AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1999
REGISTRATION NO. 333-72885
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
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)
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VIRGINIA 54-0857512
(STATE OR OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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10 SOUTH 6TH STREET
RICHMOND, VIRGINIA 23219-3802
(804)780-2691
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KATHERYN E. SURFACE
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
UNITED DOMINION REALTY TRUST, INC.
10 SOUTH 6TH STREET
RICHMOND, VIRGINIA 23219-3802
(804) 780-2691
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
JAMES W. FEATHERSTONE, III
RANDALL S. PARKS
HUNTON & WILLIAMS
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219-4074
(804) 788-8267
Approximate date of commencement of proposed sale to the public: From
time to time 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 securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
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.
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The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED APRIL 8, 1999
130,416 SHARES
UNITED DOMINION REALTY TRUST, INC.
COMMON STOCK
This Prospectus relates to the possible issuance of up to 130,416 shares
of common stock to certain individuals and entities (the "Unitholders") who sold
278 multi-family apartment homes to United Dominion Realty Trust, Inc. ("United
Dominion") on February 5, 1998. As partial consideration for their properties,
the Unitholders received 130,416 units of limited partnership interest in United
Dominion Realty, L.P. United Dominion will issue the shares of common stock to
the Unitholders if
(1) the Unitholders choose to redeem their units, and
(2) United Dominion, as United Dominion Realty, L.P.'s general
partner, elects to purchase the units for shares of common stock.
The Unitholders will receive one share of common stock for each unit
they sell to United Dominion. The Unitholders will not pay, and United Dominion
will not receive, any cash for the shares of common stock.
The common stock is traded on the New York Stock Exchange under the symbol
"UDR."
So that United Dominion may qualify as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended, United Dominion's
Amended Articles of Incorporation permit its Board of Directors
(1) to limit the number of shares of common stock that may be owned
by any single person or affiliated group and
(2) to restrict the transfer of shares of common stock if the
transfer would prevent United Dominion from qualifying as a REIT.
See "Restrictions on Transfer of Capital Stock."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is April , 1999.
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TABLE OF CONTENTS
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UNITED DOMINION REALTY TRUST, INC............................................................2
DESCRIPTION OF CAPITAL STOCK.................................................................2
General..............................................................................2
Common Stock.........................................................................2
Preferred Stock......................................................................3
RESTRICTIONS ON TRANSFER OF CAPITAL STOCK....................................................3
REDEMPTION OF UNITS..........................................................................3
Redemption Rights....................................................................3
Comparison of Ownership of Units and Redemption Shares...............................4
FEDERAL INCOME TAX CONSEQUENCES OF UNITED DOMINION'S STATUS AS A REIT.......................10
Tax Consequences of Redemption..............................................................10
Taxation of United Dominion.................................................................12
Requirements for Qualification..............................................................13
Income Tests........................................................................15
Asset Tests.........................................................................17
Distribution Requirements...........................................................17
Recordkeeping Requirements..........................................................18
Failure to Qualify..................................................................18
Taxation of Taxable U.S. Stockholders.......................................................19
Taxation of U.S. Stockholders on the Disposition of the Common Stock................20
Capital Gains and Losses............................................................20
Information Reporting Requirements and Backup Withholding...........................20
Taxation of Tax-Exempt Stockholders.........................................................21
Taxation of Non-U.S. Stockholders...........................................................21
Other Tax Consequences......................................................................23
State and Local Taxes...............................................................23
PLAN OF DISTRIBUTION........................................................................23
EXPERTS.....................................................................................23
LEGAL MATTERS...............................................................................24
IF YOU WOULD LIKE ADDITIONAL INFORMATION....................................................25
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UNITED DOMINION REALTY TRUST, INC.
United Dominion Realty Trust, Inc. ("United Dominion"), a Virginia
corporation headquartered in Richmond, Virginia, is a self-administered real
estate investment trust ("REIT"), whose business is the ownership and operation
of apartment communities located throughout the United States. United Dominion
is a fully integrated real estate company with acquisition, development and
property management capabilities. At December 31, 1998, United Dominion's
portfolio consisted of 326 communities containing 86,893 apartment homes. United
Dominion's apartment portfolio also included eight communities with 2,292
apartment homes under development (of which 662 were completed) and two
additions to existing communities with 316 apartment homes (none of which were
completed). United Dominion had approximately 2,800 employees as of December 31,
1998.
United Dominion operates as a REIT under the federal income tax laws. To
qualify as a REIT, United Dominion must meet certain tests which, among other
things, require that (1) its assets consist primarily of real estate, (2) its
income be derived primarily from real estate and (3) at least 95% of its taxable
income be distributed to its shareholders each year. Because United Dominion
qualifies as a REIT, it generally is not subject to federal income taxes.
DESCRIPTION OF CAPITAL STOCK
GENERAL
United Dominion is authorized to issue 150,000,000 shares of common stock,
$1.00 par value, and 25,000,000 shares of preferred stock, no par value. At
April 5, 1999, there were outstanding 104,051,172 shares of common stock and
18,200,000 shares of preferred stock, consisting of 4,200,000 shares of United
Dominion's 9 1/4% Series A Cumulative Redeemable Preferred Stock (the "Series A
Preferred"), 6,000,000 shares of United Dominion's 8.60 % Series B Cumulative
Redeemable Preferred Stock (the "Series B Preferred"), 0 shares of United
Dominion's Series C Junior Participating Cumulative Redeemable Preferred Stock
(the "Series C Preferred) and 8,000,000 shares of United Dominion's 7.5% Series
D Convertible Preferred Stock (the "Series D Preferred"). The following
statements with respect to the capital stock of United Dominion are subject to
the detailed provisions of United Dominion's Restated Articles of Incorporation,
as amended (the "Articles"), and bylaws (the "Bylaws") as currently in effect.
These statements do not purport to be complete, or to give full effect to the
terms of the provisions of statutory or common law, and are subject to, and are
qualified in their entirety by reference to, the terms of the Articles and
Bylaws, which are filed as exhibits to the registration statement of which this
prospectus is a part.
COMMON STOCK
Holders of common stock are entitled to receive dividends when and as
declared by the Board of Directors after payment of, or provision for, full
cumulative dividends on and any required redemptions of shares of preferred
stock then outstanding. 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 United Dominion, holders of common stock are entitled to share
ratably in the distributable assets of United Dominion remaining after
satisfaction of the prior preferential rights of the preferred stock and the
satisfaction of all debts and liabilities of United Dominion. Holders of common
stock do not have preemptive rights. The dividend and liquidation rights of
holders of the common stock are specifically limited by the terms of the Series
A Preferred, the Series B Preferred, the Series C Preferred and the Series D
Preferred, as described in the description of United Dominion's preferred stock
contained in United Dominion's registration statements on Form 8-A, as amended,
filed pursuant to Section 12 of the Exchange Act on May 1, 1995, June 11, 1997
and February 4, 1998. The transfer agent for the common stock is Chase Mellon
Shareholder Services, L.L.C., Ridgefield Park, New Jersey.
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RIGHTS TO PURCHASE SERIES C PREFERRED STOCK
Each share of common stock has attached to it one right to purchase from
the Company one one-thousandth of a share of Series C Junior Participating
Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock"). Each one
one-thousandth of a share of Series C Preferred Stock is structured to be the
equivalent of one share of common stock. The exercise price of the rights is
$45.00, subject to adjustment.
The rights will separate from the common stock and a distribution of
certificates evidencing the rights will occur upon the earlier of (i) 10
business days following a public announcement that a person or group of related
persons has acquired, or obtained the right to acquire, beneficial ownership of
more than 15% of the outstanding shares of common stock, or (ii) 10 business
days following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning more than 15% of the outstanding
shares of common stock.
The rights will expire at the close of business on February 4, 2008,
unless earlier redeemed or exchanged by the Company. A more complete description
of the rights and the Series C Preferred Stock is contained in United Dominion's
registration statement on Form 8-A, as amended, as filed on February 4, 1998.
PREFERRED STOCK
The preferred stock is described in United Dominion's registration
statements on Form 8-A, as amended, filed pursuant to Section 12 of the Exchange
Act on May 1, 1995, June 11, 1997 and February 4, 1998.
RESTRICTIONS ON TRANSFER OF CAPITAL STOCK
For United Dominion to qualify as a REIT under federal income tax laws,
its shares of capital stock must be held by a minimum of 100 persons for at
least 335 days in each calendar year or during a proportionate part of a shorter
calendar year. In addition, at all times during the second half of each calendar
year, no more than 50% in value of the shares of capital stock of United
Dominion may be owned, directly or indirectly by five or fewer individuals (the
"5/50 Rule"). Because the Board of Directors believes it is essential for United
Dominion to continue to qualify as a REIT, the Articles permit the Board of
Directors to prevent an individual or individuals from directly or indirectly
owning shares to the extent that such ownership would disqualify United Dominion
as a REIT.
If the Board of Directors, in its good faith, determines that an
individual's or individuals' ownership of stock may disqualify United Dominion
as a REIT, the Board of Directors may call for a redemption (by lot or other
equitable means) to redeem a number of shares sufficient to maintain United
Dominion's REIT status. The redemption price per share shall be the closing sale
price on the NYSE as of the business day preceding the day on which notice of
redemption is given. In addition, United Dominion may stop any acquisition or
transfer of shares that would jeopardize United Dominion's REIT status.
REDEMPTION OF UNITS
REDEMPTION RIGHTS
Pursuant to the agreement governing the Partnership (the "Partnership
Agreement"), the limited partners of the Partnership generally have the right to
cause the redemption (the "Redemption Rights") of their interests in the
Partnership (the "Units"). Each limited partner may, subject to certain
limitations, require that the Partnership redeem all or a portion of his Units
at any time after one year from the date the Units were acquired by delivering a
notice of exercise of redemption right to the Partnership and United Dominion.
The form of notice is an exhibit to the Partnership Agreement. A limited partner
must request the redemption of at least 1,000 Units (or all of the Units held by
such holder, if less than 1,000 are so held).
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Upon redemption, each limited partner generally will receive from the
Partnership cash equal to the value of the Units being redeemed. The value of
each Unit will be assumed to be equal to the market value of one share of common
stock. The market value of the common stock for this purpose will be equal to
the average of the closing trading prices of the common stock (or substitute
information, if no such closing prices are available) on the NYSE for the ten
consecutive trading days before the day on which the redemption notice was
received by United Dominion.
Instead of the Partnership redeeming the Units, United Dominion, in its
sole discretion, may elect to purchase the Units directly by paying to the
limited partner either (A) a number of shares of common stock equal to the
number of Units being redeemed ("Redemption Shares"), or (B) cash in an amount
equal to the cash value of the Units, as determined pursuant to the preceding
paragraph. If United Dominion exercises its right to purchase the Units, then
the Partnership has no obligation to redeem the Units.
United Dominion anticipates that it generally will elect to purchase
Units through the issuance of the Redemption Shares pursuant to this Prospectus.
Such an acquisition will be treated as a sale of the Units to United Dominion
for federal income tax purposes. See "-- Tax Consequences of Redemption." Upon
purchase or redemption, a limited partner will no longer have the right to
receive distributions with respect to the Units.
A limited partner may not redeem his Units if receipt of common stock in
exchange for those Units would (A) result in such partner or any other person
owning, directly or indirectly, more than 9.8% of the outstanding common stock,
(B) result in common stock being owned by fewer than 100 persons (determined
without reference to any rules of attribution), (C) result in United Dominion
being "closely held" under the federal income tax laws, (D) cause United
Dominion to own, actually or constructively, 10% or more of the ownership
interests in a tenant of United Dominion's or the Partnership's real property,
or (E) cause the acquisition of common stock by such partner to be "integrated"
with any other distribution of common stock for purposes of complying with the
registration provisions of the Securities Act of 1933, as amended. United
Dominion, in its sole discretion, may waive this restriction and permit a
limited partner to exercise its Redemption Rights, but only if the limited
partner receives cash in exchange for the Units.
COMPARISON OF OWNERSHIP OF UNITS AND REDEMPTION SHARES
The information below highlights a number of the significant differences
between the Partnership and United Dominion and compares certain legal rights
associated with the ownership of Units and common stock, respectively. These
comparisons are intended to assist limited partners of the Partnership in
understanding how their investment will be changed if their Units are redeemed
for Redemption Shares. THIS DISCUSSION IS SUMMARY IN NATURE AND DOES NOT
CONSTITUTE A COMPLETE DISCUSSION OF THESE MATTERS. HOLDERS OF UNITS SHOULD
CAREFULLY REVIEW THE BALANCE OF THIS PROSPECTUS AND THE REGISTRATION STATEMENT
OF WHICH THIS PROSPECTUS IS A PART FOR ADDITIONAL IMPORTANT INFORMATION ABOUT
UNITED DOMINION.
FORM OF ORGANIZATION AND ASSETS OWNED. The Partnership is organized as a
Virginia limited partnership. United Dominion is a Virginia corporation. United
Dominion elected to be taxed as a REIT under the Code effective for its taxable
year ended December 31, 1972 and intends to maintain its qualification as a
REIT.
LENGTH OF INVESTMENT. The Partnership has a stated termination date of
December 31, 2051, although it may be terminated earlier under certain
circumstances. United Dominion has a perpetual term and intends to continue its
operations for an indefinite time period.
ADDITIONAL EQUITY. The Partnership is authorized to issue Units and
other partnership interests to its partners or to other persons for such
consideration and on such terms and conditions as United Dominion, in its sole
discretion, may deem appropriate. In addition, United Dominion may cause the
Partnership to issue additional Units, or other partnership interests in one or
more different series or classes which may be senior to the Units, to United
Dominion. Consideration for additional partnership interests may be cash or
other property or other assets permitted by Virginia law.
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Under the Articles, the total number of shares of all classes of stock
that United Dominion has the authority to issue is 150,000,000 shares of common
stock and 25,000,000 shares of preferred stock. As of the date of this
Prospectus, 18,200,000 shares of preferred stock are outstanding.
MANAGEMENT AND CONTROL. All management and control over the business of
the Partnership are vested in United Dominion, as general partner of the
Partnership, and no limited partner has any right to participate in or exercise
management or control over the business of the Partnership. Upon the occurrence
of an event of bankruptcy or the dissolution of United Dominion, United Dominion
shall be deemed to be removed as general partner; otherwise, United Dominion may
not be removed by the limited partners with or without cause.
The Board of Directors has exclusive control over United Dominion's
business and affairs subject to the restrictions in the Articles and Bylaws. The
Board of Directors has adopted certain policies with respect to acquisitions,
development, investing, financing and conflict of interest, but these policies
may be altered or eliminated without a vote of the shareholders. Accordingly,
except for their vote in the elections of directors, shareholders have no
control over the ordinary business policies of United Dominion.
FIDUCIARY DUTIES. Under Virginia law, United Dominion is accountable to
the Partnership as a fiduciary and, consequently, is required to exercise good
faith in all of its dealings with respect to partnership affairs. However, under
the Partnership Agreement, United Dominion is under no obligation to take into
account the tax consequences to any limited partner of any action taken by it,
and United Dominion will have no liability to a limited partner as a result of
any damages suffered by or benefits not derived by a limited partner as a result
of an action or inaction of United Dominion so long as United Dominion acted in
good faith.
Under Virginia law, United Dominion's directors must perform their
duties in good faith, in a manner that they believe to be in the best interests
of United Dominion and with the care an ordinarily prudent person in a like
situation would exercise under similar circumstances. Directors of United
Dominion who act in such a manner generally will not be liable to United
Dominion for monetary damages arising from their activities.
MANAGEMENT LIMITATION OF LIABILITY AND INDEMNIFICATION. The Partnership
Agreement generally provides that United Dominion will incur no liability for
monetary damages to the Partnership or any limited partner for losses sustained
as a result of errors in judgment or of any act or omission if United Dominion
acted in good faith. In addition, United Dominion is not responsible for any
misconduct or negligence on the part of its agents, provided United Dominion
appointed such agents in good faith. The Partnership Agreement also provides for
indemnification of United Dominion, the directors and officers of United
Dominion and such other persons as United Dominion may from time to time
designate, against any and all losses, claims, damages, liabilities (joint or
several), expenses (including reasonable legal fees and expenses), judgments,
fines, settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, that relate to the operations of the Partnership in which such
person may be involved, or is threatened to be involved. However, the
Partnership shall not indemnify any such person (A) for an act or omission of
such person that was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate
dishonesty, (B) if such person actually received an improper benefit in money,
property or services or (C) in the case of any criminal proceeding, if such
person had reasonable cause to believe that the act or omission was unlawful.
Any indemnification will be made only out of assets of the Partnership.
United Dominion's Articles obligate it to indemnify and advance expenses
to present and former directors and officers to the maximum extent permitted by
Virginia law. The Virginia Stock Corporation Act ("VSCA") permits a corporation
to indemnify its present and former directors and officers, among others,
against judgments, settlements, penalties, fines or reasonable expenses incurred
with respect to a proceeding to which they may be made a party by reason of
their service in those or other capacities if (A) such persons conducted
themselves in good faith, (B) they reasonably believed, in the case of conduct
in their official capacities with the corporation, that their conduct was in its
best interests and, in all other cases, that their conduct was at least not
opposed to its best interests, and (C) in the case of any criminal proceeding,
they had no reasonable cause to believe that their conduct was unlawful. Any
indemnification by United Dominion pursuant to the provisions of the Articles
described above will be paid out of the assets of United Dominion and will not
be recoverable from the shareholders.
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The VSCA permits the charter of a Virginia corporation to include a
provision eliminating or limiting the personal liability of its directors to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except that such provision cannot eliminate or limit the
liability of a director (A) for any breach of the director's duty of loyalty to
the corporation or its shareholders, (B) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of the law, or
(C) for unlawful distributions that exceed what could have been distributed
without violating the VSCA or the corporation's charter. United Dominion's
Articles contain a provision eliminating the personal liability of its directors
or officers to United Dominion or its shareholders for money damages to the
maximum extent permitted by Virginia law from time to time.
ANTI-TAKEOVER PROVISIONS. Except in limited circumstances, United
Dominion has exclusive management power over the business and affairs of the
Partnership. United Dominion may not be removed as general partner by the
limited partners with or without cause. Under the Partnership Agreement, United
Dominion may, in its sole discretion, prevent a limited partner from
transferring his interest or any rights as a limited partner. United Dominion
may exercise this right of approval to deter, delay or hamper attempts by
persons to acquire a controlling interest in the Partnership.
As described above under "Restrictions on Transfer of Capital Stock,"
United Dominion's Board of Directors may restrict the acquisition of shares of
common stock.
In addition, Virginia has enacted several statutory provisions to deter
takeovers of Virginia corporations. The VSCA generally requires that any merger,
share exchange or sale of substantially all of the assets of a corporation not
in the ordinary course of business be approved by at least two-thirds of the
votes entitled to be cast by each voting group entitled to vote, unless the
articles of incorporation provide for a greater or lesser vote (but in no event
less than a majority of votes cast by each such voting group at a meeting at
which a quorum of the voting group exists). United Dominion's Articles and
Bylaws do not provide for a greater or lesser vote for the approval of
extraordinary transactions.
The VSCA also contains provisions governing "Affiliated Transactions."
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. Affiliated Transactions subject to this approval requirement include
mergers, share exchanges, material dispositions of corporate assets not in the
ordinary course of business, any dissolution of the corporation proposed by or
on behalf of an Interested Shareholder, or any reclassification, including
reverse stock splits, recapitalization or merger of the corporation with its
subsidiaries which increases the percentage of voting shares owned beneficially
by an Interested Shareholder by more than five percent.
For three years following the time that an Interested Shareholder
becomes an owner of 10% of the outstanding voting shares of a corporation, the
corporation 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." A Disinterested Director means, with respect
to a particular Interested Shareholder, a member of the board of directors who
was (A) a member on the date on which an Interested Shareholder became an
Interested Shareholder and (B) recommended for election by, or was elected to
fill a vacancy and received the affirmative vote of, a majority of the
Disinterested Directors then on the board. 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.
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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 statute. In general, the fair-price requirement provides
that in a two-step acquisition transaction, the Interested Shareholder must pay
the shareholders in the second step either the same amount of cash or the same
amount and type of consideration paid to acquire the Virginia corporation's
shares in the first step.
None of the foregoing limitations and special voting requirements
applies to a transaction with an Interested Shareholder (A) whose acquisition of
shares making such person an Interested Shareholder was approved by a majority
of the Virginia corporation's Disinterested Directors or (B) who was an
Interested Shareholder on the date the corporation became subject to these
provisions by virtue of its having 300 shareholders of record.
In addition, the statute provides that, by affirmative vote of a
majority of the voting shares other than shares owned by any Interested
Shareholder, a corporation can adopt an amendment to its articles of
incorporation or bylaws providing that the Affiliated Transactions provisions
shall not apply to the corporation. United Dominion has not "opted out" of the
Affiliated Transactions provisions.
The VSCA also contains provisions regulating certain "control share
acquisitions," which are transactions causing the voting strength of any person
acquiring beneficial ownership of shares of a public corporation in Virginia to
meet or exceed certain threshold percentages (20%, 33 1/3% or 50%) of the total
votes entitled to be cast for the election of directors. Shares acquired in a
control share acquisition have no voting rights unless (A) the voting rights are
granted by a majority vote of all outstanding shares other than those held by
the acquiring person or any officer or employee director of the corporation, or
(B) the articles of incorporation or bylaws of the corporation provide that
these Virginia law provisions do not apply to acquisitions of its shares. The
acquiring person may require that a special meeting of the shareholders be held
to consider the grant of voting rights to the shares acquired in the control
share acquisition. United Dominion has not adopted an amendment to its Articles
or Bylaws making these provisions inapplicable to acquisition of its shares.
VOTING RIGHTS. Under the Partnership Agreement, the limited partners
have voting rights only as to the continuation of the Partnership in certain
circumstances and as to certain amendments of the Partnership Agreement, as
described more fully below. Otherwise, all decisions relating to the operation
and management of the Partnership are made by United Dominion. At February 22,
1999, United Dominion held approximately 79% of the outstanding interests in the
Partnership. As Units held by limited partners are redeemed, United Dominion's
percentage ownership of the Partnership will increase. If additional Units are
issued to third parties, United Dominion's percentage ownership of the
Partnership will decrease.
Shareholders of United Dominion have the right to vote on, among other
things, a merger or sale of substantially all of the assets of United Dominion,
certain amendments to the Articles and dissolution of United Dominion. All
shares of common stock have one vote, and the Articles permit the Board of
Directors to classify and issue preferred stock in one or more series having
voting power which may differ from that of the common stock. See "Description of
Capital Stock."
AMENDMENT OF THE PARTNERSHIP AGREEMENT OR THE ARTICLES. The Partnership
Agreement may be amended by United Dominion without the consent of the limited
partners in any respect, except that certain amendments affecting the
fundamental rights of a limited partner must be approved by consent of limited
partners (other than United Dominion or any subsidiary of United Dominion)
holding more than 50% of the Units. Such consent is required for any amendment
that would (A) affect the Redemption Rights, (B) adversely affect the rights of
limited partners to receive distributions payable to them under the Partnership
Agreement, (C) alter the Partnership's profit and loss allocations, (D) alter
the provisions relating to the amendment of the Partnership Agreement, or (E)
impose any obligation upon the limited partners to make additional capital
contributions to the Partnership.
The Articles may be amended by the affirmative vote of the holders of a
majority of the shares of each voting group entitled to vote on the amendment.
United Dominion's Bylaws may be amended by the Board of Directors or by vote of
the holders of a majority of the outstanding shares.
<PAGE>
VOTE REQUIRED TO DISSOLVE THE PARTNERSHIP OR UNITED DOMINION. At any
time prior to December 31, 2051 (upon which date the Partnership shall
terminate), United Dominion may elect to dissolve the Partnership in its sole
discretion. Such dissolution shall also occur upon (A) the bankruptcy,
dissolution or withdrawal of United Dominion (unless the limited partners
unanimously elect to continue the Partnership), (B) the passage of 90 days after
the sale or other disposition of all or substantially all the assets of the
Partnership or (C) the redemption of all of the outstanding Units (other than
those held by United Dominion or any subsidiary of United Dominion, if any).
Under Virginia law, the Board of Directors generally must recommend and
the holders of two-thirds of the outstanding common stock entitled to vote must
approve any proposal in order to dissolve United Dominion.
VOTE REQUIRED TO SELL ASSETS OR MERGE. Under the Partnership Agreement,
the sale, exchange, transfer or other disposition of all or substantially all of
the Partnership's assets or merger or consolidation of the Partnership requires
only the consent of United Dominion. Under Virginia law, any merger or share
exchange of United Dominion requires the separate approval of the Board of
Directors and each group of shareholders entitled to vote on such matter by
two-thirds of all votes entitled to be cast by such group. Under Virginia law,
the sale of all or substantially all of the assets of United Dominion other than
in the normal course of business requires the approval of the Board of Directors
and holders of two-thirds of the outstanding shares of common stock. No approval
of the shareholders is required for the sale of United Dominion's assets in the
usual and regular course of business.
COMPENSATION, FEES AND DISTRIBUTIONS. United Dominion does not receive
any compensation for its services as general partner of the Partnership. As a
partner in the Partnership, however, United Dominion has the same right to
allocations and distributions as other partners of the Partnership. In addition,
the Partnership will reimburse United Dominion for all expenses incurred
relating to the ongoing operation of the Partnership and any offering of
partnership interests in the Partnership or capital stock of United Dominion.
LIABILITY OF INVESTORS. Under the Partnership Agreement and applicable
state law, the liability of the limited partners for the Partnership's debts and
obligations is generally limited to the amount of their investment in the
Partnership, and limited partners are generally not liable for any debts,
liabilities, contracts or obligations of the Partnership.
Under Virginia law, United Dominion's shareholders are not personally
liable for the debts or obligations of United Dominion.
NATURE OF INVESTMENTS. The Units constitute equity interests entitling
each limited partner to his pro rata share of cash distributions made to the
limited partners of the Partnership. The Partnership generally intends to retain
and reinvest in its business proceeds of the sale of property or excess
refinancing proceeds.
The shares of common stock constitute equity interests in United
Dominion. United Dominion is entitled to receive its pro rata share of
distributions made by the Partnership with respect to the Units, and each
shareholder will be entitled to his pro rata share of any dividends or
distributions paid with respect to the common stock. The dividends payable to
the shareholders are not fixed in amount and are only paid if, when and as
declared by the Board of Directors. In order to qualify as a REIT, United
Dominion must distribute at least 95% of its annual taxable income (excluding
capital gains), and any taxable income (including capital gains) not distributed
will be subject to corporate income tax.
POTENTIAL DILUTION OF RIGHTS. United Dominion is authorized, in its sole
discretion and without the consent of the limited partners, to cause the
Partnership to issue additional limited partnership interests and other equity
securities for any partnership purpose at any time to the limited partners or to
other persons on terms and conditions established by United Dominion.
The Board of Directors of United Dominion may issue, in its discretion,
additional shares of common stock and a variety of other equity securities of
United Dominion with such powers, preferences and rights as the Board of
Directors may designate. The issuance of additional shares of either common
stock or other similar or senior equity securities may result in the dilution of
the interests of the shareholders.
<PAGE>
LIQUIDITY. Subject to certain exceptions, a limited partner may not
transfer all or any portion of his Units without (A) obtaining the prior written
consent of United Dominion, which consent may be withheld in the sole and
absolute discretion of United Dominion, and (B) meeting certain other
requirements set forth in the Partnership Agreement. limited partners should
expect to hold their Units until they redeem them for cash or shares of common
stock, or until the Partnership terminates. The right of a transferee to become
a substituted limited partner also is subject to the consent of United Dominion,
which consent may be withheld in its sole and absolute discretion. If United
Dominion does not consent to the admission of a transferee, the transferee will
succeed to all economic rights and benefits attributable to such Units but will
not become a limited partner or possess any other rights of limited partners
(including the right to vote on or consent to actions of the Partnership).
United Dominion has the right to redeem any Units held by a transferee who does
not become a substituted limited partner within 20 business days of the
transfer. United Dominion may require, as a condition of any transfer, that the
transferring limited partner assume all costs incurred by the Partnership in
connection with such transfer.
FEDERAL INCOME TAXATION. The Partnership is not subject to federal
income taxes. Instead, each holder of an interest in the Partnership takes into
account its allocable share of the Partnership's taxable income or loss in
determining its federal income tax liability. As of January 1, 1999, the maximum
federal income tax rate for individuals was 39.6%. Income and loss from the
Partnership generally is subject to the "passive activity" limitations. Under
the "passive activity" rules, income and loss from the Partnership that is
considered "passive" income or loss generally can be offset against income and
loss (including passive loss carry-forwards from prior years) from other
investments that constitute "passive activities" (unless the Partnership is
considered a "publicly traded partnership," in which case income and loss from
the Partnership can only be offset against other income and loss from the
Partnership). Income of the Partnership, however, that is attributable to
dividends or interest does not qualify as passive income and cannot be offset
with losses and deductions from a "passive activity." Cash distributions from
the Partnership are not taxable to a holder of Units except to the extent they
exceed such holder's basis in its Units (which will include such holder's
allocable share of the Partnership's debt). Each year, holders of Units will
receive a Schedule K-1 tax form containing detailed tax information for
inclusion in preparing their federal income tax returns. Holders of Units are
required in some cases to file state income tax returns and/or pay state income
taxes in the states in which the Partnership owns property, even if they are not
residents of those states, and in some such states the Partnership is required
to remit a withholding tax with respect to distributions to such nonresidents.
United Dominion elected to be taxed as a REIT effective for its taxable
year ended December 31, 1972. As long as it qualifies as a REIT, United Dominion
generally will be permitted to deduct distributions paid to its shareholders,
which effectively will reduce (or eliminate) the "double taxation" that
typically results when a corporation earns income and distributes that income to
its shareholders in the form of dividends. A REIT, however, is subject to
federal income tax on income that is not distributed and also may be subject to
federal income and excise taxes in certain circumstances. The maximum federal
income tax rate for corporations currently is 35% and for individuals is 39.6%.
Dividends paid by United Dominion will be treated as "portfolio" income and
cannot be offset with losses from "passive activities." Distributions made by
United Dominion to its taxable domestic shareholders out of current or
accumulated earnings and profits will be taken into account by them as ordinary
income. Distributions that are designated as capital gain dividends generally
will be taxed as long-term capital gain, subject to certain limitations.
Distributions in excess of current and accumulated earnings and profits will be
treated as a non-taxable return of capital to the extent of a shareholder's
adjusted basis in its common stock, and the excess over a shareholder's adjusted
basis will be taxed as capital gain. Each year, shareholders of United Dominion
(other than certain types of institutional investors) will receive IRS Form
1099, which is used by corporations to report dividends paid to their
shareholders. Shareholders who are individuals generally should not be required
to file state income tax returns and/or pay state income taxes outside of their
state of residence with respect to United Dominion's operations and
distributions. United Dominion may be required to pay state income and/or
franchise taxes in certain states.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
OF UNITED DOMINION'S STATUS AS A REIT
The following sections summarize the federal income tax issues that you,
as a redeeming limited partner and prospective shareholder of United Dominion,
may consider relevant. Because this section is a summary, it does not address
all of the tax issues that may be important to you. In addition, this section
does not address the tax issues that may be important to certain types of
shareholders that are subject to special treatment under the federal income tax
laws, such as insurance companies, tax-exempt organizations (except to the
extent discussed in "--Taxation of Tax-Exempt Stockholders" below), financial
institutions or broker-dealers, and non-U.S. individuals and foreign
corporations (except to the extent discussed in "--Taxation of Non-U.S.
Stockholders" below).
The statements in this section are based on the current federal income
tax laws governing our qualification as a REIT. United Dominion cannot assure
you that new laws, interpretations thereof, or court decisions, any of which may
take effect retroactively, will not cause any statement in this section to be
inaccurate.
UNITED DOMINION URGES YOU TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES TO YOU OF REDEEMING YOUR UNITS FOR COMMON STOCK AND OF
UNITED DOMINION'S ELECTION TO BE TAXED AS A REIT. SPECIFICALLY, YOU SHOULD
CONSULT YOUR OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX CONSEQUENCES OF SUCH INVESTMENT AND ELECTION, AND REGARDING POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
TAX CONSEQUENCES OF REDEMPTION
The following discussion summarizes certain federal income tax
considerations that may be relevant to a limited partner who exercises his right
to require the redemption of his Units.
TAX TREATMENT OF REDEMPTION OF UNITS. Upon a limited partner's exercise
of his redemption right, United Dominion may elect to purchase the Units. See
"--- Redemption Rights." If United Dominion assumes the redemption obligation
and purchases Units from a redeeming limited partner, the Partnership Agreement
provides that the redemption will be treated by United Dominion, the
Partnership, and the redeeming limited partner as a sale of Units by the limited
partner to United Dominion. The sale will be fully taxable to the redeeming
limited partner, and he will realize for tax purposes an amount equal to the sum
of the cash or the value of the common stock received in exchange for the Units,
plus the amount of any partnership liabilities allocable to the redeemed Units
at the time of the purchase.
If United Dominion does not elect to assume the obligation to redeem a
limited partner's Units, then the Partnership may either (A) redeem the Units
for cash that United Dominion contributes to the Partnership, or (B) redeem the
Units for cash that United Dominion does not contribute to the Partnership. If
the Partnership redeems the Units for cash contributed by United Dominion, the
redemption likely would be treated for tax purposes as a sale of such Units in a
fully taxable transaction. In that event, the redeeming partner will realize an
amount equal to the sum of the cash received in connection with the redemption,
plus the amount of any partnership liabilities allocable to the redeemed Units
at the time of the redemption. The determination of the amount of gain or loss
in the event of sale treatment is discussed more fully below.
If the Partnership chooses to redeem Units for cash that is not
contributed by United Dominion, the tax consequences would be the same as
described in the previous paragraph, except that if the Partnership redeems less
than all of the Units owned by a limited partner, the limited partner would not
be permitted to recognize any loss occurring on the transaction. The limited
partner will recognize taxable gain only to the extent that (A) the sum of the
cash and the amount of any partnership liabilities allocable to the redeemed
Units exceeds (B) his adjusted basis in all of his Units immediately before the
redemption.
<PAGE>
TAX TREATMENT OF DISPOSITION OF UNITS BY LIMITED PARTNER GENERALLY. If a
Unit is redeemed in a manner that is treated as a sale of the Unit, or if a
limited partner otherwise disposes of a Unit (other than in a transaction that
is treated as a redemption for tax purposes), the determination of gain or loss
from such sale or other disposition will be based on the difference between the
amount realized for tax purposes and the tax basis in such Unit. See "-- Basis
of Units."
Upon the sale of a Unit, the "amount realized" will be measured by the
sum of the cash and fair market value of other property (e.g., shares of common
stock) received, plus the amount of any partnership liabilities allocable to the
Unit sold. To the extent that the amount realized exceeds the limited partner's
basis in the Unit sold, the limited partner will recognize gain. The amount of
gain recognized, or even the tax liability resulting from such gain, could
exceed the amount of cash and the value of any other property received during
the sale.
Except as described below, any gain recognized upon a sale or other
disposition of Units will be treated as gain attributable to the sale or
disposition of a capital asset. To the extent, however, that (A) the amount
realized upon the sale of a Unit that is attributable to a limited partner's
share of the Partnership's "unrealized receivables" (as defined in the federal
income tax laws) exceeds (B) the limited partner's basis attributable to those
assets, the excess will be treated as ordinary income. Unrealized receivables
include, to the extent not previously included in the Partnership's income, any
rights to payment for services rendered or to be rendered. Unrealized
receivables also include amounts that would be subject to recapture as ordinary
income if the Partnership had sold its assets at their fair market value at the
time of the transfer of a Unit.
BASIS OF UNITS. In general, if a limited partner received his Units upon
liquidation of a partnership, he will have an initial tax basis in his Units
("Initial Basis") equal to his basis in his interest in the liquidated
partnership. Similarly, in general, if a limited partner received his Units in
exchange for a contribution of a partnership interest or other property to the
Partnership, he will have an Initial Basis equal to his basis in the contributed
partnership interest or other property.
A limited partner's Initial Basis generally is increased by (1) his
share of the Partnership's taxable income and (2) increases in his share of the
Partnership's liabilities (including any increase in his share of liabilities
occurring in connection with the transactions resulting in the issuance of the
Units).
Generally, a limited partner's basis in his Units is decreased (but not
below zero) by (1) his share of the Partnership's distributions, (2) decreases
in his share of the Partnership's liabilities (including any decrease in his
share of liabilities occurring in connection with the transactions resulting in
the issuance of the Units), (3) his share of the Partnership's losses and (4)
his share of the Partnership's nondeductible expenditures that are not
chargeable to capital.
POTENTIAL APPLICATION OF DISGUISED SALE REGULATIONS TO A REDEMPTION OF
UNITS. There is a risk that a redemption of Units may cause the limited
partner's original transfer of property to the Partnership in exchange for Units
to be treated as a "disguised sale" of property.
Federal income tax law generally provides that, unless an exception
applies, if (A) a partner contributes property to a partnership and (B) the
partnership at the same time or afterwards transfers money or other
consideration (including the assumption of or taking subject to a liability) to
the partner, then the transaction will be treated as a "disguised sale," in
whole or in part, of the property by the partner to the partnership. In the
absence of an applicable exception, if money or other consideration is
transferred by a partnership to a partner within two years of the partner's
contribution of property to the partnership, the transactions will be, when
viewed together, presumed to be a sale of the contributed property unless the
facts and circumstances clearly establish that the transfers do not constitute a
sale. However, if two years have passed between the contribution of property and
the transfer of money or other consideration from the partnership to a partner,
the transactions will be presumed not to be a sale unless the facts and
circumstances clearly establish that the transfers constitute a sale.
<PAGE>
Accordingly, if the Partnership redeems a Unit, the Internal Revenue
Service could argue that the transaction should be treated as a sale, because
the redeeming limited partner will receive cash after he has contributed
property to the Partnership. If the Internal Revenue Service were to make that
argument successfully, the original issuance of the Units could be taxable as a
disguised sale under the federal income tax laws. Any gain recognized thereby
may be eligible for installment reporting under Section 453 of the Code, subject
to certain limitations.
TAXATION OF UNITED DOMINION
United Dominion elected to be taxed as a REIT under the federal income
tax laws commencing with its taxable year ended December 31, 1972. United
Dominion believes that it has operated in a manner intended to qualify as a REIT
since its election to be a REIT and it intends to continue to so operate. This
section discusses the laws governing the federal income tax treatment of a REIT
and its shareholders. These laws are highly technical and complex.
United Dominion's qualification as a REIT depends on its ability to meet
on a continuing basis certain qualification tests set forth in the federal tax
laws. Those qualification tests involve the percentage of income that United
Dominion earns from specified sources, the percentage of its assets that fall
within certain categories, the diversity of its share ownership, and the
percentage of its earnings that it distributes. The REIT qualification tests are
described in more detail below. For a discussion of the tax treatment of United
Dominion and its shareholders if United Dominion fails to qualify as a REIT, see
"--Failure to Qualify."
If United Dominion qualifies as a REIT, it generally will not be subject
to federal income tax on the taxable income that it distributes to its
shareholders. The benefit of that tax treatment is that it avoids the "double
taxation" (i.e., at both the corporate and stockholder levels) that generally
results from owning stock in a corporation. However, United Dominion will be
subject to federal tax in the following circumstances:
o United Dominion will pay federal income tax on taxable income
(including net capital gain) that it does not distribute to
its shareholders during, or within a specified time period
after, the calendar year in which the income is earned.
o United Dominion may be subject to the "alternative minimum
tax" on any items of tax preference that it does not
distribute or allocate to its shareholders.
o United Dominion will pay income tax at the highest corporate
rate on (A) net income from the sale or other disposition of
property acquired through foreclosure ("foreclosure property")
that it holds primarily for sale to customers in the ordinary
course of business and (B) other non-qualifying income from
foreclosure property.
o United Dominion will pay a 100% tax on net income from certain
sales or other dispositions of property (other than
foreclosure property) that it holds primarily for sale to
customers in the ordinary course of business ("prohibited
transactions").
o If United Dominion fails to satisfy the 75% gross income test
or the 95% gross income test (as described below under
"--Requirements for Qualification--Income Tests"), and
nonetheless continues to qualify as a REIT because it meets
certain other requirements, it will pay a 100% tax on (A) the
gross income attributable to the greater of the amounts by
which it fails the 75% and 95% gross income tests, multiplied
by (B) a fraction intended to reflect its profitability.
o If United Dominion fails to distribute during a calendar year
at least the sum of (A) 85% of its REIT ordinary income for
such year, (B) 95% of its REIT capital gain net income for
such year, and (C) any undistributed taxable income from prior
periods, it will pay a 4% excise tax on the excess of such
required distribution over the amount it actually distributed.
<PAGE>
o United Dominion may elect to retain and pay income tax on its
net long-term capital gain.
o If United Dominion acquires any asset from a C corporation
(i.e., a corporation generally subject to full corporate-level
tax) in a merger or other transaction in which it acquires a
basis in the asset that is determined by reference to the C
corporation's basis in the asset (or another asset)), it will
pay tax at the highest regular corporate rate applicable if it
recognizes gain on the sale or disposition of such asset
during the 10-year period after it acquires such asset. The
amount of gain on which it will pay tax is the lesser of (i)
the amount of gain that it recognizes at the time of the sale
or disposition and (ii) the amount of gain that it would have
recognized if it had sold the asset at the time it acquired
the asset. The rule described in this paragraph will apply
assuming that United Dominion makes an election under IRS
Notice 88-19 upon its acquisition of an asset from a C
corporation.
REQUIREMENTS FOR QUALIFICATION
A REIT is a corporation, trust, or association that meets the following
requirements:
1. it is managed by one or more trustees or directors;
2. its beneficial ownership is evidenced by transferable shares,
or by transferable certificates of beneficial interest;
3. it would be taxable as a domestic corporation, but for
provisions of federal income tax law defining a REIT;
4. it is neither a financial institution nor an insurance company
subject to certain provisions of the federal income tax law;
5. at least 100 persons are beneficial owners of its shares or
ownership certificates;
6. not more than 50% in value of its outstanding shares or
ownership certificates is owned, directly or indirectly, by
five or fewer individuals (as defined in the federal income
tax laws to include certain entities) during the last half of
any taxable year (the "5/50 Rule");
7. it elects to be a REIT (or has made such election for a
previous taxable year) and satisfies all relevant filing and
other administrative requirements established by the Service
that must be met to elect and maintain REIT status;
8. it uses a calendar year for federal income tax purposes and
complies with the recordkeeping requirements of the federal
income tax laws; and
9. it meets certain other qualification tests, described below,
regarding the nature of its income and assets.
United Dominion must meet requirements 1 through 4 during its entire
taxable year and must meet requirement 5 during at least 335 days of a taxable
year of 12 months, or during a proportionate part of a taxable year of less than
12 months. If United Dominion complies with all the requirements for
ascertaining the ownership of its outstanding shares in a taxable year and has
no reason to know that it violated the 5/50 Rule, it will be deemed to have
satisfied the 5/50 Rule for such taxable year. For purposes of determining share
ownership under the 5/50 Rule, an "individual" generally includes a supplemental
unemployment compensation benefits plan, a private foundation, or a portion of a
trust permanently set aside or used exclusively for charitable purposes. An
"individual," however, generally does not include a trust that is a qualified
employee pension or profit sharing trust under the federal income tax laws, and
beneficiaries of such a trust will be treated as holding shares of United
Dominion's capital stock in proportion to their actuarial interests in the trust
for purposes of the 5/50 Rule.
<PAGE>
United Dominion believes it has issued sufficient common stock with
sufficient diversity of ownership to satisfy requirements 5 and 6 set forth
above. In addition, United Dominion's Articles restrict the ownership and
transfer of the common stock so that United Dominion should continue to satisfy
requirements 5 and 6. The provisions of the Articles restricting the ownership
and transfer of the common stock are described in "Restrictions on Transfer of
Capital Stock."
United Dominion currently has several direct corporate subsidiaries and
may have additional corporate subsidiaries in the future. A corporation that is
a "qualified REIT subsidiary" is not treated as a corporation separate from its
parent REIT. All assets, liabilities, and items of income, deduction, and credit
of a "qualified REIT subsidiary" are treated as assets, liabilities, and items
of income, deduction, and credit of the REIT. A "qualified REIT subsidiary" is a
corporation, all of the capital stock of which is owned by the REIT. Thus, in
applying the requirements described herein, any "qualified REIT subsidiary" of
United Dominion will be ignored, and all assets, liabilities, and items of
income, deduction, and credit of such subsidiary will be treated as assets,
liabilities, and items of income, deduction, and credit of United Dominion.
United Dominion's corporate subsidiaries are qualified REIT subsidiaries.
Accordingly, they are not subject to federal corporate income taxation, though
they may be subject to state and local taxation.
In the case of a REIT that is a partner in a partnership, the REIT is
treated as owning its proportionate share of the assets of the partnership and
as earning its allocable share of the gross income of the partnership for
purposes of the applicable REIT qualification tests. Thus, United Dominion's
proportionate share of the assets, liabilities and items of income of the
Partnership and of any other partnership in which United Dominion has acquired
or will acquire an interest, directly or indirectly, are treated as assets and
gross income of United Dominion for purposes of applying the various REIT
qualification requirements.
INCOME TESTS
United Dominion must satisfy two gross income tests annually to maintain
its qualification as a REIT. First, at least 75% of its gross income (excluding
gross income from prohibited transactions) for each taxable year must consist of
defined types of income that it derives, directly or indirectly, from
investments relating to real property or mortgages on real property or temporary
investment income (the "75% gross income test"). Qualifying income for purposes
of the 75% gross income test includes:
o "rents from real property,"
o interest on debt secured by mortgages on real property or on
interests in real property, and
o dividends or other distributions on and gain from the sale of
shares in other REITs.
Second, at least 95% of its gross income (excluding gross income from
prohibited transactions) for each taxable year must consist of income that is
qualifying income for purposes of the 75% gross income test, dividends, other
types of interest, gain from the sale or disposition of stock or securities, or
any combination of the foregoing (the "95% gross income test"). The following
paragraphs discuss the specific application of these tests to United Dominion.
RENTS AND INTEREST. Rent that United Dominion receives from real
property that it owns and leases to tenants will qualify as "rents from real
property" (which is qualifying income for purposes of the 75% and 95% gross
income tests) only if the following conditions are met.
<PAGE>
o First, the rent must not be based, in whole or in part, on the
income or profits of any person. However, "rents from real
property" generally does not exclude an amount solely because
it is based on a fixed percentage or percentages of receipts
or sales.
o Second, neither United Dominion nor a direct or indirect owner
of 10% or more of its stock may own, actually or
constructively, 10% or more of a tenant from whom it receives
rent.
o Third, all of the rent received under a lease of real property
will not qualify as "rents from real property" unless the rent
attributable to the personal property leased in connection
with such lease is no more than 15% of the total rent received
under the lease.
o Finally, United Dominion generally must not operate or manage
its real property or furnish or render services to its
tenants, other than through an "independent contractor" who is
adequately compensated and from whom United Dominion does not
derive revenue. However, United Dominion need not provide
services through an "independent contractor," but instead may
provide services directly, if the services are "usually or
customarily rendered" in connection with the rental of space
for occupancy only and are not otherwise considered "rendered
to the occupant." In addition, United Dominion may render a DE
MINIMIS amount of "non-customary" services to the tenants of a
property, other than through an independent contractor, as
long as its income from the services does not exceed 1% of its
income from the related property.
United Dominion does not receive any rent that is based on the income or
profits of any person. In addition, United Dominion does not own, directly or
indirectly, 10% or more of any tenant. Furthermore, United Dominion believes
that any personal property rented in connection with our apartment facilities is
well within the 15% restriction. Finally, United Dominion does not provide
services (other than within the 1% de minimis exception described above) to its
tenants that are not customarily furnished or rendered in connection with the
rental of the apartment units, other than through an independent contractor.
United Dominion, through the Partnership (which is not an independent
contractor), provides certain services with respect to the facilities and will
provide certain services with respect to any newly acquired apartment
facilities. Such services include (1) common area services, such as cleaning and
maintaining public entrances, exits, stairways, walkways, lobbies and rest
rooms, removing snow and debris, collecting trash, and painting the exteriors of
the facilities and common areas, (2) providing general security for the
facilities, (3) cleaning and repairing units at the facilities as tenants move
in and out, (4) at the request of the tenant, and without additional charge,
accepting delivery of goods from carriers or unlocking a particular unit when
goods are delivered to a facility (however, the Partnership does not otherwise
assist tenants in the storage or removal of goods or belongings from the units),
(5) permitting tenants to use the fax machine at a facility for occasional local
faxes without additional charge and for occasional long-distance faxes for a
nominal charge, (6) maintaining underground utilities and structural elements of
the facilities, and (7) paying real and personal property taxes or the cost of
replacing or refurbishing personal property with respect to real and personal
property owned by the Partnership at a facility. United Dominion believes that
the services provided by the Partnership are customarily furnished or rendered
in connection with the rental of space for occupancy only by apartment
facilities in the geographic areas in which its facilities are located.
United Dominion's investment, through the Partnership, in the facilities
in major part gives rise to rental income that is qualifying income for purposes
of the 75% and 95% gross income tests. Gains on sales of the facilities (other
than from prohibited transactions, as described below) or of United Dominion's
interest in the Partnership generally will be qualifying income for purposes of
the 75% and 95% gross income tests. United Dominion anticipates that income on
its other investments will not result in United Dominion's failing the 75% or
95% gross income test for any year.
PROHIBITED TRANSACTION RULES. A REIT will incur a 100% tax on the net
income derived from any "prohibited transaction." A "prohibited transaction"
generally is a sale or other disposition of property (other than foreclosure
property) that the REIT holds primarily for sale to customers in the ordinary
course of a trade or business. United Dominion believes that none of its or the
Partnership's assets is held for sale to customers and that a sale of any such
asset would not be in the ordinary course of its business. Whether a REIT holds
an asset "primarily for sale to customers in the ordinary course of a trade or
business" depends, however, on the facts and circumstances in effect from time
to time, including those related to a particular asset. Nevertheless, United
Dominion will attempt to comply with the terms of safe-harbor provisions in the
Code prescribing when an asset sale will not be characterized as a prohibited
transaction. United Dominion cannot assure you, however, that United Dominion
can comply with such safe-harbor provisions or that United Dominion or the
Partnership will avoid owning property that may be characterized as property
that it holds "primarily for sale to customers in the ordinary course of a trade
or business."
<PAGE>
HEDGING TRANSACTIONS. From time to time, United Dominion or the
Partnership may enter into hedging transactions with respect to one or more of
its assets or liabilities. Its hedging activities may include entering into
interest rate swaps, caps and floors (or options to purchase such items), and
futures and forward contracts. To the extent that United Dominion or the
Partnership enters into an interest rate swap or cap contract, option, futures
contract, forward rate agreement or any similar financial instrument to hedge
its indebtedness incurred to acquire or carry "real estate assets," any periodic
income or gain from the disposition of such contract should be qualifying income
for purposes of the 95% gross income test, but not the 75% gross income test. To
the extent that United Dominion or the Partnership hedges with other types of
financial instruments, or in other situations, it is not entirely clear how the
income from those transactions will be treated for purposes of the gross income
tests. United Dominion intends to structure any hedging transactions in a manner
that does not jeopardize its status as a REIT.
FAILURE TO QUALIFY. If United Dominion fails to satisfy one or both of
the 75% and 95% gross income tests for any taxable year, it nevertheless may
qualify as a REIT for such year if it qualifies for relief under certain
provisions of the Code. Those relief provisions generally will be available if
its failure to meet such tests is due to reasonable cause and not due to willful
neglect, United Dominion attaches a schedule of the sources of its income to its
tax return, and any incorrect information on the schedule was not due to fraud
with intent to evade tax. United Dominion cannot predict, however, whether in
all circumstances it would qualify for the relief provisions. In addition, as
discussed above in "--Taxation of United Dominion," even if the relief
provisions apply, United Dominion would incur a 100% tax on the gross income
attributable to the greater of the amounts by which it fails the 75% and 95%
gross income tests, multiplied by a fraction intended to reflect its
profitability.
ASSET TESTS
To maintain its qualification as a REIT, United Dominion also must
satisfy two asset tests at the close of each quarter of each taxable year.
First, at least 75% of the value of its total assets must consist of cash or
cash items (including certain receivables), government securities, "real estate
assets," or qualifying temporary investments (the "75% asset test"). The term
"real estate assets" includes interests in real property, interests in mortgages
on real property and stock in other REITs. For purposes of the 75% asset test,
the term "interest in real property" includes an interest in mortgage loans or
land and improvements thereon, a leasehold of real property, and an option to
acquire real property (or a leasehold of real property). Qualifying temporary
investments are investments in stock or debt instruments during the one-year
period following United Dominion's receipt of new capital that it raises through
equity or long-term (at least five-year) debt offerings.
The second asset test has two components. First, of United Dominion's
investments not included in the 75% asset class, the value of its interest in
any one issuer's securities (which does not include its stock in other REITs,
the Partnership, or any qualified REIT subsidiary) may not exceed 5% of the
value of its total assets (the "5% asset test"). Second, United Dominion may not
own more than 10% of any one issuer's outstanding voting securities (which does
not include its stock in other REITs, the Partnership, or any qualified REIT
subsidiary) (the "10% asset test").
For purposes of the asset tests, United Dominion is deemed to own its
proportionate share of the assets of the Partnership, rather than its interest
in the Partnership. United Dominion has operate and intends to continue to
operate so that it has not acquired or disposed, and in the future will not
acquire or dispose, of assets in a way that would cause it to violate either
asset test.
<PAGE>
If United Dominion should fail to satisfy the asset tests at the end of
a calendar quarter, it would not lose its REIT status if (A) it satisfied the
asset tests at the close of the preceding calendar quarter and (B) the
discrepancy between the value of its assets and the asset test requirements
arose from changes in the market values of its assets and was not wholly or
partly caused by the acquisition of one or more non-qualifying assets. If United
Dominion did not satisfy the condition described in clause (B) of the preceding
sentence, it still could avoid disqualification as a REIT by eliminating any
discrepancy within 30 days after the close of the calendar quarter in which the
discrepancy arose.
DISTRIBUTION REQUIREMENTS
Each taxable year, United Dominion must distribute dividends (other than
capital gain dividends and deemed distributions of retained capital gain) to its
shareholders in an aggregate amount at least equal to:
o the sum of (A) 95% of its "REIT taxable income" (computed
without regard to the dividends paid deduction and its net
capital gain or loss) and (B) 95% of its net income (after
tax), if any, from foreclosure property,
o minus the sum of certain items of non-cash income.
United Dominion must pay such distributions in the taxable year to which
they relate, or in the following taxable year if it declares the distribution
before it timely files its federal income tax return for such year and pays the
distribution on or before the first regular dividend payment date after such
declaration.
United Dominion will pay federal income tax on taxable income (including
net capital gain) that it does not distribute to shareholders. Furthermore, if
it fails to distribute during a calendar year (or, in the case of distributions
with declaration and record dates falling in the last three months of the
calendar year, by the end of January following such calendar year) at least the
sum of:
o 85% of its REIT ordinary income for such year,
o 95% of its REIT capital gain income for such year, and
o any undistributed taxable income from prior periods,
it will incur a 4% nondeductible excise tax on the excess of such
required distribution over the amounts it actually distributed. United Dominion
may elect to retain and pay income tax on the net long-term capital gain it
receives in a taxable year. See "--Taxation of Taxable U.S. Stockholders." If it
so elects, it will be treated as having distributed any such retained amount for
purposes of the 4% excise tax described above. United Dominion has made, and
intends to continue to make, timely distributions sufficient to satisfy the
annual distribution requirements.
It is possible that, from time to time, United Dominion may experience
timing differences between (A) the actual receipt of income and actual payment
of deductible expenses and (B) the inclusion of that income and deduction of
such expenses in arriving at its REIT taxable income. For example, United
Dominion may not deduct recognized capital losses from its "REIT taxable
income." Further, it is possible that, from time to time, United Dominion may be
allocated a share of net capital gain attributable to the sale of depreciated
property that exceeds its allocable share of cash attributable to that sale. As
a result of the foregoing, United Dominion may have less cash than is necessary
to distribute all of its taxable income and thereby avoid corporate income tax
and the excise tax imposed on certain undistributed income. In such a situation,
it may need to borrow funds or issue preferred stock or additional common stock.
<PAGE>
Under certain circumstances, United Dominion may be able to correct a
failure to meet the distribution requirement for a year by paying "deficiency
dividends" to its shareholders in a later year. United Dominion may include such
deficiency dividends in its deduction for dividends paid for the earlier year.
Although United Dominion may be able to avoid income tax on amounts distributed
as deficiency dividends, it will be required to pay interest to the Internal
Revenue Service based upon the amount of any deduction it takes for deficiency
dividends.
RECORDKEEPING REQUIREMENTS
United Dominion must maintain certain records in order to qualify as a
REIT. In addition, to avoid a monetary penalty, it must request on an annual
basis certain information from its shareholders designed to disclose the actual
ownership of its outstanding stock. United Dominion has complied, and intends to
continue to comply, with such requirements.
FAILURE TO QUALIFY
If United Dominion failed to qualify as a REIT in any taxable year, and
no relief provision applied, it would be subject to federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. In calculating its taxable income in a year in which it
failed to qualify as a REIT, United Dominion would not be able to deduct amounts
paid out to shareholders. In fact, United Dominion would not be required to
distribute any amounts to shareholders in such year. In such event, to the
extent of its current and accumulated earnings and profits, all distributions to
shareholders would be taxable as ordinary income. Subject to certain limitations
of the Code, corporate shareholders might be eligible for the dividends received
deduction. Unless United Dominion qualified for relief under specific statutory
provisions, it also would be disqualified from taxation as a REIT for the four
taxable years following the year during which it ceased to qualify as a REIT.
United Dominion cannot predict whether in all circumstances it would qualify for
such statutory relief.
TAXATION OF TAXABLE U.S. STOCKHOLDERS
As long as United Dominion qualifies as a REIT, a taxable "U.S.
Stockholder" must take into account distributions out of United Dominion's
current or accumulated earnings and profits (and that it does not designate as
capital gain dividends or retained long-term capital gain) as ordinary income. A
U.S. Stockholder will not qualify for the dividends received deduction generally
available to corporations. As used herein, the term "U.S. Stockholder" means a
holder of United Dominion's common stock that for U.S. federal income tax
purposes is
o a citizen or resident of the United States,
o a corporation, partnership, or other entity created or
organized in or under the laws of the United States or of an
political subdivision thereof,
o an estate whose income from sources outside the United States
is includible in gross income for U.S. federal income tax
purposes regardless of its connection with the conduct of a
trade or business within the United States, or
o any trust with respect to which (A) a U.S. court is able to
exercise primary supervision over the administration of such
trust and (B) one or more U.S. persons have the authority to
control all substantial decisions of the trust.
A U.S. Stockholder will recognize distributions that United Dominion
designates as capital gain dividends as long-term capital gain (to the extent
they do not exceed United Dominion's actual net capital gain for the taxable
year) without regard to the period for which the U.S. Stockholder has held its
common stock. Subject to certain limitations, United Dominion will designate its
capital gain dividends as either 20% or 25% rate distributions. A corporate U.S.
Stockholder, however, may be required to treat up to 20% of certain capital gain
dividends as ordinary income.
<PAGE>
United Dominion may elect to retain and pay income tax on the net
long-term capital gain that it receives in a taxable year. In that case, a U.S.
Stockholder would be taxed on its proportionate share of United Dominion's
undistributed long-term capital gain. The U.S. Stockholder would receive a
credit or refund for its proportionate share of the tax United Dominion paid.
The U.S. Stockholder would increase the basis in its stock by the amount of its
proportionate share of United Dominion's undistributed long-term capital gain,
minus its share of the tax United Dominion paid.
A U.S. Stockholder will not incur tax on a distribution in excess of
United Dominion's current and accumulated earnings and profits if such
distribution does not exceed the adjusted basis of the U.S. Stockholder's common
stock. Instead, such distribution will reduce the adjusted basis of such common
stock. A U.S. Stockholder will recognize a distribution in excess of both United
Dominion's current and accumulated earnings and profits and the U.S.
Stockholder's adjusted basis in its common stock as long-term capital gain (or
short-term capital gain if the common stock has been held for one year or less),
assuming the common stock is a capital asset in the hands of the U.S.
Stockholder. In addition, if United Dominion declares a distribution in October,
November, or December of any year that is payable to a U.S. Stockholder of
record on a specified date in any such month, such distribution shall be treated
as both paid by United Dominion and received by the U.S. Stockholder on December
31 of such year, provided that United Dominion actually pays the distribution
during January of the following calendar year. United Dominion will notify U.S.
Stockholders after the close of its taxable year as to the portions of the
distributions attributable to that year that constitute ordinary income or
capital gain dividends.
TAXATION OF U.S. STOCKHOLDERS ON THE DISPOSITION OF THE COMMON STOCK
In general, a U.S. Stockholder who is not a dealer in securities must
treat any gain or loss realized upon a taxable disposition of the common stock
as long-term capital gain or loss if the U.S. Stockholder has held the common
stock for more than one year and otherwise as short-term capital gain or loss.
However, a U.S. Stockholder must treat any loss upon a sale or exchange of
common stock held by such shareholder for six months or less (after applying
certain holding period rules) as a long-term capital loss to the extent of
capital gain dividends and other distributions from United Dominion that such
U.S. Stockholder treats as long-term capital gain. All or a portion of any loss
a U.S. Stockholder realizes upon a taxable disposition of the common stock may
be disallowed if the U.S. Stockholder purchases other shares of common stock
within 30 days before or after the disposition.
CAPITAL GAINS AND LOSSES
A taxpayer generally must hold a capital asset for more than one year
for gain or loss derived from its sale or exchange to be treated as long-term
capital gain or loss. The highest marginal individual income tax rate is 39.6%.
The maximum tax rate on long-term capital gain applicable to non-corporate
taxpayers is 20% for sales and exchanges of assets held for more than one year.
The maximum tax rate on long-term capital gain from the sale or exchange of
"section 1250 property" (i.e., depreciable real property) is 25% to the extent
that such gain would have been treated as ordinary income if the property were
"section 1245 property." With respect to distributions that United Dominion
designates as capital gain dividends and any retained capital gain that it is
deemed to distribute, United Dominion may designate (subject to certain limits)
whether such a distribution is taxable to its non-corporate shareholders at a
20% or 25% rate. Thus, the tax rate differential between capital gain and
ordinary income for non-corporate taxpayers may be significant. In addition, the
characterization of income as capital gain or ordinary income may affect the
deductibility of capital losses. A non-corporate taxpayer may deduct capital
losses not offset by capital gains against its ordinary income only up to a
maximum annual amount of $3,000. A non-corporate taxpayer may carry forward
unused capital losses indefinitely. A corporate taxpayer must pay tax on its net
capital gain at ordinary corporate rates. A corporate taxpayer can deduct
capital losses only to the extent of capital gains, with unused losses being
carried back three years and forward five years.
<PAGE>
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
United Dominion will report to its shareholders and to the Internal
Revenue Service the amount of distributions it pays during each calendar year,
and the amount of tax it withholds, if any. Under the backup withholding rules,
a shareholder may be subject to backup withholding at the rate of 31% with
respect to distributions unless such holder (A) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact or
(B) provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding, and otherwise complies with the applicable
requirements of the backup withholding rules. A shareholder who does not provide
United Dominion with its correct taxpayer identification number also may be
subject to penalties imposed by the Internal Revenue Service. Any amount paid as
backup withholding will be creditable against the shareholder's income tax
liability. In addition, United Dominion may be required to withhold a portion of
capital gain distributions to any shareholders who fail to certify their
non-foreign status to United Dominion. The Treasury Department has issued final
regulations regarding the backup withholding rules as applied to Non-U.S.
Stockholders. Those regulations alter the current system of backup withholding
compliance and are effective for distributions made after December 31, 1999. See
"--Taxation of Non-U.S. Stockholders."
TAXATION OF TAX-EXEMPT STOCKHOLDERS
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts and annuities ("Exempt
Organizations"), generally are exempt from federal income taxation. However,
they are subject to taxation on their unrelated business taxable income
("UBTI"). While many investments in real estate generate UBTI, the Internal
Revenue Service has issued a published ruling that dividend distributions from a
REIT to an exempt employee pension trust do not constitute UBTI, provided that
the exempt employee pension trust does not otherwise use the shares of the REIT
in an unrelated trade or business of the pension trust. Based on that ruling,
amounts that United Dominion distributes to Exempt Organizations generally
should not constitute UBTI. However, if an Exempt Organization were to finance
its acquisition of the common stock with debt, a portion of the income that they
receive from United Dominion would constitute UBTI pursuant to the
"debt-financed property" rules. Furthermore, social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts and qualified
group legal services plans that are exempt from taxation under paragraphs (7),
(9), (17), and (20), respectively, of Code section 501(c) are subject to
different UBTI rules, which generally will require them to characterize
distributions that they receive from United Dominion as UBTI. Finally, in
certain circumstances, a qualified employee pension or profit sharing trust that
owns more than 10% of United Dominion's stock is required to treat a percentage
of the dividends that it receives from United Dominion as UBTI (the "UBTI
Percentage"). The UBTI Percentage is equal to the gross income United Dominion
derives from an unrelated trade or business (determined as if it were a pension
trust) divided by its total gross income for the year in which it pays the
dividends. The UBTI rule applies to a pension trust holding more than 10% of
United Dominion's stock only if:
o the UBTI Percentage is at least 5%;
o United Dominion qualifies as a REIT by reason of the
modification of the 5/50 Rule that allows the beneficiaries of
the pension trust to be treated as holding United Dominion's
stock in proportion to their actuarial interests in the
pension trust; and
o United Dominion is a "pension-held REIT" (i.e., either (i) one
pension trust owns more than 25% of the value of its stock or
(ii) a group of pension trusts individually holding more than
10% of the value of its stock collectively owns more than 50%
of the value of its stock).
<PAGE>
TAXATION OF NON-U.S. STOCKHOLDERS
The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
shareholders (collectively, "Non-U.S. Stockholders") are complex. This section
is only a summary of such rules. UNITED DOMINION URGES NON-U.S. STOCKHOLDERS TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL, STATE, AND
LOCAL INCOME TAX LAWS ON OWNERSHIP OF THE COMMON STOCK, INCLUDING ANY REPORTING
REQUIREMENTS.
A Non-U.S. Stockholder that receives a distribution that is not
attributable to gain from United Dominion's sale or exchange of U.S. real
property interests (as defined below) and that United Dominion does not
designate as a capital gain dividend or retained capital gain will recognize
ordinary income to the extent that United Dominion pays such distribution out of
its current or accumulated earnings and profits. A withholding tax equal to 30%
of the gross amount of the distribution ordinarily will apply to such
distribution unless an applicable tax treaty reduces or eliminates the tax.
However, if a distribution is treated as effectively connected with the Non-U.S.
Stockholder's conduct of a U.S. trade or business, the Non-U.S. Stockholder
generally will be subject to federal income tax on the distribution at graduated
rates, in the same manner as U.S. Stockholders are taxed with respect to such
distributions (and also may be subject to the 30% branch profits tax in the case
of a Non-U.S. Stockholder that is a non-U.S. corporation). United Dominion plans
to withhold U.S. income tax at the rate of 30% on the gross amount of any such
distribution paid to a Non-U.S. Stockholder unless (i) a lower treaty rate
applies and the Non-U.S. Stockholder files the required form evidencing
eligibility for that reduced rate with United Dominion or (ii) the Non-U.S.
Stockholder files an IRS Form 4224 with United Dominion claiming that the
distribution is effectively connected income. The U.S. Treasury Department has
issued final regulations that modify the manner in which United Dominion will
comply with the withholding requirements. Those regulations are effective for
distributions made after December 31, 1999.
A Non-U.S. Stockholder will not incur tax on a distribution in excess of
United Dominion's current and accumulated earnings and profits if such
distribution does not exceed the adjusted basis of its common stock. Instead,
such a distribution will reduce the adjusted basis of such common stock. A
Non-U.S. Stockholder will be subject to tax on a distribution that exceeds both
United Dominion's current and accumulated earnings and profits and the adjusted
basis of its common stock, if the Non-U.S. Stockholder otherwise would be
subject to tax on gain from the sale or disposition of its common stock, as
described below. Because United Dominion generally cannot determine at the time
it makes a distribution whether or not the distribution will exceed its current
and accumulated earnings and profits, it normally will withhold tax on the
entire amount of any distribution at the same rate as it would withhold on a
dividend. However, a Non-U.S. Stockholder may obtain a refund of amounts that
United Dominion withholds if it later determines that a distribution in fact
exceeded its current and accumulated earnings and profits.
United Dominion must withhold 10% of any distribution that exceeds its
current and accumulated earnings and profits. Consequently, although it intends
to withhold at a rate of 30% on the entire amount of any distribution, to the
extent that it does not do so, it will withhold at a rate of 10% on any portion
of a distribution not subject to withholding at a rate of 30%.
For any year in which United Dominion qualifies as a REIT, a Non-U.S.
Stockholder will incur tax on distributions that are attributable to gain from
its sale or exchange of "U.S. real property interests" under the provisions of
the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). The term
"U.S. real property interests" includes certain interests in real property and
stock in corporations at least 50% of whose assets consists of interests in real
property, but excludes mortgage loans and mortgage-backed securities. Under
FIRPTA, a Non-U.S. Stockholder is taxed on distributions attributable to gain
from sales of U.S. real property interests as if such gain were effectively
connected with a U.S. business of the Non-U.S. Stockholder. A Non-U.S.
Stockholder thus would be taxed on such a distribution at the normal capital
gain rates applicable to U.S. Stockholders (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of a nonresident
alien individual). A non-U.S. corporate shareholder not entitled to treaty
relief or exemption also may be subject to the 30% branch profits tax on
distributions subject to FIRPTA. United Dominion must withhold 35% of any
distribution that it could designate as a capital gain dividend. A Non-U.S.
Stockholder may receive a credit against its FIRPTA tax liability for the amount
United Dominion withholds.
<PAGE>
A Non-U.S. Stockholder generally will not incur tax under FIRPTA on gain
from the sale of its common stock as long as United Dominion is a "domestically
controlled REIT." A "domestically controlled REIT" is a REIT in which at all
times during a specified testing period non-U.S. persons held, directly or
indirectly, less than 50% in value of the stock. However, a Non-U.S. Stockholder
that owned, actually or constructively, 5% or less of the common stock at all
times during a specified testing period will not incur tax under FIRPTA if the
common stock is "regularly traded" on an established securities market. If the
gain on the sale of the common stock were taxed under FIRPTA, a Non-U.S.
Stockholder would be taxed in the same manner as U.S. Stockholders with respect
to such gain (subject to applicable alternative minimum tax, a special
alternative minimum tax in the case of nonresident alien individuals, and the
possible application of the 30% branch profits tax in the case of non-U.S.
corporations). However, a Non-U.S. Stockholder will incur tax on gain not
subject to FIRPTA if:
o the gain is effectively connected with the Non-U.S.
Stockholder's U.S. trade or business, in which case the
Non-U.S. Stockholder will be subject to the same treatment as
U.S. Stockholders with respect to such gain, or
o the Non-U.S. Stockholder is a nonresident alien individual who
was present in the U.S. for 183 days or more during the
taxable year and has a "tax home" in the United States, in
which case the Non-U.S. Stockholder will incur a 30% tax on
his capital gains.
OTHER TAX CONSEQUENCES
STATE AND LOCAL TAXES
United Dominion and/or you may be subject to state and local tax in
various states and localities, including those states and localities in which
United Dominion or you transact business, own property or reside. The state and
local tax treatment in such jurisdictions may differ from the federal income tax
treatment described above. Consequently, you should consult your own tax advisor
regarding the effect of state and local tax laws upon an investment in the
common stock.
PLAN OF DISTRIBUTION
This Prospectus relates to the possible issuance by United Dominion of
the Redemption Shares if, and to the extent that, the Unitholders tender such
Units for redemption and United Dominion elects to purchase the Units for shares
of common stock. United Dominion is registering the issuance of the Redemption
Shares to make it possible to provide the Unitholders with freely tradeable
securities upon redemption of their Units. However, registration of such shares
does not necessarily mean that any of such shares will be issued by United
Dominion or offered or sold by such Unitholder.
United Dominion may from time to time issue Redemption Shares upon
purchase of Units tendered for redemption. United Dominion will acquire Units in
exchange for any Redemption Shares that United Dominion issues in connection
with these acquisitions. Consequently, with each such redemption, United
Dominion's interest in the Partnership will increase.
EXPERTS
Ernst & Young, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1998, as set forth in their report, which is
incorporated in this prospectus and elsewhere in this Registration Statement by
reference. Our consolidated financial statements and schedule are incorporated
by reference in reliance on Ernst and Young LLP's report, given on their
authority as experts in accounting and auditing.
<PAGE>
The consolidated financial statements and schedule of ASR incorporated
in this Prospectus by reference from ASR's Annual Report on Form 10-K for the
year ended December 31, 1997 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
The consolidated financial statements of American Apartment Communities
II, Inc. and American Apartment Communities II, L.P., for the year ended
December 31, 1997, included in United Dominion's Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 23, 1998, as
amended, incorporated herein by reference, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
The statement of rental operations of Dogwood Creek Apartments and the
combined statement of rental operations of Trails at Mount Moriah Apartments,
Trails at Kirby Parkway Apartments, Cinnamon Trails Apartments, Audubon
Apartments, Carmel Apartments, Cimarron City Apartments, Grand Cypress
Apartments, Kenton Apartments, Peppermill Apartments, The Crest Apartments, and
Villages of Thousand Oaks Apartments, included in United Dominion's Current
Report on Form 8-K dated June 9, 1998, filed on June 24, 1998, as amended by
Amendment No. 1 on Form 8-K/A dated and filed on August 13, 1998, incorporated
by reference herein, has been incorporated herein in reliance upon the reports
dated May 1, 1998, May 8, 1998 and June 29, 1998 of L. P. Martin & Company,
P.C., independent auditors, also incorporated by reference herein, and upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered
pursuant to this Prospectus will be passed upon for United Dominion by Hunton &
Williams.
<PAGE>
IF YOU WOULD LIKE ADDITIONAL INFORMATION
United Dominion files annual, quarterly and special reports, proxy
statements and other information with the U.S. Securities and Exchange
Commission ("SEC"). You may read and copy this information at the SEC's public
reference rooms, which are located at:
450 Fifth Street, NW 7 World Trade Center, Suite 1300
Washington, DC 20549 New York, NY 10048
500 West Madison Street, Suite 1400
Chicago, IL 60661-2511
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. This information is also available on-line through the
SEC's Electronic Data Gathering, Analysis, and Retrieval System (EDGAR), located
on the SEC's web site (http://www.sec.gov.).
Also, United Dominion will provide you (free of charge) with any of its
documents filed with the SEC. To get your free copies, please call or write:
United Dominion Realty Trust, Inc.
10 South 6th Street
Richmond, Virginia 23219-3802
(804) 780-2691
United Dominion has filed a Registration Statement with the SEC on Form
S-3 with respect to the Redemption Shares. This prospectus is a part of the
Registration Statement, but the prospectus does not repeat important information
that you can find in the Registration Statement, reports and other documents
that United Dominion filed with the SEC. The SEC allows United Dominion to
"incorporate by reference" those documents, which means that United Dominion can
disclose important information to you by referring you to other documents. The
documents that are incorporated by reference are legally considered to be a part
of this prospectus. The documents incorporated by reference are:
(1) Annual Report on Form 10-K for the year ended December 31, 1998;
(2) Current Report on Form 8-K dated January 27, 1998, filed on
February 4, 1998; Current Report on Form 8-K dated and filed on
February 13, 1998; Current Report on Form 8-K dated and filed on
February 17, 1998; Current Report dated March 27, 1998, filed on
April 13, 1998, as amended by Amendment No. 1 on Form 8-K/A dated
and filed on June 12, 1998; Current Report on Form 8-K dated June
9, 1998, filed on June 24, 1998, as amended by Amendment No. 1 on
Form 8-K/A dated and filed on August 13, 1998; Current Report on
Form 8-K dated May 28, 1998, filed on October 19, 1998; Current
Report on Form 8-K dated September 11, 1998, filed on October 23,
1998, as amended by Amendment No. 1 on Form 8-K/A dated and filed
on December 21, 1998; Current Report on Form 8-K dated and filed
on October 28, 1998; Current Report on Form 8-K dated November 2,
1998, filed on November 6, 1998; Current Report on Form 8-K dated
November 10, 1998, filed on November 12, 1998; Current Report on
Form 8-K dated December 7, 1998, filed on December 21, 1998;
Current Report on Form 8-K dated and filed on January 20, 1999;
Current Report on Form 8-K dated and filed March 29, 1999;
(3) The description of the common stock and preferred stock contained
in United Dominion's Registration Statements on Form 8-A dated
April 9, 1990, May 1, 1995, June 10, 1997 and February 4, 1998,
filed under the Exchange Act, including any amendments or reports
filed for the purpose of updating such descriptions;
<PAGE>
(4) Any filings with the SEC pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act of 1934 between the date of this
prospectus and the termination of the offering of all of the
Redemption Shares.
As you read the above documents, you may find some inconsistencies in
information from one document to another. If you find inconsistencies between
the documents, or between a document and this prospectus, you should rely on the
statements made in the most recent document.
You should rely only on the information in this prospectus or incorporated by
reference. United Dominion has not authorized anyone to provide you with any
different information.
<PAGE>
PROSPECTIVE INVESTORS MAY RELY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. UNITED DOMINION HAS NOT AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE
INVESTORS WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS.
THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY
SALE OF THESE SECURITIES.
UNITED DOMINION REALTY TRUST, INC.
130,416 SHARES
COMMON STOCK
---------------
PROSPECTUS
---------------
APRIL , 1999
<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 ................. $349.00
Accounting fees and expenses......................................... 5,000.00
Legal fees and expenses ............................................. 2,500.00
Printing and postage expenses........................................ 500.00
Miscellaneous........................................................ 0.00
TOTAL ........................................................ $8,349.00
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Directors and officers of United Dominion 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. 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 United Dominion's Articles 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 United Dominion,
the Board of Directors may cause United Dominion to indemnify to the same extent
allowed for Directors and officers of United Dominion 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 United Dominion, or is or was serving at the request of United Dominion
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise.
ITEM 16 EXHIBITS
2(a) -- Agreement and Plan of Merger dated as of December 19, 1997,
between United Dominion, ASR Investments Corporation and ASR
Acquisition Sub, Inc. (filed as Exhibit 2(a) to United Dominion's
Form S-4 Registration Statement, filed with the Commission on
January 30, 1998 (File No. 333-45305), and incorporated by
reference herein)
2(b) -- Agreement and Plan of Merger dated as of October 1, 1996,
between United Dominion, United Sub, Inc. and South West Property
Trust Inc. (filed as Exhibit 2(a) to United Dominion's Form S-4
Registration Statement, filed with the Commission on October 9,
1996 (File No. 333-13745), and incorporated by reference herein)
2(c) -- Agreement and Plan of Merger dated as of September 10, 1998,
between United Dominion and American Apartment Communities II,
Inc. including as exhibits thereto the proposed terms of the
Series D Preferred Stock and the proposed form of Investment
Agreement between United Dominion, United Dominion Realty, L.P.,
American Apartment Communities II, Inc., American Apartment
Communities II, L.P., American Apartment Communities Operating
Partnership, L.P., Schnitzer Investment Corp., AAC Management LLC
and LF Strategic Realty Investors, L.P. (filed as Exhibit 2(c) to
United Dominion's Form S-3 Registration Statement, filed with the
Commission on September 25, 1998 (File No. 333-64281), and
incorporated by reference herein)
<PAGE>
2(d) -- Partnership Interest Purchase and Exchange Agreement dated as of
September 10, 1998, between United Dominion, United Dominion
Realty, L.P., American Apartment Communities Operating
Partnership, L.P., AAC Management LLC, Schnitzer Investment Corp,
Fox Point Ltd. and James D. Klingbeil including as an exhibit
thereto the proposed form of the Third Amended and Restated
limited partnership Agreement of United Dominion Realty, L.P.
(filed as Exhibit 2(d) to United Dominion's Form S-3 Registration
Statement, filed with the Commission on September 25, 1998 (File
No. 333-64281), and incorporated by reference herein)
4(a) -- Restated Articles of Incorporation of United Dominion (filed
as Exhibit 4(b) to United Dominion's Form S-3 Registration
Statement, filed with the Commission on January 16, 1998 (File
No. 333-44463), and incorporated by reference herein)
4(a)(i) -- Amendment of Articles of Incorporation of United Dominion
(filed as Exhibit 3 to United Dominion's Form 8-A Registration
Statement dated February 4, 1998 (File No. 1-10524), and
incorporated by reference herein)
4(a)(ii) -- Restated Articles of Incorporation of United Dominion, dated
January 21, 1999 (previously filed)
4(b) -- Restated Bylaws of the Company (filed as Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1998 (File No. 1-10524), and incorporated by reference
herein)
4(c) -- Specimen United Dominion common stock certificate (filed as
Exhibit 4(i) to United Dominion's Annual Report on Form 10-K for
the year ended December 31, 1993 (File No. 1-10524), and
incorporated by reference herein)
4(d)(i) -- Loan Agreement dated as of November 7, 1993, between United
Dominion and Aid Association for Lutherans (filed as Exhibit
6(c)(1) to United Dominion's Form 8-A Registration Statement
dated April 19, 1990 (File No. 10524), and incorporated by
reference herein)
4(d)(ii) -- Note Purchase Agreement dated as of January 15, 1993, between
United Dominion 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 United Dominion's Form 8-A Registration
Statement dated April 19, 1990 (File No. 1-10524), and
incorporated by reference herein)
4(e) -- Rights Agreement dated as of January 27, 1998, between United
Dominion and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (filed as Exhibit 1 to United Dominion's Form 8-A
Registration Statement dated February 4, 1998 (File No. 1-10524)
and incorporated by reference herein)
4(f) -- Form of Rights Certificate (included in Exhibit 4(e))
5 -- Opinion of Hunton & Williams (previously filed)
23(a) -- Consent of Ernst & Young LLP
23(b) -- Consent of Deloitte & Touch LLP
23(c) -- Consent of Arthur Andersen LLP
23(d) -- Consent of L.P. Martin & Company, P.C.
23(e) -- Consent of Hunton & Williams (included in Exhibit 5)
<PAGE>
24 -- Power of Attorney (previously filed)
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement;
(iii)To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of 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 this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this pre-effective amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Richmond, Commonwealth of Virginia on the 7th day of
April, 1999.
UNITED DOMINION REALTY TRUST, INC.
By /s/ John P. McCann
-------------------
John P. McCann
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
pre-effective amendment to the registration statement has been signed by the
following persons in the capacities indicated on April 7, 1999.
<TABLE>
Signature Title & Capacity
--------- ----------------
<S> <C>
/s/ John P. McCann* Chairman, Chief Executive Officer (Principal
- ------------------- Executive Officer) and Director
John P. McCann
/s/ Kevin W. Walsh * Vice President, Finance (Principal Financial
- --------------------- Officer)
Kevin W. Walsh
/s/ Robin R. Flanagan * Principal Accounting Officer
- -------------------------
Robin R. Flanagan
/s/ Jeff C. Bane * Director
- -----------------------
Jeff C. Bane
/s/ R. Toms Dalton * Director
- -----------------------
R. Toms Dalton, Jr.
/s/ Robert P. Freeman * Director
- -------------------------
Robert P. Freeman
/s/ Jon A. Grove * Director
- -------------------------
Jon A. Grove
/s/ Barry M. Kornblau * Director
- -------------------------
Barry M. Kornblau
/s/ James D. Klingbeil * Director
- -------------------------
James D. Klingbeil
<PAGE>
/s/ Lynne B. Sagalyn * Director
- -----------------------
Lynne B. Sagalyn
/s/ Mark J. Sandler * Director
- -----------------------
Mark J. Sandler
Director
- -----------------------
Robert W. Scharar
/s/ John S. Schneider * President and Director
- ------------------------
John S. Schneider
/s/ C. Harmon Williams * Director
- -------------------------
C. Harmon Williams, Jr.
*By: /s/ Katheryn E. Surface
------------------------
Katheryn E. Surface
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit Document
- ------- --------
2(a) -- Agreement and Plan of Merger dated as of December 19, 1997,
between United Dominion, ASR Investments Corporation and ASR
Acquisition Sub, Inc. (incorporated by reference)
2(b) -- Agreement and Plan of Merger dated as of October 1, 1996, between
United Dominion, United Sub, Inc. and South West Property Trust
Inc. (incorporated by reference)
2(c) -- Agreement and Plan of Merger dated as of September 10, 1998,
between United Dominion and American Apartment Communities II,
Inc. including as exhibits thereto the proposed terms of the
Series D Preferred Stock and the proposed form of Investment
Agreement between United Dominion, United Dominion Realty, L.P.,
American Apartment Communities II, Inc., American Apartment
Communities II, L.P., American Apartment Communities Operating
Partnership, L.P., Schnitzer Investment Corp., AAC Management
LLC and LF Strategic Realty Investors, L.P. (incorporated by
reference)
2(d) -- Partnership Interest Purchase and Exchange Agreement dated as of
September 10, 1998, between United Dominion, United Dominion
Realty, L.P., American Apartment Communities Operating
Partnership, L.P., AAC Management LLC, Schnitzer Investment
Corp, Fox Point Ltd. and James D. Klingbeil including as an
exhibit thereto the proposed form of the Third Amended and
Restated limited partnership Agreement of United Dominion Realty,
L.P. (incorporated by reference)
4(a) -- Restated Articles of Incorporation of United Dominion
(incorporated by reference)
4(a)(i) -- Amendment of Articles of Incorporation of United Dominion
(incorporated by reference)
4(a)(ii) -- Restated Articles of Incorporation of United Dominion, dated
January 21, 1999 (previously filed)
4(b) -- Restated Bylaws of United Dominion (incorporated by reference)
4(c) -- Specimen United Dominion common stock certificate (incorporated
by reference)
4(d)(i) -- Loan Agreement dated as of November 7, 1993, between United
Dominion and Aid Association for Lutherans (incorporated by
reference)
4(d)(ii) -- Note Purchase Agreement dated as of January 15, 1993, between
United Dominion 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
(incorporated by reference)
4(e) -- Rights Agreement dated as of January 27, 1998, between United
Dominion and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (incorporated by reference)
4(f) -- Form of Rights Certificate (included in Exhibit 4(e))
5 -- Opinion of Hunton & Williams (previously filed)
23(a) -- Consent of Ernst & Young LLP
23(b) -- Consent of Deloitte & Touch LLP
23(c) -- Consent of Arthur Andersen LLP
23(d) -- Consent of L.P. Martin & Company, P.C.
23(e) -- Consent of Hunton & Williams (included in Exhibit 5)
24 -- Power of Attorney (previously filed)
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-72885) and related
Prospectus of United Dominion Realty Trust, Inc. for the registration of 130,416
shares of its common stock and rights to purchase series C junior participating
redeemable preferred stock and to the incorporation by reference therein of our
report dated January 27, 1999, with respect to the consolidated financial
statements and schedule of United Dominion Realty Trust, Inc. included in its
Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Richmond, Virginia
April 2, 1999
Exhibit 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Pre-Effective Amendment No.
1 to Registration Statement No. 333-72885 of United Dominion Realty Trust, Inc.
on Form S-3 of our report dated February 27, 1998 (March 27, 1998 as to Note 12)
appearing in the Annual report on Form 10-K of ASR Investments Corporation for
the year ended December 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
April 5, 1999
Exhibit 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on American Apartment
Communities II, Inc., dated February 27, 1998, and our report on American
Apartment Communities II, L.P., dated February 12, 1998, included in the
Company's Current Report on Form 8-K, filed with the SEC on October 23, 1998,
and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
San Francisco, California
April 5, 1999
Exhibit 23(d)
Letterhead of L.P. Martin & Company
CONSENT OF L.P. MARTIN & COMPANY, P.C., INDEPENDENT AUDITORS
We consent to the reference to our firm under "Experts" in the
Pre-Effective Amendment No. 1 to the Registration Statement (Form S-3) of United
Dominion Realty Trust, Inc. for the registration of 130,416 shares of its Common
Stock and to the incorporation by reference therein of (a) our report dated May
1,1998, with respect to the statement of rental operations of Dogwood Creek
Apartments for the year ended December 31, 1997, included in the Current Report
of United Dominion Realty Trust, Inc. on Form 8-K, dated June 9, 1998, filed
with the Securities and Exchange Commission, (b) our report dated May 8, 1998,
with respect to the combined statement of rental operations of Trails at Mount
Moriah Apartments, Trails at Kirby Parkway Apartments, and Cinnamon Trails
Apartments for the year ended December 31, 1997, included in the Current Report
of United Dominion Realty Trust, Inc. on Form 8-K, dated June 9, 1998, filed
with the Securities and Exchange Commission, (c) our report dated June 29,1998,
with respect to the combined statement of rental operations of Audubon
Apartments, Carmel Apartments, Cimarron City Apartments, Grand Cypress
Apartments, Kenton Apartments, Peppermill Apartments, The Crest Apartments, and
Village of Thousand Oaks Apartments for the year ended December 31,
1997,included in the Current Report of United Dominion Realty Trust, Inc. on
Form 8-K, dated June 9, 1998, filed the Securities and Exchange Commission and
(d) our report dated with respect to the statement of rental operations of
Rancho Mirage Apartments for the year ended December 31, 1997, included in the
Current Report of United Dominion Realty Trust, Inc. on Form 8-K dated May 28,
1998, filed with the Securities and Exchange Commission.
/s/ L.P. Martin & Company, P.C.
L.P. Martin & Company, P.C.
Certified Public Accountants
Richmond, Virginia
April 6, 1999
