<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 33-63523
PROSPECTUS SUPPLEMENT [IRT LOGO]
(TO PROSPECTUS DATED NOVEMBER 9, 1995)
$75,000,000
IRT PROPERTY COMPANY
7.25% SENIOR NOTES DUE 2007
------------------------
The 7.25% Senior Notes due 2007 (the "Notes") offered hereby are being
issued by IRT Property Company (the "Company") in an aggregate principal amount
of $75,000,000. The Notes will mature on August 15, 2007. The Notes are
redeemable at any time at the option of the Company, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of the Notes being
redeemed plus accrued interest to the redemption date and (ii) the Make-Whole
Amount (as defined herein). Interest on the Notes is payable semi-annually in
arrears on February 15 and August 15 of each year, commencing on February 15,
1998. The Notes are senior unsecured obligations of the Company and will rank
equally with all unsecured and unsubordinated indebtedness of the Company. The
Notes contain certain restrictions on the Company's ability to incur additional
indebtedness. See "Capitalization" and "Description of Notes."
The Notes constitute a separate series of debt securities which will be
represented by one or more Global Securities (as defined herein) registered in
the name of The Depository Trust Company ("DTC") or its nominee. Interests in
the Global Securities will be shown on, and transfers thereof will be effected
only through, records maintained by DTC and its participants. Except as
described in "Description of Notes -- Book-Entry System," Notes in definitive
form will not be issued. The Notes will trade in DTC's Same-Day Funds Settlement
System until maturity, and secondary market trading activity in the Notes will
therefore settle in immediately available funds. All payments of principal and
interest will be made by the Company in immediately available funds. See
"Description of Notes."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===================================================================================================================
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note............................. 99.432% 0.650% 98.782%
- -------------------------------------------------------------------------------------------------------------------
Total................................ $74,574,000 $487,500 $74,086,500
===================================================================================================================
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters (as defined
herein) against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $262,500.
------------------------
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if delivered to and accepted by them, and subject to approval of certain
legal matters by counsel for the Underwriters. The Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part. It is expected that delivery of the Notes will be made on or about
August 15, 1997 through the book-entry facilities of DTC against payment
therefor in immediately available funds.
------------------------
PAINEWEBBER INCORPORATED SALOMON BROTHERS INC
------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS AUGUST 12, 1997.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE UNDERWRITERS MAY STABILIZE OR MAY BID FOR, AND PURCHASE, THE
NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
------------------------
CERTAIN MATTERS DISCUSSED UNDER THE CAPTIONS "PROSPECTUS SUPPLEMENT
SUMMARY"; "THE COMPANY"; "CAPITALIZATION" AND ELSEWHERE IN THIS PROSPECTUS
SUPPLEMENT, THE ATTACHED PROSPECTUS, AND THE INFORMATION INCORPORATED BY
REFERENCE HEREIN, INCLUDING, WITHOUT LIMITATION, DEMOGRAPHIC PROJECTIONS, AND
STRATEGIC INITIATIVES, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS FOR PURPOSES OF
THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND THE SECURITIES EXCHANGE
ACT OF 1934, AND AS SUCH MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT
FACTORS THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE
COMPANY TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ARE DISCLOSED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED
PROSPECTUS ("CAUTIONARY STATEMENTS"), INCLUDING, WITHOUT LIMITATION, THOSE
STATEMENTS MADE IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED
HEREIN. ALL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
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<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information included elsewhere in this
Prospectus Supplement and the accompanying Prospectus or incorporated herein or
therein by reference. Unless the context otherwise requires, all references in
this Prospectus Supplement to the "Company" or "IRT" shall mean IRT Property
Company and its subsidiaries on a consolidated basis, as well as their
respective predecessors.
THE COMPANY
IRT is an owner, operator and redeveloper of neighborhood and community
shopping centers, primarily in the Southeastern United States. Founded in 1969
and based in Atlanta, Georgia, IRT is a self-administered and self-managed real
estate investment trust ("REIT"), with acquisition, redevelopment, financing,
property management and leasing capabilities. As of July 1, 1997, on a cost
basis, approximately 97% of the Company's investment portfolio was located in
the Southeastern United States, and such portfolio consisted primarily of
neighborhood and community shopping centers. As of such date, the Company's 86
shopping centers contained in excess of 8.7 million square feet of leasable
space, which was approximately 95% leased. See "The Company -- Properties."
The Company's focus on neighborhood and community shopping centers in the
Southeastern United States provides it with a high degree of market familiarity
and promotes greater efficiencies in the Company's acquisition, property
management and leasing activities. Such focus allows the Company to establish
and maintain strong working relationships with major national and regional
retailers which serve the Southeastern market. The Company's leading tenants
include supermarkets such as Publix, Kroger, Winn-Dixie, Delchamps, Harris
Teeter and Food Lion; drug stores such as CVS, Eckerd and K&B; and national
retailers such as Wal-Mart and Kmart.
IRT's strategy has been to acquire and operate high-quality, well-located
shopping centers which are anchored by supermarkets, drug stores and other
consumer necessity or value-oriented retailers. The Company also is pursuing a
strategy which contemplates supplementing its traditional business with several
new initiatives. These new initiatives include developing neighborhood and
community shopping centers, whether for the Company's own account or in
strategic alliances with prominent Southeastern shopping center developers, and
increasing the Company's emphasis on major market "in fill" and value-added
opportunities and on redeveloping and expanding existing centers. Starting in
1996, the Company began taking a more active approach to the disposition of
certain of its properties. In addition, the Company intends to pursue co-
investment opportunities in Southeastern shopping centers where a taxable
affiliate would manage the shopping center after its acquisition or development,
thereby providing management fee income in addition to an investment return. The
Company evaluates from time to time various potential property acquisitions,
both directly and indirectly through mergers, acquisitions and combinations with
companies engaged in similar business. See "The Company -- Recent Developments."
The Company's Southeastern shopping centers are spread among 66 counties in
10 states. Based on data provided by DRI/McGraw Hill, for the period from 1997
to 2001, the weighted average population growth rate in the Company's
Southeastern counties is estimated to be 5.3% compared to an estimated growth
rate of 3.5% for the United States as a whole. In addition, based on data
provided by DRI/McGraw Hill, these Southeastern counties are projected to have a
weighted average growth rate in non-farm employment of 7.1% over the same
period, compared to an estimated national average of 5.5%.
Since its founding in 1969, the Company has successfully operated and grown
through three major real estate recessions. Senior management has an average of
20 years of real estate experience, with a combined total of over 115 years. The
Company's Common Stock has been publicly traded since 1971 and is listed on the
New York Stock Exchange under the symbol "IRT".
The Company's principal executive offices are located at 200 Galleria
Parkway, Suite 1400, Atlanta, Georgia 30339, telephone (770) 955-4406.
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<PAGE> 4
THE OFFERING
Unless otherwise defined herein, capitalized terms used herein have the
meanings provided in the Indenture (as defined herein) or under "Description of
Notes."
Securities Offered.................. $75,000,000 aggregate principal amount
of 7.25% Senior Notes due 2007.
Maturity............................ The Notes will mature on August 15,
2007.
Interest Payment Dates.............. Interest on the Notes is payable
semi-annually in arrears on February 15
and August 15, commencing February 15,
1998.
Ranking............................. The Notes will be senior unsecured
obligations of the Company and will
rank equally with the Company's other
unsecured and unsubordinated
indebtedness. The Notes will be
effectively subordinated to mortgages
and other secured indebtedness of the
Company and to indebtedness and other
liabilities of the Company's
Subsidiaries. The Notes will be senior
to the Company's 7.3% Convertible
Subordinated Debentures due 2003 (the
"Convertible Debentures"),
approximately $30.0 million of which
were outstanding on June 30, 1997. As
of June 30, 1997, on a pro forma basis
after giving effect to this offering,
the application of the net proceeds
therefrom, the repayment of certain
secured indebtedness and a property
purchase, the Company would have had
outstanding approximately $211,441,000
of total indebtedness, of which
approximately $124,937,000 would have
been unsecured and unsubordinated
indebtedness and approximately
$56,533,000 would have been secured
indebtedness. See "Capitalization."
Use of Proceeds..................... The net proceeds from the sale of the
Notes are estimated to be approximately
$73,824,000. The net proceeds will be
used primarily to repay indebtedness
outstanding under the Company's $100
million unsecured revolving line of
credit (the "Line of Credit"). Any
excess proceeds will be used for
general corporate purposes. See "Use of
Proceeds."
Limitation on Incurrence of Debt.... The Notes contain various covenants
including the following:
Neither the Company nor any Subsidiary
may incur any Debt if, after giving
effect thereto, the aggregate principal
amount of all outstanding Debt of the
Company and its Subsidiaries on a
consolidated basis is greater than 60%
of the sum of (i) the Total Assets of
the Company and its Subsidiaries as of
the end of the most recent calendar
quarter and (ii) the purchase price of
any real estate assets or mortgages
receivable acquired, and the amount of
any securities offering proceeds
received (to the extent that such
proceeds were not used to acquire real
estate assets or mortgages
S-4
<PAGE> 5
receivable or used to reduce Debt), by
the Company or any Subsidiary since the
end of such calendar quarter, including
those proceeds obtained in connection
with the incurrence of such additional
Debt.
Neither the Company nor any Subsidiary
may incur any Debt secured by any
mortgage or other lien upon any of the
property of the Company or any
Subsidiary if, after giving effect
thereto, the aggregate principal amount
of all outstanding Debt of the Company
and its Subsidiaries on a consolidated
basis which is secured by any mortgage
or other lien on the property of the
Company or any Subsidiary is greater
than 40% of the sum of (i) the Total
Assets of the Company and its
Subsidiaries as of the end of the most
recent calendar quarter and (ii) the
purchase price of any real estate
assets or mortgages receivable
acquired, and the amount of any
securities offering proceeds received
(to the extent that such proceeds were
not used to acquire real estate assets
or mortgages receivable or used to
reduce Debt), by the Company or any
Subsidiary since the end of such
calendar quarter, including those
proceeds obtained in connection with
the incurrence of such additional Debt.
The Company and its Subsidiaries may
not at any time own Total Unencumbered
Assets equal to less than 150% of the
aggregate outstanding principal amount
of the Unsecured Debt of the Company
and its Subsidiaries on a consolidated
basis.
Neither the Company nor any Subsidiary
may incur any Debt, if, after giving
effect thereto, the ratio of
Consolidated Income Available for Debt
Service to the Annual Service Charge
for the four consecutive fiscal
quarters most recently ended prior to
the date on which such additional Debt
is to be incurred shall have been less
than 1.5:1 on a pro forma basis after
giving effect to certain assumptions.
Optional Redemption................. The Notes are redeemable at any time at
the option and in the sole discretion
of the Company, in whole or in part, at
a redemption price equal to the sum of
(i) the principal amount of the Notes
being redeemed plus accrued interest to
the redemption date and (ii) the
Make-Whole Amount, if any. See
"Description of Notes -- Optional
Redemption."
S-5
<PAGE> 6
THE COMPANY
The Company is an owner, operator and redeveloper of neighborhood and
community shopping centers, primarily in the Southeastern United States. Founded
in 1969 and based in Atlanta, Georgia, IRT is a self-administered and
self-managed REIT, with acquisition, redevelopment, financing, property
management and leasing capabilities. As of July 1, 1997, on a cost basis,
approximately 97% of the Company's investment portfolio was located primarily in
the Southeastern United States, and such portfolio consisted primarily of
neighborhood and community shopping centers. As of such date, the Company's 86
shopping centers contained in excess of 8.7 million square feet of leasable
space, which was approximately 95% leased. See "-- Properties."
The Company's focus on neighborhood and community shopping centers in the
Southeastern United States provides it with a high degree of market familiarity
and promotes greater efficiencies in the Company's acquisition, property
management and leasing activities. Such focus allows the Company to establish
and maintain strong working relationships with major national and regional
retailers which serve the Southeastern market. The Company's leading tenants
include supermarkets such as Publix, Kroger, Winn-Dixie, Delchamps, Harris
Teeter and Food Lion; drug stores such as CVS, Eckerd and K&B; and national
retailers such as Wal-Mart and Kmart.
RECENT DEVELOPMENTS
Strategic Initiatives
The Company has initiated new plans to complement its strategy of acquiring
and operating high-quality, well-located shopping centers which are anchored by
supermarkets, drug stores and other consumer necessity or value-oriented
retailers. This strategy includes developing neighborhood and community shopping
centers, whether for the Company's own account or in strategic alliances with
prominent Southeastern shopping center developers, and increasing the Company's
emphasis on major market "in fill" and value-added opportunities and on
redeveloping and expanding existing centers. In 1996, the Company began taking a
more active approach to the disposition of certain investment properties. In
addition, the Company intends to pursue co-investment opportunities in
Southeastern shopping centers where IRT Capital Corporation ("IRT Capital"), a
taxable affiliate of the Company, would manage the center after its acquisition
or development, thereby providing management fee income in addition to its
investment return.
Acquisitions
The Company constantly evaluates possible property acquisitions. To date in
1997, the Company has purchased five shopping centers (four in greater Atlanta,
Georgia, and one in Palm Beach County, Florida) containing an aggregate of
approximately 458,000 square feet of retail space for costs totaling
approximately $43,985,000.
On February 6, 1997, the Company acquired Grassland Crossing in Alpharetta,
Georgia for a total cost of $9,907,000, consisting of the initial purchase price
of $9,890,000 and approximately $17,000 of acquisition costs. This acquisition
was funded by cash of $3,114,000 and the assumption of the $6,793,000 existing
mortgage debt with an annual interest rate of 7.865%. This 90,900 square foot
center is anchored by a 70,100 square foot Kroger supermarket.
On April 16, 1997, the Company acquired Market Place Shopping Center in
Norcross, Georgia for $7,069,000 cash, consisting of the initial purchase price
of $6,800,000, $250,000 of capital expenditures and approximately $19,000 of
acquisition costs. This 73,700 square foot center is anchored by Regal Cinemas
and CVS Drugs.
On May 13, 1997, the Company acquired Powers Ferry Plaza in Marietta,
Georgia for a total cost of $6,894,000, consisting of the initial purchase price
of $6,800,000 and approximately $94,000 of acquisition costs. This acquisition
was funded by cash of $5,644,000 and a $1,250,000 purchase-money mortgage with
an annual interest rate of 9.00%. This 82,700 square foot center is anchored by
Micro Center and CVS Drugs.
S-6
<PAGE> 7
On June 17, 1997, the Company acquired Fairview Oaks Shopping Center in
Ellenwood, Georgia for $7,109,000 cash, consisting of the initial purchase price
of $7,100,000 and approximately $9,000 of acquisition costs. This 77,100 square
foot center is anchored by a 54,500 square foot Kroger supermarket.
On July 1, 1997, the Company acquired Greenwood Shopping Center in Palm
Springs, Florida for $13,006,000 cash, consisting of the initial purchase price
of $12,950,000 and approximately $56,000 of acquisition costs. This 134,100
square foot center is anchored by a 50,000 square foot Publix supermarket and by
a Walgreens drug store.
The Company presently has under contract for purchase a new Publix-anchored
shopping center in Huntsville, Alabama for a purchase price of $5,750,000 and
has entered into a letter of intent for the purchase of a Publix-anchored center
in the Fort Lauderdale area of Florida for $16,750,000. Both transactions are
subject to various conditions, including satisfactory completion of
environmental and other due diligence. No assurance can be given that such
conditions will be met or that these acquisitions will be completed.
Co-Development
The Company has commenced its first transaction in fulfillment of its
business initiative to co-develop neighborhood and community shopping centers.
The Company's taxable subsidiary, IRT Capital, has entered into a co-development
agreement for the development of a Kroger-anchored shopping center in Decatur,
Georgia. The project will be developed in two phases aggregating approximately
140,000 square feet, not including two outparcels, for a total anticipated cost
of approximately $14,100,000. The venture may require the Company to purchase
the shopping center upon completion of Phase I at cost or upon the completion of
Phase II at the greater of cost or a 10.75% capitalization rate. It is
anticipated that the Company will ultimately acquire the project upon completion
of Phase I or Phase II.
Dispositions
The Company continually assesses its portfolio for possible dispositions of
properties which do not fit its ongoing business strategies because of
functional obsolescence, geography, limited growth prospects or other reasons.
The Company has entered into contracts to sell its Gulf Gate Plaza Shopping
Center in Naples, Florida, Masonova Plaza Shopping Center in Daytona Beach,
Florida and Whitehall Kent Apartments in Kent, Ohio. The purchasers of these
properties are presently conducting environmental and other due diligence, and
the Company cannot predict whether or when any or all of these potential sales
may occur.
Issuance of Common Stock and Repurchase of Convertible Debentures
On January 14 and 22, 1997, the Company completed the offering of 4,653,747
shares of its Common Stock at $11.25 per share. The net proceeds from the
offering totaled approximately $49,534,000 and were used to repurchase a portion
of the Convertible Debentures, as well as to reduce outstanding indebtedness
under the Line of Credit.
On January 17, 1997, the Company completed the repurchase of $54,799,000 of
the Convertible Debentures in a private transaction with a single debenture
holder. The debentures were repurchased by the Company at par plus $1,689,000 of
accrued interest. The consideration paid by the Company was comprised of
1,500,000 shares of Common Stock, valued for purposes of the exchange at $11.05
per share, and cash in the amount of $38,224,000.
Interest Rate Reduction and Extension of Line of Credit
Effective June 30, 1997, the applicable margins charged for LIBOR-based
borrowings under the Company's Line of Credit were reduced from a range of 1.3%
to 1.5% to a range of 0.95% to 1.40%. The applicable margin is based upon the
rating of the senior unsecured long-term debt obligations of the Company. On
that date, the applicable margin based on the Company's current rating was
reduced from 1.50% to 1.25%. Additionally, the Company pays a fee of 0.25% per
annum of the aggregate unused portion of the
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<PAGE> 8
commitment. Effective July 1, 1997, this fee will be reduced to 0.15% per annum
whenever the unused portion is less than 50% of the total commitment.
On July 22, 1997, the maturity date of the Line of Credit was extended for
an additional 12-month period to January 4, 2001.
Repayments of Mortgage Indebtedness
On July 17, 1997, the Company repaid four mortgage notes aggregating
approximately $30.9 million which were scheduled to mature on August 1, 1997.
The interest rate on three of such mortgages aggregating approximately $27.7
million was 7.6% per annum, and the interest rate on the fourth $3.2 million
mortgage was 9.375% per annum. The repayment of these mortgages was funded by
borrowings under the Line of Credit.
PROPERTIES
The Company's shopping centers are typically anchored by prominent consumer
necessity-oriented tenants, such as supermarkets and drug stores, which tend to
attract shoppers for basic household goods. In addition, the Company's tenants
include national value retailing chains. Company management believes that the
generally high quality of its shopping center locations is attractive to new
tenants and aids in the retention of existing tenants. The Company seeks to
diversify the credit risk within its portfolio and among the retailers that
occupy shopping centers. The Company holds over 1,100 leases with approximately
825 different tenants, with no single tenant or corporate entity accounting for
more than 6.5% of its 1996 annual revenues, as adjusted for its acquisitions and
dispositions completed during 1996 and 1997 (to date). Eight different
supermarket chains and two national value chains comprise 10 of the 14 tenants
which accounted for 1% or more of such revenues. Together, supermarkets
accounted for approximately 29% of such revenues, while national value retailers
and drugstores accounted for approximately 12% and 4% of such revenues,
respectively. The Company's leading tenants include supermarkets such as Publix,
Kroger, Winn-Dixie, Delchamps, Harris Teeter and Food Lion; drug stores such as
CVS, Eckerd, and K&B; and national retailers such as Wal-Mart and Kmart.
The Company's Southeastern shopping centers are spread among 66 counties in
10 states. Based on data provided by DRI/McGraw Hill, for the period from 1997
to 2001, the weighted average population growth rate in the Company's
Southeastern counties is estimated to be 5.3% compared to an estimated growth
rate of 3.5% for the United States as a whole. In addition, based on data
provided by DRI/McGraw Hill, these Southeastern counties are projected to have a
weighted average growth rate in non-farm employment of 7.1% over the same
period, compared to an estimated national average of 5.5%.
The following table lists all of the Company's real estate investments, as
of July 1, 1997, with shopping centers grouped by state and metropolitan
markets:
<TABLE>
<CAPTION>
YEAR
COMPANY PERCENT COMPLETED, MAJOR TENANTS
DATE OWNED GROSS LEASED RENOVATED OR -----------------------------------
DESCRIPTION ACQUIRED LEASEABLE AREA 7/1/97 EXPANDED TENANT SQUARE FEET
- ----------- -------- -------------- ------- ------------ ---------------------- -----------
(SQ. FT.)
<S> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS
ALABAMA
Columbus (GA) 8/92 70,475 96% 1988 Piggly Wiggly 30,625
Stadium Plaza CVS Drugs 10,950
Phenix City, AL
Mobile
West Gate Plaza 6/74 & 64,378 100 1974 & Winn-Dixie 44,000
Mobile, AL 1/85 1995 K&B Drugs 12,000
FLORIDA
Daytona Beach
Masonova Plaza(1) 6/79 157,955 72 1969 Haynes & Smith 34,941
Daytona Beach, FL Rite Aid(2) 10,050
New Smyrna Beach Regional 8/92 118,451 97 1987 Publix 42,112
New Smyrna Beach, FL Walgreens 13,070
Beall's Outlet 8,000
Old Kings Commons 5/88 84,759 97 1988 Wal-Mart (Scotty's)(2) 54,233
Palm Coast, FL
</TABLE>
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<TABLE>
<CAPTION>
YEAR
COMPANY PERCENT COMPLETED, MAJOR TENANTS
DATE OWNED GROSS LEASED RENOVATED OR -----------------------------------
DESCRIPTION ACQUIRED LEASEABLE AREA 7/1/97 EXPANDED TENANT SQUARE FEET
- ----------- -------- -------------- ------- ------------ ---------------------- -----------
(SQ. FT.)
<S> <C> <C> <C> <C> <C> <C>
Ft. Lauderdale
Countryside Shops 6/94 173,161 100% 1986, 1988 Publix 39,795
Cooper City, FL & 1991 Uptons 44,000
Eckerd Drugs 10,356
Westgate Square 6/94 104,853 98 1984 & Winn-Dixie 36,320
Sunrise, FL 1988 Walgreens 13,000
Ft. Walton Beach
Ft. Walton Beach Plaza 7/86 48,248 100 1986 Food World 42,848
Ft. Walton Beach, FL
Jacksonville
South Beach Regional 8/92 289,319 97 1990 & Kmart 86,479
Jacksonville Beach, FL 1991 Stein Mart 35,077
Beall's 35,500
Food Lion 29,000
Naples
Gulf Gate Plaza(1) 6/79 174,566 80 1969 & Publix 29,120
Naples, FL 1974 Beall's Outlet 17,500
JoAnn Fabrics 15,138
Dockside Imports 22,000
Rite Aid(2) 10,168
Orlando
Alafaya Commons 11/96 120,586 99 1987 Publix 54,230
Orlando, FL JoAnn Fabrics 11,000
Hoffner Plaza(1) 6/79 39,370 15 1972
Orlando, FL
Pensacola
Parkmore Plaza 12/92 159,067 100 1986 & Wal-Mart 90,399
Milton, FL 1992 Delchamps 49,968
Pensacola Plaza 7/86 56,098 100 1985 Food World 42,848
Pensacola, FL
Sarasota -- Bradenton
North River Village Center 12/92 & 177,128 100 1988 & Kmart 94,841
Ellenton, FL 12/93 1993 Publix 42,112
Walgreens 13,500
Beall's 9,000
Venice Plaza(3) 6/79 144,850 94 1971 & Kash & Karry 22,220
Venice, FL 1979 TJX 77,117
Rite Aid (Silk Floral
Unlimited)(2) 7,500
Tampa-St. Petersburg-Clearwater
Chelsea Place 7/93 81,144 100 1992 Publix 48,890
New Port Richey, FL Eckerd Drugs 9,504
Palm Gardens 6/79 52,670 93 1970 Food Lion(2) 34,050
Largo, FL
Seven Hills 7/93 64,890 100 1991 Publix 48,890
Spring Hill, FL
West Palm Beach-Boca Raton
Greenwood Shopping Center 7/97 134,132 94 1982 & Publix 50,032
Palm Springs, FL 1994 Walgreens 13,000
GEORGIA
Atlanta
Douglas Commons 8/92 97,027 93 1988 Kroger 59,431
Douglasville, GA
Fairview Oaks 6/97 77,052 100 1997 Kroger 54,498
Ellenwood, GA
Grassland Crossing 2/97 90,906 100 1996 Kroger 70,086
Alpharetta, GA
Macland Pointe 1/93 79,699 98 1992 & Publix 55,999
Marietta, GA 1993
Market Place Shopping Center 4/97 73,686 97 1976 Regal Cinemas 30,009
Norcross, GA CVS Drugs 9,328
Paulding Commons 8/92 192,391 96 1991 Kmart 86,479
Dallas, GA Kroger 49,700
Powers Ferry Plaza 5/97 82,676 92 1983 Micro Center 29,520
Marietta, GA CVS Drugs 7,800
Spalding Village 8/92 235,318 100 1989 Kmart 86,479
Griffin, GA Kroger 59,431
J.C. Penney's 33,796
Wesley Chapel Crossing 12/92 170,792 98 1989 Wal-Mart 91,124
Decatur, GA Ingles 32,000
CVS Drugs 8,468
Macon
Watson Central 12/92 & 227,747 94 1989 & Wal-Mart 122,382
Warner Robins, GA 10/93 1993 Winn-Dixie 45,000
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
YEAR
COMPANY PERCENT COMPLETED, MAJOR TENANTS
DATE OWNED GROSS LEASED RENOVATED OR -----------------------------------
DESCRIPTION ACQUIRED LEASEABLE AREA 7/1/97 EXPANDED TENANT SQUARE FEET
- ----------- -------- -------------- ------- ------------ ---------------------- -----------
(SQ. FT.)
<S> <C> <C> <C> <C> <C> <C>
Various
Colony Square 2/88 50,000 100% 1987 Food Lion 25,000
Fitzgerald, GA
Commerce Crossing 12/92 100,668 100 1988 Wal-Mart 50,968
Commerce, GA Ingles 32,000
Heritage Walk 6/93 159,362 100 1991 & Kmart 86,479
Milledgeville, GA 1992 Bi-Lo 30,623
Goody's 25,000
West Towne Square 3/90 89,596 96 1988 Bruno's Foodmax 44,512
Rome, GA Eckerd Drugs(2) 6,864
KENTUCKY
Scottsville Square 8/92 38,450 21 1986
Bowling Green, KY
LOUISIANA
Baton Rouge
Bluebonnet Village 12/94 89,879 94 1983 Delchamps 33,387
Baton Rouge, LA K&B Drugs 15,000
Millervillage Shopping Center 12/94 94,559 93 1983 & Delchamps 56,052
Baton Rouge, LA 1992 K&B Drugs 15,000
Sherwood South 12/94 75,607 100 1972, 1988 Sav-A-Center
Baton Rouge, LA & 1992 (Old America)(2) 22,500
Eckerd Drugs 12,000
Cloth World 9,750
Siegen Village 12/94 157,528 100 1988 & Kmart 92,079
Baton Rouge, LA 1996 Office Depot 31,266
Houma
Tarpon Heights 1/95 56,605 100 1982 Delchamps 28,092
Galliano, LA Eckerd Drugs 8,905
Lafayette
Ambassador Row 12/94 193,982 100 1980 & Kmart (Holly Lobby &
Lafayette, LA 1991 C.R. Anthony's)(2) 83,067
K&B Drugs 18,580
Big Lots 32,109
Ambassador Row Courtyards 12/94 155,483 82 1986 & Delchamps 53,284
Lafayette, LA 1991 Marshalls 22,500
The Boulevard 12/94 68,012 100 1976 & Campo Concept Store(4) 30,975
Lafayette, LA 1994 Piccadilly 10,440
Pinhook Plaza 12/94 190,319 100 1979 & Kmart 72,897
Lafayette, LA 1992 Delchamps 42,599
K&B Drugs 15,000
Plaza Acadienne(5) 12/94 105,419 100 1980 Delchamps 28,092
Eunice, LA K&B Drugs 15,000
Howard Brothers(2) 46,000
New Orleans
Country Club Plaza 1/95 64,686 90 1982 Delchamps 33,387
Slidell, LA K&B Drugs 8,450
The Crossing 12/94 113,989 100 1988 & Albertson's 58,432
Slidell, LA 1993 Campo Concept Store(4) 20,000
Piccadilly 11,250
Elmwood Oaks 1/92 130,284 100 1989 Wal-Mart 95,079
Harahan, LA Blockbuster Music 12,045
Western Auto 10,560
Village at Northshore 12/94 144,373 100 1988 & Delchamps 51,348
Slidell, LA 1993 Service Merchandise 50,000
Kirshman's 20,125
MISSISSIPPI
Delchamps Plaza 4/88 66,857 98 1987 Delchamps 42,057
Pascagoula, MS K&B Drugs 15,000
NORTH CAROLINA
Asheville
Asheville Plaza(1)(6) 4/86 49,800 100 1967 The Paty Company(2) 49,800
Asheville, NC
Charlotte-Gastonia-Rock Hill
Providence Square 12/71 85,930 94 1973 Harris Teeter 35,702
Charlotte, NC Eckerd Drugs 9,600
Stanley Market Place 1/92 40,364 100 1980 & Winn-Dixie 28,400
Stanley, NC 1991 CVS Drugs 6,000
Greensboro-Winston Salem-High Point
Thomasville Commons 8/92 148,754 100 1991 Kmart 86,479
Thomasville, NC Ingles 32,000
CVS Drugs 8,450
</TABLE>
S-10
<PAGE> 11
<TABLE>
<CAPTION>
YEAR
COMPANY PERCENT COMPLETED, MAJOR TENANTS
DATE OWNED GROSS LEASED RENOVATED OR -----------------------------------
DESCRIPTION ACQUIRED LEASEABLE AREA 7/1/97 EXPANDED TENANT SQUARE FEET
- ----------- -------- -------------- ------- ------------ ---------------------- -----------
(SQ. FT.)
<S> <C> <C> <C> <C> <C> <C>
76,970 94% 1987 Food Lion 29,000
Salisbury Marketplace 8/96
Salisbury, NC CVS Drugs 8,470
Greenville
University Center 12/89 56,180 95 1989 Harris Teeter 32,960
Greenville, NC Eckerd Drugs 9,720
Hickory-Morganton-Lenoir
Taylorsville Shopping Center 8/86 & 48,537 100 1982 & Harris Teeter 31,137
Taylorsville, NC 12/88 1988
Raleigh-Durham-Chapel Hill
Centre Pointe Plaza 12/92 & 163,642 100 1989 & Wal-Mart(2) 91,155
Smithfield, NC 12/93 1993 Winn-Dixie 38,547
Riverview Shopping Center 3/72 130,058 84 1973 & Kroger 53,538
Durham, NC 1994 Upchurch Drugs 10,000
Willowdaile Shopping Center 8/86 & 120,815 98 1986 Harris Teeter 33,177
Durham, NC 12/87 Carmike Cinemas 25,383
Eckerd Drugs 9,600
Wilmington
The Galleria 8/86 & 92,344 97 1986 & Harris Teeter 28,000
Wrightsville Beach, NC 12/87 1990 Eckerd Drugs 9,600
Various
Chadwick Square 1/92 31,700 100 1985 Food Lion 28,600
Hendersonville, NC
Chestnut Square 1/92 39,640 100 1985 Food Lion 21,000
Brevard, NC Eckerd Drugs(2) 8,640
Eden Centre 11/94 56,355 100 1991 Food Lion 29,000
Eden, NC CVS Drugs 8,450
First Street Station 8/94 52,230 95 1989 Harris Teeter 32,960
Albemarle, NC Eckerd Drugs 8,640
Forest Hills Centre 8/90 74,180 98 1990 Harris Teeter 32,960
Wilson, NC Eckerd Drugs
(Piece Goods)(2) 8,640
Plaza North 8/92 47,240 92 1986 Bi-Lo 25,590
Hendersonville, NC CVS Drugs 8,450
Shelby Plaza(5) 4/86 103,000 60 1972 Big Lots 30,000
Shelby, NC Heilig-Meyers 25,000
SOUTH CAROLINA
Various
Abbeville Plaza(1) 4/86 59,525 50 1970
Abbeville, SC
Carolina Place 5/89 36,560 97 1989 Bi-Lo 32,960
Hartsville, SC
Chester Plaza 4/86 & 71,443 59 1967 & Bi-Lo 30,623
Chester, SC 2/92 1992
Lancaster Plaza 4/86 77,400 100 1971 Bi-Lo 19,200
Lancaster, SC CVS Drugs 6,600
Lancaster Shopping Center 8/86 & 29,047 100 1963 & Harris Teeter 24,045
Lancaster, SC 12/87 1987
Litchfield Landing 8/86 42,201 98 1984 Harris Teeter 24,806
North Litchfield, SC Eckerd Drugs 8,640
North Village Center(3) 8/86 60,356 100 1984 Harris Teeter 24,806
North Myrtle Beach, SC CVS Drugs 10,500
TENNESSEE
Nashville
Smyrna Village 8/92 83,334 100 1992 Kroger 59,214
Smyrna, TN
Various
Lawrence Commons 8/92 52,295 97 1987 Kroger(8) 37,245
Lawrenceburg, TN
Forrest Gallery 12/92 214,450 93 1987 Wal-Mart (Tractor
Tullahoma, TN Supply)(2) 65,930
Kroger 48,780
Ira A. Watson 32,680
VIRGINIA
Lynchburg
Waterlick Plaza 10/89 98,694 95 1973 & Harris Teeter 30,780
Lynchburg, VA 1988 Piece Goods 22,260
CVS Drugs 10,500
Various
Smyth Valley Crossing 12/92 126,841 100 1989 Wal-Mart(7) 65,930
Marion, VA Ingles 32,000
Harris Teeter(6) 6/88 & 36,535 100 1981 & Harris Teeter 36,535
Lexington, VA 6/89 1989
--------- ---------
TOTAL FOR 81 SHOPPING CENTERS 8,195,472 5,459,348
</TABLE>
S-11
<PAGE> 12
<TABLE>
<CAPTION>
YEAR
COMPANY PERCENT COMPLETED, MAJOR TENANTS
DATE OWNED GROSS LEASED RENOVATED OR -----------------------------------
DESCRIPTION ACQUIRED LEASEABLE AREA 7/1/97 EXPANDED TENANT SQUARE FEET
- ----------- -------- -------------- ------- ------------ ---------------------- -----------
(SQ. FT.)
<S> <C> <C> <C> <C> <C> <C>
NET LEASED WAL-MARTS
Wal-Mart Stores, Inc. 6/85 54,223 100% 1985 Wal-Mart 54,223
Mathews, LA
Wal-Mart Stores, Inc. 7/85 53,571 100 1985 Wal-Mart(2) 53,571
Marble Falls, TX
LAND PURCHASE LEASEBACKS
Lawrence County Shopping Center 5/71 135,605 100 1971 N/A N/A
Sybene, OH
Grand Marche Shopping Center 9/72 200,585 100 1969 N/A N/A
Lafayette, LA
Manatee County Shopping Center 5/71 120,500 100 1971 N/A N/A
Bradenton, FL
--------- ---------
TOTAL FOR 86 SHOPPING CENTERS 8,759,956 5,567,142
========= =========
APARTMENT
Whitehall Kent Apartments(1) 6/79 188 89 1968 N/A N/A
Kent, OH units
=========
INDUSTRIAL PROPERTIES
Industrial Buildings 6/79 188,513 78 1956 & ABF Freight System 82,400
Charlotte, NC 1963
Plasti-Kote 6/79 41,000 100 1961 & Plasti-Kote Company 41,000
Medina, OH 1966
---------
229,513
=========
BANKS
The Old Phoenix 12/84 73,074 100 Various The Old Phoenix 73,074
=========
National Bank(9) National Bank
Medina County, OH
</TABLE>
- ---------------
(1) Hoffner Plaza, Asheville Plaza and Abbeville Plaza represent candidates for
sale or redevelopment. The Company has entered into contracts to sell Gulf
Gate Plaza, Masonova Plaza and Whitehall Kent Apartments. See "The
Company -- Recent Developments -- Dispositions."
(2) The noted tenants have vacated but are still paying minimum rental under
their leases. If subleased, sublessee is noted in parenthesis.
(3) The Company owns a 54.5% interest in North Village Center and a 75% interest
in Venice Plaza Shopping Center, which are consolidated for financial
reporting purposes and minority interests recorded.
(4) The tenant has filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") and may, in accordance with
the Bankruptcy Code, assume or reject its leases with the Company. However,
the tenant has not informed the Company whether it will assume or reject
such leases, which require aggregate per annum payments by the tenant of
approximately $400,000.
(5) Subject to ground leases expiring in 2002 for Shelby Plaza and 1998 and 2008
for Plaza Acadienne. The Company has an option to purchase the land at
Shelby Plaza for $265,000 in 2002.
(6) Asheville Plaza and Harris Teeter shopping center investments represent net
leased properties not managed or operated by the Company.
(7) Tenant expanded its space by 32,980 sq. ft. to a total of 98,910 sq. ft. at
its expense and at no additional rental on the increased square footage.
(8) Tenant expanded its space by 19,869 sq. ft. to a total of 57,114 sq. ft. at
its expense and at no additional rental on the increased square footage.
(9) This investment represents 10 branch bank properties leased to one tenant.
S-12
<PAGE> 13
Shopping Center Lease Expirations
The following tables show, as of July 1, 1997, anchor tenant and shop
tenant lease expirations, assuming that no tenants exercise renewal options:
ANCHOR TENANTS(1)
LEASE EXPIRATION SCHEDULE
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE BASE
APPROXIMATE TOTAL LEASED RENT PER
NUMBER OF SQUARE ANNUALIZED BASE SQUARE
LEASE YEAR LEASES SQ. FT. FOOTAGE RENT UNDER FOOTAGE
EXPIRATION EXPIRING EXPIRING EXPIRING EXPIRING LEASES EXPIRING
- ---------- ----------- --------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Month-to-Month(2).................. 1 34,941 0% $ 60,000 $1.72
1997............................... 2 22,168 0 65,054 2.93
1998............................... 7 238,654 3 1,197,012 5.02
1999............................... 8 92,705 1 561,984 6.06
2000............................... 4 53,500 1 172,200 3.22
2001............................... 8 84,178 1 542,659 6.45
2002............................... 13 250,254 3 998,360 3.99
2003............................... 6 90,543 1 551,676 6.09
2004............................... 8 236,649 3 1,527,613 6.46
2005............................... 12 360,288 5 1,772,388 4.92
2006............................... 9 376,109 5 2,213,764 5.89
2007............................... 9 340,472 4 2,129,740 6.26
Thereafter......................... 76 3,386,681 43 20,962,376 6.19
--- --------- -- ----------- -----
163 5,567,142 71% $32,754,826 $5.88
=== ========= == =========== =====
</TABLE>
- ---------------
(1) Anchor tenants include all supermarkets, drug stores, national value
retailers and department stores and other tenants leasing in excess of
10,000 sq. ft. which, in management's opinion, have the traffic-generating
qualities necessary to be considered an anchor.
(2) Lease is currently month-to-month.
SHOP TENANTS(1)
LEASE EXPIRATION SCHEDULE
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE BASE
APPROXIMATE TOTAL LEASED RENT PER
NUMBER OF SQUARE ANNUALIZED BASE SQUARE
LEASE YEAR LEASES SQ. FT. FOOTAGE RENT UNDER FOOTAGE
EXPIRATION EXPIRING EXPIRING EXPIRING EXPIRING LEASES EXPIRING(2)
- ---------- ----------- --------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Month-to-Month(3).................. 41 78,274 1% $ 653,938 $ 8.35
1997............................... 84 213,378 3 1,722,438 7.95
1998............................... 214 388,373 5 3,882,162 9.98
1999............................... 226 477,055 6 4,720,904 9.88
2000............................... 196 452,516 6 4,726,496 10.42
2001............................... 115 335,026 4 3,074,938 9.00
2002............................... 94 218,881 3 2,322,152 10.61
2003............................... 16 29,155 0 335,137 11.08
2004............................... 9 20,679 0 207,977 10.06
2005............................... 7 25,764 0 410,731 15.94
2006............................... 17 39,301 1 630,964 14.87
2007............................... 2 5,600 0 143,984 13.39
Thereafter......................... 11 4,752 0 220,909 12.81
----- --------- -- ----------- ------
1,032 2,288,754 29% $23,052,730 $ 9.90
===== ========= == =========== ======
</TABLE>
- ---------------
(1) Shop tenants include all tenants except anchor tenants.
(2) Land rents, which totaled $396,093 and are included in Shop Tenant
Annualized Base Rent, have been excluded in calculating Average Base Rent
Per Square Foot.
(3) Leases currently month-to-month or in process of renewal.
S-13
<PAGE> 14
MORTGAGE LOAN INVESTMENTS
The Company held fixed rate mortgage loan investments with respect to seven
properties aggregating $13,125,505 as of June 30, 1997. Each of these loans is
secured by a first mortgage lien, except as described below. Interest rates on
such investments ranged from 7.00% to 12.38% per annum, with maturity dates from
August 1998 to May 2009. One of the Company's mortgage loan investments is a
$5,050,579 purchase-money second lien mortgage taken back on the sale of a
former equity investment, Spanish Quarter Apartments. The Spanish Quarter
Apartments mortgage loan investment is part of a wrap-around mortgage financing
and is subordinate to $664,830 of mortgage debt owed by the Company with respect
to such property. All of the Company's mortgage loan investments are current,
and the Company considers all such loans to be well-secured.
REIT STATUS
In order to maintain its qualification as a REIT, the Company must satisfy
various tests, including tests related to the source and amount of its income,
the nature of its assets, and its stock ownership. For example, not more than
50% in value of the outstanding shares of the Company may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Internal Revenue
Code of 1986, as amended). To minimize the possibility that the Company will
fail to qualify as a REIT under this test, the Company's Amended and Restated
Articles of Incorporation (the "Articles") authorize the directors to take such
action as may be required to preserve its qualification as a REIT and generally
limits the ownership of Common Stock by any particular shareholder. In addition,
the ownership of the Company's assets must comply with certain asset tests that
both limit the type of assets it may hold to certain types of real estate and
other investment assets and limit the concentration of those assets in otherwise
permitted investments.
If the Company fails to qualify as a REIT, it will become subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at corporate rates, and would be unable to deduct dividends paid
to shareholders. Should the failure to qualify be determined to have occurred
retroactively in an earlier tax year of the Company, substantial federal income
tax liability attributable to such nonqualifying tax years could be imposed on
the Company. In addition, unless entitled to relief under certain statutory
provisions, the Company will also be disqualified from treatment as a REIT for
the four taxable years following the year during which qualification is lost,
unless the failure was due to reasonable cause and not wilful neglect. This
treatment would reduce the cash available for debt service because of the
additional tax liability for the year or years involved. However, in such
instances, distributions to shareholders would no longer be required to be made.
S-14
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Company and is qualified by, and should be read in conjunction with, the
information included under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the "Consolidated Financial Statements"
included in the Company's Annual Report on Form 10-K, as amended, for the fiscal
year ended December 31, 1996, and in the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997 incorporated herein by reference. In the
opinion of Management, the consolidated historical financial information of the
Company for the six months ended June 30, 1996 and 1997 includes all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information set forth herein. See "Available Information" and "Incorporation
of Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF AND FOR THE
AS OF AND FOR THE YEARS SIX MONTHS
ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues:
Income from rental properties....................... $ 44,681 $ 58,008 $ 57,925 $ 28,752 $ 31,541
Interest............................................ 3,268 900 1,389 636 723
Interest on direct financing leases................. 1,253 1,288 919 506 312
-------- -------- -------- -------- --------
49,202 60,196 60,233 29,894 32,576
-------- -------- -------- -------- --------
Expenses:
Operating expenses of rental properties............. 10,319 12,734 12,113 5,785 6,517
Interest............................................ 14,553 17,572 17,750 8,825 7,357
Depreciation........................................ 8,214 10,427 10,310 5,188 5,582
Amortization of debt costs.......................... 446 446 596 285 204
General and administrative.......................... 2,881 3,467 3,862 1,921 1,799
-------- -------- -------- -------- --------
36,413 44,646 44,631 22,004 21,459
-------- -------- -------- -------- --------
Earnings before gain (loss) on real estate
investments......................................... 12,789 15,550 15,602 7,890 11,117
-------- -------- -------- -------- --------
Gain (loss) on real estate investments:
Gain (loss) on sales of properties.................. 300 173 1,232 195 --
Valuation loss...................................... (4,125) -- -- -- --
-------- -------- -------- -------- --------
(3,825) 173 1,232 195 0
-------- -------- -------- -------- --------
Earnings before extraordinary items................... 8,964 15,723 16,834 8,085 11,117
Extraordinary items:
Gain (loss) on extinguishment of debt............... 3,748 (137) (16) (16) --
-------- -------- -------- -------- --------
Net earnings................................. $ 12,712 $ 15,586 $ 16,818 $ 8,069 $ 11,117
======== ======== ======== ======== ========
OTHER DATA
Net earnings per share................................ $ 0.50 $ 0.61 $ 0.65 $ 0.31 $ 0.35
Dividends declared per share.......................... $ 0.84 $ 0.885 $ 0.90 $ 0.45 $ 0.45
Weighted average shares outstanding................... 25,349 25,590 25,750 25,721 31,516
Funds from operations(1).............................. $ 21,342 $ 26,406 $ 26,389 $ 13,294 $ 16,879
Assuming conversion of 7.30% convertible debentures:
Funds from operations(1)............................ N/A $ 32,983 $ 32,953 $ 16,576 $ 18,227
Weighted average shares............................. N/A 33,157 33,297 33,268 34,614
EBITDA(2)............................................. $ 36,002 $ 43,996 $ 44,258 $ 22,187 $ 24,260
Net cash flows from (used in):
Operating activities................................ $ 22,512 $ 25,947 $ 27,751 $ 15,519 $ 17,057
Investing activities................................ $(99,052) $ (7,769) $(15,660) $ (611) $(23,559)
Financing activities................................ $ (248) $(20,003) $ (8,933) $ (8,383) $ 4,948
Ratio of earnings to fixed charges(3)................. 1.58x 1.86x 1.91x 1.88x 2.47x
Ratio of funds from operations before fixed charges to
fixed charges(1)(3)................................. 2.40x 2.45x 2.43x 2.45x 3.23x
Ratio of Debt to Total Assets(4)...................... 47% 46% 48% 47% 37%
Ratio of secured Debt to Total Assets(4).............. 28% 21% 17% 19% 17%
Ratio of Unencumbered Assets to Unsecured Debt(4)..... 369% 275% 244% 259% 358%
Ratio of Consolidated Income Available for Debt
Service to Annual Service Charge(4)................. 2.47x 2.50x 2.49x 2.51x 3.30x
Percent Leased........................................ 93% 92% 94% 94% 95%
</TABLE>
S-15
<PAGE> 16
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Net real estate investments........................... $418,553 $418,505 $424,875 $414,046 $450,839
Total assets.......................................... 428,579 427,398 437,695 429,367 459,742
Mortgage notes payable................................ 105,107 99,188 84,001 88,436 87,414
7.30% convertible subordinated debentures............. 86,250 84,905 84,905 84,905 29,971
7.45% senior notes.................................... -- -- 49,929 49,921 49,937
Indebtedness to banks................................. 26,000 36,000 15,000 -- 26,700
Total liabilities..................................... 225,541 228,768 244,340 233,647 204,016
Total shareholders' equity............................ 203,038 198,630 193,355 195,720 255,727
</TABLE>
- ---------------
(1) The Company defines funds from operations, consistent with the NAREIT
definition, as net income before gains (losses) on real estate investments
and extraordinary items plus depreciation and amortization of capitalized
leasing costs. Interest on debentures and amortization of convertible
debenture costs is added to funds from operations when assumed conversion of
the debentures is dilutive. Conversion of the Convertible Debentures is
dilutive and therefore assumed for the years ended December 31, 1995 and
1996 and for the six month periods ended June 30, 1996 and 1997. Management
believes funds from operations should be considered along with, but not as
an alternative to, net income as defined by generally accepted accounting
principles as a measure of the Company's operating performance. Funds from
operations does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not
necessarily indicative of cash available to fund cash needs.
(2) EBITDA represents earnings before interest, income taxes, depreciation and
amortization, gain or loss on real estate investments and extraordinary
items. EBITDA is relevant to an understanding of the economics of the
Company because it indicates cash flow available from the operations of the
Company to service fixed obligations. EBITDA should not be considered as an
alternative to operating income, as determined in accordance with generally
accepted accounting principles, as an indicator of the Company's operating
performance, or to cash flow from operating activities (as determined in
accordance with generally accepted accounting principles) as a measure of
liquidity.
(3) For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before
income taxes and extraordinary items. Fixed charges consist of interest
costs, whether expensed or capitalized, the interest component of rental
expense, and amortization of debt costs, discounts and issue costs, whether
expensed or capitalized. Conversion of the Convertible Debentures has not
been assumed in the ratio of funds from operations before fixed charges to
fixed charges.
(4) For a description of each ratio, see "Description of Notes -- Certain
Covenants."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes are estimated to
be approximately $73,824,000. The net proceeds will be used primarily to repay
indebtedness outstanding under the Company's Line of Credit. Any excess proceeds
will be used for general corporate purposes. At June 30, 1997 and August 4,
1997, indebtedness under the Line of Credit accrued interest at a weighted
average rate of approximately 7.0% and 6.92% per annum, respectively. The Line
of Credit currently terminates on January 4, 2001 and, subject to its terms, may
be extended. The amounts outstanding under the Line of Credit were borrowed to
fund acquisitions, to repay approximately $30.9 million of secured mortgage
indebtedness and for general corporate purposes. Following this offering, the
Company expects to continue to borrow and reborrow under the Line of Credit or
to incur secured or other indebtedness for the acquisition, development,
redevelopment, renovation and expansion of properties.
S-16
<PAGE> 17
CAPITALIZATION
CAPITAL STRUCTURE
The following table sets forth the capitalization of the Company as of June
30, 1997, (i) on an actual basis, (ii) on a pro forma basis giving effect to
repayments on July 17, 1997 of four mortgage notes payable aggregating
approximately $30.9 million and the acquisition of Greenwood Shopping Center on
July 1, 1997 for approximately $13.0 million, all funded from borrowings under
the Line of Credit and (iii) as adjusted to give effect to such repayments and
acquisition and to the offering of the Notes and the application of the net
proceeds therefrom as described under "Use of Proceeds":
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------------------
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CAPITALIZATION
Debt:
Mortgage notes payable.............................. $ 87,414 $ 56,533 $ 56,533
7.30% convertible subordinated debentures........... 29,971 29,971 29,971
7.45% senior unsecured notes........................ 49,937 49,937 49,937
Notes offered hereby................................ -- -- 75,000
Indebtedness to banks............................... 26,700 70,587 --
-------- -------- --------
Total debt.................................. 194,022 207,028 211,441
-------- -------- --------
Shareholders' equity:
Common stock, $1 par value, 75,000,000 shares
authorized; 32,075,298 shares issued and
outstanding, actual, pro forma and as adjusted... 32,075 32,075 32,075
Preferred stock, $1 par value, 10,000,000 shares
authorized; none issued, actual, pro forma and as
adjusted......................................... -- -- --
Additional paid-in-capital.......................... 260,660 260,660 260,660
Cumulative distributions in excess of net
earnings......................................... (37,008) (37,008) (37,008)
-------- -------- --------
Total shareholders' equity.................. 255,727 255,727 255,727
-------- -------- --------
Total capitalization........................ $449,749 $462,755 $467,168
======== ======== ========
CERTAIN RATIOS(1)
Ratio of Debt to Total Assets......................... 37% 39% 39%
Ratio of secured Debt to Total Assets................. 17% 11% 11%
Ratio of Unencumbered Assets to Unsecured Debt........ 358% 292% 287%
</TABLE>
- ---------------
(1) For a description of each ratio, see "Description of Notes -- Certain
Covenants."
S-17
<PAGE> 18
SUMMARY OF INDEBTEDNESS
The following table sets forth the mortgage indebtedness of the Company
currently secured by the following investments, with principal balances shown as
of June 30, 1997 (dollar amounts in thousands):
<TABLE>
<CAPTION>
HISTORICAL
COST OF
PRINCIPAL INTEREST MATURITY COLLATERAL
INVESTMENT BALANCE RATE DATE PROPERTIES
- ---------- --------- -------- -------- ----------
<S> <C> <C> <C> <C>
Tarpon Heights............................ $ 2,219(1) 11.000% 3/01/98 $ 2,837
Powers Ferry Plaza........................ 1,250 9.000 1/31/99(2) 6,894
Pinhook Plaza............................. 7,145 9.875 1/01/00(3) 11,098
Macland Pointe............................ 3,730 7.750 2/01/00(3) 6,113
Plaza Acadienne........................... 2,272 10.250 7/01/00(3) 2,974
Thomasville Commons....................... 5,509 9.625 6/01/02(3) 7,187
Spanish Quarter Apartments................ 665 8.250 7/15/02 5,073(4)
Elmwood Oaks.............................. 7,500(1) 8.375 6/01/05 11,179
North Village Center...................... 2,593(5) 8.125 3/15/09 3,279
Spalding Village.......................... 11,377(6) 8.194 9/01/10(3) 15,425
Village at Northshore..................... 5,496 9.000 7/01/13(7) 8,268
Grassland Crossing........................ 6,755 7.865 12/01/16(3) 9,907
------- --------
56,511 $ 90,234
========
Interest Premium................ 22(8)
-------
$56,533
=======
</TABLE>
- ---------------
(1) Interest only. Entire principal due at maturity.
(2) Accrued and unpaid interest and $625,000 of the outstanding principal
balance is due 1/31/98 and the remaining $625,000 of the outstanding
principal balance and accrued and unpaid interest is due 1/31/99.
(3) Balloon payment at maturity.
(4) Balance represents the carrying value of the mortgage note receivable
secured by Spanish Quarter Apartments before deducting $1,055,000 of
deferred income taxes.
(5) Although the Company is a partner or joint venturer in this investment, 100%
of the mortgage note payable is recorded for financial reporting purposes.
(6) Interest only through 9/01/00; then principal and interest of $1,158,448
annually for the last 10 years.
(7) Callable anytime after 7/30/03.
(8) For financial reporting purposes, mortgage indebtedness is valued assuming
current interest rates at the dates of acquisition.
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<PAGE> 19
The following table sets forth the debt obligations of the Company as of
June 30, 1997, (i) on an actual basis, (ii) on a pro forma basis giving effect
to repayments on July 17, 1997 of four mortgage notes payable aggregating
approximately $30.9 million and the acquisition of Greenwood Shopping Center on
July 1, 1997 for approximately $13.0 million, all funded from borrowings under
the Line of Credit and (iii) as adjusted to give effect to such repayments and
acquisition and to the offering of the Notes and the application of the net
proceeds therefrom as described under "Use of Proceeds":
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
1997........................................... $ 31,349 $ 468 $ 468
1998........................................... 3,828 3,828 3,828
1999........................................... 1,690 1,690 1,690
2000........................................... 39,591(1) 12,891 12,891
2001........................................... 50,872(2) 121,459(3) 50,872(2)
2002........................................... 6,125 6,125 6,125
2003........................................... 30,875(4) 30,875(4) 30,875(4)
Thereafter..................................... 29,692 29,692 104,692(5)
-------- -------- --------
$194,022 $207,028 $211,441
======== ======== ========
</TABLE>
- ---------------
(1) Includes $26,700 of borrowings under the Line of Credit originally maturing
January 4, 2000. In July 1997, the maturity of such indebtedness was
extended to January 4, 2001.
(2) Includes $50,000,000 of 7.45% senior notes, less discount of $62,550.
(3) Includes $50,000,000 of 7.45% senior notes, less discount of $62,550, and
$70,587,000 of borrowings under the Line of Credit maturing January 4, 2001.
Not later than June 30 of each year, the Company may request to extend the
maturity date of the Line of Credit for an additional twelve-month period
beyond the existing maturity date.
(4) Includes $29,971,000 of Convertible Debentures due August 15, 2003. The
Convertible Debentures are convertible at any time prior to maturity into
Common Stock of the Company at $11.25 per share, subject to adjustment in
certain events. The Company has the option to redeem the Convertible
Debentures at par at any time.
(5) Includes the Notes offered hereby.
S-19
<PAGE> 20
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the "Senior Securities" set
forth in the accompanying Prospectus, to which reference is hereby made. Unless
otherwise defined herein, capitalized terms used under "Description of Notes"
have the meanings provided in the Indenture.
GENERAL
The Notes constitute a separate series of Senior Securities (which are more
fully described in the accompanying Prospectus)to be issued under an Indenture,
dated as of November 9, 1995 (the "Original Indenture"), as supplemented by
Supplemental Indenture No. 1, dated as of March 26, 1996, and Supplemental
Indenture No. 2, dated as of August 15, 1997, between the Company and SunTrust
Bank, Atlanta (the "Trustee"). Supplemental Indenture No. 2 is referred to
herein as the "Supplemental Indenture," and Supplemental Indentures No. 1 and
No. 2, together with the Original Indenture, are collectively referred to herein
as the "Indenture." The Indenture has been filed as an exhibit to (or
incorporated by reference into) the Registration Statement of which this
Prospectus Supplement is a part and is available for inspection at the offices
of the Company. The Indenture is subject to, and governed by, the Trust
Indenture Act of 1939, as amended (the "TIA"). The statements made hereunder
relating to the Indenture and the Notes to be issued thereunder are summaries of
certain provisions thereof, do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture and such Notes. All section references appearing herein are to
sections of the Indenture, and capitalized terms used but not defined herein
shall have the respective meanings set forth in the Indenture.
The Notes will be limited to an aggregate principal amount of $75,000,000
million and will be direct, senior unsecured obligations of the Company and will
rank equally with all other unsecured and unsubordinated indebtedness of the
Company from time to time outstanding. The Notes will be effectively
subordinated to mortgages and other secured indebtedness of the Company and to
indebtedness and other liabilities of any Subsidiaries (as defined below) which
may be formed by the Company in the future. As of June 30, 1997, on a pro forma
basis after giving effect to this offering, the application of the net proceeds
therefrom, the repayment of certain secured indebtedness and a property
purchase, the Company would have had outstanding approximately $211,441,000 of
total indebtedness, of which approximately $124,937,000 would have been
unsecured and unsubordinated indebtedness and approximately $56,533,000 would
have been secured indebtedness. See "Capitalization."
Except as described under "-- Certain Covenants -- Limitations on
Incurrence of Debt" below and under "Description of Debt Securities -- Merger,
Consolidation or Sale" in the accompanying Prospectus, the Indenture does not
contain any provisions that would limit the ability of the Company to incur
indebtedness or that would afford holders of the Notes protection in the event
of (i) a debt-financed transaction involving the Company, (ii) a change of
control or (iii) a reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect the holders of the Notes. The
Company may, in the future, enter into certain transactions such as the sale of
all or substantially all of its assets or a merger or consolidation that may
increase the amount of the Company's indebtedness or substantially change the
Company's assets, which may have an adverse effect on the Company's ability to
service its indebtedness, including the Notes. The Company may incur additional
indebtedness, including secured indebtedness, subject to the provisions
described below under "-- Certain Covenants -- Limitations on Incurrence of
Debt."
The Notes will only be issued in fully registered form in denominations of
$1,000 and integral multiples thereof.
PRINCIPAL AND INTEREST
The Notes will bear interest at 7.25% per annum and will mature on August
15, 2007. The Notes will bear interest from August 15, 1997 or from the
immediately preceding Interest Payment Date (as defined below) to which interest
has been paid, payable semi-annually in arrears on February 15 and August 15 of
each year, commencing on February 15, 1998 (each, an "Interest Payment Date"),
to the persons in whose
S-20
<PAGE> 21
name the applicable Notes are registered in the Security Register on the
preceding February 1 or August 1 (whether or not a Business Day, as defined
below), as the case may be (each, a "Regular Record Date"). Interest on the
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
If any Interest Payment Date or Stated Maturity falls on a day that is not
a Business Day, the required payment shall be made on the next Business Day as
if it were made on the date such payment was due and no interest shall accrue on
the amount so payable for the period from and after such Interest Payment Date
or the Maturity Date, as the case may be. "Business Day" means any day, other
than a Saturday or Sunday, on which banks in the City of New York or in the City
of Atlanta are not required or authorized by law or executive order to close.
The principal of and interest on the Notes will be payable at the corporate
trust office of SunTrust Bank, Atlanta (the "Paying Agent") in the City of
Atlanta, Georgia, initially located at 58 Edgewood Avenue, 4th Floor, Atlanta,
Georgia 30303 or First Chicago Trust Company of New York, 14 Wall Street, 8th
Floor, New York, New York 10005, provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of the Person
entitled thereto as it appears in the Security Register or by wire transfer of
funds to such Person at an account maintained within the United States (Sections
301, 307, 1001 and 1002).
CERTAIN COVENANTS
Limitations on Incurrence of Debt. The Company will not, and will not
permit any Subsidiary to, incur any Debt (as defined below) if, immediately
after giving effect to the incurrence of such additional Debt and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 60% of the sum of (without
duplication) (i) the Total Assets (as defined below) of the Company and its
Subsidiaries as of the end of the calendar quarter covered in the Company's
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be,
most recently filed with the Securities and Exchange Commission (or, if such
filing is not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Debt and (ii) the purchase price of any real
estate assets or mortgages receivable acquired, and the amount of any securities
offering proceeds received (to the extent that such proceeds were not used to
acquire real estate assets or mortgages receivable or used to reduce Debt), by
the Company or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of such additional
Debt (Section 2.4 of the Supplemental Indenture).
In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt secured
by any Encumbrance (as defined below) upon any of the property of the Company or
any Subsidiary if, immediately after giving effect to the incurrence of such
additional Debt and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries on
a consolidated basis which is secured by any Encumbrance on property of the
Company or any Subsidiary is greater than 40% of the sum of (without
duplication) (i) the Total Assets of the Company and its Subsidiaries as of the
end of the calendar quarter covered in the Company's Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, most recently filed with
the Securities and Exchange Commission (or, if such filing is not permitted
under the Exchange Act, with the Trustee) prior to the incurrence of such
additional Debt and (ii) the purchase price of any real estate assets or
mortgages receivable acquired, and the amount of any securities offering
proceeds received (to the extent that such proceeds were not used to acquire
real estate assets or mortgages receivable or used to reduce Debt), by the
Company or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of such additional
Debt. (Section 2.4 of the Supplemental Indenture).
The Company and its Subsidiaries may not at any time own Total Unencumbered
Assets (as defined below) equal to less than 150% of the aggregate outstanding
principal amount of the Unsecured Debt of the Company and its Subsidiaries on a
consolidated basis. (Section 2.4 of the Supplemental Indenture).
In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if the
ratio of Consolidated Income Available for Debt Service (as
S-21
<PAGE> 22
defined below) to the Annual Service Charge (as defined below) for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Debt is to be incurred shall have been less than 1.5:1 on a pro forma
basis after giving effect thereto and to the application of the proceeds
therefrom, and calculated on the assumption that (i) such Debt and any other
Debt incurred by the Company and its Subsidiaries since the first day of such
four-quarter period and the application of the proceeds therefrom, including to
refinance other Debt, had occurred at the beginning of such period; (ii) the
repayment or retirement of any other Debt by the Company and its Subsidiaries
since the first day of such four-quarter period had been repaid or retired at
the beginning of such period (except that, in making such computation, the
amount of Debt under any revolving credit facility shall be computed based upon
the average daily balance of such Debt during such period); (iii) in the case of
Acquired Debt (as defined below) or Debt incurred in connection with any
acquisition since the first day of such four-quarter period, the related
acquisition had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition being included in such pro forma
calculation; and (iv) in the case of any acquisition or disposition by the
Company or its Subsidiaries of any asset or group of assets since the first day
of such four-quarter period, whether by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation (Section 2.4 of the Supplemental Indenture).
As used herein, and in the Indenture:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Debt
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Debt shall be deemed to be
incurred on the date of the related acquisition of assets from any Person
or the date the acquired Person becomes a Subsidiary.
"Annual Service Charge" for any period means the maximum amount which
is payable during such period for interest on, and the amortization during
such period of any original issue discount of, Debt of the Company and its
Subsidiaries and the amount of dividends which are payable during such
period in respect of any Disqualified Stock.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of such Person and any rights
(other than debt securities convertible into or exchangeable for corporate
stock), warrants or options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations (as defined below) of the Company and its
Subsidiaries plus amounts which have been deducted, and minus amounts which
have been added, for the following (without duplication): (i) interest on
Debt of the Company and its Subsidiaries, (ii) provision for taxes of the
Company and its Subsidiaries based on income, (iii) amortization of debt
discount, (iv) provisions for gains and losses on properties and property
depreciation and amortization, (v) the effect of any noncash charge
resulting from a change in accounting principles in determining Earnings
from Operations for such period and (vi) amortization of deferred charges.
"Debt" of the Company or any Subsidiary means any indebtedness of the
Company or any Subsidiary, whether or not contingent, in respect of (i)
money borrowed or evidenced by bonds, notes, debentures or similar
instruments, (ii) indebtedness for borrowed money secured by any
Encumbrance existing on property owned by the Company or any Subsidiary,
(iii) the reimbursement obligations, contingent or otherwise, in connection
with any letters of credit actually issued or amounts representing the
balance deferred and unpaid of the purchase price of any property or
services, except any such balance that constitutes an accrued expense or
trade payable, or all conditional sale obligations or obligations under any
title retention agreement, (iv) the principal amount of all obligations of
the Company or any Subsidiary with respect to redemption, repayment or
other repurchase of any Disqualified Stock or (v) any lease of property by
the Company or any Subsidiary as lessee which is
S-22
<PAGE> 23
reflected on the Company's Consolidated Balance Sheet as a capitalized
lease in accordance with GAAP, to the extent, in the case of items of
indebtedness under (i) through (iii) above, that any such items (other than
letters of credit) would appear as a liability on the Company's
Consolidated Balance Sheet in accordance with GAAP, and also includes, to
the extent not otherwise included, any obligation by the Company or any
Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business),
Debt of another Person (other than the Company or any Subsidiary) (it being
understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the
terms of any security into which it is convertible or for which it is
exchangeable or exercisable), upon the happening of any event or otherwise
(i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise (other than Capital Stock which is redeemable
solely in exchange for common stock), (ii) is convertible into or
exchangeable or exercisable for Debt or Disqualified Stock or (iii) is
redeemable at the option of the holder thereof, in whole or in part (other
than Capital Stock which is redeemable solely in exchange for common
stock), in each case on or prior to the Stated Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items, and property
valuation losses, net as reflected in the financial statements of the
Company and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting
equity securities or (ii) the outstanding equity interests are owned,
directly or indirectly, by such Person. For the purposes of this
definition, "voting equity securities" means equity securities having
voting power for the election of directors, whether at all times or only so
long as no senior class of security has such voting power by reason of any
contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its
Subsidiaries determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and
(ii) all other assets of the Company and its Subsidiaries not subject to an
Encumbrance for borrowed money determined in accordance with GAAP (but
excluding accounts receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the
Company and its Subsidiaries on such date, before depreciation and
amortization determined on a consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any Encumbrance
upon any of the properties of the Company or any Subsidiary.
See "Description of Debt Securities -- Certain Covenants" in the
accompanying Prospectus for a description of additional covenants applicable to
the Company.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time at the option and in the sole
discretion of the Company, in whole or from time to time in part, at a
redemption price equal to the sum of (i) the principal amount of the
S-23
<PAGE> 24
Notes being redeemed plus accrued interest thereon to the redemption date and
(ii) the Make-Whole Amount (as defined below), if any, with respect to such
Notes (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes called for redemption shall have been made available on
the redemption date referred to in such notice, such Notes will cease to bear
interest on the date fixed for such redemption specified in such notice, and the
only right of the holders of the Notes will be to receive payment of the
Redemption Price.
Notice of any optional redemption of any Notes will be given to holders at
their addresses, as shown in the security register for the Notes, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Notes held by each holder to be redeemed.
If less than all the Notes are to be redeemed at the option and in the sole
discretion of the Company, the Company will notify the Trustee at least 45 days
prior to giving notice of redemption (or such shorter period as is satisfactory
to the Trustee) of the aggregate principal amount of Notes to be redeemed and
their redemption date. The Trustee shall select not more than 60 days prior to
the redemption date, in such manner as it shall deem fair and appropriate, Notes
to be redeemed in whole or in part.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Notes, the excess, if any, of (i) the
aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount
of interest (exclusive of interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of each such
dollar if such redemption or accelerated payment had not been made,
determined by discounting, on a semi-annual basis, such principal and
interest at the Reinvestment Rate (determined on the third business day
preceding the date such notice of redemption is given or declaration of
acceleration is made) from the respective dates on which such principal and
interest would have been payable if such redemption or accelerated payment
had not been made to the date of redemption or accelerated payment, over
(ii) the aggregate principal amount of the Notes being redeemed or paid.
For purposes of the Indenture, all references to any "premium" on the Notes
shall be deemed to refer to any Make-Whole Amount, unless the context
otherwise requires.
"Reinvestment Rate" means 0.25% (one quarter of one percent) plus the
arithmetic mean of the yields under the heading "Week Ending" published in
the most recent Statistical Release under the caption "Treasury Constant
Maturities" for the maturity (rounded to the nearest month) corresponding
to the remaining life to maturity, as of the payment date of the principal
being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely
corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make-Whole
Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Board of Governors of the Federal Reserve System and which reports yields
on actively traded United States government securities adjusted to constant
maturities, or, if such statistical release is not published at the time of
any determination under the Indenture, then such other reasonably
comparable index which shall be designated by the Company.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The provisions of Article 14 of the Indenture relating to defeasance and
covenant defeasance, which are described under "Description of Debt
Securities -- Discharge, Defeasance and Covenant Defeasance" in the accompanying
Prospectus, will apply to the Notes. Each of the covenants described under
"-- Certain
S-24
<PAGE> 25
Covenants" herein and "Description of Debt Securities -- Certain Covenants" in
the accompanying Prospectus will be subject to covenant defeasance.
ORIGINAL ISSUE DISCOUNT
The Notes are being issued with certain original issue discount ("OID").
The amount of OID is considered de minimis because the stated redemption price
at maturity (100% of par) does not exceed the issue price of the Notes (99.432%
of par) by more than 0.25% of the stated redemption price at maturity multiplied
by the number of complete years to maturity. Accordingly, under applicable
Treasury Regulations, a holder of Notes must include any such OID in income as
stated principal payments are made. The "issue price" of the Notes is the first
price at which a substantial number of Notes were sold for money, excluding
sales to underwriters, placement agents or wholesalers. The "stated redemption
price at maturity" is the sum of all payments to be made on the Notes other than
"qualified stated interest." The term "qualified stated interest" means,
generally, stated interest that is unconditionally payable in cash or in
property (other than debt instruments of the issuer) at least annually at a
single fixed rate or, subject to certain conditions, based on one or more
interest indices. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval between payments.
BOOK-ENTRY SYSTEM
The Notes will be issued in the form of one or more fully registered global
securities ("Global Securities") which will be deposited with, or on behalf of
DTC, and registered in the name of DTC's nominee, Cede & Co. Except under the
circumstance described below, the Notes will not be issuable in definitive form.
Unless and until it is exchanged in whole or in part for the individual Notes
represented thereby, a Global Security may not be transferred except as a whole
by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of
DTC or by DTC or any nominee of DTC to a successor depository or any nominee of
such successor.
Upon the issuance of a Global Security, DTC or its nominee will credit on
its book-entry registration and transfer system the respective principal amounts
of the individual Notes represented by such Global Security to the accounts of
persons that have accounts with DTC ("Participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to the Notes.
Ownership of beneficial interests in a Global Security will be limited to
Participants or persons that may hold interests through Participants. Ownership
of beneficial interests in such Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominee (with respect to beneficial interests of Participants) and
records of Participants (with respect to beneficial interests of persons who
hold through Participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and laws may impair the ability to own, pledge or transfer any
beneficial interest in a Global Security.
So long as DTC or its nominee is the registered owner of such Global
Security, DTC or its nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Security for all
purposes under the Indenture and the beneficial owners of the Notes will be
entitled only to those rights and benefits afforded to them in accordance with
DTC's regular operating procedures. Except as provided below, owners of
beneficial interest in a Global Security will not be entitled to have any of the
individual Notes registered in their names, will not receive or be entitled to
receive physical delivery of any such notes in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Payments of principal of and any interest on, individual Notes represented
by a Global Security registered in the name of DTC or its nominee will be made
to DTC or its nominee, as the case may be, as the registered owner of the Global
Security representing such Notes. None of the Company, the Trustee, any Paying
Agent or the Security Registrar will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Security for such Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
S-25
<PAGE> 26
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a permanent Global Security representing any
Notes, immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of DTC or its nominee. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such Participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global
Security or Securities representing the Notes. In addition, the Company may, at
any time and in its sole discretion, determine not to have any Notes represented
by one or more Global Securities and, in such event, will issue individual Notes
in exchange for the Global Security or Securities representing the Notes.
Individual Notes so issued will be issued in denominations, unless otherwise
specified by the Company, of $1,000 and integral multiples thereof.
DTC has advised the Company of the following information regarding DTC: DTC
is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC holds
securities that its Participants deposit with DTC. DTC also facilitates the
settlement among its Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in its Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants of DTC include
securities brokers and dealers (including the Underwriters), banks, trust
companies, clearing corporations, and certain other organizations. DTC is owned
by a number of its direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct Participant of DTC, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the Commission.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of the Notes
will be made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
NO PERSONAL LIABILITY
No past, present or future director, officer or shareholder of the Company
or any successor thereof shall have any liability for any obligation, covenant
or agreement of the Company contained under the Notes, the Indenture or other
debt obligations. Each Holder of Notes by accepting such Notes waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
S-26
<PAGE> 27
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, dated
August 12, 1997 (the "Underwriting Agreement"), by and among the Company and the
underwriters named below (the "Underwriters"), the Company has agreed to sell to
each of the Underwriters, severally, and each of the Underwriters has agreed
severally to purchase, the respective principal amount of the Notes set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
- ----------- -----------
<S> <C>
PaineWebber Incorporated.................................... $37,500,000
Salomon Brothers Inc........................................ 37,500,000
-----------
Total............................................. $75,000,000
===========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, and that the
Underwriters will purchase all Notes offered hereby if any of such Notes are
purchased.
The Underwriters have advised the Company that they propose initially to
offer the Notes directly to the public at the public offering price set forth on
the cover page of this Prospectus Supplement and to certain dealers at such
price less a concession not in excess of 0.40% of the principal amount of the
Notes. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of 0.25% of the principal amount of the Notes to certain other
dealers. After the initial offering of the Notes, the public offering price and
other selling terms may from time to time be changed.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.
Until the distribution of the Notes is completed, rules of the Securities
and Exchange Commission may limit the ability of the Underwriters to bid for and
purchase the Notes. As an exception to these rules, the Underwriters are
permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes. In addition, if the
Underwriters create a short position in the Notes in connection with this
offering (i.e., they sell more Notes than are set forth on the cover page of
this Prospectus Supplement), the Underwriters may reduce that short position by
purchasing Notes in the open market. In general, purchases of a security for the
purpose of stabilization or to reduce a short position could cause the price of
the security to be higher than it might be in the absence of such purchases.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
LEGAL OPINIONS
The validity of the Notes offered hereby and certain other legal matters
will be passed upon for the Company by Alston & Bird LLP, Atlanta, Georgia.
Certain legal matters will be passed upon for the Underwriters by Rogers &
Wells, New York, New York. Rogers & Wells will rely upon the opinion of Alston &
Bird LLP with respect to all matters of Georgia law.
S-27
<PAGE> 28
PROSPECTUS
IRT PROPERTY COMPANY
$200,000,000
DEBT SECURITIES AND COMMON STOCK
---------------------
IRT Property Company (the "Company") may from time to time issue, in one or
more series, its (i) unsecured senior or subordinated debt securities (the "Debt
Securities") and (ii) shares of Common Stock, $1 par value ("Common Stock"),
having an aggregate initial public offering price not to exceed $200,000,000 (or
its equivalent in any other currency or composite currency based on the exchange
rate at the time of sale) in amounts, at prices and on terms to be determined at
the time of offering. The Debt Securities and Common Stock (collectively, the
"Securities") may be offered, separately or together, in separate series, in
amounts, at prices and on terms to be set forth in a supplement or supplements
to this Prospectus ("Prospectus Supplement").
The Debt Securities will be direct unsecured obligations of the Company and
may be either senior debt securities ("Senior Securities") or subordinated debt
securities ("Subordinated Securities"). The Senior Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Securities will be subordinated to all existing and future Senior
Debt of the Company, as defined. See "Description of Debt Securities."
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Debt Securities, the specific
title, aggregate principal amount, currency, form (which may be registered or
bearer, or certificated or global), authorized denominations, maturity, rate (or
manner of calculation thereof) and time of payment of interest, terms for
redemption at the option of the Company or repayment at the option of the
Holder, terms for sinking fund payments, terms for conversion into Common Stock,
additional covenants and any initial public offering price; and (ii) in the case
of Common Stock, any initial public offering price. In addition, such specific
terms may include limitations on direct or beneficial ownership and restrictions
on transfer of the Securities, in each case including limitations as may be
appropriate to preserve the status of the Company as a real estate investment
trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered directly by the Company, through agents
designated from time to time by the Company, or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of the applicable Prospectus Supplement or a term sheet describing the
method and terms of the offering of such series of Securities.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
---------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER 9, 1995.
<PAGE> 29
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 Section maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549; Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade
Center, New York, New York 10048. In addition, the Common Stock is listed on the
New York Stock Exchange, Inc. ("NYSE") and similar information about the Company
can be inspected and copied at prescribed rates at the offices of the NYSE, 20
Broad Street, New York, New York 10005. In addition, the Commission maintains a
site on the World Wide Web at http://www.sec.gov that contains reports,
information statements and other information regarding the Company and other
registrants that file electronically with the Commission.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities being offered hereby. For
further information with respect to the Company and the Securities offered
hereby, reference is made to the Registration Statement and exhibits thereto.
Statements contained in this Prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance, reference is
made to the copy of such contract or documents filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-7859) are incorporated in this Prospectus by reference and are made a part
hereof:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1994, as amended and restated under Form 10-K/A Amendment No.
1 filed September 28, 1995.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995.
3. The Company's Current Report on Form 8-K filed January 5, 1995
(date of event reported December 21, 1994), as amended by Form 8-K/A
Amendment No. 1 filed January 20, 1995 and Form 8-K/A Amendment No. 2 filed
March 1, 1995.
4. The description of the Company Common Stock contained in the
Company's prospectus dated August 5, 1991 which constitutes a part of
Registration Statement No. 33-41301 filed with the Commission.
Each document filed subsequent to the date of this Prospectus pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering of all Securities to which this Prospectus relates
shall be deemed to be incorporated by reference in this Prospectus and shall be
a part hereof from the date of filing of such document.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement herein, in any
accompanying Prospectus Supplement relating to a specific offering of Securities
or in any other subsequently filed document that is also incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
accompanying Prospectus Supplement. Subject to the foregoing, all information
appearing in this Prospectus and each accompanying Prospectus Supplement is
qualified in its entirety by the information appearing in the documents
incorporated by reference.
Upon written or oral request of any person to whom a Prospectus is
delivered, the Company will provide, without charge, a copy of the documents
which have been incorporated by reference in this Prospectus.
2
<PAGE> 30
Requests for such documents should be directed to Lee A. Harris, Senior Vice
President and Secretary, IRT Property Company, 200 Galleria Parkway, Suite 1400,
Atlanta, Georgia 30339, telephone (770) 955-4406.
THE COMPANY
The Company, founded in 1969, is a self-administered and self-managed
equity REIT which invests primarily in neighborhood and community shopping
centers which are located in the Southeastern United States and are anchored by
supermarkets, drug stores and/or discount variety stores. As of June 30, 1995,
the Company owned 83 shopping centers comprising approximately 8.7 million
square feet of leasable space.
The Company conducts its property management and leasing activities
internally through its offices in Atlanta, Charlotte, Orlando, Fort Lauderdale
and New Orleans. The Company believes that this approach promotes efficiencies
in property maintenance, leasing, cost control and the identification of
expansion and redevelopment opportunities. The Company is and has been an active
redeveloper of properties and believes it can add significantly to operating
results and values by a continued emphasis on property enhancement.
The Company conducts its operations in order to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"). The Company's principal
executive offices are located at 200 Galleria Parkway, Suite 1400, Atlanta,
Georgia 30339, and its telephone number is (770) 955-4406.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement for any
offering of Securities, the Company intends to use the net proceeds from the
sale of Securities offered by the Company to repay debt (including repayments of
amounts drawn on lines of credit), improve, expand or redevelop its properties,
acquire or develop additional properties and for working capital. Pending use
for the foregoing purposes, such proceeds may be invested in short-term,
interest-bearing time or demand deposits with financial institutions, cash items
or qualified government securities.
CERTAIN RATIOS
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown:
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED ENDED
DECEMBER 31, JUNE 30,
----------------------------------------- --------------
1990 1991 1992 1993 1994 1994 1995
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges..................... 2.07x 1.78x 1.99x 2.20x 1.58x 1.30x 1.86x
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For these purposes, earnings consist of income before
extraordinary items plus fixed charges. Fixed charges consist of interest
expense (including interest costs capitalized), amortization of debt costs and
the portion of rent expense representing an interest factor.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Senior Securities are to be issued under an indenture (the "Senior
Indenture"), to be entered into between the Company and SunTrust Bank, Atlanta,
as Trustee, and the Subordinated Securities are to be issued under an indenture
(the "Subordinated Indenture"), also to be entered into between the Company and
SunTrust Bank, Atlanta, as Trustee. The term "Trustee" as used herein shall
refer to SunTrust Bank, Atlanta, or such other bank as the Company may appoint
as trustee pursuant to the terms of the applicable Indenture, in its or their
capacity as Trustee for the Senior Securities or the Subordinated Securities, as
appropriate. The
3
<PAGE> 31
forms of the Senior Indenture and the Subordinated Indenture (being sometimes
referred to herein collectively as the "Indentures" and individually as an
"Indenture") are filed as exhibits to the Registration Statement. The Indentures
are subject to and governed by the Trust Indenture Act of 1939, as amended (the
"TIA"), and may be supplemented from time to time following execution. The
statements made under this heading relating to the Debt Securities and the
Indentures are summaries of the provisions thereof and do not purport to be
complete and are qualified in their entirety by reference to the Indentures and
such Debt Securities. All section references below are to sections of the
Indentures and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indentures.
As of June 30, 1995, the Company had $84,905,000 aggregate principal amount
of 7.3% Convertible Subordinated Debentures outstanding due in 2003. SunTrust
Bank, Atlanta serves as the trustee under the indenture pursuant to which such
convertible subordinated debentures were issued.
TERMS
The Debt Securities will be direct, unsecured obligations of the Company.
The indebtedness represented by the Senior Securities will rank equally with all
other unsecured and unsubordinated indebtedness of the Company. The indebtedness
represented by the Subordinated Securities will be subordinated in right of
payment to the prior payment in full of the Senior Debt of the Company as
described under "Subordination."
Each Indenture provides that the Debt Securities may be issued without
limit as to aggregate principal amount, in one or more series, in each case as
established from time to time in, or pursuant to authority granted by, a
resolution of the Board of Directors of the Company or as established in one or
more indentures supplemental to such Indenture. Debt Securities may be issued
with terms different from those of Debt Securities previously issued; all Debt
Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the Holders
of the Debt Securities of such series, for issuances of additional Debt
Securities of such series (Section 301 of each Indenture).
Each Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under an
Indenture may resign or be removed with respect to one or more series of Debt
Securities, and a successor Trustee may be appointed to act with respect to such
series (Section 608 of each Indenture). In the event that two or more persons
are acting as Trustee with respect to different series of Debt Securities, each
such Trustee shall be a Trustee of a trust under the applicable Indenture
separate and apart from the trust administered by any other Trustee (Section 101
and Section 609 of each Indenture), and, except as otherwise indicated herein,
any action described herein to be taken by each Trustee may be taken by each
such Trustee with respect to, and only with respect to, the one or more series
of Debt Securities for which it is Trustee under the applicable Indenture.
Reference is made to the applicable Prospectus Supplement relating to the
series of Debt Securities being offered for the specific terms thereof,
including, but not limited to:
(1) the title of such Debt Securities and whether such Debt Securities
are Senior Securities or Subordinated Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount thereof,
the portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof, or (if applicable) the portion of the
principal amount of such Debt Securities which is convertible into Capital
Stock (as defined in the Indentures) or the method by which any such
portion shall be determined;
(4) if convertible, any applicable limitations on the ownership or
transferability of the Common Stock into which such Debt Securities are
convertible including such limitations in connection with the preservation
of the Company's status as a REIT;
4
<PAGE> 32
(5) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable and
the amount of principal payable thereon;
(6) the rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(7) the date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the Interest Payment Dates
on which any such interest will be payable, the Regular Record Dates if
any, for such interest payable on any Registered Security on any Interest
Payment Dates, or the method by which such dates shall be determined, the
Persons to whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day year
consisting of twelve 30-day months;
(8) the place or places where the principal of (and premium or
Make-Whole Amount, if any) interest, if any, on and Additional Amounts, if
any, payable in respect of such Debt Securities will be payable, where such
Debt Securities may be surrendered for conversion or registration of
transfer or exchange and where notices or demands to or upon the Company in
respect of such Debt Securities and the applicable Indenture may be served;
(9) the period or periods within which, the price or prices (including
premium or Make-Whole Amount, if any) at which, the currency or currencies,
currency unit or units or composite currency or currencies in which and the
other terms and conditions upon which such Debt Securities may be redeemed,
as a whole or in part, at the option of the Company if the Company is to
have such an option;
(10) the obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or periods
within which, the date or dates on which, the price or prices at which, the
currency or currencies, currency unit or units or composite currency or
currencies in which and the other terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, as a whole or in part,
pursuant to such obligation;
(11) if other than United States dollars, the currency or currencies
in which such Debt Securities are denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
(12) whether the amount of payment of principal of (and premium or
Make-Whole Amount, if any) or interest, if any, on such Debt Securities may
be determined with reference to an index, formula or other method (which
index, formula or method may, but need not be, based on a currency,
currencies, currency unit or units, composite currency or currencies,
commodities, equity indices or other indices) and the manner in which such
amounts shall be determined;
(13) whether the principal of (and premium or Make-Whole Amount, if
any) or interest or Additional Amounts, if any, on such Debt Securities are
to be payable, at the election of the Company or a Holder thereof, in a
currency or currencies, currency unit or units or composite currency or
currencies other than that in which such Debt Securities are denominated or
stated to be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made, and the time and manner
of, and identity of the exchange rate agent with responsibility for,
determining the exchange rate between the currency or currencies, currency
unit or units or composite currency or currencies in which such Debt
Securities are denominated or stated to be payable and the currency or
currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are to be payable;
(14) provisions, if any, granting special rights to the Holders of
such Debt Securities upon the occurrence of such events as may be
specified;
(15) any addition to, modifications of or deletions from the terms of
such Debt Securities with respect to the Events of Default or covenants set
forth in the applicable Indenture;
5
<PAGE> 33
(16) whether such Debt Securities will be issued in certificated or
book-entry form and terms and conditions relating thereto;
(17) whether such Debt Securities will be in registered or bearer form
and terms and conditions relating thereto, and if in registered form, the
denominations thereof if other than $1,000 and any integral multiple
thereof and, if in bearer form, the denominations thereof if other than
$5,000;
(18) the applicability, if any, of the defeasance and covenant
defeasance provisions of the applicable Indenture;
(19) the terms, if any, upon which such Debt Securities may be
convertible into Capital Stock of the Company and the terms and conditions
upon which such conversion will be effected, including, without limitation,
the initial conversion price or rate and the conversion period;
(20) whether and under what circumstances the Company will pay
Additional Amounts, if any, as contemplated in the applicable Indenture on
such Debt Securities to any Holder who is not a United States person in
respect of any tax, assessment or governmental charge and, if so, whether
the Company will have the option to redeem such Debt Securities in lieu of
paying such Additional Amounts (and the terms of any such option); and
(21) any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture (Section 301 of each Indenture).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities") (Section 502 of each Indenture). Any
special U.S. federal income tax, accounting and other considerations applicable
to Original Issue Discount Securities will be described in the applicable
Prospectus Supplement.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series issued in registered form will be issuable in
denominations of $1,000 and integral multiples thereof. Unless otherwise
described in the applicable Prospectus Supplement, the Debt Securities of any
series issued in bearer form will be issuable in denominations of $5,000
(Section 302 of each Indenture).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and interest,
if any, on any series of Debt Securities will be payable at the corporate trust
office of the Trustee, initially located at 58 Edgewood Ave., Room 400, Atlanta,
Georgia 30303 in the case of each of the Senior Securities and the Subordinated
Securities, provided that, at the option of the Company, payment of interest may
be made by check mailed to the address of the Person entitled thereto as it
appears in the Security Register for such series or by wire transfer of funds to
such Person at an account maintained within the United States (Sections 301,
305, 307 and 1002 of each Indenture).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Trustee, notice whereof shall be mailed to each Holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner, all as more completely described in the
applicable Indenture (Section 307 of each Indenture).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee referred
to above. In addition, subject to certain limitations imposed upon Debt
Securities issued in book-entry form, the Debt Securities of any series may be
surrendered for conversion or registration of transfer or exchange at the
corporate trust office of the applicable Trustee referred to above. Every Debt
Security surrendered for conversion, registration of transfer
6
<PAGE> 34
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith (Section 305 of each Indenture). If the applicable Prospectus
Supplement refers to any transfer agent (in addition to the applicable Trustee)
initially designated by the Company with respect to any series of Debt
Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each Place of Payment for such series. The Company may at any
time designate additional transfer agents with respect to any series of Debt
Securities (Section 1002 of each Indenture).
Neither the Company nor any Trustee shall be required to: (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing or publication of the relevant notice of redemption; (ii)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security being
redeemed in part; (iii) exchange any Bearer Security selected for redemption,
except that such a Bearer Security may be exchanged for a Registered Security of
that series and like tenor, provided that such Registered Security shall be
simultaneously surrendered for redemption; or (iv) issue, register the transfer
of or exchange any Debt Security that has been surrendered for repayment at the
option of the Holder, except the portion, if any, of such Debt Security not to
be so repaid (Section 305 of each Indenture).
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other corporation
or trust or entity provided that: (i) either the Company shall be the continuing
entity, or the successor entity (if other than the Company) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets shall expressly assume payment of the principal of (and
premium or Make-Whole Amount, if any) and interest (including any Additional
Amounts), if any, on all of the Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
each Indenture; (ii) immediately after giving effect to such transaction and
treating any indebtedness that becomes an obligation of the Company or any
Subsidiary as a result thereof as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default under the
Indenture, and no event which, after notice or the lapse of time, or both, would
become such an Event of Default, shall have occurred and be continuing; and
(iii) an officers' certificate and legal opinion covering such conditions shall
be delivered to the Trustee (Sections 801 and 803 of each Indenture).
CERTAIN COVENANTS
Existence. Except as permitted under "Merger, Consolidation or Sale," the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its legal existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be required to
preserve any right or franchise if it determines that the preservation thereof
is no longer desirable in the conduct of its business (Section 1005 of each
Indenture).
Maintenance of Properties. The Company will cause all of its material
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that the Company and its Subsidiaries shall not
be prevented from selling or otherwise disposing of their properties in the
ordinary course of business (Section 1006 of each Indenture).
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Insurance. The Company will keep, and will cause each of its Subsidiaries
to keep, all of its insurable properties insured against loss or damage in an
amount at least equal to their then full insurable value with financially sound
and acceptable insurance companies (Section 1007 of each Indenture).
Payment of Taxes and Other Claims. The Company will pay or discharge, or
cause to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings (Section 1008 of each Indenture).
Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company will, within 15 days of
each of the respective dates by which the Company would have been required to
file annual reports, quarterly reports and other documents with the Commission
pursuant to such Section 13 and 15(d) if the Company were so subject, (i)
transmit by mail to all Holders of Debt Securities, as their names and addresses
appear in the Security Register, without cost to such Holders, copies of the
annual reports and quarterly reports that the Company would have been required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if the Company were subject to such Sections, (ii) file with the applicable
Trustee copies of the annual reports, quarterly reports and other documents that
the Company would have been required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act if the Company were subject to such
Sections and (iii) promptly upon written request and payment of the reasonable
cost of duplication and delivery, supply copies of such documents to any
prospective Holder (Section 1009 of each Indenture).
Waiver of Certain Covenants. The Company may omit to comply with any term,
provision or condition of the foregoing covenants, and with any other term,
provision or condition with respect to the Debt Securities of any series
specified in Section 301 of the Indentures (except any such term, provision or
condition which could not be amended without the consent of all Holders of Debt
Securities of such series), if before or after the time for such compliance the
Holders of at least a majority in principal amount of all outstanding Debt
Securities of such series, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such covenant or condition
except to the extent so expressly waived, and until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force and
effect (Section 1012 of each Indenture).
Additional Covenants. Any additional covenants with respect to any series
of Debt Securities will be set forth in the Prospectus Supplement relating
thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (i) default for
30 days in the payment of any installment of interest or Additional Amounts, if
any, payable on any Debt Security of such series; (ii) default in the payment of
the principal of (or premium or Make-Whole Amount, if any, on) any Debt Security
of such series at its Maturity; (iii) default in making any sinking fund payment
as required for any Debt Security of such series; (iv) default in the
performance or breach of any other covenant of the Company contained in the
Indenture (other than a covenant added to the Indenture solely for the benefit
of a series of Debt Securities issued thereunder other than such series),
continued for 60 days after written notice as provided in the applicable
Indenture; (v) default under a bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company (or by any Subsidiary, the
repayment of which the Company has guaranteed or for which the Company is
directly responsible or liable as obligor or guarantor) having a principal
amount outstanding in excess of $10,000,000, (other than indebtedness which is
non-recourse to the Company or the Subsidiaries), whether such indebtedness now
exists or shall hereafter be created, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have
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become due and payable, without such acceleration having been rescinded or
annulled within 30 days after written notice to the Company as provided in the
Indenture; (vi) the entry by a court of competent jurisdiction of one or more
judgments, orders or decrees against the Company or any Subsidiary in an
aggregate amount (excluding amounts fully covered by insurance) in excess of
$10,000,000 and such judgments, orders or decrees remain undischarged, unstayed
and unsatisfied in an aggregate amount (excluding amounts fully covered by
insurance) in excess of $10,000,000 for a period of 60 consecutive days; (vii)
certain events of bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of the Company or any Significant
Subsidiary or for all or substantially all of the property of either, and (viii)
any other Event of Default provided with respect to a particular series of Debt
Securities (Section 501 of each Indenture). The term "Significant Subsidiary"
means each significant subsidiary (as defined in Regulation S-X promulgated
under the Securities Act) of the Company.
If an Event of Default under an Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the applicable Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
amount as may be specified in the terms thereof) of and premium or Make-Whole
Amount, if any, on all of the Debt Securities of that series to be due and
payable immediately by written notice thereof to the Company (and to the
applicable Trustee if given by the Holders). However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the applicable Indenture, as the
case may be) has been made, but before a judgment or decree for payment of the
money due has been obtained by the applicable Trustee, the Holders of not less
than a majority in principal amount of the Outstanding Debt Securities of such
series (or of all Debt Securities then Outstanding under the applicable
Indenture, as the case may be) may rescind and annul such declaration and its
consequences if (i) the Company shall have deposited with the applicable Trustee
all required payments of the principal of (and premium or Make-Whole Amount, if
any) and interest, and any Additional Amounts, on the Debt Securities of such
series (or of all Debt Securities then Outstanding under the applicable
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the applicable Trustee and (ii) all Events of Default, other than
the nonpayment of accelerated principal (or a specified portion thereof and the
premium or Make-Whole Amount, if any) or interest, with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under the
applicable Indenture, as the case may be) have been cured or waived as provided
in the Indenture (Section 502 of each Indenture). Each Indenture also provides
that the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the applicable Indenture, as the case may be) may waive any
past default with respect to such series and its consequences, except a default
(x) in the payment of principal of (or premium or Make-Whole Amount, if any) or
interest or Additional Amounts, if any, on any Debt Security of such series or
(y) in respect of a covenant or provision contained in the applicable Indenture
that cannot be modified or amended without the consent of the Holders of each
Outstanding Debt Security affected thereby (Section 513 of each Indenture).
The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the applicable Indenture unless such default
shall have been cured or waived; provided, however, that such Trustee may
withhold notice to the Holders of any series of Debt Securities of any default
with respect to such series (except a default in the payment of the principal of
(or premium or Make-Whole Amount, if any) or interest or Additional Amounts, if
any, on any Debt Security of such series or in the payment of any sinking fund
installment in respect of any Debt Security of such series) if the Responsible
Officers of such Trustee consider such withholding to be in the interest of such
Holders (Section 601 of each Indenture).
Each Indenture provides that no Holder of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to such Indenture
or for any remedy thereunder, except in the case of failure of the applicable
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of not
less than 25% in principal amount of the Outstanding Debt Securities of such
series, as well as an offer of indemnity reasonably satisfactory to it (Section
507 of each Indenture). This provision will not prevent, however, any Holder of
Debt Securities from instituting suit
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for the enforcement of payment of the principal of (and premium or Make-Whole
Amount, if any) and interest if any, on or Additional Amounts, if any, payable
with respect to such Debt Securities at the respective due dates thereof
(Section 508 of each Indenture).
Subject to provisions in each Indenture relating to its duties in case of
default, the Trustee is under an obligation to exercise any of its rights or
powers under such Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under such Indenture, unless such
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 602 of each Indenture). The Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
(or of all Debt Securities then Outstanding under each Indenture, as the case
may be) shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the applicable Trustee, or of
exercising any trust or power conferred upon such Trustee. However, the Trustee
may refuse to follow any direction which is in conflict with any law or the
applicable Indenture, which may involve such Trustee in personal liability or
which may be unduly prejudicial to the Holders of Debt Securities of such series
not joining therein (Section 512 of each Indenture).
Within 120 days after the close of each fiscal year, the Company must
deliver to each Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default under
the applicable Indenture and, if so, specifying each such default and the nature
and status thereof (Section 1010 of each Indenture).
MODIFICATION OF THE INDENTURES
Modification and amendment of an Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities issued under such Indenture which are affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (i) change the Stated Maturity of the principal of (or Premium
or Make-Whole Amount, if any), or any installment of principal of or interest or
Additional Amounts, if any, payable on, any such Debt Security, (ii) reduce the
principal amount of, or the rate or amount of interest on, or any premium or
Make-Whole Amount, payable on redemption of or any Additional Amount, if any,
payable with respect to any such Debt Security, or reduce the amount of
principal of an Original Issue Discount Security that would be due and payable
upon declaration of acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the Holder of any such
Debt Security, (iii) change the Place of Payment, or the coin or currency, for
payment of principal of (and Premium or Make-Whole Amount, if any), or interest
on, or any Additional Amounts payable with respect to, any such Debt Security,
(iv) impair the right to institute suit for the enforcement of any payment on or
with respect to any such Debt Security, (v) reduce the percentage of the Holders
of outstanding Debt Securities of any series necessary to modify or amend the
applicable Indenture, to waive compliance with certain provisions thereof or
certain defaults and consequences thereunder or to reduce the quorum or voting
requirements set forth in the applicable Indenture, or (vi) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902 of each Indenture).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities issued under either Indenture have the right to waive compliance
by the Company with certain covenants in such Indenture (Section 1012 of each
Indenture).
Modifications and amendments of an Indenture may be made by the Company and
the respective Trustee thereunder without the consent of any Holder of Debt
Securities for any of the following purposes: (i) to evidence the succession of
another Person to the Company as obligor under such Indenture; (ii) to add to
the covenants of the Company for the benefit of the Holders of all or any series
of Debt Securities or to surrender any right or power conferred upon the Company
in such Indenture; (iii) to add Events of Default for the benefit of the Holders
of all or any series of Debt Securities; (iv) to add or change any provisions of
an
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Indenture to facilitate the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided that such action shall not adversely
affect the interests of the Holders of the Debt Securities of any series in any
material respect; (v) to add, change or eliminate any provisions of an
Indenture, provided that any such addition, change or elimination shall become
effective only when there are no Outstanding Debt Securities of any series
created prior thereto which are entitled to the benefit of such provision; (vi)
to secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series, including the provisions and procedures, if
applicable, for the conversion of such Debt Securities into Capital Stock of the
Company; (viii) to provide for the acceptance or appointment of a successor
Trustee or facilitate the administration of the trusts under an Indenture by
more than one Trustee; (ix) to cure any ambiguity, defect or inconsistency in an
Indenture, provided that such action shall not adversely affect the interests of
Holders of Debt Securities of any series issued under such Indenture; (x) to
close an Indenture with respect to the authentication and delivery of additional
series of Debt Securities or to qualify, or maintain qualification of, an
Indenture under the TIA; or (xi) to supplement any of the provisions of an
Indenture to the extent necessary to permit or facilitate defeasance and
discharge of any series of such Debt Securities, provided that such action shall
not adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect (Section 901 of each Indenture).
SUBORDINATION
Upon any distribution to creditors of the Company in a liquidation,
dissolution, bankruptcy, insolvency or reorganization, the payment of the
principal of and interest on the Subordinated Securities will be subordinated to
the extent provided in the Subordinated Indenture in right of payment to the
prior payment in full of all Senior Debt (Sections 1601 and 1602 of the
Subordinated Indenture), but the obligation of the Company to make payment of
the principal of and interest on the Subordinated Securities will not otherwise
be affected (Section 1608 of the Subordinated Indenture). No payment of
principal or interest may be made on the Subordinated Securities at any time if
a default on Senior Debt exists that permits the holders of such Senior Debt to
accelerate its maturity and the default is the subject of judicial proceedings
or the Company receives notice of the default (Section 1603 of the Subordinated
Indenture). The Company may resume payments on the Subordinated Securities when
the default is cured or waived, or 120 days pass after the notice is given if
the default is not the subject of judicial proceedings, if the subordination
provisions of the Subordinated Indenture otherwise permit payment at that time
(Section 1603 of the Subordinated Indenture). After all Senior Debt is paid in
full and until the Subordinated Securities are paid in full, Holders will be
subrogated to the rights of holders of Senior Debt to the extent that
distributions otherwise payable to Holders have been applied to the payment of
Senior Debt (Section 1607 of the Subordinated Indenture). By reason of such
subordination, in the event of a distribution of assets upon insolvency, certain
general creditors of the Company may recover more, ratably, than Holders of the
Subordinated Securities.
Senior Debt is defined in the Subordinated Indenture as the principal,
premium, if any, unpaid interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for post-filing interest is allowed in such
proceeding), fees, charges, expenses, reimbursement and indemnification
obligations, and all other amounts payable under or in respect of the following
indebtedness of the Company for money borrowed, whether any such indebtedness
exists as of the date of the Subordinated Indenture or is created, incurred,
assumed or guaranteed after such date:
(1) any debt (i) for money borrowed, or (ii) evidenced by a bond,
note, debenture, or similar instrument (including purchase money
obligations) given in connection with the acquisition of any business,
property or assets, whether by purchase, merger, consolidation or
otherwise, but shall not include any account payable or other obligation
created or assumed in the ordinary course of business in connection with
the obtaining of materials or services, or (iii) which is a direct or
indirect obligation which arises as a result of banker's acceptances or
bank letters of credit issued to secure obligations of the Company, or to
secure the payment of revenue bonds issued for the benefit of the Company,
whether contingent or otherwise;
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(2) any debt of others described in the preceding clause (1) which he
Company has guaranteed or for which it is otherwise liable;
(3) the obligation of the Company as lessee under any lease of
property which is reflected on the Company's balance sheet as a capitalized
lease; and
(4) any deferral, amendment, renewal, extension, supplement or
refunding of any liability of the kind described in any of the preceding
clauses (1), (2), and (3);
provided, however, that, in computing the indebtedness of the Company, there
shall be excluded any particular indebtedness if, upon or prior to the maturity
thereof, there shall have been deposited with a depository in trust money (or
evidence of indebtedness if permitted by the instrument creating such
indebtedness) in the necessary amount to pay, redeem or satisfy such
indebtedness as it becomes due, and the amount so deposited shall not be
included in any computation of the assets of the Company provided, further, that
in computing the indebtedness of the Company hereunder, there shall be excluded
(i) any such indebtedness, obligation or liability referred to in clauses (1)
through (4) above as to which, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding, it is provided that such
indebtedness, obligation or liability is not superior in right of payment to the
Subordinated Securities, or ranks pari passu with the Subordinated Securities,
(ii) any such indebtedness, obligation or liability which is subordinated to
indebtedness of the Company to substantially the same extent as or to a greater
extent than the Subordinated Securities are subordinated and (iii) the
Subordinated Securities. (Section 101 of the Subordinated Indenture). At June
30, 1995, Senior Debt aggregated approximately $137.6 million. There are no
restrictions in the Subordinated Indenture upon the creation of additional
Senior Debt or other indebtedness.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Under each Indenture, the Company may discharge certain obligations to
Holders of any series of Debt Securities issued thereunder that have not already
been delivered to the applicable Trustee for cancellation and that either have
become due and payable or will become due and payable within one year (or
scheduled for redemption within one year) by irrevocably depositing with the
applicable Trustee, in trust, funds in such currency or currencies, currency
unit or units or composite currency or currencies in which such Debt Securities
are payable in an amount sufficient to pay the entire indebtedness on such Debt
Securities in respect of principal (and premium or Make-Whole Amount, if any)
and interest and any Additional Amounts payable to the date of such deposit (if
such Debt Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be (Section 401 of each Indenture).
Each Indenture provides that, if the provisions of Article Fourteen thereof
are made applicable to the Debt Securities of or within any series pursuant to
Section 301 of such Indenture, the Company may elect either (i) to defease and
be discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402 of each Indenture) or (ii) to be released from its
obligations with respect to such Debt Securities under Sections of each
Indenture described under "Certain Covenants" or, if provided pursuant to
Section 301 of each Indenture, its obligations with respect to any other
covenant, and any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403 of each Indenture), in either case upon the
irrevocable deposit by the Company with the applicable Trustee, in trust, of an
amount, in such currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are payable at Stated
Maturity, or Government Obligations (as defined below), or both, applicable to
such Debt Securities which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium or Make-Whole
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Amount, if any) and interest and any Additional Amounts on such Debt Securities,
and any mandatory sinking fund or analogous payments thereon, on the scheduled
due dates therefor.
Such a trust may only be established if, among other things, the Company
has delivered to the applicable Trustee an Opinion of Counsel (as specified in
each Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance or covenant defeasance
had not occurred, and such Opinion of Counsel, in the case of defeasance, must
refer to and be based upon a ruling of the Internal Revenue Service or a change
in applicable United States federal income tax laws occurring after the date of
such Indenture (Section 1404 of each Indenture).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101 of each Indenture).
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(i) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of either Indenture or the terms of such Debt Security
to receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(ii) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium or Make-Whole Amount, if any) and interest and any Additional
Amounts on such Debt Security as they become due out of the proceeds yielded by
converting the amount so deposited in respect of such Debt Security into the
currency, currency unit or composite currency in which such Debt Security
becomes payable as a result of such election or such cessation of usage based on
the applicable market exchange rate (Section 1405 of each Indenture).
"Conversion Event" means the cessation of use of (i) a currency, currency
unit or composite currency issued by the government of one or more countries
other than the United States (other than the European Currency Unit ("ECU") or
other currency unit) both by the government of the country that issued such
currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (ii) the
ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or
(iii) any currency unit or composite currency other than the ECU for the
purposes for which it was established (Section 101 of each Indenture). Unless
otherwise provided in the applicable Prospectus Supplement, all payments of
principal of (and premium or Make-Whole Amount, if any) and interest and any
Additional Amounts on any Debt Security that is payable in a Foreign Currency
that ceases to be used by its government of issuance shall be made in United
States dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the
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Event of Default descried in clause (iv) under "Events of Default, Notice and
Waiver" with respect to Sections 1004 to 1009, inclusive, of either Indenture
(which Sections would no longer be applicable to such Debt Securities) or
described in clause (vii) under "Events of Default, Notice and Waiver" with
respect to a covenant as to which there has been covenant defeasance, the amount
in such currency, currency unit or composite currency in which such Debt
Securities are payable, and Government Obligations on deposit with the Trustee,
will be sufficient to pay amounts due on such Debt Securities at the time of
their Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such amounts due at
the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Capital Stock will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include whether such Debt
Securities are convertible into Capital Stock, the conversion price (or manner
of calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the Holders or the Company, the events
requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such Debt Securities and any
restrictions on conversion, including restrictions directed at maintaining the
Company's REIT status.
BOOK ENTRY SYSTEM
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such series. Global Securities, if any,
issued in the United States are expected to be deposited with the Depository
Trust Company, as Depository. Global Securities may be issued in fully
registered form and may be issued in either temporary or permanent form. The
specific terms of the depositary arrangement with respect to a series of Debt
Securities, if any, will be described in the applicable Prospectus Supplement
relating to such series.
GOVERNING LAW
The Indentures are governed by and shall be construed in accordance with
the laws of the State of Georgia.
REDEMPTION OF SECURITIES
The Indentures provide that the Debt Securities may be redeemed at any time
at the option of the Company, in whole or in part, for certain reasons including
those intended to protect the Company's status as a REIT. Debt Securities may
also be subject to optional or mandatory redemption on terms and conditions
described in the applicable Prospectus Supplement.
From and after notice has been given as provided in the Indenture, if funds
for the redemption of any Debt Securities called for redemption shall have been
made available on such redemption date, such Debt Securities will cease to bear
interest on the date fixed for such redemption specified in such notice, and the
only right of the Holders of the Debt Securities will be to receive payment of
the Redemption Price.
DESCRIPTION OF COMMON STOCK
This summary of certain terms and provisions of the Common Stock does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the terms and provisions of the Company's Articles of
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Incorporation, as amended (the "Articles"), and By-laws, as amended, which are
filed as exhibits to the Registration Statement of which this Prospectus is a
part.
The Company is authorized to issue an aggregate of 75,000,000 shares of
Common Stock. As of October 1, 1995, there were 25,652,281 shares of Common
Stock outstanding held by approximately 4,000 shareholders of record. All
outstanding shares of Common Stock are fully paid and nonassessable.
GENERAL
Shareholders of the Company do not have preemptive rights. Shareholders of
record are entitled to cast one vote for each share held on all matters
presented for a vote of shareholders. Cumulative voting for the election of
directors is not permitted. When a quorum is present at any meeting, the vote of
the holders of a majority of the shares present, either in person or by proxy,
shall decide any question properly brought before such meeting, except on
matters where the Georgia Business Corporation Code requires the vote of the
holders of a majority of all outstanding shares, such as amending the Articles.
The Board of Directors may, in its discretion, cause to be distributed
ratably among the shareholders such portion of the cash available from
operations, net profits, capital surplus or assets as it may from time to time
deem proper.
Except as outlined below under "Restriction on Ownership/REIT
Qualification, "the shares are freely transferable and there are no conversion,
sinking fund, redemption or similar provisions regarding the shares.
RESTRICTION ON OWNERSHIP/REIT QUALIFICATION
The Articles contain provisions restricting transfer of shares and
authorizing the directors to call shares for purchase as appropriate to maintain
the Company's qualification as a REIT under the Code. Among the requirements for
REIT qualification, the Company must have at least 100 shareholders, and five or
fewer individuals may not own directly or indirectly 50% or more of the
outstanding shares. In addition, 95% of the Company's gross annual income must
come from qualifying sources, including principally "rents from real property"
with the Code specifically excluding from the definition of such term any rents
received from any tenant which itself owns, or which is more than 10% owned by
any individual who owns, more than 10% of the shares. The Articles authorize the
directors to refuse to transfer shares and to call for the purchase of shares so
as to prevent concentrations of ownership potentially disqualifying the Company
as a REIT or potentially disqualifying income as "rents from real property." The
Articles also void any purported transfer of shares which would result in
ownership by less than 100 shareholders, or would result in five or fewer
individuals directly or indirectly owning more than 50% of the Company, or would
result in any tenant or 10% or more owner of a tenant owning more than 10% of
the Company; and further provide that the purported transferee of any such
shares shall be deemed never to have had an interest therein or alternatively
shall be deemed to have acquired and to be holding such shares for and on behalf
of the Company. Any call for purchase of any shares pursuant to the aforesaid
provisions of the Articles would most likely be from one or more holders of
significant blocks whose concentrated ownership is considered by the directors
to threaten the Company's REIT status.
RIGHTS UPON LIQUIDATION
In the event of liquidation of the Company, shareholders are entitled to
share ratably in the assets available for distribution after payment of all
liabilities.
TRANSFER AGENT AND REGISTRAR
SunTrust Bank, Atlanta, Atlanta, Georgia, serves as the Company's Transfer
Agent and Registrar. The Common Stock is listed on the NYSE (Symbol: IRT).
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<PAGE> 43
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters, and also may
sell Securities directly to other purchasers or through designated agents. Any
such underwriter or agent involved in the offer and sale of the Securities will
be named in the applicable Prospectus Supplement.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Company also may, from
time to time, authorize underwriters acting as the Company's agents to offer and
sell the Securities upon the terms and conditions set forth in any Prospectus
Supplement.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities, for whom they
may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
they receive from the Company, and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the applicable
Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Stock which is listed on the NYSE. Any Common Stock sold
pursuant to a Prospectus Supplement will be listed on such exchange, subject to
official notice of issuance. The Company may elect to list any series of Debt
Securities on an exchange, but is not obligated to do so. It is possible that
one or more underwriters may make a market in a series of Securities, but will
not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of the
trading market for the Securities.
Under agreements the Company may enter into, underwriters, dealers and
agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Company in the ordinary course of
business.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, as amended and
restated on Form 10-K/A Amendment No. 1 filed September 28, 1995, have been
audited by Arthur Andersen LLP, independent auditors, as stated in their report
which is incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
LEGAL OPINIONS
The legality of the Securities offered hereby as well as certain federal
income tax matters will be passed upon for the Company by Alston & Bird.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH THEY RELATE OR ANY OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
SUCH SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary......... S-3
The Company........................... S-6
Selected Consolidated Financial
Data................................ S-15
Use of Proceeds....................... S-16
Capitalization........................ S-17
Description of Notes.................. S-20
Underwriting.......................... S-27
Legal Opinions........................ S-27
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Certain Ratios........................ 3
Description of Debt Securities........ 3
Description of Common Stock........... 14
Plan of Distribution.................. 16
Experts............................... 16
Legal Opinions........................ 16
</TABLE>
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$75,000,000
IRT PROPERTY
COMPANY
[IRT LOGO]
7.25% SENIOR NOTES DUE 2007
------------------------
PROSPECTUS SUPPLEMENT
------------------------
PAINEWEBBER INCORPORATED
SALOMON BROTHERS INC
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AUGUST 12, 1997
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