properties located in such areas represented 84 percent
of our total annualized base rents due under all of our leases. Adverse economic
developments in these states could adversely impact the operations of our
properties and, therefore, our profitability. Since our portfolio consists
primarily of retail properties (as compared to a more diversified portfolio), a
decline in the economy or a decline in the demand for retail space may adversely
affect our ability to make distributions.
Dependence on Certain Properties. As of December 31, 1998, the total
annualized base rent due under leases with tenants at four of our properties
located in Hialeah, Florida represented 35 percent of our total annualized base
rents due under all of our leases. Adverse economic developments or a decline in
consumer demand for shopping centers in this area or at these four properties
could disproportionately and adversely affect our ability to make distributions.
CONFLICTS OF INTEREST.
Potential Conflicts With Management. Our executive officers, including
Mr. Philip Pilevsky and Ms. Sheila Levine, direct our day-to-day operations.
Philips International Holding Corp., a corporation that Mr. Pilevsky and
Ms. Levine own, manages such day-to-day operations pursuant to a management
agreement dated December 31, 1997 among us, Philips International Realty. L.P.
and Philips International Holding Corp. Mr. Pilevsky also has several other real
estate holdings and activities that are not part of our company. A limited
number of such holdings are retail properties that may compete with our
properties. Personnel of Philips International Holding Corp. will spend some of
their time managing the holdings of Mr. Pilevsky. This will prevent such
personnel from devoting their efforts full-time to managing our properties. The
failure of the such personnel to adequately serve us could adversely affect our
business.
Potential Conflicts With Other Real Estate Activities. In connection with
our and Philip International Realty, L.P.'s formation in December 1997, we
acquired twelve of our thirteen properties from holders of units of the Philips
International Realty, L.P. Certain of these holders, including Mr. Pilevsky and
Ms. Levine, continue to hold significant interests in real properties (including
retail properties that may compete with our properties) that they owned but did
not transfer to us at such time. While an amended and restated non-competition
agreement dated as of December 31, 1997 among us, Philips International Realty,
L.P., Philips International Holding Co., Mr. Pilevsky and Ms. Levine prevents
Mr. Pilevsky, Ms. Levine and Philips International Holding Corp. from acquiring,
operating and managing or developing certain retail shopping center properties
other than through us, it does not restrict their activities with respect to
retail properties they owned but did not transfer to us at the time of our
formation. As a result, Mr. Pilevsky will devote his professional time to
overseeing the management of our properties as well as overseeing the management
of other properties. The failure of Mr. Pilevsky to adequately serve us could
adversely affect our business.
Potential Conflicts With Holders of Units of Philips International Realty,
L.P. Holders of units of Philips International Realty, L.P., including
Mr. Pilevsky and Ms. Levine, may have interests that conflict with our and our
shareholders' interests. If we (1) sell or refinance certain properties or
(2) reduce indebtedness encumbering such properties, holders of units
(particularly Mr. Pilevsky and Ms. Levine who previously held interests in our
properties) may suffer worse tax consequences than we or our shareholders may
suffer. To avoid such consequences, Mr. Pilevsky and Ms. Levine, as executive
officers and directors of our company, could (1) influence our board of
directors not to sell or refinance a property even though such sale or
refinancing might otherwise benefit us or (2) cause us to refinance a property
at a higher level of debt than would be in our best interest.
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REAL ESTATE INVESTMENT CONSIDERATIONS.
General. Our ability to make distributions to our shareholders depends on
the ability of our properties to generate funds (including earned income and
capital appreciation) in excess of operating expenses (including scheduled
principal payments on debt and capital expenditure requirements). Events or
conditions that are beyond our control may adversely affect funds from
operations and the value of our properties. Such events or conditions could
include:
o changes in the general economic climate;
o material and adverse changes in capital market availability of debt
and/or equity;
o changes in local conditions such as oversupply of space or a reduction in
demand for rental space;
o decreased attractiveness of our properties to potential tenants;
o competition from other available space;
o our inability to provide adequate maintenance;
o increased operating costs, including insurance premiums and real estate
taxes, due to inflation and other factors which may not necessarily be
offset by increased rents;
o changes in laws and regulations (including tax, environmental and housing
laws and regulations) and agency or court interpretations of such laws
and regulations and the related costs of compliance;
o changes in interest rate levels and the availability of financing;
o the inability of a significant number of tenants to pay rent;
o our inability to rent space on favorable terms; and
o civil unrest, earthquakes and other natural disasters that may result in
uninsured losses.
Financially Distressed Tenants May Reduce Our Cash Flow. A tenant may
default or file for bankruptcy at any time. If a tenant defaults, we may
experience delays and incur substantial costs in enforcing our rights as
landlord and protecting our investments. If a tenant files for bankruptcy, a
potential court judgment rejecting and terminating such tenant's lease could
reduce our cash flow available for distribution. Two of our anchor tenants,
Caldor Inc. and Bradlees Stores Inc., currently operate under the protection of
the bankruptcy laws. Caldor Inc. leases 94,393 square feet at Elm Plaza Shopping
Center and 86,830 square feet at Branhaven Plaza and Bradlees Stores Inc. leases
60,000 square feet at Foxboro Plaza. Termination of any of such leases could
temporarily interrupt our rental income from (1) the tenant of the affected
space and (2) other tenants at the property whose income depends upon the
tenant's presence as an anchor store at such property.
Illiquidity of Real Estate Limits Our Ability to Act Quickly. Real estate
investments are relatively illiquid. Such illiquidity may limit our ability to
vary our portfolio quickly in response to changes in economic and other
conditions. If we want to sell a property, we might not be able to dispose of
such property in the time period we desire, and the sales price of such property
might not recoup or exceed the amount of our investment. The prohibition in the
Internal Revenue Code of 1986, as amended, and related regulations on a real
estate investment trust holding property for sale also may restrict our ability
to sell property. Such limitations on our ability to sell our investments could
adversely affect our ability to make distributions.
Americans With Disabilities Act Compliance Could Be Costly. Under the
Americans with Disabilities Act of 1990 (the "ADA"), all public accommodations
and commercial facilities must meet certain federal requirements related to
access and use by disabled persons. Compliance with the ADA requirements could
involve removal of structural barriers to certain disabled persons' accesses.
Other federal, state and local laws may require modifications to or restrict
further renovations of our properties with respect to such accesses. Although we
believe that our properties are substantially in compliance with present
requirements, noncompliance with the ADA or related laws or regulations could
result in the United States government
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imposing fines or private litigants being awarded damages against us. Such costs
may adversely affect our ability to make distributions.
Environmental Regulations Could Subject Us to Liability. Various federal,
state and local laws and regulations subject property owners or operators to
liability for the costs of removal or remediation of certain hazardous or toxic
substances located on or in the property. These laws often impose liability
without regard to whether the owner or operator was responsible for or even knew
of the presence of such substances. The presence of or failure to properly
remediate hazardous or toxic substances may adversely affect our ability to
rent, sell or borrow against contaminated property. Various laws and regulations
also impose on persons who arrange for the disposal or treatment of hazardous or
toxic substances at another location liability for the costs of removal or
remediation of such substances at the disposal or treatment facility. These laws
often impose liability whether or not the person arranging for such disposal
ever owned or operated the disposal facility. Certain other environmental laws
and regulations impose liability on owners or operators of property for injuries
relating to the release of asbestos-containing materials into the air. As owners
and operators of property and as potential arrangers for hazardous substance
disposal, we may be liable under such laws and regulations for removal or
remediation costs, governmental penalties, property damage, personal injuries
and related expenses. Payment of such costs and expenses could adversely affect
our ability to make distributions.
Within the last two years, independent environmental consultants completed
a "Phase I" environmental assessment of our properties. Although this
environmental assessment did not reveal any environmental liability that could
materially affect our financial condition or results of operations, you should
consider that (1) such assessment involved general inspections without soil
sampling or ground water analysis and may not have revealed all environmental
liabilities, (2) future laws, ordinances or regulations could impose material
environmental liability on us and (3) acts by tenants or other third parties and
the condition of land near our properties (such as the presence of underground
storage tanks) could adversely affect the condition of our properties and
subject us to environmental liability.
Competition Within Our Markets Could Reduce Our Cash Flow. Retailers at
our properties face increasing competition from other forms of retailing such as
catalogues, discount shopping clubs and telemarketing. We face increasing
competition for prospective tenants with landlords of shopping center properties
that may be newer in appearance, better located or better maintained than our
properties. Such competition may reduce our cash flow and adversely affect our
ability to make distributions by:
o interfering with our ability to attract and retain tenants in our
properties or in properties we develop or acquire;
o increasing vacancies which lowers market rental rates and limits our
ability to negotiate rental rates; and
o adversely affecting our ability to minimize expenses of operation.
Risks of Redevelopment and Development Projects. As part of our strategy,
we actively pursue (1) redevelopment projects and (2) development projects. In
addition to the risks involved in the ownership and operation of established
retail properties, included among the risks of redevelopment or development
projects that may adversely affect our cash available for distribution are the
following:
o failure to complete construction on schedule or within budget may
increase debt service expense and construction costs;
o we may incur predevelopment costs for projects we do not complete;
o inadequate occupancy or rental rates of a completed project may affect
our ability to pay operating expenses or earn our targeted rate of return
on our investment;
o an unsuccessful project could cause our losses to exceed our investment
in such project;
o financing for redevelopment and newly developed projects may not be
available to us on favorable terms;
o long-term financing may not be available upon completion of construction;
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o and our distribution of 95 percent of our real estate investment trust
taxable income (to maintain our qualification as a real estate investment
trust) will limit our ability to finance acquisitions or new developments
with income or cash flow from operations.
Risks of Uninsured Losses. We carry comprehensive liability, fire, flood,
extended coverage and rental loss insurance. Our insurance policies contain
specifications, limits and deductibles comparable to those typically contained
in policies covering similar properties. We also carry owner's title insurance
policies on all of our properties for amounts that may be less than the full
value of our properties. If an uninsured loss or a loss from a title defect to a
property in excess of insured limits occurs, we could lose all or part of our
investment in and anticipated profits and cash flows from such property. In the
case of a title defect, we could remain obligated for any recourse mortgage
indebtedness or other financial obligations related to such property. Any of
such losses could adversely affect our ability to make distributions.
REAL ESTATE FINANCING RISKS.
Debt Financing and Debt Maturities. We are subject to the risks normally
associated with debt financing, including the following:
o our cash flow may be insufficient to meet required payments of principal
and interest;
o payments of principal and interest on borrowings may leave us with
insufficient cash resources to pay operating expenses;
o we may not be able to refinance indebtedness on our properties at
maturity;
o the terms of refinancing may not be as favorable as the terms of the
related indebtedness; and
o we could become more highly leveraged (because our policies and
organizational documents do not limit the amount of debt, ratio of debt
to total market capitalization or percentage of indebtedness we may
incur) and, therefore, default on our obligations and debt service
requirements.
As of December 31, 1998, we had outstanding an aggregate of approximately
$137.5 million of primarily mortgage indebtedness (including borrowings under
our senior revolving credit facility with Prudential Securities Credit
Corporation). As of December 31, 1998, we had outstanding an aggregate of
approximately $52.5 million under our senior revolving credit facility with
Prudential Securities Credit Corporation.
Inability to Refinance Indebtedness May Reduce Cash Flow. Because we may
not be able to pay all of our mortgage indebtedness prior to maturity with our
internally generated cash, we may need to repay such debt through refinancings
and/or equity offerings. If we are unable to refinance our indebtedness on
acceptable terms, or at all, events or conditions that may adversely affect our
cash flow and ability to make distributions include the following:
o we may need to dispose of one or more of our properties upon
disadvantageous terms;
o prevailing interest rates or other factors at the time of refinancing
could increase interest rates and, therefore, our interest expense;
o if we mortgage property to secure payment of indebtedness and are unable
to meet mortgage payments, the mortgagee could foreclose upon such
property or appoint a receiver to receive an assignment of our rents and
leases;
o certain of our mortgages encumbering properties have "cross default" or
"cross collateralization" provisions that entitle the secured lender to
certain remedies (including foreclosure) against more than one property;
and
o foreclosures upon mortgaged property could create taxable income without
accompanying cash proceeds and, therefore, hinder our ability to meet the
real estate investment trust distribution requirements of the Internal
Revenue Code.
Risk of Rising Interest Rates May Increase Costs. Advances under our
$100 million senior revolving credit facility with Prudential Securities Credit
Corporation will bear interest at rates ranging from 1.25% to 1.75 percent over
the 30-day London Interbank Offered Rate based on the level of borrowings
outstanding
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relative to collateral value. We may incur additional debt in the future that
also bears interest at variable rates. Variable rate debt creates higher debt
service requirements if market interest rates increase. Higher debt service
requirements could adversely affect our cash flow and ability to make
distributions or cause us to default under certain debt covenants.
DEPENDENCE ON KEY PERSONNEL. We are dependent upon our executive officers
for strategic business direction and real estate experience. While we believe
that we could find replacements for these key personnel, loss of their services
could adversely affect our operations. We cannot assure you that any of our
executive officers will remain with us. We have entered into employment
agreements with Louis J. Petra, Sheila Levine and Brian J. Gallagher. Although
we do not expect to enter into an employment agreement with Philip Pilevsky,
Mr. Pilevsky has a significant ownership interest in our company. We also have
entered into a non-competition agreement with each of Mr. Pilevsky and
Ms. Levine that prevents them from engaging in certain retail real estate
activities.
DISRUPTION IN OPERATIONS DUE TO YEAR 2000 PROBLEMS. The Year 2000 issue
concerns the potential exposures related to the automated generation of business
and financial misinformation resulting from the application of computer programs
which have been written using two digits, rather than four, to define the
applicable year of business transactions. We recognize the importance of
minimizing the frequency and significance of any disruptions in our business and
financial affairs that may occur as a result of Year 2000, and have adopted a
comprehensive compliance program designed to achieve this objective.
Our program encompasses the following:
o the assessment and modification, as necessary, of our internal
information technology systems that may be affected by the Year 2000
problem;
o the identification and interrogation of third parties, including tenants,
vendors, contractors and joint venture partners, to enable us to evaluate
and appropriately respond to the state of preparedness by such parties to
address Year 2000 problems; and
o the assessment of property operating systems to avert operational
malfunctions associated with Year 2000.
Our execution of our Year 2000 program is proceeding on schedule. Our
principal property management systems are licensed from and maintained by a
third party software development company which has modified its real estate
products to address the Year 2000 issue. Our expenditures on the initiatives to
date have been nominal, and our management does not anticipate any significant
future costs or problems associated with becoming Year 2000 compliant.
The failure to correct a material Year 2000 problems could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000 readiness of third parties, we are unable to determine at this time
whether the consequences of failing to adequately address all Year 2000 concerns
will have a material impact on our results of operations, liquidity or financial
condition. We expect our Year 2000 program to significantly reduce our level of
uncertainty about the Year 2000 problem. We believe that, with appropriate
modification of our information and operating systems and completion of the
program as scheduled, the possibility of significant interruptions of normal
operations should be reduced.
Certain statements in this Year 2000 issue discussion regarding our efforts
to become Year 2000 compliant, the timing thereof and costs associated therewith
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although we believe the statements and
projections are based upon reasonable assumptions, actual results may differ
from those that we have projected.
INABILITY TO MAKE REQUIRED DISTRIBUTIONS TO SHAREHOLDERS COULD AFFECT REIT
STATUS. For the Internal Revenue Service to treat us as a real estate
investment trust under the Internal Revenue Code, we must distribute to our
shareholders at least 95 percent of our real estate investment trust taxable
income each year. We cannot assure you that we will satisfy the annual
distribution requirement to qualify as a real estate investment trust.
8
<PAGE>
Reliance on Board of Directors to Determine Distributions. Much of our
income will consist of our allocable share of the income of Philips
International Realty, L.P. and much of our cash flow will consist of
distributions from Philips International Realty, L.P. Our board of directors
will determine distributions by Philips International Realty, L.P. In making
such determination, the board of directors may consider many factors, including
the following:
o the amount of cash available for distribution;
o Philips International Realty, L.P.'s financial condition;
o Philips International Realty, L.P.'s capital expenditure requirements;
o the annual distribution requirement under the real estate investment
trust provisions of the Internal Revenue Code; and
o such other factors as our board of directors deems relevant.
Risk of Borrowing Funds to Meet Distribution Requirements. We may need to
borrow funds on a short-term or long-term basis to meet the distribution
requirements for real estate investment trust qualification even if the then
prevailing market conditions are not favorable for borrowings. Our need to
borrow such funds depends on (1) differences in timing between the receipt of
income and the payment of expenses in arriving at taxable income (of us or
Philips International Realty, L.P.) and (2) the effect of nondeductible capital
expenditures, the creation of reserves or required debt amortization payments.
CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION. Our failure to qualify as a real estate investment trust
for federal income tax purposes could adversely affect our financial and other
conditions.
Tax Liabilities as a Consequence of Failure to Qualify as a REIT. We have
operated so as to qualify as a real estate investment trust for federal income
tax purposes since our taxable year ended December 31, 1997. Although we believe
we will continue to operate in such manner, we cannot guarantee you that we
will. Qualification as a real estate investment trust depends on our meeting
various requirements (some on an annual and quarterly basis) established under
highly technical and complex tax provisions of the Internal Revenue Code.
Because few judicial or administrative interpretations of such provisions exist
and qualification determinations are fact sensitive, we cannot assure you that
we will qualify as a real estate investment trust for any taxable year.
If we fail to qualify as a real estate investment trust in any taxable
year, we will be subject to the following:
o we will not be allowed a deduction for distributions to shareholders;
o we will be subject to federal income tax at regular corporate rates,
including any alternative minimum tax, if applicable; and
o unless we are entitled to relief under certain statutory provisions, we
will not be permitted to qualify as a real estate investment trust for
the four taxable years following the year during which we were
disqualified.
A loss of real estate investment trust status would reduce our net earnings
available for investment or distribution to our shareholders. Failure to qualify
as a real estate investment trust also would eliminate the requirement that
distributions to our shareholders be made.
Other Tax Liabilities. Even if we qualify as a real estate investment
trust, we are subject to certain federal, state and local taxes on our income
and property and, in some circumstances, certain other state taxes.
Risk of Changes in the Tax Law Applicable to REITs. Since the Internal
Revenue Service, the United States Treasury Department and Congress frequently
review federal income tax legislation, we cannot predict whether, when or to
what extent new federal tax laws, regulations, interpretations or rulings will
be adopted.
9
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Any of such legislative action may prospectively or retroactively modify our tax
treatment and, therefore, may adversely affect taxation of us or our
shareholders.
CERTAIN PROVISIONS MAY INHIBIT CHANGES IN CONTROL. Certain provisions of
the Maryland General Corporation Law, our articles of incorporation, our by-laws
and Philips International Realty, L.P.'s partnership agreement may (1) inhibit a
change in control of our company, (2) inhibit the removal of existing management
or (3) prevent us from paying you a premium for your shares of our common stock
over the then-prevailing market prices.
Staggered Board of Directors. We divide our board of directors into three
classes serving staggered three-year terms. This may inhibit a change in control
of our company.
New Classes and Series. Under our articles of incorporation, our board of
directors may create new classes and series of securities and establish
preferences and rights of such classes and series. Our issuance of additional
classes or series of our capital stock may inhibit a change of control of our
company.
Ownership Limit. Under our articles of incorporation and certain
resolutions of our board of directors, no one may acquire or own more than 8.0
percent of the outstanding shares of our capital stock (except for Mr. Pilevsky
who may own up to 17.5 percent of such shares) and no one may own or acquire
shares of any class of our capital stock that would (1) cause five or fewer
persons to own more than 50 percent in value of our shares of capital stock or
(2) otherwise cause us to fail to qualify as a real estate investment trust. See
"Description of Securities--Ownership Limit." Such ownership limit may:
o discourage a change of control of our company;
o deter tender offers for our capital stock that you may find attractive;
or
o limit your opportunity to receive a premium for your capital stock that
might otherwise exist if an investor attempted to assemble a block of
capital stock in excess of the ownership limit or to effect a change in
control of our company.
Rights of Limited Partners. Under Philips International Realty, L.P.'s
partnership agreement, we may not engage in any of the following transactions
unless all limited partners of Philips International Realty, L.P. will receive
(or have the right to receive) for each unit an amount of cash, securities or
other property equal to the product of (1) the number of shares of our common
stock for which each unit is redeemable and (2) the greatest amount of cash,
securities or other property paid to the holder of shares of common stock
pursuant to the terms of such transaction:
o a merger, consolidation or other combination with or into another person
o a sale of all or substantially all of our assets; or
o any reclassification, recapitalization or change of our outstanding
equity interests.
If, in connection with any of the above transactions, the holders of outstanding
shares of our common stock accepts a purchase, tender or exchange offer, each
holder of units of Philips International Realty L.P. will receive (or have the
right to receive) the greatest amount of cash, securities or other property
which such holder would have received had it (1) exercised its right to
redemption and (2) received shares of common stock in exchange for its units
immediately prior to the expiration of such purchase, tender or exchange offer
and then accepted such purchase, tender or exchange offer.
OUR BOARD OF DIRECTORS MAY CHANGE INVESTMENT AND FINANCING POLICIES WITHOUT
YOUR VOTE.
General. Our board of directors determines (1) our investment and
financing policies, (2) our growth strategy, and (3) our debt, capitalization,
distribution and operating policies. At any time and without your approval, the
board of directors may revise or amend these policies and strategies. Such
changes could adversely affect our financial condition or results of operations,
and, therefore, our ability to make distributions.
Issuance of Additional Securities. You do not have any preemptive right to
acquire any common stock or other equity or debt securities we may offer. Any
such issuance of securities could dilute your investment.
10
<PAGE>
Risks Involved in Acquisitions Through Partnerships or Joint Ventures. We
may invest in properties through partnerships or joint ventures. Partnership or
joint venture investments may involve risks not involved with direct
acquisitions that include the following:
o a co-venturer or partner in an investment may become bankrupt;
o a co-venturer's or partner's economic or business interests or goals may
conflict with our interests or goals;
o a co-venturer or partner may act contrarily to our instructions,
requests, policies or objectives; and
o our articles of incorporation do not limit the amount we may invest in
such joint ventures or partnerships.
Risks of Investing in Securities of Entities Owning Real Estate. We may
acquire securities of entities that own real estate. Because of ownership limits
and gross income requirements we must meet to maintain our real estate
investment trust qualification, we may not be able to control (1) the ownership,
operation and management of the underlying real estate or (2) the distributions
with respect to such securities. Our lack of control could adversely affect our
ability to make required distributions.
Risks of Investing in Mortgages. We may invest in mortgages. Investments
in mortgages may include the following risks that may adversely affect our
ability to make distributions:
o borrowers may be unable to make debt service payments or pay principal
when due;
o the principal of the mortgage note securing a property may exceed the
value of the mortgaged property; and
o interest rates payable on the mortgages may be lower than our cost of
funds to acquire such mortgages.
ADVERSE EFFECT OF INCREASING MARKET INTEREST RATE LEVELS ON PRICE OF COMMON
STOCK. The annual distribution rate on the price paid for shares of our common
stock (compared to rates on alternative investments) may influence the public
market price of our common stock. An increase in general interest rate levels
may lead purchasers of our common stock to demand a higher annual distribution
rate. Such demands could adversely affect the market price of our common stock.
USE OF PROCEEDS
We are registering the shares of common stock offered by this prospectus
for the account of the selling shareholders identified in the section of this
prospectus entitled "Selling Shareholders." All of the net proceeds from the
sale of the common stock will go to the shareholders who offer and sell their
shares of such stock. We will not receive any part of the proceeds from the sale
of such shares.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our articles of incorporation and bylaws contain certain provisions to
indemnify our directors and officers against liability incurred by them as a
result of their services in those capacities. Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended, may be
permitted to our directors, officers or controlling persons pursuant to the
above provisions, we have been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933, and is therefore unenforceable.
11
<PAGE>
SELLING SHAREHOLDERS
The selling shareholders are persons listed in the table below who own or
may receive shares of our common stock by exchanging their units of limited
partnership interest in Philips International Realty, L.P. for an equal number
of shares of our common stock. As of the date of this prospectus, (1) 3 of the
selling shareholders held an aggregate of 86,702 shares of our common stock and
(2) 17 of the selling shareholders held an aggregate of 2,472,395 units that are
redeemable for an equal number of shares of our common stock. We issued such
securities in connection with the transactions resulting in the formation of our
company and Philips International Realty, L.P. on December 31, 1997. The selling
shareholders may redeem their units for an equal number of shares of our common
stock in accordance with the terms described in this prospectus. There are,
however, significant federal tax consequences to the unit holders if they
convert the units into common stock.
If and when the selling shareholders have redeemed and sold all their units
for shares of our common stock, Philip Pilevsky will own approximately 3.2
percent of our common stock.
Holders of units of Philips International Realty, L.P. may require Philips
International Realty, L.P. to redeem all or part of their units for (1) cash
(based upon the fair market value of an equivalent number of shares of common
stock at the time of such redemption) or (2) at our election, shares of common
stock (on a one-for-one basis).
We may assume Philips International Realty, L.P.'s obligation to redeem the
units in exchange for, at the election of Philips International Realty, L.P.,
either cash or shares of common stock. However, we may not pay for such
redemption with shares of common stock if, after giving effect to such
redemption, any person would beneficially or constructively own shares in excess
of the ownership limit described in "Restrictions on Transfer" below.
The following table sets forth, as of the date of this prospectus:
o the name of each selling shareholder,
o the number of shares of our common stock beneficially owned by each
selling shareholder prior to this offering,
o the number of shares of our common stock to be sold in this offering,
o the number of shares of our common stock underlying units of Philips
International Realty, L.P. to be sold in this offering,
o the total maximum number of shares of our common stock and the number of
shares of our common stock underlying units of Philips International
Realty, L.P. to be sold in this offering and
o the number of shares of our common stock beneficially owned by each
selling shareholder following the offering to which this prospectus
relates.
Each selling shareholder will receive all of the net proceeds from the sale
of his or her shares of common stock offered by this prospectus.
This offering will not affect the number of (i) shares of common stock and
common stock equivalents outstanding or (ii) the number of shares or percentage
of ownership which persons, other than the selling shareholders, beneficially
own. Because the selling shareholders may sell all or part of their shares of
common stock pursuant to this prospectus and this offering is not being
underwritten on a firm commitment basis, we cannot estimate the number and
percentage of shares of common stock that the selling shareholders will hold at
the end of the offering covered by this prospectus.
12
<PAGE>
THE SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
TOTAL MAXIMUM
NUMBER OF SHARES
NUMBER OF NUMBER OF SHARES OF COMMON STOCK
SHARES OF OF COMMON STOCK AND NO. OF SHARES OF
COMMON STOCK UNDERLYING UNITS COMMON STOCK
TO BE SOLD TO BE SOLD IN UNDERLYING UNITS
IN THIS THIS TO BE SOLD IN THIS
NAME OFFERING OFFERING OFFERING
- --------------------------------------------------------- --------------- ----------------- ---------------------
<S> <C> <C> <C>
Philip Pilevsky(1)....................................... 26,702 1,540,290 1,566,992
Sheila Levine(2)......................................... -- 137,125 137,125
Louis J. Petra........................................... 57,143 -- 57,143
Brian J. Gallagher(3).................................... 2,857 -- 2,857
Merrick Holiday Corp.(4)................................. 569 569
Palm Mile Corp.(5)....................................... -- 58,425 58,425
Merrick Equities L.P.(6)................................. -- 179,133 179,133
Fred Pilevsky............................................ -- 38,090 38,090
Allen Pilevsky........................................... -- 96,943 96,943
Bakara Realty Co......................................... -- 45,562 45,562
Century Realty Inc....................................... -- 22,780 22,780
Estate of Harry Wilf..................................... -- 11,390 11,390
Joseph Wilf.............................................. -- 11,390 11,390
Philips Freeport Development Corp.(7).................... -- 1,847 1,847
Gregg Saunders........................................... -- 42,206 42,206
Alfred S. Friedman....................................... -- 67,660 67,660
Maurice Friedman......................................... -- 12,276 12,276
SP Avenue U Corp.(8)..................................... -- 4,053 4,053
Norman Stark............................................. 202,656 202,656
------- --------- ---------
Total.................................................. 86,702 2,472,395 2,559,097
------- --------- ---------
------- --------- ---------
</TABLE>
- ------------------
(1) Philip Pilevsky will beneficially own 317,994 shares of common stock after
this offering. This number excludes options issued pursuant to our 1997
Stock Option and Long-Term Incentive Plan.
(2) Sheila Levine will beneficially own 2,800 shares of common stock after this
offering. This number excludes options issued pursuant to our 1997 Stock
Option and Long-Term Incentive Plan.
(3) Brian J. Gallagher will beneficially own 1,430 shares of common stock after
this offering. This number excludes options issued pursuant to our 1997
Stock Option and Long-Term Incentive Plan.
(4) Merrick Holiday Corp. is 100 percent owned by Philip Pilevsky.
(5) Palm Mile Corp. is 100 percent owned by Sheila Levine.
(6) Merrick Equities L.P. is 100 percent owned by Norman Stark.
(7) Philips Freeport Development Corp. is 100 percent owned by Allen Pilevsky.
(8) SP Avenue U Corp. is 100 percent owned by Norman Stark.
13
<PAGE>
Information regarding certain selling shareholder's current relationship
with us or our predecessors and affiliates and such relationships, if any,
within the past three years is set forth below.
<TABLE>
<CAPTION>
NAME RELATIONSHIP WITH US, OUR PREDECESSORS AND AFFILIATES
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Philip Pilevsky........................... Chairman of our board of directors and chief executive officer.
Mr. Pilevsky has served as chief executive officer and president of
Philips International Holding Corp. since its formation in 1982.
Mr. Pilevsky has been involved in the real estate business for
25 years, including the development, leasing, management, operation,
acquisition and disposition of commercial properties. He and
Ms. Levine founded the entities that now comprise Philips
International Holding Corp. and its affiliates. Mr. Pilevsky is a
nationally recognized member of the real estate community, providing
us with strategic leadership and a broadly-based network of
relationships. Outside the real estate industry, Mr. Pilevsky is
renowned as an educator, author in the field of international
relations and frequent commentator for Fox 5 and CNBC. Mr. Pilevsky
received a Bachelor of Arts degree from C.W. Post College and a
Masters Degree of Arts and a Masters Degree of Education from
Columbia University. Mr. Pilevsky is the son of Fred Pilevsky and the
brother of Sheila Levine and Allen Pilevsky.
Sheila Levine............................. Chief Operating Officer, executive vice president and a member of our
board of directors. Ms. Levine has served as chief operating officer
and executive vice president of Philips International Holding Corp.
Ms. Levine oversees our daily operations including acquisitions,
development, property management, finance and asset management,
construction, leasing and marketing for each property in our
portfolio. Ms. Levine also oversees property development, which
entails setting the management direction from pre-construction
planning to the marketing and leasing strategies. She has been
involved in the real estate business for 18 years and, together with
Mr. Pilevsky, founded the entities that now comprise Philips
International Holding Corp. and its affiliates. Ms. Levine received a
Bachelor of Science in Business Administration from Hofstra
University's School of Business. Ms. Levine is the daughter of Fred
Pilevsky and the sister of Philip Pilevsky and Allen Pilevsky.
Louis J. Petra............................ President and member of our board of directors. Before joining us,
Mr. Petra served as chief financial officer, vice president and
treasurer of Kimco Realty Corporation, a public real estate
investment trust, from July 1984 through June 1997. Mr. Petra has
extensive experience in the financial management, administration and
control of public and private real estate companies, with particular
knowledge of the shopping center and the real estate investment trust
industries. Mr. Petra received a Bachelor of Science in accounting
from St. John's University and is a member of the American Institute
of Certified Public Accountants and the New York State Society of
Certified Public Accountants.
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
Brian J. Gallagher........................ Chief Financial Officer and Acquisitions Director. Mr. Gallagher
served from March 1989 until December 31, 1997 as the Director of
Finance of Philips International Holding Corp. Mr. Gallagher is
primarily responsible for our capital deployment and capital
management, including obtaining financing and structuring and
negotiating acquisitions and joint ventures. Since joining the
Philips group, he has been responsible for transactions valued at
over $1 billion. Prior to joining us, Mr. Gallagher held positions in
commercial real estate finance with Credit Alliance Corporation and
National Westminster Bank USA where he was responsible for project
finance and major account relationships. He received a Bachelor of
Science and a Masters Degree in city and regional planning from Ohio
State University.
Fred Pilevsky............................. In connection with our and Philips International Realty, L.P.'s
formation in December 1997, Fred Pilevsky contributed property to us
in exchange for units of Philips International Realty, L.P. Fred
Pilevsky is the father of Philip Pilevsky, Sheila Levine and Allen
Pilevsky.
Allen Pilevsky............................ In connection with our and Philips International Realty, L.P.'s
formation in December 1997, Allen Pilevsky contributed property to us
in exchange for units of Philips International Realty, L.P.'s. Allen
Pilevsky is the son of Fred Pilevsky and the brother of Philip
Pilevsky and Sheila Levine.
</TABLE>
PLAN OF DISTRIBUTION
Once the selling shareholders have exchanged their common units for shares
of common stock the selling shareholders may from time to time offer and sell
their shares of common stock offered by this prospectus. We have registered
their shares for resale to provide them with freely tradable securities.
However, registration does not necessarily mean that they will offer and sell
any of their shares.
OFFER AND SALE OF SHARES
The selling shareholders, or their pledgees, donees, transferees or other
successors in interest, may offer and sell their shares of common stock in the
following manner:
o on the New York Stock Exchange or other exchanges on which the common
stock is traded at the time of sale;
o in the over-the-counter market or otherwise at prices and at terms then
prevailing or at prices related to the then current market price; or
o in negotiated transactions.
The selling shareholders, or their pledgees, donees, transferees or other
successor in interest, may sell their shares of common stock in one or more of
the following transactions:
o a block trade in which the broker or dealer so engaged will attempt to
sell the shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
o a broker or dealer may purchase as principal and resell such shares for
its own account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of the exchange;
and
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
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<PAGE>
The selling shareholders may accept and, together with any agent of the selling
shareholders, reject in whole or in part any proposed purchase of the shares of
common stock offered by this prospectus.
PLEDGE OF SHARES
We have been advised by Prudential Securities Incorporated that the shares
of common stock underlying the units held by the following individuals/entities
are subject to pledge and security agreements in favor of Prudential Securities
Incorporated:
o Merrick Equities L.P. (179,133 units)
o SP Avenue U Corp. (4,053 units)
o Norman Stark (202,656 units)
o Philip Pilevsky (1,200,000 units)
Following the transfer of such shares to Prudential Securities
Incorporated, pursuant to the pledge and securities agreements such shares may
be sold by Prudential Securities Incorporated pursuant to this prospectus.
BROKERS AND DEALERS
Selling Through Brokers and Dealers. The selling shareholders may select
brokers or dealers to sell their shares of common stock. Brokers or dealers that
the selling shareholders engage may arrange for other brokers or dealers to
participate in selling such shares. The selling shareholders may give such
brokers or dealers commissions or discounts in amounts to be negotiated
immediately before any sale. In connection with such sales, these brokers or
dealers, any other participating brokers or dealers, and certain pledgees,
donees, transferees and other successors in interest, may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act. In
addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 of the Securities Act may be sold under such rule rather
than pursuant to this prospectus.
Supplemental Prospectus Regarding Material Arrangements. If and when a
selling shareholder notifies us that he, she or it has entered into a material
arrangement with a broker or dealer for the sale of his, her or its shares of
common stock offered by this prospectus through a block trade, special offering,
exchange or secondary distribution or a purchase by a broker or dealer, we will
file a supplemental prospectus, if required, pursuant to Rule 424(c) under the
Securities Act. The supplemental prospectus will provide: (1) the name(s) of
each such selling shareholder(s) and of the participating broker-dealer(s);
(2) the number of shares of common stock involved; (3) the price at which such
shares were sold; (4) the commissions paid or discounts or concessions allowed
to such broker-dealer(s), where applicable; (5) that such broker-dealer(s) did
not conduct any investigation to verify the information set out or incorporated
by reference in this prospectus; and (6) other facts material to the
transaction.
Commissions. The selling shareholders will pay any sales commissions or
other seller's compensation applicable to such transactions.
SUPPLEMENTAL PROSPECTUS REGARDING SALES
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: (1) the amount of the shares of common stock to be
sold; (2) purchase prices; (3) public offering prices; (4) the names of any
agents, dealers or underwriters; and (5) any applicable commissions or discounts
with respect to a particular offer. The selling shareholders and agents who
execute orders on their behalf may be deemed to be "underwriters" as that term
is defined in Section 2(11) of the Securities Act. A portion of any proceeds of
sales and discounts, commissions or other seller's compensation may be deemed to
be underwriting compensation for purposes of the Securities Act.
16
<PAGE>
COMPLIANCE WITH STATE SECURITIES LAWS
We have not registered or qualified the shares of common stock offered by
this prospectus under the laws of any country, other than the United States. In
certain states, the selling shareholders may not offer or sell their shares of
common stock unless (1) we have registered or qualified such shares for sale in
such states; or (2) we have complied with an available exemption from
registration or qualification. Also, in certain states, to comply with such
states' securities laws, the selling shareholders can offer and sell their
shares of common stock only through registered or licensed brokers or dealers.
LIMITATIONS IMPOSED BY EXCHANGE ACT RULES AND REGULATIONS
Certain provisions of the Exchange Act of 1934, as amended, and the related
rules and regulations will apply to the selling shareholders and any other
person engaged in a distribution of shares of the common stock. Such provisions
may (1) limit the timing of purchases and sales of any of the shares of common
stock by the selling shareholders or such other person; (2) affect the
marketability of such stock; and (3) affect the brokers' and dealers'
market-making activities with respect to such stock.
PAYMENT OF INCIDENTAL EXPENSES
We will pay substantially all of the expenses related to the registration
of the shares of common stock offered by this prospectus. We estimate such
expenses to be approximately $51,317.22.
DESCRIPTION OF COMMON STOCK
AUTHORIZED CAPITAL STOCK
Pursuant to our articles of incorporation, we have the authority to issue
150,000,000 shares of common stock, par value $0.01 per share, and 30,000,000
shares of preferred stock, par value $0.01 per share. At February 8, 1999,
7,340,474 shares of common stock were issued and outstanding, and no shares of
preferred stock were issued and outstanding.
COMMON STOCK
Voting, Dividend and Other Rights. Each outstanding share of common stock
entitles the holder to one vote on all matters presented to shareholders for a
vote, subject to the provisions of our articles of incorporation regarding the
restrictions on transfer of such stock, discussed in "Restrictions on Transfer"
below. Holders of shares of common stock do not have any cumulative voting
rights. This means that the holders of a majority of the outstanding shares of
common stock can elect all of the directors then standing for election and the
holders of the remaining shares will not be able to elect any directors. Holders
of shares of common stock do not have preemptive rights to subscribe for any of
our securities. All shares of common stock will, when issued, be duly
authorized, fully paid, and nonassessable. We may pay distributions to the
holders of shares of common stock if and when our board of directors declares
such dividends out of legally available funds.
Rights Upon Liquidation. Under Maryland law, our shareholders generally are
not liable for our debts or obligations. Upon our liquidation, subject to the
right of any holders of preferred stock to receive preferential distributions,
each holder of common stock may participate pro rata in the assets remaining
after payment of, or adequate provision for, all of our known debts and
liabilities. Such debts and liabilities may arise from our status of general
partner of Philips International Realty, L.P.
Ownership Limit. Pursuant to our articles of incorporation and resolutions
of our board of directors, with certain exceptions, no person may own, or be
deemed to own by virtue of the attribution rules of the Internal Revenue Code,
more than 8.0 percent of the value of our issued and outstanding shares of
capital stock. See "Restrictions on Transfer" below.
Transfer Agent. Boston EquiServe is the registrar and transfer agent for
our common stock.
17
<PAGE>
RESTRICTIONS ON TRANSFER
Ownership Limit. For us to qualify as a real estate investment trust under
the Internal Revenue Code, we must meet the following requirements concerning
the ownership of outstanding shares of our capital stock:
o five or fewer individuals (as defined in the Internal Revenue Code to
include certain entities) may not collectively own, directly or
indirectly, more than 50 percent of the value of our outstanding capital
stock during the last half of a taxable year; and
o at least 100 persons during at least 335 days of a taxable year or during
a proportionate part of a shorter taxable year must beneficially own our
capital stock.
Further, under our articles of incorporation, subject to certain exceptions, no
holder of shares of our capital stock may own, or be deemed to own by virtue of
the attribution rules of the Internal Revenue Code, more than 6.5 percent by
value of our outstanding capital stock. Our articles of incorporation authorizes
our board of directors to, by resolution, increase such percentage up to 9.8
percent. Our board of directors has by resolution set the ownership limit at 8.0
percent of the issued and outstanding shares of capital stock. Such limit will
be referred to in this prospectus as the "Ownership Limit."
Exemption from Ownership Limit Upon Waiver by Board of Directors. Our board
of directors may exempt a person from the Ownership Limit if the board of
directors or our tax counsel is satisfied that such ownership will not then or
in the future jeopardize our status as a real estate investment trust. To obtain
such exemption, the intended transferee of shares of our capital stock must
(1) give us written notice of the proposed transfer and (2) furnish such
opinions of counsel, affidavits, undertakings, agreements and information as the
board of directors may require no later than the 15th day before any transfer
which could cause the intended transferee's direct or beneficial ownership of
shares to exceed the Ownership Limit. If the board of directors decides that it
is no longer in our best interests to continue to qualify as a real estate
investment trust, then the restrictions on transferability and ownership will
not apply.
Exemption from Ownership Limit for Philip Pilevsky. Our board of directors
has exempted Mr. Pilevsky from the Ownership Limit. The board of directors has
set Mr. Pilevsky's ownership limit at 17.5 percent of the issued and outstanding
shares of our capital stock.
Null and Void Transfers. A transfer of shares of capital stock shall be
null and void and the intended transferee of such shares will not acquire any
rights in such shares if the transfer would:
o create a direct or indirect ownership of shares of stock in excess of the
Ownership Limit;
o result in the shares of stock being owned by fewer than 100 persons; or
o result in our being "closely held" within the meaning of
Section 856(h) of the Internal Revenue Code.
Shares Transferred in Excess of Ownership Limit. We will automatically deem
shares of capital stock transferred to a shareholder in excess of the Ownership
Limit as shares of excess stock. By operation of law, we will automatically
transfer such shares to the trustee of a trust for the exclusive benefit of one
or more charitable organizations (as described in 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Internal Revenue Code) that we select. We will deem the trustee
of such trust to own such shares for the benefit of the charitable beneficiary
on the date of the violative transfer to the original transferee-shareholder.
Any such transfer is subject to several provisions, including but not limited to
the following:
o we will rescind as void ab initio any dividend or distribution we have
authorized and declared but not paid to the original
transferee-shareholder and we will pay such sum to the trustee for the
benefit of the charitable beneficiary;
o we will rescind as void ab initio any vote cast by an original
transferee-shareholder prior to the discovery of the violative transfer;
o while the excess shares are held in trust and subject to the restriction
that we have not already taken irreversible action, we will deem the
original transferee-shareholder as having given an irrevocable proxy to
the trustee to vote such shares for the benefit of the charitable
beneficiary; and
18
<PAGE>
o we may require the trustee to sell, subject to certain pricing and timing
restrictions, the excess stock to a person or entity whose ownership of
the shares of our capital stock would be permitted or to us.
Certificate Legend Referring to Restrictions. All certificates representing
shares of our common stock will bear a legend referring to the restrictions
described in the above section entitled "Restrictions on Transfer--Null and Void
Transfer."
Required Disclosures by Shareholders. Every shareholder must, upon our
demand, provide in writing information that we may request to determine the
effect of such shareholder's direct, indirect and constructive ownership of such
shares on our status as a real estate investment trust.
Effect of Ownership Limits on Control of Our Company. The ownership
limitations set forth in this prospectus may prevent, defer or delay the
acquisition of control of our company without the consent of the board of
directors.
LEGAL MATTERS
Pryor Cashman Sherman & Flynn LLP, New York, New York, will issue an
opinion to us regarding certain legal matters in connection with this offering,
including the validity of the issuance of the shares of common stock offered by
this prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited (i) our financial
statements and schedule as of December 31, 1997 and for the period from July 16,
1997 (inception) to December 31, 1997; (ii) the balance sheet of Philips
International Realty L.P. as of December 31, 1997; (iii) the balance sheet of
the Property Partnerships as of December 31, 1997; (iv) the combined financial
statements of the Philips Company as of December 31, 1996 and for each of the
three years in the period ended December 31, 1997; and (v) the combined
statement of revenue and certain expenses of the Merrick Commons and Mill Basin
Properties, included in our Annual report on form 10-K for the year ended
December 31, 1997, as set forth in their reports which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's reports, given on their authority as experts in accounting
and auditing. We have incorporated by reference in this prospectus the combined
financial statements of the Munsey Park Shopping Center, for the year ended
December 31, 1997, in our Current Report on Form 8-K dated July 31, 1998, in
reliance on the reports of Gentile, Pismeny & Brengle, LLP, independent
auditors, given on the authority of said firm as experts in auditing and
accounting.
19
<PAGE>
================================================================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. YOU SHOULD NOT RELY ON SUCH INFORMATION OR REPRESENTATIONS AS IF WE
OR THE SELLING SHAREHOLDERS HAVE AUTHORIZED THEM. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION WHERE OR TO ANY PERSON WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
ANY INFORMATION CONTAINED THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents By
Reference.................................... 2
Information About Philips International Realty
Corp......................................... 3
Risk Factors................................... 4
Use of Proceeds................................ 11
Indemnification for
Securities Act Liabilities................... 11
Selling Shareholders........................... 12
Plan of Distribution........................... 15
Description of Common Stock.................... 17
Legal Matters.................................. 19
Experts........................................ 19
</TABLE>
================================================================================
================================================================================
2,559,097 SHARES
PHILIPS INTERNATIONAL
REALTY CORP.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
February , 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses to be paid by us, Philips International Realty Corp., in
connection with the issuance and distribution of the securities being registered
are as follows:
<TABLE>
<S> <C>
Registration Fee.................................................... $11,317.22
Legal Fees and Expenses............................................. 25,000.00
Accounting Fees and Expenses........................................ 5,000.00
Printing Fees....................................................... 10,000.00
----------
Total.......................................................... $51,317.22
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our officers and directors are indemnified under Maryland law, our articles
of incorporation and the amended and restated agreement of limited partnership
of Philips International Realty, L.P. (the "Partnership Agreement of Philips
International Realty, L.P."), against certain liabilities. Our articles of
incorporation require us to indemnify our directors and officers to the fullest
extent permitted from time to time by the laws of the State of Maryland. The
bylaws contain provisions which implement the indemnification provisions of the
articles of incorporation.
The Maryland General Corporation Law ("MGCL") permits a corporation to
indemnify its directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason of
their service in those capacities unless it is established that the act or
omission of the director or officer was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty, or the director or officer actually received an improper
personal benefit in money, property or services, or in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful, or the director or officer was adjudged to be liable
to the corporation for the act or omission. No amendment of our articles of
incorporation shall limit or eliminate the right to indemnification provided
with respect to acts or omissions occurring prior to such amendment or repeal.
Maryland law permits us to provide indemnification to an officer to the same
extent as a director, although additional indemnification may be provided if
such officer is not also a director.
The MGCL permits the articles of incorporation of a Maryland corporation to
include a provision limiting the liability of its directors and officers to the
corporation and its shareholders for money damages, with specified exceptions.
The MGCL does not, however, permit the liability of directors and officers to
the corporation or its shareholders to be limited to the extent that (1) it is
proved that the person actually received an improper benefit or profit in money,
property or services (to the extent such benefit or profit was received) or
(2) a judgment or other final adjudication adverse to such person is entered in
a proceeding based on a finding that the person's action, or failure to act, was
the result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. Our Articles of Incorporation contain a
provision consistent with the MGCL. No amendment of the Articles of
Incorporation shall limit or eliminate the limitation of liability with respect
to acts or omissions occurring prior to such amendment or repeal.
The Partnership Agreement of Philips International Realty, L.P. also
provides for indemnification of us and our officers and directors to the same
extent indemnification is provided to our officers and directors in our Articles
of Incorporation, and limits the liability of us and our officers and directors
to Philips International Realty, L.P. and its partners to the same extent
liability of our officers and directors to our shareholders is limited under our
articles of incorporation.
II-1
<PAGE>
In addition, the Delaware Revised Limited Partnership Act provides that a
limited partner has the power to indemnify and hold harmless any partner or
other person from and against any and all claims and demands whatsoever, subject
to such standards and restrictions, if any, as are set forth in its partnership
agreement.
We have entered into indemnification agreements with each of our directors
and officers. The indemnification agreements require, among other things, that
we indemnify our directors and officers to the fullest extent permitted by law,
and advance to the directors and officers all related expenses, subject to
reimbursement if it is subsequently determined that indemnification is not
permitted. We also must indemnify and advance all expenses incurred by directors
and officers seeking to enforce their rights under the indemnification
agreements, and cover directors and officers under our directors' and officers'
liability insurance. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by provisions of the Articles
of Incorporation and the bylaws and the Partnership Agreement of Philips
International Realty, L.P., it provides greater assurance to directors and
officers that indemnification will be available, because, as a contract, it
cannot be modified unilaterally in the future by the Board of Directors or by
the shareholders to eliminate the rights it provides.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------------------------------
<S> <C>
4.1 Form of Common Stock certificate(1)
5.1 Opinion of Pryor Cashman Sherman & Flynn LLP regarding the validity of the common stock being registered
8.1 Opinion of Pryor Cashman Sherman & Flynn LLP regarding tax matters
23.1 Consent of Pryor Cashman Sherman & Flynn LLP (included as part of Exhibit 5.1)
23.2 Consent of Pryor Cashman Sherman & Flynn LLP (included as part of Exhibit 8.1)
23.3 Consent of Ernst & Young, LLP
23.4 Consent of Gentile, Pismeny & Brengel, LLP
</TABLE>
- ------------------
(1) Incorporated herein by reference to Exhibit 3.5 to our registration
statement on Form S-11 filed with the Securities and Exchange Commission on
April 17, 1998.
ITEM 17. UNDERTAKINGS.
We, the undersigned Registrant, hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in this registration statement or any material
change to such information in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
We hereby further undertake that, for the purposes of determining any
liability under the Securities Act of 1933, each filing of our annual reports
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
We hereby further undertake that:
(1) For the purpose of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance under Rule 430A and
contained in a form of prospectus filed by us pursuant to
Rule 424(b)(1) or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this registration statement at the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by
one of our directors, officers or controlling persons in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, we
certify that we have reasonable grounds to believe that we meet all the
requirements for filing on Form S-3 and have duly caused this registration
statement to be signed on our behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York on this 10th day of
February, 1999.
PHILIPS INTERNATIONAL REALTY CORP.
By: /s/ PHILIP PILEVSKY
-----------------------------------
Philip Pilevsky
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Philip Pilevsky, his or her
attorneys-in-fact and agents, each with full power of substitution and
resubstitution for him or her in any and all capacities, to sign any or all
amendments or post-effective amendments to this registration statement or a
registration statement prepared in accordance with Rule 462 of the Securities
Act of 1933, as amended, and to file the same, with exhibits thereto and other
documents in connection herewith or in connection with the registration of the
offered securities under the Securities Exchange Act of 1934, as amended, with
the Securities and Exchange Commission, granting unto each of such
attorneys-in-fact and agents full power to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his or her substitutes may do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------ -----------------
<S> <C> <C>
/s/ PHILIP PILEVSKY Director, Chief Executive Officer and February 10, 1999
-------------------------------------- Chairman of the board
Philip Pilevsky
/s/ LOUIS J. PETRA Director and President February 10, 1999
--------------------------------------
Louis J. Petra
/s/ SHEILA LEVINE Director, Chief Operating Officer, Executive February 10, 1999
-------------------------------------- Vice President and Secretary
Sheila Levine
/s/ BRIAN J. GALLAGHER Chief Financial Officer, Acquisitions Director February 10, 1999
-------------------------------------- and Treasurer
Brian J. Gallagher
/s/ ARNOLD S. PENNER Director February 10, 1999
--------------------------------------
Arnold S. Penner
/s/ A.F. PETROCELLI Director February 10, 1999
--------------------------------------
A. F. Petrocelli
/s/ ELISE JAFFE Director February 10, 1999
--------------------------------------
Elise Jaffe
/s/ ROBERT S. GRIMES Director February 10, 1999
--------------------------------------
Robert S. Grimes
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------- ------------
<S> <C> <C>
4.1 Form of Common Stock certificate(1)
5.1 Opinion of Pryor Cashman Sherman & Flynn LLP regarding the validity of the common stock
being registered
8.1 Opinion of Pryor Cashman Sherman & Flynn LLP regarding tax matters
23.1 Consent of Pryor Cashman Sherman & Flynn LLP (included as part of Exhibit 5.1)
23.2 Consent of Pryor Cashman Sherman & Flynn LLP (included as part of Exhibit 8.1)
23.3 Consent of Ernst & Young LLP
23.4 Consent of Gentile, Pismeny & Brengle, LLP
</TABLE>
- ------------------
(1) Incorporated herein by reference to Exhibit 3.5 to our registration
statement on Form S-11 filed with the Securities and Exchange Commission on
April 17, 1998.
<PAGE>
EXHIBIT 5.1
PRYOR CASHMAN SHERMAN & FLYNN LLP
February 10, 1999
Philips International Realty Corp.
417 Fifth Avenue
New York, New York 10016
Ladies and Gentlemen:
We are acting as counsel to Philips International Realty Corp., a Maryland
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 (File No. 333- ) (the "Registration Statement"), as filed by the
Company with the Securities and Exchange Commission with respect to the
registration under the Securities Act of 1933, as amended (the "Act"), of
2,559,097 shares (the "Shares") of the common stock, par value $0.01 per share,
of the Company for reoffer and resale by certain Selling Shareholders named
therein.
We are qualified to practice law in the State of New York. We express no
opinion as to, and, for the purposes of the opinion set forth herein, we have
conducted no investigation of, and do not purport to be experts on, any laws
other than the laws of the State of New York, the Maryland General Corporation
Law and the federal securities laws of the United States of America.
We have examined such documents as we considered necessary for the
purposes of this opinion. Based on such examination, it is our opinion the
Shares have been duly authorized and, upon issuance, will be legally issued,
fully-paid and non-assessable under the laws of the State of Maryland.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to us under the heading "Legal
Matters" in the Registration Statement, the Prospectus constituting a part
thereof, and any amendments thereto.
This opinion is furnished in connection with the transactions covered
hereby. This opinion may not be relied upon by you for any other purpose, or
furnished to, quoted to, or relied upon by any other person, firm or corporation
for any purpose, without our prior written consent.
Very truly yours,
/s/ PRYOR CASHMAN SHERMAN & FLYNN LLP
<PAGE>
Exhibit 8.1
[Letterhead of Pryor Cashman Sherman & Flynn LLP]
February 10, 1999
Philips International Realty Corp.
417 Fifth Avenue
New York, NY 10016
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
We have acted as tax counsel to Philips International Realty Corp. (the
"Company") in connection with the Prospectus included as part of that certain
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission and as amended through the date hereof (the "Registration
Statement"). In connection therewith, you have requested our opinion with
respect to the qualification of the Company as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code") and
the accuracy of the discussion included in the Registration Statement under the
heading "Certain United States Federal Income Tax Considerations to the Company
of its REIT Election."
We hereby consent to the use of our opinions as an Exhibit to the
Registration Statement and to any and all references to our firm in the
Prospectus that is a part of the Registration Statement, which Prospectus will
be delivered to prospective purchasers of securities of the Company, and we
hereby consent to such use of our opinion. All defined terms used herein shall
have the same meaning as used in the Registration Statement.
FACTS AND ASSUMPTIONS RELIED UPON
In rendering the opinions expressed herein, we have examined the
Articles of Incorporation and Bylaws of the Company, and such other records,
certificates and documents as we have deemed necessary or appropriate for
purposes of rendering the opinions set forth herein.
<PAGE>
Philips International Realty Corp.
February 10, 1999
Page 2
In our examination of documents, we have assumed, with your consent,
that all documents submitted to us are authentic originals, or if submitted as
photocopies, that they faithfully reproduce the originals thereof, that all such
documents have been or will be duly executed to the extent required, that all
representations and statements set forth in such documents are true and correct,
and that all obligations imposed by any such on the parties thereto have been or
will be performed or satisfied in accordance with their terms. We have also
assumed, without investigation, that all documents, certificates, warranties and
covenants on which we have relied in rendering the opinions set forth below and
that were given or dated earlier than the date of this letter continue to remain
accurate, insofar as relevant to the opinions set forth herein, from such
earlier date through and including the date of this letter.
We have reviewed the Registration Statement and the descriptions set
forth therein of the Company and its investments and activities. We have relied
upon factual representations of the Company and its affiliates regarding the
manner in which the Company has been and will continue to be owned and operated.
We have also relied upon the representations of the accountants for the Company
and certification from the Company regarding the type and amount of income
received by the Company during its taxable year ended December 31, 1998, the
character and amount of distributions made with respect to its taxable year
ended December 31, 1998, and the Company's operations, and the representations
similarly made with respect to prior years of the Company. We have neither
independently investigated nor verified such representations, and we assume that
such representations are true, correct and complete and that all representations
made "to the best of the knowledge and belief" of any person(s) or party(ies)
are and will be true, correct and complete as if made without such
qualification. We assume that the Company has been and will be operated in
accordance with applicable laws and the terms and conditions of applicable
documents, and the descriptions of the Company and its investments, and the
proposed investments, activities, operations and governance of the Company set
forth in the Registration Statement continue to be true. In addition, we have
relied on certain additional facts and assumptions described below.
The foregoing representations are all contained in letters to us dated
as of the date hereof (the "Certificates"). No facts have come to our attention
that are inconsistent with the facts and representations set forth in the
Certificates.
OPINIONS
Based upon and subject to the foregoing, we are of the following
opinions:
1. The Company has been organized in conformity with the requirements for
qualification as a REIT under the Code commencing with its initial taxable year
ended December 31, 1997, and for all subsequent taxable years to date, and its
method of operation as described in the representations referred to above, will
enable it to continue to meet the requirements for qualification and taxation as
a REIT under the Code.
<PAGE>
Philips International Realty Corp.
February 10, 1999
Page 3
2. The discussion contained in that portion of the Registration Statement under
the caption "Certain United States Federal Income Tax Considerations to the
Company of its REIT Election" fairly summarizes the material federal income tax
considerations relevant to the Company's status as a REIT.
The opinions expressed herein are based upon the Code, the Treasury
Regulations promulgated thereunder, current administrative positions of the
Internal Revenue Service, and existing judicial decisions, any of which could be
changed at any time, possibly on a retroactive basis. Any such changes could
adversely affect the opinions rendered herein and the tax consequences to the
Company and investors in the Company's common stock. In addition, as noted
above, our opinions are based solely on the documents that we have examined, the
additional information that we have obtained, and the representations that are
being made to us, and cannot be relied upon if any of the facts contained in
such documents or in such additional information are, or later become,
inaccurate or if any of the representations made to use are, or later become,
inaccurate.
We express no opinion with respect to the Registration Statement other
than those expressly set forth herein. Furthermore, the Company's qualification
as a REIT will depend on the Company meeting, in its actual operations, the
applicable asset composition, source of income, shareholder diversification,
distribution, record-keeping and other requirements of the Code necessary for a
corporation to qualify as a REIT. We will not review these operations, and no
assurance can be given that the actual operations of the Company and its
affiliates will meet these requirements or the representations made to us with
respect thereto.
Finally, our opinion is limited to the tax matters specifically covered
hereby, and we have not been asked to address, nor have we addressed, any other
tax consequences of an investment in the Company's common stock.
Very truly yours,
/s/ Pryor Cashman Sherman & Flynn LLP
<PAGE>
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated March 6, 1998, in the Registration Statement Form S-3
No. and the related Prospectus of Philips International Realty Corp.
(the "Company") for the registration of 2,559,097 shares of its common stock.
We also consent to the incorporation by reference therein of our reports dated
(i) March 6, 1998, with respect to the financial statements and schedule of
Philips International Realty Corp. for the period of July 16, 1997 (inception)
to December 31, 1997; (ii) March 6, 1998, with respect to the balance sheet of
Philips International Realty, L.P. as of December 31, 1997, (iii) March 6, 1998,
with respect to the balance sheet of the Property Partnerships as of December
31, 1997; (iv) March 6, 1998, with respect to the combined financial statements
of the Philips Company as of December 31, 1996 and for the related combined
statements of income, owners deficit and cash flows for each of the three years
in the period ended December 31, 1997; and (v) March 6, 1998, with respect to
the combined statements of revenues and certain expenses of the Merrick Commons
and Mill Basin Plaza Properties included in the Annual Report (Form 10-K) for
1997 filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
- ---------------------
Ernst & Young LLP
New York, New York
February 10, 1999
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-3, File No. __________, and the related prospectus
of Philips International Realty Corp. for the registration of $200,000,000 of
Common Stock, Preferred Stock, Depositary Shares and Warrants and to the
incorporation by reference therein of our report dated August 27, 1998, with
respect to the statement of revenue and certain operating expenses of Munsey
Park Shopping Center.
/s/ GENTILE, PISMENY & BRENGEL, LLP
- -----------------------------------
Gentile, Pismeny & Brengel, LLP
Great Neck, New York
February 10, 1999
