<PAGE> 1
Filed Pursuant to Rule 424(B)(5)
Registration No. 333-12179
PROSPECTUS SUPPLEMENT
(To Prospectus Dated September 30, 1996)
3,000,000 SHARES
WEINGARTEN REALTY INVESTORS
7.44% Series A Cumulative Redeemable Preferred Shares
(Par Value $.03 per Share)
(Liquidation Preference Equivalent to $25.00 per Share)
----------------------
Dividends on the 7.44% Series A Cumulative Redeemable Preferred
Shares,$.03 par value per share (the "Series A Preferred Shares"), of Weingarten
Realty Investors (the "Company") will be cumulative from the date of original
issue and will be payable quarterly on or about the last day of March, June,
September and December of each year, commencing March 31, 1998, at the rate of
7.44% of the liquidation preference per annum (equivalent to $1.86 per annum per
share).
The Series A Preferred Shares are not redeemable prior to March 31,
2003. On or after March 31, 2003, the Series A Preferred Shares may be redeemed
for cash at the option of the Company in whole or in part, at a redemption price
of $25.00 per share, plus accrued and unpaid dividends, if any, thereon. The
redemption price (other than the portion thereof consisting of accrued and
unpaid dividends) is payable solely out of the sale proceeds of other capital
shares of the Company, which may include other series of preferred shares. The
Series A Preferred Shares have no stated maturity and will not be subject to any
sinking fund or mandatory redemption and will not be convertible into any other
securities of the Company. See "Description of Series A Preferred Shares --
Redemption." In order to maintain its qualification as a real estate investment
trust for federal income tax purposes, the Company's Restated Declaration of
Trust, as amended, imposes limitations on the number of capital shares,
including Series A Preferred Shares, that may be owned by any single person or
affiliated groups. See "Description of Series A Preferred Shares -- Restrictions
on Transfer."
Application will be made to list the Series A Preferred Shares on the
New York Stock Exchange ("NYSE"). If such application is approved, trading of
the Series A Preferred Shares on the NYSE is expected to commence within a
30-day period after the date of initial delivery of the Series A Preferred
Shares. While the Underwriters have advised the Company that they intend to make
a market in the Series A Preferred Shares prior to commencement of trading on
the NYSE, they are under no obligation to do so and no assurance can be given
that a market for the Series A Preferred Shares will exist prior to commencement
of trading. See "Underwriting."
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.
<TABLE>
<CAPTION>
=======================================================================================================================
Price to Underwriting Proceeds to
Public (1) Discount (2) Company (3)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................................ $25.00 $.7875 $24.2125
Total (4)............................................ $75,000,000 $2,362,500 $72,637,500
=======================================================================================================================
</TABLE>
(1) Plus accrued dividends, if any, from the date of original issue.
(2) The Company 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 Company estimated at $125,000.
(4) The Company has granted the Underwriters an option to purchase up to an
additional 450,000 shares to cover over-allotments. If all such shares are
purchased, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $86,250,000, $2,716,875, and $83,533,125,
respectively. See "Underwriting."
--------------------------------
The Series A Preferred Shares are being offered by the Underwriters,
subject to prior sale, when, as and if delivered to and accepted by them,
subject to approval of certain legal matters by counsel for the Underwriters and
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 Series A Preferred Shares will be made in New York, New
York on or about February 24, 1998.
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
The date of this Prospectus Supplement is February 19, 1998.
<PAGE> 2
PROSPECTUS SUPPLEMENT SUMMARY
THE COMPANY
The Company is a real estate investment trust ("REIT") based in Houston,
Texas, which has developed, acquired and owned anchored neighborhood and
community shopping centers and, to a lesser degree, industrial real estate since
its organization in 1948. As of December 31, 1997, the Company owned or had an
equity interest in 194 operating properties consisting of 22.2 million square
feet of building area. The portfolio consists of: (a) 169 shopping centers in
the 100,000 to 400,000 square foot range which represent approximately 89% of
total revenues, (b) 23 industrial projects, including both bulk warehouse space
and office/service centers, which represent about 9% of total revenues, (c) one
office building which serves in part as the Company's headquarters and (d) one
apartment project. The properties are primarily located in Texas (147
properties), and neighboring states including Louisiana (11), Arizona (9),
Nevada (5), New Mexico (5), Arkansas (5), Oklahoma (4), Kansas (3), Colorado
(2), Missouri (1), Tennessee (1) and Maine (1). The shopping centers anchor
tenants included supermarkets, drugstores and other retailers which sell basic
necessity-type items. The Company leases to approximately 3,300 different
tenants comprising 2,500 separate leases with no single tenant representing more
than 3.7% of the Company's revenues. The average occupancy rate for all of the
Company's properties was 92% as of December 31, 1997.
The Company and the REIT industry consider funds from operations ("FFO")
to be the most appropriate measure of the performance of an equity REIT. The
Company's FFO grew 9.6% from $74.6 million ($2.82 per share) in 1995 to $81.8
million ($3.08 per share) in 1996, and for the first nine months of 1997 FFO
increased 9.3% from $61.0 million ($2.30 per share) in 1996 to $66.6 million
($2.50 per share) as of September 30, 1997.
Management believes both the Company's past, as well as its future
success, is a result of its financial, operational and growth strategies and its
experienced management team. Financially, the Company's strategy includes
maintaining a strong balance sheet allowing the Company continued access to
lower costs of capital. The Company has a senior unsecured debt rating of A from
Standard and Poors and A-2 from Moody's. Operationally, the Company leases and
manages its properties for its own account, thus it is sensitive to both
securing the proper anchor retailers as well as smaller merchants that complete
its shopping centers. Management believes that the Company's success is directly
derived from the success of its merchants. The Company's growth strategy focuses
on its FFO growth, on a per share basis, rather than the pure growth as measured
in square footage of building area or total dollars invested. A significant part
of the growth in FFO over the last several years has resulted from the
disciplined growth of the portfolio. These additions have come from both
acquisition of existing properties and the development of properties in both the
shopping center and industrial divisions. The Company invested $121.5 million to
acquire and develop additional properties in 1997 and expects to invest similar
amounts in the future. The Company has an extremely experienced management team.
The officers have an average of 23 years of real estate experience, but
additionally, have an average of 19 years of service with the Company.
The Company has increased its common share quarterly dividend every year
since it completed its initial public offering in 1985. The Company paid a
quarterly dividend of $.64 per share ($2.56 on an annualized basis) for each of
the first three quarters of 1997. The percentage of funds from operations paid
in cash dividends, or the dividend payout ratio, was 77% for the first nine
months of 1997.
The Company currently conducts its operations in order to qualify as a
real estate investment trust under the Internal Revenue Code of 1986, as amended
(the "Code"). The Company's principal executive offices are located at 2600
Citadel Plaza Drive, Houston, Texas 77008, and its telephone number is
713-866-6000.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
SERIES A PREFERRED SHARES, INCLUDING EXERCISING THE OVERALLOTMENT OPTION,
ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS, AND
IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
S-2
<PAGE> 3
SELECTED FINANCIAL DATA
The following table presents selected unaudited financial data of the
Company as of and for the three months and the nine months ended September 30,
1997:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
(Dollars in thousands except per share)
OPERATING DATA (Unaudited)
Revenues: -----------------------
<S> <C> <C> <C> <C>
Rentals.................................................. $42,600 $36,508 $124,480 $107,310
Interest:
Securities and Other................................ 249 450 800 1,250
Affiliates.......................................... 364 414 1,095 1,236
Equity in earnings of real estate joint ventures and
partnerships.................................... 266 229 769 999
Other................................................... 521 355 1,372 1,101
------- ------- --------- ---------
Total........................................... 44,000 37,956 128,516 111,896
------ ------ ------- -------
Expenses:
Depreciation and amortization........................... 9,450 8,518 28,191 24,788
Interest................................................ 7,588 5,569 21,729 15,890
Operating............................................... 6,625 5,749 19,337 16,830
Ad valorem taxes........................................ 5,618 4,604 16,479 14,184
General and administrative.............................. 1,381 1,248 4,013 3,798
------- ------- ------- -------
Total........................................... 30,662 25,688 89,749 75,490
------ ------ ------ ------
Income from Operations...................................... 13,338 12,268 38,767 36,406
Gain on sales of property................................... 2,839 4,057 2,941 5,454
------- ------- ------- -------
Net Income.................................................. $16,177 $16,325 $41,708 $41,860
======= ======= ======= =======
Funds from Operations(1)..................................... $22,683 $20,710 $66,643 $60,970
======= ======= ======= =======
PER COMMON SHARE
Net Income Per Common Share................................. $ .61 $ .61 $ 1.57 $ 1.57
Cash Dividends Declared Per Common Share.................... $ .64 $ .62 $ 1.92 $ 1.86
FIXED CHARGES RATIOS
Ratio of Earnings to Fixed Charges.......................... 2.96x 3.67x 2.78x 3.32x
Ratio of Funds from Operations before Interest Expense to
Fixed Charges............................................
3.76x 4.40x 3.86x 4.40x
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA September 30, December 31,
------------- ------------
1997 1996
---- ----
<S> <C> <C>
Real Estate, before accumulated depreciation $1,031,919 $970,418
Total Real Estate Assets........................................... 784,212 744,186
Total Assets....................................................... 871,413 831,097
Total Debt......................................................... 441,174 389,225
Shareholders' Equity............................................... 393,345 400,998
</TABLE>
- --------
(1) The Company considers funds from operations to be an alternate measure
of the performance of an equity REIT since such measure does not
recognize depreciation and amortization of real estate assets as
operating expenses. Management believes that reductions for these
charges are not meaningful in evaluating income-producing real estate,
which historically has not depreciated. The National Association of
Real Estate Investment Trusts defines funds from operations as net
income plus depreciation and amortization of real estate assets, less
gains and losses on sales of properties. Funds from operations does not
represent cash flows from operations as defined by generally accepted
accounting principles and should not be considered as an alternative to
net income as an indicator of the Company's operating performance or to
cash flows as a measure of liquidity.
S-3
<PAGE> 4
THE OFFERING
Securities Offered.............. 3,000,000 shares of 7.44% Series A Cumulative
Redeemable Preferred Shares.
Use of Proceeds................. The net proceeds to the Company from the
Offering (approximately $72,500,000 million,
assuming the Underwriters overallotment is not
exercised) will be used to reduce existing
revolving credit indebtedness incurred under
the Company's credit facility, for
acquisitions, new development, and other
corporate purposes.
Ranking......................... With respect to the payment of dividends and
amounts upon liquidation, the Series A
Preferred Shares offered hereby will rank pari
passu with any other preferred shares which
are not by their terms subordinated to the
Series A Preferred Shares and will rank senior
to the common shares and any other shares of
the Company which by their terms rank junior
to the Series A Preferred Shares. See
"Description of Preferred Shares -- Rank" in
the accompanying Prospectus.
Dividends....................... Dividends on the Series A Preferred Shares
offered hereby are cumulative from the date of
issue and are payable quarterly on or about
the last day of March, June, September and
December of each year, commencing on March 31,
1998, at the rate of 7.44% of the liquidation
preference per annum (equivalent to $1.86 per
annum per share). Dividends on the Series A
Preferred Shares will accrue whether or not
the Company has earnings, whether or not there
are funds legally available for the payment of
such dividends and whether or not such
dividends are declared.
Liquidation Rights.............. The Series A Preferred Shares will have a
liquidation preference of $25.00 per share,
plus an amount equal to accrued and unpaid
dividends. See "Description of Series A
Preferred Shares -- Liquidation Preference."
Redemption...................... The Series A Preferred Shares are not
redeemable prior to March 31, 2003. On and
after March 31, 2003, the Series A Preferred
Shares will be redeemable for cash at the
option of the Company, in whole or in part, at
$25.00 per share, plus accrued and unpaid
dividends, if any, thereon. The redemption
price (other than the portion thereof
consisting of accrued and unpaid dividends) is
payable solely out of the sale proceeds of
other capital shares of the Company which may
include other series of preferred shares, and
from no other source. See "Description of
Series A Preferred Shares -- Redemption."
Voting Rights................... If dividends on the Series A Preferred Shares
are in arrears for six or more quarterly
periods, whether or not such quarterly periods
are consecutive, holders of the Series A
Preferred Shares (voting separately as a class
with all other series of preferred shares upon
which like voting rights have been conferred
and are exercisable) will be entitled to vote
for the election of two additional Trust
Managers to serve on the Board of Trust
Managers of the Company until all distribution
arrearages have been paid. See "Description of
Series A Preferred Shares -- Voting Rights."
Conversion...................... The Series A Preferred Shares are not
convertible or exchangeable for any other
property or securities of the Company.
S-4
<PAGE> 5
Ownership Limits................ The Series A Preferred Shares will be subject
to certain restrictions on transfer intended
to preserve the Company's status as a REIT for
federal income tax purposes. In general, under
such restrictions, a holder may not acquire or
own Series A Preferred Shares to the extent
that such ownership causes an individual
defined to include natural persons as well as
organizations treated as natural persons under
Section 542(a) of the Code (subject to certain
adjustments as set forth in the Declaration of
Trust) to own more than 9.8% of the Company's
outstanding equity securities, including the
Series A Preferred Shares, taking into account
applicable constructive ownership rules of the
Code. Under these rules, Preferred Shares held
by entities such as corporations, mutual
funds, insurance companies and pension trusts
generally would be treated as owned by their
ultimate individual beneficial owners for
purposes of applying the 9.8% ownership limit.
See "Description of Series A Preferred Shares
-- Restrictions on Transfer."
Trading......................... Application will be made to list the Series A
Preferred Shares on the New York Stock
Exchange ("NYSE"). If such application is
approved, trading of the Series A Preferred
Shares on the NYSE is expected to commence
within a 30-day period after the date of
initial delivery of the Series A Preferred
Shares. While the Underwriters have advised
the Company that they intend to make a market
in the Series A Preferred Shares prior to
commencement of trading on the NYSE, they are
under no obligation to do so and no assurance
can be given that a market for the Series A
Preferred Shares will exist prior to
commencement of trading. See "Underwriting."
S-5
<PAGE> 6
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Preferred Shares
offered hereby are estimated at approximately $72.5 million (assuming that the
Underwriters' overallotment option is not exercised). The Company plans to use
the net proceeds of this offering to pay down part of the approximately $90.5
million outstanding under the Company's revolving credit facilities. The
revolving credit debt was incurred to fund new development and acquisition
activity, and future borrowings under the revolving credit facilities may be
used for such purposes.
CAPITALIZATION
The following table sets forth the debt and the capitalization of the
Company at September 30, 1997 and as adjusted to reflect: (a) the application of
the net proceeds from the sale of the Series A Preferred Shares offered hereby
and (b) to reflect certain events that occurred subsequent to September 30,
1997, including (i) sale of $12.2 million of Marketable Debt Securities and
retirement of $12.4 million of Repurchase Agreements with the proceeds and (ii)
the funding of $49.2 million of acquisition of additional properties under the
Company's revolving credit agreements completed in the fourth quarter of 1997.
See "Use of Proceeds."
<TABLE>
<CAPTION>
(Dollars in thousands
except per share)
September 30, As
1997 Adjusted
---- --------
Debt:
<S> <C> <C>
Fixed-Rate Debt Payable to 2015 at 6.0% to 10.5% ...................... $362,936 $362,936
Variable-Rate Debt (1)(2):
Revolving Credit Agreements ....................................... 44,840 21,540
Repurchase Agreements ............................................. 12,436 --
Industrial Revenue Bonds to 2015 4.5% to 6.8% ..................... 7,467 7,467
Obligations Under Capital Leases .................................. 12,467 12,467
Other debt ............................................................ 1,028 1,028
-------- --------
Total Debt ............................................... 441,174 405,438
-------- --------
Shareholders' Equity:
Preferred Shares $0.03 par value: authorized 10,000,000
7.44% Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25.00 per share, no
shares issued and outstanding (3,000,000 as adjusted) ............. -- 90
Common Shares, $0.03 par value: authorized - 150,000,000;
Outstanding - 26,659,000 ......................................... 800 800
Capital Surplus ....................................................... 392,545 464,955
-------- --------
Total Shareholders' Equity ............................... 393,345 465,845
-------- --------
Total Capitalization ........................... $834,519 $871,283
======== ========
</TABLE>
(1) Interest rate swap agreements in a notional amount of $40 million fix
the interest rates on a like amount of variable-rate debt at 8.1%.
(2) Interest rates ranging from 4.5% to 6.8% at September 30, 1997.
S-6
<PAGE> 7
DESCRIPTION OF SERIES A PREFERRED SHARES
This description of the particular terms of the Series A Preferred
Shares offered hereby supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Preferred
Shares set forth in the accompanying Prospectus, to which description reference
is hereby made.
GENERAL
The Company is authorized to issue up to 10,000,000 preferred shares,
$.03 par value per share, in one or more series, with such designations, powers,
preferences and rights of such series and the qualifications, limitations or
restrictions thereon, including, but not limited to, the fixing of the dividend
rights, dividend rate or rates, conversion rights, voting rights and terms of
redemption (including sinking fund provisions), the redemption price or prices,
and the liquidation preferences, in each case, if any, as the Board of Trust
Managers of the Company may determine by adoption of an applicable resolution
(the "Designating Resolution"), without any vote or action by the shareholders.
See "Description of Preferred Shares -- Terms" in the accompanying Prospectus.
On February 19, 1998, a form of Designating Resolution was adopted
determining the terms of a series of preferred shares consisting of up to
3,450,000 shares, designated 7.44% Series A Cumulative Redeemable Preferred
Shares. The following summary of the terms and provisions of the Series A
Preferred Shares does not purport to be complete and is qualified in its
entirety by reference to the pertinent sections of the Designating Resolution
designating the Series A Preferred Shares, which is available upon request from
the Company.
None of the Series A Preferred Shares contain any provisions affording
holders of the Series A Preferred Shares protection in the event of a highly
leveraged or other transaction that might adversely affect holders of Series A
Preferred Shares.
The registrar, transfer agent and dividends disbursing agent for the
Series A Preferred Shares will be ChaseMellon Shareholder Services, L.L.C.
DIVIDENDS
Holders of the Series A Preferred Shares shall be entitled to receive,
when and as authorized by the Board of Trust Managers, out of funds legally
available for the payment of dividends, cumulative cash dividends at the rate of
7.44% of the liquidation preference per annum (equivalent to $1.86 per annum per
share). Such dividends shall accrue and be cumulative from the date of original
issue and shall be payable quarterly in arrears on or about the last day of each
March, June, September and December or, if not a business day, the succeeding
business day (each, a "Dividend Payment Date"). The first dividend on the Series
A Preferred Shares will be paid on March 31, 1998. Any dividend payable on the
Series A Preferred Shares for any partial dividend period will be computed on
the basis of a 360-day year consisting of twelve 30-day months. Dividends will
be payable to holders of record as they appear in the share records of the
Company at the close of business on the applicable record date, which shall be
the 15th day of the calendar month in which the applicable Dividend Payment Date
falls or such other date designated by the Board of Trust Managers of the
Company for the payment of dividends that is not more than 30 nor less than 10
days prior to such Dividend Payment Date (each, a "Dividend Record Date").
No dividends on the Series A Preferred Shares shall be authorized by
the Board of Trust Managers of the Company or be paid or set apart for payment
by the Company at such time as the terms and provisions of any agreement of the
Company, including any agreement relating to its indebtedness, prohibits such
authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law.
Notwithstanding the foregoing, dividends on the Series A Preferred
Shares will accrue whether or not the Company has earnings, whether or not there
are funds legally available for the payment of such dividends and whether or not
such dividends are authorized. Accrued but unpaid dividends on the Series A
Preferred Shares will not bear interest and holders of the Series A Preferred
Shares will not be entitled to any dividends in excess of full cumulative
dividends as described above. See "Description of Preferred Shares -- Dividends"
in the accompanying Prospectus.
S-7
<PAGE> 8
Any dividend payment made on the Series A Preferred Shares shall first
be credited against the earliest accrued but unpaid dividend due with respect to
such shares which remains payable.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the
affairs of the Company, the holders of the Series A Preferred Shares are
entitled to be paid out of the assets of the Company legally available for
distribution to its shareholders liquidating distributions in cash or property
at its fair market value as determined by the Company's Board of Trust Managers
in the amount of a liquidation preference of $25.00 per share, plus an amount
equal to any accrued and unpaid dividends to the date of such liquidation,
dissolution or winding up, before any distribution of assets is made to holders
of Common Shares or any other capital shares that rank junior to the Series A
Preferred Shares as to liquidation rights. After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of Series
A Preferred Shares will have no right or claim to any of the remaining assets of
the Company. The consolidation or merger of the Company with or into any other
entity or the sale, lease, transfer 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. For further information
regarding the rights of the holders of Series A Preferred Shares upon the
liquidation, dissolution or winding up of the Company, see "Description of
Preferred Shares -- Liquidation Preference" in the accompanying Prospectus.
REDEMPTION
The Series A Preferred Shares are not redeemable prior to March 31,
2003. On and after March 31, 2003, the Company, at its option upon not less than
30 nor more than 60 days' written notice, may redeem the Series A Preferred
Shares, in whole or in part, at any time or from time to time, in cash at a
redemption price of $25.00 per share, plus accrued and unpaid dividends thereon
to the date fixed for redemption (except as provided below), without interest,
to the extent the Company will have funds legally available therefor. The
redemption price of the Series A Preferred Shares (other than any portion
thereof consisting of accrued and unpaid dividends) shall be paid solely from
the sale proceeds of other capital shares of the Company and not from any other
source. For purposes of the preceding sentence, "capital shares" means any
common shares, preferred shares, depositary shares, interests, participation, or
other ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing. Holders of Series A Preferred Shares to be
redeemed shall surrender such shares at the place designated in such notice and
shall be entitled to the redemption price and any accrued and unpaid dividends
payable upon such redemption following such surrender. If notice of redemption
of any Series A Preferred Shares 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 Series A Preferred Shares so called for redemption, then from
and after the redemption date dividends will cease to accrue on such Series A
Preferred Shares, such shares shall no longer be deemed outstanding and all
rights of the holders of such shares will terminate, except the right to receive
the redemption price, plus accrued and unpaid dividends thereon to the date
fixed for redemption, if any. If fewer than all of the outstanding Series A
Preferred Shares are to be redeemed, the Series A Preferred Shares to be
redeemed shall be selected pro rata (as nearly as may be practicable without
creating fractional Series A Preferred Shares) or by any other equitable method
determined by the Company. See "Description of Preferred Shares -- Redemption"
in the accompanying Prospectus.
Notice of redemption will be given by publication in a newspaper of
general circulation in the City of New York, such publication to be made once a
week for two successive weeks commencing not less than 30 nor more than 60 days
prior to the redemption date. A similar notice furnished by the Company will be
mailed by the registrar, postage prepaid, not less than 30 nor more than 60 days
prior to the redemption date, addressed to the respective holders of record of
the Series A Preferred Shares to be redeemed at their respective addresses as
they appear on the share transfer records of the registrar. No failure to give
such notice or any defect thereto or in the mailing thereof shall affect the
validity of the proceedings for the redemption of any Series A Preferred Shares
except as to the holder to whom notice was defective or not given. Each notice
shall state: (i) the redemption date; (ii) the redemption price; (iii) the
number of Series A Preferred Shares to be redeemed; (iv) the place or places
where the Series A Preferred Shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed will cease
to accrue on such redemption date. If fewer than all the Series A Preferred
Shares held by any holder are to be redeemed, the notice mailed to such holder
shall also specify the number of Series A Preferred Shares to be redeemed from
such holder.
S-8
<PAGE> 9
The holders of Series A Preferred Shares at the close of business on a
Dividend Record Date will be entitled to receive the dividend payable with
respect to the Series A Preferred Shares on the corresponding Dividend Payment
Date notwithstanding the redemption thereof between such Dividend Record Date
and the corresponding Dividend Payment Date or the Company's default in the
payment of the dividend due. Except as provided above, the Company will make no
payment or allowance for unpaid dividends, whether or not in arrears, on Series
A Preferred Shares to be redeemed.
The Series A Preferred Shares have no stated maturity and will not be
subject to any sinking fund or mandatory redemption provisions (except as
provided under "-- Restrictions on Transfer" below).
VOTING RIGHTS
Except as indicated below or in the accompanying Prospectus, or except
as otherwise from time to time required by applicable law, the holders of Series
A Preferred Shares will have no voting rights.
On any matter on which the Series A Preferred Shares are entitled to
vote (as expressly provided herein or as may be required by law), including any
action by written consent, each Series A Preferred Share shall be entitled to
one vote. With respect to each Series A Preferred Share, the holder thereof may
designate a proxy, with each such proxy having the right to vote on behalf of
such holder.
If dividends on the Series A Preferred Shares are in arrears for six or
more quarterly periods, whether or not such quarterly periods are consecutive,
holders of the Series A Preferred Shares (voting separately as a class with all
other series of preferred shares upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
additional Trust Managers to serve on the Board of Trust Managers of the Company
until all dividend arrearages have been paid. For further information regarding
the voting rights of the holders of the Series A Preferred Shares, see
"Description of Preferred Shares -- Voting Rights" in the accompanying
Prospectus.
CONVERSION
The Series A Preferred Shares are not convertible into or exchangeable
for any other property or securities of the Company.
RESTRICTIONS ON TRANSFER
Ownership Limits. The Declaration of Trust contains certain
restrictions on the number of Series A Preferred Shares that a single
shareholder may own. For the Company to qualify as a REIT under the Code, no
more than 50% in value of its outstanding Preferred Shares and Common Shares may
be owned, actually and constructively under the applicable constructive
ownership provisions of the Code, by five or fewer individuals (as defined in
the Code to include certain entities) during the last half of a taxable year
(other than the first year) or during a proportionate part of a shorter taxable
year. The Preferred Shares and Common Shares must also be beneficially owned by
100 or more persons during at least 335 days of a taxable year (other than the
first year) or during a proportionate part of a shorter taxable year. Because
the Company has elected to be treated as a REIT, the Declaration of Trust, and
the Designating Resolution of the Company contain restrictions on the
acquisition of Preferred Shares and common shares intended to ensure compliance
with these requirements.
Subject to certain exceptions specified in the Declaration of Trust, no
person who is an "individual" (defined to include natural persons and
organizations treated as natural persons under Section 542(a)(2) of the Code)
may own, after taking account the applicable constructive ownership provisions
of the Code, more than 9.8% (the "Ownership Limit") of the Company's outstanding
equity securities, including the Series A Preferred Shares. Under the
constructive ownership rules, Series A Preferred Shares owned by an entity,
including a corporation, life insurance company, mutual fund or pension trust,
are generally treated as owned by the ultimate individual beneficial owners of
the entity.
If any shareholder purports to transfer shares to a person and either
the transfer would cause the transferee to hold more than the applicable
Ownership Limit, the purported transfer will be null and void as to that number
of shares
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the transfer of which would cause a violation of the applicable limit, and the
shareholder will be deemed not to have transferred such excess shares. In
addition, if by virtue of any legal decision, statute, rule or regulation, any
transfer of such excess shares is not null and void, such transferee will be
deemed to hold the shares that cause the limit to be exceeded as agent for the
Company, and will not receive dividends or distributions with respect to such
shares and will not be entitled to exercise any voting rights with respect to
such shares.
All certificates representing Series A Preferred Shares will bear a
legend referring to the restrictions described above.
The Declaration of Trust provides that the ownership of shares is
conditioned upon the owner or prospective owner having provided to the Company,
upon reasonable request, definitive written information respecting his ownership
of shares.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material federal income tax
considerations to the Company based on current law and is for general
information only. The following discussion is not exhaustive of all possible tax
considerations and is not tax advice. Moreover, this summary does not deal with
all tax aspects that might be relevant to a particular prospective holder of
Series A Preferred Shares in light of its individual investment or tax
circumstances; nor does it deal with particular types of holders that are
subject to special treatment under the Internal Revenue Code of 1986, as amended
(the "Code"), such as insurance companies, financial institutions and
broker-dealers. The Code provisions governing the federal income tax treatment
of REITs are highly technical and complex, and this summary is qualified in its
entirety by the applicable Code provisions, rules and regulations promulgated
thereunder, and administrative and judicial interpretations thereof.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO SUCH PURCHASER'S SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES OF THE PURCHASE, HOLDING AND SALE OF SERIES A
PREFERRED SHARES AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
The Company has elected to be taxed as a REIT under the Code. The
Company believes that it has been organized, has operated and qualified as a
REIT under the Code and will continue to operate in such a manner as to qualify
for taxation as a REIT under the Code. No assurance can be given, however, that
such requirements will be met in the future.
FEDERAL INCOME TAXATION OF THE COMPANY
If and as long as the Company qualifies for taxation as a REIT, it
generally will not be subject to federal corporate income taxes on that portion
of its ordinary income or capital gain that is currently distributed to
shareholders. The REIT provisions of the Code generally allow a REIT to deduct
dividends paid to its shareholders. This deduction for dividends paid to
shareholders substantially eliminates the federal "double taxation" on earnings
(once at the corporate level and once again at the shareholder level) that
usually results from an investment in a corporation.
Even if the Company qualifies for taxation as a REIT, the Company will
be subject to federal income tax, however, as follows:
First, the Company will be taxed at regular corporate rates on
its undistributed REIT taxable income, including undistributed net
capital gains.
Second, under certain circumstances, the Company may be
subject to the "alternative minimum tax" as a consequence of its items
of tax preference to the extent that such tax exceeds its regular tax.
Third, if the Company has net income from the sale or other
disposition of "foreclosure property" that is held primarily for sale
to customers in the ordinary course of business or other non-qualifying
income from foreclosure property, it will be subject to tax at the
highest corporate rate on such income.
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Fourth, if the Company has net income from prohibited
transactions (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the
ordinary course of business, but excluding foreclosure property), such
income will be subject to a 100% tax.
Fifth, if the Company should fail to satisfy certain gross
income tests, but has nonetheless maintained its qualification as a
REIT because certain other requirements had been met, it will be
subject to a 100% tax on the net income attributable to the greater of
the amount by which the Company fails such tests, multiplied by a
fraction intended to reflect the Company's profitability.
Sixth, if the Company fails to distribute during each year at
least the sum of (i) 85% of its REIT ordinary income for such year,
(ii) 95% of its REIT capital gain net income for such year, and (iii)
any undistributed taxable income from prior periods, the Company will
be subject to a 4% excise tax on the excess of such required
distributions over the distributed amount.
Seventh, if the Company should acquire any asset from a C
corporation (i.e., a corporation subject to full corporate-level tax)
in a carryover-basis transaction and the Company subsequently
recognizes gain on the disposition of such asset during the ten-year
period (the "Recognition Period") beginning on the date on which the
asset was acquired by the Company, then the excess of (a) the fair
market value of the asset as of the beginning of the applicable
Recognition Period over (b) the Company's adjusted basis in such asset
as of the beginning of such Recognition Period will be subject to tax
at the highest regular corporate rate, pursuant to guidelines issued by
the IRS.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable
year and certain relief provisions do not apply, the Company will be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Such a failure to qualify for taxation as a REIT could
have an adverse impact on the market value and marketability of the Series A
Preferred Shares. Distributions to shareholders in any year in which the Company
fails to qualify as a REIT will not be deductible by the Company nor will they
be required to be made. In such event, to the extent of current and accumulated
earnings and profits, all distributions to shareholders will be dividends,
taxable as ordinary income, and subject to certain limitations of the Code,
corporate distributees may be eligible for the dividends-received deduction.
Unless the Company is entitled to relief under specific statutory provisions,
the Company also will be disqualified from taxation as a REIT for the four
taxable years following the year during which qualification was lost. It is not
possible to state whether in all circumstances the Company would be entitled to
such statutory relief. For example, if the Company fails to satisfy the gross
income tests because nonqualifying income that the Company intentionally incurs
exceeds the limit on such income, the IRS could conclude that the Company's
failure to satisfy the tests was not due to reasonable cause.
TAXATION OF TAXABLE U.S. SHAREHOLDERS
As long as the Company qualifies as a REIT, distributions made to
taxable U.S. Shareholders (as hereinafter defined) out of current or accumulated
earnings and profits (and not designated as capital gain dividends) will be
taken into account by such U.S. Shareholders (as hereinafter defined) as
ordinary income and will not be eligible for the dividends received deduction
generally available to corporations. Subject to the provisions of applicable
law, the current and accumulated earnings and profits of the Company will be
allocated first to distributions to the Series A Preferred Shares and then to
distributions with respect to common shares of the Company. As used herein, the
term "U.S. Shareholder" means a holder of the Company's shares that for United
States Federal income tax purposes is (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or any state thereof or the District of
Columbia, (iii) an estate the income of which is subject to United States
Federal income taxation regardless of its source, or (iv) a trust if (A) a court
within the United States is able to exercise primary supervision over the
administration of the trust, and (B) one or more United States persons have the
authority to control all substantial decisions of the trust. Distributions that
are designated as capital gain dividends will be taxed as gain from the sale or
exchange of a capital asset held for more than one year (to the extent they do
not exceed the payor's actual net capital gain for the taxable year) without
regard to the period for which the U.S. Shareholder has held his or her shares.
However, corporate U.S. Shareholders may be required to treat up to 20% of
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<PAGE> 12
certain capital gain dividends as ordinary income. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a U.S.
Shareholder to the extent that they do not exceed the adjusted basis of the U.S.
Shareholder's shares, but will reduce the adjusted basis of such shares by the
amount of such excess (but not below zero). To the extent that such
distributions in excess of current and accumulated earnings and profits exceed
the adjusted basis of a U.S. Shareholder's shares, such distributions will be
included in income as capital gain, assuming that such shares are capital assets
in the hands of the U.S. Shareholder. The tax rate to which such capital gain
will be subject will depend on the U.S. Shareholder's holding period for his
shares. See "-- Capital Gains Rates Under the 1997 Act" below. In addition, any
distribution declared by the Company in October, November or December of any
year and payable to a U.S. Shareholder of record on a specified dated in any
such month shall be treated as both paid by the payor and received by the U.S.
Shareholder on December 31 of such year, provided that the distribution is
actually paid by the payor during January of the following calendar year.
For its taxable years beginning after December 31, 1997, the Company
may make an election with respect to all or part of its undistributed net
capital gain. If the Company should make such an election, its shareholders
would be required to include in their income as long-term capital gain their
proportionate share of the Company's undistributed net capital gain as designed
by the Company. Each such shareholder would be deemed to have paid his
proportionate share of the income tax imposed on the Company with respect to
such undistributed net capital gain, and this amount would be credited or
refunded to the shareholder. In addition, the tax basis of the shareholder's
stock would be increased by his proportionate share of undistributed net capital
gains included in his income less his proportionate share of the income tax
imposed on the Company with respect to such gains.
U.S. Shareholders may not include in their individual income tax
returns any net operating losses or capital losses of the Company. Instead, such
losses would be carried over by the Company for potential offset against its
future income (subject to certain limitations). Taxable distributions from the
Company and gain from the disposition of its shares will not be treated as
passive activity income and, therefore, U. S. Shareholders generally will not be
able to apply any "passive activity losses" (such as losses from certain types
of limited partnerships in which a shareholder is a limited partner) against
such income. In addition, taxable distributions from the Company generally will
be treated as investment income for purposes of the investment interest
limitations. Capital gains from the disposition of the Company's shares (or
distributions treated as such), however, will be treated as investment income
only if the U.S. Shareholder so elects, in which case such capital gains will be
taxed at ordinary income rates. The Company will notify shareholders after the
close of the Company's taxable year as to the portions of the distributions
attributable to that year that constitute ordinary income, return of capital and
capital gain.
TAXATION OF U.S. SHAREHOLDERS ON THE DISPOSITION OF THE COMPANY'S SHARES
In general, any gain or loss realized upon a taxable disposition of the
Company's shares by a U.S. Shareholder who is not a dealer in securities will be
treated as a capital gain or loss. Lower marginal tax rates for individuals may
apply in the case of capital gains, depending on the holding period of the
Company's shares that are sold. See "-- Capital Gains Rates Under the 1997 Act"
below. However, any loss upon a sale or exchange by a U.S. Shareholder who has
held such shares for six months or less (after applying certain holding period
rules), will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such U.S. Shareholder
as long-term capital gain. All or a portion of any loss realized upon a taxable
disposition of the Company's shares may be disallowed if other Company's shares
are purchased within 30 days before or after the disposition. In addition,
capital losses not offset by capital gains may be deducted from an individual's
ordinary income only up to a maximum of $3,000 per year. Unused capital losses
may be carried forward. A corporate taxpayer may deduct capital losses only to
the extent of capital gains, but may carry unused capital losses back three
years and forward five years.
CAPITAL GAINS RATES UNDER THE 1997 ACT
In general, under the Taxpayer Relief Act of 1997 (the "1997 Act"), the
maximum tax rate on an individual's net capital gain is reduced from 28-percent
to 20-percent. In addition, any net capital gain which otherwise would be taxed
at a 15-percent rate is taxed at a 10-percent rate. However, the rates
applicable to ordinary income continue to apply to the sale and exchange of
capital assets held for one year or less, and the applicable tax rates under
prior law, rather than the new 20-percent and 10-percent rates, will continue to
apply to the sale or exchange of capital assets held
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for more than one year but not more than 18 months. In the case of capital gain
dividends paid by a REIT, which, under Section 857 of the Code, are required to
be treated as "gain from the sale or exchange of a capital asset held for more
than one year," the IRS has indicated in Notice 97-64 that the REIT will notify
the U.S. shareholder as to the applicable rate for the capital gain dividend.
The Treasury Department is authorized to issue regulations that address the
application of the new capital gains rates to sales and exchanges by REITs and
to sales and exchanges of interests in REITs, but no such regulations have been
issued.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Company will report to its U.S. Shareholders and to the IRS the
amount of distributions paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a U.S. Shareholder may be
subject to backup withholding at the rate of 31% with respect to distributions
paid unless such holder (i) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with the applicable requirements of the
backup withholding rules. A U.S. Shareholder who does not provide the Company
with his correct taxpayer identification number also may be subject to penalties
imposed by the IRS. Any amount paid as backup withholding will be creditable
against the U.S. Shareholder's income tax liability. In addition, the Company
may be required to withhold a portion of capital gain distributions to any U.S.
Shareholders who fail to certify their nonforeign status to the Company. See
"--Taxation of Non-U.S. Shareholders."
TAXATION OF TAX-EXEMPT SHAREHOLDERS
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from Federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI"). While many
investments in real estate generate UBTI, the IRS has issued a published ruling
that dividend distributions from a REIT to an exempt employee pension trust do
not constitute UBTI, provided that the shares of the REIT are not otherwise used
in an unrelated trade or business of the exempt employee pension trust. Based on
that ruling, amounts distributed by the Company to Exempt Organizations
generally should not constitute UBTI. However, if an Exempt Organization
finances its acquisition of shares with "acquisition indebtedness," a portion of
its income from distributions on such shares will constitute UBTI pursuant to
the "debt-financed property" rules. Furthermore, social clubs, voluntary
employee benefit association, supplemental unemployment benefit trusts and
qualified group legal service plans that are exempt from taxation under
paragraphs (7), (9), (17) and (20), respectively, of Code section 501(c) are
subject to different UBTI rules, which generally will require them to
characterize distributions from the Company as UBTI. In addition, in certain
circumstances, a pension trust that owns more than 10% of the Company's shares
(as determined based on value) would be required to treat a percentage of the
dividends on its shares as UBTI (the "UBTI Percentage"). The UBTI Percentage is
the gross income, less related direct expenses, derived by the REIT from an
unrelated trade or business (determined as if the REIT were a pension trust)
divided by the gross income, less related direct expenses, of the REIT for the
year in which the dividends are paid. The UBTI rule applies to a pension trust
holding more than 10% of the shares of the REIT (as determined based upon value)
only if (i) the UBTI Percentage is at least 5%, (ii) the REIT qualifies as a
REIT by reason of certain Code provisions which allow the beneficiaries of the
pension trust to be treated as holding shares of the REIT, in proportion to
their actuarial interests in the pension trust and (iii) either (A) one pension
trust owns more than 25% of the value of the shares or (B) a group of pension
trusts, each of which holds more than 10% of the value of the REIT's shares
collectively owns more than 50% of the value of the REIT's shares.
TAXATION OF NON-U.S. SHAREHOLDERS
The rules governing United States Federal income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships and
other foreign holders of the Company's shares (collectively, "Non-U.S.
Shareholders") are complex and no attempt will be made herein to provide more
than a summary of such rules. NON-U.S. SHAREHOLDERS SHOULD CONSULT WITH THEIR
OWN TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL, STATE AND LOCAL INCOME TAX
LAWS WITH REGARD TO AN INVESTMENT IN THE SECURITIES, INCLUDING ANY REPORTING
REQUIREMENTS.
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Distributions to Non-U.S. Shareholders that are not attributable to
gain from sales or exchanges by the Company of United States real property
interests and are not designated by the Company as capital gain dividends will
be treated as dividends of ordinary income to the extent that they are made out
of the Company's current or accumulated earnings and profits. Such distributions
ordinarily will be subject to a withholding tax equal to 30% of the gross amount
of the distribution unless an applicable tax treaty reduces or eliminates that
tax. However, if income from the investment in shares is treated as effectively
connected with the Non-U.S. Shareholder's conduct of a United States trade or
business, the Non-U.S. Shareholder generally will be subject to Federal income
tax at graduated rates, in the same manner as U.S. Shareholders are taxed with
respect to such distributions (and also may be subject to the 30% branch profits
tax in the case of a Non-U.S. Shareholder that is a corporate Non-U.S.
Shareholder). The Company expects to withhold United States income tax at the
rate of 30% on the gross amount of any such distributions made to a Non-U.S.
Shareholder unless (i) a lower treaty rate applies and any required form
evidencing eligibility for that reduced rate is filed with the Company or (ii)
the Non-U.S. Shareholder files an IRS Form 4224 with the Company claiming that
the distribution is effectively connected income. The IRS issued proposed
regulations in April 1996 that would modify the manner in which the Company
complies with the withholding requirements.
Distributions in excess of current and accumulated earnings and profits
of the Company will not be taxable to a shareholder to the extent that such
distributions do not exceed the adjusted basis of the shareholder's shares but
rather will reduce the adjusted basis of such shares. To the extent that
distributions in excess of current and accumulated earnings and profits exceed
the adjusted basis of a Non-U.S. Shareholder's shares, such distributions will
give rise to tax liability if the Non-U.S. Shareholder otherwise would be
subject to tax on any gain from the sale or disposition of his shares as
described below. Because it generally cannot be determined at the time a
distribution is made whether or not such distribution will be in excess of
current and accumulated earnings and profits, the entire amount of any
distribution normally will be subject to withholding at the same rate as a
dividend. However, amounts so withheld are refundable to the extent it is
determined subsequently that such distribution was, in fact, in excess of the
payor's current and accumulated earnings and profits.
The Company is required to withhold 10% of any distribution in excess
of its current and accumulated earnings and profits to the extent such shares
constitute a "U.S. real property interests" under Section 897(c) of the Code.
Consequently, although the Company intends to withhold at a rate of 30% on the
entire amount of any distribution to a Non-U.S. Shareholder, to the extent that
the Company does not do so, any portion of a distribution not subject to 30%
withholding will be subject to 10% withholding.
For any year in which the Company qualifies as a REIT, distributions
that are attributable to gain from sales or exchanges of U.S. real property
interests will be taxed to a Non-U.S. Shareholder under the provisions of the
Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). Under FIRPTA,
distributions attributable to gain from sales of United States real property
interests are taxed to a Non-U.S. Shareholder as if such gain were effectively
connected with a United States business. Non-U.S. Shareholders thus would be
taxed at the normal capital gain rates applicable to U.S. Shareholders (subject
to applicable alternative minimum tax and a special alternative minimum tax in
the case of nonresident alien individuals). Distributions subject to FIRPTA also
may be subject to the 30% branch profits tax in the hands of a corporate
Non-U.S. Shareholder not entitled to treaty relief or exemption. The Company is
required to withhold 35% of any distribution that is designated by it as a
capital gains dividend. The amount withheld is creditable against the Non-U.S.
Shareholder's U.S. tax liability.
Gain recognized by a Non-U.S. Shareholder upon a sale of shares
generally will not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons. The Company is currently a
"domestically-controlled REIT" and, therefore, the sale of Common Stock will not
be subject to taxation under FIRPTA. However, because the Company's shares are
publicly traded, no assurance can be given that the Company is or will continue
to be a "domestically-controlled REIT." In addition, a Non-U.S. Shareholder that
owned (actually or constructively under certain constructive ownership rules) 5%
or less of the Company's outstanding shares at all times during a specified
testing period will not be subject to tax under FIRPTA if such shares are
regularly traded on an established securities market (e.g., the NYSE, on which
the shares are currently traded). Furthermore, gain not subject to FIRPTA will
be taxable to a Non-U.S. Shareholder if (i) investment in shares is effectively
connected with the Non-U.S. Shareholder's United States trade or business, in
which case the Non-U.S. Shareholder will be subject to
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the same treatment as U.S. Shareholders with respect to such gain, or (ii) the
Non-U.S. Shareholder is a nonresident alien individual who was present in the
United States for 183 days or more during the taxable year and certain other
conditions apply, in which case the nonresident alien individual will be subject
to a 30% tax on the individual's capital gains. If the gain on the sale of
shares were to be subject to taxation under FIRPTA, the Non-U.S. Shareholder
would be subject to the same treatment as U.S. Shareholders with respect to such
gain (subject to applicable alternative minimum tax, a special alternative
minimum tax in the case of nonresident alien individuals, and the possible
application of the 30% branch profits tax in the case of corporate Non-U.S.
Shareholders).
REDEMPTION OF SERIES A PREFERRED SHARES
The treatment to be accorded to any redemption by the Company of Series
A Preferred Shares can only be determined on the basis of particular facts as to
each holder of Series A Preferred Shares at the time of redemption. In general,
a holder of Series A Preferred Shares will recognize capital gain or loss
(provided the Series A Preferred Shares are held as a capital asset) measured by
the difference between the amount realized by the holder upon the redemption and
such holder's adjusted tax basis in the Series A Preferred Shares redeemed if
such redemption (i) results in a "complete termination" of the holder's interest
in all classes of shares of the Company under Section 302(b)(3) of the Code,
(ii) is "substantially disproportionate" with respect to the holder's interest
in the Company under Section 302(b)(2) of the Code (which will not be the case
if only Series A Preferred Shares are redeemed, since they generally do not have
voting rights) or (iii) is "not essentially equivalent to a dividend" with
respect to the holder of Series A Preferred Shares under Section 302(b)(1) of
the Code. In determining whether any of these tests have been met, shares
considered to be owned by the holder by reason of certain constructive ownership
rules set forth in the Code, as well as shares actually owned, generally must be
taken into account. If the aforementioned tests are not met, the redemption will
be treated as a distribution with respect to the Series A Preferred Shares as
described herein-above. Because the determination as to whether any of the
alternative tests of Section 302(b) of the Code will be satisfied with respect
to any particular holder of Series A Preferred Shares depends upon the facts and
circumstances at the time when the determination must be made, prospective
investors are advised to consult their own tax advisors to determine such tax
treatment.
CAPITAL GAIN DIVIDENDS PAID TO SHAREHOLDERS
Under IRS Notice 97-64, a REIT may designate (subject to certain
limits) whether a capital gain dividend is taxable to U.S. Shareholders (other
than corporations) as a 20 percent rate gain distribution (for capital gains
recognized by the REIT with respect to capital assets held for more than 18
months), a 28 percent rate gain distribution (for capital gains recognized by
the REIT with respect to capital assets held for more than one year but not more
than 18 months), or a Section 1250 gain distribution taxed at a 25 percent rate
(for a portion of the gain, recognized by the REIT with respect to dispositions
of certain real property held for more than 18 months, equal to the amount of
all prior depreciation deductions not otherwise required to be taxed as ordinary
depreciation recapture income).
NEW TREASURY REGULATIONS REGARDING WITHHOLDING, INFORMATION REPORTING AND BACKUP
WITHHOLDING
The Treasury Department recently issued final regulations relating to
withholding, information reporting and backup withholding on U.S. source income
paid to foreign persons (including, for example, dividends paid by the Company
to Non-U.S. Shareholders). These regulations generally will be effective with
respect to payments made after December 31, 1998, subject to certain transition
rules. Prospective investors should consult their own tax advisors as to the
effect, if any, of the final regulations on their purchase, ownership and
disposition of the Series A Preferred Shares.
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UNDERWRITING
Subject to the terms and conditions contained in the pricing agreement
and related underwriting agreement (collectively, the "Underwriting Agreement"),
the Company has agreed to sell to each of the Underwriters named below (the
"Underwriters") and each of the Underwriters has severally agreed to purchase
from the Company the aggregate number of Series A Preferred Shares set forth
opposite the name of each such Underwriter. 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
Series A Preferred Shares if any are purchased.
<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated .................. 750,000
Goldman, Sachs & Co. ........................ 750,000
Morgan Stanley & Co. Incorporated ........... 750,000
Smith Barney Inc ............................ 750,000
---------
Total ......................... 3,000,000
=========
</TABLE>
The Underwriters have advised the Company that they propose initially
to offer the Series A Preferred Shares 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 $.50 per share. The
Underwriters may allow, and such dealers may reallow, a reallowance not in
excess of $.30 to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
The Company has granted an option to the Underwriters, exercisable
during the 30-day period after the date of this Prospectus Supplement, to
purchase up to 450,000 additional Series A Preferred Shares at the price to the
public set forth on the cover page of this Prospectus Supplement, less the
underwriting discount.
The Company has 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.
In connection with the Offering, the rules of the Securities and
Exchange Commission permit the Underwriters to engage in certain transactions
that stabilize the price of the Series A Preferred Shares. Such transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Series A Preferred Shares.
If the Underwriters create a short position in the Series A Preferred
Shares in connection with the Offering (i.e., if they sell more Series A
Preferred Shares than are set forth on the cover page of this Prospectus
Supplement), the Underwriters may reduce that short position by purchasing
Series A Preferred Shares in the open market. The Underwriters may also elect to
reduce any short position by exercising all or part of the over-allotment option
described herein.
The Underwriters also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Underwriters purchase Series A
Preferred Shares in the open market to reduce the Underwriters' short position
or to stabilize the price of the Common Shares or Series A Preferred Shares,
they may reclaim the amount of the selling concession from the Underwriters and
selling group members who sold those shares as part of the Offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the Offering.
S-16
<PAGE> 17
Neither the Company nor any of the Underwriters make any representation
or prediction as to the direction or magnitude of any effect that the
transaction described above may have on the price of the Series A Preferred
Shares. In addition, neither the Company nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Application will be made to list the Series A Preferred Shares on the
NYSE. If such application is approved, trading of the Series A Preferred Shares
on the NYSE is expected to commence within a 30-day period after the date of
initial delivery of the Series A Preferred Shares. While the Underwriters have
advised the Company that they intend to make a market in the Series A Preferred
Shares prior to commencement of trading on the NYSE, they are under no
obligation to do so and no assurance can be given that a market for the Series A
Preferred Shares will exist prior to commencement of trading.
LEGAL MATTERS
The validity of the Series A Preferred Shares offered pursuant to this
Prospectus Supplement and the Prospectus will be passed upon for the Company by
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., Dallas, Texas and for the
Underwriters by Brown & Wood LLP, New York, New York.
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K have been audited by Deloitte & Touche, L.L.P., independent
auditors, as stated in their reports which are incorporated herein by reference,
and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
S-17
<PAGE> 18
PROSPECTUS
WEINGARTEN REALTY INVESTORS
$250,000,000
DEBT SECURITIES, PREFERRED SHARES,
COMMON SHARES AND SECURITIES WARRANTS
---------------
Weingarten Realty Investors, a real estate investment trust formed
under Texas law (the "Company"), may from time to time offer in one or more
series (i) its unsecured debt securities (the "Debt Securities"), (ii) its
preferred shares of beneficial interest, par value $.03 per share (the
"Preferred Shares"), (iii) its common shares of beneficial interest, par value
$.03 per share (the "Common Shares"), or (iv) warrants to purchase Common Shares
(the "Common Shares Warrants"), warrants to purchase Debt Securities (the "Debt
Securities Warrants") and warrants to purchase Preferred Shares (the "Preferred
Shares Warrants"), with an aggregate public offering price of up to $250,000,000
(or its equivalent in any other currency or composite currency based on the
exchange rate at the time of sale) in amounts, at prices and on terms to be
determined by market conditions at the time of offering. The Common Shares
Warrants, the Debt Securities Warrants and the Preferred Shares Warrants shall
be referred to herein collectively as the "Securities Warrants." The Debt
Securities, Preferred Shares, Common Shares and Securities Warrants
(collectively, the "Securities") may be offered, separately or together, in
separate series in amounts, at prices and on terms to be set forth in a
supplement to this Prospectus (a "Prospectus Supplement").
The Debt Securities will be direct unsecured obligations of the Company
and may be either senior Debt Securities ("Senior Securities") or subordinated
Debt Securities ("Subordinated Securities"). The Senior Securities will rank
equally with all other unsecured and unsubordinated indebtedness of the Company.
The Subordinated Securities will be subordinated to all existing and future
Senior Debt of the Company, as defined.
See "Description of Debt Securities."
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 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 Company or
repayment at the option of the Holder, terms for sinking fund payments, terms
for conversion into Preferred Shares or Common Shares and any initial public
offering price; (ii) in the case of Preferred Shares, 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 Common
Shares, any initial public offering price; and (iv) in the case of Securities
Warrants, the duration, offering price, exercise price and detachability, if
applicable. 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 by the Company, through agents
designated from time to time by the Company, 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 the applicable Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of the applicable 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 30, 1996.
<PAGE> 19
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (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. The Commission also maintains a Web site at
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. In addition, the Company's Common Shares are listed on the New York
Stock Exchange, Inc. and similar information about the Company can be inspected
and copied at prescribed rates at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
The Company has 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 being offered
hereby. For further information with respect to the Company 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 with the Commission (File
No. 1-9876) 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, 1995; and
2. The Company's Quarterly Report on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996.
Each document filed subsequent to the date of this Prospectus pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
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
a part hereof from the date of filing of such document.
Any statement contained 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 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.
UPON WRITTEN OR ORAL REQUEST OF ANY PERSON TO WHOM A PROSPECTUS IS
DELIVERED, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF THE DOCUMENTS
WHICH HAVE BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS. REQUESTS FOR SUCH
DOCUMENTS SHOULD BE DIRECTED TO M. CANDACE DUFOUR, VICE PRESIDENT AND SECRETARY,
WEINGARTEN REALTY INVESTORS, 2600 CITADEL PLAZA DRIVE, HOUSTON, TEXAS 77008,
TELEPHONE (713) 866-6000.
2
<PAGE> 20
THE COMPANY
Weingarten Realty Investors has owned and developed shopping centers
and other commercial real estate since its organization in 1948. The Company's
investment focus has been and continues to be on shopping centers. As of August
31, 1996, Trust Managers and executive officers of the Company controlled
4,162,092 Common Shares or approximately 15.7% of the outstanding Common Shares.
Initially, the Company grew primarily through development of
properties, with 93 of the 176 operating properties owned at August 31, 1996,
having been developed by the Company. With respect to these projects, the
Company acquired the raw land, constructed buildings and leased the store
spaces. The Company generally develops new projects only when it has leases in
place with financially strong and viable anchor retailers. More recently, the
Company has expanded its property base primarily through acquisitions of
properties previously developed by other parties which satisfy investment
criteria similar to those applicable to new developments. Management believes
that the majority of the Company's growth in the immediate future will continue
to result from acquisitions, due to the continuing over-supply of developed real
estate projects, the current lack of capital for most of the Company's
competitors to finance new investments and the prevailing market discount from
reproduction costs for new projects. As part of its acquisition strategy, the
Company seeks under-managed properties in good locations, the value of which can
be enhanced through remerchandising and renovating. Geographically, the Company
considers expansion in areas where it currently has a presence or where it can
acquire within a reasonable time frame a sufficient number of properties that
meet its investment criteria.
An equally important part of the Company's strategy has been to improve
the cash flow and value of its existing portfolio through: (i) maximizing rental
revenues, occupancy and retail sales, (ii) operating the properties in the most
cost effective manner and (iii) renovating and remerchandising the tenant mix
with respect to selected properties.
Management believes that its overall debt structure is conservative.
Based upon the approximately $1 billion market value of the Company's equity at
June 30, 1996, the Company's debt represented approximately 24% of its total
market capitalization. The Company's ratio of funds from operations before
interest expense to fixed charges for the quarter ended June 30, 1996 was
approximately 4.28 to 1.0.
The Company conducts its operations in order to qualify as a REIT under
the Internal Revenue Code of 1986, as amended. The Company's principal executive
offices are located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and its
telephone number is (713) 866-6000. As used herein, the term "Company" refers to
Weingarten Realty Investors and its predecessors unless the context otherwise
specifically requires.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement for
any offering of Securities, the Company intends to use the majority of the net
proceeds from the sale of Securities offered by the Company to repay debt
(including repayments of amounts drawn on lines of credit for property
acquisitions), make improvements to properties, acquire or develop additional
properties and for working capital. Pending use for the foregoing purposes, such
proceeds may be invested in short-term, interest-bearing time or demand deposits
with financial institutions, cash items or qualified government securities.
3
<PAGE> 21
CERTAIN RATIOS
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges and of funds from operations before interest expense
to fixed charges for the periods shown:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges. . . . 1.72x 1.89x 3.94x 4.16x 3.05x
Ratio of Funds from Operations Before
Interest Expense to Fixed Charges . . . 2.49x 2.74x 5.70x 6.11x 4.48x
</TABLE>
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. The ratios of funds from operations before interest
expense to fixed charges were computed by dividing funds from operations before
interest expense by fixed charges. For these purposes, earnings consist of
income before extraordinary items plus fixed charges (excluding interest costs
capitalized). Funds from operations before interest expense consists of net
income plus depreciation and amortization of real estate assets, interest on
indebtedness and extraordinary charges, less gains and losses on sales of
properties and securities. Fixed charges consist of interest expense (including
interest costs capitalized), amortization of debt costs and the portion of rent
expense representing an interest factor.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Senior Securities are to be issued under an indenture (the "Senior
Indenture"), dated as of May 1, 1995, between the Company and Texas Commerce
Bank National Association, as Trustee, and the Subordinated Securities are to be
issued under a separate indenture (the "Subordinated Indenture"), dated as of
May 1, 1995, also between the Company and Texas Commerce Bank National
Association, as Trustee. The term "Trustee" as used herein shall refer to Texas
Commerce Bank National Association or such other bank as the Company may appoint
as trustee pursuant to the terms of the applicable Indenture, in its or their
capacity as Trustee for the Senior Securities or the Subordinated Securities, as
appropriate. The forms of the Senior Indenture and the Subordinated Indenture
(being sometimes referred to herein collectively as the "Indentures" and
individually as an "Indenture") are filed as exhibits to the Registration
Statement. The Indentures are subject to and governed by the Trust Indenture Act
of 1939, as amended (the "TIA"), and may be amended or supplemented from time to
time following execution. The statements made under this heading relating to the
Debt Securities and the Indentures are summaries of the provisions thereof and
do not purport to be complete and are qualified in their entirety by reference
to the Indentures and such Debt Securities. Parenthetical references below are
to the Indentures and capitalized terms used but not defined herein shall have
the respective meanings set forth in the Indentures.
TERMS
The Debt Securities will be direct, unsecured obligations of the
Company. The indebtedness represented by the Senior Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the Company. The
indebtedness represented by the Subordinated Securities will be subordinated in
right of payment to the prior payment in full of the Senior Debt of the Company
as described under "Subordination."
Each Indenture provides that 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 Trust Managers of the Company or as established in
one or more indentures supplemental to such 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 of each Indenture).
Each Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under either Indenture may resign or be removed with respect to one or
4
<PAGE> 22
more series of Debt Securities, and a successor Trustee may be appointed to act
with respect to such series (Section 608 of each Indenture). 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
applicable Indenture separate and apart from the trust administered by any other
Trustee (Section 609 of each Indenture), and, except as otherwise indicated
herein, any action described herein to be taken by each 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 applicable
Indenture.
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 and whether such
Debt Securities are Senior Securities or Subordinated
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, or (if
applicable) the portion of the principal amount of
such Debt Securities which is convertible into Common
Shares or Preferred Shares, or the method by which
any such portion shall be determined;
(4) if convertible, in connection with the preservation
of the Company's status as a REIT, any applicable
limitations on the ownership or transferability of
the Common Shares or Preferred Shares into which such
Debt Securities are convertible;
(5) the date or dates, or the method for determining such
date or dates, on which the principal of such Debt
Securities will be payable;
(6) 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;
(7) the date or dates, or the method for determining such
date or dates, from which any such interest will
accrue, the Interest Payment Dates on which any such
interest will be payable, the Regular Record Dates
for such Interest Payment Dates, or the method by
which such dates shall be determined, the Persons 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;
(8) the place or places where the principal of (and
premium, if any) and interest, if any, on such Debt
Securities will be payable, where such Debt
Securities may be surrendered for conversion or
registration of transfer or exchange and where
notices or demands to or upon the Company in respect
of such Debt Securities and the applicable Indenture
may be served;
(9) the period or periods within which, the price or
prices at which and the other terms and conditions
upon which such Debt Securities may be redeemed, as a
whole or in part, at the option of the Company, if
the Company is to have such an option;
(10) the obligation, if any, of the Company 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
other terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, as
a whole or in part, pursuant to such obligation;
5
<PAGE> 23
(11) 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;
(12) 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;
(13) any additions to, modifications of or deletions from
the terms of such Debt Securities with respect to the
Events of Default or covenants set forth in the
applicable Indenture;
(14) whether such Debt Securities will be issued in
certificated or book-entry form;
(15) 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 and terms and conditions
relating thereto;
(16) the applicability, if any, of the defeasance and
covenant defeasance provisions of Article Fourteen of
the applicable Indenture;
(17) if such Debt Securities are to be issued upon the
exercise of Debt Securities Warrants, the time,
manner and place for such Debt Securities to be
authenticated and delivered;
(18) the terms, if any, upon which such Debt Securities
may be convertible into Common Shares or Preferred
Shares of the Company and the terms and conditions
upon which such conversion will be effected,
including, without limitation, the initial conversion
price or rate and the conversion period;
(19) whether and under what circumstances the Company will
pay Additional Amounts as contemplated in the
applicable Indenture on such Debt Securities in
respect of any tax, assessment or governmental charge
and, if so, whether the Company will have the option
to redeem such Debt Securities in lieu of making such
payment; and
(20) any other terms of such Debt Securities not
inconsistent with the provisions of the applicable
Indenture (Section 301 of each Indenture).
The Debt Securities may be issued at a discount below their principal
amount and may provide for less than the entire principal amount thereof to be
payable upon declaration of acceleration of the maturity thereof or bear no
interest or bear interest at a rate which at the time of issuance is below
market rates ("Original Issue Discount Securities") (Section 502 of each
Indenture). Special U.S. federal income tax, accounting and other considerations
applicable to Original Issue Discount Securities will be described in the
applicable Prospectus Supplement.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302 of each Indenture).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest, if any, on any
series of Debt Securities will be payable at the corporate trust office of the
Trustee, provided that, at the option of the Company, payment of interest may be
made by check mailed to the address of the Person entitled thereto as it appears
in the Security Register or by wire transfer of funds to such Person at an
account maintained within the United States (Sections 301, 305, 306, 307 and
1002 of each Indenture).
6
<PAGE> 24
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
applicable Trustee, notice whereof shall be mailed to each 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
applicable Indenture (Section 307 of each 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 applicable 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 conversion or registration of transfer or exchange at the
corporate trust office of the applicable Trustee referred to above. Every Debt
Security surrendered for conversion, 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 Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith (Section 305 of
each Indenture). If the applicable Prospectus Supplement refers to any transfer
agent (in addition to the applicable Trustee) initially designated by the
Company with respect to any series of Debt Securities, the Company 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 the Company
will be required to maintain a transfer agent in each Place of Payment for such
series. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities (Section 1002 of each Indenture).
Neither the Company nor any Trustee shall be required to: (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
that 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 of each
Indenture).
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other corporation
or trust or entity provided that: (i) either the Company shall be the continuing
entity, or the successor entity (if other than the Company) 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, if any, on all of the Debt Securities and the due
and punctual performance and observance of all of the covenants and conditions
contained in each Indenture; (ii) immediately after giving effect to such
transaction and treating any indebtedness that becomes an obligation of the
Company or any Subsidiary as a result thereof as having been incurred by the
Company 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 (iii) an officers' certificate and legal opinion covering such
conditions shall be delivered to each Trustee (Sections 801 and 803 of each
Indenture).
7
<PAGE> 25
CERTAIN COVENANTS
Limitations on Incurrence of Debt. The Company will not, and will not
permit any Subsidiary to, incur any Debt (as defined below) if, immediately
after giving effect to the incurrence of such Debt and the application of the
proceeds thereof, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated basis determined in accordance
with generally accepted accounting principles is greater than 60% of the sum of
(without duplication) (i) the Company's Total Assets (as defined below) as of
the end of the calendar quarter covered in the Company'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
purchase price of any real estate assets or mortgages receivable acquired, and
the amount of any securities offering proceeds received (to the extent such
proceeds were not used to acquire real estate assets or mortgages receivable or
used to reduce Debt), by the Company or any Subsidiary since the end of such
calendar quarter, including those proceeds obtained in connection with the
incurrence of such additional Debt (Section 1004 of each Indenture).
In addition to the foregoing limitation on the incurrence of Debt, the
Company 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 Company or any Subsidiary if, immediately
after giving effect to the incurrence of such Debt and the application of the
proceeds thereof, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated basis which is secured by any
mortgage, lien, charge, pledge, encumbrance or security interest on property of
the Company or any Subsidiary is greater than 40% of the Company's Total Assets
(Section 1004 of each Indenture).
In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if the
ratio of Consolidated Income Available for Debt Service (as defined below) to
the Annual Service Charge (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 1.5, on a pro forma basis after giving
effect thereto and to the application of the proceeds therefrom, and calculated
on the assumption that: (i) such Debt and any other Debt incurred by the Company
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; (ii) the repayment or retirement of
any other Debt by the Company and 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) in the case of Acquired Debt (as
defined below) 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 the appropriate adjustments with respect to
such acquisition being included in such pro forma calculation; and (iv) in the
case of any acquisition or disposition by the Company 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
(Section 1004 of each Indenture).
Existence. Except as permitted under "Merger, Consolidation or Sale,"
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its legal existence, rights (charter and
statutory) and franchises; provided, however, that the Company 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
(Section 1005 of each Indenture).
Maintenance of Properties. The Company will 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 will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times (Section 1006 of each Indenture).
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Insurance. The Company will keep, and will cause each of its
Subsidiaries to keep, all of its insurable properties insured against loss or
damage in an amount at least equal to their then full insurable value with
insurers of recognized responsibility and, if such insurer has publicly rated
debt, the rating for such debt must be at least investment grade with a
nationally recognized rating agency (Section 1007 of each Indenture).
Payment of Taxes and Other Claims. The Company will 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 the income, profits or property of the Company or 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 Company or any
Subsidiary; provided, however, that the Company 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
(Section 1008 of each Indenture).
Provision of Financial Information. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, within 15
days of each of the respective dates by which the Company would have been
required to file annual reports, quarterly reports and other documents with the
Commission if the Company were so subject, (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, quarterly
reports and other documents that the Company would have been required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act if the
Company were subject to such Sections, (ii) file with the applicable Trustee
copies of the annual reports, quarterly reports and other documents that the
Company would have been required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act if the Company were subject to such Sections and
(iii) promptly upon written request and payment of the reasonable cost of
duplication and delivery, supply copies of such documents to any prospective
Holder (Section 1009 of each Indenture).
Maintenance of Value of Unencumbered Assets to Unsecured Debt. The
Company will at all times maintain an Unencumbered Total Asset Value in an
amount of not less than 100% of the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries that is unsecured (Section
1013 of each Indenture).
Limited Covenants in the Event of a Highly Leveraged Transaction. Other
than the covenants of the Company included in the Indentures as described above,
there are no covenants in the Indentures that will afford the holders of Debt
Securities protection in the event of a highly leveraged transaction or similar
transaction involving the Company. Restrictions on ownership and transfers of
the Company's Common Shares and Preferred Shares are designed to preserve its
status as a REIT and, therefore, may act to prevent or hinder a change of
control. See "Description of Preferred Shares" and "Description of Common
Shares." 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 of the Company that are described above,
including any addition of a covenant or other event risk provision or similar
protection.
As used herein,
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person, in each case, other than Debt incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary or such
acquisition. Acquired Debt shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Subsidiary.
"Annual Service Charge" as of any date means the maximum amount which
is payable in any period for interest on, and original issue discount of, Debt
of the Company and its Subsidiaries and the amount of dividends which are
payable in respect of any Disqualified Stock (as defined below).
"Capital Shares" means, with respect to any Person, any capital shares
(including preferred shares), interests, participations or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into or exchangeable for capital shares), warrants or
options to purchase any thereof.
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<PAGE> 27
"Consolidated Income Available for Debt Service" for any period means
Funds from Operations (as defined below) of the Company and its Subsidiaries
plus amounts which have been deducted for interest on Debt of the Company and
its Subsidiaries.
"Debt" of the Company or any Subsidiary means any indebtedness of the
Company, or any Subsidiary, other than contingent liabilities (except to the
extent set forth in (iii) below), in respect of (without duplication) (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 Company or any
Subsidiary, (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 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, (iv) the principal amount of all obligations of the Company
or any Subsidiary with respect to redemption, repayment or other repurchase of
any Disqualified Stock or (v) any lease of property by the Company or any
Subsidiary as lessee which is reflected on the Company's consolidated balance
sheet as a capitalized lease in accordance with generally accepted accounting
principles to the extent, in the case of items of indebtedness under (i) through
(iii) above, that any such items (other than letters of credit) would appear as
a liability on the Company's consolidated balance sheet in accordance with
generally accepted accounting principles, but does not include any obligation of
the Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor
or otherwise, Debt of another Person (other than the Company or any Subsidiary)
unless and until the Company or such Subsidiary shall become directly liable in
respect thereof.
"Disqualified Stock" means, with respect to any Person, any Capital
Shares of such Person which by the terms of such Capital Shares (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 (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, (ii)
is convertible into or exchangeable or exercisable for Debt or Disqualified
Stock or (iii) is redeemable at the option of the holder thereof, in whole or in
part, in each case on or prior to the Stated Maturity of the Debt Securities.
"Funds from Operations" for any period means net income plus
depreciation and amortization of real estate assets and extraordinary charges,
excluding gains and losses on sales of properties and securities.
"Total Assets" as of any date means the sum of (i) the Company's
Undepreciated Real Estate Assets and (ii) all other assets of the Company
determined in accordance with generally accepted accounting principles (but
excluding goodwill and unamortized debt costs).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Unencumbered Total Asset Value" as of any date shall mean the sum of
the Company's Total Assets which are unencumbered by any mortgage, lien, charge,
pledge, or security interest.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture provides that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (i)
default for 30 days in the payment of any installment of interest on any Debt
Security of such series; (ii) default in the payment of the principal of (or
premium, if any, on) any Debt Security of such series at its Maturity; (iii)
default in making any sinking fund payment as required for any Debt Security of
such series; (iv) default in the performance or breach of any other covenant or
warranty of the Company 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), continued for 60 days after written notice
as provided in the applicable Indenture; (v) a default under any bond,
debenture, note or other evidence of indebtedness for money borrowed by the
Company (including obligations under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles but
not including any indebtedness or obligations for which recourse is limited to
property purchased or property mortgaged) in an aggregate principal amount in
excess of $10,000,000 or under any mortgage,
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<PAGE> 28
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company
(including such leases but not including such indebtedness or obligations for
which recourse is limited to property purchased) in an aggregate principal
amount in excess of $10,000,000 by the Company, whether such indebtedness now
exists or shall hereafter be 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 or such obligations being
accelerated, without such acceleration having been rescinded or annulled; (vi)
certain events of bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of the Company or any Significant
Subsidiary or either of their properties; and (vii) any other Event of Default
provided with respect to a particular series of Debt Securities (Section 501 of
each Indenture). The term "Significant Subsidiary" means each significant
subsidiary (as defined in Regulation S-X promulgated under the Securities Act)
of the Company.
If an Event of Default under either Indenture with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing, then
in every such case the applicable 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 Company (and to the applicable 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
either Indenture, as the case may be) has been made, but before a judgment or
decree for payment of the money due has been obtained by the applicable 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
applicable Indenture, as the case may be) may rescind and annul such declaration
and its consequences if (i) the Company 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 applicable Indenture, as the case may be), plus certain
fees, expenses, disbursements and advances of the applicable Trustee and (ii)
all Events of Default, other than the non-payment of accelerated principal (or a
specified portion thereof), with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the applicable Indenture, as the
case may be) have been cured or waived as provided in each Indenture (Section
502 of each Indenture). Each 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 applicable
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, if any, on any Debt Security of
such series or (y) in respect of a covenant or provision contained in the
applicable Indenture that cannot be modified or amended without the consent of
the Holders of each Outstanding Debt Security affected thereby (Section 513 of
each Indenture).
Each Trustee is required to give notice to the Holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default shall have been cured or waived; provided, however, that such
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, if any, 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 the Responsible Officers of such Trustee
consider such withholding to be in the interest of such Holders (Section 601 of
each Indenture).
Each Indenture provides that no Holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the case of failure of
the applicable 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 of each Indenture). 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,
if any, on such Debt Securities at the respective due dates thereof (Section 508
of each Indenture).
Subject to provisions in each Indenture relating to its duties in case
of default, neither Trustee is under an obligation to exercise any of its rights
or powers under such Indenture at the request or direction of any Holders of
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any series of Debt Securities then Outstanding under such Indenture, unless such
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 602 of each Indenture). 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 each 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 applicable Trustee, or of
exercising any trust or power conferred upon such Trustee. However, each Trustee
may refuse to follow any direction which is in conflict with any law or the
applicable Indenture, which may involve such Trustee in personal liability or
which may be unduly prejudicial to the Holders of Debt Securities of such series
not joining therein (Section 512 of each Indenture).
Within 120 days after the close of each fiscal year, the Company must
deliver to each Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default under
the applicable Indenture and, if so, specifying each such default and the nature
and status thereof (Section 1010 of each Indenture).
MODIFICATION OF THE INDENTURES
Modification and amendment of either Indenture may be made only with
the consent of the Holders of not less than a majority in principal amount of
all Outstanding Debt Securities issued under such Indenture 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, (i) change the Stated Maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security, (ii)
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, (iii) change the Place of Payment, or the coin or
currency, for payment of principal of, premium, if any, or interest, if any, on
any such Debt Security, (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Debt Security, (v)
reduce the above-stated percentage of Outstanding Debt Securities of any series
necessary to modify or amend the applicable 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 applicable Indenture,
or (vi) 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 of each Indenture).
The Holders of not less than a majority in principal amount of
Outstanding Debt Securities issued under either Indenture have the right to
waive compliance by the Company with certain covenants in such Indenture
(Section 1012 of each Indenture).
Modifications and amendments of either Indenture may be made by the
Company and the respective Trustee thereunder 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 Company as obligor under such Indenture;
(ii) to add to the covenants of the Company for the benefit of the Holders of
all or any series of Debt Securities or to surrender any right or power
conferred upon the Company in such 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 either 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 either 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, including the provisions and procedures,
if applicable, for the conversion of such Debt Securities into Common Shares or
Preferred Shares of the Company; (viii) to provide for the acceptance or
appointment of a successor Trustee or facilitate the administration of the
trusts under either Indenture by more than one Trustee; (ix) to cure any
ambiguity, defect or inconsistency in either Indenture, provided that such
action shall not adversely affect the interests of Holders of Debt Securities of
any series issued under such Indenture; or (x) to supplement any of the
provisions of either Indenture to the extent necessary to permit or facilitate
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<PAGE> 30
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 (Section 901 of each Indenture).
SUBORDINATION
Upon any distribution to creditors of the Company in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
the Subordinated Securities will be subordinated to the extent provided in the
Subordinated Indenture in right of payment to the prior payment in full of all
Senior Debt (Sections 1601 and 1602 of the Subordinated Indenture), but the
obligation of the Company to make payment of the principal of and interest on
the Subordinated Securities will not otherwise be affected (Section 1608 of the
Subordinated Indenture). No payment of principal or interest may be made on the
Subordinated Securities at any time if a default on Senior Debt exists that
permits the holders of such Senior Debt to accelerate its maturity and the
default is the subject of judicial proceedings or the Company receives notice of
the default (Section 1603 of the Subordinated Indenture). After all Senior Debt
is paid in full and until the Subordinated Securities are paid in full, Holders
will be subrogated to the rights of holders of Senior Debt to the extent that
distributions otherwise payable to Holders have been applied to the payment of
Senior Debt (Section 1607 of the Subordinated Indenture). By reason of such
subordination, in the event of a distribution of assets upon insolvency, certain
general creditors of the Company may recover more, ratably, than holders of the
Subordinated Securities.
Senior Debt is defined in the Subordinated Indenture as the principal
of and interest on, or substantially similar payments to be made by the Company
in respect of, the following, whether outstanding at the date of execution of
the Subordinated Indenture or thereafter incurred, created or assumed: (i)
indebtedness of the Company for money borrowed or represented by purchase-money
obligations, (ii) indebtedness of the Company evidenced by notes, debentures or
bonds, or other securities issued under the provisions of an indenture, fiscal
agency agreement or other instrument, (iii) obligations of the Company as lessee
under leases of property either made as part of any sale and leaseback
transaction to which the Company is a party or otherwise, (iv) indebtedness of
partnerships and joint ventures which is included in the consolidated financial
statements of the Company, (v) indebtedness, obligations and liabilities of
others in respect of which the Company is liable contingently or otherwise to
pay or advance money or property or as guarantor, endorser or otherwise or which
the Company has agreed to purchase or otherwise acquire, and (vi) any binding
commitment of the Company to fund any real estate investment or to fund any
investment in any entity making such real estate investment, in each case other
than (A) any such indebtedness, obligation or liability referred to in clauses
(i) through (vi) above as to which, in the instrument creating or evidencing the
same pursuant to which the same is outstanding, it is provided that such
indebtedness, obligation or liability is not superior in right of payment to the
Subordinated Securities or ranks pari passu with the Subordinated Securities,
(B) any such indebtedness, obligation or liability which is subordinated to
indebtedness of the Company to substantially the same extent as or to a greater
extent than the Subordinated Securities are subordinated, and (C) the
Subordinated Securities (Section 101 of the Subordinated Indenture). At June 30,
1996, Senior Debt aggregated approximately $323 million.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Under each Indenture, the Company may discharge certain obligations to
Holders of any series of Debt Securities issued thereunder that have not already
been delivered to the applicable 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
applicable 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 (Section 401 of each
Indenture).
Each Indenture provides that, if the provisions of Article Fourteen
thereof are made applicable to the Debt Securities of or within any series
pursuant to Section 301 of such Indenture, the Company may elect either (i) 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, 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
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<PAGE> 31
in respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402 of each Indenture) or (ii) to be released from its
obligations with respect to such Debt Securities under Sections 1004 to 1009,
inclusive, and Section 1013 of each Indenture (being the restrictions described
under "Certain Covenants") or, if provided pursuant to Section 301 of each
Indenture, 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 of each Indenture), in either case upon the irrevocable deposit by the
Company with the applicable 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 (Section 1404 of
each Indenture).
Such a trust may only be established if, among other things, the
Company has delivered to the applicable Trustee an Opinion of Counsel (as
specified in each 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 U.S. federal income tax law occurring after
the date of the Indenture (Section 1404 of each Indenture).
"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 specified 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 (Section 101 of each Indenture).
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(i) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of either 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
(ii) 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
cessation of usage based on the applicable market exchange rate (Section 1405 of
each Indenture). "Conversion Event" means the cessation 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 European Currency Unit ("ECU") both within the European
Monetary System and for the settlement of transactions by public institutions of
or within the European Communities or (iii) any currency unit or composite
currency other than the ECU for the purposes of which it was established. Unless
otherwise provided in the applicable Prospectus Supplement, all payments of
principal of (and premium, if any) and interest, if any, 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 (Section 101 of each Indenture).
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In the event that the Company 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 (iv) under "Events of Default, Notice and Waiver"
with respect to Sections 1004 through 1009, inclusive, and Section 1013 of each
Indenture (which Sections would no longer be applicable to such Debt Securities)
or described in clause (vii) 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
applicable 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 Company 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.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Shares or Preferred Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Common Shares or Preferred
Shares, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the Holders
or the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities and any restrictions on conversion, including restrictions directed
at maintaining the Company's REIT status.
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. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in Debt Securities represented by Global Securities.
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DESCRIPTION OF PREFERRED SHARES
GENERAL
The Company is authorized to issue 10,000,000 preferred shares of
beneficial interest, $.03 par value per share (the "Preferred Shares"), of which
no Preferred Shares were outstanding at August 31, 1996.
The following description of the Preferred Shares sets forth certain
general terms and provisions of the Preferred Shares to which any Prospectus
Supplement may relate. The statements below describing the Preferred Shares are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Restated Declaration of Trust, as amended
(the "Declaration of Trust") and Bylaws and applicable statement of designations
(the "Statement of Designations").
TERMS
Subject to the limitations prescribed by the Declaration of Trust, the
Board of Trust Managers is authorized to fix the number of shares constituting
each series of Preferred Shares and the designations, preferences, conversion,
exchange or other rights, participations, voting powers, options, restrictions,
limitations, special rights or relations, limitations as to dividends,
qualifications, terms and conditions of redemption and such other subjects or
matters as may be fixed by resolution of the Board of Trust Managers. The
Preferred Shares 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 Shares offered thereby for specific terms, including:
1. The title and stated value of such Preferred Shares;
2. The number of such Preferred Shares offered, the liquidation
preference per share and the offering price of such Preferred
Shares;
3. The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Shares;
4. The date from which dividends on such Preferred Shares shall
accumulate, if applicable;
5. The procedures for any auction and remarketing, if any, for
such Preferred Shares;
6. The provision for a sinking fund, if any, for such Preferred
Shares;
7. The provision for redemption, if applicable, of such Preferred
Shares;
8. Any listing of such Preferred Shares on any securities
exchange;
9. The terms and conditions, if applicable, upon which such
Preferred Shares will be convertible into Common Shares of the
Company, including the conversion price (or manner of
calculation thereof);
10. Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares;
11. A discussion of federal income tax considerations applicable
to such Preferred Shares;
12. The relative ranking and preferences of such Preferred Shares
as to dividend rights and rights upon liquidation, dissolution
or winding up of the affairs of the Company;
13. Any limitations on issuance of any series of Preferred Shares
ranking senior to or on a parity with
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such series of Preferred Shares as to dividend rights and
rights upon liquidation, dissolution or winding up of the
affairs of the Company; and
14. Any limitations on direct or beneficial ownership and
restriction 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
Shares 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 Shares or other Capital Shares of the Company, and to all
equity securities ranking junior to such Preferred Shares, (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 Shares,
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 Shares. The term "equity securities" does not include convertible debt
securities.
DIVIDENDS
Holders of the Preferred Shares of each series will be entitled to
receive, when, as and if declared by the Board of Trust Managers of the Company,
out of assets of the Company legally available for payment, cash 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 Trust Managers of the Company.
Dividends on any series of the Preferred Shares may be cumulative or
noncumulative, 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 Trust Managers of the Company
fails to declare a dividend payable on a dividend payment date on any series of
the Preferred Shares for which dividends are noncumulative, then the holders of
such series of the Preferred Shares 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 Shares of any series are outstanding, no dividends will be
declared or paid or set apart for payment on the Preferred Shares of the Company
of any other series ranking, as to dividends, on a parity with or junior to the
Preferred Shares of such series for any period unless (i) if such series of
Preferred Shares 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 Shares of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Shares 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 Shares 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 Shares of any series and the shares
of any other series of Preferred Shares ranking on a parity as to dividends with
the Preferred Shares of such series, all dividends declared upon Preferred
Shares of such series and any other series of Preferred Shares ranking on a
parity as to dividends with such Preferred Shares shall be declared pro rata so
that the amount of dividends declared per Preferred Share of such series and
such other series of Preferred Shares shall in all cases bear to each other the
same ratio that accrued dividends per share on the Preferred Shares of such
series (which shall not include any accumulation in respect of unpaid dividends
for prior dividend periods if such Preferred Shares do not have a cumulative
dividend) and such other series of Preferred Shares 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 Shares of such series which may be
in arrears.
Except as provided in the immediately preceding paragraph, unless (i)
if such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on the Preferred Shares 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 Shares
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does not have a cumulative dividend, full dividends on the Preferred Shares 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 Common Shares or other
Capital Shares ranking junior to the Preferred Shares 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 Shares,
or any other Capital Shares of the Company ranking junior to or on a parity with
the Preferred Shares of such series as to dividends or upon liquidation, nor
shall any Common Shares, or any other Capital Shares of the Company ranking
junior to or on a parity with the Preferred Shares 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 such Capital Shares of the Company ranking junior to the
Preferred Shares of such series as to dividends and upon liquidation).
Any dividend payment made on shares of a series of Preferred Shares
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such series which remains payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred
Shares 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 Shares that
is subject to mandatory redemption will specify the number of such Preferred
Shares 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 Shares do 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.
Notwithstanding the foregoing, unless (i) if such series of Preferred
Shares has a cumulative dividend, full cumulative dividends on all shares of any
series of Preferred Shares 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 Shares does not have a cumulative dividend,
full dividends on the Preferred Shares 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 Shares shall be redeemed unless all
outstanding Preferred Shares of such series are simultaneously redeemed;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Shares 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 Shares of such series, and, unless (i)
if such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on all outstanding shares of any series of Preferred Shares 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 Shares does
not have a cumulative dividend, full dividends on the Preferred Shares 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 Preferred Shares of such series (except by conversion
into or exchange for Capital Shares of the Company ranking junior to the
Preferred Shares of such series as to dividends and upon liquidation); provided,
however, that the foregoing shall not prevent the purchase or acquisition of
Preferred Shares 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 Shares of such series.
If fewer than all of the outstanding Preferred Shares of any series are
to be redeemed, the number of Preferred 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 by such
holders (with adjustments to avoid redemption of fractional shares) or by lot in
a manner determined by the Company.
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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 Shares
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 shares and series of the Preferred Shares to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such Preferred
Shares 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 will terminate. If fewer than all of the Preferred Shares of any
series are to be redeemed, the notice mailed to each such holder thereof shall
also specify the number of Preferred Shares to be redeemed from each such
holder. If notice of redemption of any Preferred Shares 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 Shares so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such Preferred Shares, 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 Shares, excess shares or any other class or
series of Capital Shares of the Company ranking junior to the Preferred Shares
in the distribution of assets upon any liquidation, dissolution or winding up of
the Company, the holders of each series of Preferred Shares 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 Shares do not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Preferred Shares 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 Shares 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 Shares in the distribution of assets, then the holders
of the Preferred Shares 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 Shares, 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 Shares 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 Shares 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 Preferred Shares shall be in arrears for six
consecutive quarterly periods, the holders of such Preferred Shares (voting
separately as a class with all other series of Preferred Shares upon which like
voting rights have been conferred and are exercisable) will be entitled to vote
for the election of two additional Trust Managers of the Company at the next
annual meeting of shareholders and at each subsequent meeting until (i) if such
series of Preferred Shares has a cumulative dividend, all dividends accumulated
on such series of Preferred Shares 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 Preferred Shares 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
Trust Managers of the Company will be increased by two Trust Managers.
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Unless provided otherwise for any series of Preferred Shares, so long
as any Preferred Shares remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of two-thirds of the shares of each
series of Preferred Shares 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 Shares ranking prior to such series of Preferred
Shares with respect to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up or reclassify any authorized Capital
Shares of the Company into any 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
Declaration of Trust or the Statement of Designations for such series of
Preferred Shares, 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 Shares 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 Shares remain 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 Shares and provided further
that (A) any increase in the amount of the authorized Preferred Shares or the
creation or issuance of any other series of Preferred Shares, or (B) any
increase in the number of authorized shares of such series or any other series
of Preferred Shares, in each case ranking on a parity with or junior to the
Preferred Shares of such series with respect to the 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 Shares
shall have been redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred
Shares are convertible into Common Shares will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
Common Shares into which the Preferred Shares are convertible, the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the holders of the Preferred
Shares or the Company, the events requiring an adjustment of the conversion
price and provisions affecting conversion in the event of the redemption of such
Preferred Shares.
SHAREHOLDER LIABILITY
As discussed below under "Description of Common Shares - Shareholder
Liability," the Declaration of Trust provides that no shareholder, including
holders of Preferred Shares, shall be personally liable for the acts and
obligations of the Company and that the funds and property of the Company shall
be solely liable for such acts or obligations. The Declaration of Trust provides
that, to the extent practicable, each written instrument creating an obligation
of the Company shall contain a provision to that effect. By statute, the State
of Texas provides limited liability for shareholders of a REIT organized under
the Texas Real Estate Investment Trust Act (the "REIT Act"). However, certain
jurisdictions may not recognize the limited liability provided shareholders
under the REIT Act and, therefore, a shareholder may be held personally liable
to the extent that such claims are not satisfied by the Company. Because of the
uncertainty that may exist in the laws of certain states in which the Company
owns property or conducts business, wholly owned subsidiary corporations are
utilized to own properties in such states. The Bylaws of the Company provide for
indemnification of shareholders by the Company for any liabilities incurred in
such capacity. The Company carries public liability insurance that the Trust
Managers consider adequate. Thus, any risk of personal liability to shareholders
is limited to situations in which the Company's assets plus its insurance
coverage would be insufficient to satisfy the claims against the Company and its
shareholders. The Company believes that its operations have been conducted and
will continue to be conducted in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Company.
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RESTRICTIONS ON OWNERSHIP
As discussed below under "Description of Common Shares - REIT
Qualification," 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 constructively, 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 other actions to limit the beneficial
ownership, directly or indirectly, by a single person to not more than 9.8% of
the Company's outstanding equity securities, including any Preferred Shares of
the Company. Therefore, the Statement of Designations for each series of
Preferred Shares will contain certain provisions restricting the ownership and
transfer of the Preferred Shares. The applicable Prospectus Supplement will
specify any additional ownership limitation relating to a series of Preferred
Shares.
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DESCRIPTION OF COMMON SHARES
GENERAL
The Common Shares are issued pursuant to the Declaration of Trust. The
Common Shares, par value $.03 per share, are equal with respect to distribution
and liquidation rights, are not convertible, have no preemptive rights to
subscribe for additional Common Shares, are nonassessable (except as described
under "Shareholder Liability" below) and are transferable in the same manner as
shares of a corporation. Each shareholder is entitled to one vote in person or
by proxy for each Common Share registered in his name and has the right to vote
on the election or removal of Trust Managers, amendments to the Declaration of
Trust, proposals to terminate, reorganize, merge or consolidate the Company or
to sell or dispose of substantially all of the Company's property and with
respect to certain business combinations. The Company will have perpetual
existence unless and until dissolved and terminated. Except with respect to the
foregoing matters, no action taken by the shareholders at any meeting shall in
any way bind the Trust Managers. The Common Shares offered by the Company will
be, when issued, fully paid and nonassessable (except as described under
"Shareholder Liability" below).
Several provisions in the Declaration of Trust may have the effect of
deterring a take-over of the Company. These provisions restrict ownership of the
Company's outstanding equity securities by a single person to not more than 9.8%
of such securities to assist in protecting and preserving the qualification of
the Company as a REIT under the Code and include a "fair price" provision that
would deter a "two-stage" take-over transaction by requiring an 80% vote of
outstanding securities entitled to vote thereon for certain defined "business
combinations" with shareholders owning more than 50% of the equity securities
considered for such purposes if the transaction is neither approved by the Board
of Trust Managers nor meets certain price and procedural conditions.
REIT QUALIFICATION
The Company operates in a manner intended to qualify it for treatment
as a REIT under Sections 856 through 860 of the Code. In general, a REIT that
distributes to its shareholders at least 95% of its taxable income (other than
net capital gain) for a taxable year and that meets certain other conditions
will not be taxed on income (including net capital gain) distributed for that
year. If the Company fails to qualify as a REIT in any taxable year, it will be
taxed as a corporation for that year, and distributions to its shareholders will
not be deductible by the Company in computing its taxable income. In such case,
the Company will likely be disqualified from being treated as a REIT for the
ensuing four taxable years. Failure to qualify as a REIT could result in the
Company incurring indebtedness and perhaps liquidating investments in order to
pay its taxes, and could have a material adverse effect upon the market price of
the Company's outstanding securities.
Among the requirements which must be met in order for the Company to
qualify as a REIT is that no more than 50% in value of the outstanding capital
shares, including in some circumstances capital shares into which outstanding
securities (including the Securities) might be converted, may be owned actually
or constructively by five or fewer individuals or certain other entities at any
time during the last half of the Company's taxable year. To assist the Company
in meeting this requirement, the Declaration of Trust limits persons to
ownership of not more than 9.8% of the outstanding equity securities of the
Company, including Common Shares. For purposes of such ownership limit,
convertible securities (whether in registered or bearer form) are treated as if
such securities had been converted in calculating the ownership limit. The
Declaration of Trust provides that any attempted transfer of Common Shares or
Preferred Shares that would cause a person to exceed the limit shall be null and
void. However, because the Code imposes broad attribution rules in determining
constructive ownership, no assurance can be given that the restrictions of the
Declaration of Trust will be effective in maintaining the Company's REIT status.
Further, owners of more than 6.5% of the Common Shares as of January 19, 1988
(currently only Stanford Alexander, who at August 31, 1996 beneficially owned
approximately 7.8% of the outstanding Common Shares) are exempted from the
limit. Without shareholder approval, the Company may issue an unlimited number
of securities, warrants, rights or other options to purchase Common Shares and
other securities convertible into Common Shares.
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SHAREHOLDER LIABILITY
The Declaration of Trust provides that no shareholder shall be
personally liable for the acts and obligations of the Company and that the funds
and property of the Company shall be solely liable for such acts or obligations.
The Declaration of Trust provides that, to the extent practicable, each written
instrument creating an obligation of the Company shall contain a provision to
that effect. By statute, the State of Texas provides limited liability for
shareholders of a REIT organized under the REIT Act. However, certain
jurisdictions may not recognize the limited liability provided shareholders
under the REIT Act and, therefore, a shareholder may be held personally liable
to the extent that such claims are not satisfied by the Company. Because of the
uncertainty that may exist in the laws of certain states in which the Company
owns property or conducts business, wholly-owned subsidiary corporations are
utilized to own properties in such states. The Bylaws of the Company provide for
indemnification of shareholders by the Company for any liabilities incurred in
such capacity. The Company carries public liability insurance that the Trust
Managers consider adequate. Thus, any risk of personal liability to shareholders
is limited to situations in which the Company's assets plus its insurance
coverage would be insufficient to satisfy the claims against the Company and its
shareholders. The Company believes that its operations have been conducted and
will continue to be conducted in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Company.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Common Shares is Society
National Bank, Cleveland, Ohio. The Common Shares are listed on the New York
Stock Exchange (Symbol: WRI).
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants (which may include
subscription rights distributed to the Company's shareholders) for the purchase
of Debt Securities, Preferred Shares or Common Shares. Securities Warrants may
be issued independently or together with any other Securities offered by any
Prospectus Supplement and may be attached to or separate from such Securities.
Each series of Securities Warrants will be issued under a separate warrant
agreement (each, a "Warrant Agreement") to be entered into between the Company
and a warrant agent specified in the applicable Prospectus Supplement (the
"Warrant Agent"). The Warrant Agent will act solely as an agent of the Company
in connection with the Securities Warrants of such series and will not assure
any obligation or relationship of agency or trust for or with any holders or
beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Warrant Agreement and the Securities Warrants do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Warrant Agreement and the Securities
Warrant certificates relating to each series of Securities Warrants which will
be filed with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of Securities Warrants.
If Securities Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Securities Warrants, including, in
the case of Securities Warrants for the purchase of Debt Securities, the
following where applicable: (i) the offering price; (ii) the denominations and
terms of the series of Debt Securities purchasable upon exercise of such
Securities Warrants; (iii) the designation and terms of any series of Debt
Securities with which such Securities Warrants are being offered and the number
of such Securities Warrants being offered with such Debt Securities; (iv) the
date, if any, on and after which such Securities Warrants and the related series
of Debt Securities will be transferable separately; (v) the principal amount of
the series of Debt Securities purchasable upon exercise of each such Securities
Warrant and the price at which such principal amount of Debt Securities of such
series may be purchased upon such exercise; (vi) the date on which the right to
exercise such Securities Warrants shall commence and the date on which such
right shall expire (the "Expiration Date"); (vii) whether the Securities
Warrants will be issued in registered or bearer form; (viii) any special United
States federal income tax consequences; (ix) the terms, if any, on which the
Company may accelerate the date by which the Securities Warrants must be
exercised; and (x) any other material terms of such Securities Warrants.
In the case of Securities Warrants for the purchase of Preferred Shares
or Common Shares, the applicable Prospectus Supplement will describe the terms
of such Securities Warrants, including the following where applicable: (i) the
offering price; (ii) the aggregate number of shares purchasable upon exercise of
such Securities Warrants, the
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exercise price, and in the case of Securities Warrants for Preferred Shares, the
designation, aggregate number and terms of the series of Preferred Shares
purchasable upon exercise of such Securities Warrants; (iii) the designation and
terms of any series of Preferred Shares with which such Securities Warrants are
being offered and the number of such Securities Warrants being offered with such
Preferred Shares; (iv) the date, if any, on and after which such Securities
Warrants and the related series of Preferred Shares or Common Shares will be
transferable separately; (vi) any special United States federal income tax
consequences; and (vii) any other material terms of such Securities Warrants.
Securities Warrant certificates may be exchanged for new Securities
Warrant certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal, premium, if
any, or interest, if any, on such Debt Securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any Securities Warrants to
purchase Preferred Shares or Common Shares, holders of such Securities Warrants
will not have any rights of holders of such Preferred Shares or Common Shares,
including the right to receive payments of dividends, if any, on such Preferred
Shares or Common Shares, or to exercise any applicable right to vote.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase
such principal amount of Debt Securities or number of Preferred Shares or Common
Shares, as the case may be, at such exercise price as shall in each case be set
forth in, or calculable from, the Prospectus Supplement relating to the offered
Securities Warrants. After the close of business on the Expiration Date (or such
later date to which such Expiration Date may be extended by the Company),
unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Warrant Agent
payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the Debt Securities, Preferred Shares or Common Shares, as
the case may be, purchasable upon such exercise together with certain
information set forth on the reverse side of the Securities Warrant certificate.
Securities Warrants will be deemed to have been exercised upon receipt of
payment of the exercise price, subject to the receipt within five (5) business
days, of the Securities Warrant certificate evidencing such Securities Warrants.
Upon receipt of such payment and the Securities Warrant certificate properly
completed and duly executed at the corporate trust office of the Warrant Agent
or any other office indicated in the applicable Prospectus Supplement, the
Company will, as soon as practicable, issue and deliver the Debt Securities,
Preferred Shares or Common Shares, as the case may be, purchasable upon such
exercise. If fewer than all of the Securities Warrants represented by such
Securities Warrant certificate are exercised, a new Securities Warrant
certificate will be issued for the remaining amount of Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
The Warrant Agreements may be amended or supplemented without the
consent of the holders of the Securities Warrants issued thereunder to effect
changes that are not inconsistent with the provisions of the Securities Warrants
and that do not adversely affect the interests of the holders of the Securities
Warrants.
COMMON SHARES WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of Common Shares covered by, a Common Shares
Warrant are subject to adjustment in certain events, including (i) payment of a
dividend on the Common Shares payable in shares of beneficial interest, share
splits, combinations or reclassification of the Common Shares; (ii) issuance to
all holders of Common Shares of rights or warrants to subscribe for or purchase
Common Shares at less than their current market price; and (iii) certain
distributions of evidences of indebtedness or assets (including securities but
excluding cash dividends or distributions paid out of consolidated earnings or
retained earnings or dividends payable in Common Shares) or of subscription
rights and warrants (excluding those referred to above).
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No adjustment in the exercise price of, and the number of Common Shares
covered by, a Common Shares Warrant will be made for regular quarterly or other
periodic or recurring cash dividends or distributions or for cash dividends or
distributions to the extent paid from consolidated earnings or retained
earnings. No adjustment will be required unless such adjustment would cause a
change of at least 1% in the exercise price then in effect. Except as stated
above, the exercise price of, and the number of Common Shares covered by, a
Common Shares Warrant will not be adjusted for the issuance of (i) Common
Shares, (ii) any securities convertible into or exchangeable for Common Shares,
or (iii) any securities carrying the right or option to purchase or otherwise
acquire Common Shares, in exchange for cash, other property or services.
In the event of any (i) consolidation or merger of the Company with or
into any entity (other than a consolidation or a merger that does not result in
any reclassification, conversion, exchange or cancellation of outstanding Common
Shares); (ii) sale, transfer, lease or conveyance of all or substantially all of
the assets of the Company; or (iii) reclassification, capital reorganization or
change of the Common Shares (other than solely a change in par value or from par
value to no par value), then any holder of a Common Shares Warrant will be
entitled, on or after the occurrence of any such event, to receive on exercise
of such Common Shares Warrant the kind and amount of shares of stock or other
securities, cash or other property (or any combination thereof) that the holder
would have received had such holder exercised such holder's Common Shares
Warrant immediately prior to the occurrence of such event. If the consideration
to be received upon exercise of the Common Shares Warrant following any such
event consists of common stock of the surviving entity, then from and after the
occurrence of such event, the exercise price of such Common Shares Warrant will
be subject to the same anti-dilution and other adjustments described in the
second preceding paragraph, applied as if such common stock were Common Shares.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through one or more underwriters
for public offering and sale, or may also sell Securities directly to other
purchasers or through agents in exchange for cash or other consideration
(including real properties) as may be specified in the applicable Prospectus
Supplement. Direct sales to purchasers may also be accomplished through
subscription rights distributed to the Company's shareholders. In connection
with distribution of subscription rights to shareholders, if all of the
underlying Securities are not subscribed for, the Company may sell such
unsubscribed Securities directly to third parties or may engage the services of
underwriters to sell such unsubscribed Securities to third parties as may be
specified in the applicable Prospectus Supplement. Any underwriter or agent
involved in the offer and sale of the Securities will be named in the applicable
Prospectus Supplement.
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 (any of which may represent a
discount from the prevailing market prices). The Company also may offer and sell
the Securities in exchange for one or more of its then outstanding issues of
debt or convertible debt securities. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell the
Securities upon the terms and conditions set forth in the applicable Prospectus
Supplement.
In connection with the sale of Securities, underwriters may receive or
be deemed to have received compensation from the Company 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,
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 will be described, in the applicable Prospectus Supplement.
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 Shares which are listed on the New York Stock Exchange.
Any Common Shares sold pursuant to a Prospectus Supplement will be listed on
such exchange, subject to official
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<PAGE> 43
notice of issuance. The Company may elect to list any series of Debt Securities
or Preferred Shares on an exchange, but is not 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 may enter into, underwriters, dealers and
agents who participate in the distribution of Securities may be entitled to
indemnification by the Company 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 in the ordinary course of
business.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date. Each
contract will be for an amount not less than, and the aggregate principal amount
of Securities sold pursuant to contracts shall be not less or more than, the
respective amounts stated in the applicable Prospectus Supplement. 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. The obligations of any purchaser under any such
contract will be subject to the condition that (i) 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 and (ii) if the Securities are
being sold to underwriters, the Company shall have sold to such underwriters the
total principal amount of the Securities less the principal amount thereof
covered by contracts. 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 as well as certain
federal income tax matters will be passed upon for the Company by Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P., 2200 Ross Avenue, Suite 900, Dallas, Texas 75201.
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report which is
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN 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 COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH
INFORMATION IS FURNISHED.
-----------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary..........................S-2
Use of Proceeds........................................S-6
Capitalization.........................................S-6
Description of Series A Preferred Shares...............S-7
Certain Federal Income Tax Considerations.............S-10
Underwriting..........................................S-16
Legal Matters.........................................S-17
Experts...............................................S-17
PROSPECTUS
Available Information....................................2
Incorporation of Certain Documents by Reference..........2
The Company..............................................3
Use of Proceeds..........................................3
Certain Ratios...........................................4
Description of Debt Securities...........................4
Description of Preferred Shares.........................16
Description of Common Shares............................22
Description of Securities Warrants......................23
Plan of Distribution....................................25
Legal Opinions..........................................26
Experts.................................................26
3,000,000 SHARES
WEINGARTEN REALTY
INVESTORS
7.44 % Series A Cumulative
Redeemable Preferred Shares
---------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
February 19, 1998
