<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 10, 1998)
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-51843
2,300,000 Shares
[WEINGARTEN REALTY INVESTORS LOGO APPEARS HERE]
Weingarten Realty Investors
7.00% Series C Cumulative Redeemable Preferred Shares
(Liquidation Preference $50.00 per Share)
----------------
Weingarten Realty Investors is a real estate investment trust 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. We are offering to the public our Series C Preferred Shares. The
principal terms of the Series C Preferred Shares are:
. We will pay cumulative dividends from the date of original issuance, in
the amount of $3.50 per share per year (equivalent to 7.00% of the $50.00
liquidation preference).
. We will pay dividends quarterly, beginning on March 15, 1999.
. We are not allowed to redeem the shares before March 15, 2004.
. On and after March 15, 2004, we may redeem the shares, from the proceeds
of an offering of our capital shares, by paying the holder $50.00 per
share, plus any accrued and unpaid dividends through the date of such
redemption.
. Upon the death of a shareholder, the shareholder's estate has a limited
right to have us redeem shares owned by the shareholder.
. The shares have no maturity date and will remain outstanding indefinitely
unless redeemed. The shares are not convertible into any other of our
securities.
. Holders of the shares generally have no voting rights, except if we fail
to pay dividends for six quarters.
. An application has been made to list the shares on the New York Stock
Exchange.
<TABLE>
<CAPTION>
Per Share Total
<S> <C> <C>
Price to Investor.................................. $50.000 $115,000,000
Underwriting Discount.............................. $1.575 $3,622,500
Proceeds to Company................................ $48.425 $111,377,500
</TABLE>
----------------
This offering is being underwritten by Edward D. Jones & Co., L.P. on a firm
commitment basis, which means that it must purchase all of the Series C
Preferred Shares if any are purchased. The underwriter's purchase of the
Series C Preferred Shares is subject to a number of conditions.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus Supplement or the Prospectus to which
it relates. Any representation to the contrary is a criminal offense.
----------------
Edward D. Jones & Co., L.P.
----------------
The date of this Prospectus Supplement is January 14, 1999.
<PAGE>
ABOUT THIS PROSPECTUS SUPPLEMENT DIVIDENDS
You should read this Prospectus If you purchase the Series C
Supplement along with the Preferred Shares, you are entitled to
Prospectus that follows. Both receive cumulative cash dividends at
documents and the documents an annual rate of 7.00% of the
incorporated in them by reference liquidation preference (equivalent to
contain information you should $3.50 per share). Dividends will
consider when making your accumulate from the date we issue the
investment decision. You should shares and will be paid quarterly in
rely only on the information arrears on March 15, June 15,
provided or incorporated by September 15 and December 15, of each
reference in the Prospectus year, beginning March 15, 1999.
Supplement and the Prospectus.
We have not authorized anyone USE OF PROCEEDS
else to provide you with
different information. We are The company plans to use the net
not making an offer of the Series proceeds to repay debt, acquire and
C Preferred Shares in any state develop properties and for other
where the offer is not permitted. corporate purposes.
You should not assume that the
information in this Prospectus RANKING
Supplement or the Prospectus is
accurate as of any date other With respect to the payment of
than the date on the front of dividends and payments upon
these documents. liquidation, the Series C Preferred
Shares will rank equally with any
SUMMARY other preferred shares which are not
by their terms junior to the Series C
The following information Preferred Shares and will rank senior
supplements, and should be read to our common shares and any other
in conjunction with, the shares which by their terms rank
information contained in this junior to the shares offered hereby.
Prospectus Supplement and in the
accompanying Prospectus. This As of December 31, 1998, there were
summary may not contain all of 3,000,000 Series A Preferred Shares
the information that is important outstanding with an aggregate
to you. To understand this liquidation value of $75,000,000, and
offering fully, you should read 3,600,000 Series B Preferred Shares
the entire Prospectus Supplement outstanding with an aggregate
and the accompanying Prospectus, liquidation value of $90,000,000
including the documents which will rank equally with the
incorporated by reference into Series C Preferred Shares.
the Prospectus, carefully.
THE COMPANY LIQUIDATION RIGHTS
The company is a real estate The Series C Preferred Shares will
investment trust ("REIT") based have a liquidation preference of
in Houston, Texas. The company $50.00 per share, plus an amount
develops, acquires and owns equal to accrued and unpaid dividends.
anchored neighborhood community
shopping centers. To a lesser REDEMPTION AT OUR OPTION
degree, we develop, acquire and
own industrial real estate. We We may redeem some or all of the
have engaged in these activities Series C Preferred Shares at any time
since 1948. after March 15, 2004 solely from the
proceeds of an offering of our
As of December 31, 1998, we owned capital shares. No other source of
or had an equity interest in 217 funds may be used to redeem the
operating properties consisting shares.
of 26.0 million square feet of
building area. These properties LIMITED RIGHT OF REDEMPTION UPON
consist of 179 shopping centers DEATH OF SHAREHOLDER
generally in the 100,000 to
400,000 square foot range, 37
industrial projects and one
office building. Our properties
are located in Texas (162
properties) and the following
states: Louisiana (11), Arizona
(10), Nevada (7), Arkansas (6),
New Mexico (5), Oklahoma (4),
Tennessee (4), Kansas (3),
Colorado (2), Missouri (1),
Illinois (1) and Maine (1). Our
shopping centers are anchored
primarily by supermarkets,
drugstores and other retailers that
sell basic necessity-type items. We
currently lease to approximately
2,500 different tenants under 3,300
separate leases. For the nine-month
period ended September 30, 1998, no
single tenant represented more than
3.2% of our revenues. On September
30, 1998, our properties were 93.1%
occupied.
We must redeem Series C Preferred limitations on the total amount of
Shares tendered by estates of Series C Preferred Shares that may
deceased shareholders at a price be redeemed from all estates in
of $50.00 per share. We will any year. We may make the estate
not, however, redeem in any redemptions in cash or in our
12-month period more than 500 common shares. See "Description of
shares of Series C Preferred the Series C Preferred Shares--
Shares from any one estate. Limited Right of Redemption Upon
There are also Death of a Shareholder By the
Estate of the Shareholder"
beginning on page S-8.
S-2
<PAGE>
CONVERSION LIMITED VOTING RIGHTS
The Series C Preferred Shares are As a holder of Series C Preferred
not convertible or exchangeable Shares, you will have voting rights
for any other property or only under certain conditions. If we
securities of the company. fail to pay dividends to you for six
or more quarterly periods, the
OWNERSHIP LIMITS holders of the Series C Preferred
Shares (together with any other
Ownership by a person or certain preferred shareholders who have the
groups of persons of more than same voting rights) may elect two
9.8% of our outstanding common additional trust managers to serve on
and preferred shares together is our board of trust managers. They
restricted in order to insure will serve on the board until all
that we preserve our status as a dividends in arrears have been paid.
REIT for federal income tax
purposes. BOOK ENTRY
The Series C Preferred Shares will
TRADING be represented by a global security
that will be deposited with and
An application has been made to registered in the name of The
list the Series C Preferred Depository Trust Company, New York,
Shares for trading on the New New York. This means you will not
York Stock Exchange upon official receive a certificate for the Series
notice of issuance. Trading on Preferred Shares.
the New York Stock Exchange is
expected to commence within five
days of the initial delivery of
the Series C Preferred Shares
under the symbol "WRI PrC".
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED SHARE DIVIDENDS
The following table sets forth the
ratio of earnings to combined
fixed charges and preferred share
dividends for the periods shown:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed
Charges and Preferred Share Dividends............... 2.32x 2.96x 2.30x 2.78x
Ratio of Funds From Operations before
Interest Expense to Combined Fixed
Charges and Preferred Share Dividends............... 3.28x 3.76x 3.35x 3.86x
</TABLE>
The ratios of earnings to combined
fixed charges and preferred share For these purposes, earnings consist
dividends were computed by of income before extraordinary items
dividing earnings by the sum of plus fixed charges (excluding
fixed charges and preferred share interest costs capitalized) and
dividends. The ratios of funds preferred dividends. Funds from
from operations before interest operations before interest expense
expense to combined fixed charges consists of net income plus
and preferred share dividends depreciation and amortization of real
were computed by dividing funds estate assets, interest on
from operations before interest indebtedness and extraordinary
expense by the sum of fixed charges, less gains and losses on
charges and preferred share sales of properties and securities.
dividends.
S-3
<PAGE>
SUMMARY FINANCIAL DATA
The following summary is a
selection of certain financial financial statements contained in our
information of the company. This Quarterly Report on Form 10-Q for the
information is taken from and quarter ended September 30, 1998.
should be read along with our See "Available Information" in the
audited financial statements Prospectus. The following table
contained in our most recent presents selected unaudited financial
Annual Report on Form 10-K for data of the company as of and for the
the year ended December 31, 1997 three months and the nine months
and our unaudited consolidated ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
___________________ ____________________
1998 1997 1998 1997
_______ _______ ________ ________
OPERATING DATA (Dollars in thousands except per share amounts)
(Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Rentals....................................................... $46,169 $42,600 $143,192 $124,480
Interest:
Securities and Other..................................... 65 249 143 800
Affiliates............................................... 356 364 1,040 1,095
Equity in earnings of real estate joint ventures and 89 266 275 769
partnerships.........................................
Other........................................................ 276 521 1,075 1,372
_______ _______ ________ ________
Total................................................ 49,955 44,000 145,725 128,516
_______ _______ ________ ________
Expenses:
Depreciation and amortization................................ 10,493 9,450 30,798 28,191
Interest..................................................... 8,479 7,588 24,899 21,729
Operating.................................................... 7,439 6,625 21,727 19,337
Ad valorem taxes............................................. 6,530 5,618 18,588 16,479
General and administrative................................... 1,662 1,381 5,058 4,013
_______ _______ ________ ________
Total................................................ 34,603 30,662 101,070 89,749
_______ _______ ________ ________
Income from Operations........................................... 15,352 13,338 44,655 38,767
Gain (loss) on sales of property................................. 347 2,839 417 2,941
Extraordinary Charge (early retirement of debt).................. (1,392)
_______ _______ ________ ________
Net Income....................................................... 15,699 16,177 43,680 41,708
Dividends on Preferred Shares.................................... 1,395 3,364
_______ _______ ________ ________
Net Income Available to Common Shareholders...................... $14,304 $16,177 $ 40,316 $ 41,708
======= ======= ======== ========
Funds from Operations/1/......................................... $24,363 $22,683 $71,810 $ 66,643
======= ======= ======= ========
Net Cash Provided by Operating Activities........................ $63,595 $58,668
======= =======
Net Income Per Common Share - Basic.............................. $ .54 $ .61 $ 1.51 $ 1.57
Net Income Per Common Share - Diluted........................... $ .53 $ .60 $ 1.50 $ 1.56
Cash Dividends Declared Per Common Share......................... $ .67 $ .64 $ 2.01 $ 1.92
BALANCE SHEET DATA September 30, December 31,
1998 1997
--------- ----------
Real Estate, before accumulated depreciation................................... $1,227,530 $1,118,758
Total Real Estate Assets....................................................... 941,949 859,031
Total Assets................................................................... 1,025,252 946,793
Total Debt..................................................................... 529,356 507,366
Shareholders' Equity........................................................... 449,649 389,986
</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-4
<PAGE>
USE OF PROCEEDS
We estimate that we will receive net proceeds from the sale of the Series C
Preferred Shares of approximately $111.2 million after all issuance costs. We
will use the net proceeds to invest in short-term interest-bearing securities in
amounts sufficient to provide for the retirement of $82 million of variable-rate
unsecured notes on or before their maturity in August 2000. The remaining
proceeds will be used to acquire and develop properties and for general working
capital purposes.
CAPITALIZATION
The following table sets forth the capitalization of the company at September
30, 1998 and as adjusted to reflect: (a) the issuance of the Series C Preferred
Shares and the application of the estimated net proceeds therefrom and (b)
certain events that occurred subsequent to September 30, 1998, including the
issuance of $90 million Series B Preferred Shares on October 28, 1998. The net
proceeds of $87.0 million were used to pay down amounts outstanding under the
company's revolving credit facilities and to fund acquisition and new
development activity in the fourth quarter of 1998. See "Use of Proceeds."
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE)
SEPTEMBER 30, AS
1998 ADJUSTED
------------- --------
DEBT:
<S> <C> <C>
Fixed-Rate Debt Payable to 2015 at 6.0% to 10.5% $402,900 $402,900
Variable-Rate Debt (1)(2):
Revolving Credit Agreements 24,590 --
Unsecured Notes Payable 82,000 82,000(3)
Industrial Revenue Bonds to 2015 6,290 6,290
Obligations Under Capital Leases 12,467 12,467
Other Debt 1,109 1,109
-------- ----------
Total Debt 529,356 504,766
-------- ----------
SHAREHOLDERS' EQUITY:
Preferred Shares $0.03 par value: authorized 10,000,000;
7.00% Series C Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $50.00 per share,
no shares issued and outstanding (2,300,000 as adjusted) 69
7.125% Series B Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25.00 per share,
no shares issued and outstanding (3,600,000 as adjusted) 108
7.44% Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25.00 per share,
3,000,000 shares issued and outstanding 90 90
Common Shares, $0.03 par value: authorized - 150,000,000; 800 800
Outstanding - 26,666,501
Capital Surplus 448,759 646,785
-------- ----------
Total Shareholders' Equity 449,649 647,852
-------- ----------
Total Capitalization $979,005 $1,152,618
-------- ----------
</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 4.1% to 6.5% at September 30, 1998.
(3) As noted in "Use of Proceeds," the $82 million of variable-rate unsecured
notes will not be retired at the closing of the sale of the Series C
Preferred Shares, but will be retired on or before their maturity in August
2000.
S-5
<PAGE>
DESCRIPTION OF THE SERIES C PREFERRED SHARES
This description of the particular terms of the Series C 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
We are authorized to issue up to 10,000,000 preferred shares, $.03 par value
per share, in one or more series, with such terms, powers, preferences and
rights of such series and the qualifications, limitations or restrictions as
Texas law and our board of trust managers may determine by adoption of a
resolution, without any vote or action by the shareholders. See "Description of
Preferred Shares -- Terms" in the accompanying Prospectus. The Series C
Preferred Shares is a series of our preferred shares.
Prior to the completion of the offering of the Series C Preferred Shares, our
trust managers will adopt a resolution specifying the terms of a series of
preferred shares consisting of 2,300,000 shares, designated 7.00% Series C
Cumulative Redeemable Preferred Shares. The following summary of the terms and
provisions of the Series C Preferred Shares does not purport to be complete and
is qualified in its entirety by reference to the pertinent sections of the
resolution designating the preferred shares, which is available from us.
The transfer agent and dividends disbursing agent for the Series C Preferred
Shares will be ChaseMellon Shareholder Services, L.L.C.
SERIES A PREFERRED SHARES
We currently have outstanding 3,000,000 shares of 7.44% Series A Cumulative
Redeemable Preferred Shares. Holders of the shares of the Series A Preferred
Shares are entitled to receive, when and as declared by the trust managers, out
of funds legally available for the payment of dividends, cumulative cash
dividends at the rate of 7.44% per annum of their $25.00 liquidation preference
(equivalent to a fixed annual rate of $1.86 per share). Such dividends are
cumulative from the date of original issue and are payable quarterly in arrears
on or before the last day of each March, June, September and December or, if not
a business day, the next business day. The Series A Preferred Shares are not
redeemable prior to March 31, 2003. On and after March 31, 2003, we may, at our
option, on no less than 30 nor more than 60 days prior written notice, redeem
the Series A Preferred Shares, in whole or in part, at any time or from time to
time, for cash at a redemption price of $25.00 per share, plus all accrued and
unpaid dividends thereon to the date fixed for redemption. Except with respect
to the foregoing description of the dividend rate and the redemption date of the
Series A Preferred Shares and the redemption rights upon the death of a holder
of Series B Preferred Shares or Series C Preferred Shares, the terms of the
Series A Preferred Shares are substantially identical to the terms of the Series
B Preferred Shares and the Series C Preferred Shares. The Series A Preferred
Shares will rank on parity with the Series B Preferred Shares and the Series C
Preferred Shares with respect to the payment of dividends and payments upon
liquidation.
SERIES B PREFERRED SHARES
We currently have outstanding 3,600,000 shares of 7.125% Series B Cumulative
Redeemable Preferred Shares. Holders of the shares of the Series B Preferred
Shares are entitled to receive, when and as declared by the trust managers, out
of funds legally available for the payment of dividends, cumulative cash
dividends at the rate of 7.125% per annum of their $25.00 liquidation preference
(equivalent to a fixed annual rate of $1.7812 per share). Such dividends are
cumulative from the date of original issue and are payable quarterly in arrears
on or before the fifteenth day of each March, June, September and December or,
if not a business day, the next business day. The Series B Preferred Shares are
not redeemable prior to October 20, 2003. On or after October 20, 2003, we may,
at our option, on no less than 30 nor more than 60 days' prior written notice,
redeem the Series B 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 all
accrued and unpaid dividends thereon to the date fixed for redemption. Except
with respect to the foregoing description of the dividend rate and the
redemption date of the Series B Preferred Shares, the terms of the Series B
Preferred Shares are substantially identical to the terms of the Series C
Preferred Shares. The Series B Preferred Shares will rank on parity with the
Series A Preferred Shares and the Series C Preferred Shares with respect to the
payment of dividends and payments upon liquidation.
S-6
<PAGE>
DIVIDENDS
Holders of the Series C Preferred Shares shall be entitled to receive, when
and as authorized by our board of trust managers, out of funds legally available
for the payment of dividends, cumulative cash dividends at the rate of 7.00% of
the liquidation preference per annum (equivalent to $3.50 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 the 15th day of each March, June,
September, and December or, if not a business day, the next business day. The
first dividend on the Series C Preferred Shares will be paid on March 15, 1999.
Any dividend payable on the Series C 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
our share records at the close of business on the applicable record date
designated by the board of trust managers for the payment of dividends that is
not more than 30 nor less than 10 days prior to such dividend payment date. The
Series C Preferred Shares will rank on parity with the Series A Preferred Shares
and the Series B Preferred Shares with respect to the payment of dividends.
No dividends on the Series C Preferred Shares will be authorized by the board
of trust managers or be paid or set apart for payment by the company at such
time as the terms and provisions of any of our agreements, including any
agreement relating to our indebtedness, prohibit such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach of such agreement or a
default thereunder, or if such authorization or payment shall be restricted or
prohibited by law.
Notwithstanding the foregoing, dividends on the Series C 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 C
Preferred Shares will not bear interest and holders of the Series C 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.
Any dividend payment made on the Series C Preferred Shares shall first be
credited against the earliest accrued but unpaid dividend due with respect to
such shares which remains payable.
LIQUIDATION PREFERENCE
If we liquidate, dissolve or wind up our affairs, you will be entitled to be
paid out of our assets legally available for distribution to our shareholders,
liquidating distributions in cash or property (at its fair market value as
determined by our board of trust managers) in the amount of a liquidation
preference of $50.00 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 our common shares or any other
capital shares that rank junior to the Series C 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 C Preferred
Shares will have no right or claim to any of our remaining assets. If we
consolidate or merge with or into any other entity or we sell, lease, transfer
or convey all of our property or business, we shall not be deemed to have been
liquidated, dissolved or wound up. For further information regarding the rights
of the holders of Series C Preferred Shares upon the liquidation, dissolution or
winding up of the company, see "Description of Preferred Shares -- Liquidation
Preference" in the accompanying Prospectus. The Series C Preferred Shares will
rank on parity with the Series A Preferred Shares and the Series B Preferred
Shares with respect to payments upon liquidation.
REDEMPTION BY THE COMPANY
The Series C Preferred Shares are not redeemable prior to March 15, 2004. On
and after March 15, 2004, at our option upon not less than 30 nor more than 60
days' prior written notice, we may redeem the Series C Preferred Shares, in
whole or in part, at any time or from time to time, in cash at a redemption
price of $50.00 per share, plus accrued and unpaid dividends thereon to the date
fixed for redemption (except as provided below), without interest, to the extent
we will have funds legally available therefor. The redemption price of the
Series C 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 C 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 C
Preferred Shares has been given and if we have set aside the funds necessary for
such redemption for the benefit of the holders of any Series C Preferred Shares
so called for redemption, then from and after the redemption date dividends will
cease to accrue on such Series C 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 C Preferred Shares are to be redeemed, the
S-7
<PAGE>
Series C Preferred Shares to be redeemed shall be selected first, on the basis
of pending redemption requests due to the death of shareholders and, second, pro
rata (as nearly as may be practicable without creating fractional Series C
Preferred Shares) or by any other equitable method determined by the company.
See "Description of Preferred Shares -- Redemption" in the accompanying
Prospectus.
We will give notice of redemption 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 us will be mailed by the
transfer agent, 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
C Preferred Shares to be redeemed at their respective addresses as they appear
on the transfer agent's share transfer records. No failure to give such notice
or any defect therein or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any Series C Preferred Shares except as to the
holder to whom notice was defective or not given. Each notice shall state: (1)
the redemption date; (2) the redemption price; (3) the number of Series C
Preferred Shares to be redeemed; (4) the place or places where the Series C
Preferred Shares are to be surrendered for payment of the redemption price; and
(5) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. If fewer than all the Series C Preferred Shares held by any
holder are to be redeemed, the notice mailed to such holder shall also specify
the number of Series C Preferred Shares to be redeemed from such holder.
The holders of Series C 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 C Preferred Shares on the corresponding dividend payment
date notwithstanding the redemption thereof between such dividend record date
and the corresponding dividend payment date or our default in the payment of the
dividend due. Except as provided above, we will make no payment or allowance for
unpaid dividends, whether or not in arrears, on Series C Preferred Shares to be
redeemed.
The Series C 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 Ownership and Transfer" below).
LIMITED RIGHT OF REDEMPTION UPON DEATH OF A SHAREHOLDER BY THE ESTATE OF THE
SHAREHOLDER
On March 15, June 15, September 15 and December 15 of each year commencing
March 15, 1999, we will, upon the death of any registered owner of the Series C
Preferred Shares, redeem such shares held by such registered owner upon
presentation of the documentation described below by such registered owner's
personal representative or surviving joint tenant(s). Our obligation to redeem
the shares is subject to the following limitations:
. We will only redeem 500 shares per owner per year.
. During the first ten years, in any one year, we will only redeem up to
69,000 shares.
. During years 11 through 20, in any one year, we will only redeem up to
46,000 shares.
. After year 20, we will only redeem up to 23,000 shares each year.
. The above yearly redemption limitations are cumulative. The difference,
if any, between that year's redemption limitation and the amount
actually redeemed in such year will be available for redemption in
later years, subject to an overall redemption limitation of 69,000
shares per year.
. We will redeem shares only four times each year subject to the following
cumulative limitations:
March 15 - up to 17,500 shares
June 15 - up to 34,500 shares
September 15 - up to 51,750 shares
December 15 - up to 69,000 shares
To redeem the shares under these circumstances, our transfer agent must
receive (1) written request for redemption in form satisfactory to the transfer
agent, signed by the personal representative or surviving joint tenant(s) of the
registered owner; (2) the Series C Preferred Shares to be redeemed if
certificated, or if not, notice of the number of shares to be redeemed; (3)
appropriate evidence of death and ownership of such shares at the time of death;
and (4) appropriate evidence of the authority of such personal representative or
surviving joint tenant(s). In order the for Series C Preferred Shares to be
eligible for the redemption on any of the dates listed above, such shares must
be presented for redemption in full compliance with the provisions set forth
above, at least 20 days preceding such dates and must be deemed acceptable by
the transfer agent at least 10 days prior to the applicable redemption date.
Any shares not redeemed in any period because of the aggregate limitations
described above or the individual limitations described above will be
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held for redemption in subsequent periods until redeemed. Redemption requests
will be prioritized on a first-come, first-served basis.
Any redemption by us may be made either in cash or in our common shares. For
redemptions made in cash, the redemption price will be $50.00 per share (plus
accrued and unpaid dividends). If the redemption is made in common shares, we
must notify you that the redemption will be made in common shares at least seven
days prior to the redemption settlement date. For redemptions made in common
shares, the redemption price will be $50.50 per preferred share based on the
closing price of our common shares on the day prior to the redemption settlement
date (plus cash in an amount equal to accrued and unpaid dividends). No
fractional shares of common stock will be issued. In lieu of any fractional
shares, the company will pay cash in an amount equal to the product of such
fraction multiplied by the closing price of one share on the day prior to the
redemption settlement date. In lieu of redeeming shares tendered for
redemption, the company may, at its option, elect to have such shares resold to
the public.
The death of a person, who during his lifetime, was entitled to substantially
all of the beneficial interest of ownership of Series C Preferred Shares will be
deemed the death of a registered owner, regardless of the registered owner, if
such beneficial interest can be established to the satisfaction of the transfer
agent. Such beneficial interest shall be deemed to exist in typical cases of
street name or nominee ownership, ownership under the Uniform Transfers to
Minors Act or similar statute, community property or other joint ownership
arrangements between husband and wife, and certain other arrangements where one
person has substantially all of the beneficial ownership interest in the Series
C Preferred Shares during his lifetime. In the case of Series C Preferred
Shares registered in the name of banks, trust companies or broker-dealers who
are members of a national securities exchange or the National Association of
Securities Dealers, Inc. ("Qualified Institutions"), the redemption limitations
described above apply to each beneficial owner of Series C Preferred Shares held
by any Qualified Institution. In connection with the redemption request, each
Qualified Institution must submit evidence, satisfactory to the transfer agent,
that it holds the Series C Preferred Shares subject to request on behalf of such
beneficial owner and must certify the aggregate amount of redemption requests
made on behalf of such beneficial owner.
In the case of a redemption request which is presented on behalf of a
deceased beneficial owner and which has not been fulfilled at the time we give
notice of our election to redeem the Series C Preferred Shares, the shares which
are the subject of such pending redemption request shall be redeemed prior to
any other Series C Preferred Shares.
Any redemption request may be withdrawn upon delivery of a written request
for such withdrawal given to the transfer agent at least 10 days prior to
payment for redemption of the shares by reason of the death of a beneficial
owner. Any party withdrawing its redemption request will forfeit its right to
require the company to redeem the Series C Preferred Shares upon the death of a
shareholder.
VOTING RIGHTS
Holders of the Series C Preferred Shares will not have any voting rights,
except as set forth below or as otherwise from time to time required by law.
On any matter on which the Series C Preferred Shares are entitled to vote (as
described herein or as may be required by law), including any action by written
consent, each Series C Preferred Share shall be entitled to one vote. With
respect to each Series C 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 C Preferred Shares are in arrears for six or more
quarterly periods, whether or not such quarterly periods are consecutive,
holders of the Series C 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, including the Series A Preferred Shares and the
Series B Preferred Shares)will be entitled to vote for the election of two
additional trust managers to serve on the board of trust managers until all
dividend arrearages have been paid. For further information regarding the voting
rights of the holders of the Series C Preferred Shares, see "Description of
Preferred Shares -- Voting Rights" in the accompanying Prospectus.
CONVERSION
The Series C Preferred Shares are not convertible into or exchangeable for
any other property or securities of the company, except (1) as necessary to
preserve REIT status for federal income tax purposes, or (2) with respect to the
Company's right to redeem Series C Preferred Shares tendered for redemption upon
the death of a shareholder in either cash or common shares.
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RESTRICTIONS ON OWNERSHIP AND TRANSFER
Ownership Limits. Our charter contains certain restrictions on the number of
Series C Preferred Shares that a single shareholder may own. For us to qualify
as a REIT for federal income tax purposes, no more than 50% in value of our
outstanding preferred shares and common shares, in the aggregate, may be owned,
actually and constructively under the applicable constructive ownership
provisions of the Internal Revenue Code of 1986, as amended (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 we elected to be treated as a REIT, our
charter and the designating resolution creating the Series C Preferred Shares
contain restrictions on the acquisition of preferred shares and common shares
intended to ensure compliance with these requirements.
Subject to certain exceptions specified in our charter, 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 into
account the applicable constructive ownership provisions of the Code, more than
9.8% (the "Ownership Limit") of our outstanding equity securities, including the
Series C Preferred Shares. Under the constructive ownership rules, Series C
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 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 the
transfer of which would cause a violation of the Ownership 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.
Any certificates representing Series C Preferred Shares will bear a legend
referring to the restrictions described above.
Our charter provides that the ownership of shares is conditioned upon the
owner or prospective owner having provided us, upon reasonable request,
definitive written information respecting his or her ownership of shares.
BOOK ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Series C Preferred Shares will be represented by one global security that
will be deposited with and registered in the name of The Depositary Trust
Company ("DTC") or its nominee. This means that we will not issue certificates
to you for the shares. One global security will be issued to DTC who will keep
a computerized record of its participants (for example, your broker) whose
clients have purchased the shares. Each participant will then keep a record of
its clients. Unless it is exchanged in whole or in part for a certificated
security, a global security may not be transferred. However, DTC, its nominees,
and their successors may transfer a global security as a whole to one another.
Beneficial interests in the global security will be shown on, and transfers of
the global security will be made only through, records maintained by DTC and its
participants.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the United States Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered under the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants (direct
participants) deposit with DTC. DTC also records the settlement among direct
participants of securities transactions, such as transfers and pledges, in
deposited securities through computerized records for direct participant's
accounts. This eliminates the need to exchange certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on
file with the Securities and Exchange Commission.
DTC is owned by a number of its direct participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
When you purchase shares through the DTC system, the purchases must be made
by or through a direct participant, who will receive credit for the shares on
DTC's records. Since you actually own the shares, you are the beneficial owner
and your ownership interest will only be recorded on the direct (or indirect)
participants' records. DTC has no knowledge
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of your individual ownership of the preferred securities. DTC's records only
show the identity of the direct participants and the amount of the shares held
by or through them. You will not receive a written confirmation of your purchase
or sale or any periodic account statement directly from DTC. You will receive
these from your direct (or indirect) participant. Thus the direct (or indirect)
participants are responsible for keeping accurate account of the holdings of
their customers like you.
We will wire dividend payments to DTC's nominee and we will treat DTC's
nominee as the owner of the global security for all purposes. Accordingly, we
will have no direct responsibility or liability to pay amounts due on the global
security to you or any other beneficial owners in the global security.
Any redemption notices will be sent by us directly to DTC, who will in turn
inform the direct participants, who will then contact you as a beneficial
holder.
It is DTC's current practice, upon receipt of any payment of dividends or
liquidation amount, to credit direct participants' accounts on the payment date
based on their holdings of beneficial interests in the global securities as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to direct participants whose accounts are credited
with preferred securities on a record date, by using an omnibus proxy. Payments
by participants to owners of beneficial interests in the global securities, and
voting by participants, will be based on the customary practices between the
participants and owners of beneficial interests, as is the case with the shares
held for the account of customers registered in "street name." However,
payments will be the responsibility of the participants and not of DTC or the
company.
Series C Preferred Shares represented by a global security will be
exchangeable for certificated securities with the same terms in authorized
denominations only if:
. DTC is unwilling or unable to continue as depositary or if DTC ceases to
be clearing agency registered under applicable law and a successor depositary
is not appointed by us within 90 days; or
. We determine not to require all of the shares to be represented by a
global security.
If the book-entry-only system is discontinued, the transfer agent will keep
the registration books for the shares at its corporate office.
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 C Preferred Shares in light of his, her or its individual investment
or tax circumstances; nor does it deal with particular types of holders that are
subject to special treatment under the Code, such as insurance companies,
financial institutions, broker-dealers, tax-exempt organizations, non-U.S.
shareholders (which are shareholders who are not U.S. Shareholders, as defined
under "--Taxation of Taxable U.S. Shareholders"). 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.
REIT QUALIFICATION
GENERAL
If certain detailed conditions imposed by the provisions of the Code are met,
entities such as ours that invest primarily in real estate and that otherwise
would be treated for federal income tax purposes as corporations generally are
not taxed at the corporate level on their "real estate investment trust taxable
income" or net capital gain that is currently distributed to shareholders. This
treatment substantially eliminates the "double taxation" on earnings (i.e., at
both the corporate and shareholder levels) that ordinarily results from the use
of corporations.
We have elected to be taxed as a REIT under the Code and we believe that we
are organized, operated and qualified as a REIT under the Code and we 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. If we fail to qualify as a REIT in any taxable year, we will
be subject to federal income taxation as if we were a domestic corporation, and
our shareholders will be taxed in the same manner as shareholders of ordinary
corporations. In this event, we could be subject to potentially significant tax
liabilities, and the amount of cash available for distribution to shareholders
would
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be reduced and possibly eliminated. We would also not be able, generally, to
elect to be taxed as a REIT for a period of four years following
disqualification.
BUILT-IN GAIN TAX
Under certain circumstances, if we recognize gain on the disposition of an
asset acquired from a C corporation during the ten-year period beginning on the
date of the acquisition, then to the extent of the asset's "built-in gain"
(i.e., the excess of the fair market value of such asset at the time of
acquisition over its then tax basis), we will be subject to tax on such gain at
the highest regular corporate rate applicable, pursuant to Treasury Regulations
not yet promulgated. We would be required to distribute 95% of the excess of
the amount of recognized built-in gain over the amount of tax paid in order to
maintain our qualification as a REIT. The foregoing assumes that we make an
election pursuant to IRS Notice 88-19 with respect to the acquisition. We
intend to generally make the election pursuant to the IRS Notice 88-19 if such
election is available.
INCOME TESTS
In general, in order to qualify as a REIT, we must derive at least 95% of our
gross income from real estate sources and certain passive investments, and
derive at least 75% of our gross income from real estate sources. Rent derived
from leases will be qualifying income under the REIT requirements, provided
several requirements are satisfied. Among other requirements, a lease may not
have the effect of giving us a share of the net income of the lessee, and the
amount of personal property leased under the lease must not exceed a defined
threshold. In addition, all leases must also qualify as "true" leases for
federal income tax purposes (as opposed to service contracts, joint ventures and
other types of arrangements). We (excluding certain corporate subsidiaries)
also may not provide services, other than customary services and de minimis non-
customary services, to lessees or their subtenants.
Payments under a lease will not constitute qualifying income for purposes of
the REIT requirements if we own, directly or indirectly, 10% or more of the
ownership interests in the relevant lessee. Constructive ownership rules apply,
such that, for instance, we are deemed to own the assets of shareholders who own
10% or more in value of our shares. Our charter is designed to prevent a
shareholder from owning common shares that would cause us to own, actually or
constructively, 10% or more of the ownership interests in a lessee. Thus, we
should never own, actually or constructively, 10% or more of a lessee. However,
no absolute assurance can be given that transfers, or other events of which we
have no knowledge, will not cause us to own constructively 10% or more of one or
more lessees at some future date.
ASSET TESTS
The REIT requirements limit the value of the non-real estate assets we may
hold. The asset tests also prevent us from holding 10% or more of the voting
securities of a corporate issuer (other than certain wholly-owned corporate
subsidiaries), or from investing more than 5% of our assets in securities of any
corporate issuer (other than certain wholly-owned corporate subsidiaries). The
asset tests must be satisfied at the close of each quarter (or, to the extent
not satisfied at the close of the quarter, within the 30-day period following
the close of the quarter). There can be no assurance that the Internal Revenue
Service ("IRS") will not challenge our compliance with these tests. If we hold
assets in violation of applicable limits, we would be disqualified as a REIT.
OTHER RESTRICTIONS
In addition to the considerations discussed above, the REIT requirements
impose a number of other restrictions on our operations. For example, net
income from sales of property sold to customers in the ordinary course of
business (other than inventory acquired by reason of certain foreclosures) is
subject to a 100% tax unless eligible for a certain safe harbor. Minimum
distribution requirements also generally require us to distribute each year at
least 95% of our taxable income for the year (excluding any net capital gain).
FAILURE TO QUALIFY
If we fail to qualify for taxation as a REIT in any taxable year and certain
relief provisions do not apply, we will be subject to tax (including any
applicable alternative minimum tax) on our 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 C Preferred Shares.
Distributions to shareholders in any year in which we fail to qualify as a REIT
will not be deductible by us 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 we are entitled to
relief under specific statutory provisions, we 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
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circumstances the company would be entitled to such statutory relief. For
example, if we fail to satisfy the gross income tests because nonqualifying
income that we intentionally receive exceeds the limit on such income, the IRS
could conclude that our failure to satisfy the tests was not due to reasonable
cause, and thus, that we are not entitled to such statutory relief.
TAXATION OF TAXABLE U.S. SHAREHOLDERS
As used herein, the term "U.S. Shareholder" means a holder of our shares
that for United States federal income tax purposes (A) is (1) a citizen or
resident of the United States; (2) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof; (3) an estate or trust, the income of which is subject to
United States federal income taxation regardless of its source; or (4) a trust,
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust and (B) is not an
entity that has a special status under the Code (such as an insurance company, a
financial institution, a tax-exempt organization or a dealer in securities).
As long as the company qualifies as a REIT, distributions made to taxable
U.S. Shareholders 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 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 C
Preferred Shares (and the Series A Preferred Shares and the Series B Preferred
Shares) and then to distributions with respect to our common shares. Subject to
the discussion below regarding changes to the capital gain rates, distributions
that are designated as capital gain dividends will be taxed as long-term capital
gains (to the extent they do not exceed our actual net capital gain for the
taxable year) without regard to the period for which the shareholder has held
his or her Series C Preferred Shares. However, corporate shareholders may be
required to treat up to 20% of certain capital gain dividends as ordinary
income. Distributions in excess of current and accumulated earnings and profits
will not be taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's Series C Preferred Shares, but rather will
reduce the adjusted basis of such Series C Preferred Shares. To the extent that
such distributions in excess of current and accumulated earnings and profits
exceed the adjusted basis of a shareholder's Series C Preferred Shares, such
distributions will be included in income as long-term capital gain (or short-
term capital gain if the Series C Preferred Shares have been held for one year
or less), assuming the Series C Preferred Shares are a capital asset in the
hands of the shareholder. In addition, any distribution we declare in October,
November or December of any year and payable to a shareholder of record on a
specified date in any such month shall be treated as both paid by the payor and
received by the shareholder on December 31 of such year, provided that the
distribution is actually paid by us during January of the following calendar
year.
We may retain and pay income tax on our net long-term capital gains
recognized during the taxable year. If we so elect for a taxable year,
shareholders would include in income as capital gain their proportionate share
of such portion of our net capital gains as we may designate. Such retained
capital gains may be further designated by us as 20% rate gain or unrecaptured
Section 1250 gain, as discussed below. Shareholders must account for their
share of such retained capital gains in accordance with such further
designation. A shareholder would be deemed to have paid its share of the tax
paid by us, which would be credited or refunded to the shareholder. The
shareholder's basis in its shares would be increased by the amount of
undistributed capital gains (less the capital gains tax paid by us) included in
the shareholder's capital gains.
Shareholders may not include in their individual income tax returns any of
our net operating losses or capital losses. Instead, such losses would be
carried over by us for potential offset against 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, 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 shareholder so elects,
in which case such capital gains will be taxed at ordinary income rates. We
will notify shareholders after the close of our taxable year as to the portions
of the distributions attributable to that year that constitute ordinary income,
return of capital and capital gain.
The Internal Revenue Service Restructuring Reform Act of 1998 (the "1998
Act") altered the taxation of capital gain income. Under the 1998 Act,
individuals, trust and estates that hold certain investments for more than one
year may be taxed, generally, at a maximum long-term capital gain rate of 20% on
the sale or exchange of those investments. The Taxpayer Relief Act of 1997 (the
"Relief Act") also provided for a maximum rate of 25% for "unrecaptured Section
1250 gain" for individuals, trusts and estates, special rules for "qualified 5-
year gain," as well as other changes to prior law. The Relief Act allows the
IRS to prescribe regulations on how the Relief Act's new capital gain rates will
apply to sales of capital assets by (or interests in) "pass-thru entities,"
including REITs such as the company. In general, IRS Notice 97-64 provides that
a REIT must determine the maximum amounts which may be designated in each class
of capital gain
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dividends as if the REIT were an individual whose ordinary income is subject to
a marginal tax rate of at least 28%. Similar rules will apply in the case of
designated retained capital gains (see above discussion). We will notify
shareholders after the close of our taxable year as to the portions of the
distributions attributable to that year that constitute ordinary income, return
of capital, and capital gain (and, with respect to capital gain dividends, the
portions constituting 20% rate gain distributions and unrecaptured Section 1250
gain distributions). We also will notify shareholders of the amounts of any
designated retained capital gains (including the amounts thereof constituting
20% rate gain and unrecaptured Section 1250 gain) and our taxes with respect to
any designated retained capital gains. Final regulations when issued may alter
the current IRS administrative pronouncements. In addition, the IRS has not
prescribed regulations regarding the application of the new rates to the sale of
shares in REITs such as the company, and it remains unclear how the new rules
will affect such sales (if at all). Investors are urged to consult their own tax
advisors with respect to the rules contained in the Relief Act.
TAXATION OF U.S. SHAREHOLDERS ON THE DISPOSITION OF THE SERIES C PREFERRED
SHARES
In general, any gain or loss realized upon a taxable disposition of the
Series C Preferred Shares by a 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 Series C Preferred Shares that are sold. See "-- Taxation of
Taxable U.S. Shareholders" above. Generally, a shareholder who disposes of
Series C Preferred Shares held less than 12 months will be taxed at ordinary
income rates. However, any loss upon a sale or exchange by a shareholder who
has held such Series C Preferred 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
shareholder as long-term capital gain. All or a portion of any loss realized
upon a taxable disposition of the Series C Preferred Shares may be disallowed if
other shares of the company 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.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
We will report to our 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 shareholder may be subject to backup
withholding at the rate of 31% with respect to distributions paid unless such
holder (1) is a United States corporation or comes within certain other exempt
categories and, when required, demonstrates this fact or (2) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with the applicable requirements of the
backup withholding rules. A shareholder who does not provide us with his, her
or its 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 shareholder's income tax liability. In addition, we may be required
to withhold a portion of capital gain distributions to any shareholders who fail
to certify to us their nonforeign status.
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"). Amounts distributed by us
to Exempt Organizations generally should not constitute UBTI. However, if an
Exempt Organization holds its shares as "debt financed property" within the
meaning of the Code or uses its shares in a trade or business, all or a portion
of its income from distributions on such shares will constitute UBTI.
Similarly, income from the sale of Series C Preferred Shares should not
constitute UBTI unless the Exempt Organization has held such Series C Preferred
Shares as "debt financed property" within the meaning of the Code or has used
the Series C Preferred Shares in a trade or business. However, social clubs,
voluntary employee benefit associations, 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 us as UBTI.
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REDEMPTION OF SERIES C PREFERRED SHARES
The treatment to be accorded to any redemption by us of Series C Preferred
Shares can only be determined on the basis of particular facts as to each holder
of Series C Preferred Shares at the time of redemption. In general, a holder of
Series C Preferred Shares will recognize capital gain or loss (provided the
Series C 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 C Preferred Shares redeemed if
certain tests under Section 302(b) of the Code are met. If such tests are not
met, the redemption will be treated as a distribution with respect to the Series
C Preferred Shares as described herein-above. Because the determination as to
whether any of the tests of Section 302(b) of the Code will be satisfied with
respect to any particular holder of Series C 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.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement and related
Pricing Agreement (collectively, the "Underwriting Agreement"), the company has
agreed to sell to Edward D. Jones & Co., L.P. (the "Underwriter"), and the
Underwriter has agreed to purchase from the company all of the Series C
Preferred Shares. Under the terms and conditions of the Underwriting Agreement,
the Underwriter is committed to take and pay for all of the Series C Preferred
Shares, if any are taken.
The Underwriter proposes to offer the Series C Preferred Shares directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus Supplement. After the Series C Preferred Shares are released
for sale to the public, the offering price and other selling terms may from time
to time be varied by the Underwriter.
The table below shows the underwriting discounts on a per share and aggregate
basis. The proceeds to be received by the company as shown in the table below
do not reflect estimated expenses of $215,000 payable by the company, which
includes $115,000 of expenses as to which the company agreed to reimburse the
Underwriter.
Per Share Total
--------- -----
Price to Investors $50.000 $115,000,000
Underwriting Discounts $1.575 $3,622,500
Proceeds to Company $48.425 $111,377,500
The company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the Underwriter may be required to make in respect
thereof.
In connection with the offering, the Underwriter may purchase and sell the
Series C Preferred Shares in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created in connection with the offering. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or retarding
a decline in the market price of the Series C Preferred Shares, and short
positions involve the sale by the Underwriter of a greater number of securities
than it is required to purchase from the company in the offering. These
activities may stabilize, maintain or otherwise affect the price of the Series C
Preferred Shares, which may be higher than the price that might otherwise
prevail in the open market. These activities, if commenced, may be discontinued
at any time. These transactions may be effected on the New York Stock Exchange,
in the over-the-counter market or otherwise.
An application has been made to list the Series C Preferred Shares for
trading on the New York Stock Exchange ("NYSE") subject to official notice of
issuance. Trading on the NYSE is expected to commence within five days of the
initial delivery of the Series C Preferred Shares. Prior to the offering, there
has been no public market for the Series C Preferred Shares. While the
Underwriter has advised the company that it intends to make a market in the
Series C Preferred Shares prior to commencement of trading on the NYSE, it is
under no obligation to do so, and no assurance can be given that a market for
the Series C Preferred Shares will exist prior to commencement of trading or at
any other time.
S-15
<PAGE>
RATINGS
The Series C Preferred Shares have been rated "a3" by Moody's Investors
Service, Inc. ("Moody's") and "A-" by Standard & Poor's Ratings Services
("S&P"). On October 20, 1998, Moody's confirmed the outstanding ratings of our
senior debt and cumulative preferred shares, as well as the ratings of our
securities issuable under our shelf registration statement; however, at the same
time, Moody's revised its rating outlook to negative, from stable. In its
statement, Moody's also noted that the company "remains one of the premier
owners of neighborhood shopping centers in the USA. The REIT has historically
maintained a conservative balance sheet while successfully expanding its market
leadership beyond its well-established Houston, Texas base. However, the rating
agency noted that the outlook change reflects the company's rising, yet
moderate, leverage in a challenging financial environment, as well as the
potential challenges from new grocery formats, and from grocery retail sector
consolidation among neighborhood shopping center owners."
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. No person is obligated to maintain any rating on the Series C
Preferred Shares, and, accordingly, there can be no assurance that the ratings
assigned to the Series C Preferred Shares upon initial issuance will not be
lowered or withdrawn by the assigning rating organization at any time
thereafter.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Locke Liddell & Sapp LLP,
Dallas, Texas as our securities and tax counsel. Certain matters in connection
with this offering will be passed upon for the Underwriter by Chapman and
Cutler, Chicago, Illinois.
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in the accompanying Prospectus by reference from the
company's Annual Report on Form 10-K for the year ended December 31, 1997 and
the financial statements of Rainbow Plaza Shopping Center for the period January
1, 1997 to October 22, 1997 incorporated in the accompanying Prospectus by
reference from the company's Current Report on Form 8-K dated April 15, 1998
have been audited by Deloitte & Touche LLP, 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.
The financial statements of Coronado Center, Ltd., Eastdale Center, Ltd.,
Mesquite Center, Ltd., and Tempe Valley Plaza, Ltd., in each case including the
balance sheets as of December 31, 1997 and the related statements of income,
venturer's capital and cash flows for each of the three years in the period
ended December 31, 1997, included in the Company's Current Report on Form 8-K
dated April 24, 1998 have been audited by Ernst & Young LLP, independent
auditors, as stated in their reports thereon 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-16
<PAGE>
PROSPECTUS
WEINGARTEN REALTY INVESTORS
$400,000,000
[LOGO] 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 $400,000,000 (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 date of this Prospectus is August 10, 1998.
<PAGE>
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, 1997;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998; and
3. The Company's Current Report on Form 8-K filed with the
Commission on April 24, 1998.
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>
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 July
31, 1998, Trust Managers and executive officers of the Company controlled
3,771,535 Common Shares or approximately 14% of the outstanding Common Shares.
Initially, the Company grew primarily through development of properties,
with 101 of the 200 operating properties owned at March 31, 1998, 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 $1,200,000,000 market value of the Company's equity at
March 31, 1998, the Company's debt represented approximately 29% of its total
market capitalization. The Company's ratio of funds from operations before
interest expense to fixed charges for the quarter ended March 31, 1998 was
approximately 3.6 to 1.0. The Company's ratio of funds from operations before
interest expense to combined fixed charges and preferred share dividends for the
quarter ended March 31, 1998 was 3.5 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.
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,
-------------------------------------
1993 1994 1995 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...... 3.94x 4.16x 3.05x 3.17x 2.70x
Ratio of Funds from Operations Before
Interest Expense to Fixed Charges...... 5.76x 6.18x 4.51x 4.32x 3.77x
</TABLE>
3
<PAGE>
Until February 1998, the Company had not issued Preferred Shares.
Accordingly, the ratios of earnings to combined fixed charges and preferred
share dividends and funds from operations to combined fixed charges and
preferred share dividends are the same as those presented in the 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 Chase Bank of
Texas, National Association (formerly known as 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 Chase Bank of Texas, National Association (formerly
as Texas Commerce Bank National Association), as Trustee. The term "Trustee" as
used herein shall refer to Chase Bank of Texas, National Association (formerly
known as 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 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
4
<PAGE>
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;
(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;
5
<PAGE>
(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).
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
6
<PAGE>
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).
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).
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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).
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
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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.
"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
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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, 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
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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 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
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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
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
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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 March 31, 1998, Senior Debt aggregated
approximately $484 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 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).
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"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).
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
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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.
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
3,000,000 shares of 7.44% Series A Cumulative Redeemable Preferred Shares with a
liquidation preference of $25.00 per share were outstanding at March 31, 1998.
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;
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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 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
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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 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
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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.
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.
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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.
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
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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. Any risk of personal liability to shareholders is
limited to situations in which the Company's assets 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.
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.
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.
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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 March 31, 1998 beneficially owned
approximately 8.1% 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.
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. Thus, any risk of personal liability
to shareholders is limited to situations in which the Company's assets 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 ChaseMellon
Shareholder Services, L.L.C. 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.
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<PAGE>
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 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.
22
<PAGE>
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).
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
23
<PAGE>
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 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 Locke Liddell & Sapp
LLP, 2001 Ross Avenue, Suite 3000, 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, 1997 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
24
<PAGE>
The Statement of Revenue and Certain Expenses of Rainbow Plaza Shopping
Center for the period January 1, 1997 to October 22, 1997, incorporated in this
Prospectus by reference from the Company's Current Report on Form 8-K dated
April 24, 1998 has been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and has
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of Coronado Center, Ltd., Eastdale Center, Ltd.,
Mesquite Center, Ltd., and Tempe Valley Plaza, Ltd., in each case including the
balance sheets as of December 31, 1997 and the related statements of income,
venturer's capital and cash flows for each of the three years in the period
ended December 31, 1997, included in the Company's Current Report on Form 8-K
dated April 24, 1998 have been audited by Ernst & Young LLP, independent
auditors, as stated in their reports thereon 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.
25
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
-----------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<S> <C>
Prospectus Supplement Summary.............................................. S-2
Use of Proceeds............................................................ S-5
Capitalization............................................................. S-5
Description of the Series C Preferred Shares............................... S-6
Certain Federal Income Tax Considerations.................................. S-11
Underwriting............................................................... S-15
Ratings.................................................................... S-16
Legal Matters.............................................................. S-16
Experts.................................................................... S-16
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Certain Ratios............................................................. 3
Description of Debt Securities............................................. 4
Description of Preferred Shares............................................ 15
Description of Common Shares............................................... 20
Description of Securities Warrants......................................... 21
Plan of Distribution....................................................... 23
Legal Opinions............................................................. 24
Experts.................................................................... 24
</TABLE>
2,300,000 Shares
WEINGARTEN REALTY INVESTORS
7.00% SERIES C
CUMULATIVE REDEEMABLE
PREFERRED SHARES
-----------------
PROSPECTUS SUPPLEMENT
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[WEINGARTEN REALTY INVESTORS LOGO APPEARS HERE]
Edward D. Jones & Co., L.P.
January 14, 1999
