Prospectus Supplement
September 28, 2000
(To prospectus dated June 15, 1998)
HRPT Properties Trust
$20,000,000
8.625% Senior Notes due 2010
The notes bear interest at the rate of 8.625% per year. Interest on the
notes is payable semiannually on each April 1 and October 1, beginning April 1,
2001. The notes mature October 1, 2010 and are redeemable at any time at the
option of HRPT Properties Trust, in whole or in part. The redemption price will
equal the outstanding principal of the notes being redeemed plus accrued
interest and the Make-Whole Amount (as defined in the Glossary to this
prospectus supplement). The notes do not have the benefit of any sinking fund.
The notes are unsecured and rank equally with all of our other unsecured
senior indebtedness. The notes will be issued only in registered form in
denominations of $1,000.
First Union Securities, Inc. has agreed to purchase the Notes from us at
99.046% of their principal amount ($19,809,200 aggregate proceeds to us, before
deducting expenses payable by us), plus accrued interest, if any, from September
29, 2000.
First Union Securities, Inc. proposes to offer the notes from time to time
for sale in one or more negotiated transactions, or otherwise, at market prices
prevailing at the time of sale, at prices related to market prices or at
negotiated prices. The price of the notes will include accrued interest, if any,
from September 29, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
We expect that the notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about September 29, 2000.
First Union Securities, Inc.
<PAGE>
Table of Contents
Page
Prospectus Supplement
Summary..................................................................... S-3
Recent Developments......................................................... S-6
Use of Proceeds............................................................. S-6
The Company................................................................. S-6
Ratio of Earnings to Fixed Charges.......................................... S-6
Description of the Notes.................................................... S-7
Material Federal Income Tax Considerations..................................S-13
Underwriting................................................................S-18
Ratings.....................................................................S-18
Legal Matters...............................................................S-19
Experts.....................................................................S-19
Incorporation of Certain Information by Reference...........................S-20
Where You Can Find More Information.........................................S-20
Forward-Looking Statements..................................................S-21
Glossary....................................................................S-22
Prospectus
Available Information....................................................... ii
Incorporation of Certain Documents by Reference............................. ii
The Company................................................................. 1
Use of Proceeds............................................................. 1
Ratio of Earnings to Fixed Charges.......................................... 1
Description of Debt Securities.............................................. 1
Description of Shares....................................................... 10
Description of Preferred Shares............................................. 11
Description of Depositary Shares............................................ 16
Description of Warrants..................................................... 19
Description of Convertible Subordinated Debentures.......................... 19
Limitation of Liability; Shareholder Liability.............................. 20
Redemption; Business Combinations and Control Share Acquisitions............ 20
Plan of Distribution........................................................ 23
Legal Matters............................................................... 24
Experts..................................................................... 24
In this Prospectus Supplement, the term "HRP" includes HRPT Properties
Trust and its consolidated subsidiaries.
In presenting "as adjusted" information in this Prospectus Supplement, we
have assumed that this offering and a previous offering on July 31, 2000, of
$30,000,000 8.875% notes due 2010 have been completed and that we have applied
the net proceeds of the notes to repay amounts outstanding under our revolving
bank credit facility.
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<PAGE>
SUMMARY
This summary may not contain all of the information that is important to
you. You should carefully read this entire Prospectus Supplement and the
accompanying Prospectus. You should also read the documents we have referred you
to in "Incorporation of Certain Information by Reference."
THE COMPANY
HRPT Properties Trust ("HRP") is a real estate investment trust ("REIT")
that owns and leases office buildings. We currently own a total of 194
properties costing approximately $2.7 billion located in 27 states and the
District of Columbia. We also hold minority investments in the common shares of
two other New York Stock Exchange REITs, Hospitality Properties Trust ("HPT")
and Senior Housing Properties Trust ("SNH"). The book value of our shares of HPT
and SNH totaled $305 million at June 30, 2000. The market value of our shares of
HPT and SNH at September 27, 2000, totaled $214 million.
HRP Investment Portfolio
(undepreciated book basis,
dollars in millions)
as of June 30, 2000
[Graphic Omitted
Content:
Owned office buildings $2,881 89%
Investment in SNH 198 7%
Investment in HPT 107 4%]
HRP Capitalization
(book basis, dollars in millions)
as of June 30, 2000
[Graphic Omitted
Content:
Equity $1,492 53%
Debt 1,358 47%]
Our ability to pay debt service depends primarily upon our receipt of rents
from tenants. Our largest tenant is the U.S. Government which rents 28 office
buildings and other space throughout our office portfolio for annual rents
totaling $68.0 million. Around 66% of our rents come from companies that are
rated investment grade or are publicly owned or their subsidiaries, and less
than 50% of our revenues come from leases that expire before 2005. The following
tables present information as of September 1, 2000.
<TABLE>
<CAPTION>
HRP Tenant Strength HRP Lease Maturities
Percentage of Percentage of
Tenant Total Revenues Year Total Revenues
--------- -------------- ---- --------------
<S> <C> <C> <C>
U.S. Government 17.0% 2000 4.8%
Other Investment Grade 2001 10.1%
Tenants 37.1% 2002 8.4%
Other Publicly Owned Tenants 12.2% 2003 11.3%
Total Investment Grade and 2004 10.3%
-----
Publicly Owned Tenants 66.3% Five Year Total 44.9%
2005-2009 29.3%
After 2009 25.8%
</TABLE>
S-3
<PAGE>
FINANCING POLICIES
At June 30, 2000, our total debt of $1.4 billion was 48% of our total book
capitalization.
The notes will have the benefit of several financial covenants. The
following table shows the financial ratios required by some of these covenants
for HRP, and HRP's financial status at June 30, 2000 applicable to those
covenants on a historical basis and an as adjusted basis. You should review our
historical financial statements in connection with this table. The section of
this Prospectus Supplement titled "Description of the Notes" contains more
information concerning the covenants.
<TABLE>
<CAPTION>
As of As Adjusted as of
Covenant Required Ratio June 30, 2000 June 30, 2000
-------------------------------------------------- ---------------------- ------------------- ---------------------
<S> <C> <C> <C>
Debt/Adjusted Total Assets.................. no more than 60% 45.2% 45.2%
Secured Debt/Adjusted Total Assets.......... no more than 40% 1.8% 1.8%
Consolidated Income Available for
Debt Service/Annual Debt Service........ at least 1.5x 2.6x 2.6x
Total Unencumbered Assets/
Unsecured Debt.......................... at least 200% 222.6% 222.6%
</TABLE>
PRINCIPAL PLACE OF BUSINESS
We are organized as a Maryland real estate investment trust. Our principal
place of business is 400 Centre Street, Newton, Massachusetts 02458, and our
telephone number is (617) 332-3990.
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<PAGE>
THE OFFERING
The following is a brief summary of certain terms of this offering. For a
more complete description of the terms of the notes (including capitalized
terms), see "Description of the Notes" and "Glossary" in this Prospectus
Supplement and "Description of Debt Securities" in the accompanying Prospectus.
Aggregate Principal Amount......... $20,000,000
Maturity Date...................... The notes will mature on October 1,
2010, unless previously redeemed.
Interest Payment Dates............. Semiannually on April 1 and October 1,
beginning April 1, 2001.
Ranking............................ The notes are senior obligations. They
are not secured by any of our property
or assets, and as a result, you will be
one of our unsecured creditors. The
notes are not obligations of any of our
subsidiaries. The notes will be
effectively subordinated to any
mortgages and other secured
indebtedness we incur and to all
indebtedness and other liabilities of
our subsidiaries. The notes, however,
will rank equally with all of our other
unsecured senior indebtedness,
including indebtedness we incur in the
future.
Optional Redemption................ The notes are redeemable at any time at
our option, in whole or in part. The
redemption price will equal the
outstanding principal of the notes
being redeemed plus accrued interest
and the Make-Whole Amount. The notes
will not have the benefit of a sinking
fund.
Use of Proceeds.................... We estimate that our net proceeds from
the offering will be approximately
$19.8 million. We intend to use these
proceeds to repay amounts outstanding
under our revolving bank credit
facility or for general business
purposes.
Limitations on Incurrence
of Debt....................... Various covenants will apply to the
notes, including the following:
(1) We may not incur Debt if the new
Debt would cause total Debt to be
more than 60% of our Adjusted
Total Assets.
(2) We may not incur Secured Debt if
the new Secured Debt would cause
our total Secured Debt to be more
than 40% of Adjusted Total Assets.
(3) We may not incur Debt if the new
Debt would cause the ratio of
Consolidated Income Available for
Debt Service to Annual Debt
Service for our most recently
completed four fiscal quarters to
be less than 1.5 to 1, determined
on a pro forma basis after giving
effect to certain assumptions.
(4) We are required to maintain Total
Unencumbered Assets of at least
200% of Unsecured Debt.
The capitalized terms used in this description of covenants have the
meanings specified in the indenture and supplemental indenture under which the
notes will be issued. The specific meanings are described in "Description of the
Notes" and "Glossary" in this Prospectus Supplement.
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<PAGE>
RECENT DEVELOPMENTS
Since we announced efforts to sell properties for up to $150-$160 million
in December 1999 we have closed on the sale of three properties totaling $13
million. We also have entered into contracts or letters of intent to sell
properties for an additional $186 million. These pending sales are subject to
negotiation of final documentation and to customary closing conditions. Our
ability to conclude these or other property sales is subject to market
conditions and other factors some of which are beyond our control; and we cannot
give you assurances that any sales will occur or that the terms of any sales
that do occur will be favorable to us.
Our Board authorized us to use the proceeds from property sales to repay
debt, make new investments and fund a share repurchase program for up to
approximately 14 million common shares. Since the beginning of this year, we
have not purchased any new properties nor have we repurchased any of our shares.
We have decided that at this time repaying debt should be the priority use for
our available cash. Therefore, we do not expect to complete our share repurchase
program up to the authorized level of 14 million shares or any other preset
amount during 2000. Any determination to repurchase shares will depend on market
conditions and on the timing and amounts of property sales proceeds.
USE OF PROCEEDS
We estimate that the net proceeds of this offering of notes will be
approximately $19.8 million. We expect to use the net proceeds of this offering
to repay amounts outstanding under our revolving bank credit facility or for
general business purposes. The credit facility bears interest at LIBOR plus a
spread and matures on April 15, 2002. At September 27, 2000, the credit facility
had an outstanding balance of $351 million and an effective interest rate on
outstanding loans of 7.4% per annum.
THE COMPANY
HRP is a REIT which owns and leases office buildings. We currently own a
total of 194 properties with approximately 20 million square feet costing
approximately $2.7 billion located in 27 states. We also hold minority
investments in the common shares of two other New York Stock Exchange REITs: 4
million shares of HPT, and 12.8 million shares of SNH.
RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges was 2.0 and 2.9 for the
six months ended June 30, 2000 and 1999, respectively, and 2.2, 3.2, 3.9, 4.3
and 3.4 for the years ended December 31, 1999, 1998, 1997, 1996 and 1995,
respectively.
S-6
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements
and, to the extent inconsistent with, replaces the description of the general
terms and provisions of debt securities set forth under "Description of Debt
Securities" in the accompanying Prospectus, to which reference is hereby made.
We have provided a Glossary at the end of this Prospectus Supplement to define
certain capitalized words used in discussing the terms of the notes.
General
We will issue the notes under an Indenture dated as of July 9, 1997, and a
Supplemental Indenture dated as of September 29, 2000 (together, the
"Indenture") between us and State Street Bank and Trust Company, as Trustee. The
Indenture is subject to, and governed by, the Trust Indenture Act of 1939, as
amended. This Prospectus Supplement briefly outlines some of the provisions of
the Indenture. These summaries are not complete. If you would like more
information on these provisions, review the copy of the Indenture that we have
filed with the Securities and Exchange Commission. See "Incorporation of Certain
Information By Reference" and "Where You Can Find More Information" in this
Prospectus Supplement and "Available Information" in the accompanying Prospectus
for information about how to locate these documents. You may also review the
Indenture at the Trustee's corporate trust office at Two Avenue de Lafayette,
Boston, Massachusetts 02111. All section references appearing below are to
sections of the Indenture.
The notes will be a separate series under the Indenture, initially in the
aggregate principal amount of $20,000,000. The Indenture does not limit the
amount of debt securities that we may issue under the Indenture, and we may
issue debt securities in one or more series up to the aggregate initial offering
price authorized by us for each series. We may, without the consent of the
holders of the notes, reopen this series of notes and issue additional notes
under the Indenture in addition to the $20,000,000 of notes authorized as of the
date of this Prospectus Supplement. The notes will mature (unless previously
redeemed) on October 1, 2010. The notes will be issued only in fully registered
form without coupons, in denominations of $1,000 and integral multiples thereof.
The notes will be evidenced by a global note in book-entry form, except under
the limited circumstances described below under "--Book Entry System and Form of
Notes."
The notes will be senior unsecured obligations of HRP and will rank equally
with each other and with all of our other unsecured and unsubordinated
indebtedness outstanding from time to time. The notes will be effectively
subordinated to our mortgages and other secured indebtedness and to indebtedness
and other liabilities of our Subsidiaries. Accordingly, this indebtedness will
have to be satisfied in full before you will be able to realize any value from
the secured or indirectly held properties.
As of June 30, 2000, on an adjusted basis after giving effect to the
issuance of the notes and the application of the proceeds from the sale of the
notes, our total outstanding indebtedness (including under our revolving credit
facility) was approximately $1.4 billion, consisting of $54 million of secured
indebtedness, $1.2 billion of senior unsecured indebtedness and $205 million of
convertible subordinated debentures. The credit facility is currently an
unsecured revolving credit facility in the amount of $500 million. We and our
Subsidiaries may incur additional indebtedness, including secured indebtedness,
subject to the provisions described below under "--Certain
Covenants--Limitations on Incurrence of Debt."
Except as described under "--Certain Covenants" and "--Merger,
Consolidation or Sale" below and under "Description of Debt Securities--Merger,
Consolidation or Sale" and "--Certain Covenants" in the accompanying Prospectus,
the Indenture does not contain any other provisions that would afford you
protection in the event of (1) a highly leveraged or similar transaction
involving us or any of our affiliates, (2) a change of control or (3) a
reorganization, restructuring, merger or similar transaction involving us that
may adversely affect you. In addition, subject to the limitations set forth
under "--Certain Covenants" and "--Merger, Consolidation or Sale" below or under
"Description of Debt Securities--Merger, Consolidation or Sale" and "--Certain
Covenants" in the accompanying Prospectus, we may enter into certain
transactions such as the sale
S-7
<PAGE>
of all or substantially all of our assets or a merger or consolidation that
would increase the amount of our indebtedness or substantially reduce or
eliminate our assets, which might have an adverse effect on our ability to
service our indebtedness, including the notes. We have no present intention of
engaging in a highly leveraged or similar transaction.
Interest and Maturity
The notes will bear interest at the rate per annum set forth on the cover
page of this Prospectus Supplement from September 29, 2000, or from the
immediately preceding Interest Payment Date (as defined below) to which interest
has been paid. Interest is payable semiannually in arrears on each April 1 and
October 1 (the "Interest Payment Dates"), commencing April 1, 2001, to the
persons in whose names the notes are registered in the security register
applicable to the notes at the close of business on the date 14 calendar days
immediately preceding the applicable Interest Payment Date (the "Regular Record
Date"), regardless of whether the Regular Record Date is a Business Day. Accrued
interest is also payable on the date of maturity or earlier redemption of the
notes. Interest on the notes will be computed on the basis of a 360-day year of
twelve 30-day months.
Optional Redemption of the Notes
We may redeem the notes in whole at any time or in part from time to time
before they mature. The redemption price will equal the outstanding principal of
the notes being redeemed plus accrued interest and the Make-Whole Amount.
We are required to give notice of such a redemption not less than 30 days
nor more than 60 days prior to the redemption date by first class mail to each
holder's address appearing in the securities register maintained by the Trustee.
In the event we elect to redeem less than all of the notes, the particular notes
to be redeemed will be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate.
We are not required to make any sinking fund or redemption payments prior
to the stated maturity of the notes.
Certain Covenants
Limitations on Incurrence of Debt. We will not, and will not permit any
Subsidiary to, incur any Debt if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds thereof,
the aggregate principal amount of all outstanding Debt of HRP and its
Subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles ("GAAP") is greater than 60% of the sum
("Adjusted Total Assets") of (without duplication) (1) the Total Assets of HRP
and its Subsidiaries as of the end of the calendar quarter covered in HRP's
Annual Report on Form 10-K, or the Quarterly Report on Form 10-Q, as the case
may be, most recently filed with the SEC (or, if such filing is not permitted
under the Securities Exchange Act of 1934, as amended, with the Trustee) prior
to the incurrence of such additional Debt and (2) the purchase price of any real
estate assets or mortgages receivable acquired, and the amount of any securities
offering proceeds received (to the extent that such proceeds were not used to
acquire real estate assets or mortgages receivable or used to reduce Debt), by
HRP or any Subsidiary since the end of such calendar quarter, including those
proceeds obtained in connection with the incurrence of such additional Debt.
In addition to the above limitations on the incurrence of Debt, we will
not, and will not permit any Subsidiary to, incur any Secured Debt if,
immediately after giving effect to the incurrence of such additional Secured
Debt and the application of the proceeds thereof, the aggregate principal amount
of all outstanding Secured Debt of HRP and its Subsidiaries on a consolidated
basis is greater than 40% of Adjusted Total Assets.
In addition to the above limitations on the incurrence of Debt, we 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 Debt Service for
the four consecutive fiscal quarters most recently ended prior to the date on
which such additional Debt is to be incurred shall have been less than 1.5x, on
a pro forma basis after giving effect thereto and to the
S-8
<PAGE>
application of the proceeds therefrom, and calculated on the assumption that (1)
such Debt and any other Debt incurred by HRP and its Subsidiaries since the
first day of such four-quarter period and the application of the proceeds
therefrom, including to refinance other Debt, had occurred at the beginning of
such period; (2) the repayment or retirement of any other Debt by HRP and its
Subsidiaries since the first date of such four-quarter period had been repaid or
retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility shall be
computed based upon the average daily balance of such Debt during such period);
(3) in the case of Acquired Debt or Debt incurred in connection with any
acquisition since the first day of such four-quarter period, the related
acquisition had occurred as of the first day of such period with appropriate
adjustments with respect to such acquisition being included in such pro forma
calculation; and (4) in the case of any acquisition or disposition by HRP or its
Subsidiaries of any asset or group of assets since the first day of such
four-quarter period, whether by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation. If the Debt giving rise to the need to make the
foregoing calculation or any other Debt incurred after the first day of the
relevant four-quarter period bears interest at a floating rate then, for
purposes of calculating the Annual Debt Service, the interest rate on such Debt
will be computed on a pro forma basis as if the average interest rate which
would have been in effect during the entire such four-quarter period had been
the applicable rate for the entire such period.
Maintenance of Total Unencumbered Assets. We and our Subsidiaries will at
all times maintain Total Unencumbered Assets of not less than 200% of the
aggregate outstanding principal amount of the Unsecured Debt of HRP and its
Subsidiaries on a consolidated basis.
See "Description of Debt Securities--Certain Covenants" in the accompanying
Prospectus for a description of additional covenants applicable to us.
Merger, Consolidation or Sale
The Indenture permits us to consolidate with, or sell, lease or convey all
or substantially all of our assets to, or merge with or into, any other entity,
provided that:
(1) either we are the continuing entity, or the successor entity (if other
than us) formed by or resulting from any such consolidation or merger
or which shall have received the transfer of such assets is an entity
organized and existing under the laws of the United States or any state
thereof and shall expressly assume the due and punctual payment of the
principal of (and premium or the Make-Whole Amount on) and any interest
on all of the notes and the due and punctual performance and observance
of all of the covenants and conditions contained in the Indenture to be
performed by us;
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of HRP or any Subsidiary as a
result thereof as having been incurred by HRP 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
(3) an officers' certificate and legal opinion covering such conditions is
delivered to the Trustee.
Events of Default, Notice and Waiver
The Indenture provides that the following events are "events of default"
with respect to the notes:
(1) default for 30 days in the payment of any installment of interest
payable on any note when due and payable;
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<PAGE>
(2) default in the payment of the principal of (or premium or the
Make-Whole Amount on) any note when due and payable;
(3) default in the performance, or breach, of any covenant of HRP
contained in the Indenture (other than a covenant added to the
Indenture solely for the benefit of a series of debt securities other
than the notes), which continues for 60 days after written notice as
provided in the Indenture;
(4) default under any bond, debenture, note, mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by HRP (or by
any Subsidiary, the repayment for which HRP is directly responsible or
liable as obligor or guarantor) having an aggregate principal amount
outstanding of at least $20,000,000, whether such indebtedness now
exists or shall hereafter be incurred or created, which default shall
have resulted in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due
and payable, without such indebtedness having been discharged or such
acceleration having been rescinded or annulled within a period of 10
days after written notice to HRP by the Trustee or to HRP and the
Trustee by the holders of at least 25% in principal amount of the
outstanding notes as provided in the Indenture; or
(5) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of HRP or any
Significant Subsidiary or for all or substantially all of either of
their property.
Upon the acceleration of notes in accordance with the terms of the
Indenture following the occurrence of an event of default, the principal amount
of the notes, plus accrued and unpaid interest thereon and the Make-Whole
Amount, will become due and payable. See "Description of Debt Securities--Events
of Default, Notice and Waiver" in the accompanying Prospectus for a description
of rights, remedies and other matters relating to events of default.
Discharge, Defeasance and Covenant Defeasance
The provisions of the Indenture relating to defeasance and covenant
defeasance described under "Description of Debt Securities--Discharge,
Defeasance and Covenant Defeasance" in the accompanying Prospectus will apply to
the notes.
Book-Entry System and Form of Notes
The notes will be issued in the form of a single fully registered global
note without coupons that will be deposited with The Depository Trust Company,
New York, New York, and registered in the name of its nominee, Cede & Co. This
means that we will not issue certificates to each owner of notes. One global
note will be issued to DTC, which will keep a computerized record of its
participants whose clients have purchased the notes. The participant will then
keep a record of its clients who purchased the notes. Unless it is exchanged in
whole or in part for a certificated note, the global note may not be
transferred, except that DTC, its nominees and their successors may transfer the
global note as a whole to one another.
Beneficial interests in the global note will be shown on, and transfers of
the global note will be made only through, records maintained by DTC and its
participants.
DTC has provided us with the following information: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. DTC holds securities that its participants ("Direct
Participants") deposit with DTC. DTC also facilitates the settlement among
Direct Participants of securities transactions, such as transfers and pledges,
in deposited securities through computerized book-entry changes in the Direct
Participants' accounts. This eliminates the need for physical movement of
securities certificates.
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Direct Participants include securities brokers and dealers (including the
Underwriter), banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange LLC and the National
Association of Securities Dealers, Inc.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly. The rules that apply to DTC and its Direct Participants are on file
with the SEC.
We expect that, pursuant to procedures established by DTC, ownership of
beneficial interests in the notes evidenced by the global note will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by DTC or its nominee (with respect to beneficial interests of Direct
Participants) and records of Direct Participants (with respect to beneficial
interests of persons who hold through Direct Participants). Neither we nor the
Trustee will have any responsibility or liability for any aspect of the records
of DTC or for maintaining, supervising or reviewing any records of DTC or any of
its Direct Participants relating to beneficial ownership interests in the notes.
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and laws
may impair your ability to own, pledge or transfer beneficial interests in the
global note.
So long as DTC or its nominee is the registered owner of the global note,
DTC or such 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 described below, as an owner of a beneficial interest in
notes evidenced by the global note you will not be entitled to have any of the
individual notes represented by such global note registered in your name, you
will not receive or be entitled to receive physical delivery of any such notes
in definitive form and you will not be considered the owner or holder thereof
under the Indenture for any purpose, including with respect to the giving of any
direction, instructions or approvals to the Trustee thereunder. Accordingly, you
must rely on the procedures of DTC and, if you are not a Direct Participant, on
the procedures of the Direct Participant through which you own your interest, to
exercise any rights of a "holder" under the Indenture. We understand that, under
existing industry practice, if we request any action of holders or if an owner
of a beneficial interest in a global note desires to give or take any action
which a holder is entitled to give or take under the Indenture, DTC would
authorize the Direct Participants holding the relevant beneficial interest to
give or take such action, and such Direct Participants would authorize
beneficial owners through such Direct Participants to give or take such actions
or would otherwise act upon the instructions of beneficial owners holding
through them.
Payments of principal, premium, if any, and interest or additional amount,
if any, on individual notes represented by a global note registered in the name
of the holder of the global note or its nominee will be made by the Trustee to
or at the direction of the holder of the global note or its nominee, as the case
may be, as the registered owner of the global note under the Indenture. Under
the terms of the Indenture, we and the Trustee may treat the persons in whose
name notes, including a global note, are registered as the owners thereof for
the purpose of receiving such payments. Consequently, neither we nor the Trustee
has or will have any responsibility or liability for the payment of such amounts
to beneficial owners of notes (including principal, premium, if any, and
interest or additional amount, if any).
DTC's practice is to credit the accounts of relevant Direct Participants on
the applicable payment date in accordance with their respective holdings of
beneficial interests in the relevant security as shown on the records of DTC.
Payments by Direct Participants to the beneficial owners of notes will be
governed by standing instructions and customary practice and will be the
responsibility of DTC's Direct Participants. Redemption notices with respect to
any notes will be sent to the holder of the global note (i.e., DTC, its nominee
or any subsequent holder). If less than all of the notes of any series are to be
redeemed, we expect the holder of the global note to determine the amount of
interest of each Direct Participant in the notes to be redeemed by lot. Neither
we, the Trustee, any paying agent nor the security registrar for such notes will
have any responsibility or
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liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global note for such notes.
Neither we nor the Trustee will be liable for any delay by the holder of a
global note or DTC in identifying the beneficial owners of notes and we and the
Trustee may conclusively rely on, and will be protected in relying on,
instructions from the holder of a global note or DTC for all purposes.
The notes, which are represented by the global note, will be exchangeable
for certificate notes with the same terms in authorized denominations only if:
o DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered under
applicable law and a successor depositary is not appointed by us
within 90 days; or
o we determine not to require all of the notes to be represented by a
global note and notify the Trustee of our decision, in which case we
will issue individual notes in denominations of $1,000 and integral
multiples thereof.
Same-Day Settlement and Payment
The Underwriter will make settlement for the notes in immediately available
funds. We will make all payments of principal and interest in respect of the
notes in immediately available funds.
So long as DTC continues to make its "Same-Day Funds Settlement System,"
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. We expect that secondary trading in the certificated
securities, if any, will also be settled 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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MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following summary of federal income tax considerations is based upon
the Internal Revenue Code of 1986, as amended, Treasury regulations and rulings
and decisions now in effect, all of which are subject to change or possible
differing interpretations. No ruling has been sought from the Internal Revenue
Service with respect to any matter described in this summary, and we cannot
provide any assurance that the IRS or a court will agree with the statements
made in this summary. The summary applies to you only if you hold the notes as a
capital asset, which generally is an asset held for investment rather than as
inventory or as property used in a trade or business. The summary also does not
discuss the particular tax consequences that might be relevant to you if you are
subject to special rules under the federal income tax law, for example if you
are:
o a bank, life insurance company, regulated investment company or other
financial institution,
o a broker or dealer in securities or foreign currency,
o a person that has a functional currency other than the U.S. dollar,
o a person who acquires our notes in connection with his employment or
other performance of services,
o a person subject to alternative minimum tax,
o a person who owns our notes as part of a straddle, hedging
transaction, conversion transaction or constructive sale transaction,
o a tax-exempt entity or
o an expatriate.
In addition, the following summary does not address all possible tax
considerations, and in particular does not discuss any estate, gift,
generation-skipping transfer, state, local or foreign tax considerations. For
all these reasons, we urge you to consult with your tax advisor about the
federal income tax and other tax consequences of your acquisition, ownership and
disposition of our notes.
For purposes of this summary, you are a "U.S. holder" if you are a
beneficial owner of our notes and for federal income tax purposes are:
o a citizen or resident of the United States, including an alien
individual who is a lawful permanent resident of the United States or
meets the substantial presence residency test under the federal income
tax laws,
o a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes, that is created or
organized in or under the laws of the United States, any state thereof
or the District of Columbia, unless otherwise provided by Treasury
regulations,
o an estate the income of which is subject to federal income taxation
regardless of its source, or
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust, or electing trusts in existence on
August 20, 1996 to the extent provided in Treasury regulations,
and if your status as a U.S. holder is not overridden pursuant to the provisions
of an applicable tax treaty. Conversely, you are a "non-U.S. holder" if you are
a beneficial owner of our notes and are not a U.S. holder.
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In General
Each note will be treated as indebtedness issued by HRP. This summary
discussion assumes the IRS will respect this classification.
U.S. Holders
If you are a U.S. holder:
Payments of Interest. You must generally include interest on a note in your
gross income as ordinary interest income:
o when you receive it, if you use the cash method of accounting for
federal income tax purposes, or
o when it accrues, if you use the accrual method of accounting for
federal income tax purposes.
Purchase price for a note that is allocable to prior accrued interest may be
treated as offsetting a portion of the interest income from the next scheduled
interest payment on the note.
Original Issue Discount. A debt instrument has original issue discount if
its stated redemption price at maturity exceeds its issue price by more than a
specified de minimis amount, which is generally defined as 1/4 of 1% of its
stated redemption price at maturity multiplied by the number of complete years
to maturity from its issue date. The issue price of a debt instrument is the
first price at which a substantial amount of notes have been sold, ignoring
sales to bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers. The stated
redemption price at maturity of a debt instrument is the sum of all payments
provided by its terms other than payments of qualified stated interest.
Qualified stated interest generally means stated interest that is
unconditionally payable in cash or property at least annually at a single fixed
rate. The stated interest on the notes constitutes qualified stated interest
because we must pay it semiannually in immediately available funds.
The notes will be issued at a discount which is less than the applicable de
minimis discount amount. As a result, the notes will be treated as issued
without original issue discount. For the year in which you acquire the note, you
generally may elect to include in income all interest that accrues on the note
by using the constant yield method applicable to calculating original issue
discount, subject to certain limitations and exceptions. For purposes of this
election, interest includes stated interest, acquisition discount, original
issue discount, de minimis original issue discount, market discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. You may revoke this election only with the
approval of the IRS, so we urge you to consult with your tax advisor about the
consequences of this election.
Market Discount. If you acquire a note and your adjusted tax basis in the
note upon acquisition is less than its issue price (in this case, its principal
amount), you will be treated as having acquired the note at a "market discount"
unless the amount of this market discount is less than the de minimis amount
specified under the Internal Revenue Code. Under the market discount rules, you
will be required to treat any gain on the sale, exchange, redemption,
retirement, or other taxable disposition of a note, or any appreciation in a
note in the case of a nontaxable disposition such as a gift, as ordinary income
to the extent of the market discount which has not previously been included in
your income and which is treated as having accrued on the note at the time of
the disposition. In addition, you may be required to defer, until the maturity
of the note or earlier taxable disposition, the deduction of all or a portion of
the interest expense on any indebtedness incurred or continued to purchase or
carry the note. Any market discount will be considered to accrue ratably during
the period from the date of your acquisition to the maturity date of the note,
unless you elect to accrue the market discount on a constant yield method. In
addition, you may elect to include market discount in income currently as it
accrues, on either a ratable or constant yield method, in which case the rule
described above regarding deferral of interest deductions will not apply. This
election to include market discount in income currently, once made, applies to
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all market discount obligations acquired on or after the first taxable year to
which the election applies and may not be revoked without the consent of the
IRS. You should consult with your tax advisor regarding these market discount
elections.
Amortizable Bond Premium. If you acquire a note and your adjusted tax basis
in the note upon acquisition is greater than its principal amount, you will be
treated as having acquired the note with "bond premium." You generally may elect
to amortize this bond premium over the remaining term of the note on a constant
yield method, and the amount amortized in any year will be treated as a
reduction of your interest income from the note for that year. If you do not
make such an election, your bond premium on a note will decrease the gain or
increase the loss that you otherwise recognize on a taxable disposition of that
note. Any election to amortize bond premium applies to all debt obligations,
other than debt obligations the interest on which is excludable from gross
income, that you hold at the beginning of the first taxable year to which the
election applies and that you thereafter acquire. You may not revoke an election
to amortize bond premium without the consent of the IRS. You should consult with
your tax advisor regarding this election.
Disposition of a Note. Upon the sale, exchange, redemption, retirement or
other disposition of a note, you generally will recognize taxable gain or loss
in an amount equal to the difference, if any, between (1) the amount you receive
in cash or in property, valued at its fair market value, upon this sale,
exchange, redemption, retirement or other disposition, other than amounts
representing accrued and unpaid interest which will be taxable as interest
income, and (2) your adjusted tax basis in the note. Your adjusted tax basis in
the note will, in general, equal your acquisition cost for the note, after
reduction for amounts allocated to prior accrued interest, as increased by any
market discount you have included into income in respect of the note, and as
decreased by any amortized bond premium on the note. Except with respect to
accrued market discount, your gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if you have held the note for more than
one year at the time of disposition. For noncorporate U.S. holders, preferential
rates of tax may apply to long-term capital gains.
Non-U.S. Holders
If you are a non-U.S. holder:
Generally. You will not be subject to federal income taxes on payments of
principal, premium, if any, or interest on a note, or upon the sale, exchange,
redemption, retirement or other disposition of a note, if:
o you do not own directly or indirectly 10% or more of the total shares
of beneficial interest of HRP,
o your income and gain in respect of the note is not effectively
connected with the conduct of a United States trade or business,
o we or the applicable paying agent (the "Withholding Agent") have
received from you a properly executed, applicable IRS Form W-8 or
substantially similar form in the year in which a payment of interest,
principal or premium occurs, or in a preceding calendar year to the
extent provided for in the instructions to the applicable IRS Form
W-8, and
o in the case of gain upon the sale, exchange, redemption, retirement or
other disposition of a note recognized by an individual non-U.S.
holder, you were present in the United States for less than 183 days
during the taxable year in which the gain was recognized.
The IRS Form W-8 or substantially similar form must be signed by you under
penalties of perjury certifying that you are a non-U.S. holder and providing
your name and address, and you must inform the Withholding Agent of any change
in the information on the statement within 30 days of the change. If you hold a
note through a securities clearing organization or other qualified financial
institution, the organization or institution may provide a signed statement to
the Withholding Agent. However, in that case, the signed statement must
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generally be accompanied by a copy of the executed IRS Form W-8 or substantially
similar form that you provided to the organization or institution.
Except in the case of income or gain in respect of a note that is
effectively connected with the conduct of a United States trade or business,
discussed below, interest received or gain recognized by you which does not
qualify for exemption from taxation will be subject to federal income tax and
withholding at a rate of 30% unless reduced or eliminated by an applicable tax
treaty. You must generally use IRS Form 1001 to claim tax treaty benefits in
calendar year 2000, and under new Treasury regulations discussed below an
applicable IRS Form W-8 or substantially similar form for subsequent calendar
years.
Effectively Connected Income and Gain. If you are a non-U.S. holder whose
income and gain in respect of a note is effectively connected with the conduct
of a United States trade or business, you will be subject to regular federal
income tax on this income and gain in generally the same manner as U.S. holders,
and general federal income tax return filing requirements will apply. In
addition, if you are a corporation, you may be subject to a branch profits tax
equal to 30% of your effectively connected adjusted earnings and profits for the
taxable year, unless you qualify for a lower rate under an applicable tax
treaty. To obtain an exemption from withholding on interest on the notes, you
must generally supply to the Withholding Agent an IRS Form 4224 for the calendar
year 2000, and under new Treasury regulations discussed below an applicable IRS
Form W-8, or substantially similar form, for subsequent calendar years.
New Treasury Regulations. New Treasury regulations alter the withholding
rules on interest paid to you, effective generally for payments after December
31, 2000 and subject to complex transition rules. For example, documentation and
procedures satisfying the new Treasury regulations are deemed in some instances
to satisfy current law requirements, and in these instances you or the
Withholding Agent may wish to satisfy the requirements of the new Treasury
regulations rather than the requirements of the Treasury regulations soon to
expire. The new Treasury regulations are complex, and you must therefore consult
with your tax advisor to determine how the new Treasury regulations affect your
particular circumstances.
The new Treasury regulations replace old IRS Forms W-8, 1001 and 4224 with
a new series of IRS Forms W-8, which you will generally have to properly execute
earlier than you would have otherwise had to for purposes of providing
replacements for the old IRS forms. For example, you must properly execute the
appropriate new version of IRS Form W-8, or substantially similar form, no later
than December 31, 2000 if you remain a non-U.S. holder of a note on that date.
Under the new Treasury regulations, it may also be possible for you to receive
payments on the notes through a qualified intermediary that complies with
requisite procedures and provides applicable certification of your non-U.S.
holder status on your behalf. The new Treasury regulations also clarify
Withholding Agents' reliance standards on executed IRS Forms W-8 or
substantially similar forms.
If you are a non-U.S. holder claiming benefits under an income tax treaty,
you should be aware that you may be required to obtain a taxpayer identification
number and to certify your eligibility under the applicable treaty's limitations
on benefits article in order to comply with the new Treasury regulations'
certification requirements. The new Treasury regulations also provide special
rules to determine whether, for purposes of determining the applicability of a
tax treaty, interest paid to a non-U.S. holder that is an entity should be
treated as paid to the entity or to those holding the ownership interests in
that entity, and whether the entity or the holders in the entity are entitled to
benefits under the tax treaty.
Information Reporting and Backup Withholding
Information reporting and backup withholding may apply to interest and
other payments to you under the circumstances discussed below. Amounts withheld
under backup withholding are generally not an additional tax and may be refunded
or credited against your federal income tax liability, provided that you furnish
the required information to the IRS.
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If you are a U.S. holder. You may be subject to backup withholding at a 31%
rate when you receive interest payments on a note or proceeds upon the sale,
exchange, redemption, retirement or other disposition of a note. In general, you
can avoid this backup withholding by properly executing under penalties of
perjury an IRS Form W-9 or substantially similar form that provides:
o your correct taxpayer identification number and
o a certification that you are exempt from backup withholding because
(a) you are a corporation or come within another enumerated exempt
category, (b) you have not been notified by the IRS that you are
subject to backup withholding or (c) you have been notified by the IRS
that you are no longer subject to backup withholding.
If you do not provide your correct taxpayer identification number on the IRS
Form W-9 or substantially similar form, you may be subject to penalties imposed
by the IRS.
Unless you have established on a properly executed IRS Form W-9 or
substantially similar form that you are a corporation or come within another
enumerated exempt category, interest and other payments on the notes paid to you
during the calendar year, and the amount of tax withheld, if any, will be
reported to you and to the IRS.
If you are a non-U.S. holder. The amount of interest paid to you on a note
during each calendar year, and the amount of tax withheld, if any, will
generally be reported to you and to the IRS. This information reporting
requirement applies regardless of whether you were subject to withholding or
whether withholding was reduced or eliminated by an applicable tax treaty. Also,
interest paid to you on a note may be subject to backup withholding at a 31%
rate, unless you properly certify your non-U.S. holder status on an IRS Form W-8
or substantially similar form in the manner described above, under "Non-U.S.
Holders." Similarly, information reporting and 31% backup withholding will not
apply to proceeds you receive upon the sale, exchange, redemption, retirement or
other disposition of a note, if you properly certify that you are a non-U.S.
holder on an IRS Form W-8 or substantially similar form. Even without having
executed an IRS Form W-8 or substantially similar form, however, in some cases
information reporting and 31% backup withholding will not apply to proceeds you
receive upon the sale, exchange, redemption, retirement or other disposition of
a note, if you receive those proceeds through a broker's foreign office.
If you are a non-U.S. holder whose income and gain on a note is effectively
connected to the conduct of a United States trade or business, a slightly
different rule may apply to proceeds you receive upon the sale, exchange,
redemption, retirement or other disposition of a note. Until you comply with the
new Treasury regulations discussed above under "Non-U.S. Holders," information
reporting and 31% backup withholding may apply to you in the same manner as a
U.S. holder, and thus you may have to execute an IRS Form W-9 or substantially
similar form to prevent the backup withholding.
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UNDERWRITING
Subject to the terms and conditions contained in the Purchase Agreement
that relates to the notes, we have agreed to sell to First Union Securities,
Inc. (the "Underwriter"), and the Underwriter has agreed to purchase from us,
all of the notes offered hereby.
The Purchase Agreement states that the obligation of the Underwriter to
purchase and accept delivery of the notes offered by this Prospectus Supplement
is subject to the approval of certain legal matters by its counsel and certain
other conditions. Pursuant to the Purchase Agreement, the Underwriter has agreed
to purchase all of the notes if any of them are purchased.
The Underwriter has told us that it proposes to offer the notes from time
to time for sale in one or more negotiated transactions, or otherwise, at market
prices prevailing at the time of sale, at prices related to the prevailing
market prices or at negotiated prices. In connection with the sale of any notes,
the Underwriter may be deemed to have received an underwriting discount equal to
the difference between the amount received by the Underwriter upon the sale of
the notes and the price at which the Underwriter purchased the notes from us.
We have agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). Alternately, we may contribute to payments that the
Underwriter may be required to make as a result of these liabilities. These
indemnification provisions would require us to hold the Underwriter harmless
from and against any and all losses, claims, damages, liabilities and judgments
caused by any false statement of or any failure to state a material fact in this
Prospectus Supplement, the accompanying Prospectus or the documents incorporated
by reference therein. The indemnification provisions would not apply to false
statements or omissions that are based on information that is furnished in
writing to us by the Underwriter expressly for use in this Prospectus Supplement
or the Prospectus and are subject to certain other limitations.
Prior to this offering, there has been no public market for the notes. The
Underwriter has informed us that it may make a market in the notes from time to
time. The Underwriter is not obligated to do this, and it may discontinue this
market making at any time without notice. Therefore, no assurance can be given
concerning the liquidity of the trading market for the notes or that an active
market will develop. We do not intend to apply for the notes to be listed on any
national securities exchange or national securities quotation system.
To the extent that the net proceeds of the offering are used to repay
borrowings under our revolving bank credit facility, First Union National Bank,
a lender under our bank credit facility and an affiliate of First Union
Securities, Inc., will receive its proportionate share of such repayment. See
"Use of Proceeds."
RATINGS
The ratings currently assigned to certain of HRP's long-term senior
unsecured debt are as follows: Moody's Investor Service--Baa2; Standard & Poor's
Rating Services--BBB; and Fitch--BBB. However, Standard & Poor's Rating Services
announced a "negative outlook" for HRP's ratings.
A rating assigned to HRP's debt reflects the applicable rating agency's
assessment of the likelihood that the holders of such debt will receive the
payments of interest and principal required to be made. A rating is not a
recommendation to purchase, hold, or sell the notes or any other debt of HRP,
and such ratings do not comment as to the marketability of the notes or any
other debt of HRP, their market price or suitability for a particular investor.
There is no assurance that any rating will remain for any given period of time
or that any rating will not be lowered or withdrawn entirely by a rating agency
if in such rating agency's judgment circumstances so warrant. Each rating should
be evaluated independently of any other rating.
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LEGAL MATTERS
Sullivan & Worcester LLP, Boston, Massachusetts, our lawyers, have issued
an opinion about the legality of the notes. Hunton & Williams, Richmond,
Virginia, the Underwriter's lawyers, will also issue an opinion to the
Underwriter as to certain matters. Sullivan & Worcester LLP and Hunton &
Williams will rely, as to certain matters of Maryland law, upon an opinion of
Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland. Hunton & Williams
will rely, as to certain matters of Massachusetts law, upon the opinion of
Sullivan & Worcester LLP. Barry M. Portnoy was a partner in the firm of Sullivan
& Worcester LLP until March 31, 1997 and is one of our Managing Trustees. Mr.
Portnoy is also a Managing Trustee of Hospitality Properties Trust and Senior
Housing Properties Trust and a director and 50% owner of REIT Management &
Research, Inc., the investment advisor to HRP. Sullivan & Worcester LLP
represents Hospitality Properties Trust, Senior Housing Properties Trust, REIT
Management & Research, Inc. and certain of their affiliates on various matters.
EXPERTS
The consolidated financial statements and financial statement schedules
of HRPT Properties Trust included or incorporated by reference in its Annual
Report on Form 10-K for the year ended December 31, 1999, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included or incorporated by reference therein and incorporated herein by
reference which, as to the years 1999, 1998 and 1997, are based in part on the
report of Arthur Andersen LLP, independent public accountants. The financial
statements and financial statement schedules referred to above are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus Supplement, and information that we
subsequently file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below which were
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"):
o Annual Report on Form 10-K for the year ended December 31, 1999;
o Quarterly Report on Form 10-Q for the quarters ended March 31, 2000,
and June 30, 2000; and
o Current Reports on Form 8-K dated July 10, 2000, July 25, 2000 and
September 28, 2000.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this Prospectus Supplement but before
the end of the notes offering:
o Reports filed under Sections 13(a) and (c) of the Exchange Act;
o Definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent shareholders'
meeting; and
o Any reports filed under Section 15(d) of the Exchange Act.
You may request a copy of any of the filings (excluding exhibits), at no
cost, by writing or telephoning us at the following address:
Investor Relations
HRPT Properties Trust
400 Centre Street
Newton, Massachusetts 02458
(617) 332-3990
WHERE YOU CAN FIND MORE INFORMATION
You may read and copy any material that we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. You may also access our SEC filings over the Internet at
the SEC's site at http://www.sec.gov.
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FORWARD-LOOKING STATEMENTS
Statements contained in this Prospectus Supplement and the accompanying
Prospectus, including the documents that are incorporated by reference, that are
not historical facts are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Also, when we use any of the words
"believe," "expect," "anticipate" or similar expressions, we are making
forward-looking statements. Forward-looking statements in this Prospectus
Supplement include statements regarding the security of our rental income and
our leases, possible property dispositions and the expected amount of proceeds
from them, possible future capital gains from asset dispositions, our access to
capital and the ability of our properties to compete effectively. In part, we
have based these forward-looking statements on possible or assumed future
results of our operations. These are forward-looking statements and not
guaranteed. They are based on our present intentions and on our present
expectations and assumptions. These statements, intentions, expectations and
assumptions involve risks and uncertainties, some of which are beyond our
control, that could cause actual results or events to differ materially from
those we anticipate or project. For example, we may be unable to sell
properties, other parties to sales contracts may withdraw or default, we may or
may not repurchase any shares or we may be unable to maintain our tenant
occupancies or lease rents. Prospective purchasers should not place undue
reliance on these forward-looking statements, as events described or implied in
such statements may not occur. We undertake no obligation to update or revise
any forward-looking statements as a result of new information, future events or
otherwise.
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement or the accompanying Prospectus. We have
not, and the Underwriter has not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
Underwriter is not, making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this Prospectus Supplement or the accompanying Prospectus, as well
as information we previously filed with the SEC and incorporated by reference,
is accurate as of the date on the front cover of this Prospectus Supplement
only. Our business, financial condition, results of operations and prospects may
have changed since that date.
The Amended and Restated Declaration of Trust establishing HRP, dated July
1, 1994, a copy of which, together with all amendments thereto, is duly filed in
the office of the Department of Assessments and Taxation of the State of
Maryland, provides that the name "HRPT Properties Trust" refers to the trustees
under the Declaration of Trust, as so amended, collectively as trustees, but not
individually or personally, and that no trustee, officer, shareholder, employee
or agent of HRP shall be held to any personal liability, jointly or severally,
for any obligation of, or claim against, HRP. All persons dealing with HRP, in
any way, shall look only to the assets of HRP for the payment of any sum or the
performance of any obligation.
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GLOSSARY
"Acquired Debt" means Debt of a person or entity (1) existing at the time
such person or entity becomes a Subsidiary or (2) assumed in connection with the
acquisition of assets from such person or entity, in each case, other than Debt
incurred in connection with, or in contemplation of, such person or entity
becoming a Subsidiary or such acquisition. Acquired Debt is deemed to be
incurred on the date of the related acquisition of assets from any person or
entity or the date the acquired person or entity becomes a Subsidiary.
"Annual Debt Service" as of any date means the maximum amount which is
expensed in any 12-month period for interest on Debt of HRP and its
Subsidiaries.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in The City of New York or in the city in which the
Corporate Trust Office of the Trustee is located are required or authorized to
close.
"Capital Stock" means, with respect to any entity, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such entity and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of HRP and its Subsidiaries plus amounts which have
been deducted, and minus amounts which have been added, for the following
(without duplication): (1) interest on Debt of HRP and its Subsidiaries, (2)
provision for taxes of HRP and its Subsidiaries based on income, (3)
amortization of debt discount and deferred financing costs, (4) provisions for
gains and losses on properties and property depreciation and amortization, (5)
the effect of any noncash charge resulting from a change in accounting
principles in determining Earnings from Operations for such period and (6)
amortization of deferred charges.
"Debt" of HRP or any Subsidiary means, without duplication, any
indebtedness of HRP or any Subsidiary, whether or not contingent, in respect of
(1) borrowed money or evidenced by bonds, notes, debentures or similar
instruments,
(2) indebtedness for borrowed money secured by any encumbrance existing on
property owned by HRP or any Subsidiary, to the extent of the lesser
of (x) the amount of indebtedness so secured and (y) the fair market
value of the property subject to such encumbrance,
(3) the reimbursement obligations, contingent or otherwise, in connection
with any letters of credit actually issued (other than letters of
credit issued to provide credit enhancement or support with respect to
other indebtedness of HRP or any Subsidiary otherwise reflected as
Debt hereunder) or amounts representing the balance deferred and
unpaid of the purchase price of any property or services, except any
such balance that constitutes an accrued expense or trade payable, or
all conditional sale obligations or obligations under any title
retention agreement,
(4) the principal amount of all obligations of HRP or any Subsidiary with
respect to redemption, repayment or other repurchase of any
Disqualified Stock, or
(5) any lease of property by HRP or any Subsidiary as lessee which is
reflected on HRP's consolidated balance sheet as a capitalized lease
in accordance with GAAP, to the extent, in the case of items of
indebtedness under (1) through (3) above, that any such items (other
than letters of credit) would appear as a liability on HRP's
consolidated balance sheet in accordance with GAAP.
Debt also includes, to the extent not otherwise included, any obligation by HRP
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
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business), Debt of another person or entity (other than HRP or any Subsidiary)
(it being understood that Debt shall be deemed to be incurred by HRP or any
Subsidiary whenever HRP or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any entity, any Capital Stock
of such entity which by the terms of such Capital Stock (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (1) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock or shares), (2) is convertible into or exchangeable or exercisable for
Debt or Disqualified Stock, or (3) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
stated maturity of the notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of HRP and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any notes, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual 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.
"Ratio of Earnings to Fixed Charges" for any period means HRP's earnings
divided by fixed charges. For this purpose, earnings have been calculated by
adding fixed charges to income before income taxes and extraordinary items.
Fixed charges consist of interest costs including amortization of deferred
financing costs.
"Reinvestment Rate" means a rate per annum equal to the sum of 0.50% plus
the yield on treasury securities at constant maturity under the heading "Week
Ending" published in the 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 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.
"Secured Debt" means Debt secured by any mortgage, lien, charge, pledge or
security interest of any kind.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" (within the meaning of Regulation S-X, promulgated by the SEC under
the Securities Act of 1933, as amended) of HRP.
"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 any
publicly available source of similar market data which shall be designated by
the Company.
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"Subsidiary" means any corporation or other entity of which a majority of
(1) the voting power of the voting equity securities or (2) the outstanding
equity interests of which are owned, directly or indirectly, by HRP or one or
more other Subsidiaries of HRP. For the purposes of this definition, "voting
equity securities" means equity securities having voting power for the election
of directors, whether at all times or only so long as no senior class of
security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (1) the Undepreciated Real
Estate Assets and (2) all other assets of HRP and its Subsidiaries determined in
accordance with GAAP (but excluding accounts receivable and intangibles).
"Total Unencumbered Assets" means the sum of (1) those Undepreciated Real
Estate Assets not subject to an encumbrance for borrowed money and (2) all other
assets of HRP and its Subsidiaries not subject to an encumbrance for borrowed
money determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of HRP and its
Subsidiaries on such date, before depreciation and amortization determined on a
consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any of the properties
of HRP or any Subsidiary.
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HRPT Properties Trust
$20,000,000
8.625% Senior Notes due 2010
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PROSPECTUS SUPPLEMENT
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First Union Securities, Inc.
September 28, 2000
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We have not authorized any dealer, salesperson or other person to give you
written information other than this Prospectus Supplement or the Prospectus in
connection with the offering made by this Prospectus Supplement. You must not
rely on unauthorized information. Neither this Prospectus Supplement nor the
Prospectus is an offer to sell these notes or our solicitation of your offer to
buy the notes in any jurisdiction where that would not be permitted or legal.
Neither the delivery of this Prospectus Supplement and Prospectus nor any sales
made hereunder after the date of the Prospectus Supplement shall create an
implication that the information contained herein or the affairs of the Company
have not changed since the date hereof.
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