<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED SEPTEMBER 11, 1995
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 7, 1995)
$100,000,000
[LOGO]
DUKE REALTY LIMITED PARTNERSHIP
% NOTES DUE SEPTEMBER , 200
--------------
The % Notes due September , 200 (the "Notes") offered hereby (the
"Offering") are being issued by Duke Realty Limited Partnership, an Indiana
limited partnership (the "Operating Partnership"), in an aggregate principal
amount of $100,000,000. The Notes will mature on September , 200 and are
redeemable at any time after September , 200 at the option of the Operating
Partnership, in whole or in part, at a redemption price equal to the sum of (i)
the principal amount of the Notes being redeemed plus accrued interest to the
redemption date and (ii) the Make-Whole Amount (as defined in "Description of
the Notes -- Certain Covenants"), if any. The Notes are not subject to any
mandatory sinking fund. Interest on the Notes is payable semi-annually in
arrears on each March and September , commencing March , 1996. See
"Description of the Notes."
The Notes will be represented by a single fully-registered global note in
book-entry form, without coupons (the "Global Note"), registered in the name of
the nominee of The Depository Trust Company ("DTC"). Beneficial interests in the
Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by DTC (with respect to beneficial interests of
participants) or by participants or persons that hold interests through
participants (with respect to beneficial interests of beneficial owners). Owners
of beneficial interests in the Global Note will be entitled to physical delivery
of Notes in definitive form equal in principal amount to their respective
beneficial interest only under the limited circumstances described under
"Description of the Notes -- Book-Entry System." Settlement for the Notes will
be made in immediately available funds. The Notes will trade in DTC's Same-Day
Funds Settlement System until maturity or until the Notes are issued in
definitive form, and secondary market trading activity in the Notes will
therefore settle in immediately available funds. All payments of principal and
interest in respect of the Notes will be made by the Operating Partnership in
immediately available funds. See "Description of the Notes -- Same-Day
Settlement and Payment."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
<TABLE>
<CAPTION>
PROCEEDS TO THE
UNDERWRITING OPERATING
PRICE TO PUBLIC (1) DISCOUNT (2) PARTNERSHIP (1)(3)
<S> <C> <C> <C>
Per Note.............................................. % % %
Total................................................. $ $ $
<FN>
(1) Plus accrued interest, if any, from September , 1995.
(2) The Operating Partnership has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) Before deducting expenses payable by the Operating Partnership estimated at
$175,000.
</TABLE>
---------------------
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if issued by the Operating Partnership and delivered to and accepted by the
Underwriters, to approval of certain legal matters by counsel for the
Underwriters and to certain other conditions. The Underwriters reserve the right
to withdraw, cancel or modify such offer and to reject orders in whole or in
part. It is expected that delivery of the Notes will be made in New York, New
York on or about September , 1995.
---------------------
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
------------
The date of this Prospectus Supplement is September , 1995.
<PAGE>
[Map graphic entitled "Duke Realty Investments Principal Markets" and consisting
of (1) a map of the continental United States on which the states of Missouri,
Wisconsin, Illinois, Michigan, Indiana, Kentucky, Tennessee and Ohio are shaded
and (2) a larger map of such states on which the city of Indianapolis, Indiana
is shown as the Corporate Headquarters; the cities of Decatur, Illinois,
Detroit, Michigan, St. Louis, Missouri, Columbus, Ohio, Cincinnati, Ohio and
Nashville, Tennessee are shown as Regional Office locations; and the cities of
Milwaukee, Wisconsin, St. Louis, Missouri, Bloomington, Illinois, Champaign,
Illinois, Decatur, Illinois, Indianapolis, Indiana, Nashville, Tennessee,
Detroit, Michigan, Fort Wayne, Indiana, Columbus, Ohio, Dayton, Ohio,
Cincinnati, Ohio and Covington, Kentucky are shown as Duke Markets.]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT
LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR INCORPORATED HEREIN AND
THEREIN BY REFERENCE. UNLESS INDICATED OTHERWISE, THE INFORMATION CONTAINED IN
THIS PROSPECTUS SUPPLEMENT IS PRESENTED AS OF JUNE 30, 1995. ALL REFERENCES TO
THE "OPERATING PARTNERSHIP" IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS INCLUDE THE OPERATING PARTNERSHIP, THOSE ENTITIES OWNED OR CONTROLLED
BY THE OPERATING PARTNERSHIP AND PREDECESSORS OF THE OPERATING PARTNERSHIP,
UNLESS THE CONTEXT INDICATES OTHERWISE.
THE OPERATING PARTNERSHIP
The Operating Partnership is managed by its general partner, Duke Realty
Investments, Inc. (the "Company"), a self-administered and self-managed real
estate investment trust (a "REIT") that began operations through a predecessor
in 1972. The Operating Partnership owns a diversified portfolio of 144 in-
service industrial, office and retail properties (the "Properties"),
encompassing approximately 15.2 million square feet and located in eight states.
The Properties have an aggregate cost basis of $740.4 million and were 95.3%
leased as of June 30, 1995. The Operating Partnership provides leasing,
management, construction, development and other tenant-related services for the
Properties and certain properties owned by third parties. The Operating
Partnership has the largest commercial real estate operations in Indianapolis
and Cincinnati and is one of the largest real estate companies in the Midwest.
The Operating Partnership believes that the Midwest offers a relatively strong
and stable economy compared to other regions of the United States and provides
significant investment opportunity due to its central location, established
manufacturing base, skilled work force and moderate labor costs.
All of the Company's interests in the Properties are held directly or
indirectly by, and substantially all of its operations relating to the
Properties are conducted through, the Operating Partnership. Partnership
interests in the Operating Partnership (the "Units") may be exchanged by the
holders thereof, other than the Company, for common stock of the Company (the
"Common Stock") on a one for one basis. Upon an exchange of Units for Common
Stock, the Company's percentage interest in the Operating Partnership will
increase. The Company controls the Operating Partnership as the sole general
partner and owner, as of June 30, 1995, of approximately 85.3% of the Units. The
six senior officers of the Company, who collectively have over 115 years of
experience in the real estate industry and have been with the Company for an
average of over 16 years, beneficially own shares of Common Stock and Units that
represent approximately 14% of the Company's Common Stock on a fully diluted
basis. The following chart illustrates the ownership interests in the Operating
Partnership.
[Ownership structure graphic consisting of (1) a box containing the words "Duke
Realty Investments, Inc. (Company)"; (2) a box containing the words "Limited
Partners"; (3) a box containing the words "Duke Realty Limited Partnership
(Operating Partnership)"; (4) a line connecting the box described in (1) and the
box described in (3) and labeled "85.3% General Partner"; and (5) a line
connecting the box described in (2) and the box described in (3) and labeled
"14.7% Limited Partners."]
S-3
<PAGE>
The following tables provide an overview of the Properties.
SUMMARY OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
PERCENT OF OCCUPANCY
PERCENT OF ANNUAL NET TOTAL NET AT
SQUARE TOTAL SQUARE EFFECTIVE EFFECTIVE JUNE 30,
TYPE OF PROPERTY FEET FEET RENT (1) ANNUAL RENT 1995
----------------------------------------------- --------- ------------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C>
Industrial..................................... 9,317 61% $ 35,621 38% 96.2%
Office......................................... 4,486 30 47,047 49 93.6%
Retail......................................... 1,366 9 12,216 13 95.1%
--------- ----- ------------ ---
Total.......................................... 15,169 100% $ 94,884 100% 95.3%
--------- ----- ------------ ---
--------- ----- ------------ ---
<FN>
------------------------
(1) Represents annual net effective rent due from tenants in occupancy as of
June 30, 1995. Net effective rent ("Net Effective Rent") equals the average
annual rental property revenue over the terms of the respective leases,
excluding additional rent due as operating expense reimbursements, landlord
allowances for operating expenses and percentage rents.
</TABLE>
SQUARE FOOTAGE AND ANNUAL NET EFFECTIVE RENT OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
SQUARE FEET PERCENT OF
------------------------------------------------------- ANNUAL NET ANNUAL NET
PERCENT EFFECTIVE EFFECTIVE
STATE INDUSTRIAL OFFICE RETAIL TOTAL OF TOTAL RENT (1) RENT
--------------------------------- ----------- --------- --------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Indiana.......................... 5,493 1,085 440 7,018 46.3% $ 32,332 34.1%
Ohio............................. 2,380 2,817 722 5,919 39.0 48,438 51.0
Missouri......................... -- 339 33 372 2.4 3,886 4.1
Illinois......................... 126 -- 171 297 2.0 2,165 2.3
Tennessee........................ 495 -- -- 495 3.3 3,079 3.2
Kentucky......................... 669 -- -- 669 4.4 1,759 1.9
Michigan......................... -- 245 -- 245 1.6 2,734 2.9
Wisconsin........................ 154 -- -- 154 1.0 491 0.5
----- --------- --------- --------- --------- ------------ ------------
Total.......................... 9,317 4,486 1,366 15,169 100.0% $ 94,884 100.0%
----- --------- --------- --------- --------- ------------ ------------
----- --------- --------- --------- --------- ------------ ------------
<FN>
------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
June 30, 1995.
</TABLE>
S-4
<PAGE>
THE OFFERING
All capitalized terms used herein and not defined herein have the meanings
provided in "Description of the Notes." For a more complete description of the
terms of the Notes specified in the following summary, see "Description of the
Notes."
<TABLE>
<S> <C>
Securities Offered................ $100,000,000 aggregate principal amount of % Notes due
200 .
Maturity.......................... September , 200 .
Interest Payment Dates............ Interest on the Notes is payable semi-annually on each
March and September , commencing March , 1996, and
at maturity.
Ranking........................... The Notes will rank pari passu with each other and with
all other unsecured and unsubordinated indebtedness of
the Operating Partnership except that the Notes will be
effectively subordinated to the prior claims of each
secured mortgage lender to any specific Property which
secures such lender's mortgage. As of June 30, 1995,
such mortgages aggregated approximately $300.2 million
(approximately $260.7 million on a pro forma basis). See
"Capitalization."
Use of Proceeds................... The net proceeds to the Operating Partnership from the
Offering (approximately $99.1 million) will be used to
reduce amounts outstanding under the Operating
Partnership's Credit Line (as defined herein) and other
mortgage debt and to fund current development and
acquisition costs.
Limitations on Incurrence of The Notes contain various covenants, including the
Debt.............................. following:
(1) The Operating Partnership will not incur any Debt,
if, after giving effect thereto, the aggregate
principal amount of all outstanding Debt of the
Operating Partnership is greater than 55% of the sum
of (i) the Operating Partnership's Total Assets as of
the end of the most recent calendar quarter and (ii)
the increase in the Operating Partnership's Total
Assets since the end of such quarter including any
increase in the Operating Partnership's Total Assets
resulting from the incurrence of such additional Debt
(such increase together with the Operating
Partnership's Total Assets is referred to as
"Adjusted Total Assets").
(2) The Operating Partnership will not incur any Secured
Debt if, after giving effect thereto, the aggregate
amount of all outstanding Secured Debt of the
Operating Partnership is greater than 40% of the
Operating Partnership's Adjusted Total Assets.
(3) The Operating Partnership will not incur any Debt if
the ratio of Consolidated Income Available for Debt
Service for the four consecutive fiscal quarters most
recently ended prior to the date of the incurrence of
such Debt, on a pro forma basis, shall be less than
2.0 times the Annual Service Charge on all Debt
outstanding immediately after the incurrence of such
additional Debt.
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
(4) The Operating Partnership is required to maintain
Total Unencumbered Assets of not less than 185% of
the aggregate outstanding principal amount of the
Unsecured Debt of the Operating Partnership.
Optional Redemption............... The Notes are redeemable at any time after September ,
200 at the option of the Operating Partnership, in whole
or in part, at a redemption price equal to the sum of
(i) the principal amount of the Notes being redeemed
plus accrued interest to the redemption date and (ii)
the Make-Whole Amount, if any. See "Description of the
Notes -- Optional Redemption."
</TABLE>
S-6
<PAGE>
THE OPERATING PARTNERSHIP
The Operating Partnership is managed by its general partner, the Company, a
self-administered and self-managed REIT that began operations through a
predecessor in 1972. The Operating Partnership owns a diversified portfolio of
144 in-service industrial, office and retail Properties, encompassing
approximately 15.2 million square feet and located in eight states. The
Properties have an aggregate cost basis of $740.4 million and were 95.3% leased
as of June 30, 1995. The Operating Partnership provides leasing, management,
construction, development and other tenant-related services for the Properties
and certain properties owned by third parties. The Operating Partnership has the
largest commercial real estate operations in Indianapolis and Cincinnati and is
one of the largest real estate companies in the Midwest. The Operating
Partnership believes that the Midwest offers a relatively strong and stable
economy compared to other regions of the United States and provides significant
investment opportunity due to its central location, established manufacturing
base, skilled work force and moderate labor costs. The Operating Partnership has
benefited, and expects to continue to benefit, from the following elements:
EXPERIENCED MANAGEMENT
The Company's six senior executives collectively have over 115 years of
experience in the real estate industry and have been with the Company for an
average of 16 years. The Company is a fully integrated real estate company which
includes a Property Management Department which aggressively manages the
property portfolio through significant interaction with existing tenants, an
Acquisitions Department dedicated to locating strategic acquisitions in the
Operating Partnership's primary markets, Development Managers in each of the
Operating Partnership's primary markets who pursue select development
opportunities meeting the Operating Partnership's investment criteria, a
Construction Management Department which oversees the construction of the
Operating Partnership's development to assure quality construction at the lowest
possible cost, an Accounting and Finance Department which monitors property
performance and evaluates the financial impact of development and acquisition
opportunities and an Investor Relations Department which coordinates the
dissemination of information about the Company and the Operating Partnership to
investors and analysts.
BUSINESS STRATEGY
The Operating Partnership's business objective is to maximize long-term
profitability for its partners and the Company's shareholders by (i) maintaining
and increasing property occupancy and rental rates through the aggressive
management of its portfolio of existing properties; (ii) expanding existing
properties; (iii) developing and acquiring new properties; and (iv) providing a
full line of real estate services to the Operating Partnership's tenants and to
third parties.
The Operating Partnership believes that the analysis of real estate
opportunities and risks can be done most effectively at regional or local
levels. As a result, the Operating Partnership intends to continue its emphasis
on increasing its market share and effective rents in its existing markets
primarily within the Midwest. The Operating Partnership also expects to utilize
its approximately 900 acres of unencumbered land (the "Land") and its many
business relationships with more than 2,400 commercial tenants to expand its
build to suit business (development projects substantially pre-leased to a
single tenant) and to pursue other development and acquisition opportunities in
its existing markets and elsewhere, primarily in the Midwest. The Operating
Partnership believes that this regional focus will allow it to assess market
supply and demand for real estate more effectively as well as to capitalize on
its strong relationships with its tenant base. The Operating Partnership
develops and acquires properties that it believes are functional and have a
flexible design for long-term ownership and optimal re-leasing.
The Operating Partnership's policy is to develop and seek to acquire
substantially pre-leased Class A commercial properties located in markets with
attractive investment potential for Fortune 500 companies and other quality
regional and local firms. The Operating Partnership's industrial and suburban
office development focuses on business parks and mixed use developments suitable
for development of multiple
S-7
<PAGE>
projects on a single site and where the Operating Partnership can create and
control the business environment. These business parks and mixed use
developments generally include restaurants and other amenities which the
Operating Partnership believes create an atmosphere that is particularly
efficient and desirable. The Operating Partnership's retail development focuses
on community, power and neighborhood centers in its existing markets. As a fully
integrated real estate company, the Operating Partnership is able to arrange for
or provide to its industrial, office and retail tenants not only well located
and well maintained facilities, but also additional services such as build to
suit construction, tenant finish construction, expansion flexibility and
advertising and marketing services.
Development projects and property acquisitions with investment values
exceeding established guidelines are subject to the review and approval of the
Asset Committee, which is comprised of a majority of unaffiliated directors of
the Company. All other development projects and property acquisitions are
subject to the review and approval of the Credit Committee, which is comprised
of members of executive management of the Operating Partnership.
The Operating Partnership seeks to maintain a well-balanced, conservative
and flexible capital structure by: (i) currently targeting a ratio of long-term
debt to total market capitalization in the range of 25% to 40%; (ii) extending
and sequencing the maturity dates of its debt; (iii) borrowing primarily at
fixed rates; (iv) generally pursuing current and future long-term debt
financings and refinancings on an unsecured basis; and (v) maintaining
conservative debt service and fixed charge coverage ratios. Management believes
that these strategies have enabled and should continue to enable the Operating
Partnership and the Company to access the debt and equity capital markets for
their long-term requirements such as debt refinancings and financings for
development and acquisitions. The Company has demonstrated its ability to access
the equity markets to finance the activities of the Operating Partnership
through recent public offerings of Common Stock in October 1993, September 1994
and May 1995 which generated aggregate net proceeds of $497.7 million.
DIVERSIFIED PORTFOLIO
The Operating Partnership owns a diversified portfolio of properties which
includes (i) the in-service Properties, consisting of 144 industrial, office and
retail properties located in Indiana, Ohio, Illinois, Michigan, Tennessee,
Kentucky, Wisconsin and Missouri; (ii) 19 buildings and one building expansion
currently under development; and (iii) the Land, consisting of approximately 900
acres of unencumbered land for future development in Indiana, Ohio, Illinois,
Kentucky, and Tennessee. The Operating Partnership owns the entire equity
interest in 125 of the Properties and a partial interest in the remainder of the
Properties. The Properties are comprised of a broad range of product types which
include bulk and medium bulk warehouse and distribution facilities, light
manufacturing facilities, multi-tenant flex space buildings, suburban office
buildings, downtown office buildings, and neighborhood, power and community
shopping centers. The Operating Partnership believes that its Properties are of
the highest quality available to tenants in its markets. The total square
footage of the in-service Properties is approximately 15.2 million, consisting
of approximately 9.3 million square feet of industrial space, approximately 4.5
million square feet of office space and approximately 1.4 million square feet of
retail space. The total square footage of the 19 buildings and one building
expansion currently under development is approximately 3.4 million square feet,
consisting of approximately 2.0 million square feet of industrial space,
approximately 1.1 million square feet of office space and approximately 270,000
square feet of retail space. The current development projects are 85% leased as
of June 30, 1995. The total annual Net Effective Rental income of the Properties
based upon tenants in occupancy as of June 30, 1995 is approximately $94.9
million, with $35.6 million relating to the industrial Properties, $47.1 million
relating to the office Properties and $12.2 million relating to the retail
Properties. At June 30, 1995, the Properties were approximately 95% leased.
MIDWESTERN FOCUS
The Operating Partnership believes that the Midwest offers a relatively
strong and stable economy compared to other regions of the United States and
provides attractive new opportunities due to its central
S-8
<PAGE>
location, established manufacturing base, skilled work force and moderate labor
costs. In addition, the interstate highway systems serving Indianapolis,
Cincinnati and Columbus, principal markets in which the Properties are located,
help make those cities prime industrial and office property locations. According
to the Chicago Association of Commerce and Industry, these three cities rank
first, third and fourth, respectively, in being centrally located to the top 100
markets in the United States.
Employment statistics are generally a useful measure of the viability of a
commercial real estate market because the demand for industrial and office space
in a geographic area is usually linked to the levels of business activity and
disposable income. According to the United States Department of Labor's Bureau
of Labor Statistics, the unemployment rate for June 1, 1995 was 4.07%, 4.13% and
3.52% in the Indianapolis, Cincinnati and Columbus metropolitan areas,
respectively, compared to 5.6% for the United States. Additionally, total
non-farm employment has increased 16.96%, 9.04% and 13.17% from January 1989 to
April 1995 for the Indianapolis, Cincinnati and Columbus metropolitan areas,
respectively, as compared to 8.65% for the United States.
Management believes that the Operating Partnership's assets are located in
strong real estate markets with good investment potential. The Winter 1995 issue
of Ernst & Young's MarketScore ("MarketScore") rated 63 metropolitan areas in
the United States in terms of their real estate investment potential for the
succeeding two years. The study segmented each metropolitan area by property
type and considered real estate, economic and demographic variables such as
vacancy rates, construction, rental trends, job growth, population and household
growth, and household income. Approximately 15.9 million square feet of the
Operating Partnership's in-service and under-development Properties are in
markets considered by Ernst & Young to have good or excellent investment
potential. The March 1995 issue of Lehman Brothers Metroview ("Metroview") ranks
Cincinnati, Columbus and Indianapolis among the ten best industrial markets in
the United States.
INDIANAPOLIS, INDIANA. With more than 1.4 million residents, Indianapolis
is Indiana's largest metropolitan area. With a central location at the
intersection of four interstate highways, Indianapolis continues to attract new
growth by offering a skilled work force and stable economic base. Indianapolis'
economic base includes distribution, government, manufacturing, retail trade,
service and tourism related industries. According to the Indianapolis Chamber of
Commerce, United Airlines, Federal Express and Dow Elanco have recently
established major new facilities in Indianapolis which are expected to create
20,000 new jobs. The Indianapolis industrial market continues to have a
declining vacancy rate. According to CB Commercial Real Estate Group, Inc. ("CB
Commercial"), the industrial vacancy rate decreased 0.2% over the 15 months
ended March 31, 1995 to 4.8%, less than the national industrial vacancy rate
average of 7.3%. According to Landauer Real Estate Counselor's 1994 Real Estate
Market Forecast and the Winter 1995 issue of MarketScore, Indianapolis is rated
as the first and second best warehouse and distribution market, respectively, in
the United States. The Indianapolis suburban office market also strengthened
over the 15-month period. According to CB Commercial, at March 31, 1995,
Indianapolis had a 12.7% suburban office vacancy rate compared to a national
average of 14.9%. Moreover, from 1992 to 1994, Indianapolis was the fifth most
improved suburban office market in the country in terms of vacancy rate change
as reported by CB Commercial.
CINCINNATI, OHIO. Cincinnati is the second largest metropolitan area in
Ohio with a population of more than 1.5 million. With an unemployment rate which
is below the national average, Cincinnati's economic base is healthy and
diverse. Balanced between major Fortune 500 employers and entrepreneurial
enterprises, Cincinnati's economic base includes banking, distribution,
manufacturing, retail trade and service related industries. Relatively low
taxes, an expanding airport (a major North American hub for Delta Airlines) and
aggressive state and local incentive packages designed to attract new business
have contributed to major corporate relocations in Cincinnati. Indicative of the
economic strength in Cincinnati, the industrial vacancy rate as reported by CB
Commercial declined by 2.3% to 2.6% over the 15 months ended March 31, 1995,
less than half the national average of 7.3%. As reported by CB Commercial, the
Cincinnati suburban
S-9
<PAGE>
office market vacancy rate was 14.5% at March 31, 1995 compared to a national
average of 14.9%, and the Cincinnati downtown office vacancy rate improved 1.4%
to 14.9% at March 31, 1995 compared to the national average of 15.6%.
COLUMBUS, OHIO. The Columbus metropolitan area has a population of
approximately 1.4 million and is the third largest metropolitan area in Ohio.
The city's central location, well-trained work force and high quality of life
have established Columbus as a major transportation and distribution center.
Columbus' economic base includes distribution, government, manufacturing, retail
trade and service-related industries. As reported by CB Commercial as of March
31, 1995, the industrial and suburban office vacancy rates in Columbus were 6.0%
and 8.1% compared to the national averages of 7.3% and 14.9%, respectively. This
suburban office vacancy rate is the eleventh lowest out of 53 markets surveyed
by CB Commercial. Additionally, the Company believes that the Class A suburban
office submarket in which it operates has a vacancy rate below 5%. Metroview
rated Columbus as the second best office market in the United States.
The following table summarizes important economic and performance statistics
for the Operating Partnership's principal markets and for the United States.
<TABLE>
<CAPTION>
CENTRAL JUNE 1995 JOB GROWTH MARCH 1995 MARCH 1995 SUBURBAN
LOCATION UNEMPLOYMENT SINCE INDUSTRIAL PROPERTY OFFICE VACANCY
RANKING (1) RATE (2) 1989 (2) VACANCY RATE (3) RATE (3)
------------ --------------- ----------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Indianapolis, Indiana............. First 4.1% 17.0% 4.8% 12.7%
Cincinnati, Ohio.................. Third 4.1% 9.0% 2.6% 14.5%
Columbus, Ohio.................... Fourth 3.5% 13.2% 6.0% 8.1%
United States..................... -- 5.6% 8.7% 7.3% 14.9%
<FN>
------------------------
(1) Source: Chicago Association of Commerce and Industry. A ranking based on
proximity to the largest 100 metropolitan areas in the United States.
(2) Source: United States Department of Labor's Bureau of Labor Statistics.
(3) Source: CB Commercial.
</TABLE>
MARKET POSITION
The Operating Partnership manages approximately 30 million square feet of
property, including over 12 million square feet owned by third parties. The
Operating Partnership manages approximately 30% of all competitive suburban
office, warehousing and light manufacturing space in Indianapolis, and
approximately 20% of all competitive office, warehousing and light manufacturing
space in Cincinnati. In addition to providing services to approximately 1,100
tenants in the Properties, the Operating Partnership provides such services to
over 1,300 tenants in approximately 150 properties owned by third parties. Based
on market data maintained by the Operating Partnership, the Operating
Partnership believes that it was responsible in 1994 for approximately 66% of
the net absorption (gross space leased minus lease terminations and expirations)
of warehousing and light manufacturing space in Indianapolis and approximately
29% of the net absorption of warehousing and light manufacturing space in
Cincinnati. The Operating Partnership believes that its dominant position in the
markets in which it operates gives it a competitive advantage in its real estate
activities.
QUALITY TENANT BASE
The Operating Partnership's Properties have a diverse and stable base of
approximately 1,100 tenants. Many of the tenants are Fortune 500 companies and
engage in a wide variety of businesses, including manufacturing, retailing,
wholesale trade, distribution, and professional services. Approximately 60% of
the square footage of the Properties is occupied by tenants with a net worth
based on book value of $100 million or greater. Approximately 75% of the gross
leasable area of the Properties is occupied by tenants who have been in business
for more than 10 years. The Operating Partnership renewed 73% of the square feet
of tenants up for renewal in 1994 on approximately 1.4 million square feet up
for renewal. No single tenant
S-10
<PAGE>
accounts for more than 3% of the Operating Partnership's Total Gross Effective
Rent (computed using the average annual rental property revenue over the terms
of the respective leases including landlord operating expense allowances but
excluding additional rent due as operating expense reimbursements).
RECENT DEVELOPMENTS
FINANCING. In April 1995, the Operating Partnership replaced its existing
$60 million secured revolving line of credit with a $100 million unsecured
revolving line of credit (the "Credit Line"). The Credit Line bears interest at
the 30-day London Interbank Offered Rate ("LIBOR") plus 200 basis points and
matures in April 1998. The Operating Partnership intends to use the Credit Line
to fund property development and acquisitions.
In May 1995, the Company issued an additional 3,727,500 shares of Common
Stock through an offering (the "1995 Offering") and received net proceeds of
approximately $96.3 million. The net proceeds of the 1995 Offering were
contributed by the Company to the Operating Partnership in exchange for Units
and were used to fund current development and acquisition costs and to repay the
outstanding balance on the Credit Line.
DEVELOPMENT AND ACQUISITIONS. The Operating Partnership currently has
approximately 3.4 million square feet of properties under development which are
85% pre-leased. These properties under development consist of 58% industrial,
34% office and 8% retail properties (based on square footage) and will have a
total estimated cost upon completion of $181.5 million. In addition, during
1995, the Operating Partnership has acquired 831,000 square feet of industrial
property, 339,000 square feet of office property and 81,000 square feet of
retail property at a total cost of approximately $55.6 million. The combined
weighted average unleveraged stabilized return on cost for the current
development and the 1995 acquisitions is expected to be 11.7% with anticipated
leasing activity. Assuming no further leasing activity, the combined weighted
average unleveraged stabilized return on cost would be 10.0%. Among other
acquisition prospects, the Company is currently seeking to complete an
acquisition of a group of industrial properties and undeveloped land in the
Indianapolis area at a total estimated cost of approximately $30 million.
ST. LOUIS. Consistent with its business strategy of expanding in attractive
Midwestern markets, the Operating Partnership carefully analyzed the real estate
investment potential of several major Midwestern metropolitan areas and
concluded that the St. Louis market offers the most attractive real estate
investment returns in the industrial and suburban office markets based on the
following factors: (i) fragmented competition; (ii) strong real estate
fundamentals; and (iii) favorable economic conditions. Based on this conclusion,
the Operating Partnership acquired at a cost of approximately $30.0 million
three suburban office buildings in May 1995 totaling 339,000 square feet which
are 97% leased. In addition, the Operating Partnership acquired 104 acres of
land for future industrial property development in July 1995. The Operating
Partnership has also established a regional office in St. Louis.
USE OF PROCEEDS
The net proceeds to the Operating Partnership from the sale of the Notes
offered hereby are estimated to be approximately $99.1 million after deducting
expenses payable by the Operating Partnership. The net proceeds will be used to
(1) retire outstanding interim financing expected to be approximately $35
million used to fund development and acquisition costs, (2) retire $39.5 million
of mortgage debt with a current weighted average interest rate of 6.08% and a
weighted average maturity of 3.3 years as of June 30, 1995, all of which is
scheduled to reset at a market interest rate during the fourth quarter of 1995
and (3) fund current development and acquisition costs. The interim financing
consists of the anticipated outstanding balance of $35 million at September 11,
1995 on the Operating Partnership's Credit Line which bears interest at LIBOR
plus 200 basis points and matures in April 1998. Pending such uses, the net
proceeds may be invested in short-term income producing investments such as
commercial paper, government securities or money market funds that invest in
government securities.
S-11
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Operating
Partnership and its subsidiaries as of June 30, 1995 and as adjusted (i) for all
draws on the Credit Line to fund and complete committed development projects
under construction at June 30, 1995; (ii) to give effect to issuance of the
Notes in the amount of $100 million and application of the proceeds of the
Notes; and (iii) for results of the first six months of operations of the
committed development projects based on the effect of leases signed through July
31, 1995.
<TABLE>
<CAPTION>
JUNE 30, 1995
-----------------------
PRO FORMA
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Mortgage Debt.......................................................................... $ 300,233 $ 260,733
Credit Line............................................................................ -- 4,566
% Notes due 200 ..................................................................... -- 100,000
---------- -----------
Total Debt............................................................................. $ 300,233 $ 365,299
---------- -----------
Partners' Equity....................................................................... $ 530,817 $ 545,032
---------- -----------
Total Capitalization................................................................. $ 831,050 $ 910,331
---------- -----------
---------- -----------
</TABLE>
S-12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial and operating information
for the Operating Partnership and its predecessor, the Company, on a pro forma
and historical basis. The information was derived from the Operating
Partnership's financial statements, which are incorporated by reference in the
accompanying Prospectus.
The following selected financial information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the Operating Partnership and the financial statements
incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------
PRO
FORMA ACTUAL ACTUAL YEAR ENDED DECEMBER 31,
-------- -------- -------- ----------------------------------------------------
1995 (1) 1995 1994 1994 1993 (2) 1992 (2) 1991 (2) 1990 (2)
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Rental Operations:
Revenues:
Rental income............. $63,924 $ 51,510 $ 41,843 $ 87,786 $33,228 $17,657 $16,530 $15,382
Interest and other
income................... 472 1,116 405 1,572 287 18 259 365
-------- -------- -------- -------- -------- -------- -------- --------
64,396 52,626 42,248 89,358 33,515 17,675 16,789 15,747
-------- -------- -------- -------- -------- -------- -------- --------
Operating expenses:
Rental expenses........... 10,790 9,786 8,579 17,507 7,059 3,919 4,003 3,602
Real estate taxes......... 4,698 4,290 4,201 8,256 3,403 1,787 1,854 1,873
Interest expense.......... 14,111 10,053 8,723 18,920 10,334 7,582 7,920 7,519
Depreciation and
amortization............. 13,756 11,103 8,138 18,036 7,369 4,483 4,253 3,906
General and
administrative........... 970 969 922 2,145 737 623 592 561
-------- -------- -------- -------- -------- -------- -------- --------
44,325 36,201 30,563 64,864 28,902 18,394 18,622 17,461
-------- -------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
rental operations........ 20,071 16,425 11,685 24,494 4,613 (719) (1,833) (1,714)
-------- -------- -------- -------- -------- -------- -------- --------
Service Operations:
Revenues:
Property management,
maintenance and leasing
fees..................... 5,256 5,256 5,393 11,084 3,000 -- -- --
Construction management
and development
fees..................... 2,455 2,455 2,963 6,107 2,501 -- -- --
Interest and other
income................... 444 444 663 1,282 153 -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
8,155 8,155 9,019 18,473 5,654 -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Operating expenses:
Payroll................... 3,982 3,982 4,202 8,723 2,688 -- -- --
Maintenance............... 546 546 487 1,069 473 -- -- --
Office and other.......... 1,062 1,062 1,209 2,373 957 -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
5,590 5,590 5,898 12,165 4,118 -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Earnings from service
operations............... 2,565 2,565 3,121 6,308 1,536 -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Operating income (loss)..... 22,636 18,990 14,806 30,802 6,149 (719) (1,833) (1,714)
-------- -------- -------- -------- -------- -------- -------- --------
Earnings from property
sales........................ -- -- 135 2,198 517 66 226 1,143
Equity in earnings of
unconsolidated companies..... 543 470 593 1,056 297 -- -- --
Minority interest in earnings
of subsidiaries.............. (431) (431) (605) (1,088) (293) -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)............. $22,748 $ 19,029 $ 14,929 $ 32,968 $ 6,670 $ (653) $(1,607) $ ( 571)
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
-------------------------------
PRO FORMA ACTUAL ACTUAL AS OF DECEMBER 31,
--------- --------- --------- -----------------------------------------------------
1995 (1) 1995 1994 1994 1993 (2) 1992 (2) 1991 (2) 1990 (2)
--------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate investments....... $ 939,706 $ 840,414 $ 654,587 $ 723,713 $ 592,843 $ 132,459 $ 134,129 $ 133,521
Accumulated depreciation...... (49,860) (47,251) (30,795) (38,058) (23,725) (17,508) (14,118) (10,528)
--------- --------- --------- --------- --------- --------- --------- ---------
Net real estate
investments................ 889,846 793,163 623,792 685,655 569,118 114,951 120,011 122,993
Cash.......................... 2,869 21,101 5,030 40,427 10,065 10 219 --
Other assets.................. 60,105 59,275 63,665 49,802 54,702 6,920 6,687 6,824
--------- --------- --------- --------- --------- --------- --------- ---------
Total assets................ $ 952,820 $ 873,539 $ 692,487 $ 775,884 $ 633,885 $ 121,881 $ 126,917 $ 129,817
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Mortgage debt................. $ 260,733 $ 300,233 $ 244,894 $ 298,640 $ 249,034 $ 82,132 $ 83,321 $ 81,249
% Notes due 200 ........... 100,000 -- -- -- -- -- -- --
Line of credit................ 4,566 -- 56,500 -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total debt.................. 365,299 300,233 301,394 298,640 249,034 82,132 83,321 81,249
Other liabilities............. 42,489 42,489 45,897 29,946 35,156 3,620 3,376 3,303
--------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities........... 407,788 342,722 347,291 328,586 284,190 85,752 86,697 84,552
--------- --------- --------- --------- --------- --------- --------- ---------
Partners' equity.............. 545,032 530,817 345,196 447,298 349,695 36,129 40,220 45,265
--------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities and
partners' equity........... $ 952,820 $ 873,539 $ 692,487 $ 775,884 $ 633,885 $ 121,881 $ 126,917 $ 129,817
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------
PRO FORMA ACTUAL ACTUAL YEAR ENDED DECEMBER 31,
--------- --------- --------- -----------------------------------------------------------
1995 (1) 1995 1994 1994 1993 (2) 1992 (2) 1991 (2) 1990 (2)
--------- --------- --------- --------- --------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PROPERTIES AND RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Funds from Operations (3)... $ 36,837 $ 30,417 $ 23,238 $ 49,359 $ 13,615 $ 3,764 $ 2,420 $ 2,192
Cash flow provided by (used
in):
Operating activities...... 46,926 40,554 25,779 51,856 14,363 5,453 2,451 3,357
Investing activities...... (213,713) (114,421) (59,056) (116,227) (315,025) (710) (845) (422)
Financing activities...... 129,229 54,541 28,242 94,733 310,717 (4,952) (1,387) (2,935)
Ratio of earnings to debt
service (4)(6)............. 2.53 2.77 2.56 2.51 1.57 * * *
Ratio of earnings to fixed
charges (5)(6)............. 2.54 2.48 2.48 2.33 1.58 * * *
Ratio of Funds from
Operations before debt
service to debt service
(3)(7)..................... 3.48 3.82 3.44 3.42 2.26 1.49 1.28 1.29
Ratio of Funds from
Operations before fixed
charges to fixed charges
(3)(8)..................... 3.50 3.54 3.43 3.26 2.28 1.48 1.30 1.29
Ratio of Funds from
Operations from
unencumbered assets to
unsecured fixed charges
(3)(9)..................... 5.97 N/A N/A N/A N/A N/A N/A N/A
Ratio of Debt to Adjusted
Total Assets (10)......... 38.04% N/A N/A N/A N/A N/A N/A N/A
Ratio of Secured Debt to
Adjusted
Total Assets (11)......... 27.15% N/A N/A N/A N/A N/A N/A N/A
Ratio of Consolidated Income
Available for Debt Service
to Annual Service Charge
(12)....................... 3.59 N/A N/A N/A N/A N/A N/A N/A
Ratio of Total Unencumbered
Assets to Unsecured Debt
(13)....................... 413% N/A N/A N/A N/A N/A N/A N/A
Number of Properties at end
of period.................. 163 144 120 128 114 30 31 32
Square feet available at end
of period.................. 18,551 15,169 11,881 12,895 10,867 1,963 1,986 2,061
<FN>
------------------------------
</TABLE>
* See footnote 6 on next page.
(1) The pro forma financial information includes adjustments to the historical
Consolidated Statement of Operations and Consolidated Balance Sheet as of
and for the six months ended June 30, 1995, related to the effects of the
public sale by the Company of 3,727,500 shares of Common Stock in the 1995
Equity Offering, the issuance by the Operating Partnership of the Notes
pursuant to this Offering with an assumed interest rate of 7.5%, the
acquisition of 12 properties and commencement of operations of four
development projects which only had a partial period of operations during
the six months ended June 30, 1995, and the estimated
S-14
<PAGE>
first six months of operations of the 19 properties and one building
expansion (including two properties owned by joint ventures in which the
Operating Partnership is a 50% partner) which were under construction at
June 30, 1995. The first six months of operations of the 19 development
projects are based only on leases signed as of July 31, 1995. These projects
under development were approximately 86% leased as of July 31, 1995. These
transactions are reflected as if they had occurred on January 1, 1995,
utilizing net proceeds from the 1995 Equity Offering and this Offering, as
well as the Credit Line. The assumed interest rate of 7.5% on the Notes
considers a $100 million Forward Treasury Lock Agreement the Operating
Partnership entered into in order to hedge its exposure to interest rate
fluctuations. The Operating Partnership will amortize any gain or loss
realized upon settlement of the agreement into interest expense over the
term of the Notes.
(2) The Operating Partnership was formed on October 4, 1993, when the Company
completed the acquisition of substantially all of the properties and
businesses of Duke Associates, a full-service commercial real estate firm
(the "Reorganization"). The selected consolidated financial statements
include the accounts and operations of the Company for the period from
January 1, 1990 to October 4, 1993 and the accounts and operations of the
Operating Partnership and its majority-owned or controlled subsidiaries for
the period from October 4, 1993 to December 31, 1993 and subsequent periods.
(3) Funds from Operations ("FFO"), as defined by the National Association of
Real Estate Investment Trusts ("NAREIT"), means the consolidated net income
of the Operating Partnership and its subsidiaries without giving effect to
depreciation and amortization, gains or losses from extraordinary items,
gains or losses on sales of real estate, gains or losses on investments in
marketable securities and any provision/benefit for income taxes for such
period, plus the allocable portion, based on the Operating Partnership's
ownership interest, of funds from operations of unconsolidated joint
ventures, all determined on a consistent basis in accordance with generally
accepted accounting principles. FFO does not represent cash flows from
operations as defined by generally accepted accounting principles, should
not be considered as an alternative to net income as an indicator of the
Operating Partnership's operating performance and is not indicative of cash
available to fund all cash flow needs. In March 1995, NAREIT issued a
clarification of its definition of FFO. The clarification provides that
amortization of deferred financing costs and depreciation of non-rental real
estate assets are no longer to be added back to net income in arriving at
FFO. These changes are to be implemented no later than 1996. The amounts in
this table do not include the effect of the new clarifications. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Funds From Operations."
(4) In computing the ratios of earnings to debt service, earnings have been
calculated by adding debt service to income (loss) before gains or losses on
property sales. Debt service consists of interest and recurring principal
amortization (excluding maturities) and excludes amortization of debt
issuance costs.
(5) In computing the ratios of earnings to fixed charges, earnings have been
calculated by adding fixed charges, excluding capitalized interest, to
income (loss) before gains or losses on property sales. Fixed charges
consist (if applicable) of interest costs, whether expensed or capitalized,
the interest component of rental expense and amortization of debt issuance
costs.
(6) Prior to formation of the Operating Partnership and completion of the
Reorganization in October 1993, the Company maintained a different capital
structure. As a result, although the original properties have historically
generated positive net cash flow, the consolidated financial statements of
the Company show net losses for the fiscal years ended December 31, 1992,
1991 and 1990. Consequently, earnings were inadequate to cover debt service
and fixed charges by approximately $0.7 million, $1.8 million and $1.7
million, respectively, for such fiscal years. The recapitalization of the
Operating Partnership effected in connection with the Reorganization
permitted the Operating Partnership to significantly deleverage its
Properties, resulting in significantly improved ratios of earnings to debt
service and fixed charges subsequent to the Reorganization.
(7) The ratios of FFO before debt service to debt service represent the sum of
FFO and debt service compared to debt service.
(8) The ratios of FFO before fixed charges to fixed charges represent the sum of
FFO and fixed charges compared to fixed charges.
(9) The ratios of FFO from unencumbered assets to unsecured fixed charges
represent FFO from unencumbered assets plus the fixed charges on the
unsecured debt, if any, compared to fixed charges on the unsecured debt, if
any. The Operating Partnership had 69 unencumbered Properties totaling 8.4
million square feet with a gross investment of $432.3 million which will
provide $24.2 million of FFO on a pro forma basis as of June 30, 1995.
(10) As specified in the Indenture, Debt consists of indebtedness of the
Operating Partnership and its consolidated subsidiaries from borrowed money,
secured indebtedness, reimbursement obligations in connection with letters
of credit and capitalized leases. Adjusted Total Assets consist of all
assets of the Operating Partnership and its consolidated subsidiaries, other
than intangibles and accounts receivable and before depreciation and
amortization with respect to real estate assets. See "Description of the
Notes -- Certain Covenants."
(11) As specified in the Indenture, Secured Debt consists of Debt secured by a
mortgage or other encumbrance on any of the property of the Operating
Partnership or its consolidated subsidiaries. See "Description of the Notes
-- Certain Covenants."
(12) As specified in the Indenture, Consolidated Income Available for Debt
Service consists of consolidated income of the Operating Partnership and its
consolidated subsidiaries plus amounts deducted for interest, provisions for
income taxes, amortization of debt discount, provisions for gains and and
losses on properties, depreciation and amortization, noncash charges and
amortization of deferred charges. Annual Service Charge means the amount
expensed in any 12-month peried for interest on Debt. See "Description of
the Notes -- Certain Covenants."
(13) As specified in the Indenture, Total Unencumbered Assets consists of all
assets of the Operating Partnership and its consolidated subsidiaries not
subject to an encumbrance, other than intangibles and accounts receivable
and before depreciation and amortization with respect to real estate assets.
Unsecured Debt means Debt not secured by a mortgage or other encumbrance on
any of the Properties. See "Description of the Notes -- Certain Covenants."
S-15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS -- SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX
MONTHS ENDED
JUNE 30, 1994
Revenues from Rental Operations increased from $42.2 million for the six
months ended June 30, 1994 to $52.6 million for the six months ended June 30,
1995. This $10.4 million increase is attributable to the expansion of the
in-service rental property portfolio through the acquisition and development of
24 properties totaling approximately 3.3 million square feet since June 30,
1994.
Operating expenses related to Rental Operations increased from $30.6 million
for the six months ended June 30, 1994 to $36.2 million for the six months ended
June 30, 1995. The main components of this increase include (i) $1.2 million of
additional rental expenses related to the 24 additional in-service properties;
(ii) $1.4 million of additional interest expense on borrowings used to fund the
acquisition and development costs of the additional in-service properties; and
(iii) $3.0 million of additional depreciation and amortization related to the
additional in-service properties.
Revenues from Service Operations decreased from $9.0 million for the six
months ended June 30, 1994 to $8.2 million for the six months ended June 30,
1995. This decrease was mainly due to decreased construction management and
development fees resulting from decreased third-party construction and
development activity.
Operating expenses related to Service Operations decreased from $5.9 million
for the six months ended June 30, 1994 to $5.6 million for the six months ended
June 30, 1995 due to significant growth and development of Company-owned
properties which resulted in increased allocation of operating costs to such
properties, thereby reducing the proportionate amount of such costs attributable
to third party fee services.
Primarily as a result of the fluctuations discussed above, net income and
net income per weighted average Unit increased from $14.9 million and $.73 per
Unit, respectively, for the six months ended June 30, 1994 to $19.0 million and
$.75 per Unit, respectively, for the six months ended June 30, 1995.
The occupancy at June 30, 1995 for all of the in-service properties in which
the Operating Partnership owns a whole or partial interest was 96.2% for the
industrial properties (94.5% at June 30, 1994), 93.6% for the office properties
(90.3% at June 30, 1994), and 95.1% for the retail properties (92.7% at June 30,
1994), for an overall average occupancy rate of 95.3% (93.0% at June 30, 1994).
The following table sets forth information regarding the Operating
Partnership's portfolio of rental properties as of June 30, 1995:
<TABLE>
<CAPTION>
IN-SERVICE PROPERTIES UNDER DEVELOPMENT
----------------------------------- -----------------------------------
TOTAL TOTAL
PERCENT SQUARE PERCENT OF PERCENT SQUARE PERCENT OF
TYPE LEASED FEET TOTAL LEASED FEET TOTAL
------------------------------------------- ----------- --------- ----------- ----------- --------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
Industrial................................. 96.2% 9,317 61.4% 87.1% 1,974 58.4%
Office..................................... 93.6% 4,486 29.6 78.7% 1,138 33.6
Retail..................................... 95.1% 1,366 9.0 96.3% 270 8.0
--------- ----- --------- -----
Total.................................. 95.3% 15,169 100.0% 85.0% 3,382 100.0%
--------- ----- --------- -----
--------- ----- --------- -----
</TABLE>
Management expects occupancy to remain stable because (i) only 3.3% and
10.0% of the Operating Partnership's total leased square footage are subject to
leases expiring in the remainder of 1995 and 1996, respectively, and (ii) the
Operating Partnership's renewal percentage averaged 73% and 65% in 1994 and
1993, respectively. This stable occupancy, along with increasing rental rates in
the Operating Partnership's markets, should allow the in-service portfolio to
continue to provide a comparable level of earnings from
S-16
<PAGE>
rental operations in the future. The Operating Partnership expects to also
realize growth in earnings from rental operations as the 3.4 million square feet
of properties under development at June 30, 1995 are placed in service.
FUNDS FROM OPERATIONS
Management believes that FFO is the industry standard for reporting the
operations of real estate investment trusts. In March 1995, NAREIT issued a
clarification of its definition of FFO. The clarification provides that
amortization of deferred financing costs and depreciation of non-rental real
estate assets are no longer to be added back to net income in arriving at FFO.
Although the Operating Partnership has not yet adopted the new method, the
following table presents the Operating Partnership's FFO under both methods of
calculation for illustrative purposes:
<TABLE>
<CAPTION>
CURRENT METHOD NEW METHOD
------------------- -------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS
AND PERCENTAGES)
<S> <C> <C> <C> <C>
Net Income................................................... $19,029 $14,929 $19,029 $14,929
Add back:
Depreciation and amortization.............................. 10,518 7,875 10,518 7,875
Amortization of deferred financing costs and depreciation
of non-rental real estate assets.......................... 726 349 -- --
Depreciation and amortization of joint ventures............ 144 220 144 220
(Gain) loss on property sales.............................. -- (135) -- (135)
-------- -------- -------- --------
Funds From Operations........................................ $30,417 $23,238 $29,691 $22,889
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average Units....................................... 25,255 20,478 25,255 20,478
------ ------ ------ ------
------ ------ ------ ------
FFO per weighted average Unit................................ $1.20 $1.13 $1.18 $1.12
----- ----- ----- -----
----- ----- ----- -----
Distribution paid per Unit................................... $.96 $.92 $.96 $.92
---- ---- ---- ----
---- ---- ---- ----
FFO payout ratio (1)......................................... 80.0% 81.4% 81.4% 82.1%
----- ----- ----- -----
----- ----- ----- -----
<FN>
------------------------
(1) Calculated as the distribution paid per Unit divided by FFO per weighted
average Unit.
</TABLE>
Management anticipates continued growth in FFO through (i) maintaining and
increasing property occupancy and rental rates through aggressive management of
the Operating Partnership's existing portfolio of properties; (ii) expanding
existing properties; (iii) developing and acquiring new properties; and (iv)
providing a full line of real estate services to the Operating Partnership's
tenants and to third parties.
S-17
<PAGE>
The following table indicates the components of the Operating Partnership's
FFO:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30,
---------------------
1995 1994
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Rental operations:
Original portfolio (1)......................................................... $ 29,574 $ 28,406
Development (2)................................................................ 4,128 490
Acquisitions (3)............................................................... 4,144 316
Investments in unconsolidated companies.......................................... 613 813
Interest expense................................................................. (10,053) (8,723)
---------- ---------
Net rental operations.......................................................... 28,406 21,302
Service operations, net of minority interest..................................... 2,107 2,638
Other, net....................................................................... (96) (702)
---------- ---------
Funds From Operations -- Current Method.......................................... $ 30,417 $ 23,238
---------- ---------
---------- ---------
<FN>
------------------------
(1) Consists of the component of FFO from the portfolio of Properties
in-service at the date of the Reorganization.
(2) Consists of the component of FFO from all Properties developed and placed
in-service subsequent to the date of the Reorganization.
(3) Consists of the component of FFO from all Properties acquired subsequent to
the date of the Reorganization.
</TABLE>
While management believes that FFO is the most relevant and widely used
measure of the Operating Partnership's operating performance, such amount does
not represent cash flow from operations as defined by generally accepted
accounting principles, should not be considered as an alternative to net income
as an indicator of the Operating Partnership's operating performance, and is not
indicative of cash available to fund all cash flow needs.
LIQUIDITY AND CAPITAL RESOURCES
The Operating Partnership pays regular quarterly distributions with a policy
of distributing no more than 90% of FFO. The distribution declared on July 27,
1995 represented 80.3% of second quarter FFO. Rental and Service Operation
revenue have been the principal sources of capital available to fund the
Operating Partnership's operating expenses, debt service and recurring capital
expenditures. Net cash provided by operating activities, totaling $40.6 million
for the six months ended June 30, 1995, represents the primary source of
liquidity to fund distributions to Unitholders and the minority interests and to
fund recurring costs associated with the renovation and re-letting of the
Operating Partnership's properties. Recurring capital expenditures for the six
months ended June 30, 1995 were $3.2 million. Funds Available for Distribution
(FFO adjusted for straight-line rent and recurring capital expenditures) for the
six months ended June 30, 1995 were $26.0 million, resulting in a payout ratio
for the distributions for such period of 93.2% of Funds Available for
Distribution.
The investing activities of the Operating Partnership for the six months
ended June 30, 1995 of $114.4 million represent primarily the costs incurred for
the development and acquisition of 18 properties placed in service during the
six months and 19 properties and one building expansion under development as of
June 30, 1995. The estimated remaining development costs for these properties as
of June 30, 1995 is $110 million. These development costs will be funded by cash
on hand as of June 30, 1995, the Credit Line and the net proceeds of the
Offering. The investing activities for the $114.4 million of property
development and acquisitions were substantially funded with the proceeds of the
1995 Equity Offering. The Operating Partnership has a $100 million unsecured
Credit Line which bears interest at LIBOR plus 200 basis points
S-18
<PAGE>
and matures in April 1998. The Credit Line is available to fund the remaining
development costs of the properties under construction at June 30, 1995 as well
as future development and acquisition activities. Also, the Operating
Partnership has obtained implied investment grade ratings for its unsecured debt
from Standard & Poor's, Moody's and Duff & Phelps.
The Operating Partnership intends to maintain a conservative capital
structure. The Operating Partnership's debt to total market capitalization ratio
at June 30, 1995 was 27.3% compared to 30.2% at December 31, 1994. Following the
issuance of the Notes, the Operating Partnership's debt to total market
capitalization ratio will be 31.4%, based on a market price of $28.25 per Unit,
which reflects the market price of the Common Stock on June 30, 1995.
The mortgage debt outstanding at June 30, 1995 consists of notes totaling
$300.2 million with a weighted average interest rate of 7.31% maturing at
various dates through 2018, of which only 1.5% is currently floating rate debt.
Scheduled principal amortization of mortgage debt totaled $723,000 for the six
months ended June 30, 1995. A portion of the proceeds from the issuance of the
Notes will be used to retire the $10 million outstanding on the Operating
Partnership's Credit Line at August 31, 1995, making it fully available for
future acquisitions and development. Approximately $39.5 million of the proceeds
will be used to retire existing mortgage debt with a current weighted average
interest rate of 6.08% and a weighted average maturity of 3.3 years as of June
30, 1995, all of which is scheduled to reset at a market interest rate during
the fourth quarter of 1995. The total debt in unconsolidated subsidiaries at
June 30, 1995 is $49.6 million of which the Operating Partnership's percentage
share is $10.8 million. The unconsolidated subsidiary debt has a weighted
average interest rate of 7.11%, and only 15.9% is currently floating rate debt.
Following is a summary of the scheduled future amortization and maturities
of the Operating Partnership's debt as of June 30, 1995:
<TABLE>
<CAPTION>
FUTURE
SCHEDULED FUTURE OFFERING PRO FORMA
YEAR AMORTIZATION MATURITIES TOTAL (1) TOTAL
----------------------------- ------------ ---------- ---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1995......................... $ 1,096 $ -- $ 1,096 $ (240 ) $ 856
1996......................... 3,191 62,325 65,516 (1,398 ) 64,118
1997......................... 3,963 -- 3,963 (1,874 ) 2,089
1998......................... 2,916 80,627 83,543 (35,988 ) 47,555
1999......................... 2,548 -- 2,548 -- 2,548
2000......................... 2,637 2,423 5,060 -- 5,060
2001......................... 2,291 59,954 62,245 -- 62,245
2002......................... 2,494 -- 2,494 -- 2,494
2003......................... 252 68,814 69,066 -- 69,066
2004......................... 273 -- 273 -- 273
2005......................... 300 -- 300 100,000 100,300
Thereafter................... 4,129 -- 4,129 -- 4,129
------------ ---------- ---------- ----------- -----------
Total.................... $ 26,090 $ 274,143 $ 300,233 $ 60,500 $ 360,733
------------ ---------- ---------- ----------- -----------
------------ ---------- ---------- ----------- -----------
<FN>
------------------------
(1) Assumes maturity in 2005 of the Notes offered hereby and the use of $39.5
million of the proceeds to retire existing mortgage debt.
</TABLE>
S-19
<PAGE>
PROPERTIES
GENERAL
The Operating Partnership owns a diversified portfolio of properties which
includes (i) the in-service Properties, consisting of 144 industrial, office and
retail properties located in Indiana, Ohio, Illinois, Michigan, Tennessee,
Kentucky, Wisconsin and Missouri; (ii) 19 buildings and one building expansion
currently under development; and (iii) the Land, consisting of approximately 900
acres of unencumbered land for future development in Indiana, Ohio, Illinois,
Kentucky, and Tennessee. The Operating Partnership owns the entire equity
interest in 125 of the Properties and a partial interest in the remainder of the
Properties. The Properties are comprised of a broad range of product types which
include bulk and medium bulk warehouse and distribution facilities, light
manufacturing facilities, multi-tenant flex space buildings, suburban office
buildings, downtown office buildings, and neighborhood, power and community
shopping centers. The Operating Partnership believes that its Properties are of
the highest quality available to tenants in its markets. The total square
footage of the in-service Properties is approximately 15.2 million, consisting
of approximately 9.3 million square feet of industrial space, approximately 4.5
million square feet of office space and approximately 1.4 million square feet of
retail space. The total square footage of the 19 buildings and one building
expansion currently under development is approximately 3.4 million square feet,
consisting of approximately 2.0 million square feet of industrial space,
approximately 1.1 million square feet of office space and approximately 270,000
square feet of retail space. The current development projects are 85% leased as
of June 30, 1995. The total annual Net Effective Rental income of the Properties
based upon tenants in occupancy as of June 30, 1995 is approximately $94.9
million, with $35.6 million relating to the industrial Properties, $47.1 million
relating to the office Properties and $12.2 million relating to the retail
Properties. At June 30, 1995, the Properties were approximately 95% leased.
The following tables provide an overview of the Properties.
SQUARE FOOTAGE AND ANNUAL NET EFFECTIVE RENT OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
SQUARE FEET PERCENT OF
--------------------------------------------------------- ANNUAL NET ANNUAL NET
PERCENT OF EFFECTIVE EFFECTIVE
STATE INDUSTRIAL OFFICE RETAIL TOTAL TOTAL RENT(1) RENT
------------------------------------ ----------- --------- --------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Indiana............................. 5,493 1,085 440 7,018 46.3% $ 32,332 34.1%
Ohio................................ 2,380 2,817 722 5,919 39.0 48,438 51.0
Missouri............................ -- 339 33 372 2.4 3,886 4.1
Illinois............................ 126 -- 171 297 2.0 2,165 2.3
Tennessee........................... 495 -- -- 495 3.3 3,079 3.2
Kentucky............................ 669 -- -- 669 4.4 1,759 1.9
Michigan............................ -- 245 -- 245 1.6 2,734 2.9
Wisconsin........................... 154 -- -- 154 1.0 491 0.5
----- --------- --------- --------- ----- ------------ -----
Total........................... 9,317 4,486 1,366 15,169 100.0% $ 94,884 100.0%
----- --------- --------- --------- ----- ------------ -----
----- --------- --------- --------- ----- ------------ -----
Percent of total square feet........ 61.4% 29.6% 9.0% 100.0%
----- --------- --------- ---------
----- --------- --------- ---------
<FN>
------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
June 30, 1995.
</TABLE>
S-20
<PAGE>
SUMMARY OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
PERCENT OF
PERCENT OF ANNUAL NET TOTAL NET
SQUARE TOTAL SQUARE EFFECTIVE EFFECTIVE OCCUPANCY AT
TYPE OF PROPERTY FEET FEET RENT(1) ANNUAL RENT JUNE 30, 1995
-------------------------------------------------- --------- --------------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
Industrial........................................ 9,317 61% $ 35,621 38% 96.2%
Office............................................ 4,486 30 47,047 49 93.6%
Retail............................................ 1,366 9 12,216 13 95.1%
--------- --- ------------ ---
Total......................................... 15,169 100% $ 94,884 100% 95.3%
--------- --- ------------ ---
--------- --- ------------ ---
<FN>
------------------------
(1) Represents annual net effective rent due from tenants in occupancy as of
June 30, 1995. Net Effective Rent equals the average annual rental property
revenue over the terms of the respective leases, excluding additional rent
due as operating expense reimbursements, landlord allowances for operating
expenses and percentage rents.
</TABLE>
The following table sets forth the aggregate average percent leased for all
of the Properties during the indicated periods.
AVERAGE OCCUPANCY
(ALL PROPERTIES)
<TABLE>
<CAPTION>
SQUARE FEET AVERAGE
YEAR AVAILABLE OCCUPANCY
---------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Through June 30, 1995................................................. 15,169,339 94.9%
1994.................................................................. 12,894,603 93.8%
1993.................................................................. 10,864,245 92.1%
1992.................................................................. 10,572,874 89.3%
</TABLE>
S-21
<PAGE>
The following table shows lease expirations for leases in place as of June
30, 1995 for each of the ten years beginning with the remainder of 1995 for the
Properties, assuming none of the tenants exercises early termination or renewal
options.
LEASE EXPIRATIONS
(ALL PROPERTIES)
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NET RENTABLE ANNUAL NET ANNUAL NET ANNUAL NET TOTAL LEASED
NUMBER OF AREA (IN SQ. EFFECTIVE RENT EFFECTIVE RENT PER EFFECTIVE RENT SQ. FT.
YEAR OF LEASE LEASES FT.) SUBJECT TO UNDER SQ. FT. UNDER REPRESENTED BY REPRESENTED BY
EXPIRATION EXPIRING EXPIRING LEASES EXPIRING LEASES(1) EXPIRING LEASES (1) EXPIRING LEASES EXPIRING LEASES
-------------------- ----------- --------------- ------------------ ------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1995................ 128 562,583 $ 3,769,815 $ 6.70 3.97% 3.89%
1996................ 227 1,739,084 10,241,972 $ 5.89 10.79 12.03
1997................ 186 1,090,507 9,531,255 $ 8.74 10.05 7.54
1998................ 189 2,281,391 12,454,347 $ 5.46 13.13 15.78
1999................ 155 2,024,738 11,412,590 $ 5.64 12.03 14.00
2000................ 105 1,532,538 10,025,034 $ 6.54 10.57 10.60
2001................ 41 1,496,817 7,394,935 $ 4.94 7.79 10.35
2002................ 19 394,405 3,404,411 $ 8.63 3.59 2.73
2003................ 12 194,570 2,258,777 $ 11.61 2.37 1.35
2004................ 12 779,547 3,414,639 $ 4.38 3.60 5.39
2005................ 20 787,672 6,583,552 $ 8.36 6.94 5.45
2006................ -- -- -- -- -- --
2007 and
thereafter......... 27 1,575,076 14,392,059 $ 9.14 15.17 10.89
----- --------------- ------------------ ------ ------
Total........... 1,121 14,458,928 $ 94,883,386 $ 6.56 100.00% 100.00%
----- --------------- ------------------ ------ ------
----- --------------- ------------------ ------ ------
<FN>
------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
June 30, 1995.
</TABLE>
INDUSTRIAL PROPERTIES
The 74 industrial Properties are primarily located in industrial or business
parks that have been developed by the Operating Partnership or the Company and
consist of 44 bulk distribution facilities and 30 service center facilities.
Approximately 80% of the square footage of the industrial Properties is
contained in bulk distribution facilities. The bulk distribution facilities
accommodate the needs of large warehouse and distribution users with ceiling
clear heights of 20 feet and more while providing leased space to many large
tenants including users of more than 500,000 square feet. The service center
facilities are also known as flex buildings or light industrial properties with
12 to 18 foot ceiling heights and a combination of drive-up and dock loading
access. These service center facilities accommodate users of 1,200 square feet
and up. The diversity of the industrial buildings allows the Operating
Partnership to cater to many segments of the industrial market and renders the
Operating Partnership less dependent upon any specific market segment. Over 90%
of the industrial Properties are in the primary markets of the Operating
Partnership of Indianapolis, Cincinnati and Columbus. Over 90% of the square
footage of the industrial Properties was constructed or acquired and renovated
by the Operating Partnership in the last 10 years.
S-22
<PAGE>
The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the industrial Properties during the
indicated periods.
AVERAGE OCCUPANCY AND AVERAGE RENTALS
(INDUSTRIAL PROPERTIES)
<TABLE>
<CAPTION>
NET EFFECTIVE
SQUARE FEET AVERAGE RENT PER LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT(1)
------------------------------------------------------ ----------- ------------- ----------------
<S> <C> <C> <C>
Through June 30, 1995................................. 9,317,431 96.3% $ 4.00(2)(3)
1994.................................................. 7,622,627 95.5% $ 4.05(2)
1993.................................................. 6,235,835 93.2% $ 4.06
1992.................................................. 5,962,235 89.7% $ 3.91
<FN>
------------------------
(1) Calculated as the Net Effective Rent for the indicated period divided by
the average total square feet under lease during the same period.
(2) During 1994 and the first six months of 1995, the Operating Partnership
renewed 62% of its industrial leases up for renewal. The rental rate of the
726,000 square feet renewed during this period increased 10.4% for the
renewal period as compared to the prior lease term. During this same
period, the Operating Partnership leased an additional 1,063,000 square
feet in the in-service Properties at a Net Effective Rental rate of $4.28
per square foot.
(3) The average Net Effective Rent per leased square foot decreased in the
first six months of 1995 because the increase in square footage available
relates primarily to bulk warehouse space which provides a lower average
Net Effective Rent per leased square foot.
</TABLE>
S-23
<PAGE>
The following table shows lease expirations for leases in place as of June
30, 1995, for each of the ten years beginning with the remainder of 1995, for
the industrial Properties, assuming none of the tenants exercises early
termination or renewal options.
LEASE EXPIRATIONS
(INDUSTRIAL PROPERTIES)
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NET RENTABLE ANNUAL NET ANNUAL NET ANNUAL NET TOTAL LEASED
NUMBER OF AREA (IN SQ. EFFECTIVE RENT EFFECTIVE RENT PER EFFECTIVE RENT SQ. FT.
YEAR OF LEASE LEASES FT.) SUBJECT TO UNDER SQ. FT. UNDER REPRESENTED BY REPRESENTED BY
EXPIRATION EXPIRING EXPIRING LEASES EXPIRING LEASES(1) EXPIRING LEASES (1) EXPIRING LEASES EXPIRING LEASES
-------------------- ------------- --------------- ------------------ ------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1995................ 33 308,469 $ 1,158,836 $ 3.76 3.25% 3.44%
1996................ 88 1,164,640 4,403,329 $ 3.78 12.36 13.00
1997................ 51 397,536 2,240,280 $ 5.64 6.29 4.44
1998................ 66 1,675,433 6,365,518 $ 3.80 17.87 18.70
1999................ 60 1,500,280 6,076,989 $ 4.05 17.06 16.74
2000................ 44 1,093,512 4,577,947 $ 4.19 12.85 12.20
2001................ 16 1,211,872 4,352,625 $ 3.59 12.22 13.52
2002................ 7 124,980 499,681 $ 4.00 1.40 1.39
2003................ 3 40,378 441,951 $ 10.95 1.24 0.45
2004................ 7 703,033 2,552,673 $ 3.63 7.17 7.85
2005................ 4 313,120 1,040,080 $ 3.32 2.92 3.49
2006................ -- -- -- -- -- --
2007 and
thereafter......... 4 427,486 1,911,229 $ 4.47 5.37 4.78
--- --------------- ------------------ ------ ------
Total........... 383 8,960,739 $ 35,621,138 $ 3.98 100.00% 100.00%
--- --------------- ------------------ ------ ------
--- --------------- ------------------ ------ ------
<FN>
------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
June 30, 1995.
</TABLE>
OFFICE PROPERTIES
The Operating Partnership owns a portfolio of 49 office Properties. The
Operating Partnership has 46 suburban office buildings ranging from one-story
buildings to five-story or mid-rise office buildings located in developed
business parks and mixed use developments with excellent interstate access and
visibility. Three of the suburban office buildings are medical buildings,
including a single tenant facility with a 20 year lease and two multi-tenant
properties attached to a hospital. In addition, the Operating Partnership owns
three downtown buildings consisting of two new high-rise office buildings and
one rehabilitated office building. The office Properties are a collection of
modern facilities with over 95% constructed or renovated within the last ten
years. The Operating Partnership believes that these primarily Class A office
Properties are among the highest quality available to tenants in its markets.
This diverse mix of office buildings is occupied by tenants spanning all
segments of the office market.
S-24
<PAGE>
The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the office Properties during the
indicated periods.
AVERAGE OCCUPANCY AND AVERAGE RENTALS
(OFFICE PROPERTIES)
<TABLE>
<CAPTION>
NET EFFECTIVE
RENT PER
SQUARE FEET AVERAGE LEASED SQUARE
YEAR AVAILABLE OCCUPANCY FOOT (1)
------------------------------------------------------ ----------- ------------- --------------
<S> <C> <C> <C>
Through June 30, 1995................................. 4,485,879 92.1% $ 10.88(2)
1994.................................................. 3,986,629 90.7% $ 10.86(2)
1993.................................................. 3,811,904 90.5% $ 10.91
1992.................................................. 3,811,904 88.9% $ 10.89
<FN>
------------------------
(1) Calculated as the Net Effective Rent for the indicated period, divided by
the average total square feet under lease during the same period.
(2) During 1994 and the first six months of 1995, the Operating Partnership
renewed 65% of its office leases up for renewal. The rental rate of the
430,000 square feet renewed during this period increased 4.5% for the
renewal period as compared to the prior lease term. During this same
period, the Operating Partnership leased an additional 429,000 square feet
in the in-service Properties at a Net Effective Rental rate of $10.08 per
square foot.
</TABLE>
The following table shows lease expirations for leases in place as of June
30, 1995, for each of the ten years beginning with the remainder of 1995, for
the office Properties, assuming none of the tenants exercises early termination
or renewal options.
LEASE EXPIRATIONS
(OFFICE PROPERTIES)
<TABLE>
<CAPTION>
ANNUAL NET ANNUAL NET PERCENT OF PERCENT OF
NET RENTABLE EFFECTIVE RENT EFFECTIVE RENT ANNUAL NET TOTAL LEASED
NUMBER OF AREA (IN SQ. UNDER PER SQ. FT. UNDER EFFECTIVE RENT SQ. FT.
YEAR OF LEASE LEASES FT.) SUBJECT TO EXPIRING EXPIRING REPRESENTED BY REPRESENTED BY
EXPIRATION EXPIRING EXPIRING LEASES LEASES(1) LEASES(1) EXPIRING LEASES EXPIRING LEASES
--------------------- ------------- --------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1995................. 83 232,368 $ 2,369,596 $ 10.20 5.04% 5.53%
1996................. 97 472,030 4,750,587 $ 10.06 10.10 11.24
1997................. 94 588,409 6,126,540 $ 10.41 13.02 14.01
1998................. 88 498,378 4,951,133 $ 9.93 10.52 11.87
1999................. 65 402,267 4,091,057 $ 10.17 8.70 9.58
2000................. 32 326,451 4,205,490 $ 12.88 8.94 7.78
2001................. 21 252,045 2,730,998 $ 10.84 5.80 6.00
2002................. 5 174,580 2,043,187 $ 11.70 4.34 4.16
2003................. 5 117,696 1,487,327 $ 12.64 3.16 2.80
2004................. 3 63,326 726,258 $ 11.47 1.54 1.51
2005................. 9 329,797 4,367,990 $ 13.24 9.28 7.86
2006................. -- -- -- -- -- --
2007 and
thereafter.......... 12 741,265 9,196,356 $ 12.41 19.56 17.66
--- --------------- ----------------- ------ ------
Total............ 514 4,198,612 $ 47,046,519 $ 11.21 100.00% 100.00%
--- --------------- ----------------- ------ ------
--- --------------- ----------------- ------ ------
<FN>
------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
June 30, 1995.
</TABLE>
S-25
<PAGE>
RETAIL PROPERTIES
The retail Properties, which cater to a variety of retail markets, include
one regional shopping center, 12 neighborhood shopping centers, three shopping
centers designed primarily to serve the business parks in which they are located
and five free-standing single-tenant buildings. The regional and neighborhood
shopping centers either have well known anchor tenants such as Wal-Mart and Pet
Food Supermarket, or are located adjacent to major retailers such as Kroger or
in areas where other large commercial facilities draw consumers. The retail
Properties are generally located in upscale suburban and high growth areas.
The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the retail Properties during the
indicated periods.
AVERAGE OCCUPANCY AND AVERAGE RENTALS
(RETAIL PROPERTIES)
<TABLE>
<CAPTION>
NET EFFECTIVE
SQUARE FEET AVERAGE RENT PER LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT (1)
------------------------------------------------------ ----------- ------------- ----------------
<S> <C> <C> <C>
Through June 30, 1995................................. 1,366,029 95.4% $ 9.05(2)
1994.................................................. 1,285,347 93.6% $ 8.96(2)
1993.................................................. 816,506 91.2% $ 9.04
1992.................................................. 795,506 87.2% $ 8.85
<FN>
------------------------
(1) Calculated as the Net Effective Rent for the indicated period divided by
the average total square feet under lease during the same period.
(2) During 1994 and the first six months of 1995, the Operating Partnership
renewed 83% of its retail leases up for renewal. The rental rate of the
105,000 square feet renewed during this period increased 11.2% for the
renewal period as compared to the prior lease term. During this same
period, the Operating Partnership leased an additional 114,000 square feet
in the in-service Properties at a Net Effective Rental rate of $10.61 per
square foot.
</TABLE>
S-26
<PAGE>
The following table shows lease expirations for leases in place as of June
30, 1995, for each of the ten years beginning with the remainder of 1995, for
the retail Properties, assuming none of the tenants exercises early termination
or renewal options.
LEASE EXPIRATIONS
(RETAIL PROPERTIES)
<TABLE>
<CAPTION>
ANNUAL NET ANNUAL NET PERCENT OF PERCENT OF
NET RENTABLE EFFECTIVE RENT EFFECTIVE RENT ANNUAL NET TOTAL LEASED
NUMBER OF AREA (IN SQ. UNDER PER SQ. FT. UNDER EFFECTIVE RENT SQ. FT.
YEAR OF LEASE LEASES FT.) SUBJECT TO EXPIRING EXPIRING REPRESENTED BY REPRESENTED BY
EXPIRATION EXPIRING EXPIRING LEASES LEASES (1) LEASES (1) EXPIRING LEASES EXPIRING LEASES
--------------------- ------------- --------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1995................. 12 21,746 $ 241,383 $ 11.10 1.98% 1.67%
1996................. 42 102,414 1,088,056 $ 10.62 8.91 7.88
1997................. 41 104,562 1,164,435 $ 11.14 9.53 8.05
1998................. 35 107,580 1,137,696 $ 10.58 9.31 8.28
1999................. 30 122,191 1,244,544 $ 10.19 10.19 9.40
2000................. 29 112,575 1,241,597 $ 11.03 10.16 8.66
2001................. 4 32,900 311,312 $ 9.46 2.55 2.53
2002................. 7 94,845 861,543 $ 9.08 7.05 7.30
2003................. 4 36,496 329,499 $ 9.03 2.70 2.81
2004................. 2 13,188 135,708 $ 10.29 1.11 1.01
2005................. 7 144,755 1,175,482 $ 8.12 9.62 11.16
2006................. -- -- -- -- -- --
2007 and
thereafter.......... 11 406,325 3,284,474 $ 8.08 26.89 31.25
--- --------------- ----------------- ------ ------
Total............ 224 1,299,577 $ 12,215,729 $ 9.40 100.00% 100.00%
--- --------------- ----------------- ------ ------
--- --------------- ----------------- ------ ------
<FN>
------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
June 30, 1995.
</TABLE>
LAND
Substantially all the approximately 900 acres of unencumbered Land is
located adjacent to the Properties in industrial or business parks that have
been developed by the Operating Partnership or the Company. Approximately 80% of
the Land is zoned for industrial use, with the remainder zoned for either office
or retail use. All of the Land is unencumbered, has available to it appropriate
utilities and is ready for immediate development. The Operating Partnership
believes that approximately 120 buildings containing approximately 11 million
square feet of commercial development can be constructed on the Land. The
Operating Partnership believes that the Land gives it a competitive advantage
over other real estate companies operating in its markets.
S-27
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes constitute a separate series of securities (which are more fully
described in the accompanying Prospectus) to be issued pursuant to an indenture
dated as of September , 1995, as amended or supplemented (the "Indenture"),
between the Operating Partnership and The First National Bank of Chicago, as
trustee (the "Trustee"), and will be limited to an aggregate principal amount of
$100,000,000. The terms of the Notes include those provisions contained in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Notes are
subject to all such terms, and holders of Notes are referred to the Indenture
and the Trust Indenture Act for a statement thereof. The following summary of
certain provisions of the Indenture does not purport to be complete and is
subject to and qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below.
The Notes will be direct, unsecured obligations of the Operating Partnership
and will rank pari passu with each other and with all other unsecured and
unsubordinated indebtedness of the Operating Partnership from time to time
outstanding. The Notes will be effectively subordinated to the prior claims of
each secured mortgage lender to any specific Property which secures such
lender's mortgage. As of June 30, 1995, such mortgages aggregated approximately
$300.2 million (approximately $260.7 million on a pro forma basis). See
"Capitalization." Subject to certain limitations set forth in the Indenture, and
as described under "-- Certain Covenants -- Limitations on Incurrence of Debt"
below, the Indenture will permit the Operating Partnership to incur additional
secured and unsecured indebtedness.
The Notes will mature on September , 200 (the "Maturity Date"). The Notes
are not subject to any sinking fund provisions. The Notes will be issued only in
fully registered, book-entry form without coupons, in denominations of $1,000
and integral multiples thereof, except under the limited circumstances described
below under "Description of the Notes -- Book-Entry System."
Except as described under "-- Certain Covenants -- Limitations on Incurrence
of Debt" below and under "Description of Debt Securities -- Merger,
Consolidation or Sale" in the accompanying Prospectus, the Indenture does not
contain any other provisions that would limit the ability of the Operating
Partnership to incur indebtedness or that would afford holders of the Notes
protection in the event of (i) a highly leveraged or similar transaction
involving the Operating Partnership, the Company as general partner of the
Operating Partnership, or any Affiliate of either such party, (ii) a change of
control, or (iii) a reorganization, restructuring, merger or similar transaction
involving the Operating Partnership that may adversely affect the holders of the
Notes. In addition, subject to the limitations set forth under "Description of
Debt Securities -- Merger, Consolidation or Sale" in the accompanying
Prospectus, the Operating Partnership may, in the future, enter into certain
transactions such as the sale of all or substantially all of its assets or the
merger or consolidation of the Operating Partnership that would increase the
amount of the Operating Partnership's indebtedness or substantially reduce or
eliminate the Operating Partnership's assets, which may have an adverse effect
on the Operating Partnership's ability to service its indebtedness, including
the Notes. The Operating Partnership and its management have no present
intention of engaging in a highly leveraged or similar transaction involving the
Operating Partnership.
PRINCIPAL AND INTEREST
The Notes will bear interest at % per annum from September , 1995 or
from the immediately preceding Interest Payment Date (as defined below) to which
interest has been paid, payable semi-annually in arrears on each March and
September , commencing March , 1996 (each, an "Interest Payment Date"), and
on the Maturity Date, to the persons (the "Holders") in whose names the
applicable Notes are registered in the security register applicable to the Notes
at the close of business 15 calendar days prior to such payment date regardless
of whether such day is a Business Day, as defined below (each, a "Regular Record
Date"). Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
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<PAGE>
The principal of each Note payable on the Maturity Date will be paid against
presentation and surrender of such Note at the corporate trust office of the
Trustee, located initially at 14 Wall Street, Eighth Floor, New York, New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
If any Interest Payment Date or the Maturity Date falls on a day that is not
a Business Day, the required payment shall be made on the next Business Day as
if it were made on the date such payment was due and no interest shall accrue on
the amount so payable for the period from and after such Interest Payment Date
or the Maturity Date, as the case may be. "Business Day" means any day, other
than a Saturday or Sunday, on which banking institutions in The City of New York
are open for business.
CERTAIN COVENANTS
LIMITATIONS ON INCURRENCE OF DEBT. The Operating Partnership will not, and
will not permit any Subsidiary to, incur any Debt (as defined below), other than
intercompany debt (representing Debt to which the only parties are the Company,
the Operating Partnership and any of their Subsidiaries (but only so long as
such Debt is held solely by any of the Company, the Operating Partnership and
any Subsidiary) that is subordinate in right of payment to the Notes) if,
immediately after giving effect to the incurrence of such additional Debt, the
aggregate principal amount of all outstanding Debt of the Operating Partnership
and its Subsidiaries on a consolidated basis determined in accordance with
generally accepted accounting principles is greater than 55% of the sum of (i)
the Operating Partnership's Total Assets (as defined below) as of the end of the
calendar quarter covered in the Operating Partnership's Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed
with the Commission (or, if such filing is not permitted under the Exchange Act,
with the Trustee) prior to the incurrence of such additional Debt and (ii) the
increase in Total Assets from the end of such quarter including, without
limitation, any increase in Total Assets resulting from the incurrence of such
additional Debt (such increase together with the Operating Partnership's Total
Assets shall be referred to as the "Adjusted Total Assets").
In addition to the foregoing limitation on the incurrence of Debt, the
Operating Partnership will not, and will not permit any Subsidiary to, incur any
Debt if the ratio of Consolidated Income Available for Debt Service to the
Annual Service Charge (in each case as defined below) for the four consecutive
fiscal quarters most recently ended prior to the date on which such additional
Debt is to be incurred shall have been less than 2.0 to 1, on a pro forma basis
after giving effect to the incurrence of such Debt and to the application of the
proceeds therefrom, and calculated on the assumption that (i) such Debt and any
other Debt incurred by the Operating Partnership or its Subsidiaries since the
first day of such four-quarter period and the application of the proceeds
therefrom, including to refinance other Debt, had occurred at the beginning of
such period, (ii) the repayment or retirement of any other Debt by the Operating
Partnership or its Subsidiaries since the first day of such four-quarter period
had been incurred, repaid or retired at the beginning of such period (except
that, in making such computation, the amount of Debt under any revolving credit
facility shall be computed based upon the average daily balance of such Debt
during such period), (iii) the income earned on any increase in Adjusted Total
Assets since the end of such four-quarter period had been earned, on an
annualized basis, during such period, and (iv) in the case of any acquisition or
disposition by the Operating Partnership or any Subsidiary of any asset or group
of assets since the first day of such four-quarter period, including, without
limitation, by merger, stock purchase or sale, or asset purchase or sale, such
acquisition or disposition or any related repayment of Debt had occurred as of
the first day of such period with the appropriate adjustments with respect to
such acquisition or disposition being included in such pro forma calculation.
In addition to the foregoing limitations on the incurrence of Debt, the
Operating Partnership will not, and will not permit any Subsidiary to, incur any
Debt secured by any mortgage, lien, charge, pledge, encumbrance or security
interest of any kind upon any of the property of the Operating Partnership or
any Subsidiary ("Secured Debt"), whether owned at the date of the Indenture or
thereafter acquired, if,
S-29
<PAGE>
immediately after giving effect to the incurrence of such additional Secured
Debt, the aggregate principal amount of all outstanding Secured Debt of the
Operating Partnership and its Subsidiaries on a consolidated basis is greater
than 40% of the Operating Partnership's Adjusted Total Assets.
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Debt, Debt shall be deemed to be "incurred" by the Operating
Partnership and its Subsidiaries on a consolidated basis whenever the Operating
Partnership and its Subsidiaries on a consolidated basis shall create, assume,
guarantee or otherwise become liable in respect thereof.
MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Operating Partnership is
required to maintain Total Unencumbered Assets of not less than 185% of the
aggregate outstanding principal amount of the Unsecured Debt of the Operating
Partnership.
As used herein:
"ANNUAL SERVICE CHARGE" as of any date means the amount which is expensed in
any 12-month period for interest on Debt.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any period means
Consolidated Net Income (as defined below) of the Operating Partnership and its
Subsidiaries plus amounts which have been deducted for (a) interest on Debt of
the Operating Partnership and its Subsidiaries, (b) provision for taxes of the
Operating Partnership and its Subsidiaries based on income, (c) amortization of
debt discount, (d) provisions for gains and losses on properties, (e)
depreciation and amortization, (f) the effect of any noncash charge resulting
from a change in accounting principles in determining Consolidated Net Income
for such period and (g) amortization of deferred charges.
"CONSOLIDATED NET INCOME" for any period means the amount of consolidated
net income (or loss) of the Operating Partnership and its Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles.
"DEBT" of the Operating Partnership or any Subsidiary means any indebtedness
of the Operating Partnership and its Subsidiaries, whether or not contingent, in
respect of (i) borrowed money evidenced by bonds, notes, debentures or similar
instruments, (ii) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property owned by the Operating
Partnership and its Subsidiaries, (iii) the reimbursement obligations,
contingent or otherwise, in connection with any letters of credit actually
issued or amounts representing the balance deferred and unpaid of the purchase
price of any property except any such balance that constitutes an accrued
expense or trade payable or (iv) any lease of property by the Operating
Partnership and its Subsidiaries as lessee which is reflected in the Operating
Partnership's consolidated balance sheet as a capitalized lease in accordance
with generally accepted accounting principles, in the case of items of
indebtedness under (i) through (iii) above to the extent that any such items
(other than letters of credit) would appear as a liability on the Operating
Partnership's consolidated balance sheet in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise included,
any obligation by the Operating Partnership or any Subsidiary to be liable for,
or to pay, as obligor, guarantor or otherwise (other than for purposes of
collection in the ordinary course of business), indebtedness of another person
(other than the Operating Partnership or any Subsidiary) (it being understood
that Debt shall be deemed to be incurred by the Operating Partnership and its
Subsidiaries on a consolidated basis whenever the Operating Partnership and its
Subsidiaries on a consolidated basis shall create, assume, guarantee or
otherwise become liable in respect thereof).
"FUNDS FROM OPERATIONS" for any period means the Consolidated Net Income of
the Operating Partnership and its Subsidiaries for such period without giving
effect to depreciation and amortization, gains or losses from extraordinary
items, gains or losses on sales of real estate, gains or losses on investments
in marketable securities and any provision/benefit for income taxes for such
period, plus the allocable portion, based on the Operating Partnership's
ownership interest, of funds from operations of unconsolidated joint ventures,
all determined on a consistent basis in accordance with generally accepted
accounting principles.
S-30
<PAGE>
"SUBSIDIARY" means a corporation, partnership or limited liability company,
a majority of the outstanding voting stock, partnership interests or membership
interests, as the case may be, of which is owned or controlled, directly or
indirectly, by the Operating Partnership or by one or more other Subsidiaries of
the Operating Partnership. For the purposes of this definition, "voting stock"
means stock having voting power for the election of directors, or trustees, as
the case may be, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
"TOTAL ASSETS" as of any date means the sum of (i) the Operating
Partnership's and its Subsidiaries' Undepreciated Real Estate Assets and (ii)
all other assets of the Operating Partnership and its Subsidiaries on a
consolidated basis determined in accordance with generally accepted accounting
principles (but excluding intangibles and accounts receivable).
"TOTAL UNENCUMBERED ASSETS" means the sum of (i) those Undepreciated Real
Estate Assets not subject to an encumbrance and (ii) all other assets of the
Operating Partnership and its Subsidiaries not subject to an encumbrance
determined in accordance with generally accepted accounting principles (but
excluding accounts receivable and intangibles).
"UNDEPRECIATED REAL ESTATE ASSETS" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Operating
Partnership and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with generally
accepted accounting principles.
"UNSECURED DEBT" means Debt of the Operating Partnership or any Subsidiary
which is not secured by any mortgage, lien, charge, pledge or security interest
of any kind upon any of the Properties.
Reference is made to the section entitled "Description of Debt Securities --
Certain Covenants" in the accompanying Prospectus for a description of
additional covenants applicable to the Notes. Compliance with the covenants
described herein and such additional covenants with respect to the Notes
generally may not be waived by the Board of Directors of the Company, as general
partner of the Operating Partnership, or by the Trustee unless the Holders of at
least a majority in principal amount of all outstanding Notes consent to such
waiver; PROVIDED, HOWEVER, that the defeasance and covenant defeasance
provisions of the Indenture described under "Description of Debt Securities --
Discharge, Defeasance and Covenant Defeasance" in the accompanying Prospectus
will apply to the Notes, including with respect to the covenants described in
this Prospectus Supplement.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time after September , 200 at the option
of the Operating Partnership, in whole or from time to time in part, at a
redemption price equal to the sum of (i) the principal amount of the Notes being
redeemed plus accrued interest thereon to the redemption date and (ii) the
Make-Whole Amount (as defined below), if any, with respect to such Notes (the
"Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes called for redemption shall have been made available on
the redemption date referred to in such notice, such Notes will cease to bear
interest on the date fixed for such redemption specified in such notice and the
only right of the Holders of the Notes will be to receive payment of the
Redemption Price.
Notice of any optional redemption of any Notes will be given to Holders at
their addresses, as shown in the security register for the Notes, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Notes held by such Holder to be redeemed.
If less than all the Notes are to be redeemed at the option of the Operating
Partnership, the Operating Partnership will notify the Trustee at least 45 days
prior to giving notice of redemption (or such shorter period as is satisfactory
to the Trustee) of the aggregate principal amount of Notes to be redeemed and
their redemption date. The Trustee shall select, in such manner as it shall deem
fair and appropriate, Notes to be redeemed in whole or in part.
S-31
<PAGE>
As used herein:
"MAKE-WHOLE AMOUNT" means, in connection with any optional redemption or
accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of each such dollar if such redemption or
accelerated payment had not been made, determined by discounting, on a
semi-annual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date such notice of
redemption is given or declaration of acceleration is made) from the respective
dates on which such principal and interest would have been payable if such
redemption or accelerated payment had not been made, over (ii) the aggregate
principal amount of the Notes being redeemed or paid.
"REINVESTMENT RATE" means . % plus the arithmetic mean of the yields under
the respective heading "Week Ending" published in the most recent Statistical
Release under the caption "Treasury Constant Maturities" for the maturity
(rounded to the nearest month) corresponding to the remaining life to maturity,
as of the payment date of the principal being redeemed or paid. If no maturity
exactly corresponds to such maturity, yields for the two published maturities
most closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
"STATISTICAL RELEASE" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the Indenture, then such
other reasonably comparable index which shall be designated by the Operating
Partnership.
BOOK-ENTRY SYSTEM
The following are summaries of certain rules and operating procedures of DTC
that affect the payment of principal and interest and transfers of interests in
the Global Note. Upon issuance, the Notes will only be issued in the form of a
Global Note which will be deposited with, or on behalf of, DTC and registered in
the name of Cede & Co., as nominee of DTC. Unless and until it is exchanged in
whole or in part for Notes in definitive form under the limited circumstances
described below, the Global Note may not be transferred except as a whole (i) by
DTC to a nominee of DTC, (ii) by a nominee of DTC to DTC or another nominee of
DTC or (iii) by DTC or any such nominee to a successor of DTC or a nominee of
such successor.
Ownership of beneficial interests in the Global Note will be limited to
persons that have accounts with DTC for the Global Note ("participants") or
persons that may hold interests through participants. Upon the issuance of the
Global Note, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with the respective principal amounts of the
Notes represented by the Global Note beneficially owned by such participants.
Ownership of beneficial interests in the Global Note will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by DTC (with respect to interests of participants) and on the records
of participants (with respect to interests of persons holding through
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may limit or impair the ability to own, transfer or pledge beneficial
interests in the Global Note.
So long as DTC or its nominee is the registered owner of the Global Note,
DTC or its nominee, as the case may be, will be considered the sole owner or
Holder of the Notes represented by the Global Note for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in the
Global Note will not be entitled to have Notes represented by the Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of the Notes in certificated form and will not be considered the
registered owners or Holders thereof under the Indenture. Accordingly, each
person owning a beneficial
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<PAGE>
interest in the Global Note must rely on the procedures of DTC and, if such
person in not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a Holder under the
Indenture. The Operating Partnership understands that under existing industry
practices, if the Operating Partnership requests any action of Holders or if an
owner of a beneficial interest in the Global Note desires to give or take any
action that a Holder is entitled to give or take under the Indenture, DTC would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners holding through them.
Principal and interest payments on interests represented by the Global Note
will be made to DTC or its nominee, as the case may be, as the registered owner
of the Global Note. None of the Operating Partnership, the Trustee or any other
agent of the Operating Partnership or agent of the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership of interests in the Global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Operating Partnership expects that DTC, upon receipt of any payment of
principal or interest in respect of the Global Note, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the Global Note as shown on the records of
DTC. The Operating Partnership also expects that payments by participants to
owners of beneficial interests in the Global Note held through such participants
will be governed by standing customer instructions and customary practice, as is
now the case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants.
If DTC is at any time unwilling or unable to continue as depository for the
Notes and the Operating Partnership fails to appoint a successor depository
registered as a clearing agency under the Exchange Act within 90 days, the
Operating Partnership will issue the Notes in definitive form in exchange for
the Global Note. Any Notes issued in definitive form in exchange for the Global
Note will be registered in such name or names, and will be issued in
denominations of $1,000 and such integral multiples thereof, as DTC shall
instruct the Trustee. It is expected that such instructions will be based upon
directions received by DTC from participants with respect to ownership of
beneficial interests in the Global Note.
DTC has advised the Operating Partnership of the following information
regarding DTC. DTC is a limited-purpose trust company organized under the
Banking Law of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities of its participants
and to facilitate the clearance and settlement of transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of which (and/or their representatives) own DTC. Access to
the DTC book-entry system is also available to others, such as banks, brokers
and dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters (as defined
herein) in immediately available funds. All payments of principal and interest
in respect of the Notes will be made by the Operating Partnership in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in the terms agreement and
related purchase agreement basic provisions (collectively, the "Underwriting
Agreement"), the Operating Partnership has agreed to sell to Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), J.P. Morgan Securities
Inc. and First Chicago Capital Markets, Inc. (the "Underwriters"), and the
Underwriters have severally agreed to purchase, the respective principal amount
of the Notes set forth after their names below. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent, and that the Underwriters will be obligated to purchase
all of the Notes if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
-------------------------------------------------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................ $
J.P. Morgan Securities Inc....................................
First Chicago Capital Markets, Inc............................
----------------
Total............................................... $ 100,000,000
----------------
----------------
</TABLE>
The Underwriters have advised the Operating Partnership that they propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of % of principal amount thereof.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of % of principal amount to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Notes are a new issue of securities with no established trading market.
The Operating Partnership does not intend to apply for listing of the Notes on a
national securities exchange. The Operating Partnership has been advised by the
Underwriters that the Underwriters intend to make a market in the Notes as
permitted by applicable laws and regulations, but the Underwriters are not
obligated to do so and may discontinue market-making at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Notes.
The Operating Partnership and the Company have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
Merrill Lynch from time to time provides investment banking and financial
advisory services to the Company and the Operating Partnership. Merrill Lynch
also acted as representative of various underwriters in connection with public
offerings of the Company's Common Stock in 1993, 1994 and 1995. J.P. Morgan
Securities Inc. and the Operating Partnership have entered into a Forward
Treasury Lock Agreement pursuant to which the Operating Partnership has paid a
fee to J.P. Morgan Securities Inc. The First National Bank of Chicago, an
affiliate of First Chicago Capital Markets, Inc., is serving as Trustee for the
Notes and is also an agent bank for the Operating Partnership's Credit Line.
S-34
<PAGE>
PROSPECTUS
$360,000,000
DUKE REALTY INVESTMENTS, INC.
COMMON STOCK, PREFERRED STOCK AND DEPOSITARY SHARES
DUKE REALTY LIMITED PARTNERSHIP
DEBT SECURITIES
Duke Realty Investments, Inc. (the "Company") may from time to time offer in
one or more series (i) shares of Common Stock, $.01 par value ("Common Stock"),
(ii) shares of preferred stock, $.01 par value ("Preferred Stock") and (iii)
shares of Preferred Stock represented by depositary shares (the "Depositary
Shares"), with an aggregate public offering price of up to $100,000,000 (or its
equivalent in another currency based on the exchange rate at the time of sale)
in amounts, at prices and on terms to be determined at the time of offering.
Duke Realty Limited Partnership (the "Operating Partnership") may from time to
time offer in one or more series unsecured non-convertible investment grade debt
securities ("Debt Securities"), with an aggregate public offering price of up to
$260,000,000 (or its equivalent in another currency based on the exchange rate
at the time of sale) in amounts, at prices and on terms to be determined at the
time of offering. The Common Stock, Preferred Stock, Depositary Shares and Debt
Securities, (collectively, the "Securities") may be offered, separately or
together, in separate series in amounts, at prices and on terms to be set forth
in one or more supplements to this Prospectus (each a "Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Common Stock, any initial
public offering price; (ii) in the case of Preferred Stock, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price; (iii) in the case of
Depositary Shares, the fractional share of Preferred Stock represented by each
such Depositary Share; and (iv) in the case of Debt Securities, the specific
title, aggregate principal amount, currency, form (which may be registered or
bearer, or certificated or global), authorized denominations, maturity, rate (or
manner of calculation thereof) and time of payment of interest, terms for
redemption at the option of the Operating Partnership or repayment at the option
of the holder, terms for sinking fund payments, covenants and any initial public
offering price. In addition, such specific terms may include limitations on
direct or beneficial ownership and restrictions on transfer of the Securities,
in each case as may be appropriate to preserve the status of the Company as a
real estate investment trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered directly, through agents designated from time
to time by the Company or the Operating Partnership, or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in an accompanying Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such series of Securities.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is September 7, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company and the Operating Partnership are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, the Company files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"), and the Operating Partnership files reports with the Commission.
Such reports, proxy statements and other information can be inspected and copied
at the Public Reference Section maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549; Chicago Regional Office, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, New York, New York 10048. Such reports, proxy
statements and other information concerning the Company can also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The Company and the Operating Partnership will provide without charge to
each person to whom a copy of this Prospectus is delivered, upon their written
or oral request, a copy of any or all of the documents incorporated herein by
reference (other than exhibits to such documents). Written requests for such
copies should be addressed to 8888 Keystone Crossing, Suite 1200, Indianapolis,
Indiana 46240, Attn: Investor Relations, telephone number (317) 574-3531.
The Company and the Operating Partnership have filed with the Commission a
registration statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933 as amended (the "Securities Act"), with respect to the
Securities offered hereby. For further information with respect to the Company,
the Operating Partnership and the Securities offered hereby, reference is made
to the Registration Statement and exhibits thereto. Statements contained in this
Prospectus as to the contents of any contract or other documents are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or documents filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company under the Exchange Act with the
Commission are incorporated in this Prospectus by reference and are made a part
hereof:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1994.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995.
3. The Company's Current Reports on Form 8-K dated May 15, 1995, June 6,
1995, July 27, 1995 and September 5, 1995.
Each document filed by the Company or the Operating Partnership subsequent
to the date of this Prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act and prior to termination of the offering of all Securities to
which this Prospectus relates shall be deemed to be incorporated by reference in
this Prospectus and shall be part hereof from the date of filing of such
document. Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus (in the case of a statement in a previously-filed
document incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of Securities
or in any other subsequently filed document that is also incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
accompanying Prospectus Supplement. Subject to the foregoing, all information
appearing in this Prospectus and each accompanying Prospectus Supplement is
qualified in its entirety by the information appearing in the documents
incorporated by reference.
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THE COMPANY AND THE OPERATING PARTNERSHIP
The Company is a self-administered and self-managed real estate investment
trust that began operations through a predecessor in 1972. At June 30, 1995, the
Company owned direct or indirect interests in a portfolio of 144 in-service
industrial, office and retail properties (the "Properties"), together with
approximately 900 acres of land (the "Land") for future development. The
Properties consist of industrial, office and retail properties, located in
Indiana, Ohio, Illinois, Kentucky, Michigan, Missouri, Tennessee and Wisconsin.
As of June 30, 1995, the Properties consisted of approximately 15.2 million
square feet, which were approximately 95.3% leased to approximately 1,200
tenants.
All of the Company's interests in the Properties and Land are held by, and
substantially all of its operations relating to the Properties and Land are
conducted through, the Operating Partnership. The Operating Partnership holds a
100% interest in all but 21 of the Properties and substantially all of the Land.
The Company controls the Operating Partnership as the sole general partner and
owner, as of June 30, 1995, of approximately 85.29% of the outstanding units of
partnership interest of the Operating Partnership ("Units"). Each Unit, other
than those held by the Company, may be exchanged by the holder thereof for one
share (subject to certain adjustments) of the Common Stock. With each such
exchange, the number of Units owned by the Company and, therefore, the Company's
percentage interest in the Operating Partnership, will increase.
In addition to owning the Properties and the Land, the Operating Partnership
also provides services associated with leasing, property management, real estate
development, construction and miscellaneous tenant services (the "Related
Businesses") for the Properties. The Company also provides services associated
with the Related Businesses to third parties and owners of indirectly owned
Properties through Duke Realty Services Limited Partnership on a fee basis.
The Company's experienced staff provides a full range of real estate
services from executive offices headquartered in Indianapolis, and from six
regional offices located in the Cincinnati, Columbus, Decatur, Detroit,
Nashville and St. Louis metropolitan areas.
The Company is an Indiana corporation that was originally incorporated in
the State of Delaware in 1985, and reincorporated in the State of Indiana in
1992. The Operating Partnership is an Indiana limited partnership that was
formed in 1993. The Company's and the Operating Partnership's executive offices
are located at 8888 Keystone Crossing, Suite 1200, Indianapolis, Indiana 46240,
and their telephone number is (317) 574-3531.
USE OF PROCEEDS
The Company is required, by the terms of the partnership agreement of the
Operating Partnership, to invest the net proceeds of any sale of Common Stock,
Preferred Stock or Depositary Shares in the Operating Partnership in exchange
for additional Units or preferred Units, as the case may be. Unless otherwise
specified in the applicable Prospectus Supplement, the Company and the Operating
Partnership intend to use the net proceeds from the sale of Securities for
general corporate purposes, including the development and acquisition of
additional properties and other acquisition transactions, the payment of certain
outstanding debt, and improvements to certain properties in the Company's
portfolio.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's and the Operating Partnership's ratios of earnings to fixed
charges for the six months ended June 30, 1995 were 2.48 and for the year ended
December 31, 1994 were 2.33. The ratio of earnings to fixed charges for the
Company for the year ended December 31, 1993 was 1.58, and for the Operating
Partnership from its formation on October 4, 1993 to December 31, 1993 was 2.51.
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For purposes of computing these ratios, earnings have been calculated by
adding fixed charges, excluding capitalized interest, to income (loss) before
gains or losses on property sales and (if applicable) minority interest in the
Operating Partnership. Fixed charges consist (if applicable) of interest costs,
whether expensed or capitalized, the interest component of rental expense and
amortization of debt issuance costs.
Prior to completion of the Company's reorganization in October, 1993, the
Company maintained a different capital structure. As a result, although the
original properties have historically generated positive net cash flow, the
financial statements of the Company show net losses for the fiscal years ended
December 31, 1992, 1991 and 1990. Consequently, the computation of the ratio of
earnings to fixed charges for such periods indicates that earnings were
inadequate to cover fixed charges by approximately $0.7 million, $1.8 million
and $1.7 million for the fiscal years ended December 31, 1992, 1991 and 1990,
respectively.
The recapitalization of the Company effected in connection with the
reorganization permitted the Company to significantly deleverage, resulting in
an improved ratio of earnings to fixed charges for periods subsequent to the
reorganization.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture (the "Indenture"),
between the Operating Partnership and The First National Bank of Chicago, as
trustee. The Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and is available for inspection at
the corporate trust office of the trustee at 14 Wall Street, Eighth Floor, New
York, New York 10005 or as described above under "Available Information." The
Indenture is subject to, and governed by, the Trust Indenture Act of 1939, as
amended (the "TIA"). The statements made hereunder relating to the Indenture and
the Debt Securities to be issued thereunder are summaries of certain provisions
thereof and do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the Indenture and such Debt
Securities. All section references appearing herein are to sections of the
Indenture, and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Operating
Partnership and will rank equally with all other unsecured and unsubordinated
indebtedness of the Operating Partnership. At June 30, 1995, the total
outstanding debt of the Operating Partnership was $300.2 million, all of which
was secured debt. The Debt Securities may be issued without limit as to
aggregate principal amount, in one or more series, in each case as established
from time to time in or pursuant to authority granted by a resolution of the
Board of Directors of the Company as sole general partner of the Operating
Partnership or as established in one or more indentures supplemental to the
Indenture. All Debt Securities of one series need not be issued at the same time
and, unless otherwise provided, a series may be reopened, without the consent of
the holders of the Debt Securities of such series, for issuances of additional
Debt Securities of such series (Section 301).
The Indenture provides that there may be more than one trustee (the
"Trustee") thereunder, each with respect to one or more series of Debt
Securities. Any Trustee under the Indenture may resign or be removed
with respect to one or more series of Debt Securities, and a successor Trustee
may be appointed to act with respect to such series (Section 608). In the event
that two or more persons are acting as Trustee with respect to different series
of Debt Securities, each such Trustee shall be a trustee of a trust under the
Indenture separate and apart from the trust administered by any other Trustee
(Section 609), and, except as otherwise indicated herein, any action described
herein to be taken by a Trustee may be taken by each such Trustee with respect
to, and only with respect to, the one or more series of Debt Securities for
which it is Trustee under the Indenture.
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Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any limit on
such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the
portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;
(4) the date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable;
(5) the rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) the date or dates, or the method for determining such date or dates,
from which any interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment
dates, or the method by which any such date shall be determined, the
person to whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day year of
twelve 30-day months;
(7) the place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for registration of transfer or exchange
and notices or demands to or upon the Operating Partnership in respect
of such Debt Securities and the Indenture may be served;
(8) the period or periods within which, the price or prices at which and the
terms and conditions upon which such Debt Securities may be redeemed, as
a whole or in part, at the option of the Operating Partnership, if the
Operating Partnership is to have such an option;
(9) the obligation, if any, of the Operating Partnership to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a holder thereof, and the period or
periods within which, the price or prices at which and the terms and
conditions upon which such Debt Securities will be redeemed, repaid or
purchased, as a whole or in part, pursuant to such obligation;
(10) if other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
(11) whether the amount of payments of principal of (and premium, if any) or
interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency
unit or units or composite currency or currencies) and the manner in
which such amounts shall be determined;
(12) the events of default or covenants of such Debt Securities, to the
extent different from or in addition to those described herein;
(13) whether such Debt Securities will be issued in certificated and/or
book-entry form;
(14) whether such Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the
denominations thereof if other than $5,000 and terms and conditions
relating thereto;
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(15) the applicability, if any, of the defeasance and covenant defeasance
provisions described herein, or any modification thereof;
(16) if such Debt Securities are to be issued upon the exercise of debt
warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
(17) whether and under what circumstances the Operating Partnership will pay
additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Operating
Partnership will have the option to redeem such Debt Securities in lieu
of making such payment;
(18)_ with respect to any Debt Securities that provide for optional
redemption or prepayment upon the occurrence of certain events (such as
a change of control of the Operating Partnership), (i) the possible
effects of such provisions on the market price of the Operating
Partnership's or the Company's securities or in deterring certain
mergers, tender offers or other takeover attempts, and the intention of
the Operating Partnership to comply with the requirements of Rule 14e-1
under the Exchange Act and any other applicable securities laws in
connection with such provisions; (ii) whether the occurrence of the
specified events may give rise to cross-defaults on other indebtedness
such that payment on such Debt Securities may be effectively
subordinated; and (iii) the existence of any limitation on the
Operating Partnership's financial or legal ability to repurchase such
Debt Securities upon the occurrence of such an event (including, if
true, the lack of assurance that such a repurchase can be effected) and
the impact, if any, under the Indenture of such a failure, including
whether and under what circumstances such a failure may constitute an
Event of Default; and
(19) any other terms of such Debt Securities.
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). If material or applicable, special U.S.
federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable Prospectus
Supplement.
Except as described under "Merger, Consolidation or Sale" or as may be set
forth in any Prospectus Supplement, the Indenture does not contain any other
provisions that would limit the ability of the Operating Partnership to incur
indebtedness or that would afford holders of the Debt Securities protection in
the event of (i) a highly leveraged or similar transaction involving the
Operating Partnership, the management of the Operating Partnership or the
Company, or any affiliate of any such party, (ii) a change of control, or (iii)
a reorganization, restructuring, merger or similar transaction involving the
Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "Merger,
Consolidation or Sale," the Operating Partnership may, in the future, enter into
certain transactions, such as the sale of all or substantially all of its assets
or the merger or consolidation of the Operating Partnership, that would increase
the amount of the Operating Partnership's indebtedness or substantially reduce
or eliminate the Operating Partnership's assets, which may have an adverse
effect on the Operating Partnership's ability to service its indebtedness,
including the Debt Securities. In addition, restrictions on ownership and
transfers of the Company's common stock and preferred stock are designed to
preserve its status as a REIT and, therefore, may act to prevent or hinder a
change of control. See "Description of Common Stock -- Certain Provisions
Affecting Change of Control" and "Description of Preferred Stock -- Restrictions
on Ownership." Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions to
the events of default or covenants that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
Reference is made to "-- Certain Covenants" below and to the description of
any additional covenants with respect to a series of Debt Securities in the
applicable Prospectus Supplement. Except as otherwise
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described in the applicable Prospectus Supplement, compliance with such
covenants generally may not be waived with respect to a series of Debt
Securities by the Board of Directors of the Company as sole general partner of
the Operating Partnership or by the Trustee unless the Holders of at least a
majority in principal amount of all outstanding Debt Securities of such series
consent to such waiver, except to the extent that the defeasance and covenant
defeasance provisions of the Indenture described under "-- Discharge, Defeasance
and Covenant Defeasance" below apply to such series of Debt Securities. See "--
Modification of the Indenture."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series which are registered securities, other than registered
securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $1,000 and any integral multiple thereof and the
Debt Securities which are bearer securities, other than bearer securities issued
in global form (which may be of any denomination), shall be issuable in
denominations of $5,000 (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the Trustee, initially located
at 14 Wall Street, Eighth Floor, New York, New York, 10005, provided that, at
the option of the Operating Partnership, payment of interest may be made by
check mailed to the address of the Person entitled thereto as it appears in the
applicable Security Register or by wire transfer of funds to such Person at an
account maintained within the United States (Sections 301, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the Person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer thereof at the corporate trust office of the Trustee
referred to above. Every Debt Security surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Trustee or the Operating Partnership
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305). If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the Trustee)
initially designated by the Operating Partnership with respect to any series of
Debt Securities, the Operating Partnership may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that Operating Partnership
will be required to maintain a transfer agent in each place of payment for such
series. The Operating Partnership may at any time designate additional transfer
agents with respect to any series of Debt Securities (Section 1002).
Neither the Operating Partnership nor the Trustee shall be required (i) to
issue, register the transfer of or exchange any Debt Security if such Debt
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Debt Securities to be
redeemed and ending at the close of business on (A) if such Debt Securities are
issuable only as Registered Securities, the day of the mailing of the relevant
notice of redemption and (B) if such Debt Securities are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if such Debt
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Securities are also issuable as Registered Securities and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of any Registered Security
to be redeemed in part, the portion thereof not to be redeemed, or (iii) to
exchange any Bearer Security so selected for redemption except that such a
Bearer Security may be exchanged for a Registered Security of that series and
like tenor, PROVIDED that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Debt Security not to be so
repaid (Section 305).
MERGER, CONSOLIDATION OR SALE
The Operating Partnership may consolidate with, or sell, lease or convey all
or substantially all of its assets to, or merge with or into, any other entity,
provided that (a) the Operating Partnership shall be the continuing entity, or
the successor entity (if other than the Operating Partnership) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets shall expressly assume payment of the principal of (and
premium, if any) and interest on all the Debt Securities and the due and
punctual performance and observance of all of the covenants and conditions
contained in the Indenture; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Operating Partnership or any Subsidiary as a result thereof as having been
incurred by the Operating Partnership or such Subsidiary at the time of such
transaction, no Event of Default under the Indenture, and no event which, after
notice or the lapse of time, or both, would become such an Event of Default,
shall have occurred and be continuing; and (c) an officer's certificate and
legal opinion covering such conditions shall be delivered to the Trustee
(Sections 801 and 803).
CERTAIN COVENANTS
EXISTENCE. Except as permitted under "Merger, Consolidation or Sale," the
Operating Partnership is required to do or cause to be done all things necessary
to preserve and keep in full force and effect its existence, rights and
franchises; PROVIDED, HOWEVER, that the Operating Partnership shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1007).
MAINTENANCE OF PROPERTIES. The Operating Partnership is required to cause
all of its material properties used or useful in the conduct of its business or
the business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and to cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Operating Partnership may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; PROVIDED, HOWEVER, that the
Operating Partnership and its Subsidiaries shall not be prevented from selling
or otherwise disposing for value their respective properties in the ordinary
course of business (Section 1008).
INSURANCE. The Operating Partnership is required to, and is required to
cause each of its Subsidiaries to, keep all of its insurable properties insured
against loss or damage at least equal to their then full insurable value with
financially sound and reputable insurance companies (Section 1009).
PAYMENT OF TAXES AND OTHER CLAIMS. The Operating Partnership is required to
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon its income, profits or property or
that of any Subsidiary, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Operating Partnership or any Subsidiary; PROVIDED, HOWEVER, that the Operating
Partnership shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings (Section
1010).
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PROVISION OF FINANCIAL INFORMATION. The Holders of Debt Securities will be
provided with copies of the annual reports and quarterly reports of the
Operating Partnership. Whether or not the Operating Partnership is subject to
Section 13 or 15(d) of the Exchange Act and for so long as any Debt Securities
are outstanding, the Operating Partnership will, to the extent permitted under
the Exchange Act, be required to file with the Commission the annual reports,
quarterly reports and other documents which the Operating Partnership would have
been required to file with the Commission pursuant to such Section 13 or 15(d)
(the "Financial Statements") if the Operating Partnership were so subject, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Operating Partnership would have been
required so to file such documents if the Operating Partnership were so subject.
The Operating Partnership will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders of Debt Securities, as
their names and addresses appear in the Security Register, without cost to such
Holders, copies of the annual reports and quarterly reports which the Operating
Partnership would have been required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act if the Operating Partnership were
subject to such Sections and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Operating Partnership
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Operating Partnership were subject to such
Sections and (y) if filing such documents by the Operating Partnership with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder (Section 1011).
ADDITIONAL COVENANTS. Any additional or different covenants of the
Operating Partnership with respect to any series of Debt Securities will be set
forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (a) default for
30 days in the payment of any installment of interest on any Debt Security of
such series; (b) default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series at its maturity; (c) default in making any
sinking fund payment as required for any Debt Security of such series; (d)
default in the performance of any other covenant of the Operating Partnership
contained in the Indenture (other than a covenant added to the Indenture solely
for the benefit of a series of Debt Securities issued thereunder other than such
series), such default having continued for 60 days after written notice as
provided in the Indenture; (e) default in the payment of an aggregate principal
amount exceeding $5,000,000 of any evidence of recourse indebtedness of the
Operating Partnership or any mortgage, indenture or other instrument under which
such indebtedness is issued or by which such indebtedness is secured, such
default having occurred after the expiration of any applicable grace period and
having resulted in the acceleration of the maturity of such indebtedness, but
only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled; (f) certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee of the
Operating Partnership or any Significant Subsidiary or any of their respective
property; and (g) any other Event of Default provided with respect to a
particular series of Debt Securities. The term "Significant Subsidiary" means
each significant subsidiary (as defined in Regulation S-X promulgated under the
Securities Act) of the Operating Partnership.
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount
Securities or Indexed Securities, such portion of the principal amount as may be
specified in the terms thereof) of all of the Debt Securities of that series to
be due and payable immediately by written notice thereof to the Operating
Partnership (and to the Trustee if given by the Holders). However, at any time
after such a declaration of acceleration with respect to Debt Securities of such
series (or of all Debt Securities then Outstanding under the Indenture, as the
case may be)
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has been made, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of such series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) may rescind
and annul such declaration and its consequences if (a) the Operating Partnership
shall have deposited with the applicable Trustee all required payments of the
principal of (and premium, if any) and interest on the Debt Securities of such
series (or of all Debt Securities then Outstanding under the Indenture, as the
case may be), plus certain fees, expenses, disbursements and advances of the
Trustee and (b) all Events of Default, other than the non-payment of accelerated
principal of (or specified portion thereof), or premium (if any) or interest on
the Debt Securities of such series (or of all Debt Securities then Outstanding
under the Indenture, as the case may be) have been cured or waived as provided
in the Indenture (Section 502). The Indenture also provides that the Holders of
not less than a majority in principal amount of the Outstanding Debt Securities
of any series (or of all Debt Securities then Outstanding under the Indenture,
as the case may be) may waive any past default with respect to such series and
its consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security or such series or (y) in
respect of a covenant or provision contained in the Indenture that cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security affected thereby (Section 513).
The Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; PROVIDED, HOWEVER, that the Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or in the
payment of any sinking fund installment in respect of any Debt Security of such
series) if specified Responsible Officers of the Trustee consider such
withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of such series, as well as
an offer of indemnity reasonably satisfactory to it (Section 507). This
provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective due
dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 602). The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or of exercising any trust or power
conferred upon the Trustee. However, the Trustee may refuse to follow any
direction which is in conflict with any law or the Indenture, which may involve
the Trustee in personal liability or which may be unduly prejudicial to the
holders of Debt Securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, the Operating
Partnership must deliver to the Trustee a certificate, signed by one of several
specified officers of the Company, stating whether or not such officer has
knowledge of any default under the Indenture and, if so, specifying each such
default and the nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities or series of
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Outstanding Debt Securities which are affected by such modification or
amendment; PROVIDED, HOWEVER, that no such modification or amendment may,
without the consent of the Holder of each such Debt Security affected thereby,
(a) change the Stated Maturity of the principal of, or premium (if any) or any
installment of interest on, any such Debt Security; (b) reduce the principal
amount of, or the rate or amount of interest on, or any premium payable on
redemption of, any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon declaration
of acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt Security;
(c) change the place of payment, or the coin or currency, for payment of
principal of, premium, if any, or interest on any such Debt Security; (d) impair
the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (e) reduce the above-stated percentage of
outstanding Debt Securities of any series necessary to modify or amend the
Indenture, to waive compliance with certain provisions thereof or certain
defaults and consequences thereunder or to reduce the quorum or voting
requirements set forth in the Indenture; or (f) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902).
The Indenture provides that the Holders of not less than a majority in
principal amount of a series of Outstanding Debt Securities have the right to
waive compliance by the Operating Partnership with certain covenants relating to
such series of Debt Securities in the Indenture (Section 1014).
Modifications and amendments of the Indenture will be permitted to be made
by the Operating Partnership and the Trustee without the consent of any Holder
of Debt Securities for any of the following purposes: (i) to evidence the
succession of another Person to the Operating Partnership as obligor under the
Indenture; (ii) to add to the covenants of the Operating Partnership for the
benefit of the Holders of all or any series of Debt Securities or to surrender
any right or power conferred upon the Operating Partnership in the Indenture;
(iii) to add Events of Default for the benefit of the Holders of all or any
series of Debt Securities; (iv) to add or change any provisions of the Indenture
to facilitate the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, PROVIDED that such action shall not adversely
affect the interests of the Holders of the Debt Securities of any series in any
material respect; (v) to change or eliminate any provisions of the Indenture,
PROVIDED that any such change or elimination shall become effective only when
there are no Debt Securities Outstanding of any series created prior thereto
which are entitled to the benefit of such provision; (vi) to secure the Debt
Securities; (vii) to establish the form or terms of Debt Securities of any
series; (viii) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under the Indenture by
more than one Trustee; (ix) to cure any ambiguity, defect or inconsistency in
the Indenture, PROVIDED that such action shall not adversely affect the
interests of Holders of Debt Securities of any series in any material respect;
or (x) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of such
Debt Securities, PROVIDED that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect (Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
Outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an Indexed Security that shall be deemed
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Outstanding shall be the principal face amount of such Indexed Security at
original issuance, unless otherwise provided with respect to such Indexed
Security pursuant to the Indenture, and (iv) Debt Securities owned by the
Operating Partnership or any other obligor upon the Debt Securities or any
affiliate of the Operating Partnership or of such other obligor shall be
disregarded.
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Operating
Partnership or the holders of at least 10% in principal amount of the
Outstanding Debt Securities of such series, in any such case upon notice given
as provided in the Indenture (Section 1502). Except for any consent that must be
given by the Holder of each Debt Security affected by certain modifications and
amendments of the Indenture, any resolution presented at a meeting or adjourned
meeting duly reconvened at which a quorum is present will be permitted to be
adopted by the affirmative vote of the Holders of a majority in principal amount
of the Outstanding Debt Securities of that series; PROVIDED, HOWEVER, that,
except as referred to above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the Indenture will be
binding on all Holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; PROVIDED, HOWEVER, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in principal amount
of the Outstanding Debt Securities of a series, the Persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities of such series that
vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under the Indenture (Section
1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership may discharge certain obligations to Holders of
any series of Debt Securities that have not already been delivered to the
Trustee for cancellation and that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one
year) by irrevocably depositing with the Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be (Sections 1401 and 1404).
The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Operating Partnership may elect either (a) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligation to pay additional amounts, if any, upon
the occurrence of certain events of tax,
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assessment or governmental charge with respect to payments on such Debt
Securities and the obligations to register the transfer or exchange of such Debt
Securities, to replace temporary or mutilated, destroyed, lost or stolen Debt
Securities, to maintain an office or agency in respect of such Debt Securities
and to hold moneys for payment in trust) ("defeasance") (Section 1402) or (b) to
be released from its obligations with respect to such Debt Securities under
Sections 1004 to 1011, inclusive, of the Indenture (including the restrictions
described under "Certain Covenants") and its obligations with respect to any
other covenant, and any omission to comply with such obligations shall not
constitute a default or an Event of Default with respect to such Debt Securities
("covenant defeasance") (Section 1403), in either case upon the irrevocable
deposit by the Operating Partnership with the Trustee, in trust, of an amount,
in such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at Stated Maturity, or
Government Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) to the effect that the Holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States federal income tax law occurring
after the date of the Indenture (Section 1404).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, PROVIDED that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
Conversion Event based on the applicable market exchange rate. "Conversion
Event" means the cessation
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of use of (i) a currency, currency unit or composite currency both by the
government of the country which issued such currency and for the settlement of
transactions by a central bank or other public institutions of or within the
international banking community, (ii) the ECU both within the European Monetary
System and for the settlement of transactions by public institutions of or
within the European Community or (iii) any currency unit or composite currency
other than the ECU for the purposes for which it was established. Unless
otherwise provided in the applicable Prospectus Supplement, all payments of
principal of (and premium, if any) and interest on any Debt Security that is
payable in a foreign currency that ceases to be used by its government of
issuance shall be made in U.S. dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (d) under "Events of Default, Notice and Waiver"
with respect to Sections 1004 to 1011, inclusive, of the Indenture (which
sections would no longer be applicable to such Debt Securities) or described in
clause (g) under "Events of Default, Notice and Waiver" with respect to any
other covenant as to which there has been covenant defeasance, the amount in
such currency, currency unit or composite currency in which such Debt Securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Operating Partnership would remain liable to make payment of such
amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
NO CONVERSION RIGHTS
The Debt Securities will not be convertible into or exchangeable for any
capital stock of the Company or equity interest in the Operating Partnership.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the applicable Prospectus Supplement relating to such series. Global Securities
may be issued in either registered or bearer form and in either temporary or
permanent form. The specific terms of the depositary arrangement with respect to
a series of Debt Securities will be described in the applicable Prospectus
Supplement relating to such series.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The Company is authorized to issue 5,000,000 shares of preferred stock, $.01
par value per share, of which no Preferred Stock was outstanding at June 30,
1995.
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Amended and Restated Articles of
Incorporation (the "Articles of Incorporation") and Bylaws and any applicable
amendment to the Articles of Incorporation designating terms of a series of
Preferred Stock (a "Designating Amendment").
TERMS
Subject to the limitations prescribed by the Articles of Incorporation, the
board of directors is authorized to fix the number of shares constituting each
series of Preferred Stock and the designations and powers,
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preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution of the board of directors. The Preferred
Stock will, when issued, be fully paid and nonassessable by the Company (except
as described under "-- Shareholder Liability" below) and will have no preemptive
rights.
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Stock;
(2) The number of shares of such Preferred Stock offered, the liquidation
preference per share and the offering price of such Preferred Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such Preferred Stock;
(4) The date from which dividends on such Preferred Stock shall accumulate,
if applicable;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) The provision for a sinking fund, if any, for such Preferred Stock;
(7) The provision for redemption, if applicable, of such Preferred Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred Stock
will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof);
(10) Whether interests in such Preferred Stock will be represented by
Depositary Shares;
(11) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(12) A discussion of federal income tax considerations applicable to such
Preferred Stock;
(13) The relative ranking and preferences of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company;
(14) Any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company; and
(15) Any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or winding up of the Company, rank (i) senior to all classes or series of Common
Stock of the Company, and to all equity securities ranking junior to such
Preferred Stock; (ii) on a parity with all equity securities issued by the
Company the terms of which specifically provide that such equity securities rank
on a parity with the Preferred Stock; and (iii) junior to all equity securities
issued by the Company the terms of which specifically provide that such equity
securities rank senior to the Preferred Stock. The term "equity securities" does
not include convertible debt securities.
DIVIDENDS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the board of directors of the Company, out of assets
of the Company legally available for payment, cash
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dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the share transfer books of the Company on such record dates
as shall be fixed by the board of directors of the Company.
Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the board of directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.
If Preferred Stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Preferred Stock of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Preferred Stock of such series. When dividends
are not paid in full (or a sum sufficient for such full payment is not so set
apart) upon Preferred Stock of any series and the shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Preferred Stock of
such series, all dividends declared upon Preferred Stock of such series and any
other series of Preferred Stock ranking on a parity as to dividends with such
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Stock of such series (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend) and such
other series of Preferred Stock bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, no dividends (other than in shares of Common Stock or other capital
shares ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation) shall be declared or paid or set aside for payment or other
distribution shall be declared or made upon the Common Stock, or any other
capital shares of the Company ranking junior to or on a parity with the
Preferred Stock of such series as to dividends or upon liquidation, nor shall
any shares of Common Stock, or any other capital shares of the Company ranking
junior to or on a parity with the Preferred Stock of such series as to dividends
or upon liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any such shares) by the Company (except by conversion into or
exchange for other capital shares of the Company ranking junior to the Preferred
Stock of such series as to dividends and upon liquidation).
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REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital shares of the Company, the terms of such
Preferred Stock may provide that, if no such capital shares shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into the applicable capital shares of
the Company pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period, and (ii) if such
series of Preferred Stock does not have a cumulative dividend, full dividends of
the Preferred Stock of any series have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, no shares of any series of
Preferred Stock shall be redeemed unless all outstanding Preferred Stock of such
series is simultaneously redeemed; PROVIDED, HOWEVER, that the foregoing shall
not prevent the purchase or acquisition of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series. In addition, unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on all outstanding shares of any
series of Preferred Stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past dividends periods and the then current dividend period, and (ii) if
such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, the Company shall
not purchase or otherwise acquire directly or indirectly any shares of Preferred
Stock of such series (except by conversion into or exchange for capital shares
of the Company ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation); PROVIDED, HOWEVER, that the foregoing shall not
prevent the purchase or acquisition of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series.
If fewer than all of the outstanding shares of Preferred Stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by
the Company and such shares may be redeemed pro rata from the holders of record
of such shares in proportion to the number of such shares held or for which
redemption is requested by such holder (with adjustments to avoid redemption of
fractional shares) or by lot in a manner determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the share transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of
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shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the shares of Preferred Stock of any series are to
be redeemed, the notice mailed to each such holder thereof shall also specify
the number of shares of Preferred Stock to be redeemed from each such holder. If
notice of redemption of any Preferred Stock has been given and if the funds
necessary for such redemption have been set aside by the Company in trust for
the benefit of the holders of any Preferred Stock so called for redemption, then
from and after the redemption date dividends will cease to accrue on such
Preferred Stock, and all rights of the holders of such shares will terminate,
except the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Stock or any other class or series of capital
shares of the Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of Preferred Stock shall be entitled to receive out of
assets of the Company legally available for distribution to shareholders
liquidating distributions in the amount of the liquidation preference per share
(set forth in the applicable Prospectus Supplement), plus an amount equal to all
dividends accrued and unpaid thereon (which shall not include any accumulation
in respect of unpaid dividends for prior dividend periods if such Preferred
Stock does not have a cumulative dividend). After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of
Preferred Stock will have no right or claim to any of the remaining assets of
the Company. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the Company are
insufficient to pay the amount of the liquidating distributions on all
outstanding Preferred Stock and the corresponding amounts payable on all shares
of other classes or series of capital shares of the Company ranking on a parity
with the Preferred Stock in the distribution of assets, then the holders of the
Preferred Stock and all other such classes or series of capital shares shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes or series of capital shares ranking junior to
the Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Company with or into any other corporation, trust or entity, or the sale,
lease or conveyance of all or substantially all of the property or business of
the Company, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Company.
VOTING RIGHTS
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Whenever dividends on any shares of Preferred Stock shall be in arrears for
six or more consecutive quarterly periods, the holders of such shares of
Preferred Stock (voting separately as a class with all other series of preferred
stock upon which like voting rights have been conferred and are exercisable)
will be entitled to vote for the election of two additional directors of the
Company at a special meeting called by the holders of record of at least ten
percent (10%) of any series of Preferred stock so in arrears (unless such
request is received less than 90 days before the date fixed for the next annual
or special meeting of the stockholders) or at the next annual meeting of
stockholders, and at each subsequent annual meeting until (i) if such series of
Preferred Stock has a cumulative dividend, all dividends accumulated on such
shares of Preferred Stock for the past dividend periods and the then current
dividend period shall have been fully paid or declared and a sum sufficient for
the payment thereof set aside for payment or (ii) if such series of
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Preferred Stock does not have a cumulative dividend, four consecutive quarterly
dividends shall have been fully paid or declared and a sum sufficient for the
payment thereof set aside for payment. In such case, the entire board of
directors of the Company will be increased by two directors.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of at least two-thirds of the shares
of each series of Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking prior to such series of Preferred
Stock with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up or reclassify any authorized capital
stock of the Company into such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such shares; or (ii) amend, alter or repeal the provisions of the Company's
Articles of Incorporation or the Designating Amendment for such series of
Preferred Stock, whether by merger, consolidation or otherwise (an "Event"), so
as to materially and adversely affect any right, preference, privilege or voting
power of such series of Preferred Stock or the holders thereof; PROVIDED,
HOWEVER, with respect to the occurrence of any of the Events set forth in (ii)
above, so long as the Preferred Stock remains outstanding with the terms thereof
materially unchanged, taking into account that upon the occurrence of an Event,
the Company may not be the surviving entity, the occurrence of any such Event
shall not be deemed to materially and adversely affect such rights, preferences,
privileges or voting power of holders of Preferred Stock and provided further
that (x) any increase in the amount of the authorized Preferred Stock or the
creation or issuance of any other series of Preferred Stock, or (y) any increase
in the amount of authorized shares of such series or any other series of
Preferred Stock, in each case ranking on a parity with or junior to the
Preferred Stock of such series with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
Under Indiana law, notwithstanding anything to the contrary set forth above,
holders of each series of Preferred Stock will be entitled to vote as a class
upon any proposed amendment to the Articles of Incorporation, whether or not
entitled to vote thereon by the Articles of Incorporation, if the amendment
would (i) increase or decrease the aggregate number of authorized shares of such
series; (ii) effect an exchange or reclassification of all or part of the shares
of the series into shares of another series; (iii) effect an exchange or
reclassification, or create the right of exchange, of all or part of the shares
of another class or series into shares of the series; (iv) change the
designation, rights, preferences or limitations of all or a part of the shares
of the series; (v) change the shares of all or part of the series into a
different number of shares of the same series; (vi) create a new series having
rights or preferences with respect to distributions or dissolution that are
prior, superior or substantially equal to the shares of the series; (vii)
increase the rights, preferences or number of authorized shares of any class or
series that, after giving effect to the amendment, have rights or preferences
with respect to distributions or to dissolution that are prior, superior or
substantially equal to the shares of the series; (viii) limit or deny an
existing preemptive right of all or part of the shares of the series; or (ix)
cancel or otherwise affect rights to distributions or dividends that have
accumulated but have not yet been declared on all or part of the shares of the
series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into shares of Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Common Stock into which the shares of Preferred Stock are convertible,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether
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conversion will be at the option of the holders of the Preferred Stock or the
Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such series of
Preferred Stock.
SHAREHOLDER LIABILITY
As discussed below under "Description of Common Stock -- General,"
applicable Indiana law provides that no shareholder, including holders of
Preferred Stock, shall be personally liable for the acts and obligations of the
Company and that the funds and property of the Company shall be the only
recourse for such acts or obligations.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Description of Common Stock -- Certain Provisions
Affecting Change of Control," for the Company to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), not more than 50% in
value of its outstanding capital shares may be owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by a single person of the Company's
outstanding equity securities, including any Preferred Stock of the Company.
Therefore, the Designating Amendment for each series of Preferred Stock may
contain provisions restricting the ownership and transfer of the Preferred
Stock. The applicable Prospectus Supplement will specify any additional
ownership limitation relating to a series of Preferred Stock.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable Prospectus
Supplement. Shares of Preferred Stock of each series represented by Depositary
Shares will be deposited under a separate deposit agreement (each, a "Deposit
Agreement") among the Company, the depositary named therein (a "Preferred Stock
Depositary") and the holders from time to time of the Depositary Receipts.
Subject to the terms of the applicable Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest of
a share of a particular series of Preferred Stock represented by the Depositary
Shares evidenced by such Depositary Receipt, to all the rights and preferences
of the Preferred Stock represented by such Depositary Shares (including
dividend, voting, conversion, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by the Company to a Preferred Stock
Depositary, the Company will cause such Preferred Stock Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request, and the statements made hereunder relating to Deposit Agreements and
the Depositary Receipts to be issued thereunder are summaries of certain
anticipated provisions thereof and do not purport to be complete and are subject
to, and qualified in their entirety by reference to, all of the provisions of
the applicable Deposit Agreement and related Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
A Preferred Stock Depositary will be required to distribute all cash
dividends or other cash distributions received in respect of the applicable
Preferred Stock to the record holders of Depositary Receipts evidencing
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the related Depositary Shares in proportion to the number of such Depositary
Receipts owned by such holders, subject to certain obligations of holders to
file proofs, certificates and other information and to pay certain charges and
expenses to such Preferred Stock Depositary.
In the event of a distribution other than in cash, a Preferred Stock
Depositary will be required to distribute property received by it to the record
holders of Depositary Receipts entitled thereto, subject to certain obligations
of holders to file proofs, certificates and other information and to pay certain
charges and expenses to such Preferred Stock Depositary, unless such Preferred
Stock Depositary determines that it is not feasible to make such distribution,
in which case such Preferred Stock Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock which has been converted or
exchanged.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the applicable Preferred Stock Depositary (unless the related Depositary Shares
have previously been called for redemption or converted), the holders thereof
will be entitled to delivery at such office, to or upon each such holder's
order, of the number of whole or fractional shares of the applicable Preferred
Stock and any money or other property represented by the Depositary Shares
evidenced by such Depositary Receipts. Holders of Depositary Receipts will be
entitled to receive whole or fractional shares of the related Preferred Stock on
the basis of the proportion of Preferred Stock represented by each Depositary
Share as specified in the applicable Prospectus Supplement, but holders of such
shares of Preferred Stock will not thereafter be entitled to receive Depositary
Shares therefor. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of shares of Preferred Stock to be withdrawn, the
applicable Preferred Stock Depositary will be required to deliver to such holder
at the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by a Preferred
Stock Depositary, such Preferred Stock Depositary will be required to redeem as
of the same redemption date the number of Depositary Shares representing shares
of the Preferred Stock so redeemed, provided the Company shall have paid in full
to such Preferred Stock Depositary the redemption price of the Preferred Stock
to be redeemed plus an amount equal to any accrued and unpaid dividends thereon
to the date fixed for redemption. The redemption price per Depositary Share will
be equal to the redemption price and any other amounts per share payable with
respect to the Preferred Stock. If fewer than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional Depositary Shares) or
by any other equitable method determined by the Company that preserves the REIT
status of the Company.
From and after the date fixed for redemption, all dividends in respect of
the shares of Preferred Stock so called for redemption will cease to accrue, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts evidencing
the Depositary Shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such Depositary Receipts were entitled upon such
redemption upon surrender thereof to the applicable Preferred Stock Depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the applicable
Preferred Stock are entitled to vote, a Preferred Stock Depositary will be
required to mail the information contained in such notice of meeting to the
record holders of the Depositary Receipts evidencing the Depositary Shares which
represent such Preferred Stock. Each record holder of Depositary Receipts
evidencing Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Stock) will be entitled to
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instruct such Preferred Stock Depositary as to the exercise of the voting rights
pertaining to the amount of Preferred Stock represented by such holder's
Depositary Shares. Such Preferred Stock Depositary will be required to vote the
amount of Preferred Stock represented by such Depositary Shares in accordance
with such instructions, and the Company will agree to take all reasonable action
which may be deemed necessary by such Preferred Stock Depositary in order to
enable such Preferred Stock Depositary to do so. Such Preferred Stock Depositary
will be required to abstain from voting the amount of Preferred Stock
represented by such Depositary Shares to the extent it does not receive specific
instructions from the holders of Depositary Receipts evidencing such Depositary
Shares. A Preferred Stock Depositary will not be responsible for any failure to
carry out any instruction to vote, or for the manner or effect of any such vote
made, as long as any such action or non-action is in good faith and does not
result from negligence or willful misconduct of such Preferred Stock Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depositary Share evidenced by such Depositary
Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, will not be convertible into Common Stock or
any other securities or property of the Company. Nevertheless, if so specified
in the applicable Prospectus Supplement relating to an offering of Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
applicable Preferred Stock Depositary with written instructions to such
Preferred Stock Depositary to instruct the Company to cause conversion of the
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Stock, other shares of Preferred
Stock of the Company or other shares of stock, and the Company will agree that
upon receipt of such instructions and any amounts payable in respect thereof, it
will cause the conversion thereof utilizing the same procedures as those
provided for delivery of Preferred Stock to effect such conversion. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in part
only, a new Depositary Receipt or Receipts will be issued for any Depositary
Shares not to be converted. No fractional shares of Common Stock will be issued
upon conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the last
business day prior to the conversion.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
Any form of Depositary Receipt evidencing Depositary Shares which will
represent Preferred Stock and any provision of a Deposit Agreement will be
permitted at any time to be amended by agreement between the Company and the
applicable Preferred Stock Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Receipts or that
would be materially and adversely inconsistent with the rights granted to the
holders of the related Preferred Stock will not be effective unless such
amendment has been approved by the existing holders of at least two-thirds of
the applicable Depositary Shares evidenced by the applicable Depositary Receipts
then outstanding. No amendment shall impair the right, subject to certain
anticipated exceptions in the Deposit Agreements, of any holder of Depositary
Receipts to surrender any Depositary Receipt with instructions to deliver to the
holder the related Preferred Stock and all money and other property, if any,
represented thereby, except in order to comply with law. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Depositary Receipt, to consent and
agree to such amendment and to be bound by the applicable Deposit Agreement as
amended thereby.
A Deposit Agreement will be permitted to be terminated by the Company upon
not less than 30 days' prior written notice to the applicable Preferred Stock
Depositary if (i) such termination is necessary to preserve the Company's status
as a REIT or (ii) a majority of each series of Preferred Stock affected by such
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termination consents to such termination, whereupon such Preferred Stock
Depositary will be required to deliver or make available to each holder of
Depositary Receipts, upon surrender of the Depositary Receipts held by such
holder, such number of whole or fractional shares of Preferred Stock as are
represented by the Depositary Shares evidenced by such Depositary Receipts
together with any other property held by such Preferred Stock Depositary with
respect to such Depositary Receipts. The Company will agree that if a Deposit
Agreement is terminated to preserve the Company's status as a REIT, then the
Company will use its best efforts to list the Preferred Stock issued upon
surrender of the related Depositary Shares on a national securities exchange. In
addition, a Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares thereunder shall have been redeemed, (ii) there
shall have been a final distribution in respect of the related Preferred Stock
in connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Stock or
(iii) each share of the related Preferred Stock shall have been converted into
stock of the Company not so represented by Depositary Shares.
CHARGES OF A PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of a Deposit Agreement. In addition, the
Company will pay the fees and expenses of a Preferred Stock Depositary in
connection with the performance of its duties under a Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of a
Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the applicable
Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
A Preferred Stock Depositary will be permitted to resign at any time by
delivering to the Company notice of its election to do so, and the Company will
be permitted at any time to remove a Preferred Stock Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Preferred Stock Depositary. A successor Preferred Stock Depositary will be
required to be appointed within 60 days after delivery of the notice of
resignation or removal and will be required to be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
MISCELLANEOUS
A Preferred Stock Depositary will be required to forward to holders of
Depositary Receipts any reports and communications from the Company which are
received by such Preferred Stock Depositary with respect to the related
Preferred Stock.
Neither a Preferred Stock Depositary nor the Company will be liable if it is
prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under a Deposit Agreement. The obligations of the
Company and a Preferred Stock Depositary under a Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of Preferred
Stock represented by the applicable Depositary Shares), gross negligence or
willful misconduct, and neither the Company nor any applicable Preferred Stock
Depositary will be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts. Depositary Shares or shares of Preferred
Stock represented thereby unless satisfactory indemnity is furnished. The
Company and any Preferred Stock Depositary will be permitted to rely on written
advice of counsel or accountants, or information provided by persons presenting
shares of Preferred Stock represented thereby for deposit, holders of Depositary
Receipts or other persons believed in good faith to be competent to give such
information, and on documents believed in good faith to be genuine and signed by
a proper party.
In the event a Preferred Stock Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and the Company, on the other hand, such Preferred Stock Depositary shall
be entitled to act on such claims, requests or instructions received from the
Company.
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DESCRIPTION OF COMMON STOCK
GENERAL
The authorized capital stock of the Company includes 45,000,000 shares of
Common Stock, $.01 par value per share. Each outstanding share of Common Stock
entitles the holder to one vote on all matters presented to shareholders for a
vote. Holders of Common Stock have no preemptive rights. At June 30, 1995, there
were 24,134,745 shares of Common Stock outstanding and 4,163,459 shares reserved
for issuance upon exchange of outstanding Units.
Shares of Common Stock currently outstanding are listed for trading on the
New York Stock Exchange (the "NYSE"). The Company will apply to the NYSE to list
the additional shares of Common Stock to be sold pursuant to any Prospectus
Supplement, and the Company anticipates that such shares will be so listed.
The Articles of Incorporation of the Company provide for the board of
directors to be divided into three classes of directors, each class to consist
as nearly as possible of one-third of the directors. At each annual meeting of
shareholders, the class of directors to be elected at such meeting will be
elected for a three-year term and the directors in the other two classes will
continue in office. The overall effect of the provisions in the Articles of
Incorporation with respect to the classified board may be to render more
difficult a change of control of the Company or removal of incumbent management.
Holders of Common Stock have no right to cumulative voting for the election of
directors. Consequently, at each annual meeting of shareholders, the holders of
a plurality of the shares of Common Stock are able to elect all of the
successors of the class of directors whose term expires at that meeting.
Directors may be removed only for cause and only with the affirmative vote of
the holders of a majority of the shares of Common Stock entitled to vote in the
election of directors.
All shares of Common Stock issued will be duly authorized, fully paid, and
non-assessable. Distributions may be paid to the holders of Common Stock if and
when declared by the board of directors of the Company out of funds legally
available therefor. The Company intends to continue to pay quarterly dividends.
Under Indiana law, shareholders are generally not liable for the Company's
debts or obligations. If the Company is liquidated, subject to the right of any
holders of preferred stock, if any, to receive preferential distributions, each
outstanding share of Common Stock will be entitled to participate pro rata in
the assets remaining after payment of, or adequate provision for, all known
debts and liabilities of the Company.
CERTAIN PROVISIONS AFFECTING CHANGE OF CONTROL
GENERAL. Pursuant to Indiana law, the Company cannot merge with or sell all
or substantially all of the assets of the Company, except pursuant to a
resolution approved by shareholders holding a majority of the shares voting on
the resolution. The Company's Articles of Incorporation also contain provisions
which may discourage certain types of transactions involving an actual or
threatened change of control of the Company, including: (i) a requirement that,
in the case of certain mergers, sales of assets, liquidations or dissolutions,
or reclassifications or recapitalizations involving persons owning 10% or more
of the capital stock of the Company, such transactions be approved by a vote of
the holders of 80% of the issued and outstanding shares of capital stock of the
Company or three-fourths of the continuing directors, or provide for payment of
a price to affected shareholders for their shares not less than as specified in
the Articles of Incorporation; (ii) a requirement that any amendment or
alteration of certain provisions of the Articles of Incorporation affecting
change of control be approved by the holders of 80% of the issued and
outstanding capital stock of the Company; and (iii) a staggered board of
directors and a limitation on removal of directors to removal for cause as
described above.
The partnership agreement for the Operating Partnership also contains
provisions which could discourage transactions involving an actual or threatened
change of control of the Company, including (i) a requirement that holders of at
least 90% of the outstanding Units held by the Company and other Unit holders
approve any voluntary sale, exchange or other disposition, including merger or
consolidation (other than a disposition occurring upon a financing or
refinancing of the Operating Partnership), of all or
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substantially all of the assets of the Operating Partnership in a single
transaction or a series of related transactions; (ii) a restriction against any
assignment or transfer by the Company of its interest in the Operating
Partnership; and (iii) a requirement that holders of more than 90% of the Units
approve any merger, consolidation or other combination of the Company with or
into another entity, or sale of all or substantially all of the Company's
assets, or any reclassification or recapitalization or change of outstanding
shares of Common Stock (other than certain changes in par value, stock splits,
stock dividends or combinations) unless after the transaction substantially all
of the assets of the surviving entity are contributed to the Operating
Partnership in exchange for Units. On these matters, the Company's Units will be
voted at the discretion of the directors of the Company who are not officers or
employees of the Company and do not hold Units.
OWNERSHIP LIMITS. For the Company to qualify as a REIT under the Code, no
more than 50% in value of its outstanding capital shares may be owned, directly
or indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year or during a
proportionate part of a shorter taxable year. The Common Stock must also be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year or during a proportionate part of a shorter taxable year. Because the
Company expects to continue to qualify as a REIT, the Articles of Incorporation
of the Company contain restrictions on the acquisition of Common Stock intended
to ensure compliance with these requirements.
The Articles of Incorporation contain a restriction which authorizes, but
does not require, the board of directors to refuse to give effect to a transfer
of Common Stock which, in its opinion, might jeopardize the status of the
Company as a REIT. This provision also renders null and void any purported
acquisition of shares which would result in the disqualification of the Company
as a REIT. The provision also gives the board of directors the authority to take
such actions as it deems advisable to enforce the provision. Such actions might
include, but are not limited to, refusing to give effect to, or seeking to
enjoin, a transfer which might jeopardize the Company's status as a REIT. The
provision also requires any shareholder to provide the Company such information
regarding his direct and indirect ownership of Common Stock as the Company may
reasonably require.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.
PLAN OF DISTRIBUTION
The Company and the Operating Partnership may sell Securities to or through
underwriters, and also may sell Securities directly to other purchasers or
through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company, from the Operating Partnership or from purchasers
of Securities, for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions, or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers, and agents
that participate in the distribution of Securities may be deemed to be
underwriters, and any discounts or commissions they receive from the Company or
the Operating Partnership, and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company or the Operating Partnership will be
described, in the Prospectus Supplement.
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Unless otherwise specified in the related Prospectus Supplement, each series
of Securities will be a new issue with no established trading market, other than
the Common Stock which is listed on the NYSE. Any shares of Common Stock sold
pursuant to a Prospectus Supplement will be listed on such exchange, subject to
official notice of issuance. The Company or the Operating Partnership may elect
to list any series of Debt Securities, Preferred Stock or Depositary Shares on
an exchange, but neither is obligated to do so. It is possible that one or more
underwriters may make a market in a series of Securities, but will not be
obligated to do so and may discontinue any market making at any time without
notice. Therefore, no assurance can be given as to the liquidity of the trading
market for the Securities.
Under agreements the Company and the Operating Partnership may enter into,
underwriters, dealers, and agents who participate in the distribution of
Securities may be entitled to indemnification by the Company or the Operating
Partnership against certain liabilities, including liabilities under the
Securities Act.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, or be customers of, the Company or the Operating Partnership in
the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Company or the
Operating Partnership, as the case may be, will authorize underwriters or other
persons acting as the Company's or the Operating Partnership's agents to solicit
offers by certain institutions to purchase Securities from the Company or the
Operating Partnership pursuant to contracts providing for payment and delivery
on a future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all cases
such institutions must be approved by the Company or the Operating Partnership,
as the case may be. The obligations of any purchaser under any such contract
will be subject to the condition that the purchase of the Securities shall not
at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect of the validity or performance of such
contracts.
LEGAL OPINIONS
The legality of the Securities offered hereby is being passed upon for the
Company by Bose McKinney & Evans, Indianapolis, Indiana. John W. Wynne and
Darell E. Zink, Jr., officers and directors of the Company, were partners in
Bose McKinney & Evans through 1987 and 1982, respectively, and were of counsel
to that firm until December, 1990. The spouse of Dayle M. Eby, an officer and
shareholder of the Company, is a partner in Bose McKinney & Evans. Rogers &
Wells, New York, New York will act as counsel to any underwriters, dealers or
agents.
EXPERTS
The Consolidated Financial Statements and Schedules of the Company as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994, and the Consolidated Financial Statements of the
Operating Partnership as of December 31, 1994 and 1993, and for each of the
years in the three-year period ended December 31, 1994, each incorporated herein
by reference have been incorporated herein in reliance on the reports of KPMG
Peat Marwick LLP, independent auditors, also incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
26
<PAGE>
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NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE OPERATING PARTNERSHIP OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS
SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS OR IN THE AFFAIRS
OF THE OPERATING PARTNERSHIP SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary............................................. S-3
The Operating Partnership................................................. S-7
Recent Developments....................................................... S-11
Use of Proceeds........................................................... S-11
Capitalization............................................................ S-12
Selected Consolidated Financial Data...................................... S-13
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-16
Properties................................................................ S-20
Description of the Notes.................................................. S-28
Underwriting.............................................................. S-34
<CAPTION>
PROSPECTUS
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company and the Operating Partnership................................. 3
Use of Proceeds........................................................... 3
Ratios of Earnings to Fixed Charges....................................... 3
Description of Debt Securities............................................ 4
Description of Preferred Stock............................................ 14
Description of Depositary Shares.......................................... 20
Description of Common Stock............................................... 24
Plan of Distribution...................................................... 25
Legal Opinions............................................................ 26
Experts................................................................... 26
</TABLE>
UNTIL , 1995 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT), ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$100,000,000
[LOGO]
DUKE REALTY
LIMITED PARTNERSHIP
% NOTES
DUE SEPTEMBER , 200
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
FIRST CHICAGO
CAPITAL MARKETS, INC.
SEPTEMBER , 1995
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