UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the Fiscal Year Ended December 31, 1994
OR
[ ]TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the Transition Period From ________ to ________
Commission File Number 1-9016
American Industrial Properties REIT
(Exact name of registrant as specified in its charter)
Texas 75-6335572
(State of organization) (I.R.S. Employer
Identification Number)
6220 North Beltline, Suite 205
Irving, Texas 75063
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 550-
6053
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Shares of Beneficial Interest New York Stock Exchange
Par Value $0.10 Per Share
Securities registered pursuant to Section 12 (g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulations S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of the voting stock held by non-
affiliates of the registrant was $12,479,000 as of March 21,
1995. The aggregate market value has been computed by reference
to the closing price at which the stock was sold on the New York
Stock Exchange on March 21, 1995.
9,075,400 Shares of Beneficial Interest were outstanding as of
March 21, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
No annual report to security holders, proxy information
statement, or prospectus filed under the
Securities Act of 1933 is incorporated herein by reference.
AMERICAN INDUSTRIAL PROPERTIES REIT
For The Year Ended December 31, 1994
TABLE OF CONTENTS
FORM 10-K
Securities and Exchange Commission
Item Number and Description Page
PART I.
Item 1.Business 1
General 1
Revenue and Loss from Real Estate Operations 2
Geographic Analysis of Revenue 2
Competition and Conflicts of Interest 3
Employees 3
Item 2.
Properties 3
Item 3.
Legal Proceedings 6
Item 4.
Submission of Matters to a Vote of Shareholders 6
PART II.
Item 5.
Market for Registrant's Common Equity and Related
Shareholder Matters 6
Item 6.
Selected Financial Data 7
Item 7.
Managements' Discussion and Analysis of Financial
Condition and Results of Operations 8
Results of Operations 8
Liquidity and Capital Resources 9
Other Matters 10
Recent Developments 10
Item 8.
Financial Statements and Supplementary Data 10
Item 9.
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 11
PART III.
Item 10.Trust Managers and Executive Officers
of the Trust 11
Item 11.Executive Compensation 12
Item 12.Security Ownership of Certain Beneficial Owners and
Management 13
Item 13.Certain Relationships and Related Transactions 13
PART IV.
Item 14.Exhibits, Financial Statement Schedule and Reports on
Form 8-K 13
SIGNATURES 15
Index to Consolidated Financial Statements and Financial
Statement Schedule F-1
PART I.
ITEM 1. Business
General
American Industrial Properties REIT (the "Trust"), a Texas
equity real estate investment trust, was organized as Trammell
Crow Real Estate Investors on September 26, 1985 by the issuance
of 13,400 Shares of Beneficial Interest (the "Shares"). On
November 27, 1985, the Trust issued 9,062,000 in additional
Shares and commenced operations. The Trust's investment
objective is to maximize the total return to its Shareholders
through the acquisition, leasing, management and disposition of
industrial real estate properties.
The Trust was initially advised by Trammell Crow Ventures, Ltd.
(the "Advisor"), an affiliate of the Trammell Crow Company and
related entities (the "TCC Entities"), under an advisory
agreement that provided for the payment of an annual advisory fee
and reimbursements for certain expenses as well as transaction
fees for asset acquisitions and dispositions. In June 1993, the
Trust terminated its agreement with the Advisor and converted to
self-administration. The name of the Trust was changed to
American Industrial Properties REIT and its ticker symbol on the
New York Stock Exchange was changed to "IND" to reflect the
Trust's industrial property focus. In October 1993, Shareholders
voted to remove the finite life term of the Trust as contained in
the original Declaration of Trust, thereby making the Trust a
perpetual life entity.
The Trust is engaged in the operation of developed industrial
real estate properties and one retail real estate property. The
Trust leases space in its properties to a variety of tenants.
The industrial properties are leased for office, office-showroom,
warehouse, distribution, research and development, and light
assembly purposes. The retail property is leased to retail
merchandise establishments, restaurants, and a cinema. No single
tenant accounts for more than 10% of the Trust's consolidated
gross revenue. However, rents and tenant reimbursements related
to Tamarac Square, the Trust's retail property, were
approximately 30% of the total revenues of the Trust in 1994.
The Trust's portfolio consists of 14 industrial properties
located in California, Florida, Maryland, Minnesota, Texas,
Washington and Wisconsin, and one retail property located in
Colorado.
As part of its initial capitalization in 1985, the Trust issued
$179,698,000 (face amount at maturity) of Zero Coupon Notes due
1997 (the "Notes"). In 1991, the Trust began an effort to retire
the outstanding Notes, which were accreting at 12%. The Trust
utilized net proceeds from property sales and issuance of certain
unsecured notes payable to substantially reduce the amount of
Notes outstanding during 1991, 1992 and 1993, thereby reducing
the amount of outstanding Notes to $19,491,000 (face amount at
maturity) at December 31, 1993. On December 31, 1993, the Trust
partially in-substance defeased $12,696,000 (face amount at
maturity) of the outstanding Notes with proceeds from disposal of
short term investments. During the first half of 1994, the Trust
purchased $239,000 (face amount at maturity) of Notes and
submitted the Notes to the Trustee for cancellation. In November
1994, $3,669,000 (face amount at maturity) of the outstanding
Notes were partially in-substance defeased with the proceeds from
a refinancing of certain of the Trust's properties. In December
1994, the Trust purchased the remaining non-defeased Notes
outstanding of approximately $2,887,000 (face amount at maturity)
in the open market and submitted the Notes to the Trustee for
cancellation. As a result of the 1994 defeasance, the liens on
the Trust's properties required by the Indenture were released.
In February 1992, the Trust issued $53,234,000 in unsecured
promissory notes in connection with the retirement of certain
Notes. The terms of these unsecured notes include an 8.8% fixed
rate of interest, semi-annual interest-only payments commencing
May 1993, the deferral of interest due prior to May 1993, and a
mandatory principal payment due on or before November 27, 1993.
On December 31, 1992, the Trust used $11,648,000 of the net sales
proceeds from its 1992 sales of real estate to make a principal
and interest payment on the 8.8% unsecured notes which included
the mandatory principal payment due November 27, 1993. The
unsecured notes mature November 27, 1997 and can be prepaid at
any time prior to maturity without penalty.
In late 1993, the Trustee for the Zero Coupon Noteholders
released approximately $3.4 million from the Property Acquisition
Account established in accordance with the Indenture. The Trust
utilized these funds to purchase the Northview Distribution
Center in Dallas, Texas in December 1993.
The Trust has historically qualified as a Real Estate
Investment Trust ("REIT") for federal income tax purposes and
intends to maintain its REIT qualification in the future. In
order to preserve its REIT status, the Trust must meet certain
criteria with respect to assets, income, and shareholder
ownership. In addition, the Trust is required to distribute at
least 95% of taxable income (as defined) to its Shareholders.
Revenue and Loss from Real Estate Operations
The breakdown of revenue and loss from real estate operations
for each of the years ended December 31, 1994, 1993, and 1992 is
as follows (in thousands):
<TABLE>
<S> <C> <C> <C>
1994 1993 1992
Rents and reimbursements from unaffiliated tenants:
Retail $3,441 $3,182 $3,126
Industrial 7,639 6,944 11,783
Rents and tenant reimbursements 11,080 10,126 14,909
Interest income 146 515 230
Total revenue 11,226 10,641 15,139
Real estate expenses (12,355) (13,329) (18,443)
Administrative expenses (2,532) (2,433) (1,321)
Provisions for possible losses on
real estate (650) - (14,094)
Loss from real estate operations $(4,311) $(5,121) $(18,719)
</TABLE>
Geographic Analysis of Revenue
The geographic breakdown of the Trust's rents and tenant
reimbursements for each of the years ended December 31, 1994,
1993, and 1992 is as follows (in thousands):
<TABLE>
<S> <C> <C> <C>
Market 1994 1993 1992
Baltimore industrial $ 583 $ 597 $ 578
Charlotte industrial (a) - (10) 2,866
Dallas industrial (b) 2,259 1,628 2,626
Denver retail 3,441 3,182 3,126
Ft. Lauderdale industrial 384 451 511
Houston industrial (c) 1,197 1,391 2,272
Los Angeles industrial 936 916 893
Milwaukee industrial 982 700 787
Minneapolis industrial 721 684 680
Seattle industrial 577 587 570
Total rents and tenant
reimbursements $11,080 $10,126 $14,909
</TABLE>
_____________________
(a)The Charlotte property was sold during the fourth quarter of
1992.
(b)One property was sold in January 1993 and one property was
purchased in December 1993.
(c)One property was sold in December 1992.
Competition and Conflicts of Interest
The Trust owns industrial properties in Baltimore, Dallas, Ft.
Lauderdale, Houston, Los Angeles, Milwaukee, Minneapolis, and
Seattle, and one retail property in Denver. The principal
competitive factors in these markets are price, location, quality
of space, and amenities. In each case, the Trust owns a small
portion of the total similar space in the market and competes
with owners of other space for tenants. Each of these markets is
highly competitive, and other owners of property may have
competitive advantages not available to the Trust.
TCC Entities are employed as property managers on twelve of the
Trust's fifteen properties. TCC Entities, which also own or
manage additional properties in each market in which the Trust
owns properties, may have relationships and interests that
conflict with those of the Trust. Although the Trust actively
monitors this situation, there can be no assurance that a
potential conflict would be resolved in favor of the Trust. Each
of the property management agreements with the TCC Entities is
cancelable with thirty days notice.
Employees
The Trust currently employs six people on a full-time basis.
Information regarding executive officers of the Trust is set
forth in Item 10 of Part III of this Form 10-K and is
incorporated in this Item 1 by reference.
ITEM 2. Properties
As of December 31, 1994, the Trust owned fifteen real estate
properties consisting of fourteen industrial developments and one
enclosed specialty retail mall. The Trust sold a total of three
properties during December 1992 and January 1993 and purchased
one property in December 1993. A description of the properties
owned by the Trust as of December 31, 1994, as well as related
leased occupancy and mortgage indebtedness, is presented below.
Property Descriptions
Baltimore Industrial
Patapsco Industrial Center
Patapsco Industrial Center is a five-building, two phase
industrial park located in Linthicum Heights, Maryland, a
suburb of Baltimore. The project comprises approximately
95,000 square feet of net rentable space. As of December 31,
1994, leased occupancy was 94%. Patapsco Industrial Center is
subject to a first mortgage with a principal amount
outstanding of $1,396,000 as of December 31, 1994.
The Trust is a 99.99% general partner of the limited
partnership that currently owns Patapsco Industrial Center.
The limited partner's interest is held by a wholly-owned
subsidiary of the Trust.
Dallas Industrial
Beltline Business Center
Beltline Business Center consists of three industrial
buildings located in Irving, Texas, a suburb of Dallas, that
are 100% finished for office space and, together, comprise
approximately 61,000 square feet of net rentable space. As of
December 31, 1994, leased occupancy was 93%.
Gateway 5 and 6
Gateway 5 and 6 consists of two industrial buildings located
in Irving, Texas comprising approximately 79,000 square feet
of net rentable space. As of December 31, 1994, leased
occupancy was 89%.
Northgate II
Northgate II consists of four industrial buildings located
within a 21-building industrial park in Dallas, Texas. The
project consists of approximately 236,000 square feet of net
rentable space. As of December 31, 1994, leased occupancy was
100%.
Northview Distribution Center
Northview Distribution Center consists of two industrial
buildings located in Dallas, Texas. The project consists of
approximately 175,000 square feet of net rentable space. As
of December 31, 1994, leased occupancy was 100%. Northview
Distribution Center is subject to a mortgage with a principal
amount outstanding of $2,250,000 as of December 31, 1994.
The Trust is a 99% limited partner in the limited
partnership which owns Northview Distribution Center. A
wholly-owned subsidiary of the Trust is the 1% general
partner.
Denver Retail
Tamarac Square
Tamarac Square, located in Denver Colorado, consists of an
enclosed specialty retail mall of approximately 139,000 net
rentable square feet with an adjacent convenience center of
approximately 33,000 net rentable square feet, two free-
standing buildings of approximately 8,000 net rentable square
feet each, a separate free-standing building of approximately
9,000 net rentable square feet and two ground leases
comprising approximately 4.91 acres. During 1993, the Trust
completed a $2 million renovation of Tamarac Square. As of
December 31, 1994, leased occupancy was 92%. Tamarac Square
is subject to a mortgage with a principal amount outstanding
of $12,250,000 as of December 31, 1994.
The Trust is a 99% limited partner in the limited
partnership which owns Tamarac Square. A wholly-owned
subsidiary of the Trust is the 1% general partner.
The Trust has been notified of the possible existence of
underground contamination at Tamarac Square. The source of
the possible contamination is apparently related to
underground storage tanks located on adjacent property. The
owner of the adjacent property has provided indemnification to
the Trust for costs related to the remediation of such
contamination. Based upon preliminary testing, it does not
appear that the Trust property has been impacted.
Ft. Lauderdale Industrial
Quadrant Center
Quadrant Center consists of two industrial buildings
situated on approximately 5.4 acres of land located in
Deerfield Beach, a suburb of Ft. Lauderdale, Florida. The
project comprises approximately 73,000 square feet of net
rentable space. As of December 31, 1994, leased occupancy was
100%. Quadrant Center is subject to a mortgage with a
principal amount outstanding of $1,200,000 as of December 31,
1994.
Houston Industrial
Plaza Southwest
Plaza Southwest consists of five industrial buildings in
Houston, Texas comprising approximately 149,000 square feet of
net rentable space. As of December 31, 1994, leased occupancy
was 86%.
Commerce Park
Commerce Park consists of two industrial buildings in
Houston, Texas comprising approximately 87,000 square feet of
net rentable space. As of December 31, 1994, leased occupancy
was 67%.
Westchase Park
Westchase Park consists of two industrial buildings in
Houston, Texas comprising approximately 47,000 square feet of
net rentable space. As of December 31, 1994, leased occupancy
was 84%.
Los Angeles Industrial
Huntington Drive Center
Huntington Drive Center consists of a two-story office
building and an industrial building comprising approximately
62,000 square feet of net rentable space located in Monrovia,
California, a suburb of Los Angeles. As of December 31, 1994,
leased occupancy was 95%.
Milwaukee Industrial
Northwest Business Park
Northwest Business Park consists of three industrial
buildings comprising approximately 143,000 square feet of net
rentable space located in Menomonee Falls, Wisconsin, a suburb
of Milwaukee. As of December 31, 1994, leased occupancy was
92%. Phase I of Northwest Business Park is subject to a
mortgage with a principal amount outstanding of $1,323,000 at
December 31, 1994.
Minneapolis Industrial
Burnsville
Burnsville consists of one industrial building comprising
approximately 46,000 square feet of net rentable space located
in Burnsville, Minnesota, a suburb of Minneapolis. As of
December 31, 1994, leased occupancy was 94%. Burnsville is
subject to a first mortgage with a principal amount
outstanding of $1,955,000 as of December 31, 1994. The
mortgage matures in May 1995 and may be renewed, at the
Trust's election, for an additional three-year period.
Cahill
Cahill consists of one industrial building comprising
approximately 60,000 square feet of net rentable space located
in Edina, Minnesota, a suburb of Minneapolis. As of December
31, 1994, leased occupancy was 100%.
Seattle Industrial
Springbrook Business Park
Springbrook Business Park consists of one industrial
building located in Kent, Washington, a suburb of Seattle,
comprising approximately 81,000 square feet of net rentable
space. As of December 31, 1994, leased occupancy was 100%.
ITEM 3. Legal Proceedings
The Trust is not a party to, nor is any of its property the
subject of, any material pending legal proceedings.
ITEM 4. Submission of Matters to a Vote of Shareholders
Pursuant to a proxy statement dated October 7, 1994, the Annual
Meeting of Shareholders was held on November 21, 1994 for
purposes of election of Trust Managers and ratification of the
selection of independent auditors. Representatives of the
Trust's major Shareholder, American Holdings, Inc., proposed
their own nominees for election as Trust Managers. No nominee
achieved the two-thirds vote of all outstanding Shares required
for election as a Trust Manager or the majority vote of all
outstanding Shares required for re-election. Accordingly, the
existing Trust Managers have continued in their capacity as Trust
Managers. Item 5 of Form 8-K dated December 5, 1994 (File No. 1-
9016) reporting the Shareholder voting results of the Annual
Meeting is hereby incorporated by reference herein.
PART II.
ITEM 5. Market for Registrant's Common Equity and Related
Shareholder Matters
The Trust's Shares are listed and traded on the New York Stock
Exchange (the "NYSE") under the symbol IND. The following table
sets forth for the periods indicated the high and low per Share
closing sale price of the Trust's Shares, and the cash
distributions declared per Share:
<TABLE>
<S> <C> <C> <C>
Quarter ended High Low Distributions
December 31, 1994 1 7/8 1 1/4 .00
September 30, 1994 1 3/4 1 1/4 .00
June 30, 1994 2 1/8 1 5/8 .00
March 31, 1994 2 1/2 1 3/4 .00
December 31, 1993 3 1/4 2 .04
September 30, 1993 2 3/8 1 7/8 .04
June 30, 1993 2 1/2 2 .04
March 31, 1993 3 1 3/4 .04
</TABLE>
In December 1993, the Trust announced a suspension of quarterly
distributions to Shareholders until such time as the Zero Coupon
Notes were fully defeased and distributions could be supported by
the positive cash flow of the Trust.
As of March 21, 1995, the closing sale price per Share on the
New York Stock Exchange was $1.375. On such date, there were
9,075,400 outstanding Shares held by 2,149 Shareholders of
record.
ITEM 6. Selected Financial Data
The following table sets forth selected financial data for the
Trust and its subsidiaries for each of the five years in the
period ended December 31, 1994. This information should be read
in conjunction with the Consolidated Financial Statements of the
Trust and accompanying Notes.
<TABLE>
(in thousands except per share data)
Year Ended December 31,
<S> <C> <C> <C> <C> <C>
1994 1993 (a) 1992 (b) 1991 (c) 1990
Operating data:
Revenues 11,226 10,641 15,139 16,488 17,744
Loss from real estate operations (d) (4,311) (5,121) (18,719) (13,786) (4,484)
Net loss (d) (4,655) (7,867) (17,593) (9,162) (2,626)
Per share data:
Loss from real estate operations (d) (0.47) (0.57) (2.06) (1.52) (0.49)
Net loss (d) (0.51) (0.87) (1.94) (1.01) (0.29)
Distributions paid 0 0.16 0.20 0.42 0.70
Balance Sheet Data:
Total assets 92,550 88,297 110,446 147,877 169,465
Total long-term debt, net of
unamortized discount 65,613 57,078 68,578 87,141 94,666
Shareholders' equity 24,196 28,851 38,171 57,579 70,507
Selected other data
Calculation of funds
from operations (e):
Loss from real estate operations (4,311) (5,121) (18,719) (13,786) (4,484)
Amortization of original issue
discount on Zero Coupon Notes 419 1,391 3,356 8,456 8,842
Depreciation and amortization 3,133 3,140 4,190 4,267 4,674
Provision for possible losses
on real estate 650 0 14,094 9,371 0
Funds from Operations (109) (590) 2,921 8,308 9,032
Capitalized improvements
and leasing commissions (1,476) (1,814) (3,995) (1,383) (2,003)
Funds available for distribution (1,585) (2,404) (1,074) 6,925 7,029
Per share:
Funds from operations ($0.01) ($0.07) $0.32 $0.92 $1.00
Funds available for distribution ($0.17) ($0.26) ($0.12) $0.76 $0.77
Number of shares outstanding 9,075,400 9,075,400 9,075,400 9,075,400 9,075,400
</TABLE>
--------------------------
(a) The Trust sold one property in the first quarter of 1993, thus operating
with only 14 properties until the acquisition of the Northview Distribution
Center in December 1993.
(b) The Trust sold two properties in the fourth quarter of 1992, thus
operating with only 15 properties for the remainder of 1992.
(c) On December 30, 1990, the Trust sold two properties, thus operating
with only 17 properties during 1991.
(d) Loss from real estate operations and net loss for 1994, 1992 and 1991
include provisions for possible losses on real estate of $650,000,
$14,094,000 and $9,371,000, respectively.
(e) See definition of Funds from Operations ("FFO") below. Changes in the
Trust's debt structure from zero coupon debt to current-pay debt negatively
impacts FFO as the amortization of the zero coupon debt is not reflected in
FFO, whereas the interest on current-pay debt does impact FFO. The two
properties sold during the fourth quarter of 1992 contributed a total of
$2,111,000 to the Trust's 1992 FFO and the property sold in January 1993
contributed a total of $815,000 to the Trust's 1992 FFO. The property
purchased in December 1993 contributed approximately $420,000 to FFO for 1994.
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Below is a summary of net loss, funds from operations ("FFO"),
and funds available for distribution ("FAD") for the Trust for
the years ended December 31, 1994, 1993, and 1992. FFO is based
on the definition adopted by the National Association of Real
Estate Investment Trusts which is net income excluding gains or
losses from debt restructuring and sales of property, plus
depreciation and amortization (the Trust adds back the
amortization of the original issue discount on its Zero Coupon
Notes due 1997), and after adjustments for unconsolidated
partnerships and joint ventures. FAD more accurately portrays
the ability of the Trust to make distributions as it includes the
Trust's capital expenditures. Neither FFO or FAD should be
considered an alternative to net income as an indicator of the
Trust's operating performance or to cash flows from operations as
a measure of liquidity.
<TABLE>
<S> <C> <C> <C>
(in thousands, except per share amounts
Year Ending December 31,
1994 1993 1992
Net Loss $(4,655) $(7,867) $(17,593)
Net Loss Per Share $ (0.51) $(0.87) $ (1.94)
Funds From Operations $ (109) $ (590) $ 2,921
Funds Available for
Distribution $(1,585) $(2,404) $ (1,074)
</TABLE>
Comparison of 1994 to 1993
The net loss of the Trust in 1994 was $4,655,000, a decrease of
$3.2 million from the net loss of $7,867,000 in 1993. The
primary reasons for the improved performance in 1994 relate to an
increase in the net operating income of the Trust's properties
and a decrease in the extraordinary loss recognized by the Trust
in 1993 on the partial in-substance defeasance of the Trust's
Zero Coupon Notes due 1997 (the "Notes") as compared to 1994. In
1994, net operating income from the Trust's properties increased
to $7.1 million from $6.0 million in 1993. This increase is
primarily attributable to increases in occupancy in the
portfolio. Overall leased occupancy at December 31, 1994 was
93.2%, compared to 89.2% a year earlier. On a same property
basis, net operating income increased from $5.9 million in 1993
to $6.7 million in 1994, an increase of 14%.
The extraordinary loss on the partial in-substance defeasance
of the Notes was $2,530,000 in 1993 and $344,000 in 1994. During
1994, a significant increase in interest rates had a favorable
effect on the costs of defeasing the remaining Notes. The
defeasance of the Notes will have a positive effect on the net
loss of the Trust, but will have a detrimental effect upon both
FFO and FAD. This results from the inclusion of interest expense
on refinancing and the exclusion of the amortization of the
original issue discount on the Notes when computing FFO and FAD.
Trust administration and overhead expenses were $2.5 million in
1994 as compared to $2.4 million in 1993. Included in the 1994
amount was approximately $880,000 related to two contested proxy
elections during 1994. The 1993 amount includes $435,000 as a
termination fee to the Advisor as well as approximately $250,000
related to a nonroutine proxy election.
The Trust recorded a provision for possible losses on real
estate of $650,000 in 1994. No such provision was recorded in
1993. Due to the Trust's desire to geographically refocus its
property portfolio, the Trust reclassified two of its properties
from held for investment to held for sale. The subsequent
comparison of net book value to estimated net realizable value on
sale for these properties resulted in the need for the provision
of $650,000. One of these properties was sold in February 1995
(see Recent Developments below.)
Comparison of 1993 to 1992
The net loss in 1993 declined to $7,867,000 from $17,593,000 in
1992 due in part to provisions for possible losses on real estate
recognized in 1992 in the amount of $14,094,000. The benefit
from the absence of these provisions in 1993 was partially offset
by the extraordinary loss recognized by the Trust in 1993 in the
amount of $2,530,000 as a result of a partial in-substance
defeasance of the Trust's Zero Coupon Notes. In addition, the
Trust recognized extraordinary gains in 1992 in the amount of
$1,910,000 related to the repurchase of Zero Coupon Notes, which
caused a favorable impact in 1992 net loss when compared to 1993.
The remaining variance in net loss between 1993 and 1992 of
approximately $2.5 million (greater loss in 1993 than 1992 after
considering the previous items) can be attributed to the sales of
the Woodland Industrial Park in Charlotte, North Carolina and the
Southland industrial property in Houston, Texas, which occurred
at the end of 1992; the sale of the Royal Lane Business Park in
Dallas, Texas in January 1993; the incremental administrative
costs attributable to the termination fee paid to the Advisor in
the amount of $435,000 as further discussed below; and the proxy
solicitation effort to remove the finite life restriction of the
Trust in the amount of approximately $250,000. On a same
property basis, rental revenues remained flat during the year,
although in the third and fourth quarter, the Trust began to see
some strengthening in the leasing markets in most of the areas in
which the Trust operates in terms of both traffic and rental
rates (other than in Southern California). Same property
occupancy improved to 89% at December 31, 1993 from 88% at
December 31, 1992.
The Trust terminated its Advisory Agreement with the Advisor
effective June 13, 1993. In accordance with the terms of the
Advisory Agreements, a one-time termination fee of $435,000 was
paid to the Advisor on such date. The Trust became self-
administered, employing six full-time employees to conduct and
administer the business affairs of the Trust.
Liquidity and Capital Resources
The principal sources of funds for the Trust's liquidity
requirements are funds generated from operations of the Trust's
real estate assets and unrestricted cash reserves. As of
December 31, 1994, the Trust had $6,919,000 in unrestricted cash
on hand. The Trust presently anticipates that these cash
reserves will provide sufficient funds for all known liabilities
and commitments relating to the Trust's operations during 1995.
However, certain discretionary uses of the Trust's liquidity
(such as the purchase of additional income-producing properties
or the refinancing of existing debt obligations) could decrease
the Trust's liquidity significantly.
In November 1994, the Trust completed a $14,500,000 refinancing
of two of its properties, Tamarac Square in Denver, Colorado, and
Northview Distribution Center in Dallas, Texas. The proceeds of
this financing were used to partially in-substance defease a
portion of the outstanding Zero Coupon Notes. This partial
defeasance resulted in the release to the Trust of approximately
$7.1 million in restricted funds previously held by the Trustee.
The $14,500,000 financing consists of two separate mortgage
loans. The terms of each loan include a variable interest rate
(30-day LIBOR rate plus 3.15%) with a ceiling of 11.375%, 25-year
principal amortization, certain prepayment penalties, and a
maturity in December 2001.
In December 1994, the Trust retained NatWest Markets, an
investment banking firm, to assist it in its efforts to
recapitalize its debt structure. Although this agreement was
terminated on March 16, 1995, the Trust intends to continue such
efforts. The Trust may seek to retire existing debt obligations
with proceeds from secured debt financing, property sales, cash
on hand or a combination of these sources in the future. Such a
transaction may require the Trust to utilize the majority of its
cash on hand.
Distributions made and declared during 1993 in the amount of
$1,453,000 ($0.04 per share per quarter), were paid out of cash
reserves of the Trust. In December, 1993, the Trust Managers
announced the suspension of the Trust's quarterly distribution
(see Other Matters below).
The Trust currently has borrowings secured by mortgages on the
properties totaling $20,374,000. Of this amount, approximately
$16,455,000 represents borrowings with variable interest rates
and $3,919,000 represents borrowings with fixed rates of
interest. Based on current interest rates and assuming the
renewal of a note maturing in May 1995, annual debt service on
these borrowings amounts to $2,157,000 (see the Notes to
Consolidated Financial Statements for additional detail
concerning the terms of the mortgage notes payable).
In accordance with the terms of the Trust's 8.8% unsecured
notes payable due 1997, the Trust paid its first installment of
semi-annual interest on May 27, 1993 in the amount of $1,974,000
(see the Notes to Consolidated Financial Statements for
additional discussion regarding the terms of the 8.8% Notes).
Accrued interest in the amount of approximately $1,990,000 will
be payable each May and November until these 8.8% Notes become
due in November 1997. During 1994, the Trust requested, and
obtained, a 90-day extension of approximately one-half of the
semi-annual interest payment due May 27, 1994. The amount due,
plus interest, was paid in August 1994. The semi-annual payment
due November 27, 1994 was made as scheduled.
The nature of the Trust's operating properties, which generally
provide for leases with a term of between three and five years,
results in an approximate turnover rate of 25% of the Trust's
tenants and related revenue annually. Such turnover requires
capital outlays related to tenant improvements and leasing
commissions in order to maintain or improve the Trust's occupancy
levels. These costs amounted to $1,476,000 in the year ended
December 31, 1994 and $1,814,000 in the year ended December 31,
1993. These costs have historically been funded out of the
Trust's operating cash flow and cash reserves. The Trust has
made no commitments for additional capital expenditures beyond
those related to normal leasing and releasing activity and
related escrows. No capital improvements or renovations of
significance are anticipated in the near future for any of the
Trust's properties, with the possible exception of a large retail
lease at the Trust's retail property. Such a lease, if agreed
to, could result in expenditures for tenant improvements in
excess of $500,000.
Management intends to pursue a strategy designed to lower the
Trust's cost of capital and enable the Trust to make additional
investments in industrial properties through the use of
additional equity and/or debt financings. In order for the Trust
to issue additional equity for this purpose (in excess of the
924,600 Shares currently authorized but unissued), the Trust will
need to increase its authorized Share limit and/or have the
ability to issue additional classes of stock such as preferred
stock, either of which would require an amendment of the
Declaration of Trust by the affirmative vote of holders of two-
thirds of the outstanding Shares. There can be no assurance that
such vote will be attained or that such equity or debt financing
will otherwise be available to the Trust in the future.
Other Matters
The Trust suspended quarterly distributions to Shareholders in
December 1993 until such time as the Zero Coupon Notes were fully
defeased and distributions could be supported from current cash
flow. Accordingly, no distributions were paid during 1994. The
Trust is currently exploring alternatives which would allow for
the resumption of distributions at the earliest opportunity.
Recent Developments
On February 24, 1995, the Trust sold its Quadrant Center
industrial property in Deerfield Beach, Florida. An immaterial
loss on the sale will be recognized by the Trust in the first
quarter of 1995. After payment of the mortgage loan secured by
this property, the sale generated net proceeds of approximately
$1,250,000.
ITEM 8. Financial Statements and Supplementary Data
The financial statements and supplementary data are listed in
the Index to Financial Statements and Financial Statement
Schedule appearing on Page F-1 of this Form 10-K.
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III.
ITEM 10. Trust Managers and Executive Officers of the Trust
The persons who serve as Trust Managers and executive officers
of the Trust, their ages and their respective positions at
December 31, 1994 are as follows:
Name Age Position(s) and Office(s) Held
William H. Bricker 63 Trust Manager
Charles W. Wolcott 42 Trust Manager, President and Chief
Executive Officer
David B. Warner 36 Vice President and Chief Operating
Officer
Marc A. Simpson 40 Vice President and Chief Financial
Officer, Secretary and Treasurer
William H. Bricker, Trust Manager. Mr. Bricker has served
as President of D.S. Energy Services Incorporated and has
consulted in the energy field and international trade sine
1987. In May 1987, Mr. Bricker retired as the Chairman and
Chief Executive Officer of Diamond Shamrock Corporation where
he held various management positions from 1969 through May
1987. Mr. Bricker is a director of the LTV Corporation, the
Eltech Systems Corporation and the National Paralysis
Foundation. He received his Bachelor of Science and Masters
of Science degrees from Michigan State University.
Charles W. Wolcott, Trust Manager, President and Chief
Executive Officer. Mr. Wolcott was hired as the President and
Chief Executive Officer of the Trust on May 4, 1993. For the
six months immediately prior to his election as President of
the Trust, Mr. Wolcott was engaged in developing various
personal business enterprises. Mr. Wolcott was President and
Chief Executive Officer for Trammell Crow Asset Services, a
real estate asset and portfolio management affiliate of
Trammell Crow Company, from 1990 to 1992. He served as Vice
President and Chief Financial and Operating Officer of the
Trust from 1988 to 1991. From 1988 to 1990, Mr. Wolcott was a
partner in Trammell Crow Ventures Operating Partnership.
Prior to joining the Trammell Crow Company in 1984, Mr.
Wolcott was President of Wolcott Corporation, a firm engaged
in the development and management of commercial real estate
properties. Mr. Wolcott graduated from the University of
Texas at Austin in 1975 with a Bachelor of Science degree and
received a Masters of Business Administration degree from
Harvard University in 1977.
David B. Warner, Vice President and Chief Operating Officer.
Mr. Warner was hired as Vice President and Chief Operating
Officer of the Trust on May 24, 1993. From 1989 through the
date of his accepting a position with the Trust, Mr. Warner
was Director of the Equity Investment Group for The Prudential
Realty Group. From 1985 to 1989, he served in the Real Estate
Banking Group of NCNB Texas National Bank. Mr. Warner
graduated from the University of Texas at Austin in 1981 with
a degree in Finance and received a Master of Business
Administration from the same institution in 1984.
Marc A. Simpson, Vice President and Chief Financial Officer,
Secretary and Treasurer. Mr. Simpson was hired as the Vice
President and Chief Financial Officer, Secretary and Treasurer
of the Trust on March 7, 1994. From November 1989 to March
1994, Mr. Simpson was a Manager in the Financial Advisory
Services group of Coopers & Lybrand. Prior to that time, he
served as Controller of Pacific Realty Corporation, a real
estate development company. Mr. Simpson graduated with a
Bachelor of Business Administration from Midwestern State
University in 1978, and received a Masters of Business
Administration from Southern Methodist University in 1990.
The Trust Managers have appointed two committees, the Audit
Committee and the Compensation Committee. Both the Audit and
Compensation Committees include only Trust Managers which are
independent of management and who are free from any relationship
that would interfere with the exercise of their independent
judgment. Prior to the resignation of George P. Jenkins as an
independent Trust Manager in November 1994, Mr. Jenkins served
with Mr. Bricker on these committees. The Audit Committee
appoints the independent public accountants for the Trust subject
to the approval of the Shareholders at the Annual Meeting and
consults with the accountants on the Trust's audited financial
statements and on the efficacy of the Trust's internal control
systems. The Compensation Committee establishes guidelines for
compensation and benefits of the executive officers of the Trust
based upon achievement of objectives and other factors, including
review of compensation to executive officers of comparable
entities and recommendations of independent compensation
consultants.
On February 2, 1995, the Trust Managers adopted the Third
Amended and Restated Bylaws of the Trust (the "Bylaws"). The
Bylaws provide that the number of Trust Managers shall not be
less than two nor more than seven.
ITEM 11. Executive Compensation
In fiscal 1994, the Trust paid its independent Trust Managers a
fee of $20,000 per year for services as a Trust Manager plus
$1,000 for each meeting of the Trust Managers or a committee of
the Trust Managers attended in person. In addition, the Trust
Managers were reimbursed for their expenses incurred in
connection with their duties as Trust Managers. Mr. Wolcott did
not receive any compensation for his services as a Trust Manager.
The following table sets forth certain information regarding
the compensation paid to the Trust's executive officers for the
year ended December 31, 1994:
<TABLE>
Summary Compensation Table
Annual Compensation
Name and Fiscal
Principal Position Year Salary Bonus(1) Other(2)
<S> <C> <C> <C> <C>
Charles W. Wolcott
President and CEO 1994 $180,000 $62,100 $7,222
David B. Warner
Vice-President and COO 1994 $ 92,000 $34,500 $4,429
Marc A. Simpson
Vice-President and CFO 1994 $ 81,859 $34,500 $4,095
</TABLE>
_______________
(1) Represents bonus payments for 1994 paid in February 1995.
(2) Represents company contribution to the Retirement and Profit
Sharing Plan paid in February 1995.
The Trust has adopted a Retirement and Profit Sharing Plan (the
"Plan") for the benefit of employees of the Trust. Employees who
were employed by the Trust on November 1, 1993, and who have
attained the age of 21 are immediately eligible to participate in
the Plan. All other employees of the Trust are eligible to
participate in the Plan after they have completed six months of
service with the Trust and attained the age of 21.
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information as to the
number of Trust Shares beneficially owned by (a) each person
(including any "group" as that term is used in Section 13 (d) of
the Exchange Act) who is known by the Trust to own beneficially
5% or more of the Shares, (b) each Trust Manager, (c) each
executive officer of the Trust, and (d) all executive officers of
the Trust and Trust Managers as a group.
<TABLE>
Amount of Shares
Names of Beneficially Owned Percentage of
Beneficial Owners as of March 21, 1995 Shares Outstanding
<S> <C> <C>
William H. Bricker 2,000 (1)
Charles W. Wolcott 50,500 (1)
David B. Warner 2,000 (1)
Marc A. Simpson 9,000 (1)
American Holdings, Inc.
376 Main Street
Bedminster, NJ 07921 870,000 9.586% (2)
All Trust Managers and executive
officers as a group 63,500 (1)
______________
(1) Ownership is less than 1% of the outstanding Shares.
(2) Information obtained from Amendment No. 7 to Schedule 13D
of American Holdings, Inc. dated October 10, 1994.
</TABLE>
ITEM 13. Certain Relationships and Related Transactions
None.
PART IV.
ITEM 14. Exhibits, Financial Statement Schedule and Reports on
Form 8-K
(a) (1) and (2) Financial Statements and Financial Statement
Schedule
See Index to Consolidated Financial Statements and Financial
Statement Schedule appearing on page F-1 of this Form 10-K
(3) Exhibits:
Exhibit No. Description
3.1 Second Amended and Restated Declaration of Trust
(incorporated herein by reference from Exhibit
4.1 to the Trust's Form 10-Q for the quarter
ended September 30, 1993; File No. 1-9016)
3.2 * Third Amended and Restated Bylaws of the Trust
4.1 Indenture dated November 15, 1985 between the
Trust and IBJ Schroder Bank & Trust Company
(incorporated herein by reference from Exhibit
10.4 to Form S-4 of American Industrial
Properties REIT, Inc. dated March 16, 1994; File
No. 33-74292)
10.3 401(k) Retirement and Profit Sharing Plan
(incorporated herein by reference from Exhibit
10.5 to Amendment No. 1 to Form S-4 of American
Industrial Properties REIT, Inc. dated March 4,
1994; File No. 33-74292)
10.4 *Amendments to 401(k) Retirement and Profit
Sharing Plan
10.5 Note Purchase Agreement dated February 27, 1992
between the Trust and Manufacturers Life
Insurance Company (incorporated herein by
reference from Exhibit 10.6 to Form S-4 of
American Industrial Properties REIT, Inc. dated
January 31, 1994; File No. 33-74292)
10.6 *Addendum to $19,143,646.92 Unsecured Promissory
Note due November 27, 1997
10.7 Agreement and Assignment of Partnership
Interest, Amended and Restated Agreement and
Certificate of Limited Partnership and Security
Agreement for Patapsco Center - Linthicum
Heights, Maryland (incorporated herein by
reference from Exhibit 10.8 to Amendment No. 1
to Form S-4 of American Industrial Properties
REIT, Inc. dated March 4, 1994; File No. 33-
74292)
10.8 Note dated November 15, 1994 in the original
principal amount of $12,250,000 with AIP
Properties #1 L.P. as Maker and AMRESCO Capital
Corporation as Payee (incorporated herein by
reference from Exhibit 99.1 to Form 8-K of the
Trust dated November 22, 1994; File No. 1-9016)
10.9 Mortgage, Deed of Trust and Security Agreement
dated November 15, 1994 between AIP Properties
#1 L.P. and AMRESCO Capital Corporation
(incorporated herein by reference from Exhibit
99.2 to Form 8-K of the Trust dated November 22,
1994; File No. 1-9016)
10.10 Note dated November 15, 1994 in the original
principal amount of $2,250,000 with AIP
Properties #2 L.P. as Maker and AMRESCO Capital
Corporation as Payee (incorporated herein by
reference from Exhibit 99.3 to Form 8-K of the
Trust dated November 22, 1994; File No. 1-9016)
10.11 Mortgage, Deed of Trust and Security Agreement
dated November 15, 1994 between AIP Properties
#2 L.P. and AMRESCO Capital Corporation
(incorporated herein by reference from Exhibit
99.4 to Form 8-K of the Trust dated November 22,
1994; File No. 1-9016)
21.1 *Listing of Subsidiaries
22.1 Form 8-K dated December 5, 1994 reporting
Shareholder voting results at annual meeting
(incorporated herein by reference from Form 8-K
of the Trust dated December 5, 1994; File No. 1-
9016)
27.1 *Financial Data Schedule
__________
* Filed herewith
(b) Reports on Form 8-K:
The following information summarizes the events reported on
Form 8-K during the quarter ended December 31, 1994:
<TABLE>
Date Filed Date of Earliest Event
with SEC Reported on Form 8-K Description
<S> <C> <C> <C>
October 17, 1994 October 17, 1994 Item 5. Financing
commitment
October 20, 1994 October 7, 1994 Item 5. Clarification
of by-laws
November 22, 1994 November 16, 1994 Item 5. Closing of
financing
December 5, 1994 November 21, 1994 Item 5. Certified
voting results of
Annual Meeting
Item 6. Resignation
of Trust Manager
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized, on March 27, 1995.
AMERICAN INDUSTRIAL PROPERTIES REIT
/s/ CHARLES W. WOLCOTT
Charles W. Wolcott,
Trust Manager, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated:
Signatures Title Date
/s/ CHARLES W. WOLCOTT Trust Manager, President
Charles W. Wolcott and Chief Executive
Officer (Principal
Executive Officer) March 27, 1995
/s/ WILLIAM H. BRICKER Trust Manager March 27, 1995
William H. Bricker
/s/ MARC A. SIMPSON Vice President and Chief
Marc A. Simpson Financial Officer,
Secretary and Treasurer
(Principal Accounting
and Financial Officer) March 27, 1995
American Industrial Properties REIT
Index to Consolidated Financial Statements and
Financial Statement Schedule
Page
Reports of Independent Auditors F-2
Consolidated Financial Statements:
Consolidated Statements of Operations for the
years ended December 31, 1994, 1993, and 1992 F-4
Consolidated Balance Sheets as of December
31, 1994 and 1993 F-5
Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31,
1994, 1993, and 1992 F-6
Consolidated Statements of Cash Flows for the
years ended December 31, 1994, 1993 and 1992 F-7
Notes to Consolidated Financial Statements F-8
Financial Statement Schedule:
Schedule III - Consolidated Real Estate and
Accumulated Depreciation F-14
Notes to Schedule III F-15
All other financial statements and schedules not listed
have been omitted since the required information is either
included in the Financial Statements and the Notes thereto
as included herein or is not applicable or required.
REPORT OF INDEPENDENT AUDITORS
Trust Managers and Shareholders
American Industrial Properties REIT:
We have audited the accompanying consolidated balance sheet
of American Industrial Properties REIT (the "Trust") as of
December 31, 1994, and the related consolidated statements of
operations, shareholders' equity and cash flows for the year then
ended. Our audit also included the consolidated financial
statement schedule of the Trust listed in the Index on page F-1.
These financial statements and schedule are the responsibility of
the Trust's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1994 consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of the Trust as of December 31,
1994, and the consolidated results of its operations and its cash
flows for the year then ended, in conformity with generally
accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents
fairly, in all material respects the information set forth
therein.
Dallas, Texas ERNST & YOUNG LLP
February 23, 1995
INDEPENDENT AUDITORS' REPORT
To the Trust Managers and Shareholders
of American Industrial Properties REIT:
We have audited the accompanying consolidated balance sheet
of American Industrial Properties REIT (formerly Trammell Crow
Real Estate Investors) (the "Trust") as of December 31, 1993 and
the related consolidated statements of operations, shareholders'
equity and cash flows for the years ended December 31, 1993 and
1992. These financial statements are the responsibility of the
Trust's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of American Industrial Properties REIT as of
December 31, 1993, and the results of its operations and its cash
flows for the years ended December 31, 1993 and 1992 in
conformity with generally accepted accounting principles.
In connection with our audits of the consolidated financial
statements referred to above, we audited the information set
forth in the financial statement schedule listed in the
accompanying index on page F-1, as it relates to the year ended
December 31, 1993. In our opinion, the schedule presents fairly,
in all material respects, the aforementioned information, when
considered in relation to the financial statements taken as a
whole.
Dallas, Texas KENNETH LEVENTHAL & COMPANY
February 15, 1994
<TABLE>
American Industrial Properties REIT
Consolidated Statements of Operations
(in thousands, except share and per share data)
Years Ended December 31,
<S> <C> <C> <C>
1994 1993 1992
REVENUES
Rents 8,397 7,811 11,908
Tenant reimbursements 2,683 2,315 3,001
Interest income 146 515 230
11,226 10,641 15,139
REAL ESTATE EXPENSES
Amortization of original
issue discount on Zero
Coupon Notes due 1997 419 1,391 3,356
Depreciation and amortization 3,133 3,140 4,190
Interest on 8.8% notes payable due 1997 4,001 3,981 4,024
Interest on mortgages payable 850 683 1,370
Property operating expenses:
Property taxes 1,421 1,408 2,139
Property management fees 442 422 621
Utilities 501 458 549
Repairs and maintenance 1,150 1,248 1,183
Other property operating
expenses 438 598 1,011
Administrative expenses:
Fees paid to Advisor 0 716 565
Trust administration and
overhead 2,532 1,717 756
Provisions for possible losses
on real estate 650 0 14,094
15,537 15,762 33,858
Loss from real estate operations (4,311) (5,121) (18,719)
Loss on sales of real estate 0 (216) (784)
Extraordinary gain from partial
repurchase of Zero Coupon Notes
due 1997 0 0 1,910
Extraordinary loss on partial
in-substance defeasance of
Zero Coupon Notes due 1997 (344) (2,530) -
NET LOSS (4,655) (7,867) (17,593)
PER SHARE DATA:
Loss from real estate operations (0.47) (0.57) (2.06)
Loss on sales of real estate 0 (0.02) (0.09)
Extraordinary gain from partial
repurchase of Zero Coupon Notes
due 1997 0 0 0.21
Extraordinary loss on partial
in-substance defeasance of
Zero Coupon Notes due 1997 (0.04) (0.28) 0
Net Loss (0.51) (0.87) (1.94)
Distributions paid 0.00 0.16 0.20
Number of shares outstanding 9,075,400 9,075,400 9,075,400
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
American Industrial Properties REIT
Consolidated Balance Sheets
(in thousands, except share and per share data)
Dec. 31, Dec 31,
<S> <C> <C>
1994 1993
ASSETS
Real estate:
Held for investment 95,033 103,710
Held for sale 8,810 0
103,843 103,710
Accumulated depreciation -21,859 -19,315
Net real estate 81,984 84,395
Cash and cash equivalents:
Unrestricted 6,919 1,119
Restricted 602 0
Total cash and cash equivalents 7,521 1,119
Other assets, net 3,045 2,783
TOTAL ASSETS 92,550 88,297
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
8.8 % Notes payable due 1997 45,239 45,239
Zero Coupon Notes due 1997,
net of unamortized
discount and in-substance defeasance 0 4,682
Mortgage notes payable 20,374 7,157
Accrued interest 504 371
Accounts payable, accrued expenses
and other liabilities 1,682 1,503
Tenant security deposits 555 494
TOTAL LIABILITIES 68,354 59,446
Shareholders' Equity:
Shares of beneficial interest,
$0.10 par value; authorized
10,000,000 Shares; issued and outstanding
9,075,400 Shares 908 908
Additional paid-in capital 124,605 124,605
Retained earnings (deficit) -101,317 -96,662
Total Shareholders' Equity 24,196 28,851
Total Liabilities and Shareholders' Equity 92,550 88,297
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
American Industrial Properties REIT
Consolidated Statements of Changes in Shareholders' Equity
(in thousands, except number of shares)
Shares of Beneficial Additional Retained
Interest Paid-In Earnings
Number Amount Capital (Deficit) Total
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1992 9,075,400 908 124,605 (67,934) 57,579
Net loss (17,593) (17,593)
Distributions to Shareholders (1,815) (1,815)
Balance at December 31, 1992 9,075,400 908 124,605 (87,342) 38,171
Net loss (7,867) (7,867)
Distributions to Shareholders (1,453) (1,453)
Balance at December 31, 1993 9,075,400 908 124,605 (96,662) 28,851
Net loss (4,655) (4,655)
Balance at December 31, 1994 9,075,400 908 124,605 (101,317) 24,196
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
American Industrial Properties REIT
Consolidated Statements of Cash Flows
(in thousands)
Years Ended December 31,
<S> <C> <C> <C> <C>
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ($4,655) ($7,867) ($17,593)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Amortization of original issue discount on Zero
Coupon Notes due 1997 419 1,391 3,356
Depreciation and amortization 3,133 3,140 4,190
Provisions for possible losses on real estate 650 0 14,094
Extraordinary loss from partial defeasance
of Zero Coupon Notes payable 344 2,530 0
Loss on sales of real estate 0 216 784
Extraordinary gain from partial repurchases
of Zero Coupon Notes payable 0 0 (1,910)
Changes in operating assets and liabilities:
Decrease (increase) in other assets (256) (68) 424
Increase (decrease) in accounts payable,
accrued expenses and other liabilities
and tenant security deposits 373 (784) 539
Net Cash Provided By (Used In) Operating Activities 8 (1,442) 3,884
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized improvements and leasing commissions (1,476) (1,814) (3,995)
Acquisition of Northview Distribution Center 0 (3,289) 0
Net proceeds from sales of real estate 0 6,758 34,125
Net Cash (Used In) Provided By Investing Activities (1,476) 1,655 30,130
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage financing 14,500 0 0
Partial in-substance defeasance of Zero Coupon Notes (3,106) (10,189) 0
Partial repurchase and retirement of Zero Coupon Notes (2,241) (316) (8,745)
Principal repayments on mortgage notes payable (1,283) (4,915) (2,054)
Distributions to Shareholders 0 (1,453) (1,815)
Partial repayment of 8.8% notes payable 0 0 (7,995)
Net Cash Provided By (Used In) Financing Activities 7,870 (16,873) (20,609)
Net Increase (Decrease) in Cash and Cash Equivalents 6,402 (16,660) 13,405
Cash and Cash Equivalents at Beginning of Year 1,119 17,779 4,374
Cash and Cash Equivalents at End of Year $7,521 $1,119 $17,779
Cash Paid for Interest $4,718 $4,664 $5,023
The accompanying notes are an integral part of these financial statements.
</TABLE>
American Industrial Properties REIT
Notes to Consolidated Financial Statements
December 31, 1994
Note 1 -- Significant Accounting Policies:
General.
American Industrial Properties REIT (formerly Trammell Crow
Real Estate Investors) (the "Trust") is an equity real estate
investment trust which, as of December 31, 1994, owned and
operated 15 commercial real estate properties consisting of 14
industrial properties and one retail property. The Trust was
formed September 26, 1985, by issuing 13,400 shares to Trammell
Crow Company, Inc. for $201,000. On November 27, 1985, the Trust
issued 9,062,000 Shares of Beneficial Interest (the "Shares") and
commenced operations.
On April 13, 1993, the Independent Trust Managers gave formal
notice of the Trust's intent to terminate the Advisory Agreement
with Trammell Crow Ventures, Ltd. (the "Advisor", see Note 2).
The Trust converted to self-administration effective June 13,
1993 and began operating under the name American Industrial
Properties REIT. Pursuant to the Trust's 1993 Annual Meeting of
Shareholders, the Trust's Shareholders approved amendments to the
Trust's Declaration of Trust and By-Laws which, among other
things, officially changed the name of the Trust from Trammell
Crow Real Estate Investors to American Industrial Properties REIT
and removed the Trust's limited term restriction, converting the
Trust from a finite life entity scheduled to liquidate in 1997 to
a perpetual life entity.
Principles of Consolidation.
The consolidated financial statements of the Trust include the
accounts of American Industrial Properties REIT and its wholly-
owned subsidiaries. Significant intercompany balances and
transactions have been eliminated in consolidation.
Real Estate.
The Trust carries its real estate at lower of depreciated cost
or net realizable value. Management considers net realizable
value for assets held for sale as estimated market value. In
determining estimated market value, management considers numerous
factors, including market evaluations, the cost of capital,
operating cash flows from the property during the projected
holding period, and an expected capitalization rate applied to
the estimated stabilized net operating income of the specific
property.
The carrying amount of real estate held for investment is
reduced when management believes the carrying amount is less than
net realizable value. Management considers net realizable value
for assets held for investment as the total of the estimated
undiscounted future cash flows from the property. The book
values of the Trust's real estate properties are reviewed
periodically and any additional writedown determined to be
necessary is recorded in the period in which it becomes
reasonably estimable.
Real estate held for investment is reclassified to real estate
held for sale when management determines that there is a
reasonable probability that the asset will no longer be held for
long-term investment and actively begins to offer the property
for sale. During 1994, two properties classified as being held
for investment at December 31, 1993 were reclassified to held for
sale.
Property improvements are capitalized while maintenance and
repairs are expensed as incurred. Depreciation of buildings and
capital improvements is computed using the straight-line method
over forty years. Depreciation of tenant improvements is
computed using the straight-line method over ten years.
American Industrial Properties REIT
Notes to Consolidated Financial Statements (continued)
Cash and Cash Equivalents.
Cash equivalents include demand deposits and all highly liquid
debt instruments purchased with an original maturity of three
months or less. Restricted amounts reflect escrow deposits held
by third parties for the payment of taxes and insurance and
reserves held by third parties for property repairs or tenant
improvements.
Other Assets.
Other assets primarily consists of deferred rent receivable
(see Rents and Tenant Reimbursements.), prepaid commissions and
loan fees. Leasing commissions are capitalized and amortized on
a straight line basis over the life of the lease. Loan fees are
capitalized and amortized on a level yield basis over the term of
the related loan.
Prior to the defeasance of the outstanding Zero Coupon Notes in
1994 (see Note 5), the issuance costs of the Zero Coupon Notes
were being amortized over 12 years. Unamortized issuance costs
at the date of defeasance were written off and reflected in the
loss on defeasance.
Rents and Tenant Reimbursements.
Rental income, including contractual rent increases or delayed
rent starts, is recognized on a straight-line basis over the
lease term. The Trust has recorded deferred rent receivable
(representing the excess of rental revenue recognized on a
straight line basis over actual rents received under the
applicable lease provisions) of $1,157,000 and $1,313,000 at
December 31, 1994 and 1993, respectively.
Several tenants in the retail property are also required to pay
as rent a percentage of their gross sales volume, to the extent
such percentage exceeds their base rents. Such percentage rents
amounted to $245,000, $230,000 and $157,000 for the years ended
December 31, 1994, 1993, and 1992, respectively. In addition
to paying base and percentage rents, most tenants are required to
reimburse the Trust for operating expenses in excess of a
negotiated base amount.
Tamarac Square, the Trust's only retail property, has rental
revenues in excess of 10% of the total revenues of the Trust.
Rental revenues and tenant reimbursements from Tamarac totaled
$3,441,000, $3,182,000, and $3,126,000 in 1994, 1993, and 1992,
respectively.
Income Tax Matters.
The Trust operates as a real estate investment trust ("REIT")
for federal income tax purposes. Under the REIT provisions, the
Trust is required to distribute 95% of REIT taxable income and is
allowed a deduction for dividends paid during the year. The
Trust had a taxable loss in each of the years ending December 31,
1994, 1993, and 1992. Accordingly, no provision for income taxes
has been reflected in the financial statements.
The Trust has a net operating loss carryforward from 1994 and
prior years of approximately $26,600,000. The losses may be
carried forward for up to 15 years. The present losses will
expire beginning in the year 2004. Management intends to operate
the Trust in such a manner as to continue to qualify as a REIT
and to continue to distribute cash flow in excess of taxable
income. Therefore, no tax benefit related to the potential
utilization of accumulated net operating losses has been
reflected in the financial statements.
Earnings and profits, which will determine the taxability of
dividends to Shareholders, will differ from that reported for
financial reporting purposes due primarily to differences in the
basis of the assets and the estimated useful lives used to
compute depreciation.
American Industrial Properties REIT
Notes to Consolidated Financial Statements (continued)
Reclassification.
Certain amounts in prior years financial statements have been
reclassified to conform with the current year presentation.
Note 2 -- Transactions with Parties in Interest:
Trammell Crow Ventures, Ltd., an affiliate of the Trammell Crow
Company, served as advisor (the "Advisor") to the Trust through
June 13, 1993. Effective June 13, 1993, the Trust terminated the
Advisory Agreement with the Advisor and paid to the Advisor a one-
time termination fee of $435,000. Certain other affiliates of
the Trammell Crow Company (the "TCC Entities") continue to manage
twelve of the Trust's fifteen properties. The TCC Entities are
not considered party in interest relationships by the Trust.
During 1993 and 1992, the Trust paid fees to the Advisor of
$716,000 and $565,000, respectively, representing fees and
reimbursements pursuant to the Advisory Agreement, disposition
fees from the sale or disposition of Trust real estate assets,
and certain other fees for services provided to the Trust. In
addition, affiliates of the Advisor were paid $202,000 and
$598,000 during 1993 and 1992 pursuant to property management
agreements.
Note 3 -- Real Estate and Provisions for Possible Losses on
Real Estate:
The Trust recorded provisions for possible losses on real
estate of $650,000 and $14,094,000 in 1994 and 1992,
respectively. In accordance with the accounting policies of the
Trust, such provisions reduced the depreciated cost of real
estate. At December 31, 1994, thirteen of the Trust's properties
were classified as held for investment and two properties were
classified as held for sale. If unforeseen factors should cause a
reclassification of the Trust's real estate held for investment
to held for sale, significant adjustments to reduce the
depreciated cost of the real estate to net realizable value could
be required.
Note 4 -- 8.8% Notes Payable:
To finance the February 27, 1992 repurchase of $106,322,000
(face amount at maturity) of Zero Coupon Notes due 1997 (see Note
5), the Trust issued $53,234,000 of unsecured notes payable due
November 1997 (the "8.8% Notes Payable"). These notes bear
interest at 8.8% per annum, payable semiannually commencing May
27, 1993. The terms of the 8.8% Notes Payable allow for
prepayment, in full or in part, at any time prior to maturity
without penalty.
On December 31, 1992, the Trust used proceeds from the 1992
sales of real estate to effect a principal payment of $7,995,000
(which was due on or before November 27, 1993) and an interest
payment of $3,648,000 on the 8.8% Notes Payable.
Note 5 -- Zero Coupon Notes:
As part of its original capitalization in 1985, the Trust
issued $179,698,000 (face amount at maturity) of Zero Coupon
Notes due 1997 (the "Notes"). These Notes, which were
collateralized by first and second mortgage liens on each of the
Trust's real estate properties, accreted at 12%, compounded
semiannually. In 1991, the Trust began a program to retire the
outstanding Notes, resulting in a reduction of the outstanding
Notes to $19,491,000 (face amount at maturity) at December 31,
1993. On December 31, 1993, the Trust effected a partial in-
substance defeasance on $12,696,000 (face amount at maturity) of
the Notes and recorded an extraordinary loss of $2,530,000.
American Industrial Properties REIT
Notes to Consolidated Financial Statements (continued)
During the first half of 1994, the Trust purchased $239,000
(face amount at maturity) of Notes and submitted the Notes to the
Trustee for cancellation. In November 1994, the Trust refinanced
two of its properties and completed a partial in-substance
defeasance on $3,669,000 (face amount at maturity) of Notes and
recorded an extraordinary loss of $344,000. In December 1994,
the Trust purchased the remaining non-defeased Notes outstanding
of approximately $2,887,000 (face amount at maturity) in the open
market and submitted the Notes to the Trustee for cancellation.
The legal defeasance of the Notes resulted in the release of the
Zero Coupon Note mortgage liens which encumbered each of the
Trust's properties.
The accreted value of the Notes defeased at December 31, 1994
and 1993 was $11,665,000 and $8,054,000, respectively.
Note 6 -- Mortgages Payable:
At December 31, 1994, six of the Trust's properties were
subject to liens securing mortgage notes payable totaling
$20,374,000. Of this amount $16,455,000 represented notes with
variable interest rates of prime plus 2% or 30-day LIBOR plus
3.15% and $3,919,000 represented notes with fixed interest rates
ranging from 9.63% to 11.0%. Of the variable rate debt,
$14,500,000 is subject to a maximum interest rate of 11.375%.
Principal payments due during each of the next five years are
as follows: $2,171,000 in 1995, $1,437,000 in 1996, $261,000 in
1997, $287,000 in 1998, $1,504,000 in 1999, and $14,714,000
thereafter. These amounts reflect the maturity of individual
mortgages in May 1995 (which mortgage can be extended at the
Trust's election for an additional three-year period), in October
1996 and in March 1999.
The By-Laws of the Trust, the note purchase agreement relating
to the 8.8% Notes Payable, and certain mortgages payable contain
various borrowing restrictions and operating performance
covenants. As of December 31, 1994, the Trust is in compliance
with all such restrictions and covenants.
Note 7 -- Real Estate Acquisitions and Dispositions:
On December 10, 1993, the Trust purchased Northview
Distribution Center, a 175,000 square foot multi-tenant
industrial distribution property in Dallas, Texas for total
consideration of approximately $3.4 million.
In January 1993, the Trust sold its Royal Lane industrial
property in Dallas, Texas for $7,500,000. The sale resulted in a
loss for financial statement purposes of $216,000.
In 1992, the Trust sold its Woodland Industrial Park property
in Charlotte, North Carolina and its Southland Industrial
property in Houston, Texas. The total gross sales price for
these properties was $35,823,000. The sales resulted in a loss
for financial statement purposes of $784,000.
Note 8 -- Commitments and Contingencies:
Environmental Matters.
The Trust has been notified of the possible existence of
underground contamination at Tamarac Square, the Trust's Denver
retail property. The source of the possible contamination is
apparently related to underground storage tanks located on
adjacent property. The owner of the adjacent property has
indemnified the Trust against costs related to the remediation of
such contamination. Based upon preliminary testing, it does not
appear that the Tamarac Square property has been impacted. With
the exception of Tamarac Square, the Trust has not been notified,
and is not otherwise aware, of any material non-compliance,
liability or claim relating to hazardous or toxic substances in
connection with any of its properties.
American Industrial Properties REIT
Notes to Consolidated Financial Statements (continued)
Litigation.
On occasion, and in the normal course of business, the Trust is
involved in legal actions relating to the ownership and
operations of its properties. In management's opinion, the
liabilities, if any, that may ultimately result from such legal
actions are not expected to have a materially adverse effect on
the consolidated financial position of the Trust.
Note 9 -- Retirement and Profit Sharing Plan:
During 1993, the Trust adopted a retirement and profit sharing
plan which qualifies under section 401(k) of the Internal Revenue
Code. All existing Trust employees at adoption and subsequent
employees who have completed six months of service are eligible
to participate in the plan. Subject to certain limitations,
employees may contribute up to 15% of their salary. The Trust
may make annual discretionary contributions to the plan.
Contributions by the Trust related to the years ended December
31, 1994 and 1993 were $20,000 and $12,000, respectively.
Note 10 -- Operating Leases:
The Trust's properties are leased to others under operating
leases with expiration dates ranging from 1995 to 2005.
Excluding the property sold by the Trust in February 1995 (see
Note 14), future minimum rentals on noncancellable tenant leases
at December 31, 1994 are as follows:
<TABLE>
Year Amount
<C> <C>
1995 $ 8,555,000
1996 6,809,000
1997 5,051,000
1998 3,806,000
1999 2,187,000
Thereafter 5,249,000
$31,657,000
</TABLE>
Note 11 -- Distributions:
The Trust's distributions of $1,453,000 ($0.16 per share) in
1993 and $1,815,000 ($0.20 per share) in 1992 represent a return
of capital to Shareholders (to the extent of the Shareholder's
basis in the Shares.) The Trust did not pay any distributions in
1994.
Note 12 -- Per Share Data:
All per share data is based on 9,075,400 Shares outstanding for
each of the years presented.
Note 13 -- Fair Value of Financial Instruments:
Cash equivalents, accounts receivable, accounts payable and
accrued expenses and other liabilities are carried at amounts
that reasonably approximate their fair values. The fair values
of the Trust's unsecured 8.8% notes payable and mortgage notes
payable are estimated using discounted cash flow analyses, based
on the Trust's incremental borrowing rates for similar types of
borrowing arrangements. The carrying values of the Trust's
mortgage notes payable reasonably approximate their fair values.
The carrying amount and fair value of the Trust's unsecured 8.8%
notes payable at December 31, 1994 were $45,239,000 and
$41,738,000, respectively.
American Industrial Properties REIT
Notes to Consolidated Financial Statements (continued)
Note 14 -- Subsequent Event:
In February 1995, the Trust sold its Quadrant Center industrial
property, located in Deerfield Beach, Florida for $2,650,000. At
December 31, 1994, the net book value of the property was
approximately $2,504,000. After selling costs and adjustment for
deferred rent receivable, the sale is expected to result in an
immaterial loss for accounting purposes.
<TABLE>
SCHEDULE III
AMERICAN INDUSTRIAL PROPERTIES REIT
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
($000's)
<S> <C> <C> <C> <C> <C> <C>
Encum- Initial Cost Writedowns
brances @ Bldgs & Capitalized and
Description 12/31/94 Land Imprvmnts Imprvmnts Retirements Allowances
Industrial Properties :
Texas --
Beltline Business Ctr $1,303 $5,213 $359 ($3,516)
Commerce Park 1,108 4,431 493 (2,014)
Gateway 5 & 6 935 3,741 612 (1,861)
Northgate II 2,153 8,612 623 (4,122)
Northview $2,250 658 2,631 38
Plaza Southwest 1,312 5,248 486
Westchase 697 2,787 220 ($74) (1,158)
California--
Huntington Drive 1,559 6,237 650
Maryland--
Patatpsco 1,396 1,147 4,588 321 (650)
Minnesota--
Burnsville 1,955 761 3,045 364 (17) (1,563)
Cahill 625 2,498 357
Washington--
Springbrook 1,008 4,032 233 (436)
Wisconsin--
Northwest Bus. Park 1,323 1,296 5,184 669 (131)
Florida--
Quadrant 1,200 1,137 4,549 116 (63) (2,337)
Retail Property:
Colorado--
Tamarac Square 12,250 6,799 27,194 3,982 (241)
Trust Home Office 15
Total $20,374 $22,498 $89,990 $9,538 ($526) ($17,657)
The accompanying notes are an integral part of this schedule.
</TABLE>
<TABLE> SCHEDULE III
AMERICAN INDUSTRIAL PROPERTIES REIT
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
($000's)
Gross Amt Carried at December 31, 1994
Bldgs & Accum. Date of Date
Description Land Imprvmnts Total Deprec. Construction Acquired
<S> <C> <C> <C> <C>
Industrial Properties :
Texas --
Beltline Business Ctr 600 2759 3359 1157 1984 1985
Commerce Park 705 3,313 4,018 1,024 1984 1985
Gateway 5 & 6 563 2,864 3,427 989 1984-85 1985
Northgate 1,329 5,937 7,266 2,047 1982-83 1985
Northv 658 2,669 3,327 75 1980 1993
Plaza Southwest 1,312 5,734 7,046 1,352 1970-74 1985
Westchase 465 2,007 2,472 650 1983 1985
California--
Huntington Driv 1,559 6,887 8,446 1,561 1984-85 1985
Maryland--
Patatpsco 1,017 4,389 5,406 1,127 1980-84 1985
Minnesota--
Burnsville 432 2,158 2,590 788 1984 1986
Cahill 625 2,855 3,480 705 1981 1986
Washington--
Springbrook 921 3,916 4,837 977 1984 1986
Wisconsin--
Northwest Bus. Park 1,296 5,722 7,018 1,296 1983-86 1986
Florida--
Quadrant 670 2,732 3,402 898 1984-86 1986
Retail Property:
Colorado--
Tamarac Square 6,799 30,935 37,734 7,206 1976-79 1985
Trust Home Offic 15 15 7 N/A various
Total $18,951 $84,892 $103,843 $21,859
The accompanying notes are an integral part of this schedule.
</TABLE>
AMERICAN INDUSTRIAL PROPERTIES REIT
NOTES TO SCHEDULE III
December 31 1994
($000)
Reconciliation of Real Estate:
<TABLE>
1994 1993
<S> <C> <C>
Balance at beginning of year.... $103,710 $108,036
Additions during period:
Improvements..................... 1,024 887
Acquisitions..................... - 3,289
104,734 112,212
Deductions during period:
Dispositions.................... - 8,187
Writedowns....................... 650 -
Asset retirements.............. 241 315
Balance at end of year......... $103,843 $103,710
</TABLE>
Reconciliation of Accumulated Depreciation:
<TABLE>
1994 1993
<S> <C> <C>
Balance at beginning of year..... $19,315 $18,036
Additions during period:
Depreciation expense.......... 2,622 2,830
21,937 20,866
Deductions during period:
Accum. deprec. of realestate sold - 1,551
Asset retirements............ 78 -
Balance at end of year.......... $21,859 $19,315
</TABLE>
Tax Basis:
The income tax basis of real estate, net of accumulated tax
depreciation, is approximately $103,805
at December 31, 1994.
Depreciable Life:
Depreciation is provided by the straight-line method over the
estimated useful lives which are as follows:
Buildings and capital improvements........ 40 years
Tenant improvements.................. 10 years
Exhibit 3.2
THIRD AMENDED AND RESTATED
BYLAWS
OF
AMERICAN INDUSTRIAL PROPERTIES REIT
February 2, 1995
INDEX
ARTICLE I Offices 1
Section 1.1 Principal Office 1
Section 1.2 Other Offices 1
ARTICLE II Meetings of Shareholders 1
Section 2.1 Place of Meetings 1
Section 2.2 Annual Meeting 1
Section 2.3 Special Meetings 1
Section 2.4 Notice of Meetings 1
Section 2.5 Voting Lists 2
Section 2.6 Quorum 2
Section 2.7 Organization 2
Section 2.8 Proxies 3
Section 2.9 Voting of Shares 3
Section 2.10 Voting of Shares by Certain Holders 4
Section 2.11 Election of Trust Managers 4
Section 2.12 Telephone Meetings 4
Section 2.13 Action Without Meeting 4
Section 2.14 Inspectors and Voting Procedures 5
ARTICLE III Trust Managers 5
Section 3.1 Powers and Responsibilities 5
Section 3.2 Number and Qualification 6
Section 3.3 Election and Term of Office 6
Section 3.4 Resignation 6
Section 3.5 Vacancies; Increases 7
Section 3.6 Bond Not Required; Time Commitment 7
Section 3.7 Compensation 7
Section 3.8 Execution of Documents 7
ARTICLE IV Meetings of the Trust Managers 8
Section 4.1 Place of Meetings 8
Section 4.2 Annual Meeting 8
Section 4.3 Regular Meetings 8
Section 4.4 Special Meetings 8
Section 4.5 Quorum and Action 8
Section 4.6 Presumption of Assent to Action 8
Section 4.7 Telephone Meetings 9
Section 4.8 Action Without Meeting 9
Section 4.9 Minutes 9
Section 4.10 Interest of Trust Managers 9
Section 4.11
Right of Trust Managers and Officers to
Own Shares or Other Property and to
Engage in Other Businesses 9
Section 4.12
Transactions Between Trust Managers and
the Trust 10
Section 4.13
Persons Dealing with Trust Managers or
Officers 10
Section 4.14 Reliance 10
Section 4.15 Liability of Trust Managers 10
ARTICLE V Committees of the Trust Managers 11
Section 5.1 Membership and Authorities 11
Section 5.2 Minutes and Rules of Procedure 11
Section 5.3 Vacancies 11
Section 5.4 Telephone Meetings 11
Section 5.5 Action Without Meeting 11
ARTICLE VI Officers 12
Section 6.1 Number 12
Section 6.2Election, Term of Office and Qualification 12
Section 6.3 Subordinate Officers 12
Section 6.4 Resignation 12
Section 6.5 Removal 12
Section 6.6 Vacancies 12
Section 6.7 The Chief Executive Officer 12
Section 6.8 The President 13
Section 6.9 The Vice Presidents 13
Section 6.10 The Secretary 13
Section 6.11 Assistant Secretaries 14
Section 6.12 The Treasurer 14
Section 6.13 Assistant Treasurers 14
Section 6.14 Treasurer's Bond 14
Section 6.15 Salaries 14
Section 6.16 Execution of Documents 14
ARTICLE VII Trust Shares 15
Section 7.1 Share Certificates 15
Section 7.2 Lost Certificates, etc. 15
Section 7.3 Transfer of Shares 16
Section 7.4 Ownership of Shares 16
Section 7.5 Closing of Transfer Books 16
Section 7.6 Dividends 16
Section 7.7 Reserves 16
Section 7.8 Repurchase of Shares 16
ARTICLE VIII Indemnification 17
Section 8.1 Definitions 17
Section 8.2 Indemnification 17
Section 8.3 Successful Defense 18
Section 8.4 Determinations 18
Section 8.5 Advancement of Expenses 19
Section 8.6 Employee Benefit Plans 19
Section 8.7 Other Indemnification and Insurance 19
Section 8.8 Notice 19
Section 8.9 Construction 20
Section 8.10 Continuing Offer, Reliance, etc. 20
Section 8.11 Effect of Amendment 20
ARTICLE IX Limitations on Transfer and Ownership 20
Section 9.1 Limitations on Transfer. 20
Section 9.2 Limitations on Ownership. 21
Section 9.3 Shareholder Information. 21
Section 9.4 Transferee Information. 21
Section 9.5 Excess Shares. 22
9.5.1 Creation of Excess Shares. 22
9.5.2 Ownership in Trust. 22
9.5.3 Dividend Rights. 22
9.5.4 Rights Upon Liquidation. 22
9.5.5 Voting Rights. 23
9.5.6 Restrictions on Transfer. 23
9.5.7 Trust's Redemption Right. 23
Section 9.6
Exceptions to Certain Ownership and
Transfer Limitations. 24
9.6.1 Exemption by Trust Managers. 24
9.6.2 Shares Held by Underwriters. 24
Section 9.7
Authority to Revoke Exceptions to
Limitations 24
Section 9.8 Severability 25
Section 9.9 Authority of the Trust Managers 25
Section 9.10 New York Stock Exchange 25
ARTICLE X General Provisions 25
Section 10.1 General Policies 25
Section 10.2 Limited Liability of Shareholders 25
Section 10.3 Waiver of Notice 26
Section 10.4 Seal 26
Section 10.5 Fiscal Year 26
Section 10.6 Checks, Notes, etc 26
Section 10.7 Examination of Books and Records 26
Section 10.8 Voting Of Shares Held by the Trust 26
Section 10.9 Number, Gender, etc 27
Section 10.10 Annual and Quarterly Reports 27
ARTICLE XI Amendments 27
ARTICLE XII Subject to All Laws 27
AMERICAN INDUSTRIAL PROPERTIES REIT
THIRD AMENDED AND RESTATED BYLAWS
ARTICLE I
Offices
Section 1.1 Principal Office. The principal office of the
Trust shall be in the City of Irving, Dallas County, Texas or at
such other location as the Trust Managers may from time to time
determine.
Section 1.2 Other Offices. The Trust may also have offices
at such other places, both within and without the State of Texas,
as the Trust Managers may from time to time determine or the
business of the Trust may require.
ARTICLE II
Meetings of Shareholders
Section 2.1 Place of Meetings. The Trust Managers may
designate any place, either within or without the State of Texas,
as the place of meeting for any annual meeting or for any special
meeting called by the Trust Managers. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate
any place, either within or without the State of Texas, as the
place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Trust.
Section 2.2 Annual Meeting. The annual meeting of
shareholders commencing with the year 1995 shall be held at such
time, on such day and at such place as may be designated by the
Trust Managers. At the annual meeting, the shareholders shall,
subject to Section 3.3 of these Bylaws, elect Trust Managers and
transact such other business as may properly be brought before
the meeting.
Section 2.3 Special Meetings. Special meetings of the
shareholders for any purpose or purposes, unless otherwise
prescribed by law or by the Declaration of Trust, may be called
by the Trust Managers, any officer of the Trust or the holders of
at least ten percent (10%) of all of the shares entitled to vote
at such meeting. Business transacted at all special meetings
shall be confined to the purpose or purposes stated in the notice
of the meeting.
Section 2.4 Notice of Meetings. Written or printed notice
of all meetings of shareholders stating the place, day and hour
thereof, and in the case of a special meeting the purpose or
purposes for which the meeting is called, shall be personally
delivered or mailed, not less than ten (10) days nor more than
sixty (60) days prior to the date of the meeting, to the
shareholders of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States Mail addressed to the shareholder
at his address as it appears on the share transfer books of the
Trust and the postage shall be prepaid. Personal delivery of any
such notice to any officer of a corporation or association, or to
any member of a partnership, shall constitute delivery of such
notice to such corporation, association or partnership.
Section 2.5 Voting Lists. The officer or agent having
charge of the share transfer books for shares of the Trust shall
make, at least ten (10) days before each meeting of the
shareholders, a complete list of shareholders entitled to vote at
such meeting or any adjournment thereof, arranged in alphabetical
order, with the address of each shareholder and the number of
shares held by each shareholder, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the
registered office of the Trust and shall be subject to inspection
by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any
shareholder for the duration of the meeting. The original share
transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or
to vote at any meeting of shareholders. Failure to comply with
this Section 2.5 with respect to any meeting of shareholders
shall not affect the validity of any action taken at such
meeting.
Section 2.6 Quorum. The holders of a majority of the shares
entitled to vote, present in person or represented by proxy,
shall constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by law
or by the Declaration of Trust. If, however, such quorum shall
not be present or represented at any meeting of the shareholders,
the shareholders entitled to vote at such meeting, present in
person or represented by proxy, shall have the power to adjourn
the meeting from time to time without notice other than
announcement at the meeting until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which
might have been transacted at the meeting as originally convened.
The shareholders present at a duly organized meeting at which a
quorum was present may continue to transact business until
adjournment notwithstanding the withdrawal of enough shareholders
to leave less than a quorum present, provided that there remain
at such meeting the holder or holders of at least one-third (1/3)
of the shares issued and outstanding and entitled to vote
thereof, present in person or represented in the manner specified
above. A holder of a share shall be treated as being present at a
meeting if the holder of such share is (i) present in person at
the meeting or (ii) represented at the meeting by a valid proxy,
whether the instrument granting such proxy is marked as casting a
vote or abstaining, is left blank or does not empower such proxy
to vote with respect to some or all matters to be voted upon at
the meeting.
Section 2.7 Organization. (a) The Chief Executive Officer,
if one shall be elected, shall preside at all meetings of the
shareholders. In the absence of the Chief Executive Officer or
should one not be elected, the President or, in his absence, a
Vice President shall preside. In the absence of all of these
officers, any shareholder or the duly appointed proxy of any
shareholder may call the meeting to order and a chairman shall be
elected from among the shareholders present. Notwithstanding the
foregoing, the Trust Managers may appoint any Trust Manager to
preside over any meeting of shareholders. The presiding officer
shall fix the agenda for the meeting, shall conduct all aspects
of the meeting and shall establish and interpret the rules of
order for the conduct of the meeting.
(a) The Trust Managers may appoint any person to act as
secretary of any meeting of the shareholders.
Section 2.8 Proxies. (a) At any meeting of the
shareholders, every shareholder entitled to vote at such meeting
shall be entitled to vote in person or by proxy executed in
writing by such shareholder or by his duly authorized
attorney-in-fact. Proxies shall be filed with the Secretary or
Trust Managers immediately prior to or after the meeting has been
called to order.
(b) No proxy shall be valid after eleven (11) months from
the date of its execution unless such proxy otherwise provides.
(c) A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy
is coupled with an interest but in no event shall it remain
irrevocable for a period of more than eleven (11) months. A
proxy which is revocable as aforesaid may be revoked at any time
by filing with the Secretary an instrument revoking it or a duly
executed proxy bearing a later date. Any revocable proxy which is
not so revoked shall, subject to paragraph (b) above, continue in
full force and effect.
(d) In the event that any instrument in writing shall
designate two (2) or more persons to act as proxies, a majority
of such persons present at the meeting or, if only one shall be
present, then that one, shall have and may exercise all of the
powers conferred by such written instrument upon all the persons
so designated unless the instrument shall otherwise provide.
Section 2.9 Voting of Shares. Except as otherwise provided
by law, the Declaration of Trust or these Bylaws, each
shareholder shall be entitled at each meeting of shareholders to
one (1) vote on each matter submitted to a vote at such meeting
for each share having voting rights registered in his name on the
books of the Trust at the time of the closing of the share
transfer books (or at the record date) for such meeting. When a
quorum is present at any meeting (and notwithstanding the
subsequent withdrawal of enough shareholders to leave less than a
quorum present) in accordance with Section 2.6 of these Bylaws,
the votes of holders of a majority of the shares entitled to
vote, present in person or represented by proxy, shall decide any
matter submitted to such meeting, unless the matter is one upon
which by law or by express provision of the Declaration of Trust
or of these Bylaws the vote of a greater number is required, in
which case the vote of such greater number shall govern and
control the decision of such matter. The provisions of this
Section 2.9 will govern with respect to all votes of shareholders
except as otherwise provided for in these Bylaws or in the
Declaration of Trust or by some specific statutory provision
superseding the provisions contained in these Bylaws or the
Declaration of Trust.
Section 2.10 Voting of Shares by Certain Holders. (a) Shares
standing in the name of another business organization may be
voted by such officer, agent or proxy as the organizational
documents of such organization may authorize or, in the absence
of such authorization, as may be determined by the governing body
of such organization.
(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name so long as such
shares forming a part of an estate are in the possession and form
a part of the estate being served by him. Shares standing in the
name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name as trustee.
(c) Shares standing in the name of a receiver may be voted
by such receiver, and shares held by or under the control of a
receiver may be voted by such receiver without the transfer
thereof into his name if authority to do so is contained in an
appropriate order of the court by which such receiver was
appointed.
(d) A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been
transferred into the name of the pledgee, and thereafter the
pledgee shall be entitled to vote the shares so transferred.
Section 2.11 Election of Trust Managers. At each election of
Trust Managers, each shareholder entitled to vote at such
election shall, unless otherwise provided by the Declaration of
Trust or by applicable law, have the right to vote the number of
shares owned by him for as many persons as there are to be
elected and for whose election he has a right to vote. Unless
otherwise provided by the Declaration of Trust, no shareholder
shall have the right or be permitted to cumulate his votes on any
basis.
Section 2.12 Telephone Meetings. Shareholders may
participate in and hold a meeting of the shareholders by means of
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each
other, and participation in a meeting pursuant to this Section
shall constitute presence in person at such meeting, except where
a person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that
the meeting is not lawfully called or convened.
Section 2.13 Action Without Meeting. Any action required by
any provision of law or of the Declaration of Trust or these
Bylaws to be taken at a meeting of the shareholders or any action
which may be taken at a meeting of the shareholders may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof, and
such consent shall have the same force and effect as a unanimous
vote of the shareholders.
Section 2.14 Inspectors and Voting Procedures. (a) The
Trust shall, in advance of any meeting of shareholders, appoint
one or more inspectors to act at the meeting and make a written
report thereof. The Trust may designate one or more persons as
alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of
shareholders, the person presiding at the meeting shall appoint
one or more inspectors to act at the meeting. Each inspector,
before beginning to discharge his duties, shall take and sign an
oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the
shares represented at a meeting and the validity of proxies and
ballots, (iii) count all votes and ballots, (iv) determine and
retain for a reasonable period a record of the disposition of
any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares
represented at the meeting, and their count of all votes and
ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of the
duties of the inspectors.
(c) The date and time of the opening and closing of the
polls for each matter upon which the shareholders will vote at a
meeting shall be announced at the meeting. No ballots, proxies or
votes, nor any revocations thereof or changes thereto, shall be
accepted by the inspectors after the closing of the polls unless
a court of appropriate jurisdiction, upon application by a
shareholder, shall determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the inspectors may examine and consider such records or
factors as allowed by the Texas Real Estate Investment Trust Act
(the "Texas REIT Act").
ARTICLE III Trust Managers
Section 3.1 Powers and Responsibilities. The business
and affairs of the Trust shall be managed under the direction of
its Trust Managers who may exercise all such powers of the Trust
and do all such lawful acts and things as are not by statute, the
Declaration of Trust or these Bylaws directed or required to be
exercised or done by the shareholders. The enumeration of any
specific power or authority herein shall not be construed as
limiting the aforesaid powers or the general powers or authority
or any other specified power or authority conferred herein upon
the Trust Managers. Among other things, the Trust Managers shall
be responsible for (a) supervising the Trust's relations with the
managers of the Trust's properties, (b) evaluating the capability
and performance of the managers of the Trust's properties, (c)
reviewing the Trust's investment policies, (d) determining that
the fees and expenses of the Trust are reasonable, (e) reviewing
the aggregate borrowings of the Trust, (f) authorizing the
issuance of the capital stock of the Trust, (g) approving the
acquisition and disposition of real property and interests
therein, (h) ratifying the appointments of independent
accountants for the Trust and of independent appraisers of the
Trust's properties, and (i) establishing and reviewing guidelines
for leasing and management of the Trust's properties.
Section 3.2 Number and Qualification. There shall at all
times be no less than two (2) nor more than seven (7) Trust
Managers who (subject to Section 3.3) shall be elected annually
by the shareholders. Subject to any limitations specified by law
or in the Declaration of Trust, the number of Trust Managers may
be fixed from time to time by resolution adopted by a majority of
the Trust Managers. No decrease in the number of Trust Managers
shall have the effect of shortening the term of any incumbent
Trust Manager. A majority of the Trust Managers shall be natural
persons and residents of the State of Texas. Trust Managers
need not be shareholders, must be at least eighteen (18) years of
age, must not be subject to any legal disability and, except as
provided in the immediately preceding sentence, need not be
residents of the State of Texas. A majority of the Trust
Managers and a majority of any committee of Trust Managers shall
at all times be Independent Trust Managers; provided, however if
the number of Trust Managers shall be two (2), only one (1) of
such Trust Managers shall be required to be an Independent Trust
Manager. For purposes of these Bylaws, the term "Independent
Trust Manager" shall mean a Trust Manager who (i) does not
perform any services for the Trust (except in the capacity of a
Trust Manager) whether as an agent, advisor, consultant,
employee, property manager or in any other capacity whatsoever
(other than as a Trust Manager), and (ii) is not an "affiliate"
of any person or entity that performs any services for the Trust
(other than as a Trust Manager). The term "affiliate" as used in
these Bylaws means any individual, corporation, partnership,
trust, unincorporated organization, association or other entity
that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with any
person or entity that performs any services for the Trust (other
than as a Trust Manager).
Section 3.3 Election and Term of Office. The Trust Manager
nominees who have not been previously elected as Trust Managers
by the shareholders of the Trust shall be elected at the annual
meeting of the shareholders (except as provided in Section 3.6)
by the affirmative vote of the holders of two-thirds (2/3) of the
outstanding shares of the Trust. Trust Managers who have been
previously elected as Trust Managers by the shareholders of the
Trust shall be re-elected at the annual meeting of the
shareholders by the affirmative vote of the holders of a majority
of the outstanding shares of the Trust. Each Trust Manager shall
hold office until his successor is elected and qualified, or
until his death, resignation or removal in the manner provided in
these Bylaws. Notwithstanding anything in these Bylaws to the
contrary, any Trust Manager that has been previously elected as a
Trust Manager by the shareholders who is not re-elected by a
majority vote at a subsequent annual meeting shall nevertheless
remain in office until his successor is elected and qualified.
Section 3.4 Resignation. Any Trust Manager may resign at
any time by giving written notice to the remaining Trust
Managers. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective. A Trust Manager who has reached the age of seventy-
five (75), or who has been judged incompetent or for whom a
guardian or conservator has been appointed, shall be deemed to
have resigned as of the date of reaching such age, the date of
such adjudication or the date of such appointment.
Section 3.5 Vacancies; Increases. If any or all of the
Trust Managers cease to be Trust Managers hereunder, whether by
reason of resignation, removal, incapacity, death or otherwise,
such event shall not terminate the Trust or affect its
continuity. Until such vacancies are filled, the remaining Trust
Manager or Trust Managers (regardless of number) may exercise the
powers of the Trust Managers hereunder. Vacancies may be filled
either by a majority of the remaining Trust Managers or by vote
of the holders of at least two-thirds (2/3) of the outstanding
shares at an annual or special meeting of the shareholders. A
Trust Manager elected by the Trust Managers to fill a vacancy
shall hold office only until the next annual election of Trust
Managers by the shareholders. A Trust Manager elected by the
shareholders to fill a vacancy shall hold office until the next
annual meeting of shareholders, and until his successor is
elected and qualified. Any Trust Manager elected to fill a
vacancy created by the resignation, removal or death of any
former Trust Manager shall hold office for the unexpired term of
such Trust Manager. Notwithstanding any provision in these
Bylaws to the contrary, any vacancy created by reason of an
increase in number of Trust Managers shall be filled by the
affirmative vote of the majority of the remaining Trust Managers,
though less than a quorum of the full Board of Trust Managers. A
Trust Manager elected to fill a vacancy created by reason of an
increase in the number of Trust Managers shall hold office only
until the next annual election of the Trust Managers by the
shareholders.
Section 3.6 Bond Not Required; Time Commitment. Unless
otherwise required by law, no Trust Manager shall be required to
give bond, surety or security in any jurisdiction for the
performance of his duties or obligations to the Trust. No Trust
Manager shall be required to devote his entire time to the
business and affairs of the Trust.
Section 3.7 Compensation. Trust Managers shall receive
compensation for their services to the Trust as may be determined
from time to time by the Trust Managers. The Trust Managers may
delegate to any committee the power to fix from time to time the
compensation of Trust Managers. Officers of the Trust who also
serve as Trust Managers shall not receive compensation for their
service as Trust Managers.
Section 3.8 Execution of Documents. Each Trust Manager and
any one of them is authorized to execute on behalf of the Trust
any document or instrument of any nature whatsoever, provided
that the execution by the Trust of any such document or
instrument shall have been previously authorized by such action
of the Trust Managers as may be required by statute, the
Declaration of Trust or these Bylaws.
ARTICLE IV Meetings of the Trust Managers
Section 4.1 Place of Meetings. The Trust Managers of the
Trust may hold their meetings, both regular and special, either
within or without the State of Texas.
Section 4.2 Annual Meeting. The annual meeting of the Trust
Managers shall be held immediately following the adjournment of
the annual meeting of the shareholders and no notice of such
meeting shall be necessary to the Trust Managers in order legally
to constitute the meeting, provided a quorum shall be present, or
they may meet at such time and place as shall be fixed by the
consent in writing of all of the Trust Managers.
Section 4.3 Regular Meetings. Regular meetings of the Trust
Managers, in addition to the annual meetings referred to in
Section 4.2, may be held without notice at such time and place as
shall from time to time be determined by the Trust Managers.
Section 4.4 Special Meetings. Special meetings of the Trust
Managers may be called by the Chief Executive Officer, if one
shall be elected, or by the President, if a Chief Executive
Officer is not elected, on one (1) business day's notice (oral or
written) to each Trust Manager. Special meetings shall be called
by the Chief Executive Officer (if one shall be elected), the
President or the Secretary on like notice on the oral or written
request of any Trust Manager. Neither the purpose of, nor the
business to be transacted at, any special meeting of the Trust
Managers need be specified in the notice or waiver of notice of
such meeting. Attendance of a Trust Manager at a meeting shall
constitute a waiver of notice of such meeting except where a
Trust Manager attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business on the grounds that the meeting is not lawfully
called or convened.
Section 4.5 Quorum and Action. At all meetings of the Trust
Managers, the presence of a majority of the Trust Managers shall
be necessary and sufficient to constitute a quorum for the
transaction of business and the act of a majority of the Trust
Managers at any meeting at which a quorum is present shall be the
act of the Trust Managers unless the act of a greater number is
required by law, the Declaration of Trust or these Bylaws. If a
quorum shall not be present at any meeting of Trust Managers, the
Trust Managers present may adjourn the meeting from time to time
without notice other than announcement at the meeting until a
quorum shall be present. If there are only two Trust Managers,
the presence of both Trust Managers shall be necessary to
constitute a quorum.
Section 4.6 Presumption of Assent to Action. A Trust
Manager who is present at a meeting of the Trust Managers at
which action on any Trust matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the secretary of the meeting
before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Trust immediately after
the adjournment of the meeting. Such right to dissent shall not
apply to a Trust Manager who voted in favor of such action.
Section 4.7 Telephone Meetings. Trust Managers may
participate in and hold a meeting of the Trust Managers by means
of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this Section
shall constitute presence in person at such meeting, except where
a person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that
the meeting is not lawfully called or convened.
Section 4.8 Action Without Meeting. Any action required or
permitted to be taken at a meeting of the Trust Managers may be
taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by all the Trust Managers, and
such consent shall have the same force and effect as a unanimous
vote at a meeting.
Section 4.9 Minutes. The Trust Managers shall keep regular
minutes of their proceedings. The minutes shall be placed in the
minute book of the Trust.
Section 4.10 Interest of Trust Managers. With respect to the
actions of the Trust Managers, Trust Managers who have any direct
or indirect interest in connection with any matter being acted
upon may be counted for all quorum purposes under this Article
IV.
Section 4.11 Right of Trust Managers and Officers to Own
Shares or Other Property and to Engage in Other Businesses. Any
Trust Manager or officer of the Trust may acquire, own, hold and
dispose of shares of the Trust for his individual account, and
may exercise all rights of a shareholder to the same extent and
in the same manner as if he were not a Trust Manager or officer
of the Trust. Except as provided specifically to the contrary in
a written agreement with the Trust, any Trust Manager may, in a
capacity other than that of Trust Manager, have business
interests and engage in business activities similar to or in
addition to those relating to the Trust, which interests or
activities may be similar to and competitive with those of the
Trust and may include the acquisition, syndication, holding,
management, development, operation or disposition, for his own
account or for the account of others, of interests in mortgages,
interests in real property, or interests in entities engaged in
the real estate business. Except as provided specifically to the
contrary in a written agreement with the Trust, each Trust
Manager shall be free of any obligation to present to the Trust
any investment opportunity which comes to him in any capacity
other than solely as Trust Manager of the Trust, even if such
opportunity is of a character which, if presented to the Trust,
could be exploited by the Trust. Subject to the provisions of
Article III hereof, any Trust Manager or officer of the Trust may
be a trustee, officer, director, shareholder, partner, member,
advisor or employee of, or otherwise have a direct or indirect
interest in any person who may be engaged to render advice or
services to the Trust, and may receive compensation from such
person as well as compensation as Trust Manager or officer or
otherwise hereunder.
Section 4.12 Transactions Between Trust Managers and the
Trust. Except as otherwise provided by the Declaration of Trust
or these Bylaws, and in the absence of fraud, a contract, act or
other transaction, between the Trust and any other person, or in
which the Trust is interested, shall be valid and no Trust
Manager or officer of the Trust shall have any liability as a
result of entering into any such contract, act or transaction,
even though (a) one or more of the Trust Managers, directly or
indirectly is interested in or connected with, or is a trustee,
partner, director, shareholder, member, employee, officer or
agent of such other person, or (b) one or more of the Trust
Managers, individually or jointly with others, is a party to, or
directly or indirectly is interested in, or connected with, such
contract, act or transaction, provided that (i) such interest or
connection is disclosed in reasonable detail or known to the
Trust Managers and thereafter the Trust Managers authorize or
ratify such contract, act or other transaction by the affirmative
vote of a majority of the Trust Managers who are not interested
in the transaction or (ii) such interest or connection is
disclosed in reasonable detail or known to the shareholders, and
thereafter such contract, act or transaction is approved by the
shareholders holding a majority of the shares then outstanding
and entitled to vote thereon.
Section 4.13 Persons Dealing with Trust Managers or Officers.
Any act of the Trust Managers or officers of the Trust purporting
to be done in their capacity as such shall, as to any person
dealing with such Trust Managers or officers, conclusively be
deemed to be within the purposes of the Trust and within the
powers of the Trust Managers or officers. No person dealing with
the Trust Managers or any of them or with the officers of the
Trust or any of them, shall be bound to see to the application of
any funds or property passing into their hands or control. The
receipt of the Trust Managers or any of the officers of the Trust
of moneys or other consideration shall be binding upon the Trust.
Section 4.14 Reliance. Trust Managers and officers of the
Trust shall not be liable for any claims or damages that may
result from their acts in the discharge of any duty imposed or
power conferred upon them by the Trust, if, in the exercise of
ordinary care, they acted in good faith and in reliance upon the
written opinion of an attorney for the Trust. In discharging
their duties, Trust Managers and officers of the Trust, when
acting in good faith and exercising ordinary care, may rely upon
financial statements of the Trust, stated in a written report by
an independent certified public accountant, to fairly present the
financial position of the Trust. The Trust Managers and officers
of the Trust may rely upon any instrument or other document
believed by them to be genuine.
Section 4.15 Liability of Trust Managers. No Trust Manager
of the Trust shall be liable to the Trust for any act, omission,
loss, damage or expense arising from the performance of his duty
to the Trust, except to the extent specifically required by
statute, the Declaration of Trust or these Bylaws.
ARTICLE V Committees of the Trust Managers
Section 5.1 Membership and Authorities. The Trust Managers,
by resolution adopted by a majority of the Trust Managers, may
designate one (1) or more Trust Managers to constitute such
committees as the Trust Managers may determine, including, but
not limited to, a Compensation Committee and an Audit Committee,
each of which committees to the extent provided in such
resolution shall have and may exercise all of the authority of
the Trust Managers in the business and affairs of the Trust,
except in those cases where the authority of the Trust Managers
is specifically denied to the committee or committees by the
Trust Managers, applicable law, the Declaration of Trust or these
Bylaws. No committee shall have the power to alter or to repeal
any resolution adopted by the Trust Managers. The designation of
a committee and the delegation thereto of authority shall not
operate to relieve the Trust Managers, or any member thereof, of
any responsibility imposed upon them by law. The members of each
such committee shall serve at the pleasure of the Trust Managers.
A majority of the members of each committee shall be Independent
Trust Managers; provided, however, that if a committee shall
consist of two (2) members, only one (1) of such members shall be
required to be an Independent Trust Manager.
Section 5.2 Minutes and Rules of Procedure. Each committee
designated by the Trust Managers shall keep regular minutes of
its proceedings and report the same to the Trust Managers when
requested by the Trust Managers. Subject to the provisions of
these Bylaws, the members of any committee may fix such
committee's own rules of procedure.
Section 5.3 Vacancies. The Trust Managers shall have the
power at any time to fill vacancies in, to change the membership
of, or to dissolve, any committee.
Section 5.4 Telephone Meetings. Members of any committee
designated by the Trust Managers may participate in or hold a
meeting by use of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant
to this Section shall constitute presence in person at such
meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called
or convened.
Section 5.5 Action Without Meeting. Any action required or
permitted to be taken at a meeting of any committee designated by
the Trust Managers may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all the
members of the committee, and such consent shall have the same
force and effect as a unanimous vote at a meeting.
ARTICLE VI Officers
Section 6.1 Number. The officers of the Trust shall include
a President and a Secretary. The Trust Managers may also elect a
Chief Executive Officer, one (1) or more Vice Presidents, a
Treasurer, one (1) or more Assistant Secretaries and one (1) or
more Assistant Treasurers. One (1) person may hold any two (2) or
more of these offices.
Section 6.2 Election, Term of Office and Qualification. The
Trust Managers shall elect officers, none of whom need be a Trust
Manager, at their annual meeting after each annual meeting of
shareholders. Each officer so elected shall hold office until his
successor shall have been duly elected and qualified or until his
death, resignation or removal in the manner hereinafter provided.
Section 6.3 Subordinate Officers. The Trust Managers may
appoint such other officers and agents as it shall deem necessary
who shall hold their offices for such terms, have such authority
and perform such duties as the Trust Managers may from time to
time determine. The Trust Managers may delegate to any committee
or officer the power to appoint any such subordinate officer or
agent. No subordinate officer appointed by any committee or
superior officer as aforesaid shall be considered an officer of
the Trust, the officers of the Trust being limited to the
officers elected or appointed by the Trust Managers.
Section 6.4 Resignation. Any officer may resign at any time
by giving written notice thereof to the Trust Managers or to the
President or Secretary of the Trust. Any such resignation shall
take effect at the time specified therein and, unless otherwise
specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 6.5 Removal. Any officer elected or appointed by
the Trust Managers may be removed by the Trust Managers at any
time with or without cause by majority vote of the Trust
Managers. Any other officer may be removed at any time with or
without cause by the Trust Managers or by any committee or
superior officer upon whom such power of removal may be conferred
by the Trust Managers. The removal of any officer shall be
without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent shall
not of itself create any contract rights.
Section 6.6 Vacancies; New Offices. A vacancy in any
existing office or any vacancy resulting from the creation of a
new office shall be filled for the unexpired portion of the term
by the Trust Managers, but in case of a vacancy occurring in an
office filled by a committee or superior officer in accordance
with the provisions of Section 6.3, such vacancy may be filled by
such committee or superior officer.
Section 6.7 The Chief Executive Officer. The Chief
Executive Officer, if one shall be elected, may preside at all
meetings of the shareholders and Trust Managers, shall be an ex
officio member of all standing committees, shall have general and
active management of the business of the Trust, shall have the
general supervision and direction of all other officers of the
Trust with full power to see that their duties are properly
performed and shall see that all orders and resolutions of the
Trust Managers are carried into effect. He may sign, with any
other proper officer, certificates for shares of the Trust and
any deeds, bonds, mortgages, contracts and other documents which
the Trust Managers have authorized to be executed, except where
required by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly
delegated by the Trust Managers or these Bylaws, to some other
officer or agent of the Trust. In addition, the Chief Executive
Officer shall perform whatever duties and shall exercise all
powers that are given to him by the Trust Managers.
Section 6.8 The President. If no Chief Executive Officer
shall be elected, the President shall be the chief executive
officer of the Trust and shall have the powers and duties of the
Chief Executive Officer as set forth in Section 6.7. In the
absence of a Chief Executive Officer, the President may preside
at all meetings of the shareholders and Trust Managers. He may
sign, with any other proper officer, certificates for shares of
the Trust and any deeds, bonds, mortgages, contracts and other
documents which the Trust Managers have authorized to be
executed, except where required by law to be otherwise signed and
executed and except where the signing and execution thereof shall
be expressly delegated by the Trust Managers or these Bylaws to
some other officer or agent of the Trust. In addition, the
President shall perform whatever duties and shall exercise
whatever powers given to him by the Trust Managers or by the
Chief Executive Officer, if one shall be elected.
Section 6.9 The Vice Presidents. The Vice Presidents shall
perform such duties as are given to them by these Bylaws and as
may from time to time be assigned to them by the Trust Managers,
by the Chief Executive Officer, (if one shall be elected), or by
the President, (if a Chief Executive Officer is not elected), and
may sign, with any other proper officer, certificates for shares
of the Trust. At the request of the President, or in his absence
or disability, the Vice President designated by the President (or
in the absence of such designation, the Vice President who has
served the longest term of office with the Trust), shall perform
the duties and exercise the powers of the President.
Section 6.10 The Secretary. The Secretary, when available,
shall attend all meetings of the Trust Managers and all meetings
of the shareholders and shall perform like duties for the
standing committees when requested by such committee. The
Secretary shall record all votes and the minutes of all
proceedings in the minute book of the Trust unless the Trust
Managers designate another person (who need not be an officer,
employee or Trust Manager of the Trust) to perform such tasks.
The Secretary shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the Trust
Managers as required by law or these Bylaws, be custodian of the
Trust records and have general charge of the share books of the
Trust and shall perform such other duties as may be prescribed by
the Trust Managers, by the Chief Executive Officer, if one shall
be elected, or by the President, if a Chief Executive Officer is
not elected, under whose supervision he shall be. The Secretary
may sign, with any other proper officer, certificates for shares
of the Trust and shall keep in safe custody the seal of the
Trust, and, when authorized by the Trust Managers, affix the same
to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the Treasurer or
an Assistant Secretary.
Section 6.11 Assistant Secretaries. The Assistant
Secretaries shall perform such duties as are given to them by
these Bylaws or as may from time to time be assigned to them by
the Trust Managers or by the Secretary. At the request of the
Secretary, or in his absence or disability, the Assistant
Secretary designated by the Secretary (or in the absence of such
designation the Assistant Secretary who has served the largest
term of office with the Trust), shall perform the duties and
exercise the powers of the Secretary.
Section 6.12 The Treasurer. The Treasurer shall have the
custody and be responsible for all Trust funds and securities and
shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Trust and shall deposit
all monies and other valuable effects in the name and to the
credit of the Trust in such depositories as may be designated by
the Trust Managers. The Treasurer shall disburse the funds of
the Trust as may be ordered by the Trust Managers, taking proper
vouchers for such disbursements, and shall render to the Chief
Executive Officer, if one shall be elected, the President and the
Trust Managers, whenever they may require it, an account of all
his transactions as Treasurer and of the financial condition of
the Trust. The Treasurer may sign, with any other proper
officer, certificates for shares of the Trust.
Section 6.13 Assistant Treasurers. The Assistant Treasurers
shall perform such duties as are given to them by these Bylaws or
as may from time to time be assigned to them by the Trust
Managers or by the Treasurer. At the request of the Treasurer, or
in his absence or disability, the Assistant Treasurer designated
by the Treasurer (or in the absence of such designation, the
Assistant Treasurer who has served the longest term of office
with the Trust), shall perform the duties and exercise the powers
of the Treasurer.
Section 6.14 Treasurer's Bond. If required by the Trust
Managers, the Treasurer and any Assistant Treasurer shall give
the Trust a bond in such sum and with such surety or sureties as
shall be satisfactory to the Trust Managers for the faithful
performance of the duties of his office and for the restoration
to the Trust, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the Trust.
Section 6.15 Salaries. The salary or other compensation of
officers shall be fixed from time to time by the Trust Managers.
The Trust Managers may delegate to any committee the power to fix
from time to time the salary or other compensation of officers,
subordinate officers and agents appointed in accordance with the
provisions of these Bylaws.
Section 6.16 Execution of Documents. Each officer of the
Trust and any one of them is authorized to execute on behalf of
the Trust any document or instrument of any nature whatsoever,
provided that the execution by the Trust of any such document or
instrument shall have been previously authorized by such action
of the Trust Managers as may be required by statute, the
Declaration of Trust or these Bylaws.
ARTICLE VII Trust Shares
Section 7.1 Share Certificates. (a) The certificates
representing shares of beneficial interest of the Trust shall be
in such form, not inconsistent with statutory provisions and the
Declaration of Trust, as shall be approved by the Trust Managers.
The certificates shall be signed by the Chief Executive Officer,
if one shall be elected, the President or a Vice President and a
Secretary or Assistant Secretary, or such other or additional
officers as may be prescribed from time to time by the Trust
Managers. The signatures of such officer or officers upon a
certificate may be facsimiles if the certificate is countersigned
by a transfer agent or registered by a registrar, either of which
is other than the Trust itself or an employee of the Trust. In
case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued with
the same effect as if he were such officer at the date of its
issuance.
(b) In the event the Trust has, by its Declaration of
Trust, limited or denied the preemptive right of shareholders,
there shall be set forth on the face or back of the certificates,
which the Trust shall issue to represent shares of beneficial
interest, such legends or statements, if any, as shall be
required by applicable law or the Declaration of Trust or as may
be approved by the Trust Managers.
(c) All certificates shall be consecutively numbered and
the name of the person owning the shares represented thereby,
with the number of such shares and the date of issue, shall be
entered on the Trust's books.
(d) All certificates surrendered to the Trust shall be
canceled, and, except as provided in Section 7.2 with respect to
lost, destroyed or mutilated certificates, no new certificate
shall be issued until the former certificate for the same number
of shares has been surrendered and canceled.
Section 7.2 Lost Certificates, etc. The Trust Managers may
direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Trust
alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed. In authorizing such issue of a new
certificate or certificates, the Trust Managers may, in their
discretion and as a condition precedent to the issue thereof,
require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same
in such manner as the Trust Managers shall require and/or
indemnify the Trust as the Trust Managers may prescribe.
Section 7.3 Transfer of Shares. Subject to Article IX
hereof and any other restrictions upon transfer, upon surrender
to the Trust or the transfer agent of the Trust of a certificate
for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer and satisfaction
of the Trust that the requested transfer complies with the
provisions of applicable state and federal laws and regulations,
the Declaration of Trust and any agreements to which the Trust is
a party, the Trust shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 7.4 Ownership of Shares. The Trust shall be entitled
to treat and recognize the holder of record of any share or
shares as the holder in fact thereof and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Texas.
Section 7.5 Closing of Transfer Books. For the purpose of
determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled
to receive a distribution by the Trust (other than a distribution
involving a purchase or redemption by the Trust of its own
shares) or a share dividend, or in order to make a determination
of shareholders for any other proper purpose, the Trust Managers
may provide that the share transfer books shall be closed for a
stated period but not to exceed, in any case, sixty (60) days. If
the share transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least
ten (10) days immediately preceding such meeting. In lieu of
closing the share transfer books, the Trust Managers may fix in
advance a date as the record date for any such determination of
shareholders, and the determination of shareholders on such
record date shall apply with respect to the particular action
requiring the same notwithstanding any transfer of shares on the
books of the Trust after such record date.
Section 7.6 Dividends. Except as otherwise set forth in the
Declaration of Trust, the Trust Managers may, from time to time,
declare, and the Trust may pay, dividends on its outstanding
shares in the manner and upon the terms and conditions provided
by the Declaration of Trust and by law, such dividends to be paid
in cash or in property or in shares of beneficial interest of the
Trust, except no dividends shall be paid when the Trust is
insolvent or when the payment thereof would render the Trust
insolvent.
Section 7.7 Reserves. By resolution, the Trust Managers may
create such reserve or reserves of the Trust as the Trust
Managers from time to time, in their absolute discretion,
determine to be proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Trust or for such other purpose
as the Trust Managers shall determine to be beneficial to the
interest of the Trust. The Trust Managers may modify or abolish
any such reserve in the manner in which it was created.
Section 7.8 Repurchase of Shares. Upon resolution adopted
by the Trust Managers, the Trust shall be entitled to purchase,
directly or indirectly, its own shares of beneficial interest,
provided that following such repurchase the Trust would continue
to be able to pay its debts as they become due in the ordinary
course of its business.
ARTICLE VIII Indemnification
Section 8.1 Definitions. In this Article:
(a) "Indemnitee" means (i) any present or former Trust
Manager or officer of the Trust, (ii) any person who while
serving in any of the capacities referred to in clause (i) hereof
served at the Trust's request as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar
functionary of another real estate investment trust or foreign or
domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise,
and (iii) any person nominated or designated by (or pursuant to
authority granted by) the Trust Managers or any committee thereof
to serve in any of the capacities referred to in clauses (i) or
(ii) hereof.
(b) "Official Capacity" means (i) when used with respect to
a Trust Manager, the office of Trust Manager of the Trust and
(ii) when used with respect to a person other than a Trust
Manager, the elective or appointive office of the Trust held by
such person or the employment or agency relationship undertaken
by such person on behalf of the Trust, but in each case does not
include service for any other real estate investment trust or
foreign or domestic corporation or any partnership, joint
venture, sole proprietorship, trust, employee benefit plan or
other enterprise.
(c) "Proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such
an action, suit or proceeding, and any inquiry or investigation
that could lead to such an action, suit or proceeding.
Section 8.2 Indemnification. The Trust shall indemnify
every Indemnitee against all judgments, penalties (including
excise and similar taxes), fines, amounts paid in settlement and
reasonable expenses actually incurred by the Indemnitee in
connection with any Proceeding in which he was, is or is
threatened to be named defendant or respondent, or in which he
was or is a witness without being named a defendant or
respondent, by reason, in whole or in part, of his serving or
having served, or having been nominated or designated to serve,
in any of the capacities referred to in Section 8.l(a), if it is
determined in accordance with Section 8.4 that the Indemnitee (a)
conducted himself in good faith, (b) reasonably believed, in the
case of conduct in his Official Capacity, that his conduct was in
the Trust's best interests and, in all other cases, that his
conduct was at least not opposed to the Trust's best interests,
and (c) in the case of any criminal proceeding, had no reasonable
cause to believe that his conduct was unlawful; provided,
however, that in the event that an Indemnitee is found liable to
the Trust or is found liable on the basis that personal benefit
was improperly received by the Indemnitee the indemnification (i)
is limited to reasonable expenses actually incurred by the
Indemnitee in correction with the Proceeding and (ii) shall not
be made in respect of any Proceeding in which the Indemnitee
shall have been found liable for willful or intentional
misconduct in the performance of his duty to the Trust. Except as
provided in the immediately preceding proviso to the first
sentence of this Section 8.2, no indemnification shall be made
under this Section 8.2 in respect of any Proceeding in which such
Indemnitee shall have been (x) found liable on the basis that
personal benefit was improperly received by him, whether or not
the benefit resulted from an action taken in the Indemnitee's
Official Capacity, or (y) found liable to the Trust. The
termination of any Proceeding by judgment, order, settlement or
conviction, or on a plea of nolo contendere or its equivalent, is
not of itself determinative that the Indemnitee did not meet the
requirements set forth in clauses (a), (b) or (c) in the first
sentence of this Section 8.2. An Indemnitee shall be deemed to
have been found liable in respect of any claim, issue or matter
only after the Indemnitee shall have been so adjudged by a court
of competent jurisdiction after exhaustion of all appeals
therefrom. Reasonable expenses shall include, without limitation,
all court costs and all fees and disbursements of attorneys for
the Indemnitee.
Section 8.3 Successful Defense. Without limitation of
Section 8.2 and in addition to the indemnification provided for
in Section 8.2, the Trust shall indemnify every Indemnitee
against reasonable expenses incurred by such person in connection
with any Proceeding in which he is a witness or a named defendant
or respondent because he served in any of the capacities referred
to in Section 8.l(a), if such person has been wholly successful,
on the merits or otherwise, in defense of the Proceeding.
Section 8.4 Determinations. Any indemnification under
Section 8.2 (unless ordered by a court of competent jurisdiction)
shall be made by the Trust only upon a determination that
indemnification of the Indemnitee is proper in the circumstances
because he has met the applicable standard of conduct. Such
determination shall be made (a) by the Trust Managers by a
majority vote of a quorum consisting of Trust Managers who, at
the time of such vote, are not named defendants or respondents in
the Proceeding; (b) if such a quorum cannot be obtained, then by
a majority vote of a committee of the Trust Managers, duly
designated to act in the matter by a majority vote of all Trust
Managers (in which Trust Managers who are named defendants or
respondents in the Proceeding may vote), such committee to
consist solely of two (2) or more Trust Managers who, at the time
of the committee vote, are not named defendants or respondents in
the Proceeding; (c) by special legal counsel selected by the
Trust Managers or a committee thereof by vote as set forth in
clauses (a) or (b) of this Section 8.4 or, if the requisite
quorum of all of the Trust Managers cannot be obtained and such
committee cannot be established, by a majority vote of all of the
Trust Managers (in which Trust Managers who are named defendants
or respondents in the Proceeding may participate); or (d) by the
shareholders in a vote that excludes the shares held by Trust
Managers that are named defendants or respondents in the
Proceeding. Determination as to reasonableness of expenses shall
be made in the same manner as the determination that
indemnification is permissible, except that if the determination
that indemnification is permissible is made by special legal
counsel, determination as to reasonableness of expenses must be
made in the manner specified in clause (c) of the preceding
sentence for the selection of special legal counsel. In the event
a determination is made under this Section 8.4 that the
Indemnitee has met the applicable standard of conduct as to some
matters but not as to others, amounts to be indemnified may be
reasonably prorated.
Section 8.5 Advancement of Expenses. Reasonable expenses
(including court costs and attorneys' fees) incurred by an
Indemnitee who was or is a witness or was, is or is threatened to
be made a named defendant or respondent in a Proceeding shall be
paid or reimbursed by the Trust at reasonable intervals in
advance of the final disposition of such Proceeding, and without
making any of the determinations specified in Section 8.4, after
receipt by the Trust of (a) a written affirmation by such
Indemnitee of his good faith belief that he has met the standard
of conduct necessary for indemnification by the Trust under this
Article VIII and (b) a written undertaking by or on behalf of
such Indemnitee to repay the amount paid or reimbursed by the
Trust if it shall ultimately be determined that he is not
entitled to be indemnified by the Trust as authorized in this
Article VIII. Such written undertaking shall be an unlimited
obligation of the Indemnitee but need not be secured and it may
be accepted without reference to financial ability to make
repayment. Notwithstanding any other provision of this Article
VIII, the Trust may pay or reimburse expenses incurred by an
Indemnitee in connection with his appearance as a witness or
other participation in a Proceeding at a time when he is not
named a defendant or respondent in the Proceeding.
Section 8.6 Employee Benefit Plans. For purposes of this
Article VIII, the Trust shall be deemed to have requested an
Indemnitee to serve an employee benefit plan whenever the
performance by him of his duties to the Trust also imposed or
imposes duties on or otherwise involved or involves services by
him to the plan or participants or beneficiaries of the plan.
Excise taxes assessed on an Indemnitee with respect to an
employee benefit plan pursuant to applicable law shall be deemed
fines. Action taken or omitted by an Indemnitee with respect to
an employee benefit plan in the performance of his duties for a
purpose reasonably believed by him to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the
Trust.
Section 8.7 Other Indemnification and Insurance. The
indemnification provided by this Article VIII shall (a) not be
deemed exclusive of, or to preclude, any other rights to which
those seeking indemnification may at any time be entitled under
the Trust's Declaration of Trust, any law, agreement or vote of
shareholders or disinterested Trust Managers, or otherwise, or
under any policy or policies of insurance purchased and
maintained by the Trust on behalf of any Indemnitee, both as to
action in his Official Capacity and as to action in any other
capacity, (b) continue as to a person who has ceased to be in the
capacity by reason of which he was an Indemnitee with respect to
matters arising during the period he was in such capacity, and
(c) inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8.8 Notice. Any indemnification of or advance of
expenses to an Indemnitee in accordance with this Article VIII
shall be reported in writing to the shareholders of the Trust
with or before the notice or waiver of notice of the next
shareholders' meeting or with or before the next submission to
shareholders of a consent to action without a meeting and, in any
case, within the twelve-month period immediately following the
date of the indemnification or advance.
Section 8.9 Construction. The indemnification provided by
this Article VIII shall be subject to all valid and applicable
laws, including, without limitation, the Texas REIT Act, and, in
the event this Article VIII or any of the provisions hereof or
the indemnification contemplated hereby are found to be
inconsistent with or contrary to any such valid laws, the latter
shall be deemed to control and this Article VIII shall be
regarded as modified accordingly, and, as so modified, shall
continue in full force and effect.
Section 8.10 Continuing Offer, Reliance, etc. The provisions
of this Article VIII (a) are for the benefit of, and may be
enforced by, each Indemnitee of the Trust, the same as if set
forth in their entirety in a written instrument duly executed and
delivered by the Trust and such Indemnitee and (b) constitute a
continuing offer to all present and future Indemnities. The
Trust, by its adoption of these Bylaws, (x) acknowledges and
agrees that each Indemnitee of the Trust has relied upon and will
continue to rely upon the provisions of this Article VIII in
becoming, and serving in any of the capacities referred to in
Section 8.1 hereof, (y) waives reliance upon, and all notices of
acceptance of, such provisions by such Indemnities and (z)
acknowledges and agrees that no present or future Indemnitee
shall be prejudiced in his right to enforce the provisions of
this Article VIII in accordance with their terms by any act or
failure to act on the part of the Trust.
Section 8.11 Effect of Amendment. No amendment, modification
or repeal of this Article VIII or any provision of this Article
VIII shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnities to be indemnified by the
Trust, nor the obligation of the Trust to indemnify any such
Indemnities, under and in accordance with the provisions of this
Article VIII as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims
may be asserted.
ARTICLE IX Limitations on Transfer and Ownership
Section 9.1 Limitations on Transfer. The shares (other
than Excess Shares) shall be freely transferable by the record
owner thereof, subject to the provisions of Section 9.2 hereof
and provided that any purported acquisition or transfer of shares
that would result in (a) the common shares of beneficial interest
being owned directly or indirectly by fewer than 100 persons
(determined without reference to the rules of attribution under
Section 544 of the Internal Revenue Code of 1986, as amended (the
"Code")) or (b) the Trust being "closely held" within the meaning
of Section 856(h) of the Code shall be void an initio. Subject
to the provisions of Section 9.5 hereof, any purported transfer
of shares that, if effective, would result in a violation of
Section 9.2 hereof (unless excepted from the application of such
Section 9.2 pursuant to Section 9.6 hereof) shall be void an
initio as to the transfer of that number of shares that would
otherwise be beneficially owned by a shareholder in violation of
Section 9.2 hereof, the intended transferee of such shares shall
acquire no rights therein and the transfer of such shares will
not be reflected on the Trust's stock record books. For purposes
of this Article IX, a "transfer" of shares shall mean any sale,
transfer, gift, hypothecation, pledge, assignment or other
disposition, whether voluntary or involuntary, by operation of
law or otherwise.
Section 9.2 Limitations on Ownership. Commencing on February
1, 1994, except as provided by Section 9.6 hereof, no person
shall at any time directly or indirectly acquire or hold
beneficial ownership of shares with an aggregate value in excess
of 9.8% of the aggregate value of all outstanding shares (the
"Ownership Limit").
For purposes of this Article IX, (a) the value of any
shares shall be reasonably determined in the manner established
by the Trust Managers and (b) a person (which includes natural
persons, corporations, trusts, partnerships and other entities)
shall be deemed to be the beneficial owner of the shares that
such person (i) actually owns, (ii) constructively owns after
applying the rules of Section 544 of the Code, as modified in the
case of a REIT by Section 856(h) of the Code, and (iii) has the
right to acquire upon exercise of outstanding rights, options and
warrants, and upon conversion of any securities convertible into
shares, if any.
Section 9.3 Shareholder Information. Each shareholder
shall, upon demand of the Trust, disclose to the Trust in writing
such information with respect to his or its direct and indirect
beneficial ownership of shares as the Trust Managers in their
discretion deem necessary or appropriate in order that the Trust
may fully comply with all provisions of the Code relating to
REITs and all regulations, rulings and cases promulgated or
decided thereunder (the "REIT Provisions") and to comply with the
requirements of any taxing authority or governmental agency. All
persons who have acquired or who hold, directly or indirectly,
beneficial ownership of shares with an aggregate value in excess
of 9.8% of the aggregate value of all outstanding shares must
disclose in writing such ownership information to the Trust no
later than January 31 of each year.
Section 9.4 Transferee Information. No later than the
fiftieth day prior to any transfer which, if effected, would
result in the intended transferee owning shares in excess of the
Ownership Limit, the intended transferee shall provide to the
Trust Managers an affidavit setting forth the number of shares
already beneficially owned by such intended transferee. In
addition, whenever the Trust Managers deem it reasonably
necessary to protect the tax status of the Trust as a REIT under
the REIT Provisions, the Trust Managers may require a statement
or affidavit from each shareholder setting forth the number of
shares beneficially owned by such shareholder. Subject to the
terms of Section 9.10 hereof, if, in the opinion of the Trust
Managers, any proposed transfer may jeopardize the qualification
of the Trust as a REIT, the Trust Managers shall have the right,
but not the duty, to refuse to permit the transfer of such shares
to the proposed transferee. All contracts for the sale or other
transfer of shares shall be subject to this Section 9.4.
Section 9.5 Excess Shares.
9.5.1 Creation of Excess Shares. If, notwithstand
ing the other provisions contained in this Article IX, at
any time there is a purported transfer of shares or a
change in the capital structure of the Trust (including any
redemption of Excess Shares pursuant to Subsection 9.5.7
hereof) such that any person would beneficially own shares
in excess of the Ownership Limit ("Excess Shares") then,
except as otherwise provided in Section 9.6 hereof, such
shares in excess of the Ownership Limit (rounded up to the
nearest whole share), shall be automatically deemed an
equal number of Excess Shares.
9.5.2 Ownership in Trust. Upon any purported transfer
of shares that results in Excess Shares pursuant to
Subsection 9.5.1 hereof, such Excess Shares shall be deemed
to have been transferred to the Trust, as trustee of a
separate trust for the exclusive benefit of the person or
persons to whom such Excess Shares can ultimately be
transferred without violating the Ownership Limit. Shares
of Excess Shares so held in trust shall be issued and
outstanding shares of the Trust under the Texas REIT Act.
The purported transferee of Excess Shares shall have no
rights in such Excess Shares, except the right to designate
a transferee of its interest in the trust created under
this Subsection 9.5.2 upon the terms specified in
Subsection 9.5.6 hereof. If any of the restrictions on
transfer set forth in this Article IX are determined to be
void, invalid or unenforceable by virtue of any legal deci
sion, statute, rule or regulation, then the intended
transferee of any Excess Shares may be deemed, at the
option of the Trust, to have acted as an agent on behalf of
the Trust in acquiring the Excess Shares and to hold the
Excess Shares on behalf of the Trust.
9.5.3 Dividend Rights. Excess Shares shall not be
entitled to any dividends. Any dividend or distribution
paid prior to the discovery by the Trust that shares have
been deemed Excess Shares shall be repaid to the Trust upon
demand, and any dividend or distribution declared but
unpaid shall be rescinded as void an initio with respect to
such Excess Shares.
9.5.4 Rights Upon Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or
winding up of, or any distribution of the assets of, the
Trust, each holder of Excess Shares shall be entitled to
receive, ratably with each other holder of common shares of
beneficial interest or Excess Shares, that portion of the
assets of the Trust available for distribution to the
holders of Excess Shares as the number of Excess Shares
held by such holder bears to the total number of shares and
Excess Shares then outstanding. The Trust, as the holder
of all Excess Shares in one or more trusts, or, if the
Trust shall have been dissolved, any trustee appointed by
the Trust prior to its dissolution, shall distribute to
each transferee of an interest in such a trust pursuant to
Subsection 9.5.6 hereof, when determined, any assets
received in any liquidation, dissolution or winding up of,
or any distribution of the assets of, the Trust in respect
of the Excess Shares held in such trust and represented by
the trust interest transferred to such transferee.
9.5.5 Voting Rights. No shareholder may vote any
Excess Shares. The Excess Shares will not be considered
for purposes of any shareholder vote or for purposes of
determining a quorum for such a vote.
9.5.6 Restrictions on Transfer. Excess Shares shall
not be transferable. The purported transferee of any
shares that are deemed Excess Shares pursuant to Subsection
9.5.1 hereof (the "Initial Transferee") may freely
designate a transferee (the "Subsequent Transferee") of the
interest in the trust that represents such Excess Shares,
if (a) the Excess Shares held in the trust and represented
by the trust interest to be transferred would not be Excess
Shares in the hands of the Subsequent Transferee, and (b)
the Initial Transferee does not receive a price for the
trust interest in excess of (i) the price the Initial
Transferee paid for the shares in the purported transfer of
shares that resulted in the Excess Shares represented by
the trust interest or (ii) if the Initial Transferee did
not give value for such shares (e.g., the shares were
received through a gift, devise or other transaction), a
price equal to the aggregate Market Price (as defined in
Subsection 9.5.7 hereof) for all shares that were deemed
Excess Shares on the date of the purported transfer that
resulted in the Excess Shares. No interest in a trust may
be transferred unless the Initial Transferee of such
interest has given advance written notice to the Trust of
the designation of the Subsequent Transferee. Upon the
transfer of an interest in a trust in compliance with this
Subsection 9.5.6, the corresponding Excess Shares that are
represented by the transferred interest in the trust shall
be automatically deemed an equal number of shares of the
same class and series from which the corresponding Excess
Shares were originally created, such shares shall be
transferred of record to the Subsequent Transferee, and the
interest in the trust representing such Excess Shares shall
automatically terminate.
9.5.7 Trust's Redemption Right. All Excess Shares
shall be deemed to have been offered by the Initial
Transferee for sale to the Trust, or its designee, at a
price per share equal to the lesser of (a) the price per
share in the transaction that created such Excess Shares
(or, in the case of devise or gift, the Market Price per
share at the time of such devise or gift) or (b) the Market
Price per share of the class of shares for which such
Excess Shares were created on the date the Trust or its
designee, accepts such offer. The Trust shall have the
right to accept such offer for a period ending on the
earlier of (i) ninety (90) days after (a) the date of the
purported transfer that resulted in such Excess Shares if
the Initial Transferee notified the Trust of such purported
transfer within ten (10) days thereof or (b) the date on
which the Trust Managers determine in good faith that the
purported transfer resulting in Excess Shares occurred if
the Trust was not notified of the purported transfer by the
Initial Transferee and (ii) the date on which the Initial
Transferee gives notice of its intent to transfer its trust
interest to a Subsequent Transferee. For purposes of this
Article IX, "Market Price" means for any share, the average
daily per share closing sales price of a share if such
shares are listed on a national securities exchange or
quoted on the National Association of Securities Dealers
Automated Quotation National Market ("Nasdaq"), and if such
shares are not so listed or quoted, the Market Price shall
be the mean between the average per share closing bid
prices and the average per share closing asked prices, in
each case during the 30 calendar day period ending on the
business day prior to the redemption date, or if there have
been no sales on a national securities exchange or on the
Nasdaq and no published bid and asked quotations with
respect to such shares during such 30 calendar day period,
the Market Price shall be the price determined by the Trust
Managers in good faith. Payment of all of the amount
determined as the redemption payment for shares redeemed in
accordance with this Subsection 9.5.7 shall be made within
30 days of the date on which the Trust shall have notified
the Initial Transferee in writing of the Trust's intent to
exercise its redemption rights. No interest shall accrue
on any redemption payment with respect to the period
subsequent to the redemption date to the date of the
redemption payment. Notwithstanding anything in this
Subsection 9.5.7 to the contrary, the Trust's redemption
rights with respect to any Excess Shares shall terminate
upon any transfer of the trust interest relating thereto to
a Subsequent Transferee.
Section 9.6 Exceptions to Certain Ownership and Transfer
Limitations. The Ownership Limit set forth in Section 9.2 hereof
shall not apply to the following shares and such shares shall not
be deemed to be Excess Shares at the times and subject to the
terms and conditions set forth in this Section 9.6:
9.6.1 Exemption by Trust Managers. Subject to the
provisions of Section 9.7 hereof, shares which the Trust
Managers in their sole discretion may exempt from the
Ownership Limit while owned by a person who has provided
the Trust with evidence and assurances acceptable to the
Trust Managers that the qualification of the Trust as a
REIT would not be jeopardized thereby.
9.6.2 Shares Held by Underwriters. Subject to the
provisions of Section 9.7 hereof, shares acquired and held
by an underwriter in a public offering of shares, or in any
transaction involving the issuance of shares by the Trust
in which the Trust Managers determine that the underwriter
or other person or party initially acquiring such shares
will make a timely distribution of such shares to or among
other holders such that, at all times prior to and
following such distribution, the Trust will continue to be
in compliance with the REIT Provisions.
Section 9.7 Authority to Revoke Exceptions to
Limitations. The Trust Managers, in their sole discretion, may
at any time revoke any exception pursuant to Subsection 9.6.1 or
9.6.2 hereof in the case of any shareholder, and upon such
revocation, the provisions of Sections 9.2 and 9.5 hereof shall
immediately become applicable to such shareholder and all shares
of which such shareholder may be the beneficial owner. A
decision to exempt or refuse to exempt from the Ownership Limit
the ownership of certain designated shares, or to revoke an
exemption previously granted, shall be made by the Trust Managers
in their sole discretion, based on any reason whatsoever,
including, but not limited to, the preservation of the Trust's
qualification as a REIT.
Section 9.8 Severability. If any provision of this
Article IX or any application of any such provision is determined
to be invalid by any federal or state court having jurisdiction,
the validity of the remaining provisions of this Article IX shall
not be affected and other applications of such provision shall be
affected only to the extent necessary to comply with the
determination of such court. To the extent this Article IX may be
inconsistent with any other provision of these Bylaws, this
Article IX shall be controlling.
Section 9.9 Authority of the Trust Managers. Subject to
Section 9.10 hereof, nothing contained in this Article IX or in
any other provisions of these Bylaws shall limit the authority of
the Trust Managers to take such action as they deem necessary or
advisable to protect the Trust and the interests of the
shareholders by preservation of the Trust's qualification as a
REIT under the REIT Provisions, provided that no such action may
be taken to amend or delete Section 9.10 hereof. In applying the
provisions of this Article IX, the Trust Managers may take into
account the lack of certainty in the REIT Provisions relating to
the ownership of shares that may prevent a corporation from
qualifying as a REIT and may make interpretations concerning the
Ownership Limit, Excess Shares, beneficial ownership and related
matters as conservatively as the Trust Managers deem advisable to
minimize or eliminate uncertainty as to the Trust's continued
qualification as a REIT. Notwithstanding any other provisions of
these Bylaws, if the Trust Managers determine that it is no
longer in the best interests of the Trust and the shareholders to
continue to have the Trust qualify as a REIT, the Trust Managers
may revoke or otherwise terminate the Trust's REIT election
pursuant to Section 856(g) of the Code.
Section 9.10 New York Stock Exchange. Nothing in this
Article IX shall preclude the settlement of any transaction
entered into through the facilities of the New York Stock
Exchange.
ARTICLE X General Provisions
Section 10.1 General Policies. The Trust intends to make
investments that are consistent with the applicable requirements
of the Internal Revenue Code of 1986, as amended, and the Texas
REIT Act, as amended, and related regulations with respect to the
composition of the Trust's investments and the derivation of its
income.
Section 10.2 Limited Liability of Shareholders. A
shareholder shall not be personally or individually liable in any
manner whatsoever for any debt, act, omission or obligation
incurred by the Trust or the Trust Managers. A shareholder shall
be under no obligation to the Trust or to its creditors with
respect to such shares other than the obligation to pay to the
Trust the full amount of the consideration for which such shares
were issued or are to be issued. Upon the payment of such
consideration, such shares shall be fully paid and non-assessable
by the Trust.
Section 10.3 Waiver of Notice. (a) Whenever, under the
provisions of applicable law or of the Declaration of Trust or of
these Bylaws, any notice is required to be given to any
shareholder or Trust Manager, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be equivalent to the
giving of such notice.
(b) Attendance of a Trust Manager at a meeting shall
constitute a waiver of notice of such meeting except where a
Trust Manager attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business on the grounds that the meeting is not lawfully
called or convened.
Section 10.4 Seal. If one be adopted, the Trust seal shall
have inscribed thereon the name of the Trust and shall be in such
form as may be approved by the Trust Managers. Said seal shall be
kept in the custody of the Secretary and may be used by causing
it or a facsimile of it to be impressed or affixed or in any
manner reproduced.
Section 10.5 Fiscal Year. The fiscal year of the Trust shall
be a calendar year unless changed by resolution of the Trust
Managers.
Section 10.6 Checks, Notes, etc. All checks or demands for
money and notes of the Trust shall be signed by such officer or
officers or such other person or persons as the Trust Managers
may from time to time designate. The Trust Managers may authorize
any officer or officers or such other person or persons to enter
into any contract or execute and deliver any instrument in the
name of and on behalf of the Trust, and such authority may be
general or confined to specific instances.
Section 10.7 Examination of Books and Records. The Trust
Managers shall determine from time to time whether, and if
allowed, when and under what conditions and regulations the
accounts and books of the Trust (except such as may by statute be
specifically opened to inspection) or any of them shall be open
to inspection by the shareholders, and the shareholders' rights
in this respect are and shall be restricted and limited
accordingly.
Section 10.8 Voting Of Shares Held by the Trust. Unless
otherwise ordered by the Trust Managers, the Chief Executive
Officer, or if no Chief Executive Officer shall be elected, the
President, acting on behalf of the Trust, shall have full power
and authority to attend and to act and to vote at any meeting of
shareholders of any corporation or other entity in which the
Trust may hold shares and at any such meeting, shall possess and
may exercise any and all of the rights and powers incident to the
ownership of such shares which, as the owner thereof, the Trust
might have possessed and exercised, if present. The Trust
Managers by resolution from time to time may confer like powers
upon any other person or persons (who need not be an officer,
employee or Trust Manager of the Trust).
Section 10.9 Number, Gender, etc. Wherever the singular
number is used in these Bylaws and when required by the context,
the same shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The term "person", as
used herein and as the context requires shall mean and include
individuals, corporations, limited partnerships, general
partnerships, joint stock companies or associations, joint
ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and
governments and agencies and political subdivisions thereof.
Section 10.10 Annual and Quarterly Reports. The Trust shall
furnish to its shareholders annual reports containing audited
financial statements with a report thereon by its independent
accountants. The Trust shall also furnish to its shareholders
quarterly reports for each of the first three quarters of each
fiscal year containing unaudited financial information.
ARTICLE XI Amendments
Except as otherwise provided by applicable law or the
Declaration of Trust, the power to alter, amend or repeal these
Bylaws or to adopt new Bylaws shall be vested in the Trust
Managers and (to the extent not inconsistent with the Texas REIT
Act and the Declaration of Trust and specified in the notice of
the meeting) the shareholders, and such action shall be taken by
the affirmative vote of a majority of the Trust Managers or by
the affirmative vote of the holders of a majority of the Trust's
outstanding shares.
ARTICLE XII
Subject to all Laws
The provisions of these Bylaws shall be subject to all valid
and applicable laws, including, without limitation, the Texas
REIT Act as now or hereafter amended, and in the event that any
of the provisions of these Bylaws are found to be inconsistent
with or contrary to any such valid laws, the later shall be
deemed to control and these Bylaws shall be deemed modified
accordingly, and, as so modified, shall continue in full force
and effect.
EXHIBIT 10.4
Amendment No. 1 to
AMERICAN INDUSTRIAL PROPERTIES REIT
EMPLOYEES RETIREMENT AND PROFIT SHARING PLAN
In accordance with Section 8.1 of the American Industrial
Properties REIT Employees Retirement and Profit Sharing Plan
(the "Plan"), the Plan is hereby amended as follows:
Effective March 7, 1994, the Trustee is Marc A.
Simpson. The Trustee shall have the powers and
perform the duties as set forth in Article VII of
the Plan.
/s/ Charles W. Wolcott
Charles W. Wolcott, President
American Industrial Properties REIT
/s/ Marc A. Simpson
Marc A. Simpson
Trustee
Amendment No. 2 to
AMERICAN INDUSTRIAL PROPERTIES REIT
EMPLOYEES RETIREMENT AND PROFIT SHARING PLAN
(the "Plan")
In accordance with the amendment provisions of Section 8.1
of the Plan, Section 3.1 is hereby amended in its entirety
as follows:
Any Eligible Employee who was employed on
November 1, 1993 shall be eligible to participate
and shall enter the Plan as of the first day of
such Plan year. Any other Eligible Employee who
has completed six (6) consecutive months of
service and has attained age 21 shall be eligible
to participate hereunder as of the date he has
satisfied such requirements. The Employer shall
give each prospective Eligible Employee written
notice of his eligibility to participate in the
Plan prior to the close of the Plan Year in which
he first becomes an Eligible Employee.
Dated as of November 29, 1994.
/s/ Charles W. Wolcott
Charles W. Wolcott
American Industrial Properties REIT
/s/ Marc A. Simpson
Marc A. Simpson
Trustee
/s/ Vickie Dell
Vickie Dell
Plan Administrator
EXHIBIT 10.6
ADDENDUM TO
Unsecured Promissory Note Due November 27, 1997
$19,143,646.92 February 27, 1992
Effective February 24, 1995, the first paragraph of this
note is hereby modified as follows:
TRAMMELL CROW REAL ESTATE INVESTORS, a real
estate investment trust duly organized and
existing under the laws of the State of Texas (the
"REIT"), for value received, hereby promises to
pay to the order of PATIO & CO. or its permitted
assigns ("MLI") at C/O STATE STREET BANK, P.O.
BOX 5756, BOSTON, MA 02206 (or such other party or
place as MLI may from time to time designate in
writing to the REIT) the principal sum of NINETEEN
MILLION, ONE HUNDRED FORTY-THREE THOUSAND, SIX
HUNDRED FORTY-SIX AND 92/100THS DOLLARS
($19,143,646.92), together with interest on the
principal hereof from time to time remaining
unpaid at the interest rates hereinafter stated,
at such times and on such terms and conditions as
are hereinafter set forth. All capitalized terms
used in this Note which are used but not defined
herein shall have the respective meanings ascribed
to them in the Note Purchase Agreement, dated as
of February 27, 1992, between the REIT and MLI (as
amended, modified, supplemented, renewed or
extended from time to time, the "Note Purchase
Agreement").
All other terms and conditions of the Note remain the same.
By signing below, The Manufacturers Life Insurance Company
("MLI") represents that Patio and Co. is the nominee name by
which State Street Bank and Trust Company, N.A. holds this
note as custodian on behalf of MLI , and that such re-
registration is not a grant of participation or transfer of
interest in such Note as contemplated by Section 8.3 of the
Note Purchase Agreement dated February 27, 1992.
THE MANUFACTURERS LIFE INSURANCE COMPANY
BY: /s/ D. Stewart Sprague
DATE: March 1, 1995
AMERICAN INDUSTRIAL PROPERTIES REIT (formerly
Trammell Crow Real Estate Investors)
BY: /s/ Charles W. Wolcott
DATE: February 24, 1995
EXHIBIT 21.1
SUBSIDIARIES OF
AMERICAN INDUSTRIAL PROPERTIES REIT
<TABLE>
State of %
Subsidiary Incorporation Owned
<S> <C> <C>
American Industrial Properties
REIT, Inc. Maryland 100
AIP-Patapsco, Inc. Maryland 100
AIP Tamarac, Inc. Texas 100
AIP Properties #1 L.P. Delaware 100
AIP Northview, Inc. Texas 100
AIP Properties #2 L.P. Delaware 100
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 7521
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 103843
<DEPRECIATION> 21859
<TOTAL-ASSETS> 92550
<CURRENT-LIABILITIES> 0
<BONDS> 65613
<COMMON> 908
0
0
<OTHER-SE> 23288
<TOTAL-LIABILITY-AND-EQUITY> 92550
<SALES> 0
<TOTAL-REVENUES> 11226
<CGS> 0
<TOTAL-COSTS> 10267
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5270
<INCOME-PRETAX> (4311)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4311)
<DISCONTINUED> 0
<EXTRAORDINARY> (344)
<CHANGES> 0
<NET-INCOME> (4655)
<EPS-PRIMARY> (.51)
<EPS-DILUTED> (.51)
</TABLE>
