<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 1994
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNITED DOMINION REALTY TRUST, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 54-0857512
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
10 SOUTH 6TH STREET, SUITE 203
RICHMOND, VIRGINIA 23219-3802
(804) 780-2691
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN P. MCCANN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
UNITED DOMINION REALTY TRUST, INC.
10 SOUTH 6TH STREET, SUITE 203
RICHMOND, VIRGINIA 23219-3802
(804) 780-2691
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
JAMES W. FEATHERSTONE, III HOWARD G. GODWIN, JR.
HUNTON & WILLIAMS BROWN & WOOD
RIVERFRONT PLAZA, EAST ONE WORLD TRADE CENTER
TOWER
951 EAST BYRD STREET NEW YORK, NEW YORK 10048-0557
RICHMOND, VIRGINIA (212) 839-5381
23219-4074
(804) 788-8267
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. ( )
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. ( )
CALCULATION OF REGISTRATION FEE
[CAPTION]
<TABLE>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT (1) OFFERING PRICE
<S> <C> <C> <C>
Common Stock, $1.00 par
value....................... 8,050,000 shares $14.50 $116,725,000
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Common Stock, $1.00 par
value....................... $40,250.00
</TABLE>
(1) Determined pursuant to Rule 457(c).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 26, 1994
P R O S P E C T U S
7,000,000 SHARES
[LOGO]
COMMON STOCK
The Common Stock is listed on the New York Stock Exchange. On May 25, 1994,
the last reported sale price of the Common Stock was $14 3/4 per share. See
"Price Range of Common Stock and Distributions."
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.
[CAPTION]
<TABLE>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) TRUST (2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total (3)................................. $ $ $
</TABLE>
(1) The Trust has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Trust estimated at $230,000.
(3) The Trust has granted the several Underwriters an option to purchase up to
an additional 1,050,000 shares to cover over-allotments. If all such shares
are purchased, the total Price to Public, Underwriting Discount and Proceeds
to Trust will be $ , $ and $ ,
respectively. See "Underwriting."
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 shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, 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 shares
will be made in New York, New York on or about June , 1994.
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
SCOTT & STRINGFELLOW, INC.
The date of this Prospectus is June , 1994.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
SUCH STATE.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE TRUST AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
THE TRUST
United Dominion Realty Trust, Inc. (the "Trust"), founded in 1972, is a
self-administered equity real estate investment trust that owns and operates
apartments in the Southeast from Maryland to Florida. It is a fully integrated
real estate company that acquires, improves, operates, manages and selectively
sells properties with the primary goal of maximizing its funds from operations,
while increasing the value of its real estate through capital improvements and
intensive management.
The Trust's 99 properties include 80 apartment communities, 15 shopping
centers, two warehouse/industrial properties and two office properties. The
apartment properties consist of 19,982 apartment units, providing approximately
90% of the Trust's rental income. Commercial properties consist of approximately
2.0 million square feet of rentable space, providing approximately 10% of rental
income. All of the Trust's properties are located in the Southeast. Management
believes that the Trust has benefitted from the population and job growth within
this region and that this region will continue to provide attractive demographic
and economic patterns conducive to real estate investment in the 1990's.
The Trust's investment policy has been to acquire primarily apartment
properties presenting the opportunity for higher occupancy, increased rents and
enhanced property values through a program of renovation, refurbishment and
intensive property management. Beginning in 1991, the Trust embarked on a major
expansion of its apartment portfolio involving (i) the acquisition of apartment
properties having high occupancy levels and not requiring substantial
renovation, and (ii) entry into new markets, most recently the
Baltimore/Washington area and central Florida. The properties have been acquired
generally at significant discounts from replacement cost and at attractive
current yields. The sellers were primarily financially distressed real estate
limited partnerships, the RTC, the FDIC, lenders who had foreclosed and
insurance companies seeking to reduce their real estate exposure. Since 1991,
the Trust has acquired 42 apartment properties containing 11,305 units at a
total cost of approximately $328 million.
The Trust has paid continuous quarterly distributions to its shareholders
since 1973 and has increased its distributions each year during the past 18
years. The distribution for the first quarter of 1994 was $.195 per share. The
current indicated annual distribution is $.78 per share. In past years, a
portion of the Trust's distributions to shareholders has been designated as a
non-taxable return of capital for Federal income tax purposes.
The Trust, a Virginia corporation, has its principal office at 10 South 6th
Street, Suite 203, Richmond, Virginia 23219-3802, and its telephone number is
(804) 780-2691. Unless the context indicates otherwise, the term "Trust," as
used herein, includes the Trust and its subsidiary.
RECENT DEVELOPMENTS
PROPOSED ACQUISITIONS
The Trust has executed individual contracts to purchase a portfolio of 25
apartment properties containing 5,170 units for a total purchase price of
approximately $162 million, excluding closing costs (the "Portfolio
Acquisition"). Twenty-three of the properties are located in the Southeast, and
approximately two-thirds of the units are based in four of the Trust's existing
markets: Baltimore, Maryland, Charlotte, North Carolina and Columbia and
Greenville, South Carolina. The Trust is currently performing the due diligence
necessary to determine whether to proceed with the acquisition. The due
diligence period runs through June 1, 1994 during which time the Trust may
terminate the contracts for any reason without penalty. If, after completing due
diligence, the Trust elects to proceed with the purchase, it is expected that
the transaction would close in July. If the transaction is consummated as
planned, it is expected to have an immediate positive impact on the Trust's
operating results. While each of the individual properties in the Portfolio
Acquisition was valued based on a different estimated first year return, when
taken as a whole, the Portfolio Acquisition will be made based upon internal
analyses showing a weighted average first year return on average investment of
9.0%.
In addition, the Trust has three other apartment communities containing 832
units under contract in separate transactions at a cash purchase price totalling
$27.7 million, excluding closing costs. These properties are located in Griffin,
Georgia (272 units), Columbia, South Carolina (304 units) and Sanford, Florida
(256 units).
There can be no assurance that any of the proposed acquisitions will be
consummated.
3
<PAGE>
1994 ACQUISITIONS
Since January 1, 1994, the Trust has acquired six apartment communities
aggregating 2,068 apartment units at a total cost of $77.8 million, including
closing costs. These acquisitions were made based in part on internal analyses
showing a weighted average first year return on average investment of 9.0%.
The Shire Apartments -- 302 units located in Raleigh, North
Carolina, acquired March 4, 1994, for $13.8 million cash ($45,600 per
unit).
Lakewood Place Apartments -- 346 units located in Tampa, Florida,
acquired March 11, 1994, for $12.0 million cash ($34,800 per unit).
River Place Apartments -- 240 units located in Macon, Georgia,
acquired April 8, 1994, for $8.6 million cash ($35,800 per unit).
Lakeside North Apartments -- 360 units located in Altamonte
Springs, Florida, acquired April 14, 1994, for $12.6 million ($35,000
per unit). This acquisition was financed through the assumption of $12.4
million of tax-exempt housing bonds.
Palm Grove Apartments -- 244 units located in Tampa, Florida,
acquired April 15, 1994, for $5.9 million cash ($24,100 per unit).
Walnut Creek Apartments -- 576 units located in Raleigh, North
Carolina, acquired May 17, 1994, for $24.9 million cash ($43,200 per
unit).
FINANCING
Since January 1, 1994, the Trust has completed (i) a private placement of
$12.4 million of tax-exempt housing bonds, (ii) a public offering of $6.2
million of tax-exempt housing bonds and (iii) a public offering of $75 million
of senior unsecured notes. An additional public offering of $5.0 million of
tax-exempt housing bonds is scheduled to close on or about June 7, 1994.
The Trust presently intends to issue $75 million to $100 million of 7 to 10
year senior unsecured debt during the third quarter of 1994 to help finance its
1994 apartment acquisitions, including the Portfolio Acquisition. To mitigate
the risks of rising interest rates, on May 18, 1994, the Trust entered into an
interest rate hedge agreement, which has the effect of limiting the Trust's
exposure to an increase in the 10-year Treasury Rate to a maximum of 7.197% for
$75 million of its debt to be issued on or before September 15, 1994.
The Trust anticipates that it will continue to finance its acquisition
program using a combination of debt, equity and convertible securities.
USE OF PROCEEDS
The net proceeds to the Trust from the sale of 7,000,000 shares of Common
Stock are estimated at $ . The Trust presently intends to use the net
proceeds to fund a portion of the $162 million purchase price of the Portfolio
Acquisition. It is anticipated that such purchase will occur on or about the
same date as the net proceeds are available to the Trust. Pending such use, the
Trust will invest the net proceeds in short-term instruments bearing interest at
market rates. The Trust will fund the balance of the purchase price of the
Portfolio Acquisition with borrowings under its bank lines of credit pending
permanent financing. See "Recent Developments -- Financing."
4
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Trust at March 31,
1994, and as adjusted to give effect to (i) the issuance of 7,000,000 shares of
Common Stock offered hereby, (ii) the sale of $75 million of senior unsecured
notes on April 7, 1994 and the application of the proceeds thereof, (iii) the
issuance since March 31, 1994, of $11.2 million of tax-exempt housing bonds to
finance Trust properties, (iv) the assumption by the Trust of $12.4 million of
tax-exempt housing bonds on April 14, 1994, and (v) the authorization of
25,000,000 shares of Preferred Stock and an increase in the number of authorized
shares of Common Stock to 100,000,000, both approved by the shareholders on May
10, 1994. The table should be read in conjunction with the Trust's financial
statements incorporated herein by reference.
<TABLE>
<CAPTION>
MARCH 31, 1994
HISTORICAL AS ADJUSTED
<S> <C> <C>
(IN THOUSANDS)
Debt:
Mortgage notes payable.............................. $ 72,660 $ 96,304(1)
Notes payable....................................... 188,101 224,701(2)
Total debt....................................... $ 260,761 $ 321,005
Shareholders' equity:
Preferred Stock, no par value; 25,000,000 shares
authorized, no shares outstanding................
Common Stock, $1 par value;
60,000,000 shares authorized
(100,000,000 as adjusted)
41,703,785 shares issued and outstanding
(48,703,785 as adjusted)......................... 41,704 48,704
Additional paid-in capital.......................... 302,981
Notes receivable from officer shareholders.......... (4,096) (4,096)
Distributions in excess of net income............... (84,509) (84,509)
Total shareholders' equity....................... $ 256,080 $
Total capitalization........................... $ 516,841 $
</TABLE>
(1) Reflects the issuance or assumption of $23,644,000 of tax-exempt housing
bonds subsequent to March 31, 1994 to finance Trust properties.
(2) Reflects the public sale of $75 million of senior unsecured notes on April
7, 1994. Net proceeds of $74.3 million were used to repay $60.3 million of
bank lines outstanding on March 31, 1994 with the remaining $14.0 million
being used to finance subsequent apartment acquisitions. Since that date,
the Trust has drawn down an additional $21.9 million on its bank lines that
is outstanding at the date hereof.
5
<PAGE>
PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS
PRICE RANGE
The Trust's Common Stock is traded on the New York Stock Exchange (the
"NYSE") under the symbol "UDR." The following table sets forth the reported high
and low sale prices of the Common Stock on the NYSE for the periods indicated
and the distributions per share paid in such periods, in each case as adjusted
for a 2 for 1 stock split effective May 5, 1993.
<TABLE>
<CAPTION>
DISTRIBUTIONS
HIGH LOW PAID
<S> <C> <C> <C> <C>
1991
1st Quarter................................................. $ 8 5/8 $ 7 1/16 $.155
2nd Quarter................................................. 9 1/4 8 1/4 .155
3rd Quarter................................................. 9 9/16 8 11/16 .155
4th Quarter................................................. 10 5/16 8 7/8 .160
.625
1992
1st Quarter................................................. 11 1/2 10 .160
2nd Quarter................................................. 10 13/16 9 3/4 .165
3rd Quarter................................................. 12 3/16 10 9/16 .165
4th Quarter................................................. 12 11/16 10 7/8 .165
.655
1993
1st Quarter................................................. 14 13/16 11 7/8 .165
2nd Quarter................................................. 14 5/8 12 1/2 .175
3rd Quarter................................................. 16 5/8 13 1/2 .175
4th Quarter................................................. 16 7/8 12 5/8 .175
.690
1994
1st Quarter................................................. 15 7/8 12 3/4 .175
2nd Quarter (through May 25)................................ 15 1/8 13 3/8 .195
</TABLE>
On May 24, 1994, the Trust had 4,552 shareholders of record.
DISTRIBUTIONS
The Trust has paid continuous quarterly distributions to its shareholders
since 1973, its first full year of operations, and has increased its
distributions each year during the past 18 years. The Trust's current policy is
to make distributions in amounts exceeding 75% of its funds from operations, but
not less than such amounts as may be necessary to continue its qualification as
a real estate investment trust (a "REIT") under the Internal Revenue Code of
1986, as amended (the "Code"). Funds from operations may not necessarily equal
cash available for distribution as the cash flow of the Trust is affected by
other factors not included in the calculation of funds from operations. The
distribution for the first quarter of 1994 was approximately 83% of funds from
operations for the quarter. The quarterly distribution for the second quarter of
1994 is to be paid on July 29, 1994 to shareholders of record as of the close of
business on July 15, 1994. Purchasers of the Common Stock offered hereby are
expected to participate in this distribution. The current indicated annual
distribution is $.78 per share.
For Federal income tax purposes, distributions paid to shareholders may
consist of ordinary income, capital gains distributions, non-taxable return of
capital or a combination thereof. Distributions which exceed the Trust's current
and accumulated earnings and profits constitute a return of capital rather than
a dividend and reduce the shareholder's basis in his shares. To the extent that
a distribution exceeds both current and accumulated earnings and profits and the
shareholder's basis in his shares, it will generally be treated as gain from the
sale or exchange of that shareholder's shares. The Trust annually notifies
shareholders as to the taxability of distributions paid during the preceding
year. Since 1989, cash distributions per share paid to shareholders have been
taxable as set forth below.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Ordinary income................................ $.378 $.355 $.368 $.418 $.493
Capital gains.................................. .010 -- -- -- --
Return of capital.............................. .212 .265 .257 .237 .197
Total distributions paid.................. $.600 $.620 $.625 $.655 $.690
</TABLE>
6
<PAGE>
HISTORICAL TOTAL RETURNS
The table below sets forth the compound annual rates of pretax total return
(increase in market value plus distributions paid) which would have been
realized by an investor who purchased the Trust's Common Stock on the open
market at the beginning of the periods indicated and sold such Common Stock on
the open market at the end of the periods indicated. Distributions paid during
each year are assumed to have been reinvested on the date paid at the then
closing market price of the Common Stock. Past performance is not necessarily
indicative of the results that can be expected in the future from an investment
in the Trust's Common Stock.
<TABLE>
<CAPTION>
COMPOUND ANNUAL
RATE OF TOTAL
PERIOD RETURN
<S> <C>
Ten years ended December 31, 1993.................................................. 18.6%
Five years ended December 31, 1993................................................. 16.9
Year ended December 31, 1993....................................................... 18.5
</TABLE>
MANAGEMENT
The officers and directors of the Trust are:
<TABLE>
<CAPTION>
NAME AGE OFFICE
<S> <C> <C>
John P. McCann 49 President and Chief Executive Officer; Director
James Dolphin 44 Senior Vice President and Chief Financial Officer; Director
Barry M. Kornblau 44 Senior Vice President and Director of Apartment Operations; Director
Curtis W. Carter 37 Vice President, Apartment Property Management
Richard B. Chess 40 Vice President and Director of Acquisitions
Jerry A. Davis 31 Vice President, Controller-Corporate Accounting and Assistant Secretary
Richard A. Giannotti 38 Vice President and Director of Construction
Katheryn E. Surface 36 Vice President, Secretary and General Counsel
Jeff C. Bane 64 Director; President, Blake & Bane Inc., Richmond, Virginia, real estate brokers
Robert P. Buford 68 Director; Senior Counsel, Hunton & Williams, Richmond, Virginia, attorneys
R. Toms Dalton, Jr. 61 Director; Partner, Allen & Carwile, Waynesboro, Virginia, attorneys
John C. Lanford 63 Director; President of Adams Construction Co., Roanoke, Virginia, general contractors
H. Franklin Minor 61 Director; Attorney-at-law and Real Estate Broker
C. Harmon Williams, Jr. 63 Chairman of the Board of Directors; Real Estate Broker
</TABLE>
7
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Trust and
should be read in conjunction with the financial statements of the Trust and
related notes incorporated herein by reference and with the pro forma financial
statements and related notes included elsewhere herein.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH
YEAR ENDED DECEMBER 31, 31,
PRO
HISTORICAL FORMA HISTORICAL
1989 1990 1991 1992 1993 1993 1993
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATING DATA
Income:
Income from property
operations:
Rental income............. $ 37,173 $ 44,042 $ 51,250 $ 63,202 $ 89,084 $133,843 $ 20,182
Property operating
expenses................ 14,214 17,969 20,956 26,503 37,859 59,523 8,171
Depreciation of real
estate owned............ 8,762 10,464 12,845 15,732 19,764 26,642 4,611
14,197 15,609 17,449 20,967 31,461 47,678 7,400
Interest and other income... 1,552 273 79 1,402 708 270 56
15,749 15,882 17,528 22,369 32,169 47,948 7,456
Expenses:
Interest.................... 9,934 9,435 11,859 11,697 16,938 25,121 3,913
General and
administrative............ 1,475 1,718 1,872 2,231 3,349 3,349 823
Other depreciation and
amortization.............. 201 173 219 300 596 596 131
11,610 11,326 13,950 14,228 20,883 29,066 4,867
Income before gains (losses)
on investments and
extraordinary item.......... 4,139 4,556 3,578 8,141 11,286 18,882 2,589
Gains (losses) on sales of
investments................. 1,433 417 26 -- (89) (89) --
Provision for possible
investment losses........... -- -- -- (1,564) -- -- --
Income before extraordinary
item........................ 5,572 4,973 3,604 6,577 11,197 18,793 2,589
Extraordinary item -- early
extinguishment of debt...... (98) (103) (35) (242) -- -- --
Net income.................... $ 5,474 $ 4,870 $ 3,569 $ 6,335 $ 11,197 $ 18,793 $ 2,589
Net income per share:
Before extraordinary item... $ .29 $ .21 $ .14 $ .19 $ .29 $ .42 $ .07
Extraordinary item.......... (.01) -- -- (.01) -- -- --
$ .28 $ .21 $ .14 $ .18 $ .29 $ .42 $ .07
Weighted average number of
shares outstanding.......... 19,329 23,238 24,642 34,604 38,202 45,202 35,312
Distributions declared........ $ 12,156 $ 14,402 $ 15,872 $ 23,271 $ 27,988 $ 32,888 $ 6,185
Distributions declared per
share....................... .61 .62 .63 .66 .70 .70 .175
OTHER DATA
Funds from operations(1)...... $ 12,865 $ 15,231 $ 17,158 $ 24,185 $ 31,658 $ 46,132 $ 7,331
<CAPTION>
PRO
FORMA
1994 1994
<S> <C> <C>
OPERATING DATA
Income:
Income from property
operations:
Rental income............. $ 26,706 $ 35,276
Property operating
expenses................ 11,385 15,732
Depreciation of real
estate owned............ 5,706 6,874
9,615 12,670
Interest and other income... 114 114
9,729 12,784
Expenses:
Interest.................... 4,655 6,236
General and
administrative............ 1,474 1,474
Other depreciation and
amortization.............. 185 185
6,314 7,895
Income before gains (losses)
on investments and
extraordinary item.......... 3,415 4,889
Gains (losses) on sales of
investments................. -- --
Provision for possible
investment losses........... -- --
Income before extraordinary
item........................ 3,415 4,889
Extraordinary item -- early
extinguishment of debt...... -- --
Net income.................... $ 3,415 $ 4,889
Net income per share:
Before extraordinary item... $ .08 $ .10
Extraordinary item.......... -- --
$ .08 $ .10
Weighted average number of
shares outstanding.......... 41,688 48,688
Distributions declared........ $ 8,133 $ 9,498
Distributions declared per
share....................... .195 .195
OTHER DATA
Funds from operations(1)...... $ 9,760 $ 12,402
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, 1994
1989 1990 1991 1992 1993 HISTORICAL
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Real estate owned, at cost.... $251,051 $294,205 $361,503 $454,115 $582,213 $611,270
Total assets.................. 231,537 259,532 314,473 390,365 505,840 535,602
Mortgage and other notes
payable..................... 80,896 117,703 168,346 181,121 229,420 260,761
Convertible subordinated
debentures.................. 15,808 14,987 -- -- -- --
Shareholders' equity.......... 127,764 118,154 136,152 197,677 259,963 256,080
<CAPTION>
PRO
FORMA
<S> <C>
BALANCE SHEET DATA
Real estate owned, at cost.... $795,465
Total assets.................. 719,797
Mortgage and other notes
payable..................... 346,256
Convertible subordinated
debentures.................. --
Shareholders' equity.......... 354,780
</TABLE>
(1) Funds from operations is defined as income before gains (losses) on
investments and extraordinary items adjusted for certain non-cash items,
primarily real estate depreciation. The Trust considers funds from
operations in evaluating property acquisitions and its operating
performance, and believes that funds from operations should be considered
along with, but not as an alternative to, net income and cash flows as a
measure of the Trust's operating performance and liquidity. 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.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND OPERATIONS
RESULTS OF OPERATIONS
Funds from operations is defined as income before gains (losses) on
investments and extraordinary items adjusted for certain non-cash items,
primarily real estate depreciation. The Trust considers funds from operations in
evaluating property acquisitions and its operating performance, and believes
that funds from operations should be considered along with, but not as an
alternative to, net income and cash flows as a measure of the Trust's operating
performance and liquidity. 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.
THREE MONTHS ENDED MARCH 31, 1994
For the first quarter of 1994, the Trust reported increases over the
comparable 1993 quarter in rental income, income from property operations, net
income and funds from operations. First quarter 1994 rental income was $26.7
million compared to $20.2 million in the first quarter of 1993, an increase of
$6.5 million or 32.3%. Income from property operations, excluding depreciation,
increased from $12.0 million to $15.3 million, an increase of $3.3 million or
27.6%. Net income for the first quarter of 1994 totalled $3.4 million which was
$826,000, or 31.9%, greater than the $2.6 million reported for the first quarter
of 1993. On a per share basis, net income increased from $.07 for the first
quarter of 1993 to $.08 for the first quarter of 1994. Net income for the 1994
quarter includes a $450,000 charge ($.01 per share) reflecting the Trust's
implementation of the provisions of SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." First quarter funds from operations increased 33.1%
from $7.3 million in 1993 to $9.8 million in 1994.
The Trust's 1993 acquisitions made the largest contribution to the reported
increases. The Trust's first quarter 1994 acquisitions and improved results from
its core portfolio of mature apartments and commercial properties also had a
positive impact on first quarter results. The Trust considers an apartment
community to be mature after it has been owned for a full calendar (fiscal)
year. For the Trust's 13,832 mature apartments (57 communities) that have been
owned since the beginning of 1993, economic occupancy increased 1.2% to 92.5%
for the first quarter of 1994 compared to 91.3% for the first quarter of 1993.
Average rents at these properties grew by 3.0% and operating expenses increased
approximately 5.5%, increasing the operating expense ratio 0.3% to 44.7%. As a
result, net operating income from these apartment units for the first quarter of
1994 increased 4.1%, or $386,000, compared to the first quarter of 1993. For the
remaining 4,730 apartment units (19 communities), acquired by the Trust since
January 1, 1993, economic occupancy averaged 91.1% and the operating expense
ratio was 44.9% during the first quarter of 1994.
For the first quarter of 1994, net operating income from commercial
properties increased 7.6%, or $141,000, from the first quarter in 1993,
primarily reflecting additional small tenant leases. Average economic occupancy
for the first quarter of 1994 increased 1.1% to 84.5% compared to the first
quarter of 1993.
During the first quarter of 1994, interest expense was approximately
$742,000 higher than it was in the first quarter of 1993 ($4.7 million in 1994
versus $3.9 million in 1993) as the Trust had more debt outstanding in 1994 than
in 1993. At March 31, 1994, the Trust's total debt (mortgage and unsecured notes
payable) was $260.7 million versus $209.7 million at March 31, 1993.
For the first quarter of 1994, depreciation expense increased to $5.7
million versus $4.6 million in the first quarter of 1993, reflecting the
portfolio expansion that has occurred during the past year.
Management expects that the Trust's operating results for the second
quarter of 1994 will show continued improvement when compared to the comparable
period last year reflecting the continued positive impact of the 1993 and 1994
acquisitions and anticipated occupancy gains and rent growth.
9
<PAGE>
YEAR ENDED DECEMBER 31, 1993
For 1993, the Trust reported significant increases over 1992 in rental
income, income from property operations, income before gains (losses) on
investments and extraordinary item, net income, and funds from operations. These
increases are attributable primarily to the significant portfolio expansion that
has occurred since the beginning of 1992. The performance of the Trust's mature
group of 10,924 apartment units (46 apartment communities) contributed to the
increases.
For 1993, the Trust's mature apartment properties provided 60% of the
Trust's rental income. These units had average economic occupancy of 91.2%
during 1993 compared to 90.6% for 1992, an increase of 0.6%. In 1993, average
rents at these properties grew 2.6% (to $440 per month) and rental expenses
increased 5.3%, resulting in an increase in the operating expense ratio (the
ratio of rental expenses to rental income) of 0.8% to 47.9%. Net operating
income (rental income minus operating expenses) from these apartment units was
up approximately $500,000 or 1.8%. For the remaining 6,990 apartment units
acquired by the Trust since the beginning of 1992, economic occupancy averaged
92.1% and the operating expense ratio was 43.3% for 1993. For the 17,914
apartments in the 74 communities owned on December 31, 1993, economic occupancy
averaged 91.5% and the expense ratio was 46.4% for the full year. In 1992, the
13,832 units then owned had economic occupancy of 90.7% and an expense ratio of
46.5%.
For 1993, net operating income from commercial properties increased
$288,000, or 4.0%, primarily reflecting additional small tenant leases.
For 1993, depreciation expense increased $4.0 million with substantially
all of the increase attributable to the portfolio expansion that has occurred
during the past year.
For 1993, interest income was $708,000 compared to $1.4 million in 1992.
During each year, the Trust completed a public offering of Common Stock and
invested the proceeds temporarily in short-term money market investments. During
1992, the Trust had such temporary investments throughout much of the year at
higher rates than in 1993 when the average amount invested in the money markets
was significantly lower. Consequently, interest income declined.
Interest expense increased approximately $5.2 million reflecting the fact
that the Trust used less equity relative to debt to finance its 1993
acquisitions than it did in 1992. While interest expense increased $.105 per
share in 1993, as a percent of rental income it was virtually unchanged.
LIQUIDITY AND CAPITAL RESOURCES
As a qualified REIT, the Trust distributes a substantial portion of its
cash flow to its shareholders in the form of distributions. Over the past
several years, these distributions have exceeded 80% of the Trust's cash flow
from operating activities and its funds from operations. While the Trust seeks
to retain sufficient cash to cover its normal operating needs, including routine
replacements, its distribution payout ratio requires that portfolio growth,
property improvements and balloon debt payments be financed through a variety of
primarily external sources. The Trust has frequently utilized its bank lines of
credit to temporarily finance these expenditures and has subsequently replaced
this short-term bank debt with longer term debt or equity.
For 1993 and the first quarter of 1994, the Trust's cash flow from
operating activities increased substantially as a result of the expansion of the
Trust's portfolio as discussed below and under "Results of Operations."
At the beginning of 1993, the Trust had $1.1 million of cash and cash
equivalents and $22.5 million of available and unused bank lines of credit. On
February 24, 1993, the Trust privately placed $52 million of senior unsecured
notes with three insurance companies at an interest rate of 7.98%. The notes are
due in equal annual principal installments of $7.4 million from 1997 to 2003.
The proceeds of the debt placement were utilized to repay $50 million of
short-term bank debt that had been incurred in connection with certain apartment
acquisitions completed since mid-December, 1992. In early July, 1993, the Trust
sold 6,095,000 shares of Common Stock in a public offering at $13.50 per share.
The net proceeds of the offering approximated $78 million of which $35 million
was used to repay, in full, then outstanding short-term bank debt. The remaining
proceeds were invested primarily in additional apartment acquisitions during the
second half of 1993. Also, at the beginning of July, 1993, the Trust completed
the refunding of $13.8 million of tax-exempt housing bonds encumbering two
Maryland apartment communities that had been acquired at the end of 1992. The
bonds were sold in a public offering, mature in 30 years and have a weighted
average life of 22.3 years. The bonds bear interest at a weighted average
interest rate of 5.91%. On April 7, 1994, the Trust completed a $75 million
public offering of 7 1/4% senior unsecured notes due April 1, 1999. The notes
were priced at 99.833% to yield 7.29% to maturity. The net proceeds from the
offering (approximately $74.3 million) were utilized to repay, in full,
outstanding bank debt and to fund subsequent apartment acquisitions.
10
<PAGE>
Since the beginning of 1993, the Trust has expanded its bank lines of
credit to $73.5 million, an increase of $22.5 million. As of May 25, 1994, the
Trust had approximately $52 million of credit available under these lines. The
Trust anticipates increasing its bank lines of credit to as much as $100 million
during 1994. Historically, the Trust has utilized its lines only as an interim
source of funds for new acquisitions and has subsequently replaced any such bank
borrowings with longer-term debt or equity capital when market conditions allow.
The Trust presently intends to issue $75 million to $100 million of 7 to 10
year senior unsecured debt during the third quarter of 1994 to help finance its
1994 apartment acquisitions, including the Portfolio Acquisition. To mitigate
the risks of rising interest rates, on May 18, 1994, the Trust entered into an
interest rate hedge agreement, which has the effect of limiting the Trust's
exposure to an increase in the 10-year Treasury Rate to a maximum of 7.197% for
$75 million of its debt to be issued on or before September 15, 1994.
During 1993, the Trust acquired 17 apartment communities containing 4,082
units at an aggregate cost of $118 million, including closing costs. The Trust
also made $10.4 million of capital improvements to its portfolio during the
year. This amount includes approximately $3.5 million of improvements at the
Trust's 10,924 mature apartment units that have been owned since the beginning
of 1992. Excluding English Hills (acquired December, 1991) which was still
undergoing rehabilitation in 1993, the remaining 10,348 mature units averaged
$270 per unit in capital expenditures. To date in 1994, the Trust has acquired
six apartment communities containing 2,068 units at a total cost of $77.8
million, including closing costs. In connection with one of these acquisitions,
the Trust assumed $12.4 million of tax-exempt housing bonds. In early April
1994, the Trust agreed to acquire a portfolio of 25 properties containing 5,170
units for approximately $162 million.
The Trust's goal is to acquire 6,000 or more apartment units in addition to
the Portfolio Acquisition, during 1994. Assuming a sufficient level of
acquisition activity, it will be necessary for the Trust to raise additional
capital later in the year. In connection with two of its 1993 acquisitions, the
Trust received regulatory approval for the issuance of approximately $11.2
million of tax-exempt housing bonds. These bonds were sold in the second quarter
of 1994. See "Recent Developments -- Proposed Acquisitions" and "Business
-- Proposed Portfolio Acquisition."
In April, 1993, the Trust engaged outside property management for most of
its shopping center properties following the decision to exit the commercial
property business. Although no formal plan has been adopted, management intends
to offer the Trust's seven Richmond, Virginia shopping centers for sale sometime
during the remainder of 1994. Management has committed to developing alternative
strategies that will enable the Trust to dispose of most of these properties
over the next few years.
The Trust's liquidity and capital resources are believed to be more than
adequate to meet its cash requirements for the foreseeable future.
INFLATION
Management believes that the direct effects of inflation on the Trust's
operations have been inconsequential.
BUSINESS
The Trust acquires, improves, operates, manages and selectively sells
properties with the principal objective of maximizing its funds from operations.
To meet this objective, the Trust has emphasized the acquisition of properties
that can be acquired at attractive initial yields and immediately increase funds
from operations. Historically, the Trust's primary investment policy has been to
acquire apartment properties presenting the opportunity for higher occupancy,
increased rents and enhanced property values through a program of renovation,
refurbishment and intensive property management. In 1991, the Trust expanded its
investment policy with the acquisition of apartment properties having higher
occupancies and requiring substantially less renovation. Generally, these
properties have been acquired at significant discounts from replacement cost and
at attractive initial yields. The Trust has also expanded into new markets, most
recently the Baltimore/Washington area and central Florida. Since 1991, the
Trust has acquired 42 apartment properties containing 11,305 units at a total
cost of approximately $328 million.
The Trust seeks to employ leverage conservatively using primarily corporate
debt, which is considered to be more flexible and less costly than mortgage debt
on individual properties. At March 31, 1994, approximately $459 million, or 75%,
of the Trust's real estate owned at cost was unencumbered by mortgage debt. The
Trust also uses tax-exempt housing bonds to finance eligible properties.
11
<PAGE>
The Trust considers apartments to be its principal business and plans to
commit substantially all of its investment portfolio and all of its new
acquisitions to apartments. Over the long term, management believes that
investment in apartments in the Southeast will benefit from the following
factors:
(Bullet) There has been a significant decline in apartment
construction in the Trust's target markets beginning in 1990
which has continued through the first quarter of 1994.
(Bullet) Only about two million apartments are projected to be built
in the 1990's. There were 600,000 completed in 1986 alone.
(Bullet) Approximately 12 million new households are expected to be
formed in the 1990's, and a majority of this growth is
projected in the South.
(Bullet) Approximately 36% of all households were renters at the start
of the decade. Despite historically low mortgage interest
rates, the proportion of renters has declined only slightly
over the past three years.
(Bullet) During this same period, only about 15% of all residential
construction permits have been for multifamily apartments.
(Bullet) There are estimates that a significant majority of today's
renter households cannot afford to buy a moderately priced
home in their region because of credit problems, the lack of
a down payment or a monthly payment that is too high.
(Bullet) Other demographic characteristics favor apartment demand
including an increase in single person and single parent
households, higher growth rates among minorities, additional
immigrant households and a decline in younger household
income.
Management also believes that demand for apartments within the Southeast will
grow faster than the national average for several reasons including both
population and job growth rates that are projected to be approximately 50%
greater than the national average. In several of the markets where the Trust
owns properties, the population and job growth rates for the decade are
projected to be more than double that of the national average.
The following chart shows the geographic distribution of the Trust's
apartment properties. Pro forma information gives effect to the proposed
acquisition by the Trust of the Portfolio Acquisition. See " -- Proposed
Portfolio Acquisition" and "Recent Developments. "
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF
APARTMENT NUMBER OF APARTMENT
PROPERTIES UNITS UNITS
HISTORICAL PRO FORMA HISTORICAL PRO FORMA HISTORICAL
<S> <C> <C> <C> <C> <C>
Richmond, Virginia................................ 12 12 3,170 3,170 16%
Columbia, South Carolina.......................... 6 10 1,500 2,914 8
Baltimore/Washington.............................. 6 11 1,535 2,621 8
Raleigh, North Carolina........................... 8 9 2,440 2,505 12
Charlotte, North Carolina......................... 8 11 1,700 2,186 8
Tampa/Clearwater, Florida......................... 7 7 1,999 1,999 10
Greenville/Spartanburg, South Carolina............ 3 7 587 1,330 3
Tidewater Virginia(1)............................. 5 5 1,140 1,140 6
Atlanta, Georgia.................................. 4 4 1,123 1,123 6
Nashville, Tennessee.............................. 3 3 842 842 4
Orlando, Florida.................................. 3 3 821 821 4
Wilmington, North Carolina........................ 3 3 661 661 3
Other North Carolina.............................. 6 6 1,288 1,288 6
Other Virginia.................................... 3 4 456 570 2
Other Georgia..................................... 1 2 240 468 1
Other South Carolina.............................. 1 2 168 408 1
Other Florida..................................... 1 2 312 400 2
Alabama........................................... 0 2 0 382 0
Delaware.......................................... 0 2 0 324 0
Total........................................ 80 105 19,982 25,152 100%
<CAPTION>
PRO FORMA
<S> <C>
Richmond, Virginia................................ 13%
Columbia, South Carolina.......................... 12
Baltimore/Washington.............................. 10
Raleigh, North Carolina........................... 10
Charlotte, North Carolina......................... 9
Tampa/Clearwater, Florida......................... 8
Greenville/Spartanburg, South Carolina............ 5
Tidewater Virginia(1)............................. 5
Atlanta, Georgia.................................. 4
Nashville, Tennessee.............................. 3
Orlando, Florida.................................. 3
Wilmington, North Carolina........................ 3
Other North Carolina.............................. 5
Other Virginia.................................... 2
Other Georgia..................................... 2
Other South Carolina.............................. 2
Other Florida..................................... 2
Alabama........................................... 1
Delaware.......................................... 1
Total........................................ 100%
</TABLE>
(1) The Norfolk/Virginia Beach/Newport News/Hampton area.
12
<PAGE>
APARTMENTS
The Trust's apartments consist of a mix of lower to upper income properties
with a majority being middle to moderate income. A majority of the tenants are
family households. The apartments are typically suburban, garden or townhouse
style units with one, two and three bedrooms. The units are generally
individually heated and cooled, with all appliances and wall-to-wall carpet.
Amenities normally include swimming pools, tennis courts, clubhouses and
playgrounds. Some of the apartment communities also have fitness centers,
volleyball courts, jacuzzis and racquet ball courts. The average cost for the
Trust's apartments, including all renovations and refurbishment costs, was
approximately $28,700 per unit at March 31, 1994. During the first quarter of
1994, apartment occupancy averaged 92.2% overall and 92.5% for the mature 13,832
units which were acquired prior to 1993.
The following table presents information concerning the Trust's apartment
properties.
<TABLE>
<CAPTION>
MORTGAGE AVERAGE
COST(1) DEBT(2) MONTHLY
DATE NO. OF (IN (IN RENT PER AVERAGE
LOCATION ACQUIRED UNITS MILLIONS) MILLIONS) UNIT(3) OCCUPANCY(4)
<S> <C> <C> <C> <C> <C> <C> <C>
NORTH CAROLINA
Beechwood Greensboro 12/22/93 208 $ 7.5 $ -- $529 91%
Bramblewood Goldsboro 12/31/84 188 4.4 0.7 401 98
Brynn Marr Jacksonville 12/31/84 196 5.2 -- 438 96
Canterbury Woods Charlotte 12/18/85 207 7.0 -- 432 83
Cedar Point Raleigh 12/18/85 168 7.3 -- 489 98
Cinnamon Ridge Raleigh 12/01/89 365 8.2 7.0 404 97
Colony Village New Bern 12/31/84 171 4.3 -- 381 95
Courtney Square Raleigh 07/08/93 200 6.4 -- 518 100
Cove at Lake Lynn Raleigh 12/01/92 225 7.3 -- 533 97
The Creek Wilmington 06/30/92 198 3.5 1.5 423 98
Emerald Bay Charlotte 02/06/90 250 7.2 -- 473 95
Forest Hills Wilmington 06/30/92 279 6.8 3.2 530 98
Grand Oaks Charlotte 05/01/84 243 7.0 -- 433 92
The Highlands Charlotte 01/17/84 176 4.7 -- 454 88
The Ledges Winston-Salem 08/13/86 239 6.6 -- 306 84
Liberty Crossing Jacksonville 11/30/90 286 6.0 1.8 396 97
Mill Creek Wilmington 09/30/91 184 5.8 -- 539 99
Park Green Raleigh 09/27/91 200 5.6 -- 509 100
Peppertree Charlotte 12/14/93 292 9.3 -- 510 95
The Shire (5) Raleigh 03/04/94 302 13.8 -- 612 97
Spring Forest Raleigh 05/21/91 404 11.3 -- 487 97
Summit on Park Charlotte 01/17/84 80 2.1 -- 479 86
Walnut Creek (6) Raleigh 05/17/94 576 24.9 -- -- --
Windsor Harbor Charlotte 01/13/89 200 6.2 -- 444 87
Woodland Hollow Charlotte 11/03/86 252 7.4 3.3 419 78
VIRGINIA
Azalea Richmond 12/31/84 156 3.9 -- 485 91
Bayberry Commons Portsmouth 04/07/88 192 5.0 -- 414 88
Courthouse Green Richmond 12/31/84 266 6.6 -- 459 90
Craig Manor Roanoke 11/06/87 108 3.2 -- 439 99
Eastwind Virginia Beach 04/04/88 200 6.7 -- 514 95
English Hills Richmond 12/06/91 576 15.9 -- 511 91
Hampton Court Alexandria 02/19/93 308 12.3 -- 714 94
Heather Lake Hampton 03/01/80 252 5.9 -- 520 96
Heritage Trace Newport News 06/30/89 200 4.7 3.9 378 95
Laurel Ridge Roanoke 05/17/88 216 4.0 3.0 320 97
Laurel Village Richmond 09/06/91 159 4.3 -- 546 97
Meadow Run Richmond 12/31/84 204 5.1 -- 444 94
Meadowdale Lakes Richmond 12/31/84 516 11.0 1.3 417 92
The Melrose Dumfries 12/11/85 370 8.2 5.3 438 97
Northview Roanoke 09/29/78 132 1.9 -- 406 97
Olde West Village Richmond 12/31/84(7) 502 15.6 4.0 506 85
Parkwood Court Alexandria 06/30/93 189 6.7 -- 638 87
River Road Terrace Petersburg 08/31/81 128 2.7 -- 408 100
Rollingwood Richmond 12/31/84 278 7.6 2.6 441 88
Timbercreek Richmond 08/31/83 160 3.5 -- 412 92
Towne Square Hopewell 08/27/85 76 1.8 1.3 382 98
Twin Rivers Hopewell 01/06/82 149 2.1 -- 375 97
Woodscape Newport News 12/29/87 296 9.7 -- 466 91
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE AVERAGE
COST(1) DEBT(2) MONTHLY
DATE NO. OF (IN (IN RENT PER AVERAGE
LOCATION ACQUIRED UNITS MILLIONS) MILLIONS) UNIT(3) OCCUPANCY(4)
<S> <C> <C> <C> <C> <C> <C> <C>
FLORIDA
Bay Cove Clearwater 12/31/84 336 $ 10.2 $ -- $531 92%
Dover Village Orlando 03/31/93 296 10.4 -- 576 94
Foxcroft Tampa 01/28/93 192 5.1 -- 490 92
Lake Washington Downs Melbourne 09/24/93 312 6.5 -- 428 94
Lakeside North (8) Altamonte Springs 04/14/94 360 12.6 12.4 -- --
Lakewood Place (5) Tampa 03/11/94 346 12.0 -- 544 93
Orange Orlando Orlando 01/28/93 165 4.2 -- 468 89
Palm Grove (8) Tampa 04/15/94 244 5.9 -- -- --
Pinebrook Clearwater 09/28/93 209 4.5 -- 478 93
Summit West Tampa 12/16/92 264 7.5 -- 495 99
Village at Old Tampa Bay Tampa 12/08/93 408 12.6 -- 550 78
SOUTH CAROLINA
Colonial Villa Columbia 09/16/92 296 6.9 -- 422 94
Country Walk Columbia 12/19/91 208 4.6 -- 459 84
Forestbrook Columbia 07/01/93 180 3.7 -- 419 87
Gable Hill Columbia 12/04/89 180 6.8 -- 532 93
Heatherwood Greenville 09/30/93 152 3.7 -- 434 91
Key Pines Spartanburg 09/25/92 241 5.0 -- 417 95
Patriot Place Florence 10/23/85 168 6.2 2.2 310 99
Plum Chase Columbia 01/04/91 300 8.2 7.0 454 91
Riverwind Spartanburg 12/31/93 194 7.2 -- 576 91
St. Andrews Commons Columbia 05/20/93 336 10.9 -- 517 96
GEORGIA
Colony of Stone Mountain Atlanta 06/12/90 404 11.3 -- 495 80
Crescent Square Atlanta 03/22/89 360 12.0 -- 432 92
Mill Creek Atlanta 11/11/88 224 7.8 -- 465 95
River Place (8) Macon 04/08/94 240 8.6 -- -- --
Stanford Village Atlanta 09/26/89 135 4.1 2.1 496 100
TENNESSEE
Harbour Town Nashville 12/10/93 185 4.1 -- 417 99
The Lakes Nashville 09/15/93 256 7.4 -- 500 85
2131 Apartments Nashville 12/16/92 401 10.7 -- 487 96
MARYLAND
Braeland Commons Columbia 12/29/92 172 8.8 5.1 645 98
Eden Commons Columbia 12/29/92 232 12.1 8.7 654 93
Gatewater Landing Baltimore 12/16/92 264 8.5 -- 586 78
Total 19,982 $ 584.3 $ 76.4
</TABLE>
(1) Represents at March 31, 1994 the sum of the total acquisition cost of the
property plus the capitalized cost of improvements made subsequent to
acquisition, less allowance for possible investment losses.
(2) Represents at March 31, 1994 the outstanding principal balances of the
mortgage loans, exclusive of discounts.
(3) Represents the weighted average of rent charged during the quarter ended
March 31, 1994 for occupied apartments and rent asked for unoccupied apartments
at 100% occupancy.
(4) Represents economic occupancy during the quarter ended March 31, 1994
expressed as the ratio of actual rent collected to potential rent collectible at
final occupancy.
(5) These properties were acquired during March, 1994. Average rent and
occupancy data are for the month of April, 1994.
(6) This property was acquired in May, 1994. Average rent and occupancy data for
a full month under Trust management are not available.
(7) This property was acquired in two phases. The acquisition dates were
December 31, 1984 and August 27, 1991.
(8) These properties were acquired in April, 1994. Average rent and occupancy
data for a full month under Trust management are not available.
14
<PAGE>
PROPOSED PORTFOLIO ACQUISITION
The Trust has contracted to acquire a portfolio of 25 apartment
communities containing 5,170 units in separate but related transactions
from certain affiliates of Clover Financial Corporation, a New Jersey
corporation, for an aggregate purchase price of approximately $162 million,
excluding closing costs. Two of the properties, Harris Pond and Royal Oaks,
have mortgage debt of $5.2 million and $6.5 million, respectively. The
following table sets forth certain information concerning the Portfolio
Acquisition.
<TABLE>
<CAPTION>
AVERAGE AVERAGE
NO. UNIT MONTHLY
OF YEAR SIZE RENT PER
LOCATION UNITS CONSTRUCTED (SQ. FT.) 1 BR 2 BR 3 BR UNIT(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NORTH CAROLINA
Excalibur Charlotte 240 1987 1,048 132 108 $532
Grove Park Raleigh 65 1970 1,083 9 44 12 506
Harris Pond Charlotte 170 1987 832 74 96 562
Mallard Green Charlotte 76 1985 836 32 44 591
VIRGINIA
Huntingwood Lynchburg 114 1976 918 36 32 46 481
Knolls of Newgate Fairfax 144 1972 892 40 104 634
FLORIDA
Marina Park North Miami 88 1974 943 76 12 665
SOUTH CAROLINA
Crossroads Columbia 622 1977-1984 683 382 240 404
Hampton Forest Greenville 130 1968 879 60 70 409
Hunting Ridge Greenville 152 1972 791 72 80 351
The Landing Greenville 224 1976 995 48 133 43 454
Overlook Greenville 237 1976 703 125 112 406
Park Columbia 292 1975-1977 696 172 120 403
St. Andrews Columbia 232 1972 1,131 48 152 32 517
Somerset Dorchester 240 1979 1,092 22 154 64 447
Waterford Columbia 268 1985 598 232 36 427
GEORGIA
Royal Oaks Savannah 228 1980 1,446 196 32 702
MARYLAND
Ellicott
Great Oaks City 300 1974 939 126 174 596
Holly Tree Waldorf 144 1973 786 36 108 685
Twin Coves Glen Burnie 132 1974 624 48 84 557
Woodside Glen Burnie 366 1966 909 117 249 588
ALABAMA
Indian Hills Anniston 140 1975 1,014 40 80 20 439
Three Fountains Montgomery 242 1973 1,097 76 136 30 477
DELAWARE
Dover Country Club Dover 224 1970 859 58 155 11 546
West Knoll Newark 100 1964 781 48 52 587
5,170 889 2,109 2,771 290
<CAPTION>
AVERAGE
OCCUPANCY(2)
<S> <C>
NORTH CAROLINA
Excalibur 94%
Grove Park 99
Harris Pond 95
Mallard Green 88
VIRGINIA
Huntingwood 95
Knolls of Newgate 83
FLORIDA
Marina Park 90
SOUTH CAROLINA
Crossroads 87
Hampton Forest 91
Hunting Ridge 91
The Landing 90
Overlook 89
Park 88
St. Andrews 93
Somerset 75
Waterford 89
GEORGIA
Royal Oaks 90
MARYLAND
Great Oaks 93
Holly Tree 92
Twin Coves 90
Woodside 90
ALABAMA
Indian Hills 88
Three Fountains 95
DELAWARE
Dover Country Club 92
West Knoll 93
</TABLE>
(1) Represents the weighted average of rent charged during the quarter
ended March 31, 1994 for occupied apartments and rent asked for
unoccupied apartments at 100% occupancy.
(2) Represents economic occupancy during the quarter ended March 31, 1994
expressed as the ratio of actual rent collected to potential rent
collectible at final occupancy.
15
<PAGE>
SHOPPING CENTERS AND OTHER PROPERTIES
The Trust owns approximately two million square feet of commercial property
space including 15 neighborhood and community shopping centers and four other
commercial properties. Commercial properties provide approximately 10 % of the
Trust's rental income. Near the end of 1992, management of the Trust determined
that the Trust should devote substantially all of its resources to the apartment
business. Consequently, the Trust has decided not to acquire any additional
commercial properties. The Trust plans to dispose of most or all of its
commercial properties over the next few years. Although no formal plans have
been adopted, management intends to offer the Trust's seven Richmond, Virginia
shopping centers for sale sometime during the remainder of 1994. Effective April
1, 1993, the Trust engaged independent fee management companies to manage all
but three of its commercial properties. The use of outside commercial property
management has not resulted in any significant changes in operating costs.
During the first quarter of 1994, net operating income from the Trust's
commercial properties was $2.0 million which was $141,000, or 7.6%, higher than
in the comparable period of 1993.
CAPITAL STOCK OF THE TRUST
COMMON STOCK
The Trust has authority to issue 100,000,000 shares of Common Stock, of
which 41,722,902 shares were issued and outstanding as of May 24, 1994. Holders
of Common Stock are entitled to receive dividends when and as declared by the
Board of Directors. Holders of Common Stock have one vote per share and
non-cumulative voting rights, which means that holders of more than 50% of the
shares voting can elect all of the directors if they choose to do so, and, in
such event, the holders of the remaining shares will not be able to elect any
directors. In the event of any voluntary or involuntary liquidation or
dissolution of the Trust, holders of Common Stock are entitled to share ratably
in the distributable assets of the Trust. Holders of Common Stock do not have
preemptive rights.
Covenants in its loan agreements with certain lenders restrict the payment
of distributions in excess of the sum of (i) current "cash flow," (ii) varying
additional amounts and (iii) the proceeds of Common Stock offerings subsequent
to various dates, all as defined in the particular loan agreement. The covenants
do not prohibit the Trust from paying distributions in order to continue its
qualification as a REIT under the Code.
PREFERRED STOCK
The Trust is authorized to issue 25,000,000 shares of Preferred Stock,
which is issuable without the vote of holders of Common Stock, for any corporate
purpose and for whatever consideration the Board of Directors deems appropriate,
in one or more series having varying voting rights, redemption and conversion
features, distribution (including liquidating distribution) rights and
preferences, and other rights, including rights of approval of specified
transactions, as may be determined by the Board of Directors in fixing series
characteristics. A series of Preferred Stock could be given more than one vote
per share and a series having preferential distribution rights could limit
Common Stock distributions and reduce the amount holders of Common Stock would
otherwise receive on dissolution of the Trust.
No Preferred Stock has been issued and, at present, the Board of Directors
has approved no specific financing or acquisition plans involving the issuance
of Preferred Stock and does not propose to fix the characteristics of any series
in anticipation of issuing shares of that series.
AFFILIATED TRANSACTIONS
The Virginia Stock Corporation Act contains provisions governing
"Affiliated Transactions " designed to deter uninvited takeovers of Virginia
corporations. These provisions, with several exceptions discussed below, require
approval of material acquisition transactions between a Virginia corporation and
any holder of more than 10% of any class of its outstanding voting shares (an
"Interested Shareholder ") by the holders of at least two-thirds of the
remaining voting shares. For three years following the time that the Interested
Shareholder becomes an owner of 10% of the outstanding voting shares, Virginia
corporations cannot engage in an Affiliated Transaction with such Interested
Shareholder without approval of two-thirds of the voting shares other than those
shares beneficially owned by the Interested Shareholder, and majority approval
of the "Disinterested Directors." At the expiration of the three year period,
the statute requires approval of Affiliated Transactions by two-thirds of the
voting shares other than those beneficially owned by the Interested Shareholder
absent an exception. The principal exceptions to the special voting requirement
apply to transactions proposed after the three year period has expired and
require either that the transaction be approved by a majority of the
corporation's Disinterested Directors or that the transaction satisfy the
fair-price requirements of the law.
16
<PAGE>
The Virginia Stock Corporation Act also provides that shares acquired in a
transaction that would cause the acquiring person's voting strength to cross any
of three thresholds (20%, 33%, or 50%) have no voting rights unless granted by a
majority vote of shares not owned by the acquiring person or any officer or
employee-director of the Trust. An acquiring person may require the Trust to
hold a special meeting of shareholders to consider the matter within 50 days of
its request.
REDEMPTION AND RESTRICTIONS ON TRANSFER
In order to preserve the Trust's status as a REIT as defined in the Code,
the Trust can redeem or stop the transfer of shares of Common Stock. The Trust's
Articles of Incorporation provide that the Trust is organized to qualify as a
REIT. Because the Code provides that the concentration of more than 50% in value
of the direct or indirect ownership of Common Stock in five or fewer individual
shareholders during the last six months of any year would result in the
disqualification of the Trust as a REIT, the Articles of Incorporation provide
that the Trust shall have the power (i) to redeem that number of concentrated
shares sufficient in the opinion of the Board of Directors of the Trust to
maintain or bring the direct or indirect ownership of Common Stock into
conformity with the requirements of the Code, and (ii) to stop the transfer of
Common Stock to any person whose acquisition thereof would, in the opinion of
the Trust's Board of Directors, result in such disqualification. The per share
redemption price of any shares redeemed by the Trust pursuant to this provision
shall be the last reported sale price for Common Stock as of the business day
preceding the day on which notice of redemption is given. The Board of Directors
of the Trust can require shareholders to disclose in writing to the Trust such
information with respect to ownership of Common Stock as it deems necessary to
comply with the REIT provisions of the Code.
REIT QUALIFICATION
The Trust operates in a manner intended to qualify for treatment as a REIT
under the Code. In general, a REIT which distributes to its shareholders at
least 95% of its taxable income (other than net capital gain) for a taxable year
and which meets certain other conditions will not be subject to federal income
taxation on income (including net capital gain) distributed for that year. If
the Trust fails to qualify in any taxable year, it will be taxed for federal
income tax purposes as a corporation for that year and distributions to
shareholders will not be deductible by the Trust in computing its taxable
income. Under such circumstances, the Trust also will be disqualified from being
treated as a REIT under the Code for the ensuing four fiscal years. Failure to
qualify could result in the Trust's incurring indebtedness and perhaps
liquidating investments in order to pay the resultant taxes.
17
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a Purchase Agreement (the
"Purchase Agreement "), the Trust has agreed to sell to each of the Underwriters
named below, and each of the Underwriters for whom Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Alex. Brown & Sons Incorporated, Dean Witter Reynolds
Inc., A.G. Edwards & Sons, Inc. and Scott & Stringfellow, Inc. are acting as
representatives (the "Representatives"), has severally agreed to purchase from
the Trust, the number of shares of Common Stock set forth below opposite their
respective names. The Underwriters are committed to purchase all of such shares
if any are purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...............................................
Alex. Brown & Sons Incorporated........................................
Dean Witter Reynolds Inc. .............................................
A.G. Edwards & Sons, Inc. .............................................
Scott & Stringfellow, Inc..............................................
Total.................................................... 7,000,000
</TABLE>
The Representatives of the Underwriters have advised the Trust that they
propose initially to offer the shares of Common Stock to the public at the
public offering price set forth on the cover of this Prospectus and to certain
dealers at such price less a concession not in excess of $. per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $. per share on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The Trust has granted the Underwriters an option exercisable within 30 days
after the date hereof to purchase up to 1,050,000 additional shares of Common
Stock to cover over-allotments, if any, at the initial public offering price,
less the underwriting discount set forth on the cover of this Prospectus, and,
with respect to any such shares issued after July 15, 1994, less an amount equal
to such distribution. If the Underwriters exercise this option, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage thereof which the number of shares to
be purchased by it shown in the foregoing table above bears to the 7,000,000
shares offered hereby.
The Trust and certain of its officers, directors and principal shareholders
have agreed that for a period of 90 days from the date of this Prospectus they
will not, without the prior written consent of the Representatives, offer, sell
or otherwise dispose of any shares of Common Stock, except for shares issued for
property acquisitions or grants of options or issuance of shares upon exercise
of options.
In the Purchase Agreement, the Trust has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
LEGAL OPINIONS
The legality of the Common Stock offered hereby is being passed upon for
the Trust by Hunton & Williams, Richmond, Virginia, and for the Underwriters by
Brown & Wood, New York, New York.
EXPERTS
The financial statements of the Trust incorporated by reference in its
annual report on Form 10-K for the year ended December 31, 1993 have been
audited by Ernst & Young, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The combined historical summary of gross income and direct operating
expenses of Holly Tree Park Apartments, Knolls at Newgate and Mallard Green
Apartments, included in the Trust's Current Report on Form 8-K, dated May 26,
1994,
18
<PAGE>
incorporated by reference in this Prospectus has been audited by BDO Seidman,
independent certified public accountants, to the extent and for the periods set
forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting. The combined statement of rental operations
of Clover Financial Partnership Properties, included in the Trust's Current
Report on Form 8-K, dated May 26, 1994, incorporated by reference herein, has
been incorporated herein in reliance upon the report dated May 19, 1994, of
Alloy, Silverstein, Shapiro, Adams, Mulford & Co., independent auditors, also
incorporated by reference herein, and upon the authority of such firm as experts
in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Trust with the Securities and Exchange
Commission (the "Commission ") under the Securities Exchange Act of 1934 (the
"Exchange Act") are hereby incorporated by reference in this Prospectus: (i) the
Trust's annual report on Form 10-K for the year ended December 31, 1993; (ii)
the Trust's quarterly report on Form 10-Q for the quarter ended March 31, 1994;
(iii) the Trust's Current Report on Form 8-K dated April 15, 1994; (iv) the
Trust's Current Report on Form 8-K dated May 26, 1994; and (v) the description
of the Common Stock contained in the Trust's registration statement on Form 8-A
dated April 19, 1990 filed under the Exchange Act, including any amendment or
reports filed for the purpose of updating such description. All documents filed
by the Trust pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference herein.
Any statement contained herein or 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 contained herein
or in any other subsequently filed document, as the case may be, which also is
or is 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.
The Trust will provide on request and without charge to each person to whom
this Prospectus is delivered a copy (without exhibits) of any or all documents
incorporated by reference into this Prospectus. Requests for such copies should
be directed to United Dominion Realty Trust, Inc., 10 South 6th Street, Suite
203, Richmond, Virginia 23219-3802, Attention: Secretary (telephone
804/780-2691).
AVAILABLE INFORMATION
The Trust is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Commission. Reports, proxy statements and other information filed by the Trust
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
Regional Offices located at 500 West Madison Street (Suite 1400), Chicago,
Illinois 60661, and 7 World Trade Center, New York, New York 10048, and can also
be inspected and copied at the offices of the New York Stock Exchange at 20
Broad Street, New York, New York 10005. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payments of the prescribed fees.
19
<PAGE>
INDEX TO PRO FORMA FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Pro Forma Financial Information (unaudited):
United Dominion Realty Trust, Inc.
Pro Forma Balance Sheet as of March 31, 1994...................................................................... F-2
Notes to Pro Forma Balance Sheet.................................................................................. F-3
Pro Forma Statements of Operations for the Three Months Ended
March 31, 1994 and for the Year Ended December 31, 1993......................................................... F-4
Notes to Pro Forma Statements of Operations....................................................................... F-6
</TABLE>
F-1
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
PRO FORMA BALANCE SHEET
MARCH 31, 1994
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITIONS
PREVIOUSLY
REPORTED ON
PORTFOLIO FORM 8-K DATED
HISTORICAL (A) ACQUISITION APRIL 15, 1994
<S> <C> <C> <C>
BALANCE SHEET
ASSETS
Real estate owned
Apartments............................................................. $532,227 $ 162,997(B) $ 21,198(G)
Shopping centers....................................................... 74,450
Office and Industrial.................................................. 4,593
611,270 162,997 21,198
Less accumulated depreciation.......................................... 97,150
514,120 162,997 21,198
Cash and cash equivalents................................................ 10,489
Other assets............................................................. 10,993
$535,602 $ 162,997 $ 21,198
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable................................................... $ 72,660 $ 11,700(C)
Notes payable............................................................ 188,101 52,597(D) $ 21,198(H)
Accounts payable, accrued expenses and other............................. 7,259
Tenants' deposits and rents paid in advance.............................. 3,372
Distributions payable to shareholders.................................... 8,130
279,522 64,297 21,198
Shareholders' equity
Common stock, $1 par value; 60,000,000 shares authorized 41,703,785
shares
issued and outstanding (48,703,785 in pro forma)..................... 41,704 7,000(E)
Additional paid in capital............................................. 302,981 91,700(F)
Notes receivable from office shareholders.............................. (4,096)
Distributions in excess of earnings.................................... (84,509)
Total shareholders' equity............................................. 256,080 98,700 --
$535,602 $ 162,997 $ 21,198
<CAPTION>
PRO
FORMA
<S> <C>
BALANCE SHEET
ASSETS
Real estate owned
Apartments............................................................. $716,422
Shopping centers....................................................... 74,450
Office and Industrial.................................................. 4,593
795,465
Less accumulated depreciation.......................................... 97,150
698,315
Cash and cash equivalents................................................ 10,489
Other assets............................................................. 10,993
$719,797
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable................................................... $ 84,360
Notes payable............................................................ 261,896
Accounts payable, accrued expenses and other............................. 7,259
Tenants' deposits and rents paid in advance.............................. 3,372
Distributions payable to shareholders.................................... 8,130
365,017
Shareholders' equity
Common stock, $1 par value; 60,000,000 shares authorized 41,703,785
shares
issued and outstanding (48,703,785 in pro forma)..................... 48,704
Additional paid in capital............................................. 394,681
Notes receivable from office shareholders.............................. (4,096)
Distributions in excess of earnings.................................... (84,509)
Total shareholders' equity............................................. 354,780
$719,797
</TABLE>
F-2
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO PRO FORMA BALANCE SHEET
MARCH 31, 1994
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying pro forma balance sheet assumes the completion, as of
March 31, 1994, of (i) the sale of 7,000,000 shares of Common Stock at an
assumed price of $15 per share (the "Offering"), (ii) the proposed acquisition
of 25 apartment communities (the "Portfolio Acquisition"), (iii) the acquisition
of four apartment communities purchased in 1994 (previously reported on Form 8-K
dated April 15, 1994), and (iv) the borrowing of $52,597,000 necessary to fund a
portion of the Portfolio Acquisition. In management's opinion, all significant
adjustments necessary to reflect these transactions have been made. The pro
forma balance sheet should be read in conjunction with the Trust's audited
financial statements for the year ended December 31, 1993 and its unaudited
financial statements for the first quarter ended March 31, 1994.
The unaudited Pro Forma Balance Sheet is not necessarily indicative of what
the Trust's financial position would have been if the Offering and related
acquisitions had been consummated as of March 31, 1994, nor does it purport to
be indicative of the Trust's financial position in future periods.
2. ADJUSTMENTS TO THE PRO FORMA BALANCE SHEET
(A) Represents the Trust's Historical Balance Sheet contained in the
Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.
(B) Represents the initial purchase price of $161,950,000 for the 25
properties proposed to be acquired in the Portfolio Acquisition plus estimated
closing costs of $1,047,000.
(C) Represents the assumption of two mortgage loans encumbering two
properties included in the Portfolio Acquisition as follows:
<TABLE>
<CAPTION>
LOAN INTEREST
PROPERTY NAME AMOUNT RATE
<S> <C> <C>
Harris Pond Apartments................................................... $5,200,000 8.75%
Royal Oaks Apartments.................................................... 6,500,000 8.50%
</TABLE>
(D) Represents assumed additional borrowings of $52,597,000 necessary to
fund a portion of the Portfolio Acquisition.
(E) Represents the issuance of 7,000,000 shares in the Offering.
(F) Represents the net proceeds from the Offering attributable to
Additional Paid in Capital. In determining net proceeds, underwriting discounts
and other offering costs equal to 6% of gross proceeds, or $6,300,000, have been
assumed.
(G) Represents the aggregate purchase price of $21,198,000 of two apartment
communities purchased on April 8, 1994 and April 14, 1994, as previously
reported on Form 8-K dated April 15, 1994.
(H) Represents assumed additional borrowings of $21,198,000 on unsecured
notes payable necessary to fund the acquisitions of the properties in (G).
F-3
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITIONS
PREVIOUSLY
REPORTED ON PRO
PORTFOLIO FORM 8-K DATED FORMA
HISTORICAL (A) ACQUISITION (B) APRIL 15, 1994 (C) ADJUSTMENTS
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income........................................... $ 26,706 $ 7,149 $1,421
Property expenses:
Utilities............................................. 2,712 737 81
Repairs & maintenance................................. 3,716 1,174 257
Real estate taxes..................................... 1,802 511 64
Property management................................... 921 357 72 $ (177)(E)
Other operating expenses.............................. 2,234 1,127 283 (139)(F)
Depreciation of real estate owned..................... 5,706 1,168(G)
17,091 3,906 757 852
Income from property operations........................... 9,615 3,243 664 (852)
Interest income........................................... 114
9,729 3,243 664 (852)
EXPENSES
Interest................................................ 4,655 1,581(I)
General and administrative.............................. 1,474
Other depreciation and amortization..................... 185
6,314 -- -- 1,581
Income before gains (losses) on investments............... 3,415 3,243 664 (2,433)
Gains (losses) on sale of investments.....................
Net income................................................ $ 3,415 $ 3,243 $ 664 $(2,433)
Net income per share...................................... $ 0.08
Distributions declared per share.......................... .195
Weighted average number of shares outstanding............. 41,688 7,000
<CAPTION>
PRO
FORMA
<S> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income........................................... $35,276
Property expenses:
Utilities............................................. 3,530
Repairs & maintenance................................. 5,147
Real estate taxes..................................... 2,377
Property management................................... 1,173
Other operating expenses.............................. 3,505
Depreciation of real estate owned..................... 6,874
22,606
Income from property operations........................... 12,670
Interest income........................................... 114
12,784
EXPENSES
Interest................................................ 6,236
General and administrative.............................. 1,474
Other depreciation and amortization..................... 185
7,895
Income before gains (losses) on investments............... 4,889
Gains (losses) on sale of investments.....................
Net income................................................ $ 4,889
Net income per share...................................... $ 0.10
Distributions declared per share.......................... .195
Weighted average number of shares outstanding............. 48,688
</TABLE>
F-4
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITIONS ACQUISITIONS
PREVIOUSLY PREVIOUSLY
REPORTED ON REPORTED ON PRO
PORTFOLIO FORM 8-K DATED FORM 8-K DATED FORMA
HISTORICAL (A) ACQUISITION (B) APRIL 15, 1994 (C) DECEMBER 31, 1993 (D) ADJUSTMENTS
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income..................... $ 89,084 $28,345 $6,990 $ 9,424
Property expenses:
Utilities....................... 7,838 2,461 379 846
Repairs & maintenance........... 13,950 4,439 773 1,407
Real estate taxes............... 5,777 1,975 565 780
Property management............. 2,782 1,413 297 422 $ (816)(E)
Other operating expenses........ 7,512 4,489 1,236 1,552 (554)(F)
Depreciation of real estate
owned......................... 19,764 6,878(G)
57,623 14,777 3,250 5,007 5,508
Income from property operations..... 31,461 13,568 3,740 4,417 (5,508)
Interest income..................... 708 (438)(H)
32,169 13,568 3,740 4,417 (5,946)
EXPENSES
Interest.......................... 16,938 8,183(I)
General and administrative........ 3,349
Other depreciation and
amortization.................... 596
20,883 -- -- -- 8,183
Income before gains (losses) on
investments....................... 11,286 13,568 3,740 4,417 (14,129)
Gains (losses) on sale of
investments....................... (89)
Net income.......................... $ 11,197 $13,568 $3,740 $ 4,417 $ (14,129)
Net income per share................ $ 0.29
Distributions declared per share.... 0.70
Weighted average number of shares
outstanding....................... 38,202 7,000
<CAPTION>
PRO
FORMA
<S> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income..................... $133,843
Property expenses:
Utilities....................... 11,524
Repairs & maintenance........... 20,569
Real estate taxes............... 9,097
Property management............. 4,098
Other operating expenses........ 14,235
Depreciation of real estate
owned......................... 26,642
86,165
Income from property operations..... 47,678
Interest income..................... 270
47,948
EXPENSES
Interest.......................... 25,121
General and administrative........ 3,349
Other depreciation and
amortization.................... 596
29,066
Income before gains (losses) on
investments....................... 18,882
Gains (losses) on sale of
investments....................... (89 )
Net income.......................... $ 18,793
Net income per share................ $ 0.42
Distributions declared per share.... 0.70
Weighted average number of shares
outstanding....................... 45,202
</TABLE>
F-5
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND
THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying pro forma statements of operations assume the completion
of (i) the sale of 7,000,000 shares of Common Stock at an assumed price of $15
per share (the "Offering"), (ii) the proposed acquisition of 25 apartment
communities (the "Portfolio Acquisition"), (iii) the acquisition of four
apartment communities purchased in 1994 previously reported on Form 8-K dated
April 15, 1994, and (iv) the acquisitions of eleven apartment communities
previously reported on Form
8-K dated December 31, 1993, at the beginning of each period presented. In
addition, such pro forma statements of operations also assume that $35,240,000
of 7 year senior unsecured notes are outstanding for approximately 8 months for
the year ended December 31, 1993 and 2 months for the first quarter of 1994. In
management's opinion, all significant adjustments necessary to reflect these
transactions have been made. The pro forma statements of operations should be
read in conjunction with the Trust's audited financial statements for the year
ended December 31, 1993 and its unaudited financial statements for the three
months ended March 31, 1994.
The unaudited pro forma statements of operations are not necessarily
indicative of what the Trust's results would have been for the three months
ended March 31, 1994 and the year ended December 31, 1993 if the Offering and
related acquisitions had been consummated at the beginning of each period
presented, nor do they purport to be indicative of the results of operations or
financial position in future periods.
2. ADJUSTMENTS TO THE PRO FORMA STATEMENTS OF OPERATIONS
(A) Represents the Trust's Historical Statements of Operations contained in
its Quarterly Report on Form 10-Q for the three months ended March 31, 1994 and
its Annual Report on Form 10-K for the year ended December 31, 1993.
(B) Represents actual rental income and related operating expenses of the
proposed Portfolio Acquisition, as reported on Form 8-K dated May 26, 1994.
(C) Represents rental income and related operating expenses of four
apartment acquisitions, as previously reported on Form 8-K dated April 15, 1994.
(D) Reflects the net adjustments required to allow for a full year of
rental income and operating expenses for the year ended December 31, 1993, for
the Trust's acquisitions reported on Form 8-K during 1993.
(E) Reflects the net decrease in property management fees for the Portfolio
Acquisition and the Trust's 1993 and 1994 acquisitions. The Trust internally
manages its apartment properties at a cost of approximately 3% of rental income.
(F) Reflects the net decrease in insurance expense to reflect that the
Trust insures its apartments for approximately $107 per unit less that the
historical insurance expense of the Portfolio Acquisition.
(G) Represents the net adjustments to depreciation expense as outlined in
the table below. Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets. Buildings have been depreciated
over 35 years and other improvements over 15 years based upon an assumed
allocation of the estimated initial cost of the Portfolio Acquisition.
<TABLE>
<CAPTION>
3 MONTHS ENDED 12 MONTHS ENDED
MARCH 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
Increase related to the Portfolio
Acquisition $1,022,000 $ 4,088,000
Increase related to the acquisitions
previously reported on Form 8-K dated
April 15, 1994 146,000 1,280,000
Increase related to the acquisitions
previously reported on Form 8-K dated
December 31, 1993 -- 1,510,000
Total $1,168,000 $ 6,878,000
</TABLE>
F-6
<PAGE>
(H) Reflects the reduction of interest income associated with the use of
short-term investments to acquire the properties at assumed interest rates in
effect at the time of each respective acquisition for the year ended December
31, 1993, for the Trust's 1993 acquisitions reported on Form 8-K during 1993.
(I) Reflects the additional interest expense associated with the increase
in bank lines of credit and the assumption of two mortgage notes assumed to have
been incurred by the Trust to purchase (i) the Portfolio Acquisition at interest
rates and maturities which are currently available to the Trust, (ii) the 1994
apartment acquisitions through May 13, 1994 at interest rates under the Trust's
bank lines of credit on the date of purchase, and (iii) the 1993 apartment
acquisitions made by the Trust at interest rates and maturities that were
available at the time of each acquisition as follows:
<TABLE>
<CAPTION>
3 MONTHS ENDED 12 MONTHS ENDED
MARCH 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
Increase related to the Portfolio
Acquisition $1,192,000 $ 4,769,000
Increase related to the acquisitions
previously reported on Form 8-K
dated April 15, 1994 389,000 1,871,000
Increase related to the acquisitions
previously reported on Form 8-K
dated December 31, 1993 -- 1,543,000
Total $1,581,000 $ 8,183,000
</TABLE>
F-7
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE TRUST OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE TRUST SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Trust......................................... 3
Recent Developments............................... 3
Use of Proceeds................................... 4
Capitalization.................................... 5
Price Range of Common Stock
and Distributions............................... 6
Management........................................ 7
Selected Financial Data........................... 8
Mananagement's Discussion and Analysis of
Financial Condition and Operations.............. 9
Business.......................................... 11
Capital Stock of the Trust........................ 16
Underwriting...................................... 18
Legal Opinions.................................... 18
Experts........................................... 18
Incorporation of Certain Documents by Reference... 19
Available Information............................. 19
Index to Pro Forma Financial Statements........... F-1
</TABLE>
7,000,000 SHARES
[LOGO]
COMMON STOCK
PROSPECTUS
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
SCOTT & STRINGFELLOW, INC.
JUNE , 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................................. $ 40,250
Accounting fees and expenses........................................................ 45,000
Blue Sky fees and expenses.......................................................... 10,000
Legal fees and expenses............................................................. 45,000
New York Stock Exchange listing fee................................................. 28,000
Printing............................................................................ 50,000
Miscellaneous....................................................................... 11,750
TOTAL.......................................................................... $230,000
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Directors and officers of the Trust may be indemnified against liabilities,
fines, penalties, and claims imposed upon or asserted against them as provided
in the Virginia Stock Corporation Act and the Articles of Incorporation. Such
indemnification covers all costs and expenses reasonably incurred by a director
or officer. The Board of Directors, by a majority vote of a quorum of
disinterested directors or, under certain circumstances, independent counsel
appointed by the Board of Directors, must determine that the director or officer
seeking indemnification was not guilty of willful misconduct or a knowing
violation of the criminal law. In addition, the Virginia Stock Corporation Act
and the Trust's Articles of Incorporation may under certain circumstances
eliminate the liability of directors and officers in a shareholder or derivative
proceeding.
If the person involved is not a director or officer of the Trust, the Board
of Directors may cause the Trust to indemnify to the same extent allowed for
directors and officers of the Trust such person who was or is a party to a
proceeding, by reason of the fact that he is or was an employee or agent of the
Trust, or is or was serving at the request of the Trust as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
1- Form of Purchase Agreement
4(a)- Specimen Common Stock Certificate (filed as Exhibit 4(i) to the Trust's Annual Report on Form 10 -K for
the year ended December 31, 1993, and incorporated by reference herein)
4(b)(i)- Restated Articles of Incorporation (filed as Exhibit 3 to the Trust's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992, and incorporated by reference herein)
4(b)(ii)- Amendment of Restated Articles of Incorporation (filed as Exhibit 6(a)(1) to Amendment No. 3 to the
Trust's Form 8-A Registration Statement dated April 20, 1993 and incorporated by reference herein)
4(b)(iii)- Amendment of Restated Articles of Incorporation (filed as Exhibit 6(a)(2) to an amendment to the Trust's
Form 8-A Registration Statement dated May 26, 1994 and incorporated by reference herein)
4(c)- By-laws (filed as Exhibit 4(c) to the Trust's Form S-3 Registration Statement (Registration No. 33-44743)
filed with the Commission on December 31, 1991, and incorporated by reference herein)
4(c)(i)- Loan Agreement dated as of November 7, 1991, between the Trust and Aid Association for Lutherans (filed
as Exhibit 6(c)(1) to Amendment No. 1 to the Trust's Form 8-A Registration Statement dated December 31,
1991 and incorporated by reference herein)
4(c)(ii)- Loan Agreement dated as of November 14, 1991, between the Trust and Signet Bank/Virginia (filed as
Exhibit 6(c)(2) to Amendment No. 1 to the Trust's Form 8-A Registration Statement dated December 31,
1991 and incorporated by reference herein)
4(c)(iii)- Note Purchase Agreement dated as of February 19, 1992, between the Trust and Principal Mutual Life
Insurance Company (filed as Exhibit 6(c)(3) to Amendment No. 2 to the Trust's Form 8-A Registration
Statement dated April 13, 1992 and incorporated by reference herein)
4(c)(iv)- Credit Agreement dated as of December 15, 1992, between the Trust and Signet Bank/Virginia (filed as
Exhibit 6(c)(4) to Amendment No. 3 to the Trust's Form 8-A Registration Statement dated April 20, 1993
and incorporated by reference herein)
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
4(c)(v)- Note Purchase Agreement dated as of January 15, 1993, between the Trust and CIGNA Property and Casualty
Insurance Company, Connecticut General Life Insurance Company, Connecticut General Life Insurance
Company, on behalf of one or more separate accounts, Insurance Company of North America, Principal
Mutual Life Insurance Company and Aid Association for Lutherans (filed as Exhibit 6(c)(5) to Amendment
No. 3 to the Trust's Form 8-A Registration Statement dated April 20, 1993 and incorporated by reference
herein)
5- Opinion of Hunton & Williams
23(a)- Consent of Ernst & Young
23(b)- Consent of BDO Seidman
23(c)- Consent of Alloy, Silverstein, Shapiro, Adams, Mulford & Co.
23(d)- Consent of Hunton & Williams (included in Exhibit 5)
24- Power of Attorney (located on the signature page of this Registration Statement)
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(b) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of the
registration statement in reliance upon Rule 430A and contained in the form of
propectus filed by the registrant pursuant to 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed part of the registration statement as of the
time it was declared effective.
(c) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at such time shall be deemed the initial
BONA FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions of the Virginia Code, the Articles of
Incorporation or By-laws of the registrant or resolutions of the Board of
Directors of the registrant adopted pursuant thereto, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Richmond, Commonwealth of Virginia, on
May 26, 1994.
UNITED DOMINION REALTY TRUST, INC.
By: /S/ JOHN P.
MCCANN
John P. McCann
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on May 26, 1994. Each of the undersigned officers and
directors of the registrant hereby constitutes John P. McCann and James Dolphin,
either of whom may act, his true and lawful attorneys-in-fact with full power to
sign for him and in his name in the capacities indicated below and to file any
and all amendments to the registration statement filed herewith, making such
changes in the registration statement as the registrant deems appropriate, and
generally to do all such things in his name and behalf in his capacity as an
officer and director to enable the registrant to comply with the provisions of
the Securities Act of 1933 and all requirements of the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
SIGNATURE TITLE & CAPACITY
<S> <C>
/s/ JOHN P. MCCANN President, Chief Executive Officer (Principal Executive Officer)
and Director
John P. McCann
/s/ JAMES DOLPHIN Senior Vice President, Chief Financial Officer (Principal
Financial and Accounting Officer) and Director
James Dolphin
/s/ JEFF C. BANE Director
Jeff C. Bane
/s/ ROBERT P. BUFORD Director
Robert P. Buford
/s/ R. TOMS DALTON, JR. Director
R. Toms Dalton, Jr.
/s/ BARRY M. KORNBLAU Director
Barry M. Kornblau
/s/ JOHN C. LANFORD Director
John C. Lanford
/s/ H. FRANKLIN MINOR Director
H. Franklin Minor
/s/ C. HARMON WILLIAMS, JR. Director
C. Harmon Williams, Jr.
</TABLE>
II-3
` Draft 5/25/94
7,000,000 Shares
UNITED DOMINION REALTY TRUST, INC.
(a Virginia corporation)
Shares of Common Stock
($1.00 Par Value)
PURCHASE AGREEMENT
June __, 1994
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
ALEX. BROWN & SONS INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
SCOTT & STRINGFELLOW, INC.
As Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1305
Dear Sirs:
United Dominion Realty Trust, Inc., a Virginia corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Alex. Brown & Sons
Incorporated ("Alex. Brown"), Dean Witter Reynolds Inc. ("Dean Witter"),
A.G. Edwards & Sons, Inc. ("A.G. Edwards") and Scott & Stringfellow, Inc.
("Scott & Stringfellow") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10),
for whom Merrill Lynch, Alex. Brown, Dean Witter, A.G. Edwards and Scott &
Stringfellow are acting as representatives (in such capacity, Merrill
Lynch, Alex. Brown, Dean Witter, A.G. Edwards and Scott & Stringfellow
shall hereinafter be referred to as the "Representatives"), with respect to
the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the number of shares of common stock, $1.00
par value, of the Company (the "Common Stock") set forth in said Schedule
A, except as may otherwise be provided in the Pricing Agreement, as
hereinafter defined, and with respect to the grant by the Company to the
Underwriters of the option described in Section 2 hereof to purchase all or
any part of an additional 1,050,000 shares to cover over-allotments. The
aforesaid 7,000,000 shares (the "Initial Shares"), together with all or any
part of the 1,050,000 shares subject to the option described in Section 2
hereof (the "Option Shares"), are collectively hereinafter called the
"Shares".
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement
may take the form of an exchange of any standard form of written
telecommunication between the Company and the Representatives and shall
specify such applicable information as is indicated in Exhibit A hereto.
The offering of the Shares will be governed by this Agreement, as
supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be
deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-_____) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "1933 Act"), has filed such
amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof. Such registration statement (as
amended, if applicable) and the prospectus constituting a part thereof
(including in each case all documents incorporated by reference therein and
the information, if any, deemed to be a part thereof pursuant to Rule
430A(b) of the rules and regulations under the 1933 Act (the "1933 Act
Regulations")), as from time to time amended or supplemented pursuant to
the 1933 Act, are hereinafter referred to as the "Registration Statement"
and the "Prospectus", respectively, except that if any revised prospectus
shall be provided to the Underwriters by the Company for use in connection
with the offering of the Shares which differs from the Prospectus on file
at the Commission at the time the Registration Statement becomes effective
(whether or not such revised prospectus is required to be filed by the
Company pursuant to Rule 424(b) of the 1933 Act Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use.
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Representatives deem advisable after
the Registration Statement becomes effective and the Pricing Agreement has
been executed and delivered.
Section 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter of the
date hereof and as of the date of the Pricing Agreement (such latter date
being hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and
at the Representation Date, the Registration Statement will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
The Prospectus, at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of
the Shares which differs from the Prospectus on file at the Commission
at the time the Registration Statement becomes effective, in which
case at the time it is first provided to the Underwriters for such
use) and at Closing Time referred to in Section 2, will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection
shall not apply to that part of the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the
Representatives expressly for use in the Registration Statement or
Prospectus.
(ii) The documents incorporated by reference into the Prospectus
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they
were filed with the Commission or as subsequently amended, complied in
all material respects with the requirements of the Securities Exchange
Act of 1934 (the "1934 Act") and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, at the time the
Registration Statement becomes effective and at Closing Time, will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(iii) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the Commonwealth
of Virginia, with full power and authority to own, lease and operate
its properties and conduct its business as described in the
Prospectus; and the Company is duly qualified to transact business in
all jurisdictions in which the conduct of its business requires such
qualification except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company.
(iv) The Company has one subsidiary, The Commons of Columbia,
Inc., a limited purpose corporation, which has been duly organized and
is validly existing as a corporation in good standing under the laws
of the Commonwealth of Virginia; all of the issued and outstanding
capital stock of such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(v) The outstanding shares of Common Stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable; the Shares have been duly authorized and when issued
and paid for as contemplated herein and in the Pricing Agreement will
be validly issued, fully paid and non-assessable; and no preemptive
rights of shareholders exist with respect to any of the Shares or the
issue and sale thereof.
(vi) The capitalization of the Company is as set forth in the
Prospectus; the Shares conform with the statements concerning them in
the Prospectus.
(vii) The financial statements together with related notes and
schedules of the Company and of the other entities as set forth or
incorporated by reference in the Registration Statement present fairly
the financial position and the results of operations of the Company
and the respective entities at the indicated dates and for the
indicated periods. Such financial statements have been prepared in
accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of results for such
periods have been made. The summary financial and statistical data
included in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with the
financial statements presented therein. The pro forma financial
statements of the Company as adjusted as set forth therein and in the
notes thereto included in the Registration Statement and the
Prospectus reflect all adjustments necessary to summarize fairly the
pro forma combined financial position of the Company at the dates
indicated and the pro forma results of its operations for the periods
specified.
(viii) There is no action or proceeding pending or, to the
knowledge of the Company, threatened against the Company before any
court or administrative agency which might result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company except
as set forth in the Prospectus.
(ix) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal
property referred to in the Prospectus as owned or leased by the
Company, in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those referred to
in the Prospectus or which are not material in amount. (For purposes
of the preceding sentence, the term "Company" includes the subsidiary
of the Company as referred to in paragraph (iv) above.) Each lease of
real property by the Company as lessor requiring annual lease payments
in excess of $100,000 is the legal, valid and binding obligation of
the lessee in accordance with its terms (except that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought and to
the Bankruptcy Act) and the rents which at present have remained due
and unpaid for more than 30 days are not payable under leases such
that, were no further rental payments to be received under such
leases, the financial condition or results of operations of the
Company would be materially adversely affected thereby. The Company
has no reason to believe that the lessee under any lease (excluding
leases for which rent payments due for the remainder of such lease are
less than $500,000) calling for annual lease payments in excess of
$500,000 is not financially capable of performing its obligations
thereunder.
(x) The Company has filed all Federal, local and foreign income
tax returns which have been required to be filed and has paid all
taxes indicated by said returns and all assessments received by it to
the extent that such taxes have become due and are not being contested
in good faith.
(xi) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change or
development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company or the
earnings, business affairs, management, or business prospects of the
Company whether or not occurring in the ordinary course of business,
and (B) there has not been any material transaction entered into by
the Company, other than those in the ordinary course of business. The
Company has no material contingent obligations which are not disclosed
in the Registration Statement and the Prospectus, as they may be
amended or supplemented.
(xii) The Company is not in default under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a
party or by which it or any of its properties is bound and which
default is of material significance in respect of the business or
financial condition of the Company. The consummation of the
transactions herein contemplated and the fulfillment of the terms
hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company is a party, or of the Articles of Incorporation or By-Laws of
the Company or any order, rule or regulation applicable to the Company
of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the Pricing Agreement
and the consummation of the transactions herein contemplated (except
such additional steps as may be required by the National Association
of Securities Dealers, Inc. (the "NASD") or may be necessary to
qualify the Shares for public offering by the Underwriters under State
securities or Blue Sky laws) has been obtained or made and is in full
force and effect.
(xiv) The Company holds all material licenses, certificates and
permits from governmental authorities which are necessary to the
conduct of its business; and the Company has not infringed any
patents, patent rights, trade names, trademarks or copyrights, which
infringement is material to the business of the Company.
(xv) The accountants who certified the financial statements
filed with the Commission as part of, or incorporated by reference in,
the Registration Statement and Prospectus, are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(xvi) With respect to all tax periods regarding which the
Internal Revenue Service is or will be entitled to assert any claim,
the Company has met the requirements for qualification as a real
estate investment trust under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended, and the Company's present and
contemplated operations, assets and income continue to meet such
requirements; and the Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xvii) The conditions for use of registration statements on Form
S-3 set forth in the General Instructions on Form S-3 have been
satisfied and the Company is entitled to use such form for the
transaction contemplated herein.
(xviii) The Company has no knowledge of (a) the unlawful presence
of any hazardous substances, hazardous materials, toxic substances or
waste materials (collectively, "Hazardous Materials") on any of the
properties owned by it, or of (b) any unlawful spills, releases,
discharges or disposal of Hazardous Materials that have occurred or
are presently occurring off such properties as a result of any
construction on or operation and use of such properties which presence
or occurrence would materially adversely affect the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company. In connection with the construction on or
operation and use of the properties owned by the Company, the Company
represents that, as of the date of this Agreement, it has no knowledge
of any material failure to comply with all applicable local, state and
federal environmental laws, regulations, ordinances and administrative
and judicial orders relating to the generation, recycling, reuse,
sale, storage, handling, transport and disposal of any Hazardous
Materials.
(xix) The Company and certain affiliates of Clover Financial
Corporation are parties to individual purchase agreements providing
for the acquisition of twenty-five properties by the Company (the
"Portfolio Acquisition"). Nothing has come to the attention of the
Company which would lead it to believe that, had the Portfolio
Acquisition been consummated as of the date of this Agreement, the
representations and warranties contained in this Section 1 would not
remain true and correct in all material respects.
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall
be deemed a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
Section 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter agrees to purchase from the Company, at the price per
share set forth in the Pricing Agreement, the number of Shares set forth in
Schedule A opposite the name of such Underwriter (except as otherwise
provided in the Pricing Agreement), plus any additional number of Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(1) If the Company has elected not to rely upon Rule 430A under
the 1933 Act Regulations, the initial public offering price and the
purchase price per share to be paid by the several Underwriters for
the Shares have each been determined and set forth in the Pricing
Agreement, dated the date hereof, and an amendment to the Registration
Statement and the Prospectus will be filed before the Registration
Statement becomes effective.
(2) If the Company has elected to rely upon Rule 430A under the
1933 Act Regulations, the purchase price per share to be paid by the
several Underwriters for the Shares shall be an amount equal to the
initial public offering price, less an amount per share to be
determined by agreement between the Representatives and the Company.
The initial public offering price per share of the Shares shall be a
fixed price to be determined by agreement between the Representatives
and the Company. The initial public offering price per share of the
Shares shall not be higher than the last reported sale price (regular
way) or the last reported asked price, whichever is higher, of the
Common Stock on the New York Stock Exchange immediately prior to
determination of the initial public offering price. The initial
public offering price and the purchase price, when so determined,
shall be set forth in the Pricing Agreement. In the event that such
prices have not been agreed upon and the Pricing Agreement has not
been executed and delivered by all parties thereto by the close of
business on the fourth business day following the date of this
Agreement, this Agreement shall terminate forthwith, without liability
of any party to any other party, unless otherwise agreed to by the
Company and the Representatives.
(3) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an
additional 1,050,000 Shares at the price per share set forth in the
Pricing Agreement less an amount equal to any dividend paid by the
Company and payable on any Initial Shares and not payable on such
Option Shares. The option hereby granted will expire 30 days after
the date the Registration Statement becomes effective and may be
exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Shares upon notice by the
Representatives to the Company setting forth the number of Option
Shares as to which the several Underwriters are then exercising the
option and the time, date and place of payment and delivery for such
Option Shares. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representatives but shall not be
later than seven full business days after the exercise of said option,
nor in any event prior to Closing Time, as hereinafter defined, unless
otherwise agreed upon by the Representatives and the Company. If the
option is exercised as to all or any portion of the Option Shares, the
Option Shares shall be purchased by the Underwriters, severally and
not jointly, in proportion to their respective Initial Share
underwriting obligations as set forth in Schedule A.
(b) Payment of the purchase price for and delivery of certificates
for the Initial Shares shall be made at the office of Brown & Wood, One
World Trade Center, New York, New York 10048-0557, or at such other place
as shall be agreed upon by the Representatives and the Company, at 10:00
A.M. on the fifth business day (unless postponed in accordance with the
provisions of Section 10) following the date the Registration Statement
becomes effective (or, if the Company has elected to rely upon Rule 430A,
the fifth business day after execution of the Pricing Agreement), or such
other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called "Closing Time"). In addition, in
the event that any or all of the Option Shares are purchased by the Under-
writers, payment of the purchase price for and the delivery of such Option
Shares shall be made at the above-mentioned office of Brown & Wood, or at
such other place as shall be mutually agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from
the Representatives to the Company. Payment shall be made by certified or
official bank check or checks in New York Clearing House or similar next
day funds payable to the order of the Company against delivery to the
Representatives for the respective accounts of the Underwriters of
certificates for the Shares to be purchased by them. The certificates for
the Initial Shares and the Option Shares shall be in such denominations and
registered in such names as the Representatives may request in writing at
least two business days before Closing Time or the Date of Delivery, as the
case may be. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Shares which it has agreed to
purchase. Merrill Lynch, Alex. Brown, Dean Witter, A.G. Edwards or Scott &
Stringfellow, individually and not as representatives of the several
Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Shares to be purchased by any Underwriter whose
check has not been received by Closing Time, but any such payment shall not
relieve such Underwriter from its obligations hereunder. The certificates
for the Initial Shares and the Option Shares will be made available for
examination and packaging by the Representatives not later than 10:00 A.M.
on the last business day prior to Closing Time or the Date of Delivery, as
the case may be.
Section 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) The Company will notify the Representatives immediately, and
confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective
amendment), (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose. The Company will make
every reasonable effort to prevent the issuance of any such stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company will give the Representatives notice of its intention
to file or prepare any amendment to the Registration Statement (including
any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for
use by the Underwriters in connection with the offering of the Shares which
differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations), will furnish the Representatives with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Representatives or
counsel for the Underwriters shall reasonably object.
(c) The Company will deliver to the Representatives five signed
copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference into the
Prospectus pursuant to Item 12 of Form S-3 under the 1933 Act) and will
also deliver to the Representatives a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (including
documents incorporated by reference into the Prospectus but without
exhibits) for each of the Underwriters.
(d) The Company will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under the
1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act, the 1933 Act Regulations, the 1934
Act or the 1934 Act Regulations.
(e) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Underwriters, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, the
Company will either (i) forthwith prepare and furnish to the Underwriters a
reasonable number of copies of an amendment of or supplement to the
Prospectus or (ii) make an appropriate filing pursuant to Section 13, 14 or
15 of the 1934 Act, in form and substance satisfactory to counsel for the
Underwriters, which will amend or supplement the Prospectus so that it will
not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light the circumstances existing at the time it is delivered to a
purchaser, not misleading.
(f) The Company will endeavor, in cooperation with the Underwriters,
to qualify the Shares for offering and sale under the applicable securities
laws and real estate syndication laws of such states and other
jurisdictions of the United States as the Representatives may designate.
In each jurisdiction in which the Shares have been so qualified the Company
will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration
Statement.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in such Rule 158)
of the Registration Statement.
(h) The Company will use the net proceeds received by it from the
sale of the Shares in the manner specified in the Prospectus under the
caption "Use of Proceeds".
(i) The Company will not, during the 90 days following the effective
date of the Registration Statement, except with the prior written consent
of the Representatives, offer for sale, sell or otherwise dispose of any
shares of Common Stock (except for the issuance of shares of Common Stock
pursuant to existing grants or options pursuant to the Company's share
option plan), or sell or grant options, rights or warrants with respect to
any shares of Common Stock (other than shares issued pursuant to property
acquisitions or the grant of options pursuant to the Company's share option
plan), otherwise than in accordance with this Agreement or as contemplated
in the Prospectus.
(j) The Company will cause each officer of the Company who owns
shares of Common Stock not to offer for sale, sell or otherwise dispose of
any shares of Common Stock during the 90 days following the effective date
of the Registration Statement, except with the prior written consent of the
Representatives.
(k) The Company will continue to elect to qualify as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended, and
will use its best efforts to continue to meet the requirements to qualify
as a "real estate investment trust".
Section 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement,
including (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the cost of printing,
or reproducing, and distributing to the Underwriters copies of this
Agreement and the Pricing Agreement, (iii) the preparation, issuance and
delivery of the certificates for the Shares to the Underwriters, (iv) the
fees and disbursements of counsel for the Company, referred to in Section
5(b) hereof, (v) the fees and disbursements of the Company's accountants,
(vi) the qualification of the Shares under securities laws and real estate
syndication laws in accordance with the provisions of Section 3(f),
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey, (vii) the printing and delivery to the Underwriters
of copies of the Registration Statement as originally filed and of each
amendment thereto, of the preliminary prospectuses, and of the Prospectus
and any amendments or supplements thereto, (viii) the cost of printing or
reproducing and delivering to the Underwriters copies of the Blue Sky
Survey, (ix) the fee of the NASD, if any, and (x) the fees and expenses
incurred in connection with the listing of the Shares on the New York Stock
Exchange.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
Underwriters.
Section 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or, with the consent of the
Representatives, at a later time and date, not later, however, than 5:30
P.M. on the first business day following the date hereof or at such later
time and date as may be approved by a majority in interest of the
Underwriters; and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
Commission. If the Company has elected to rely upon Rule 430A of the 1933
Act Regulations, the price of the Shares and any price-related information
previously omitted from the effective Registration Statement pursuant to
such Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed
time period, and prior to Closing Time the Company shall have provided
evidence satisfactory to the Representatives of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A of the 1933 Act Regulations.
(b) At Closing Time the Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time, of Hunton &
Williams, counsel for the Company, in form and substance satisfactory
to counsel for the Underwriters, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus; the Company is duly qualified to transact business in
all jurisdictions in which the conduct of its business requires
such qualification, or in which the failure to qualify would have
a materially adverse effect upon the business of the Company; to
the best of such counsel's knowledge, the Company has one
subsidiary, The Commons of Columbia, Inc., a limited purpose
corporation, which has been duly organized and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia; all of the issued and outstanding
capital stock of such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by
the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(ii) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the
Prospectus; the authorized shares of Common Stock of the Company
have been duly authorized; the outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid
and non-assessable.
(iii) The Shares conform to the description thereof contained
in the Prospectus; the certificates for the Shares are in due and
proper form; the Shares have been duly authorized and will be
validly issued, fully paid and non-assessable when issued and
paid for as contemplated by this Agreement and the Pricing
Agreement; and no preemptive rights of shareholders exist with
respect to any of the Shares or the issue and sale thereof.
(iv) The Registration Statement has become effective under
the 1933 Act and, to the best of the knowledge of such counsel,
no stop order proceedings with respect thereto have been
instituted or are pending or threatened under the 1933 Act.
(v) The Registration Statement, all preliminary
prospectuses, the Prospectus and each amendment or supplement
thereto and any documents incorporated by reference therein
comply as to form in all material respects with the requirements
of the 1933 Act or the 1934 Act, as applicable, and the
applicable rules and regulations thereunder (except that such
counsel need express no opinion as to the financial statements,
schedules and other financial and statistical information
included or incorporated by reference therein).
(vi) The statements under the caption "Capital Stock of the
Trust" in the Prospectus, insofar as such statements constitute a
summary of documents referred to therein or matters of law, are
accurate summaries and fairly and correctly present the
information called for with respect to such documents and
matters.
(vii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to or incorporated by
reference in the Registration Statement or described in the
Registration Statement or the Prospectus which are not so filed,
incorporated by reference or described as required, and such
contracts and documents as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material
respects.
(viii) Such counsel knows of no material legal proceedings
pending or threatened against the Company except as set forth in
the Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and
will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, the Articles of
Incorporation or by-laws of the Company, or any agreement or
instrument known to such counsel to which the Company is a party
or by which the Company may be bound.
(x) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement and
the Pricing Agreement and the consummation of the transactions
herein contemplated (other than as may be required by the NASD or
as required by State securities or Blue Sky laws, as to which
such counsel need express no opinion) except such as have been
obtained or made, specifying the same.
In rendering such opinion Hunton & Williams may rely as to matters
governed by the laws of states other than Virginia or Federal laws on local
counsel in such jurisdictions, provided that in each case Hunton & Williams
shall state that they believe that they and the Underwriters are justified
in relying on such other counsel. In addition to the matters set forth
above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to
believe that the Registration Statement, as of the time it became effective
under the 1933 Act, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus at the
Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Shares which differs from the
Prospectus on file at the Commission at the Representation Date, in which
case at the time it is first provided to the Underwriters for such use) or
at Closing Time contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
(except that such counsel need express no view as to financial statements,
schedules and other financial and statistical information included or
incorporated by reference therein). With respect to such statement, Hunton
& Williams may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(2) The favorable opinion, dated as of Closing Time, of Hunton &
Williams, counsel for the Company, in form and substance satisfactory
to counsel for the Underwriters, to the effect that the Company has
qualified to be taxed as a real estate investment trust pursuant to
Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended, for its fiscal years ended December 31, 1989 through December
31, 1993, and the Company's organization and contemplated method of
operation are such as to enable it to continue to so qualify for its
fiscal year ended December 31, 1994, and in the future. In rendering
this opinion, Hunton & Williams may rely, as to factual determinations
and conclusions necessary for such opinion, on representations of the
Company.
(3) The favorable opinion, dated as of Closing Time, of Brown &
Wood, counsel for the Underwriters, with respect to the matters set
forth in (iii) to (vi), inclusive, and (x) and (xi) of subsection
(b)(1) of this Section. In rendering their opinion, Brown & Wood may
rely as to matters of Virginia law upon the opinion of Hunton &
Williams. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to
the attention of such counsel which leads them to believe that the
Registration Statement, as of the time it became effective under the
1933 Act, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus at
the Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company
for use in connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the Representation
Date, in which case at the time it is first provided to the
Underwriters for such use) or at Closing Time contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that
such counsel need express no view as to financial statements,
schedules and other financial and statistical information included or
incorporated by reference therein). With respect to such statement,
Brown & Wood may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(c) At Closing Time (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations and in all
material respects shall conform to the requirements of the 1933 Act and the
1933 Act Regulations, and neither the Registration Statement nor the
Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading and no action, suit or proceeding at
law or in equity shall be pending or to the knowledge of the Company
threatened against the Company which would be required to be set forth in
the Prospectus other than as set forth therein, (ii) there shall not have
been, since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, of the Company or in its earnings, business affairs or business
prospects, whether or not arising in the ordinary course of business, and
(iii) no proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company before or by any Federal, state or other
commission, board or administrative agency wherein an unfavorable decision,
ruling or finding would materially and adversely affect the business,
property, financial condition or income of the Company other than as set
forth in the Prospectus; and the Representatives shall have received, at
Closing Time, a certificate of the President and Chief Executive Officer
and the Senior Vice President and Chief Financial Officer of the Company,
dated as of Closing Time, evidencing compliance with the provisions of this
subsection (c) and stating that the representations and warranties set
forth in Section l(a) hereof are accurate as though expressly made at and
as of Closing Time. As used in this Section 5(c), the term "Prospectus"
means the Prospectus in the form first used to confirm sales of the Shares.
(d) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young a letter dated such date, in form
and substance satisfactory to the Representatives, to the effect that (i)
they are independent public accountants as required by the 1933 Act and the
applicable published rules and regulations thereunder with respect to the
Company; (ii) it is their opinion that the financial statements and
supporting schedules of the Company incorporated by reference in the
Registration Statement and covered by their opinion therein comply as to
form in all material respects with the applicable accounting requirements
of the 1933 Act and the 1934 Act and the related published rules and
regulations thereunder; (iii) they have performed limited procedures, not
constituting an audit, including a reading of the latest available interim
financial statements of the Company, a reading of the minute books of the
Company since December 31, 1993, inquiries of officials of the Company
responsible for financial and accounting matters and such other inquiries
and procedures as may be specified in such letter, and on the basis of such
limited review and procedures nothing came to their attention that caused
them to believe that:
(A) the unaudited financial statements of the Company
incorporated by reference in the Registration Statement do not comply
as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1934 Act and the related
published rules and regulations thereunder or are not stated on a
basis substantially consistent with that of the audited financial
statements of the Company incorporated by reference in the
Registration Statement;
(B) at a specified date not more than five days prior to the
date of such letter, there was any change in the capitalization of the
Company, any decrease in total assets or shareholders' equity, any
increase in mortgage notes payable or any increase in notes payable of
the Company, as compared with the amounts shown in the latest balance
sheet incorporated by reference in the Registration Statement; or
(C) during the period from the date of the latest balance sheet
incorporated by reference in the Registration Statement, to a
specified date not more than five days prior to the date of such
letter, there were any decreases, as compared with the corresponding
period in the preceding year, in rental income, or in the total or per
share amounts of income before gains (losses) on investments and
extraordinary items, or of net income;
except in all cases for changes, increases or decreases which the
Registration Statement discloses have occurred or may occur; and (iv) in
addition to the limited procedures referred to in clause (iii) above, they
have carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information
which are derived from the general accounting records of the Company which
are included or incorporated by reference in the Registration Statement and
which are specified by the Representatives, and have compared such amounts,
percentages and financial information with the accounting records of the
Company and have found them to be in agreement; and (v) they have read the
unaudited pro forma financial statements which are included in the
Registration Statement and the Prospectus and have performed specified
procedures set forth in detail in such letter and found the amounts
resulting from such procedures to be in agreement with the amounts set
forth in such unaudited pro forma financial statements and nothing has come
to their attention which causes them to believe that the unaudited pro
forma financial statements included in the Registration Statement and the
Prospectus which combine certain financial statements of the Company with
certain transactions set forth in the notes to such pro forma statements,
do not comply as to form in all material respects with Article 11 of
Regulation S-X under the 1933 Act.
(e) At Closing Time the Representatives shall have received from
Ernst & Young a letter dated as of Closing Time to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this Section, except that the "specified date" referred to shall be
a date not more than five days prior to Closing Time, and, if the Company
has elected to rely on Rule 430A of the 1933 Act Regulations, to the
further effect that they have carried out procedures as specified in clause
(iv) of subsection (d) of this Section with respect to certain amounts,
percentages and financial information deemed to a part of the Registration
Statement pursuant to Rule 430A(b).
(f) At Closing Time counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
Shares as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Shares
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(g) In the event the Underwriters exercise their option provided in
Section 2 hereof to purchase all or any portion of the Option Shares, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be
true and correct as of each Date of Delivery, and the Representatives shall
have received:
(1) A certificate of the President and Chief Executive Officer
and the Senior Vice President and Chief Financial Officer of the
Company, dated such Date of Delivery, confirming that their
certificate delivered at Closing Time pursuant to Section 5(c) hereof
remains true as of such Date of Delivery.
(2) The favorable opinions of Hunton & Williams, counsel for the
Company, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Shares and otherwise to the same effect as the opinions required by
Sections 5(b)(1) and 5(b)(2) hereof.
(3) The favorable opinion of Brown & Wood, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Shares and otherwise to the same effect as the opinion required by
Section 5(b)(3) hereof.
(4) A letter from Ernst & Young, in form and substance
satisfactory to the Representatives, dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished
to the Representatives pursuant to Section 5(e) hereof, except that
the "specified date" in the letter furnished pursuant to this Section
5(g)(4) shall be a date not more than five days prior to such Date of
Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time at
or prior to Closing Time, and such termination shall be without liability
of any party to any other party except as provided in Section 4.
Section 6. Indemnification. (a) The Company hereby agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act
as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant
to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), or the
omission, or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(3) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by the Representatives), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceedings by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (1) or
(2) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by any Underwriter through the Representatives expressly for
use in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have otherwise than on
account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action. In no event shall the
indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel
for all indemnified parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances.
Section 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for
in Section 6 is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and
the Underwriters shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the Company and one or more of the Underwriters, as
incurred, in such proportions that the Underwriters are responsible for
that portion represented by the percentage that the underwriting discount
appearing on the cover page of the Prospectus bears to the initial public
offering price appearing thereon and the Company is responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, each person, if any, who controls
an Underwriter within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or any controlling person, or by or on behalf of
the Company, and shall survive delivery of the Shares to the Underwriters.
Section 9. Termination of Agreement. (a) The Representatives may
terminate this Agreement, by notice to the Company, at any time at or prior
to Closing Time (i) if there has been, since the respective dates as of
which information is given in the Prospectus, any material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States or any
outbreak of hostilities or escalation of existing hostilities or other
calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the Representatives' reasonable
judgment, impracticable to market the Shares or enforce contracts for the
sale of the Shares, or (iii) if trading in the shares of Common Stock of
the Company has been suspended by the Commission, or if trading generally
on either the American Stock Exchange or the New York Stock Exchange has
been suspended, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by Federal, New
York or Virginia authorities. As used in this Section 9(a), the term
"Prospectus" means the Prospectus in the form first used to confirm sales
of the Shares.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party
except as provided in Section 4, and provided further that Sections 6 and 7
hereof shall survive such termination.
Section 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at Closing Time to purchase the Shares
which it or they are obligated to purchase under this Agreement and the
Pricing Agreement (the "Defaulted Shares"), the Representatives shall have
the right, within 24 hours thereafter, to make arrangement for one or more
of the nondefaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Shares in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Shares does not exceed 10% of the
Shares, the non-defaulting Underwriters shall be obligated to purchase the
full amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
if the number of Defaulted Shares exceeds 10% of the Shares, this
Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company
shall have the right to postpone Closing Time for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
Section 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed
or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives c/o Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated at North Tower,
World Financial Center, New York, New York 10281-1209, attention of Mr.
Fred F. Hessinger, Vice President - Corporate Syndicate; and notices to the
Company shall be directed to it at 10 S. 6th Street, Suite 203, Richmond,
Virginia 23219-3802, Attn: Mr. John P. McCann.
Section 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed
to give any person, firm or corporation, other than those referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or
the Pricing Agreement or any provision herein or therein contained. This
Agreement and the Pricing Agreement and all conditions and provisions
hereof and thereof are intended to be for the sole and exclusive benefit of
the parties hereto and thereto and their respective successors and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Shares from any Underwriter shall be deemed
to be a successor by reason merely of such purchase.
Section 13. Governing Law and Time; Miscellaneous. This Agreement
and the Pricing Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to
be performed in said State. Specified times of day refer to New York City
time.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof whereupon this
instrument along with all counterparts will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
UNITED DOMINION REALTY TRUST, INC.
By________________________________
President and Chief Executive
Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
ALEX. BROWN & SONS INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
SCOTT & STRINGFELLOW, INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By________________________________________
Authorized Signatory
For themselves and as Representatives
of the other Underwriters named
in Schedule A hereto.
<PAGE>
SCHEDULE A
Number
Name of Underwriter of Shares
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . .
Alex. Brown & Sons Incorporated . . . . . . . . .
Dean Witter Reynolds Inc. . . . . . . . . . . . .
A.G. Edwards & Sons, Inc. . . . . . . . . . . .
Scott & Stringfellow, Inc. . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . 7,000,000
<PAGE>
Exhibit A
7,000,000 Shares
UNITED DOMINION REALTY TRUST, INC.
(a Virginia corporation)
Shares of Common Stock
($1.00 Par Value)
PRICING AGREEMENT
June , 1994
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
ALEX. BROWN & SONS INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
SCOTT & STRINGFELLOW, INC.
as Representatives of the several Underwriters
named in the within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Dear Sirs :
Reference is made to the Purchase Agreement, dated June __, 1994 (the
"Purchase Agreement"), relating to the purchase by the several Underwriters
named in Schedule A thereto, for whom Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Alex. Brown & Sons Incorporated, Dean
Witter Reynolds Inc., A.G. Edwards & Sons, Inc. and Scott & Stringfellow,
Inc. are acting as representatives (the "Representatives"), of the above
shares of common stock (the "Shares") of United Dominion Realty Trust, Inc.
(the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company agrees
with each Underwriter as follows:
1. The initial public offering price per share for the Shares,
determined as provided in said Section 2, shall be $ .
<PAGE>
2. The purchase price per share for the Shares to be paid by the
several Underwriters shall be $ , being an amount equal to the
initial public offering price set forth above less $ per share.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counter- part hereof,
whereupon this instrument, along with all counter-
parts, will become a binding agreement between the Underwriters and the
Company in accordance with its terms.
Very truly yours,
UNITED DOMINION REALTY TRUST, INC.
By_________________________________
President and Chief Executive
Officer
CONFIRMED AND ACCEPTED,
as of the date first above written
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
ALEX. BROWN & SONS INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
SCOTT & STRINGFELLOW, INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By_________________________________________
Authorized Signatory
For themselves and as Representatives
of the other Underwriters named in
Schedule A to the Purchase Agreement.
Hunton & Williams
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219-4074
File No.: 27789.206
Direct Dial: (804) 788-8267
May 26, 1994
Board of Directors
United Dominion Realty Trust, Inc.
10 South Sixth Street
Richmond, Virginia 23219
Registration Statement on Form S-3
8,050,000 Shares of Common Stock
Gentlemen:
We are acting as counsel for United Dominion Realty Trust,
Inc. (the "Company") in connection with the registration under
the Securities Act of 1933 of 8,050,000 shares of Common Stock,
$1 par value, of the Company (the "Shares"). The Notes are
described in the Registration Statement on Form S-3 of the
Company (the "Registration Statement") to be filed with the
Securities and Exchange Commission (the "Commission") on May 26,
1994. In connection with the filing of the Registration
Statement you have requested our opinion concerning certain
corporate matters.
We are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the Commonwealth of Virginia.
2. When the Shares have been sold to the Underwriters as
described in the Registration Statement, the Shares will be
legally issued, fully paid and nonassessable.
We consent to the filing of this opinion with the Commission
as an exhibit to the Registration Statement and to the reference
to us in the Prospectus included therein.
Very truly yours,
HUNTON & WILLIAMS
33/33
EXHIBIT 23 (a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of United Dominion
Realty Trust, Inc. for the registration of 7,000,000 shares of its common
stock and to the incorporation by reference therein of our report
dated March 3, 1994, with respect to the financial statements and schedules
of United Dominion Realty Trust, Inc. included in or incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31,
1993, filed with the Securities and Exchange Commission.
/s/ Ernst & Young
Richmond, Virginia
May 25, 1994
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
United Dominion Realty Trust, Inc.
Richmond, Virginia
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated
February 4, 1994, relating to the combined Historical Summary of Gross Income
and Direct Operating Expenses of Holly Tree Park Apartments, Knolls at Newgate
and Mallard Green Apartments for the year ended December 31, 1993 appearing in
the May 26, 1994 Form 8-K filed by United Dominion Realty Trust, Inc.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN
Philadelphia , Pennsylvania
May 26, 1994
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
United Dominion Realty Trust, Inc.:
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference of our report dated May 19, 1994, with respect
to the Statement of Rental Operations of Clover Financial Partnership
Properties for the year ended December 31, 1993, filed with the Securities
and Exchange Commission on Form 8-K dated May 26, 1994 in the Registration
Statement (Form S-3), and related Prospectus of United Dominion Realty Trust,
Inc. for the Registration of 7,000,000 shares of Common Stock.
/s/ Alloy, Silverstein, Shapiro, Adams, Mulford & Co.
Alloy, Silverstein, Shapiro, Adams, Mulford & Co.
Certified Public Accountants
May 24, 1994
