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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1998
REGISTRATION NO. 333-40129
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GREAT LAKES REIT
(Exact Name of Registrant as Specified in Its Charter)
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MARYLAND 36-4238056
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
823 COMMERCE DRIVE
SUITE 300
OAK BROOK, ILLINOIS 60523
(630) 368-2900
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
RICHARD L. RASLEY
EXECUTIVE VICE PRESIDENT,
CO-GENERAL COUNSEL AND SECRETARY
GREAT LAKES REIT
823 COMMERCE DRIVE, SUITE 300
OAK BROOK, ILLINOIS 60523
(630) 368-2900
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copies to:
TIMOTHY J. MELTON
JONES, DAY, REAVIS & POGUE
77 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601-1692
(312) 782-3939
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Post-Effective Amendment No. 1 to Registration
Statement becomes effective as
determined by market conditions and other factors.
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If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
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If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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THE REGISTRANT HEREBY AMENDS THIS POST-EFFECTIVE AMENDMENT NO. 1 TO
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 POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS POST-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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PURSUANT TO RULE 414(D) UNDER THE SECURITIES ACT OF 1933, THE REGISTRANT, AS
THE SUCCESSOR ISSUER TO GREAT LAKES REIT, INC., HEREBY ADOPTS GREAT LAKES REIT,
INC.'S REGISTRATION STATEMENT ON FORM S-3 (COMMISSION FILE NO. 333-40129) AS ITS
OWN REGISTRATION STATEMENT FOR ALL PURPOSES OF THE SECURITIES ACT OF 1933 AND
THE SECURITIES EXCHANGE ACT OF 1934.
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SUBJECT TO COMPLETION, DATED JULY 28, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
POST-EFFECTIVE AMENDMENT TO A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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2,943,923 SHARES
GREAT LAKES REIT
COMMON SHARES OF BENEFICIAL INTEREST
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This Prospectus relates to 2,943,923 Common Shares of Beneficial Interest,
par value $.01 per share ("Common Shares"), of Great Lakes REIT, a real estate
investment trust formed under the laws of the State of Maryland (the "Company"),
to be offered (the "Offering") by certain selling shareholders (the "Selling
Shareholders"). See "Selling Securityholders." The Offering will terminate on
the earlier of the date that all Common Shares subject to the Offering have been
sold or otherwise disposed of to parties unaffiliated with the Selling
Shareholders or on December 5, 1998, unless otherwise extended. The Company will
not receive any of the proceeds from the sale of shares by the Selling
Shareholders. The Common Shares are the only class of common equity securities
outstanding and each Common Share is entitled to one vote per share. The Common
Shares offered hereby are listed on the New York Stock Exchange (the "NYSE")
under the symbol "GL." On July 27, 1998, the closing sale price of the Common
Shares on the NYSE Composite Tape was $16.13 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON SHARES OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The distribution of the Common Shares by the Selling Shareholders may be
effected from time to time in one or more transactions (which may involve block
transactions) on the NYSE or such other national stock exchange or such other
national stock exchange on which the Common Shares are traded, in special
offerings, exchange distributions and/or secondary distributions pursuant to and
in accordance with the rules of such exchanges, in the over-the-counter market,
in negotiated transactions, through underwriters, or a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market price or at negotiated prices.
The aggregate proceeds to the Selling Shareholders from the Common Shares
will be the purchase price of Common Shares sold less the aggregate agents'
commissions and underwriters' discounts, if any. The Company will receive no
proceeds from this Offering, but will pay the expenses of registration under the
Securities Act of 1933, as amended (the "Securities Act"), relating to this
Offering. See "Plan of Distribution."
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Any broker-dealers, agents or underwriters that participate with the Selling
Shareholders in the distribution of any of the Common Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any discount or
commission received by them and any profits on the resale of the Common Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
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THE DATE OF THIS PROSPECTUS IS JULY , 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained at prescribed rates by writing the Commission, Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants,
including the Company, that file electronically with the Commission. The Common
Shares are listed on the NYSE, and reports, proxy statements and other
information concerning the Company may also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement (the
"Registration Statement," which term shall include any amendments thereto) on
Form S-3 under the Securities Act with respect to the Common Shares offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission, and to which reference is hereby made. For further information,
reference is hereby made to the Registration Statement and the exhibits and
schedules thereto.
All information contained in this Prospectus relating to the Selling
Shareholders or to the proposed or potential methods of distribution of Common
Shares being offered hereby has been supplied by the Selling Shareholders and
the Company takes no responsibility for the accuracy thereof.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference in this
Prospectus and shall be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998;
3. The Company's Current Report on Form 8-K/A dated February 6, 1998, filed
with the Commission on February 20, 1998; the Company's Current Report on
Form 8-K dated April 17, 1998, filed with the Commission on April 20,
1998; the Company's Current Report on Form 8-K dated April 21, 1998,
filed with the Commission on April 24, 1998; the Company's Current Report
on Form 8-K dated May 22, 1998 filed with the Commission on June 4, 1998;
the Company's Current Report on Form 8-K/A dated June 18, 1998, filed
with the Commission on June 19, 1998; and the Company's Current Report on
Form 8-K/A dated July 24, 1998, filed with the Commission on July 24,
1998; and
4. The Company's Registration Statement on Form 8-A filed with the
Commission on July 16, 1998, including any amendment or report filed for
the purpose of updating such description.
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All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from their respective dates of filing.
Any statement contained herein or in any document incorporated or deemed to be
incorporated shall be deemed to be modified or superseded for all purposes of
this Prospectus to the extent a statement contained in this Prospectus or in any
subsequently filed document that also is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON WRITTEN OR ORAL REQUEST
OF SUCH PERSON, A COPY OF ANY AND ALL OF THE INFORMATION THAT HAS BEEN
INCORPORATED BY REFERENCE IN THIS PROSPECTUS (OTHER THAN EXHIBITS TO THE
INFORMATION THAT HAS BEEN INCORPORATED BY REFERENCE UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THIS PROSPECTUS
INCORPORATES). REQUESTS SHOULD BE DIRECTED TO RICHARD L. RASLEY, EXECUTIVE VICE
PRESIDENT, CO-GENERAL COUNSEL AND SECRETARY, GREAT LAKES REIT, AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICES, 823 COMMERCE DRIVE, SUITE 300, OAK BROOK, ILLINOIS
60523, TELEPHONE NUMBER (630) 368-2900. PERSONS REQUESTING COPIES OF EXHIBITS TO
SUCH DOCUMENTS THAT WERE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS WILL BE CHARGED THE COSTS OF REPRODUCTION AND MAILING.
THE COMPANY
IN 1996, THE COMPANY'S PREDECESSOR ORGANIZED GREAT LAKES REIT, L.P. (THE
"OPERATING PARTNERSHIP") AND SUBSEQUENTLY TRANSFERRED ALL OF THE PROPERTIES (AS
DEFINED HEREIN) TO THE OPERATING PARTNERSHIP. AS THE SOLE GENERAL PARTNER OF THE
OPERATING PARTNERSHIP, THE COMPANY HAS EXCLUSIVE POWER TO MANAGE AND CONDUCT THE
BUSINESS OF THE OPERATING PARTNERSHIP, SUBJECT TO CERTAIN LIMITED EXCEPTIONS.
ALTHOUGH THE COMPANY AND THE OPERATING PARTNERSHIP ARE SEPARATE ENTITIES, UNLESS
THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES IN THIS PROSPECTUS TO THE
"COMPANY" REFER TO THE COMPANY, ITS PREDECESSOR AND THE OPERATING PARTNERSHIP,
COLLECTIVELY.
The Company is a fully integrated, self-administered and self-managed real
estate company focused on acquiring, renovating, owning and operating suburban
office and light industrial properties primarily located within an approximate
500-mile radius of metropolitan Chicago (the "Midwest Region"). As of June 30,
1998, the Company owned and operated 37 properties (the "Properties") in
suburban Chicago, Milwaukee, Minneapolis, Detroit, Columbus, Cincinnati and
Denver (the "Current Markets"). The Properties contain approximately 4.4 million
rentable square feet leased to over 500 tenants in a variety of businesses. The
Properties primarily consist of Class A and Class B suburban office properties
and range in size from 15,000 to 370,000 rentable square feet. The Company has
elected to be treated for federal income tax purposes as a real estate
investment trust ("REIT").
The Company is a real estate investment trust formed under the laws of the
State of Maryland and its principal executive offices are located at 823
Commerce Drive, Suite 300, Oak Brook, Illinois 60523, telephone number (630)
368-2900.
THE OFFERING
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Common Shares offered by the Selling Shareholders......... 2,943,923 shares
Common Shares outstanding as of July 27, 1998............. 17,558,945 shares (1)
New York Stock Exchange Symbol............................ GL
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(1) Assumes the issuance of 72,497 Common Shares in exchange for all outstanding
interests in the Operating Partnership ("OP Units") other than those OP
Units held by the Company. Excludes 1,182,190 shares issuable upon the
exercise of outstanding options to purchase Common Shares.
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USE OF PROCEEDS
All Common Shares being offered hereby will be sold by the Selling
Shareholders for their own account. The Company will not receive any proceeds
from such sales.
RISK FACTORS
An investment in the Common Shares involves various risks. Prospective
investors should carefully consider the following information in conjunction
with the other information contained in this Prospectus before making a decision
to purchase Common Shares in the Offering.
CONCENTRATION OF PROPERTIES IN MIDWEST REGION
Thirty-five of the Properties are located in the Midwest Region, including
17 located in the suburban Chicago, Illinois area. Like other real estate
markets, these commercial real estate markets have experienced economic
downturns in the past, and future declines in any of these economies or real
estate markets could adversely affect the Company's funds available for
distribution to shareholders. The Company's financial performance and its
ability to make distributions to shareholders are therefore dependent on the
economic conditions in the Midwest Region, particularly in the Chicago area. The
Company's revenues and the value of its Properties may be affected by a number
of factors, including local economic conditions (which may be adversely impacted
by business layoffs or downsizing, industry slowdowns, changing demographics and
other factors) and local real estate conditions (such as oversupply of or
reduced demand for office, industrial and other competing commercial
properties). There can be no assurance that the economies of the Midwest Region
or the Chicago area will continue to grow or that any future growth will meet
historical growth rates.
RISK THAT THE COMPANY MAY BE UNABLE TO RETAIN TENANTS OR RENT SPACE UPON LEASE
EXPIRATIONS
The Company will be subject to the risks that upon expiration, leases may
not be renewed, the space may not be relet or the terms of renewal or reletting
(including the cost of required renovations) may be less favorable than the
expired lease terms. Leases on a total of approximately 5.4%, 11.3%, 15.2% and
18.7% of the occupied rentable square feet of the Properties will expire in
1998, 1999, 2000 and 2001, respectively. If the Company is unable to promptly
relet or renew leases for all or a substantial portion of this space or if the
rental rates upon such renewal or reletting are significantly lower than
expected, the Company's cash flow and ability to make distributions to
shareholders could be adversely affected.
RISKS ASSOCIATED WITH THE RECENT ACQUISITION OF MANY OF THE PROPERTIES; LACK OF
OPERATING HISTORY
Substantially all of the Properties have been under the Company's management
for less than five years and 23 of the Properties have been acquired since
January 1, 1996. The most recently acquired Properties may have characteristics
or deficiencies unknown to the Company that may impact their value or revenue
potential. It is also possible that the operating performance of the most
recently acquired Properties may decline under the Company's management.
The Company is currently experiencing a period of rapid growth. As the
Company acquires additional properties, the Company will be subject to risks
associated with managing new properties, including lease-up and tenant
retention. In addition, the Company's ability to manage its growth effectively
will require it to successfully integrate its new acquisitions into its existing
management structure. No assurances can be given that the Company will be able
to successfully integrate such properties or effectively manage additional
properties, or that newly acquired properties will perform as expected.
REAL ESTATE FINANCING RISKS
INABILITY TO REPAY OR REFINANCE INDEBTEDNESS AT MATURITY. The Company will
be subject to risks normally associated with debt financing, including the risk
that the Company's cash flow will be insufficient to meet
4
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required payments of principal and interest and the risk that any indebtedness
will not be able to be refinanced or that the terms of any such refinancing will
be less favorable than the terms of the expiring indebtedness.
POTENTIAL EFFECT OF RISING INTEREST RATES ON COMPANY'S VARIABLE RATE
DEBT. Advances under the Company's bank credit facility (the "Credit Facility")
bear interest at variable rates and the indebtedness under certain other lines
of credit and existing mortgage notes are subject to periodic adjustments based
on the then current market interest rates. In addition, the Company may incur
other variable rate indebtedness in the future. Increases in interest rates on
such indebtedness would increase the Company's interest expense, which could
adversely affect the Company's cash flow and amounts available for distribution
to shareholders.
REAL ESTATE INVESTMENT RISKS
REAL ESTATE OWNERSHIP RISKS. Real property investments are subject to
varying degrees of risk. The yields available from equity investments in real
estate depend in large part on the amount of revenue generated and expenses
incurred. If the Company's real properties do not generate revenue sufficient to
meet operating expenses, including debt service, tenant improvements, leasing
commissions and other capital expenditures, the Company may have to borrow
additional amounts to cover fixed costs and the Company's cash flow and ability
to make distributions to its shareholders would be adversely affected. The
Company's revenue and the value of its Properties may be adversely affected by a
number of factors, including the national economic climate; the local economic
climate; local real estate conditions; the perceptions of prospective tenants of
the attractiveness of its Properties; the ability of the Company to manage and
maintain its real properties and secure adequate insurance; and increased
operating costs (including real estate taxes and utilities). In addition, real
estate values and income from properties are also affected by such factors as
applicable laws, including tax and environmental laws, interest rate levels and
the availability of capital.
ILLIQUIDITY OF REAL ESTATE. Equity real estate investments are relatively
illiquid. Such illiquidity will tend to limit the ability of the Company to vary
its portfolio promptly in response to changes in economic or other conditions.
In addition, the Internal Revenue Code of 1986, as amended (the "Code"), limits
a REIT's ability to sell properties held for fewer than four years. This
limitation may adversely affect the Company's ability to sell properties.
IMPACT OF COMPETITION ON OCCUPANCY LEVELS AND RENTS CHARGED. Numerous
office properties compete with the Properties in attracting tenants to lease
space. Some of the competing properties may be newer, better located or owned by
parties better capitalized than the Company. The number of competitive
commercial properties in a particular area could have a material adverse effect
on (i) the ability to lease space in the Properties (or in newly acquired or
developed properties) and (ii) the rents charged.
POTENTIAL INCREASES IN CERTAIN TAXES AND REGULATORY COMPLIANCE
COSTS. Because increases in income, service or transfer taxes are generally not
passed through to tenants under leases, such increases may adversely affect the
Company's cash flow and its ability to make distributions to shareholders. The
Properties are also subject to various federal, state and local regulatory
requirements, such as requirements of the Americans with Disabilities Act (the
"ADA"), which requires all public accommodations and commercial facilities to
meet certain federal requirements related to access and use by disabled persons,
and state and local fire and life safety requirements. Compliance with the ADA
requirements could require removal of access barriers. Failure to comply with
all applicable regulatory requirements could result in the imposition of fines
by governmental authorities or awards of damages to private litigants. The
Company believes that the Properties are currently in substantial compliance
with all such regulatory requirements. However, there can be no assurance that
these requirements will not be changed or that new requirements will not be
imposed which would require significant unanticipated expenditures by the
Company that could have an adverse effect on the Company's cash flow and
distributions to shareholders.
IMPACT OF FINANCIAL CONDITION AND SOLVENCY OF TENANTS ON COMPANY'S CASH
FLOW. At any time, a tenant of the Properties may seek the protection of
bankruptcy laws, which could result in rejection and termination of such
tenant's lease and thereby cause a reduction in cash flow available for
distribution by the Company.
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Although the Company has not experienced material losses from tenant
bankruptcies, no assurance can be given that tenants will not file for
bankruptcy protection in the future or, if any tenants file, that they will
affirm their leases and continue to make rental payments in a timely manner. In
addition, a tenant from time to time may experience a downturn in its business
which may weaken its financial condition and result in a failure to make rental
payments when due. If tenant leases are not affirmed following bankruptcy or if
a tenant's financial condition weakens, the Company's revenues and cash flows
may be adversely affected.
RISKS OF ACQUISITION, RENOVATION AND DEVELOPMENT ACTIVITIES
The Company intends to continue acquiring office properties. Acquisitions of
office properties entail risk that investments will fail to perform in
accordance with expectations. Estimates of renovation costs and costs of
improvements to bring an acquired property up to standards established for the
market position intended for that property may prove inaccurate. In addition,
there are general investment risks associated with any new real estate
investment.
The Company may renovate or expand its Properties from time to time.
Renovation and expansion projects generally require expenditure of capital as
well as various government and other approvals, the receipt of which cannot be
assured. While policies with respect to renovation and expansion activities are
intended to limit some of the risks otherwise associated with such activities,
the Company would nevertheless incur certain risks, including expenditures of
funds on, and devotion of management's time to, projects which may not be
completed.
The Company anticipates that future acquisitions and renovations will be
financed through a combination of advances under the Credit Facility, other
forms of secured or unsecured financing and issuances of securities and
interests in the Operating Partnership. If new projects are financed through
construction loans, there is a risk that, upon completion of construction,
permanent financing for these properties may not be available or may be
available only on disadvantageous terms.
While the Company has generally limited its acquisition, renovation,
management and leasing business primarily to the Midwest Region, it is possible
that the Company will in the future expand its business to new geographic
markets. The Company will not initially possess the same level of familiarity
with new markets outside of the Midwest Region, which could adversely affect its
ability to acquire, develop, manage or lease properties in any new markets.
Changing market conditions, including competition from other purchasers of
properties similar to the Properties, may diminish the Company's opportunities
for attractive acquisitions.
The Company also intends to review from time to time the possibility of
developing and constructing office buildings and other commercial properties in
accordance with the Company's development policies. In this regard, the Company,
in March 1998, announced its intention to pursue the development of a mid-sized
office building to be constructed in suburban Milwaukee. Risks associated with
the Company's development and construction activities may include: abandonment
of development opportunities; construction costs of a property exceeding
original estimates, possibly making the property uneconomical; occupancy rates
and rents at a newly completed property which are not sufficient to make the
property profitable; the unavailability of financing on favorable terms for
development of a property; and an inability to complete construction and lease-
up on schedule, resulting in increased debt service expense and construction
costs. In addition, new development activities, regardless of whether they would
ultimately be successful, typically require a substantial portion of
management's time and attention. Development activities would also be subject to
risks relating to the inability to obtain, or delays in obtaining, all necessary
zoning, land-use, building, occupancy, and other required governmental permits
and authorizations.
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EFFECT OF SHARES AVAILABLE FOR FUTURE SALE ON PRICE OF COMMON SHARES
Virtually all of the outstanding Common Shares, other than shares held by
affiliates of the Company, are freely tradable. Common Shares held by affiliates
of the Company are subject to limitations on the volume that may be sold other
than sales pursuant to a registration statement under the Securities Act or an
applicable exemption from registration thereunder. The sale or issuance or the
potential for sale of additional shares by the Company, the sale of shares held
by affiliates or the sale of a significant number of shares by other current
holders could have an adverse impact on the market price of the Common Shares.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the efforts of its executive officers,
particularly Richard A. May, the Company's Chief Executive Officer, Patrick R.
Hunt, the Company's President and Chief Operating Officer, Richard L. Rasley,
the Company's Executive Vice President, and Raymond M. Braun, the Company's
Senior Vice President-Acquisitions. The loss of their services could have a
material adverse effect on the Company's operations, financial condition and
results of operations.
NO LIMITATION ON DEBT
The Company currently has a policy of incurring debt only if upon such
incurrence the total debt to total market capitalization ratio would be 50% or
less, but the organizational documents of the Company do not contain any
limitation on the amount of indebtedness the Company may incur. Accordingly, the
Board of Trustees could alter that policy at any time. If that policy was
changed, the Company could become more highly leveraged, resulting in increased
debt service costs that could adversely affect the Company's cash flow and,
consequently, the amount available for distribution to shareholders and could
increase the risk of default on the Company's indebtedness.
The Company has established its debt policy relative to its total debt to
total market capitalization ratio rather than relative to the book value of its
assets. The Company has used total market capitalization because it believes
that the book value of its assets (which to a large extent is the depreciated
original cost of real property, the Company's primary tangible assets) does not
accurately reflect its ability to borrow and to meet debt service requirements.
The market capitalization of the Company, however, is more variable than book
value, and does not necessarily reflect the fair market value of the underlying
assets of the Company. The Company also will consider factors other than market
capitalization in making decisions regarding the incurrence of indebtedness,
such as the purchase price of properties to be acquired with debt financing, the
estimated market value of its Properties upon refinancing and the ability of
particular Properties and the Company as a whole to generate sufficient cash
flow to cover expected debt service costs.
CHANGES IN POLICIES WITHOUT SHAREHOLDER APPROVAL
The Company's investment, financing, borrowing, distribution and conflicts
of interest policies and its policies with respect to all other activities will
be determined by the Company's Board of Trustees. Although the Board of Trustees
has no present intention to do so, it can amend, revise or eliminate these
policies at any time and from time to time at its discretion without a vote of
the shareholders. A change in any of these policies could adversely affect the
Company's financial condition or results of operations or the market price of
the Common Shares.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT; OTHER TAX LIABILITIES
TAX LIABILITIES AS A CONSEQUENCE OF FAILURE TO QUALIFY AS A REIT. The
Company elected to be taxed as a REIT under Sections 856 through 860 of the
Code, commencing with its taxable year ended December 31, 1993, and the Company
believes that it has been organized and has operated in such a manner so as to
qualify as a REIT for federal income tax purposes. Although the Company believes
that it will remain organized and will continue to operate so as to qualify as a
REIT, no assurance can be given that the Company has so qualified or
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<PAGE>
will be able to remain so qualified. Qualification as a REIT involves the
satisfaction of numerous requirements (in certain instances, on an annual and
quarterly basis) set forth in highly technical and complex Code provisions for
which there are only limited judicial and administrative interpretations, and
may be affected by various factual matters and circumstances not entirely within
the Company's control. In the case of a REIT, such as the Company, that holds
substantially all of its assets in partnership form, the complexity of these
Code provisions and the applicable Treasury Regulations that have been
promulgated thereunder is even greater. Further, no assurance can be given that
future legislation, new Treasury Regulations, administrative interpretations or
court decisions will not significantly change the tax laws with respect to
qualification as a REIT or the federal income tax consequences of such
qualification. The Company, however, is not aware of any pending proposal to
amend the tax laws that would materially and adversely affect its ability to
operate in such a manner so as to qualify as a REIT.
If the Company were to fail to qualify as a REIT with respect to any taxable
year, the Company would not be allowed a deduction in computing its taxable
income for amounts distributed to its shareholders, and would be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. As a result, any net earnings of the
Company available for investment or distribution to shareholders would be
reduced for the year or years involved because of the additional tax liability
of the Company, and distributions to shareholders would no longer be required to
be made. Moreover, unless entitled to relief under certain statutory provisions,
the Company would also be ineligible for qualification as a REIT for the four
taxable years following the year during which such qualification was lost.
Although the Company believes it has operated and currently intends to operate
in a manner designed to allow it to continue to qualify as a REIT, future
economic, market, legal, tax or other considerations may cause it to determine
that it is in the best interests of the Company and its shareholders to revoke
the REIT election.
OTHER TAX LIABILITIES. Even if the Company continues to qualify for and
maintains its REIT status, it may be subject to certain federal, state and local
taxes on its income and property.
EFFECT OF REIT DISTRIBUTION REQUIREMENTS
To maintain its status as a REIT for federal income tax purposes, the
Company generally will be required each year to distribute to its shareholders
at least 95% of its taxable income (excluding any net capital gain and after
certain adjustments). In addition, the Company will be subject to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
paid by it with respect to any calendar year are less than the sum of 85% of its
ordinary income for such year plus 95% of its capital gain net income for such
year plus 100% of its undistributed income from prior taxable years.
The Company intends to make distributions to its shareholders to comply with
the 95% distribution requirement of the Code and to avoid the nondeductible
excise tax described above. The Company anticipates that cash flow from
operations, including its share of distributions from the Operating Partnership,
will be sufficient to enable it to pay its operating expenses and meet the
distribution requirements of a REIT, but no assurance can be given that this
will be the case. In addition, differences in timing between (i) the actual
receipt of income and the actual payment of expenses and (ii) the inclusion of
such income and the deduction of such expenses in arriving at taxable income of
the Company could leave the Company without sufficient cash to enable it to meet
the REIT distribution requirements. Similarly, if the IRS were to determine that
the Company had failed to comply with the 95% distribution requirement of the
Code for any taxable year, under certain circumstances, the Company would be
able to rectify that failure by paying "deficiency dividends" to its
shareholders, as well as interest to the IRS, in a later taxable year. The
amount of any such "deficiency dividends" and interest could exceed the
Company's available cash. Accordingly, the Company could be required to borrow
funds or liquidate investments on adverse terms to comply with such
requirements. The requirement to distribute a substantial portion of the
Company's taxable income could also cause the Company to have to distribute
amounts that would otherwise be spent on future acquisitions, unanticipated
capital expenditures or repayment of debt, which would require additional
borrowings or sales of assets to fund the
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<PAGE>
costs of such items and could restrict the Company's ability to expand at the
same pace as it has historically or at a pace necessary to remain competitive.
FAILURE OF OPERATING PARTNERSHIP TO QUALIFY AS A PARTNERSHIP FOR FEDERAL INCOME
TAX PURPOSES
The Company believes that the Operating Partnership has been organized as a
partnership and qualifies for treatment as such for federal income tax purposes.
If the Operating Partnership failed to qualify as a partnership for federal
income tax purposes and were instead taxable as a corporation, the Company would
cease to qualify as a REIT because of its inability to satisfy the REIT gross
income and asset tests (as set forth in the Code), and the Operating Partnership
would be subject to federal income tax (including any applicable minimum tax) on
its taxable income at regular corporate rates. The imposition of a corporate tax
on the Operating Partnership would also reduce the amount of cash available for
distribution to the Company and its shareholders.
LIMITS ON CHANGES IN CONTROL
Certain provisions of the Company's Amended and Restated Declaration of
Trust (the "Declaration of Trust") and bylaws (the "Bylaws") may have the effect
of delaying, deferring or preventing a third party from making an acquisition
proposal for the Company and may therefore inhibit a change in control of the
Company. For example, such provisions may (i) deter tender offers for the
Company's shares of beneficial interest, which offers may be attractive to
shareholders or (ii) deter purchases of large blocks of the Company's shares of
beneficial interest, thereby limiting the opportunity for shareholders to
receive a premium for their shares over then-prevailing market prices. These
provisions include the following:
LIMITS ON OWNERSHIP OF SHARES. For the Company to maintain its
qualification as a REIT for federal income tax purposes, not more than 50% in
value of the outstanding shares of beneficial interest of the Company may be
owned, actually or constructively (under the applicable attribution rules of the
Code), by five or fewer individuals (as defined in the Code to include certain
tax-exempt entities other than, in general, qualified domestic pension funds) at
any time during the last half of any taxable year of the Company (the "five or
fewer requirement"). For taxable years of the Company beginning on or after
January 1, 1998, however, the Company's failure to satisfy the five or fewer
requirement would no longer result in the Company's disqualification as a REIT
so long as the Company has otherwise complied with the requirements under the
Code and the applicable Treasury Regulations for ascertaining the actual
ownership of its outstanding shares of beneficial interest and maintaining
records of such ownership, and the Company did not know, and would not have
known by exercising reasonable diligence, that it actually failed to meet the
five for fewer requirement. In addition, if the Company, or an actual or
constructive owner of 10% or more of the Company, actually or constructively
(under the applicable attribution rules of the Code) owns 10% or more of a
tenant of the Company (or a tenant of any partnership in which the Company is a
partner), the rent received by the Company (either directly or indirectly
through any such partnership) from such tenant will not be qualifying income for
purposes of the REIT gross income tests of the Code.
The Declaration of Trust provides for certain restrictions on the ownership
and transfer of Common Shares and Preferred Shares. It should be emphasized that
the ownership and transfer restrictions in the charter of the Company's
predecessor, Great Lakes REIT, Inc. (the "Corporation"), prior to its amendment
and restatement in September 1997, and the ownership and transfer restrictions
in the Corporation's bylaws did not ensure that the Company in fact satisfied
the share ownership requirements described above for its taxable years
commencing prior to January 1, 1998, primarily because the provisions in the
Corporation's charter did not operate automatically to void any attempted
transfer, acquisition or ownership of shares of the Corporation's stock that
would result in the disqualification of the Corporation as a REIT but instead
required the Corporation's Board of Directors to take action to prohibit or deem
to be null and void any such attempted transfer, acquisition or ownership of
such shares or to purchase or redeem any such shares. Particularly after the
shares of the Corporation's common stock became publicly traded, the Board of
Directors of the Corporation may not have become aware of attempted transfers,
acquisitions or ownership of the Corporation's common stock that would cause the
Corporation to fail to qualify as a REIT. Moreover, the restrictions on
ownership and transferability
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<PAGE>
contained in the Corporation's bylaws may not be enforceable against holders of
the Corporation's common stock (which shares of common stock were subsequently
converted into Common Shares) who became holders prior to the time that the
restrictions were added to the Corporation's bylaws in February 1997. If the
Corporation failed to satisfy the share ownership requirements for any of its
taxable years commencing prior to January 1, 1998, the status of the
Corporation, and the Company as successor to the Corporation, as a REIT would
have terminated, and the Corporation would not have been able to prevent such
termination.
ISSUANCE OF ADDITIONAL SHARES. The Declaration of Trust authorizes the
Board of Trustees to issue authorized but unissued Common Shares and Preferred
Shares and to classify any unissued Preferred Shares and to reclassify any
previously classified but unissued shares of any series. Prior to issuance of
shares of each series, the Board of Trustees is required by Maryland law, and
the Declaration of Trust to set, subject to the provisions of the Declaration of
Trust regarding restriction on transfer of shares of beneficial interest, the
terms, preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption for each such series. The Board of Trustees could
authorize the issuance of Preferred Shares with terms and conditions that could
have the effect of delaying, deferring or preventing a transaction or a change
in control of the Company that might involve a premium price for Common Shares
or otherwise be in the best interest of the shareholders. As of July 27, 1998,
there were 10,000,000 authorized but unissued Preferred Shares and no Preferred
Shares outstanding; the Company has no present plans to issue any Preferred
Shares.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF MARYLAND LAW AND THE DECLARATION
OF TRUST AND BYLAWS
As more fully described below, the business combination provisions and the
control share acquisition provisions of the Maryland General Corporation Law, as
amended ("MGCL"), that are applicable to Maryland real estate investment trusts,
the provisions of the Declaration of Trust on removal of trustees, and the
advance notice provisions of the Bylaws could delay, defer or prevent a
transaction or change in control of the Company that might involve a premium
price for holders of Common Shares or otherwise be in their best interest. The
following paragraphs summarize certain anti-takeover effects of each of these
items.
CLASSIFIED BOARD OF TRUSTEES. The Declaration of Trust authorizes the
Company to have a Board of Trustees with three classes, each class of trustees
serving staggered three-year terms. Although the Company currently has no
intention of implementing a classified Board of Trustees, the Board of Trustees
would have the discretion to do so at any time pursuant to the Declaration of
Trust. Adoption of a classified Board of Trustees could delay, defer or prevent
a transaction or change in control of the Company that might involve a premium
price for holders of Common Shares or otherwise be in their best interest.
REMOVAL OF TRUSTEES. Pursuant to the Declaration of Trust, a trustee may be
removed with or without cause by the affirmative vote of a majority of all the
votes entitled to be cast in the election of trustees. This provision, when
coupled with the provision in the Bylaws authorizing the Board of Trustees to
fill vacant trusteeships, precludes shareholders from removing incumbent
trustees except upon an affirmative majority vote and filling the vacancies
created by such removal with their own nominees.
BUSINESS COMBINATIONS. Under the MGCL, as applicable to Maryland real
estate investment trusts, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland real
estate investment trust and any person who beneficially owns ten percent or more
of the voting power of the trust's shares or an affiliate of the trust who, at
any time within the two-year period prior to the date in question, was the
beneficial owner of ten percent or more of the voting power of the
then-outstanding voting shares of beneficial interest of the trust (an
"Interested Shareholder") or an affiliate of such an Interested Shareholder are
prohibited for five years after the most recent date on which the Interested
Shareholder becomes an Interested Shareholder. Thereafter, any such business
combination generally must be recommended by the board of trustees of such trust
and approved by two super-majority votes of the shareholders. These provisions
of the MGCL do not apply,
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however, to business combinations that are approved or exempted by resolution of
the board of trustees of the trust prior to the time that the Interested
Shareholder becomes an Interested Shareholder.
Therefore, the business combination provisions of the MGCL will apply to any
business combination between the Company and any Interested Shareholder, unless
the Board of Trustees adopts a resolution exempting the Company from the
business combination provisions of the MGCL or approving business combinations,
either specifically or generally. The Board of Trustees currently is unaware of
any current or potential Interested Shareholder, so the Board of Trustees has no
current plans for further action with respect to these provisions.
CONTROL SHARE ACQUISITIONS. The MGCL, as applicable to Maryland real estate
investment trusts, provides that "control shares" of a Maryland real estate
investment trust acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the votes entitled to
be cast on the matter, excluding shares of beneficial interest owned by the
acquiror, officers or by trustees who are employees of the trust. "Control
Shares" are voting shares of beneficial interest which, if aggregated with all
other such shares of beneficial interest previously acquired by the acquiror or
with respect to which the acquiror is able to exercise or direct the exercise of
voting power (except solely by virtue of a revocable proxy), would entitle the
acquiror to exercise voting power in electing trustees within one of the
following ranges of voting power: (i) one-fifth or more but less than one-third,
(ii) one-third or more but less than a majority, or (iii) a majority or more of
all voting power. Control shares do not include shares the acquiring person is
then entitled to vote as a result of having previously obtained shareholder
approval. A "control share acquisition" means the acquisition of control shares,
subject to certain exceptions. The control share acquisition statute does not
apply (a) to shares acquired in a merger, consolidation or share exchange if the
trust is a party to the transaction or (b) to acquisitions approved or exempted
by the declaration of trust or bylaws of the trust.
The Bylaws contain a provision exempting from the control share acquisition
statute any and all acquisitions by any person of the Company's shares of
beneficial interest. The Board of Trustees may in the future amend or eliminate
this provision.
ADVANCE NOTICE OF TRUSTEE NOMINATIONS AND NEW BUSINESS
The Bylaws of the Company provide that (a) with respect to an annual meeting
of shareholders, nominations of persons for election to the Board of Trustees
and the proposal of business to be considered by shareholders may be made only
(i) pursuant to the Company's notice of the meeting, (ii) by the Board of
Trustees or (iii) by a shareholder who is entitled to vote at the meeting and
has complied with the advance notice procedures set forth in the Bylaws and (b)
with respect to special meetings of shareholders, only the business specified in
the Company's notice of meeting may be brought before the meeting of
shareholders and nominations of persons for election to the Board of Trustees
may be made only (i) pursuant to the Company's notice of the meeting, (ii) by
the Board of Trustees or (iii) provided that the Board of Trustees has
determined that trustees shall be elected at such meeting, by a shareholder who
is entitled to vote at the meeting and has complied with the advance notice
provisions set forth in the Bylaws.
POSSIBLE LOSSES NOT COVERED BY INSURANCE
The Company carries comprehensive liability, fire, extended coverage and
rental loss insurance covering all of the Properties, with policy specifications
and insured limits that the Company believes are adequate and appropriate under
the circumstances. There are, however, certain types of losses that are not
generally insured because it is not economically feasible to insure against such
losses. Should an uninsured loss or a loss in excess of insured limits occur,
the Company could lose its capital invested in the Property, as well as the
anticipated future revenue from the Property and, in the case of debt with
recourse to the Company, would remain obligated for any mortgage debt or other
financial obligations related to the Property. Any such loss would materially
adversely affect the Company.
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<PAGE>
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real estate may be
required to investigate and clean up hazardous or toxic substances or petroleum
product releases at such property and may be held liable to a governmental
entity or to third parties for property damage and for investigation and
clean-up costs incurred by such parties in connection with the contamination.
Such laws typically impose clean-up responsibility and liability without regard
to whether the owner knew of or caused the presence of the contaminants, and the
liability under such laws has been interpreted to be joint and several unless
the harm is divisible and there is a reasonable basis for allocation of
responsibility. The costs of investigation, remediation or removal of such
substances may be substantial, and the presence of such substances, or the
failure properly to remediate the contamination on such property, may adversely
affect the owner's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances at a disposal or treatment facility also may be
liable for the costs of removal or remediation of a release of hazardous or
toxic substances at such disposal or treatment facility, whether or not such
facility is owned or operated by such person. In addition, some environmental
laws create a lien on the contaminated site in favor of the government for
damages and costs incurred in connection with the contamination. Finally, the
owner of a site may be subject to common law claims by third parties based on
damages and costs resulting from environmental contamination emanating from such
site.
EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON SHARES
One of the factors that will influence the market price of the Common Shares
in public markets will be the distribution rate on the Common Shares. To the
extent distribution rates do not increase sufficiently in response to increasing
market interest rates, such an increase in interest rates may adversely affect
the market price of the Common Shares.
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<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth information as to the ownership of Common
Shares as of June 30, 1998 by the Selling Shareholders listed below. Each of the
Selling Shareholders acquired the Common Shares offered hereby pursuant to the
Stock Purchase Agreement dated as of August 20, 1996 (the "Stock Purchase
Agreement") by and among the Company and the Selling Shareholders. Pursuant to
the Registration Rights Agreement dated as of August 20, 1996 (the "Registration
Rights Agreement") by and among the Company and the Selling Shareholders, the
Company has granted the Selling Shareholders certain registration rights with
respect to the 3,867,000 Common Shares acquired by them pursuant to the Stock
Purchase Agreement (collectively, the "Registrable Shares"). The following
summary of certain material provisions of the Registration Rights Agreement is
qualified in its entirety by reference to the Registration Rights Agreement, a
copy of which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. In accordance with its obligations under the
Registration Rights Agreement, the Company has registered the Common Shares
offered hereby under the Securities Act pursuant to the Registration Statement
of which this Prospectus forms a part.
Subject to certain terms and conditions, the Registration Rights Agreement
provides that not later than the 180th day after the closing of the Company's
initial public offering, the Company is obligated to cause a registration
statement covering the Registrable Shares. The Company completed its initial
public offering on May 13, 1997. The Company is obligated to use its best
efforts, subject to any Permitted Interruption (as defined in the Registration
Rights Agreement), to cause such registration statement to remain effective
until the earlier of (i) the date on which all Registrable Shares have been sold
under such registration statement and (ii) the later of (A) the date that is 12
months after such registration statement becomes effective and (B) the date that
all Registrable Shares are freely transferable pursuant to Rule 144(k) or any
successor rule of the rules and regulations promulgated under the Securities Act
(assuming for purposes of calculating such period that no holder of Registrable
Shares is an affiliate of the Company) in any case, as extended by the period of
any Permitted Interruption.
The Registration Rights Agreement also provides that if the Company proposes
to register Common Shares under the Securities Act on any Registration Statement
covering such Common Shares, the holders of Registrable Shares are entitled to
have their shares included in such Registration Statement on a pro rata basis at
the Company's expense, subject to certain other terms and conditions set forth
in the Registration Rights Agreement. The Company has agreed to pay all expenses
incident to the Offering, including all related registration and filing fees. In
addition, the Company and the Selling Shareholders have agreed to indemnify each
other against certain liabilities, including liabilities under the Securities
Act.
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<PAGE>
Except as indicated below, none of the Selling Shareholders is a trustee,
executive officer or employee of the Company.
<TABLE>
<CAPTION>
COMMON SHARES COMMON SHARES
BENEFICIALLY OWNED PRIOR BENEFICIALLY OWNED AFTER
TO THE OFFERING(1) THE OFFERING(2)
------------------------- NUMBER OF SHARES ------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE OFFERED HEREBY NUMBER PERCENTAGE
- ----------------------------------------------- ---------- ------------- ---------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Morgan Stanley Dean Witter & Co.(3)(4)......... 1,939,700 11.1% 1,000,000 939,700 5.4%
Fortis Benefits Insurance Company(3)(5)........ 1,010,000 5.8 1,000,000 10,000 *
Logan, Inc.(3)(6).............................. 682,000 3.9 482,000 200,000 1.1%
Pension Trust Account No....................... 385,000 2.2 385,000 0 *
104972 Held by Bankers
Trust Company as Trustee
Wellsford Karpf Zarrilli Ventures,
L.L.C.(3)(7)................................. 76,923 * 76,923 0 *
</TABLE>
- ------------------------
* Less than 1%.
(1) Except as otherwise noted, all persons have sole voting and investment power
with respect to their shares.
(2) Assumes all Registrable Shares will be sold pursuant to the Offering.
(3) Based on the most recent Schedule 13D or 13G on file with the Commission,
except as discussed in footnotes (4) and (6) below.
(4) As reported in a Schedule 13G filed with the Commission on May 7, 1998 by
Morgan Stanley Dean Witter & Co., an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940 ("MSDW"), and Morgan
Stanley Asset Management Inc., an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940 ("MSAM"), (i) MSDW has
shared voting power as to 1,834,300 Common Shares and shared dispositive
power as to 1,934,700 Common Shares and (ii) MSAM has shared voting power as
to 1,421,700 Common Shares and shared dispositive power as to 1,522,100
Common Shares. Russell C. Platt, a director of the Company from August 1996
to February 1997, is a Managing Director of MSAM. Mr. Platt was appointed to
the Board of Directors in August 1996 pursuant to MSAM's right to nominate
one director under the Stock Purchase Agreement. Includes options
exercisable within 60 days to purchase 5,000 Common Shares, which options
were granted to Mr. Platt as director compensation and assigned by Mr. Platt
to MSAM.
(5) James J. Brinkerhoff, a director of the Company, is a Senior Vice President,
Real Estate of Fortis Advisers, Inc., which provides investment advisory
services to Fortis Benefits Insurance Company ("FBIC"), and an Officer of
FBIC. Mr. Brinkerhoff was appointed to the Board of Directors in August 1996
pursuant to FBIC's right to nominate one director under the Stock Purchase
Agreement. Includes options exercisable within 60 days to purchase 10,000
Common Shares, which options were granted to Mr. Brinkerhoff as director
compensation and assigned by Mr. Brinkerhoff to FBIC.
(6) Logan, Inc. is an indirect wholly owned subsidiary of The Northwestern
Mutual Life Insurance Company ("NML"). NML owns 200,000 shares (50,000 of
which are held in The Northwestern Mutual Life Insurance Company Group
Annuity Separate Account). Logan, Inc. and NML have shared voting and
investment power with respect to 482,000 of such shares.
(7) Edward Lowenthal, a member of Wellsford Karpf Zarrilli, L.L.C. ("WKZV"), is
a director of the Company. Mr. Lowenthal was appointed to the Board of
Directors in August 1996 pursuant to WKZV's right to nominate one director
under the Stock Purchase Agreement. In addition, beginning in December 1996,
the Company retained Karpf, Zarrilli & Co. Incorporated ("Karpf Zarrilli")
as a consultant in connection with certain matters. In its capacity as
consultant, the Company paid Karpf Zarrilli $118,750 plus expenses of
$10,884 through the closing of the Company's initial public offering in May
1997. Steven A. Karpf and Frederick P. Zarrilli are Principals of Karpf
Zarrilli and members of WKZV.
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<PAGE>
PLAN OF DISTRIBUTION
The Common Shares offered hereby may be sold from time to time by the
Selling Shareholders. The Selling Shareholders may from time to time sell all or
a portion of such Common Shares in one or more transactions (which may involve
one or more block transactions) on the exchange on which the Common Shares are
traded, if any, in the over-the-counter market, in separately negotiated
transactions or in a combination of such transactions; that each sale may be
made either at market prices prevailing at the time of such sale or at
negotiated prices; that some or all of the Common Shares may be sold through
brokers acting on behalf of the Selling Shareholders or to dealers or
underwriters for resale by such dealers or underwriters; and that in connection
with such sales such brokers, dealers and underwriters may receive compensation
in the form of discounts or commissions from the Selling Shareholders and may
receive commissions from the purchasers of Common Shares for whom they act as
broker or agent (which discounts and commissions are not anticipated to exceed
those customary in the types of transactions involved).
To the extent required, the specific Common Shares to be sold, the
respective purchase price and the public offering price, the names of any such
broker, dealer or underwriter, any commissions or discounts which respect to a
particular offer and any other information material to the transaction will be
set forth in an accompanying supplemental prospectus or, if appropriate, a
post-effective amendment to the Registration Statement of which this Prospectus
is a part.
In connection with any sales through a broker, such broker may act as agent
for the Selling Shareholders or may purchase from the Selling Shareholders all
or a portion of such Common Shares as principal. Common Shares sold by a broker
may involve one or more of the following transactions: (i) block transactions
(which may involve crosses) in which a broker may sell all or a portion of such
shares as agent but may position and resell all or a portion of the block as
principal to facilitate the transaction; (ii) purchases by any broker as
principal and resale by such broker for its own account pursuant to a Prospectus
Supplement; (iii) an exchange distribution or a secondary distribution in
accordance with applicable NYSE rules; (iv) ordinary brokerage transactions and
transactions in which any broker solicits purchasers; (v) sales "at the market"
to or through the market maker or into an existing trading market, on an
exchange or otherwise, for such Common Shares; and (vi) sales in other ways not
involving market makers or established trading markets, including direct sales
to institutions or individual purchasers.
If the sale of any shares is effected through underwriters, such
underwriters will be named in a supplemental prospectus. The Selling
Shareholders and any broker-dealers that participate with the Selling
Shareholders in the distribution of the Common Shares may be deemed to be
underwriters and any commissions received by them and any profit on the resale
of shares by them might be deemed to be underwriting discounts and commissions
under the Securities Act. Any broker-dealers or others who may be deemed
underwriters may be entitled under agreements entered into with the Company and
the Selling Shareholders to indemnification against certain liabilities,
including liabilities under the Securities Act, or contribute to payments which
the underwriters may be required to make in respect thereof.
Any Common Shares covered by this Prospectus that qualify for sale pursuant
to Rule 144 under the Securities Act ("Rule 144") may be sold under Rule 144
rather than pursuant to this Prospectus. There can be no assurance that any
Selling Shareholder will sell any or all of such Common Shares, and any Selling
Shareholder may transfer, devise or gift such Common Shares by other means not
described herein.
The Company has advised the Selling Shareholders that this Offering will
terminate on the earlier of the date that all Common Shares subject to the
Offering have been sold or otherwise disposed of to parties unaffiliated with
the Selling Shareholders or on December 5, 1998, unless otherwise extended. No
offers or sales may be made in reliance on this Prospectus following the earlier
of the date that all Common Shares subject to the Offering have been sold or
otherwise disposed of to parties unaffiliated with the Selling Shareholders or
November 19, 1998, unless otherwise extended.
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<PAGE>
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Jones, Day,
Reavis & Pogue, Chicago, Illinois, and certain matters of Maryland law,
including the validity of the Common Shares offered hereby, will be passed upon
for the Company by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
Jones, Day, Reavis & Pogue will rely on Ballard Spahr Andrews & Ingersoll, LLP
as to matters of Maryland law.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, the
statements of revenues and certain expenses of TRI-ATRIA Office Building and 777
Eisenhower Plaza for the year ended December 31, 1996 appearing in the Company's
Current Report on Form 8-K/A dated February 6, 1998, the statement of revenue
and certain expenses of Star Bank Office Building and the combined statement of
revenue and certain expenses of Milwaukee Portfolio for the year ended December
31, 1997 included in the Company's Current Report on Form 8-K/A dated June 18,
1998, and the combined statement of revenue and certain expenses of Inverness
Properties included in the Company's Current Report on Form 8-K/A dated July 24,
1998, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports thereon included therein and incorporated herein by reference.
Such consolidated financial statements and statements of revenues and certain
expenses are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY PERSON
DEEMED TO BE AN UNDERWRITER WITHIN THE MEANING OF THE SECURITIES ACT. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITY
OTHER THAN THE SECURITIES COVERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION WHERE SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH AN OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO SOME IT IS UNLAWFUL
TO MAKE SUCH AN OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 3
The Offering................................... 3
Use of Proceeds................................ 4
Risk Factors................................... 4
Selling Securityholders........................ 13
Plan of Distribution........................... 15
Legal Matters.................................. 16
Experts........................................ 16
</TABLE>
2,943,923 SHARES
GREAT LAKES REIT
COMMON SHARES OF
BENEFICIAL INTEREST
---------------------
PROSPECTUS
------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a list of the estimated expenses to be incurred by the
Company in connection with the issuance and distribution of the Common Shares
being registered hereby, other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 21,609
Printing costs..................................................... 10,000
Accounting fees and expenses....................................... 5,000
Legal fees and expenses............................................ 20,000
Miscellaneous expenses............................................. 3,391
---------
Total............................................................ $ 60,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS
Maryland law permits a Maryland real estate investment trust to include in
its declaration of trust a provision limiting the liability of its trustees and
officers to the trust and its shareholders for money damages except for
liability resulting from (a) actual receipt of an improper benefit or profit in
money, property or services or (b) active and deliberate dishonesty established
by a final judgment as being material to the cause of action. The Company's
Amended and Restated Declaration of Trust (the "Declaration of Trust") contains
such a provision that eliminates such liability to the maximum extent permitted
by Maryland law.
The Declaration of Trust authorizes the Company, to the maximum extent
permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former trustee or officer or (b) any individual who, while a
trustee of the Company and at the request of the Company, serves or has served
another real estate investment trust, corporation, partnership, joint venture,
trust, employee benefit plan or any other enterprise as a trustee, director,
officer or partner of such real estate investment trust, corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
from and against any claim or liability to which such person may become subject
or that such person may incur by reason of his status as a present or former
trustee or officer of the Company. The Company's bylaws (the "Bylaws") obligate
it, to the maximum extent permitted by Maryland law, to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former trustee or officer who is made a party to the
proceeding by reason of his service in that capacity or (b) any individual who,
while a trustee of the Company and at the request of the Company, serves or has
served another real estate investment trust, corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a trustee,
director, officer or partner of such real estate investment trust, corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and
who is made a party to the proceeding by reason of his service in that capacity,
against any claim or liability to which he may become subject by reason of such
status. The Declaration of Trust and Bylaws also permit the Company to indemnify
and advance expenses to any person who served a predecessor of the Company in
any of the capacities described above and to any employee or agent of the
Company or a predecessor of the Company. The Bylaws require the Company to
indemnify a trustee or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he is made a party by
reason of his service in that capacity.
Maryland law permits a Maryland real estate investment trust to indemnify
and advance expenses to its trustees, officers, employees and agents to the same
extent as is permitted by the Maryland General Corporation Law, as amended
("MGCL") for directors and officers of Maryland corporations. The MGCL permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they
II-1
<PAGE>
may be made a party by reason of their service in those or other capacities
unless it is established that (a) the act or omission of the director or officer
was material to the matter giving rise to the proceeding and (i) was committed
in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. However, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation or for a judgment of
liability on the basis that personal benefit was improperly received, unless in
either case a court orders indemnification and then only for expenses. In
addition, the MGCL permits a corporation to advance reasonable expenses to a
director or officer upon the corporation's receipt of (a) a written affirmation
by the director or officer of his good faith belief that he has met the standard
of conduct necessary for indemnification by the corporation and (b) a written
undertaking by him or on his behalf to repay the amount paid or reimbursed by
the corporation if it shall ultimately be determined that the standard of
conduct was not met.
The Company has in effect insurance policies in the amount of $5,000,000
covering all of the Company's trustees and officers.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
4.1 Amended and Restated Declaration of Trust of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4,
Commission File No. 333-56167 (the "S-4")).
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.3 to the S-4).
4.3 Stock Purchase Agreement dated as of August 20, 1996 by and among the Company and
the Selling Shareholders (incorporated by reference to Exhibit 1 to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
August 28, 1996).
4.4 Registration Rights Agreement dated as of August 20, 1996 by and among the Company
and the Selling Shareholders (incorporated by reference to Exhibit 2 to the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 28, 1996).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding the validity of the
securities being registered.
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in their opinion filed
as Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in the volume of securities offered (if the total dollar
value of the securities would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
II-2
<PAGE>
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Post-Effective Amendment No. 1
to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago, State of Illinois on the 28th
day of July, 1998.
GREAT LAKES REIT
By: /s/ Richard A. May
-------------------------------------
Richard A. May
CHAIRMAN OF THE BOARD OF TRUSTEES
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment No. 1 to Registration Statement has been signed below by the following
persons in the capacities indicated and on the 28th day of July, 1998.
TITLE
-----------------------------------
/s/ Richard A. May Chairman of the Board of Trustees
- ----------------------------------- and Chief Executive Officer
Richard A. May (Principal Executive Officer)
/s/ Patrick R. Hunt
- ----------------------------------- President, Chief Operating Officer
Patrick R. Hunt and Trustee
Senior Vice President-Finance,
/s/ James Hicks Chief Financial Officer and
- ----------------------------------- Treasurer (Principal Financial
James Hicks Officer and Principal Accounting
Officer)
*
- ----------------------------------- Trustee
James J. Brinkerhoff
*
- ----------------------------------- Trustee
Daniel E. Josephs
*
- ----------------------------------- Trustee
Edward Lowenthal
*
- ----------------------------------- Trustee
Donald E. Phillips
Richard L. Rasley, by signing his name hereto, does hereby sign and execute
this Post-Effective Amendment No. 1 to Registration Statement on behalf of each
of the above-named Trustees of Great Lakes REIT pursuant to powers of attorney
executed by each of such Trustees and previously filed with the Securities and
Exchange Commission.
*By /s/ Richard L. Rasley
- ----------------------------------- July 28, 1998
Richard L. Rasley
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
4.1 Amended and Restated Declaration of Trust of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4,
Commission File No. 333-56167 (the "S-4")).
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.3 to the S-4).
4.3 Stock Purchase Agreement dated as of August 20, 1996 by and among the Company and
the Selling Shareholders (incorporated by reference to Exhibit 1 to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
August 28, 1996).
4.4 Registration Rights Agreement dated as of August 20, 1996 by and among the Company
and the Selling Shareholders (incorporated by reference to Exhibit 2 to the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 28, 1996).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding the validity of the
securities being registered.
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in their opinion filed
as Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
</TABLE>
<PAGE>
Exhibit 5.1
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]
July 28, 1998
Great Lakes REIT
Suite 300
823 Commerce Drive
Oak Brook, Illinois 60523
Re: Registration Statement on Form S-3
(REGISTRATION NO. 333-40129)
-----------------------------------
Ladies and Gentlemen:
We have acted as Maryland counsel for Great Lakes REIT, a Maryland real
estate investment trust (the "Company"), in connection with certain matters
of Maryland law arising out of the filing of a Registration Statement on Form
S-3 (the "Registration Statement") relating to up to 2,943,923 common shares
(the "Shares") of beneficial interest, $.01 par value per share, of the
Company ("Common Shares") which may be sold from time to time by the
Investors (as defined herein). The Shares were issued to the Investors
pursuant to a Stock Purchase Agreement, dated as of August 20, 1996, among
the Company (then Great Lakes REIT, Inc., a Maryland corporation, referred to
herein as the "Corporation"), Fortis Benefits Insurance Company, Morgan
Stanley Institutional Fund, Inc. - U.S. Real Estate Portfolio, Morgan Stanley
SICAV Subsidiary SA, Wellsford Karpf Zarrilli Ventures, L.L.C., Logan, Inc.
and Pension Trust Account No. 104972 held by Bankers Trust Company as Trustee
(the "Investors"), as amended by Waiver Number One and Amendment Number One
to the Stock Purchase Agreement, dated October 3, 1996, between the
Corporation and the Investors (the "Purchase Agreement"). Unless otherwise
defined herein, capitalized terms used herein have the meanings given to them
in the Registration Statement.
In connection with our representation of the Company, and as a basis for
the opinions hereinafter set forth, we have examined originals, or copies
certified or otherwise identified
<PAGE>
Great Lakes REIT
July 28, 1998
Page 2
to our satisfaction, of the following documents (hereinafter collectively
referred to as the "Documents"):
1. The Registration Statement, as amended;
2. The Purchase Agreement;
3. The Registration Rights Agreement, dated as of August 20, 1996,
among the Corporation and the Investors, (the "Registration Rights
Agreement"), certified as of the date hereof by the Secretary of the Company;
4. The form of certificate evidencing Common Shares, certified as of
the date hereof by the Secretary of the Company;
5. Articles of Merger relating to the Merger of the Corporation with
and into the Company (then Great Lakes Merger Trust) and the Amended and
Restated Declaration of Trust of the Company (the "Declaration of Trust")
attached to and made a part thereof, certified as of a recent date by the
SDAT;
6. The Bylaws of the Company (the "Bylaws"), certified as of the date
hereof by the Secretary of the Company;
7. Resolutions adopted by the Board of Directors of the Corporation
relating to (a) the sale and issuance to the Investors of an aggregate of
3,867,000 shares of Common Stock and (b) the execution by the Corporation of
the Purchase Agreement and the Registration Rights Agreement, certified as of
the date hereof by the Secretary of the Company;
8. A certificate as of a recent date of the SDAT as to the good
standing of the Company;
9. A certificate executed by Richard L. Rasley, Secretary of the
Company, dated the date hereof; and
10. Such other documents and matters as we have deemed necessary or
appropriate to express the opinions set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.
In expressing the opinions set forth below, we have assumed, and so far
as is known to us there are no facts inconsistent with, the following:
<PAGE>
Great Lakes REIT
July 28, 1998
Page 3
1. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents
to which such party is a signatory, and such party's obligations set forth
therein are legal, valid and binding.
2. Each individual executing any of the Documents on behalf of a party
(other than the Company) is duly authorized to do so.
3. Each individual executing any of the Documents, whether on behalf
of such individual or another person, is legally competent to do so.
4. Any Documents submitted to us as originals are authentic. Any
Documents submitted to us as certified or photostatic copies conform to the
original documents. All signatures on all Documents are genuine. All public
records reviewed or relied upon by us or on our behalf are true and complete.
All factual statements and information contained in the Documents are true
and complete. There has been no modification of or amendment to any of the
Documents, and there has been no waiver of any provision of any of the
Documents by action or omission of the parties or otherwise.
5. The Shares have not been and will not be transferred in violation
of any restriction or limitation contained in the Declaration of Trust.
The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with this opinion.
Based upon the foregoing, and subject to the assumptions, limitations
and qualifications stated herein, it is our opinion that, as of the date
hereof:
1. The Company is a real estate investment trust duly formed and
existing under and by virtue of the laws of the State of Maryland and is in
good standing with the SDAT.
2. The Shares have been duly authorized and validly issued and are
fully paid and nonassessable.
The foregoing opinions are limited to the substantive laws of the State
of Maryland and we do not express any opinion herein concerning any other
law. We express no opinion as to
<PAGE>
Great Lakes REIT
July 28, 1998
Page 4
compliance with federal or state securities laws, including the securities
laws of the State of Maryland, or as to federal or state laws regarding
fraudulent transfers. We note that the Purchase Agreement and the
Registration Rights Agreement provide that they shall be governed by the laws
of the State of Illinois. To the extent that any matter as to which our
opinion is expressed herein would be governed by any other jurisdiction other
than the State of Maryland, we do not express any opinion on such matter.
The opinions expressed herein are subject to the effect of judicial decisions
which may permit the introduction of parol evidence to modify the terms or
the interpretation of agreements. The opinions expressed in this letter are
limited to the matters set forth in this letter and no other opinion should
be inferred beyond the matters expressly stated.
We assume no obligation to supplement this opinion if any applicable law
changes after the date hereof or if we become aware of any fact that might
change any opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Securities
and Exchange Commission as an exhibit to the Registration Statement and,
accordingly, may not be relied upon by, quoted in any manner to, or delivered
to any other person or entity without, in each instance, our prior written
consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein. In
giving this consent, we do not admit that we are within the category of
persons whose consent is required by Section 7 of the 1933 Act.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Post
Effective Amendment No. 1 to the Registration Statement (Form S-3 No.
333-40129) of Great Lakes REIT and to the incorporation by reference therein
of our reports indicated below filed with the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
Financial Statements Date of Auditors' Report
-------------------- ------------------------
<S> <C>
Consolidated financial statements and schedule of Great January 29, 1998, except
Lakes REIT, Inc. included in its Annual Report (Form 10-K) for Note 14 as to which
for the year ended December 31, 1997 the date is March 13, 1998
Statement of revenue and certain expenses of TRI-ATRIA December 17, 1997
Office Building for the year ended December 31, 1996
included in the Current Report (Form 8-K/A) of Great Lakes
REIT, Inc. dated February 6, 1998
Statement of revenue and certain expenses of 777 December 19, 1997
Eisenhower Plaza for the year ended December 31, 1996
included in the Current Report (Form 8-K/A) of Great Lakes
REIT, Inc. dated February 6, 1998
Statement of revenue and certain expenses of Star Bank April 9, 1998
Office Building for the year ended December 31, 1997
included in the Current Report (Form 8-K/A) of Great Lakes
REIT, Inc. dated June 18, 1998
Combined statement of revenue and certain expenses of May 21, 1998
Milwaukee Portfolio for the year ended December 31, 1997
included in the Current Report (Form 8-K/A) of Great Lakes
REIT, Inc. dated June 18, 1998
Combined statement of revenue and certain expenses of June 18, 1998
Inverness Properties for the year ended December 31, 1997
included in the Current Report (Form 8-K/A) of Great Lakes
REIT, Inc. dated July 24, 1998
</TABLE>
Ernst & Young LLP
Chicago, Illinois
July 28, 1998
