<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-61303
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
ARE NOT AN OFFER TO SELL, AND WE ARE NOT SOLICITING ANY OFFERS TO BUY, THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED JANUARY 29, 1999
PROSPECTUS SUPPLEMENT
- ---------------------
(To prospectus dated August 31, 1998)
[KIMCO
REALTY
CORPORATION
LOGO]
$100,000,000
KIMCO REALTY CORPORATION
% SENIOR NOTES DUE 2009
------------------------
Kimco Realty Corporation is a self-administered and self-managed equity
real estate investment trust that is one of the nation's largest publicly-traded
owners and operators of neighborhood and community shopping centers. As of
January 1, 1999, we had interests in 436 properties comprising approximately
57 million square feet of gross leasable area located in 40 states. The
properties include:
o 365 neighborhood and community shopping centers;
o two regional malls;
o 61 retail store leases;
o three parcels of undeveloped land;
o one distribution center;
o one stand-alone retail warehouse; and
o three projects under development.
We are offering $100,000,000 of notes. The notes will bear interest at
% per year and will mature on February , 2009. We will pay interest on
the notes on August and February of each year, beginning August , 1999.
The notes are not redeemable prior to maturity.
The notes will be unsecured and will rank equally with all of our other
unsecured senior indebtedness.
------------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
------------ ----------
<S> <C> <C>
Public Offering Price(1)............................................................... % $
Underwriting Discount.................................................................. % $
Proceeds, before expenses, to Kimco.................................................... % $
</TABLE>
- ------------
(1) Plus accrued interest from February , 1999, if settlement occurs after
that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about February , 1999.
------------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
LEHMAN BROTHERS
------------------------
The date of this prospectus supplement is February , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Forward-looking Information..............................................................................S-3
The Company..............................................................................................S-3
Recent Developments......................................................................................S-4
Use of Proceeds..........................................................................................S-8
Description of Notes.....................................................................................S-8
Ratio of Earnings to Fixed Charges......................................................................S-10
Certain U.S. Federal Income Tax Consequences to Non-United States Holders...............................S-10
Underwriting............................................................................................S-13
Legal Matters...........................................................................................S-14
Experts.................................................................................................S-14
PROSPECTUS
Available Information......................................................................................2
Incorporation of Certain Documents by Reference............................................................2
The Company................................................................................................3
Use of Proceeds............................................................................................3
Description of Debt Securities.............................................................................3
Description of Common Stock...............................................................................15
Description of Common Stock Warrants......................................................................16
Description of Preferred Stock............................................................................17
Description of Depositary Shares..........................................................................23
Ratios of Earnings to Fixed Charges.......................................................................27
Certain Federal Income Tax Considerations to the
Company of its REIT Election............................................................................27
Plan of Distribution......................................................................................33
Experts...................................................................................................34
Legal Matters.............................................................................................34
</TABLE>
---------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different or additional information. If anyone provides you with different
or additional information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the accompanying
prospectus is accurate as of their dates. Our business, financial condition,
results of operations and prospects may have changed since then.
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<PAGE>
FORWARD-LOOKING INFORMATION
Certain statements made or incorporated by reference in this prospectus
supplement and the accompanying prospectus are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. We intend such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 and include this statement for purposes of complying with these safe
harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe our future plans, strategies and expectations, are
generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project" or similar expressions. You should not rely
on forward-looking statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond our control and
which could materially affect our actual results, performance or achievements.
Factors which may cause actual results to differ materially from current
expectations include, but are not limited to, the following:
o general economic and local real estate conditions could change (for example,
our tenants' business may change if the economy changes, which might affect
the amount of rent they pay us or their ability to pay rent to us);
o the laws and regulations that apply to us could change (for instance, a
change in the tax laws that apply to REITs could result in unfavorable tax
treatment for us);
o capital availability (for instance, financing opportunities may not be
available to us, or may not be available to us on favorable terms);
o our operating costs may increase; and
o suitable acquisition opportunities may not be available to us or may not be
available to us on favorable terms.
For purposes of this prospectus supplement, we sometimes refer to ourselves
as "Kimco" or the "Company" and our status as a real estate investment trust as
a "REIT."
THE COMPANY
We began operations through a predecessor in 1966, and today are one of the
nation's largest publicly-traded owners and operators of neighborhood and
community shopping centers (measured by gross leasable area, which we refer to
as "GLA"). As of January 1, 1999, we owned interests in 436 properties,
including:
o 365 neighborhood and community shopping centers;
o two regional malls;
o 61 retail store leases;
o three parcels of undeveloped land;
o one distribution center;
o one stand-alone retail warehouse; and
o three projects under development.
These properties have a total of approximately 57 million square feet of
GLA and are located in 40 states.
As of January 1, 1999, we had interests in 365 neighborhood and community
shopping centers and two regional malls, located in 35 states comprising
approximately 51 million square feet of GLA ("Total Shopping Center GLA").
Neighborhood and community shopping centers are our primary focus, representing
approximately 98% of our Total Shopping Center GLA as of January 1, 1999. As of
January 1, 1999, approximately 90% of our neighborhood and community shopping
center space was leased (if we adjusted this percentage to eliminate the effect
of the remaining vacant locations resulting from our July 1998 acquisition from
Venture Stores, Inc. discussed in "Recent Developments--Venture Stores, Inc.
Transactions," the occupancy percentage would approximate 92%). As of
January 1, 1999, the average annualized base rent per leased square foot of the
neighborhood and community shopping centers was $7.93.
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In addition to our neighborhood and community shopping centers, as of
January 1, 1999, we had interests in retail store leases totaling approximately
5.5 million square feet of anchor stores in 61 neighborhood and community
shopping centers located in 24 states. As of January 1, 1999, approximately 93%
of the space in these anchor stores (if we adjusted this percentage to eliminate
the effect of the remaining vacant locations resulting from our July 1998
acquisition from Venture Stores, Inc. discussed in "Recent Developments--
Venture Stores, Inc. Transactions," the occupancy percentage would approximate
97%) had been sublet to retailers that lease the stores under net lease
agreements providing for average annualized base rental payments to us of $4.14
per square foot. Our average annualized base rental payments under our retail
store leases to the land owners of such subleased stores is approximately $2.75
per square foot. The average remaining primary term of our retail store leases
(and similarly the remaining primary terms of our sublease agreements with the
tenants currently leasing such space) is approximately 4 years, excluding
options to renew the leases for terms which generally range from 5 to 25 years.
We believe that we have operated, and we intend to continue to operate, in
such a manner as to qualify as a REIT under the Internal Revenue Code of 1986,
as amended (the "Code"). We are self-administered and self-managed through
present management, which has owned and managed neighborhood and community
shopping centers for more than 30 years. Our executive officers are engaged in
the day-to-day management and operation of our real estate exclusively, and we
administer nearly all operating functions for our properties, including leasing,
legal, construction, data processing, maintenance, finance and accounting.
Our investment objective is to:
o increase cash flow, current income and consequently, the value of our
properties; and
o seek continued growth.
Our growth strategy includes:
o strategic retenanting, renovation and expansion of our existing centers;
o selective acquisitions and development projects; and
o continued focus on neighborhood and community shopping centers.
We also intend to consider investments in other real estate sectors and in
geographic markets where we do not presently operate should suitable
opportunities arise.
Our executive offices are located at 3333 New Hyde Park Road, New Hyde
Park, New York 11042-0020 and our telephone number is (516) 869-9000.
RECENT DEVELOPMENTS
SHOPPING CENTER AND RETAIL PROPERTY ACQUISITIONS
For the year ended December 31, 1998, we acquired 27 neighborhood and
community shopping centers with approximately 3.4 million square feet of GLA
located in 14 states. We made these acquisitions in separate transactions
through our subsidiaries for an aggregate purchase price of approximately
$303 million, including the assumption of approximately $49.2 million of
mortgage debt. In addition, we have, through an affiliated entity, acquired
three properties from a retailer in the Chicago, Illinois market that have
approximately 516,000 square feet of GLA for an aggregate purchase price of
approximately $23.7 million. These properties include approximately
70,000 square feet of showroom space and adjoining warehouses of approximately
100,000 square feet at each location. At the same time we made this acquisition,
we leased to a national furniture retailer the showroom portion of each property
under individual long-term leases. We are currently planning the redevelopment
of the warehouse portion of each property.
During July 1998, we acquired real estate interests in 30 properties from
Metropolitan Life Insurance Company ("Metropolitan Life") for $167.5 million
comprising 27 fee interests and three leasehold positions. These properties,
located primarily in the Chicago, St. Louis and Kansas City markets, have
approximately 3.8 million square feet of GLA and were leased to Venture Stores,
Inc. ("Venture Stores"). In addition, during
S-4
<PAGE>
August 1998, we acquired from Venture Stores five additional leasehold
positions, including two leases already in place with us, for an aggregate
purchase price of approximately $2.2 million. See "Recent Developments--Venture
Stores, Inc. Transactions."
PRICE REIT MERGER
The Merger
On June 19, 1998, The Price REIT, Inc., a Maryland corporation, was merged
into one of our wholly owned subsidiaries, REIT Sub., Inc. For ease of
reference, we refer to the transaction as the "Merger," The Price REIT, Inc. as
"Price REIT," and our wholly owned subsidiary REIT Sub., Inc. as "Merger Sub."
On June 19, 1998, the shareholders of Price REIT approved the Merger and
our shareholders approved the issuance of the Merger consideration. The Merger
consideration consisted of the following: holders of Price REIT common stock
received one share of Kimco common stock and .36 shares of Kimco Class D
Depositary Shares (as defined in the Agreement and Plan of Merger) for each
share of Price REIT common stock. On June 19, 1998, there were 11,746,479 shares
of Price REIT common stock outstanding. The Merger was accounted for using the
purchase method of accounting for financial reporting purposes.
Price REIT
Prior to the Merger, Price REIT was a self-administered and self-managed
equity REIT that primarily focused on the acquisition, development, management
and redevelopment of destination retail shopping center properties known as
"power centers." As of June 19, 1998, Price REIT owned or had interests in 43
properties, consisting of 39 power and community centers, one stand-alone retail
warehouse, one project under development and two undeveloped land parcels,
located in 17 states containing approximately 8.0 million square feet of GLA.
The overall occupancy rate of the power and community centers was approximately
98%.
The Preferred Stock
On May 18, 1998, prior to the Merger, we entered into a purchase agreement
with Price REIT, and LB I Group Inc., an affiliate of Lehman Brothers Inc.
("LB I"). Under the purchase agreement, LB I agreed to purchase $65 million
Class A Floating Rate Cumulative Preferred Stock of Price REIT ("Price REIT
Preferred Stock"). In connection with the purchase agreement, Price REIT issued
65,000 shares of Price REIT Preferred Stock to LB I (with a total liquidation
preference and purchase price of $65 million). In the Price REIT Merger, the
Price REIT Preferred Stock was exchanged for 650,000 depositary shares, each
representing a one-tenth fractional interest in a new issue of Kimco Class E
Floating Rate Cumulative Preferred Stock, liquidation preference $1,000 per
share (equivalent to $100 per depositary share) (the "Kimco Class E Preferred
Stock"). As part of the Merger, we assumed Price REIT's obligations under the
purchase agreement and, through the issuance of the Kimco Class E Preferred
Stock, we assumed the obligations of the Price REIT Preferred Stock. The
dividend rate on the Kimco Class E Preferred Stock was equal to LIBOR plus 2.0%
per annum, and had an initial dividend rate of 7.68% per annum. The dividend
rate is adjusted every three months in accordance with changes in LIBOR. We were
able to redeem the Kimco Class E Preferred Stock at our option for the first 150
days after the effective time of the merger at a price equal to the liquidation
preference plus accrued and unpaid dividends. On November 5, 1998, we exercised
our option to redeem the 65,000 shares of Kimco Class E Preferred Stock
(represented by 650,000 depositary shares) for $65.065 million, representing the
liquidation preference of $65 million and approximately $65,000 of accrued
dividends.
VENTURE STORES, INC. TRANSACTIONS
In August 1997, we acquired through our subsidiaries real estate interests
in 49 properties from Venture Stores, comprising 19 fee interests and 30
leasehold positions. These properties total approximately 5.9 million square
feet of leasable area and are located in Illinois, Missouri, Texas, Oklahoma,
Kansas, Indiana and Iowa. The aggregate purchase price for these property
interests was approximately $130 million, consisting of $70.5 million in cash
and the assumption of approximately $59.5 million of existing mortgage debt on
certain of
S-5
<PAGE>
these properties. As a result of this transaction, Venture Stores was the
primary or sole tenant at 60 of our locations and accounted for more than 10% of
our annualized base rental revenues.
In January 1998, Venture Stores filed for protection under Chapter 11 of
the United States Bankruptcy Code. On April 27, 1998, Venture Stores announced
that it would discontinue its retail operations and that it had reached an
agreement to sell its leasehold position at 89 locations to us. These leasehold
positions include 56 properties which were already in place with us under two
unitary leases, 30 properties pursuant to a master lease with Metropolitan Life
and three properties leased by Venture Stores from others. The purchase price
for the leasehold positions was $95.0 million, less certain closing adjustments,
but in our agreement with Venture Stores, we have agreed to adjust the purchase
price depending on the success of our attempts to re-tenant the properties over
a two-year period. The agreement to sell the leasehold positions to us was
approved by the U.S. Bankruptcy Court on June 5, 1998. On July 17, 1998, we
purchased the leasehold positions with an initial payment of approximately
$50 million.
We also reached an agreement with Metropolitan Life to purchase the 30 fee
and leasehold positions of the properties which were leased by Metropolitan Life
to Venture Stores for an aggregate purchase price of $167.5 million. This
transaction was completed on July 1, 1998. See "Recent Developments--Shopping
Center and Retail Property Acquisitions."
In addition, during August 1998, we acquired from Venture Stores five
additional leasehold positions, including two leases already in place with us,
for an aggregate purchase price of approximately $2.2 million.
We have leased 76 of these former Venture Stores locations to major
retailers, including 46 locations leased to Kmart Corporation and 10 locations
leased to ShopKo Stores, Inc. As a result of these additional leases to Kmart
Corporation, Kmart Corporation currently accounts for more than 10% of our
annualized base rental revenues. We are also negotiating with other major
retailers to lease certain of the remaining Venture Stores locations. However,
we cannot give you any assurance regarding the terms or timing of these other
transactions or whether these other transactions will be consummated.
During December 1998, we sold a vacant distribution center and an adjacent
facility, which were acquired as part of the Venture Stores Inc. transactions,
for $10 million.
OTHER TRANSACTIONS
During 1998, we invested approximately $19.0 million in a partnership which
acquired and leased-back 11 automotive dealerships. We have a 50% interest in
this partnership.
In addition, we invested approximately $3.6 million in a partnership which
acquired a shopping center property in Bronx, New York. We have a 50% interest
in this partnership. We also acquired a first mortgage on a shopping center in
Manhasset, New York for approximately $21 million and have entered into a
contract to acquire fee title to this property.
DEBT AND EQUITY FINANCINGS
Debt Financings
MTN Program. During 1998, we issued three different medium-term notes and
one series of remarketed reset notes under a program we refer to as our "MTN
Program." We refer to these medium-term notes as "MTNs" in this prospectus
supplement.
During June 1998, we sold $100 million of MTNs. These MTNs mature in June
2005 and bear interest at a fixed rate of 6.73% per annum. We sold an additional
$30 million of MTNs during July 1998. These MTNs mature in July 2006 and bear
interest at a fixed rate of 6.93% per annum.
During August 1998, we sold $60 million of floating rate MTNs under our MTN
program. These floating rate MTNs mature in August 2000 and bear interest at
LIBOR plus .15% per annum. Interest on these MTNs resets and is payable for each
quarter at the end of such quarter. Concurrently with this issuance, we entered
into an interest rate swap agreement which effectively fixed the interest rate
on these MTNs at 5.91% per annum for the term of these MTNs. The proceeds from
this MTN issuance were used to prepay certain
S-6
<PAGE>
mortgage loans with a principal amount of approximately $57 million bearing
interest at 10.54% per annum plus prepayment premiums of approximately
$4.9 million. We had assumed such secured indebtedness in the August 1997
Venture Stores acquisition described above under "--Venture Stores, Inc.
Transactions."
Additionally, during August 1998, we sold $100 million of remarketed reset
notes under our MTN program. The remarketed reset notes mature in August 2008
and bear interest initially at a floating rate of LIBOR plus .30% per annum.
Interest on these notes resets and is payable for each quarter at the end of
such quarter. After an initial period of one year, the interest rate spread
applicable to each subsequent period will be determined pursuant to a
Remarketing Agreement between Kimco and an affiliate of Merrill Lynch & Co., as
the remarketing agent. At the same time we issued the remarketed reset notes, we
entered into an interest rate swap agreement which effectively fixed the
interest rate at 5.92% per annum during the initial one year period. The
proceeds from the MTN issuance were used, in part, to repay a $50 million MTN
that matured in July 1998.
Credit Facility. On August 21, 1998, we established a $215 million
unsecured revolving credit facility (the "Credit Facility") with a group of
banks. The Credit Facility is scheduled to expire in August 2001. Under the
terms of the Credit Facility, funds may be borrowed for general corporate
purposes, including (i) funding property acquisitions and (ii) development and
redevelopment costs. Interest on borrowings under the Credit Facility accrues at
a rate equal to LIBOR plus a percentage (currently .50%) which fluctuates based
on changes in the ratings on our senior debt. This Credit Facility replaces both
our (i) $100 million unsecured revolving credit facility and (ii) $150 million
interim credit facility.
Mortgage Financings. During November 1998, through special purpose
entities, we obtained mortgage financing on 20 of our properties for
approximately $272.3 million. The mortgages are non-recourse, non-cross
collateralized ten-year first mortgages, which bear interest at a fixed rate of
6.585%. We have used the net proceeds from these mortgages primarily for the
acquisition of neighborhood and community shopping centers.
Equity Financings
During 1998, we sold 7,618,305 shares of common stock in 16 transactions
providing net proceeds of approximately $278.3 million. We have used such
proceeds primarily for the acquisition of neighborhood and community shopping
centers.
Available Public Capital
Prior to the sale of the notes offered by this prospectus supplement, we
have an aggregate of approximately $623.2 million available for issuance under
our shelf registration statement of debt securities, preferred stock, depositary
shares, common stock and common stock warrants. We may choose to sell any of
these securities at any time in an aggregate amount up to our available limit if
we believe market conditions are appropriate or to satisfy our capital
requirements.
NEW INVESTMENT VEHICLE
In view of current market conditions, we have decided to explore the
creation of a new entity that would invest in real estate properties that we
believe would be more appropriately financed through greater leverage than we
traditionally use. These properties would include, but not be limited to,
fully-developed properties with strong, stable cash flows from credit-worthy
retailers with long term leases. These type of properties have limited near-term
potential for growth through redevelopment or re-tenanting. We have
preliminarily established an initial portfolio of properties for this entity
from our existing portfolio. We estimate that this initial portfolio of
properties has a net equity value of approximately $110 million. We have entered
into discussions with a number of potential institutional investors with respect
to an investment in this entity. No definitive agreement has been reached with
any investor and we have not made any determinations regarding the timing,
ownership or ultimate structure of this new entity. No assurance can be given
that we will be able to enter into such an agreement. Therefore, we cannot give
any assurance that such transaction will occur, what form it will take or
whether such a transaction would generate favorable returns.
S-7
<PAGE>
IMPACT OF YEAR 2000
Like most corporations, we rely upon technology to operate our business.
Many computer systems process dates using two digits to identify the year, and
some systems are unable to properly process dates beginning with the year 2000.
This problem is commonly referred to as the "Year 2000 issue." We have completed
our assessment and have substantially addressed the impact of the Year 2000
issue on our business. We expect that our systems, including hardware and
software, will be Year 2000 compliant by the end of the first quarter of 1999.
We cannot guarantee that our third-party vendors, partners or others will be
Year 2000 compliant. If we or such third-party vendors, partners and others
encounter problems in addressing the Year 2000 issue, our ability to operate our
properties and to bill and collect our revenues in a timely manner could be
materially adversely affected. We are currently addressing the development of a
contingency plan in the event that our systems or the systems of our third-party
vendors, partners or others fail to resolve the Year 2000 issue. The total costs
to date related to the Year 2000 issue have been immaterial to our operations.
These costs have been expensed as incurred and consist primarily of internal
staff costs and other related expenses. We do not believe that the remaining
costs expected to be incurred in addressing the Year 2000 issue will have a
material adverse effect on our financial condition or results of operations.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the notes we are
offering by this prospectus supplement will be approximately $99.3 million. We
will use the net proceeds received from this offering (i) toward the repayment
of maturing indebtedness in the amount of $100 million of floating rate notes
which bear interest at LIBOR plus .5% due February 10, 1999 and (ii) for general
corporate purposes.
Pending such use of the net proceeds, we may invest in short-term income
producing investments such as investments in commercial paper, government
securities or money market funds.
DESCRIPTION OF NOTES
The following description of the particular terms of the notes offered
hereby supplements the description of the general terms and provisions of Debt
Securities set forth in the accompanying prospectus under the caption
"Description of Debt Securities."
GENERAL
The notes will be limited in aggregate principal amount to $100 million.
The notes are to be issued under the indenture, which is more fully described in
the accompanying prospectus. Certain terms used herein are defined in the
accompanying prospectus.
The notes will bear interest at % per year and will mature on February
, 2009. We will pay interest on the notes in U.S. dollars semi-annually in
arrears on August and February of each year, commencing August , 1999, to
the registered holders of the notes on the preceding or
. We will pay the principal of each note payable upon maturity
in U.S. dollars against presentation and surrender thereof at the corporate
trust office of the Trustee, located initially at One State Street, New York,
New York 10004.
The notes are not subject to any redemption or sinking fund provisions and
are not repayable at the option of any holder prior to maturity.
Reference is made to the section entitled "Certain Covenants" in the
accompanying prospectus for a description of the covenants applicable to the
notes. The indenture contains provisions for defeasance of the entire
indebtedness of Debt Securities and certain covenants contained therein, in each
case upon compliance with the conditions set forth therein, which provisions
apply to the notes.
S-8
<PAGE>
BOOK-ENTRY SYSTEM
The notes will be issued as global securities. See the section entitled
"Description of Debt Securities--Global Securities" in the accompanying
prospectus. The Depository Trust Company, or "DTC," will be the Depository with
respect to the notes. The notes will be issued as fully registered securities in
the name of Cede & Co., DTC's partnership nominee, and will be deposited with
DTC. DTC will keep a computerized record of its participants (for example, your
broker) whose clients have purchased the notes. The participant would then keep
a record of its clients who purchased the notes. A global security may not be
transferred, except that DTC, its nominees and their successors may transfer an
entire global security to one another.
The notes will be in book-entry only form, and we will not deliver
securities in certificated form to individual purchasers of the notes, and no
person owning a beneficial interest in a global security will be treated as a
holder for any purpose under the Indenture. Accordingly, owners of such
beneficial interests must rely on the procedures of DTC and the participant
through which such person owns its interest in order to exercise any rights of a
holder under such global security or the Indenture. Beneficial interests in
global securities will be shown on, and transfers of global securities will be
made only through, records maintained by DTC and its participants. The laws of
some jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and laws may
impair the ability to transfer beneficial interests in a global security.
DTC has provided us with the following information: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing corporation"
registered under Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also facilitates the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participants' accounts. This eliminates the need
to exchange certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations.
Other organizations, such as securities brokers and dealers, banks and
trust companies that work through a Direct Participant, also use DTC's
book-entry system. The rules that apply to DTC and its participants are on file
with the Securities and Exchange Commission.
A number of Direct Participants, together with the New York Stock Exchange,
Inc., The American Stock Exchange LLC and the National Association of Securities
Dealers, Inc., own DTC.
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global securities for all
purposes. Accordingly, we and the Trustee will have no direct responsibility or
liability to pay amounts due on the securities to owners of beneficial interests
in the global securities.
It is DTC's current practice, when it receives any payment of principal or
interest, to credit Direct Participants' accounts on the payment date according
to their respective 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 securities on a record date, by using an omnibus proxy. Customary practices
between the participants and owners of beneficial interests, as in the case with
securities held for the account of customers registered in "street name," will
govern payments by participants to owners of beneficial interests in the global
securities, and voting by participants. However, these payments will be the
responsibility of the participants and not of DTC, the Trustee, or us.
Notes represented by a global security will be exchangeable for notes in
certificated form with the same terms in authorized denominations only if:
o DTC notifies us that is unwilling or unable to continue as depository
or if DTC ceases to be a clearing agency registered under applicable
law and we do not appoint a successor depository within 90 days;
o An Event of Default under the Indenture with respect to the notes has
occurred and is continuing and the beneficial owners representing a
majority in princial amount of the notes represented by the global
security advise security advise DTC to cease acting as depository; or
o we determine at any time that all notes shall no longer be represented
by a global security.
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Management of DTC is aware that some computer applications, systems and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and interest payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program included a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan included a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including, but not limited to, issuers and their agents, as
well as DTC's participants, third party vendors from whom DTC licenses software
and hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (1) impress upon them the importance of such services
being Year 2000 compliant; and (2) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, DTC is in the process of developing such contingency plans as it deems
appropriate.
According to DTC, the information in the preceding two paragraphs with
respect to DTC has been provided to the Industry for informational purposes only
and is not intended to serve as a representation, warranty, or contract
notification of any kind.
DTC may discontinue providing its services as securities depository with
respect to global securities at any time by giving reasonable notice to us or
the Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, securities in certificated form are required to be
printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, securities in
certificated form will be printed and delivered.
The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy thereof.
SAME-DAY SETTLEMENT AND PAYMENT
The underwriters will pay for the notes in immediately available funds. We
will make all payments due on the notes in immediately available funds so long
as such notes are in book-entry form.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the nine months ended
September 30, 1998 was 2.8. The Company's ratio of earnings to combined fixed
charges and preferred stock dividend requirements for the nine months ended
September 30, 1998 was 2.1.
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before income
taxes and extraordinary items. Fixed charges consist of interest costs, whether
expensed or capitalized, the interest component of rental expense, and
amortization of debt, discounts and issue costs, whether expensed or
capitalized.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following discussion is a summary of certain U.S. federal income and
estate tax consequences relevant to the purchase, ownership, and disposition of
notes by an initial beneficial owner of the notes, that for U.S. federal income
tax purposes is not a U.S. person (a "Non-U.S. Holder") and who holds the notes
as capital assets within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"). The term U.S. person, generally means a
holder of a note who for U.S. federal income tax purposes:
S-10
<PAGE>
o is a citizen or resident of the United States,
o is a corporation or partnership, including entities treated as
partnerships or corporations for federal income tax purposes, created or
organized in the United States or under the laws of the United States or of any
state thereof or the District of Columbia, unless in the case of a partnership,
Treasury Regulations provide otherwise,
o is an estate whose income is includible in gross income for U.S. federal
income tax purposes regardless of its source, or
o is a trust whose administration is subject to the primary supervision of
a United States court and which has one or more United States persons who have
the authority to control all substantial decisions of the trust. Notwithstanding
the preceding clause, to the extent provided in Treasury Regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date that elect to continue to be treated as United States
persons, shall also be considered U.S. persons.
U.S. persons acquiring the notes are subject to different rules than those
described below.
This discussion does not address any aspect of federal income taxation
applicable to the Company and its election be taxed as a real estate investment
trust. A summary of certain federal income tax considerations applicable to the
Company is provided in the Prospectus.
The discussion is based upon the Code, Treasury Regulations, Internal
Revenue Service rulings and pronouncements, and judicial decisions now in
effect, all of which are subject to change at any time by legislative,
administrative, or judicial action, possibly with retroactive effect. The
discussion does not discuss every aspect of U.S. federal taxation that may be
relevant to a particular taxpayer in light of its personal circumstances or to
persons who are otherwise subject to a special tax treatment, including, without
limitation, banks, broker-dealers, insurance companies, pension and other
employee benefit plans, tax exempt organizations and entities, persons holding
notes as a part of a hedging or conversion transaction or a straddle, certain
hybrid entities and owners of interests therein and holders whose functional
currency is not the U.S. dollar. In addition, this discussion does not discuss
the effect of any applicable U.S. state and local or non-U.S. tax laws. EACH
PROSPECTIVE PURCHASER IS URGED TO CONSULT SUCH PURCHASER'S OWN TAX ADVISOR WITH
RESPECT TO THE U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES OF HOLDING AND
DISPOSING OF NOTES, AS WELL AS ANY TAX CONSEQUENCES APPLICABLE UNDER THE LAWS OF
ANY U.S. STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION.
INTEREST
In general, a Non-U.S. Holder will not be subject to U.S. federal income
tax or withholding tax with respect to interest received or accrued on the notes
so long as:
o the interest is not effectively connected with the conduct of a trade or
business within the United States,
o the Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of the Company
entitled to vote,
o the Non-U.S. Holder is not a "controlled foreign corporation" (within the
meaning of the Code) that is "related" to the Company (within the meaning of the
Code) actually or constructively through stock ownership, and
o the Non-U.S. Holder certifies, under penalties of perjury that such
holder is not a U.S. person and provides such holder's name and address in an
appropiate form (currently IRS Form W-8) to the Company or an agent appointed by
the Company (or, a security clearing organization, bank or other financial
institution that holds the notes on a holder's behalf in the ordinary course of
its trade or business certifies on the holder's behalf that it has received such
certification from the holder and provides a copy to the Company or its agent).
If a Non-U.S. Holder is not qualified for an exemption under these rules,
interest paid on the notes may be subject to withholding tax at the rate of 30%
(or any lower applicable treaty rate). The payment of interest effectively
connected with a Non-U.S. Holder's trade or business within the United States,
however, would not be subject to a 30% withholding tax so long as the Non-U.S.
Holder provides the Company or its agent an adequate certification (currently
IRS Form 4224), but such interest would be subject to U.S. federal income tax on
a net basis at the rates applicable to U.S. persons generally. In addition, a
Non-U.S. Holder that is a corporation may also be subject to a 30% branch
profits tax (or any lower applicable treaty rate) on interest that is
effectively connected with such Non-U.S. Holder's trade or business within the
United States.
S-11
<PAGE>
GAIN ON DISPOSITION OF NOTES
Non-U.S. Holders generally will not be subject to U.S. federal income
taxation on gain recognized on a disposition of notes so long as:
o the gain is not effectively connected with the conduct by the Non-U.S.
Holder of a trade or business within the United States and
o in the case of a Non-U.S. Holder who is an individual, such Non-U.S.
Holder is not present in the United States for 183 days or more in the taxable
year of disposition and certain other requirements are met.
Payments received on the disposition of a note by a Non-U.S. Holder whose
investment in the note is effectively connected with such Non-U.S. Holder's
trade or business would be subject to U.S. federal income tax on a net basis at
the rates applicable to U.S. persons generally. In addition, in the case of
payments received on the disposition of a note by a corporate Non-U.S. Holder
whose investment in the note is effectively connected with such Non-U.S.
Holder's trade or business within the United States, the payments may also be
subject to a 30% branch profits tax.
FEDERAL ESTATE TAXES
A note held by an individual who, at the time of death, is a Non-U.S.
Holder generally will not be subject to U.S. federal estate tax as a result of
such individual's death if:
o the individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote and
o at the time of the individual's death, interest payments with respect to
such note would not have been effectively connected with the conduct by such
individual of a trade or business in the United States.
U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
Under current U.S. federal income tax law, a 31% backup withholding tax
requirement applies to certain payments of interest on, and the proceeds of a
sale, exchange or redemption of the notes. The Company will where required
report to holders of notes and the IRS the amount of any payments on the notes
and the amounts of tax withheld, if any, from those payments.
Generally, payments of interest on the notes to Non-U.S. Holders will not
be subject to information reporting or backup withholding if the Non-U.S. Holder
certifies, under penalties of perjury, that such Holder is not a U.S. Holder and
provides such Holder's name and address as described above.
Non-U.S. Holders will not be subject to information reporting or backup
withholding with respect to the payment of proceeds from the disposition of
notes effected by, to or through the foreign office of a broker; provided,
however, that if the broker is a U.S. person or a U.S.-related person,
information reporting (but not backup withholding) would apply unless the broker
has documentary evidence in its records as to the Non-U.S. Holder's foreign
status, and has no actual knowledge to the contrary, or the Non-U.S. Holder
certifies as to its non-U.S. status under penalty of perjury or otherwise
establishes an exemption.
Non-U.S. Holders will be subject to information reporting and backup
withholding at a rate of 31% with respect to the payment of proceeds from the
disposition of notes effected by, to or through the U.S. office of a broker,
unless the Non-U.S. Holder certifies as to its non-U.S. status under penalty of
perjury or otherwise establishes an exemption.
S-12
<PAGE>
Amounts withheld under the backup withholding rules do not constitute a
seperate U.S. federal income tax. Rather, amounts withheld under the backup
withholding rules from a payment to a Non-U.S. Holder will be allowed as a
credit against such Non-U.S. Holder's U.S. federal income tax liability and any
amounts withheld in excess of such Non-U.S. Holder's U.S. federal income tax
liability would be refunded, provided that the required information is furnished
to the IRS.
Non-U.S. holders should be aware that the Treasury Department promulgated
revised final regulations regarding the withholding and information report rules
discussed above. In general, the final regulations do not significantly alter
the substantive withholding and information reporting requirements but unify
certain certification procedures and forms and clarify reliance standards. The
final regulations would generally be effective for payments made after
December 31, 1999, subject to certain transition rules. NON-U.S. HOLDERS SHOULD
BE AWARE THAT THIS DISCUSSION DOES NOT GIVE EFFECT TO THESE NEW WITHHOLDING
REGULATIONS. NON-U.S. HOLDERS ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS
FOR INFORMATION ON THESE NEW WITHHOLDING REGULATIONS.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc.
and Lehman Brothers Inc., as underwriters, and us, we have agreed to sell to the
underwriters, and the underwriters have severally agreed to purchase, the
principal amount of the notes set forth opposite their names below. The
underwriting agreement provides that the obligations of the underwriters are
subject to certain conditions precedent and that when such conditions are
satisfied the underwriters will be obligated to purchase all of the notes.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................................. $
Chase Securities Inc...................................................................
Lehman Brothers Inc....................................................................
------------
Total..................................................................... $100,000,000
------------
------------
</TABLE>
The underwriters have advised us that they propose initially to offer the
notes to the public at the public offering price set forth on the cover of this
prospectus supplement and to certain dealers at such price less a concession not
in excess of % of the principal amount. The underwriters may allow, and such
dealers may reallow, a discount not in excess of % of the principal amount on
sales to certain other dealers. After the initial public offering of the notes,
the public offering price, concession and discount may be changed.
The notes are a new issue of securities with no established trading market.
We have been advised by the underwriters that they intend to make a market in
the notes, but are not obligated to do so and may discontinue market making at
any time without notice. We can give no assurance as to the liquidity of, or any
trading market for, the notes.
In connection with the offering, the underwriters are permitted to engage
in certain transactions that stabilize the price of the notes. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the notes. If the underwriters create a short position in the notes
in connection with the offering, i.e., if they sell a greater aggregate
principal amount of notes than is set forth on the cover of this prospectus
supplement, the underwriters may reduce that short position by purchasing notes
in the open market. In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchases.
Neither we nor any underwriter makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the notes. In addition, neither we nor any underwriter
makes any representation that the underwriters will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
S-13
<PAGE>
We have agreed to indemnify the several underwriters against, or contribute
to payments that the underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933.
From time to time, the underwriters and certain of their affiliates have
engaged, and may in the future engage, in transactions with, and perform
investment banking and/or commercial banking services for, us and our affiliates
in the ordinary course of business. Frank Lourenso, a member of our board of
directors, is an Executive Vice President of Chase Manhattan Bank, an affiliate
of Chase Securities Inc.
We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $50,000.
LEGAL MATTERS
Latham & Watkins, New York, New York will pass upon the validity of the
notes offered by this prospectus supplement. Latham & Watkins will rely on
Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland as to certain
matters of Maryland law. Brown and Wood LLP, New York, New York, will act as
counsel to the underwriters. Certain members of Latham & Watkins and their
families own beneficial interests in less than 1% of our common stock.
EXPERTS
Our consolidated balance sheets as of December 31, 1997 and 1996 and our
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three year period ended December 31, 1997 and the related
financial statement schedules, the combined historical summary of revenue and
certain operating expenses of certain acquired properties (the "1997 Acquired
Properties") for the year ended December 31, 1996, the combined historical
summary of revenue and certain operating expenses of certain acquired properties
(the "1998 Acquired Properties") for the year ended December 31, 1997, the
historical summary of revenues of certain acquired Metropolitan Life properties
(the "Met Life Properties") for the year ended December 31, 1997, the combined
historical summary of revenues and certain operating expenses of certain
acquired properties (the "Second 1998 Acquired Properties") for the year ended
December 31, 1997, the combined historical summary of revenues and certain
operating expenses of certain acquired properties (the "Third 1998 Acquired
Properties") for the year ended December 31, 1997 and the combined historical
summary of revenues and certain operating expenses of certain acquired
properties (the "Fourth 1998 and 1999 Acquired Properties") for the year ended
December 31, 1997, all incorporated by reference in this prospectus supplement
and the accompanying prospectus have been incorporated herein and therein in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Price REIT appearing in Price
REIT's Annual Report (Form 10-K) for the year ended December 31, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
S-14
<PAGE>
PROSPECTUS
KIMCO REALTY CORPORATION
$750,000,000
DEBT SECURITIES, PREFERRED STOCK,
DEPOSITARY SHARES, COMMON STOCK AND COMMON STOCK WARRANTS
Kimco Realty Corporation ("Kimco" or the "Company") may from time to time
offer in one or more classes or series (i) its unsecured senior debt securities
(the "Debt Securities"), (ii) shares or fractional shares of its preferred
stock, par value $1.00 per share (the "Preferred Stock"), (iii) shares of
Preferred Stock represented by depositary shares (the "Depositary Shares"), (iv)
shares of its common stock, par value $.01 per share (the "Common Stock"), or
(v) warrants to purchase Common Stock (the "Common Stock Warrants"), with an
aggregate public offering price of up to $750,000,000 on terms to be determined
at the time of offering. The Debt Securities, Preferred Stock, Depositary
Shares, Common Stock, and Common Stock Warrants (collectively, the "Offered
Securities") may be offered separately, together or as units, in separate
classes or series in amounts, at prices and on terms to be set forth in a
supplement to this prospectus (each, a "prospectus supplement").
The specific terms of the Offered 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 of
denomination and payment, 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 Stock or Common
Stock, and any initial public offering price; (ii) in the case of Preferred
Stock, the specific title and stated value, any dividend, liquidation,
redemption, conversion, voting and other rights, and any initial public offering
price; (iii) in the case of Depositary Shares, the fractional share of Preferred
Stock represented by each such Depositary Share; (iv) in the case of Common
Stock, any initial public offering price; and (v) in the case of Common Stock
Warrants, the duration, offering price, exercise price and detachability. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Offered 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 Offered Securities
covered by such prospectus supplement.
The Offered Securities may be offered directly, 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 Offered
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 Offered Securities may be sold
without delivery of the applicable prospectus supplement describing the method
and terms of the offering of such series of Offered 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 31, 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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement, the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by the Company with the Commission
in accordance with the Exchange Act can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. If available, such information also
may be accessed through the Commission's electronic data gathering, analysis and
retrieval system ("EDGAR") via electronic means, including the Commission's
home-page on the Internet (http://www.sec.gov). In addition, certain of the
Company's securities are listed on the New York Stock Exchange and similar
information concerning the Company can be inspected and copied 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 (the
"Registration Statement") (of which this prospectus is a part) under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Offered Securities. This prospectus does not contain all of the information set
forth in the Registration Statement, certain portions of which have been omitted
as permitted by the rules and regulations of the Commission. Statements
contained in this prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Offered Securities, reference is hereby made to
the Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
a. Annual Report on Form 10-K for the year ended December 31, 1997,
as amended;
b. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998 and June 30, 1998;
c. Current Reports on Form 8-K filed January 21, 1998, January 22,
1998, January 30, 1998, March 12, 1998, April 15, 1998, May 6,
1998, May 22, 1998, June 4, 1998, June 24, 1998, July 9, 1998,
August 10, 1998, August 17, 1998 and August 19, 1998 and Current
Report on Form 8-K/A on April 21, 1998; and
d. Definitive proxy statement filed May 15, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this prospectus and
prior to the termination of the offering of the Offered Securities shall be
deemed to be incorporated by reference in this prospectus and the applicable
prospectus supplement and to be part hereof and thereof from the date of filing
such documents. Any statement contained herein or therein or in a document
incorporated or deemed to be incorporated by reference herein or therein shall
be deemed to be modified or superseded for purposes of this prospectus and the
applicable prospectus supplement to the extent that a statement contained herein
or therein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein and therein 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 the applicable prospectus supplement.
Copies of all documents which are incorporated by reference in this
prospectus and the applicable prospectus supplement (not including the exhibits
to such information, unless such exhibits are specifically incorporated by
reference in such information) will be provided without charge to each person,
including any beneficial owner of the Offered Securities, to whom this
prospectus and the applicable prospectus supplement are delivered, upon written
or oral request. Requests should be directed to the Secretary of the Company,
3333 New Hyde Park Road, New Hyde Park, New York 11042-0020 (telephone number:
(516) 869-9000).
2
<PAGE>
THE COMPANY
The Company began operations through a predecessor in 1966, and today is
the nation's largest publicly-traded owner and operator of neighborhood and
community shopping centers. As of July 1, 1998, the Company's portfolio was
comprised of approximately 54.7 million square feet of gross leasable area
("GLA") in 421 property interests, consisting of 351 neighborhood and community
shopping center properties, two regional malls, 62 retail store leases, two
distribution centers, one stand-alone warehouse and three undeveloped land
parcels located in 40 states.
The Company believes that it has operated, and the Company intends to
continue to operate, in such a manner to qualify as a REIT under the Internal
Revenue Code of 1986, as amended (the "Code"). The Company is self-administered
and self-managed through present management which has owned and managed
neighborhood and community shopping centers for more than 30 years. The
executive officers are engaged in the day-to-day management and operation of
real estate exclusively with the Company, with nearly all operating functions,
including leasing, legal, construction, data processing, maintenance, finance
and accounting administered by the Company.
In order to maintain its qualification as a REIT for federal income tax
purposes, the Company is required to distribute at least 95% of its taxable
income each year. Dividends on any preferred stock issued by the Company are
included as distributions for this purpose. Historically, the Company's
distributions have exceeded, and the Company expects that its distributions will
continue to exceed, taxable income each year. A portion of such distributions
may constitute a return of capital. As a result of the foregoing, the
consolidated net worth of the Company may decline. The Company, however, does
not believe that consolidated stockholders' equity is a meaningful reflection of
net real estate values.
USE OF PROCEEDS
Unless otherwise described in the applicable prospectus supplement, the
Company intends to use the net proceeds from the sale of the Offered Securities
for general corporate purposes, which may include the acquisition of
neighborhood and community shopping centers as suitable opportunities arise, the
expansion and improvement of certain properties in the Company's portfolio, and
the repayment of indebtedness outstanding at such time.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, dated as of
September 1, 1993, as amended by the First Supplemental Indenture dated as of
August 4, 1994, the Second Supplemental Indenture dated as of April 7, 1995 and
as further amended or supplemented from time to time (the "Indenture"), between
the Company and IBJ Schroder Bank & Trust Company, as Trustee (the "Trustee").
The Indenture has been filed as an exhibit to the Registration Statement of
which this prospectus is a part and is available for inspection at the corporate
trust office of the Trustee at One State Street, New York, New York 10004 or as
described above under "Available Information." The Indenture is subject to, and
governed by, the Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made hereunder relating to the Indenture and the Debt Securities to
be issued thereunder are summaries of certain provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indenture and such Debt Securities. All
section references appearing herein are to sections of the Indenture, and
capitalized terms used but not defined herein shall have the respective meanings
set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company
and will rank equally with all other unsecured and unsubordinated indebtedness
of the Company. The 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 Directors of the Company or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one
3
<PAGE>
series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series (Section 301).
The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 608). In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities, each such Trustee
shall be a Trustee of a trust under the Indenture separate and apart from the
trust administered by any other Trustee (Section 609), and, except as otherwise
indicated herein, any action described herein to be taken by the Trustee may be
taken by each such Trustee with respect to, and only with respect to, the one or
more series of Debt Securities for which it is Trustee under the Indenture.
Reference is made to the prospectus supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
(3) 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 Stock
or Preferred Stock, 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 Stock or Preferred Stock 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 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 any such Date
shall be determined, the Person to whom such interest shall be
payable, and the basis upon which interest shall be calculated if
other than that of a 360-day year of twelve 30-day months;
(8) the place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for conversion or registration of
transfer or exchange and notices or demands to or upon the Company in
respect of such Debt Securities and the Indenture may be served;
(9) the period or periods within which, the price or prices at which and
the terms and conditions upon which such Debt Securities may be
redeemed, as a whole or in part, at the option of the 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 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 units of two
or more foreign currencies or a composite currency or currencies, and
the terms and conditions relating thereto;
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(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 Indenture;
(14) whether such Debt Securities will be issued in certificated and/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 XIV of the Indenture;
(17) if such Debt Securities are to be issued upon the exercise of debt
warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
(18) the terms, if any, upon which such Debt Securities may be convertible
into Common Stock or Preferred Stock 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 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 Indenture (Section 301).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). If material or applicable, special U.S.
federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable prospectus
supplement.
Except as described under "Certain Covenants--Limitations on Incurrence of
Debt" and under "Merger, Consolidation or Sale," the Indenture does not contain
any other provisions that would limit the ability of the Company to incur
indebtedness or to substantially reduce or eliminate the Company's assets, which
may have an adverse effect on the Company's ability to service its indebtedness
(including the Debt Securities) or that would afford Holders of the Debt
Securities protection in the event of (i) a highly leveraged or similar
transaction involving the Company, the management of the Company, or any
Affiliate of either such party, (ii) a change of control, or (iii) a
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect the Holders of the Debt Securities.
Furthermore, subject to the limitations set forth under "Merger, Consolidation
or Sale," the Company may, in the future, enter into certain transactions, such
as the sale of all or substantially all of its assets or the merger or
consolidation of the Company, that would increase the amount of the Company's
indebtedness or substantially reduce or eliminate the Company's assets, which
may have an adverse effect on the Company's ability to service its indebtedness,
including the Debt Securities. In addition, restrictions on ownership and
transfers of the Company's common stock and preferred stock are designed to
preserve its status as a REIT and, therefore, may act to prevent or hinder a
change of control. See "Description of Common Stock" and "Description of
Preferred Stock." 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 below,
including any addition of a covenant or other provision providing event risk or
similar protection.
A significant number of the Company's properties are owned through its
subsidiaries. Therefore, the rights of the Company and its creditors, including
Holders of Debt Securities, to participate in the assets of such subsidiaries
upon the liquidation or recapitalization of such subsidiaries or otherwise will
be subject to the prior
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claims of such subsidiaries' respective creditors (except to the extent that
claims of the Company itself as a creditor may be recognized).
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).
Unless otherwise specified in the applicable prospectus supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the Trustee, initially located
at One State Street, New York, New York 10004, 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).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer or exchange thereof at the corporate
trust office of the 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). If the
applicable prospectus supplement refers to any transfer agent (in addition to
the 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).
Neither the Company nor the 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
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305).
MERGER, CONSOLIDATION OR SALE
The 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, provided that (a) either the Company shall be the continuing
corporation, or the successor corporation (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 on all of the Debt Securities and the due and
punctual performance and observance of all of the covenants and conditions
contained in the Indenture; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
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
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become such an Event of Default, shall have occurred and be continuing; and
(c) an officer's certificate and legal opinion covering such conditions shall be
delivered to the Trustee (Sections 801 and 803).
CERTAIN COVENANTS
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 additional Debt, 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 65% of the sum of (i) the Company's Undepreciated
Real Estate 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 acquired by the Company or any Subsidiary since the end of such
calendar quarter, including those obtained in connection with the incurrence of
such additional Debt (Section 1004).
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 additional Debt, 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 sum of (i) the Company's Undepreciated Real Estate
Assets 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 acquired by the
Company or any Subsidiary since the end of such calendar quarter, including
those obtained in connection with the incurrence of such additional Debt
(Section 1004).
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
Consolidated Income Available for Debt Service (as defined below) for any
12 consecutive calendar months within the 15 calendar months immediately
preceding the date on which such additional Debt is to be incurred shall have
been less than 1.5 times the Maximum Annual Service Charge (as defined below) on
the Debt of the Company and all Subsidiaries to be outstanding immediately after
the incurring of such additional Debt (Section 1004).
Restrictions on Dividends and Other Distributions. The Company will not, in
respect of any shares of any class of its capital stock, (a) declare or pay any
dividends (other than dividends payable in capital stock of the Company)
thereon, (b) apply any of its property or assets to the purchase, redemption or
other acquisition or retirement thereof, (c) set apart any sum for the purchase,
redemption or other acquisition or retirement thereof, or (d) make any other
distribution, by reduction of capital or otherwise if, immediately after such
declaration or other action referred to above, the aggregate of all such
declarations and other actions since the date on which the Indenture was
originally executed shall exceed the sum of (i) Funds from Operations (as
defined below) from June 30, 1993 until 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 such
declaration or other action and (ii) $26,000,000; provided, however, that the
foregoing limitation shall not apply to any declaration or other action referred
to above which is necessary to maintain the Company's status as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), if the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries at
such time is less than 65% of the Company's Undepreciated Real Estate Assets 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 such declaration or other action
(Section 1005).
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Notwithstanding the foregoing, the Company will not be prohibited from
making the payment of any dividend within 30 days of the declaration thereof if
at such date of declaration such payment would have complied with the provisions
of the immediately preceding paragraph (Section 1005).
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 corporate 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 and that the loss thereof
is not disadvantageous in any material respect to the Holders of the Debt
Securities (Section 1006).
Maintenance of Properties. The Company will cause all of its 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;
provided, however, that the Company and its Subsidiaries shall not be prevented
from selling or otherwise disposing for value its properties in the ordinary
course of business (Section 1007).
Insurance. The Company will, and will cause each of its Subsidiaries to,
keep all of its insurable properties insured against loss or damage at least
equal to their then full insurable value with insurers of recognized
responsibility and having a rating of at least A:VIII in Best's Key Rating Guide
(Section 1008).
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
by appropriate proceedings (Section 1009).
Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to such Section 13 or 15(d) (the "Financial
Statements") if the Company were so subject, such documents to be filed with the
Commission on or prior to the respective dates (the "Required Filing Dates") by
which the Company would have been required so to file such documents if the
Company were so subject. The Company will also in any event (x) within 15 days
of each Required Filing Date (i) transmit by mail to all Holders of Debt
Securities, as their names and addresses appear in the Security Register,
without cost to such Holders copies of the annual reports and quarterly reports
which the 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 (ii) file with the Trustee copies of the annual reports, quarterly
reports and other documents which 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 (y) if filing such documents by the
Company with the Commission is not permitted under the Exchange Act, promptly
upon written request and payment of the reasonable cost of duplication and
delivery, supply copies of such documents to any prospective Holder
(Section 1010).
Maintenance of Unencumbered Total Asset Value. The Company will at
all times maintain an Unencumbered Total Asset Value in an amount of not less
than one hundred percent (100%) of the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries that is unsecured
(Section 1014).
As used herein,
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) of the Company and its Subsidiaries
plus amounts which have been deducted for (a) interest on Debt of the Company
and its Subsidiaries, (b) provision for taxes of the Company and its
Subsidiaries based on income, (c) amortization of debt discount, (d) property
depreciation and amortization and (e) the effect of any
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noncash charge resulting from a change in accounting principles in determining
Consolidated Net Income for such period.
"Consolidated Net Income" for any period means the amount of consolidated
net income (or loss) of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Debt" of the Company or any Subsidiary means any indebtedness of the
Company or any Subsidiary, whether or not contingent, in respect of
(i) borrowed money or 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) letters of credit or amounts representing the balance
deferred and unpaid of the purchase price of any property except any such
balance that constitutes an accrued expense or trade payable or (iv) any lease
of property by the 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, in the case of items of indebtedness
under (i) through (iii) above to the extent that any such items (other than
letters of credit) would appear as a liability on the Company's Consolidated
Balance Sheet in accordance with generally accepted accounting principles, and
also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), indebtedness of another person (other than the Company or any
Subsidiary) (it being understood that Debt shall be deemed to be incurred by the
Company or any Subsidiary whenever the Company or such Subsidiary shall create,
assume, guarantee or otherwise become liable in respect thereof).
"Funds from Operations" for any period means the Consolidated Net Income of
the Company and its Subsidiaries for such period without giving effect to
depreciation and amortization, gains or losses from extraordinary items, gains
or losses on sales of real estate, gains or losses on investments in marketable
securities and any provision/benefit for income taxes for such period, plus
Funds from Operations of unconsolidated joint ventures, all determined on a
consistent basis for such period.
"Maximum Annual Service Charge" as of any date means the maximum amount
which may become payable in any period of 12 consecutive calendar months from
such date for interest on, and required amortization of, Debt. The amount
payable for amortization shall include the amount of any sinking fund or other
analogous fund for the retirement of Debt and the amount payable on account of
principal on any such Debt which matures serially other than at the final
maturity date of such Debt.
"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 amortized debt costs).
"Undepreciated Real Estate Assets" as of any date means the amount 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 means the sum of the
Company's Total Assets which are unencumbered by any mortgage, lien, charge,
pledge or security interest that secures the payment of any obligations under
any Debt.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (a) default for
30 days in the payment of any installment of interest on any Debt Security of
such series; (b) default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series at its Maturity; (c) default in making any
sinking fund payment as required for any Debt Security of such series;
(d) default in the performance of any other covenant of the 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
Indenture; (e) default in the payment of an aggregate principal amount exceeding
$10,000,000 of any evidence of
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indebtedness of the Company or any mortgage, indenture or other instrument under
which such indebtedness is issued or by which such indebtedness is secured, such
default having occurred after the expiration of any applicable grace period and
having resulted in the acceleration of the maturity of such indebtedness, but
only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled; (f) certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee of the
Company or any Significant Subsidiary or either of its property; and (g) any
other Event of Default provided with respect to a particular series of Debt
Securities (Section 501). 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 the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount
Securities or Indexed Securities, such portion of the principal amount as may be
specified in the terms thereof) of all of the Debt Securities of that series to
be due and payable immediately by written notice thereof to the Company (and to
the Trustee if given by the Holders). However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may be)
has been made, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of such series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) may rescind
and annul such declaration and its consequences if (a) the Company shall have
deposited with the Trustee all required payments of the principal of (and
premium, if any) and interest on the Debt Securities of such series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be), plus
certain fees, expenses, disbursements and advances of the Trustee and (b) all
Events of Default, other than the non-payment of accelerated principal (or
specified portion thereof), with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may be)
have been cured or waived as provided in the Indenture (Section 502). The
Indenture also provides that the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of any series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be) may
waive any past default with respect to such series and its consequences, except
a default (x) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series or (y) in respect of a covenant or
provision contained in the Indenture that cannot be modified or amended without
the consent of the Holder of each Outstanding Debt Security affected thereby
(Section 513).
The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the Indenture; provided, however, that the
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if the Responsible Officers of the Trustee consider
such withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of such series, as well as
an offer of indemnity reasonably satisfactory to it (Section 507). This
provision will not prevent, however, any Holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective due
dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any
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proceeding for any remedy available to the Trustee, or of exercising any trust
or power conferred upon the Trustee. However, the Trustee may refuse to follow
any direction which is in conflict with any law or the Indenture, which may
involve the Trustee in personal liability or which may be unduly prejudicial to
the Holders of Debt Securities of such series not joining therein
(Section 512).
Within 120 days after the close of each fiscal year, the Company must
deliver to the Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default under
the Indenture and, if so, specifying each such default and the nature and status
thereof (Section 1011).
MODIFICATION
Modifications and amendments of the Indenture and Debt Securities may be
made only with the consent of the Holders of not less than a majority in
principal amount of all Outstanding Debt Securities which are affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security;
(b) reduce the principal amount of, or the rate or amount of interest on, or any
premium payable on redemption of, any such Debt Security, or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of (or premium, if any) or interest on any
such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in the Indenture; or (f) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities have the right to waive compliance by the Company with certain
covenants in the Indenture (Section 1013).
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder of Debt Securities for any of
the following purposes: (i) to evidence the succession of another Person to the
Company as obligor under the 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 the Indenture;
(iii) to add Events of Default for the benefit of the Holders of all or any
series of Securities; (iv) to add or change any provisions of the Indenture to
facilitate the issuance of, or to liberalize certain terms of, Debt Securities
in bearer form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form, provided that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect; (v) to change or eliminate any provisions of the Indenture, provided
that any such change or elimination shall become effective only when there are
no Debt Securities Outstanding of any series created prior thereto which are
entitled to the benefit of such provision; (vi) to secure the Debt Securities;
(vii) to establish the form or terms of Debt Securities of any series, including
the provisions and procedures, if applicable, for the conversion of such Debt
Securities into Common Stock or Preferred Stock of the Company; (viii) to
provide for the acceptance of appointment by a successor Trustee or facilitate
the administration of the trusts under the Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in the Indenture, provided
that such action shall not adversely affect the interests of Holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities, provided that
such action shall not adversely affect the interests of the Holders of the Debt
Securities of any series in any material respect (Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal
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amount of an Original Issue Discount Security that shall be deemed to be
outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon declaration of acceleration of
the maturity thereof, (ii) the principal amount of a Debt Security denominated
in a foreign currency that shall be deemed outstanding shall be the U.S. dollar
equivalent, determined on the issue date for such Debt Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the issue date of such Debt Security of the amount
determined as provided in (i) above), (iii) the principal amount of an Indexed
Security that shall be deemed outstanding shall be the principal face amount of
such Indexed Security at original issuance, unless otherwise provided with
respect to such Indexed Security pursuant to Section 301 of the Indenture, and
(iv) Debt Securities owned by the Company or any other obligor upon the Debt
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded (Section 101).
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting may be called at any time
by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities of such series,
in any such case upon notice given as provided in the Indenture (Section 1502).
Except for any consent that must be given by the Holder of each Debt Security
affected by certain modifications and amendments of the Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the Holders of such specified percentage in principal amount of the Outstanding
Debt Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
the Indenture will be binding on all Holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or representing a majority in principal amount
of the Outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
may be given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the Persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities of such series that
vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under the Indenture
(Section 1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to Holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in which
such Debt Securities are payable in an amount sufficient to pay the entire
indebtedness on such Debt Securities in respect of principal (and premium, if
any) and interest to the date of such deposit (if such Debt Securities have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be (Section 401).
The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to
Section 301 of the Indenture, the Company may elect either (a) to defease and
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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) or (b) to be released from its obligations with
respect to such Debt Securities under Sections 1004 to 1010, inclusive, and
Section 1014 of the Indenture (being the restrictions described under "Certain
Covenants") or, if provided pursuant to Section 301 of the 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), in
either case upon the irrevocable deposit by the Company with the Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable at
Stated Maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the Company
has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred, and such Opinion of Counsel, in the case of defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after the date of the
Indenture (Section 1404).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the Foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101).
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,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
cessation of usage based on the applicable market exchange rate (Section 1405).
"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
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community, (ii) the 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 for which it was established. Unless otherwise provided in the
applicable prospectus supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a Foreign Currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars (Section 101).
In the event 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 (d) under "Events of Default, Notice and Waiver" with respect to
Sections 1004 to 1010, inclusive, and Section 1014 of the Indenture (which
Sections would no longer be applicable to such Debt Securities) or described in
clause (g) under "Events of Default, Notice and Waiver" with respect to any
other covenant as to which there has been covenant defeasance, the amount in
such currency, currency unit or composite currency in which such Debt Securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the 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 other Debt Securities, Common Stock or Preferred Stock will be
set forth in the applicable prospectus supplement relating thereto. Such terms
will include whether such Debt Securities are convertible into other Debt
Securities, Common Stock or Preferred Stock, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to whether conversion
will be at the option of the Holders or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Debt Securities.
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.
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DESCRIPTION OF COMMON STOCK
The Company has the authority to issue 100,000,000 shares of common stock,
par value $.01 per share, and 51,000,000 shares of excess stock, par value $.01
per share. At June 30, 1998, the Company had outstanding 55,446,111 shares of
common stock and no shares of excess stock. On August 4, 1994, the Company,
previously a Delaware corporation, reincorporated as a Maryland corporation
pursuant to an Agreement and Plan of Merger approved by the Company's
stockholders.
The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any prospectus supplement may
relate, including a prospectus supplement providing that Common Stock will be
issuable upon conversion of Debt Securities or Preferred Stock of the Company or
upon the exercise of the Common Stock Warrants issued by the Company. The
statements below describing the Common Stock are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of the
Company's charter and Bylaws.
Holders of the Company's Common Stock will be entitled to receive dividends
when, as and if declared by the Board of Directors of the Company, out of assets
legally available therefor. Payment and declaration of dividends on the Common
Stock and purchases of shares thereof by the Company will be subject to certain
restrictions if the Company fails to pay dividends on the preferred stock. See
"Description of Preferred Stock." Upon any liquidation, dissolution or winding
up of the Company, holders of Common Stock will be entitled to share equally and
ratably in any assets available for distribution to them, after payment or
provision for payment of the debts and other liabilities of the Company and the
preferential amounts owing with respect to any outstanding preferred stock. The
Common Stock will possess ordinary voting rights for the election of directors
and in respect of other corporate matters, with each share entitling the holder
thereof to one vote. Holders of Common Stock will not have cumulative voting
rights in the election of directors, which means that holders of more than 50%
of all of the shares of the Company's common stock voting for the election of
directors will be able to elect all of the directors if they choose to do so
and, accordingly, the holders of the remaining shares will be unable to elect
any directors. Holders of shares of Common Stock will not have preemptive
rights, which means they have no right to acquire any additional shares of
Common Stock that may be issued by the Company at a subsequent date. The Common
Stock will, when issued, be fully paid and nonassessable and will not be subject
to preemptive or similar rights.
Under Maryland law and the Company's charter, a distribution (whether by
dividend, redemption or other acquisition of shares) to holders of shares of
common stock may be made only if, after giving effect to the distribution, the
Company's total assets are greater than the Company's total liabilities plus the
amount necessary to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights on dissolution are superior to the
holders of common stock. The Company has complied with this requirement in all
of its prior distributions to holders of Common Stock.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding stock may be owned, actually or constructively, by five
or fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year, and its stock must be beneficially owned by 100
or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year. In addition, rent from
Related Party Tenants (as defined below) is not qualifying income for purposes
of the income tests under the Code.
Subject to certain exceptions specified in the Company's charter, no holder
may own, or be deemed to own by virtue of the constructive ownership provisions
of the Code, more than 2% (the "Ownership Limit") in value of the outstanding
shares of the Company's common stock. The constructive ownership rules are
complex and may cause common stock owned actually or constructively by a group
of related individuals and/or entities to be deemed constructively owned by one
individual or entity. As a result, the acquisition of less than 2% in value of
the common stock (or the acquisition of an interest in an entity which owns
common stock) by an individual or entity could cause that individual or entity
(or another individual or entity) to own constructively in excess of 2% in value
of the common stock, and thus subject such common stock to the Ownership Limit.
Existing stockholders who exceeded the Ownership Limit immediately after
the completion of the Company's initial public offering of its common stock (the
"IPO") in November 1991, may continue to do so
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and may acquire additional shares through the stock option plan, or from other
existing stockholders who exceed the Ownership Limit, but may not acquire
additional shares from such sources such that the five largest beneficial owners
of common stock could own, actually or constructively, more than 49.6% of the
outstanding common stock, and in any event may not acquire additional shares
from any other sources. In addition, because rent from Related Party Tenants
(generally, a tenant owned, actually or constructively, 10% or more by a REIT,
or a 10% owner of a REIT) is not qualifying rent for purposes of the gross
income tests under the Code, the Company's charter provides that no individual
or entity may own, or be deemed to own by virtue of the attribution provisions
of the Code (which differ from the attribution provisions applied to the
Ownership Limit), in excess of 9.8% in value of the outstanding common stock
(the "Related Party Limit"). The Board of Directors may waive the Ownership
Limit and the Related Party Limit with respect to a particular stockholder (such
Related Party Limit has been waived with respect to the existing stockholders
who exceeded the Related Party Limit immediately after the IPO) if evidence
satisfactory to the Board of Directors and the Company's tax counsel is
presented that such ownership will not then or in the future jeopardize the
Company's status as a REIT. As a condition of such waiver, the Board of
Directors may require opinions of counsel satisfactory to it and/or an
undertaking from the applicant with respect to preserving the REIT status of the
Company. The foregoing restrictions on transferability and ownership will not
apply if the Board of Directors determines that it is no longer in the best
interests of the Company to attempt to qualify, or to continue to qualify, as a
REIT. If shares of common stock in excess of the Ownership Limit or the Related
Party Limit, or shares which would cause the REIT to be beneficially owned by
less than 100 persons or which would cause the Company to be "closely held"
within the meaning of the Code or would otherwise result in failure to qualify
as a REIT, are issued or transferred to any person, such issuance or transfer
shall be null and void to the intended transferee, and the intended transferee
would acquire no rights to the stock. Shares transferred in excess of the
Ownership Limit or the Related Party Limit, or shares which would otherwise
cause the Company to be "closely held" within the meaning of the Code or would
otherwise result in failure to qualify as a REIT, will automatically be
exchanged for shares of a separate class of stock ("Excess Stock") that will be
transferred by operation of law to the Company as trustee for the exclusive
benefit of the person or persons to whom the shares are ultimately transferred,
until such time as the intended transferee retransfers the shares. While these
shares are held in trust, they will not be entitled to vote or to share in any
dividends or other distributions (except upon liquidation). The shares may be
retransferred by the intended transferee to any person who may hold such shares
at a price not to exceed (i) the price paid by the intended transferee, or
(ii) if the intended transferee did not give value for such shares, a price per
share equal to the market value of the shares on the date of the purported
transfer to the intended transferee, at which point the shares will
automatically be exchanged for ordinary common stock. In addition, such shares
of Excess Stock held in trust are purchasable by the Company for a 90-day period
at a price equal to the lesser of the price paid for the stock by the intended
transferee and the market price for the stock on the date the Company determines
to purchase the stock. This period commences on the date of the violative
transfer if the intended transferee gives notice to the Company of the transfer,
or the date the Board of Directors determines that a violative transfer has
occurred if no notice is provided.
All certificates representing shares of common stock will bear a legend
referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Code, more than a specified percentage of the outstanding shares of common
stock must file an affidavit with the Company containing the information
specified in the Company's charter within 30 days after January 1 of each year.
In addition, each common stockholder shall upon demand be required to disclose
to the Company in writing such information with respect to the actual and
constructive ownership of shares as the Board of Directors deems necessary to
comply with the provisions of the Code applicable to a REIT or to comply with
the requirements of any taxing authority or governmental agency.
The Registrar and Transfer Agent for the Company's common stock is
BankBoston N.A.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with any
other Offered Securities offered by any prospectus supplement and may be
attached to or separate from such Offered Securities. Each series of Common
Stock
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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 Common Stock
Warrants of such series and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Common Stock
Warrants.
The applicable prospectus supplement will describe the terms of the Common
Stock Warrants in respect of which this prospectus is being delivered,
including, where applicable, the following: (1) the title of such Common Stock
Warrants; (2) the aggregate number of such Common Stock Warrants; (3) the price
or prices at which such Common Stock Warrants will be issued; (4) the
designation, number and terms of the shares of Common Stock purchasable upon
exercise of such Common Stock Warrants; (5) the designation and terms of the
other Offered Securities with which such Common Stock Warrants are issued and
the number of such Common Stock Warrants issued with each such Offered Security;
(6) the date, if any, on and after which such Common Stock Warrants and the
related Common Stock will be separately transferable; (7) the price at which
each share of Common Stock purchasable upon exercise of such Common Stock
Warrants may be purchased; (8) the date on which the right to exercise such
Common Stock Warrants shall commence and the date on which such right shall
expire; (9) the minimum or maximum amount of such Common Stock Warrants which
may be exercised at any one time; (10) information with respect to book-entry
procedures, if any; (11) a discussion of certain federal income tax
considerations; and (12) any other material terms of such Common Stock Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Common Stock Warrants.
DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue 3,470,000 shares of preferred stock, par
value $1.00 per share, 345,000 shares of 7 3/4% Class A Cumulative Redeemable
Preferred Stock, $1.00 par value per share ("Class A Preferred Stock"), 230,000
shares of 8 1/2% Class B Cumulative Redeemable Preferred Stock, $1.00 par value
per share ("Class B Preferred Stock"), 460,000 shares of 8 3/8% Class C
Cumulative Redeemable Preferred Stock, $1.00 par value per share ("Class C
Preferred Stock"), 700,000 shares of 7 1/2% Class D Cumulative Convertible
Redeemable Preferred Stock, $1.00 par value per share ("Class D Preferred
Stock") and 65,000 shares of Class E Floating Rate Cumulative Preferred Stock.
The Company is also authorized to issue 345,000 shares of Class A Excess
Preferred Stock, $1.00 par value per share ("Class A Excess Preferred Stock"),
230,000 shares of Class B Excess Preferred Stock, $1.00 par value per share
("Class B Excess Preferred Stock"), 460,000 shares of Class C Excess Preferred
Stock, $1.00 par value per share ("Class C Excess Preferred Stock"),
700,000 shares of Class D Excess Preferred Stock, $1.00 par value per share
("Class D Excess Preferred Stock") and 65,000 shares of Class E Excess Preferred
Stock, par value $1.00 per share ("Class E Preferred Stock"), which are reserved
for issuance upon conversion of certain outstanding Class A Preferred Stock,
Class B Preferred Stock, Class C Preferred Stock, Class D Preferred Stock or
Class E Preferred Stock, as the case may be, as necessary to preserve the
Company's status as a REIT. At June 30, 1998, 300,000 shares of Class A
Preferred Stock, represented by 3,000,000 depositary shares, 200,000 shares of
Class B Preferred Stock, represented by 2,000,000 depositary shares, 400,000
shares of Class C Preferred Stock, represented by 4,000,000 depositary shares,
429,159 shares of Class D Preferred Stock, represented by 4,291,590 depositary
shares and 65,000 shares of Class E Preferred Stock, represented by
650,000 depositary shares, were outstanding.
Under the Company's charter, the Board of Directors may from time to time
establish and issue one or more classes or series of preferred stock and fix the
designations, powers, preferences and rights of the shares of such classes or
series and the qualifications, limitations or restrictions thereon, including,
but not limited to, the fixing of the dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions) and the liquidation preferences.
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any prospectus supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's charter (including the applicable
articles supplementary) and Bylaws.
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GENERAL
Subject to limitations prescribed by Maryland law and the Company's
charter, the Board of Directors is authorized to fix the number of shares
constituting each class or series of Preferred Stock and the designations and
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, including such
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets, conversion or exchange, and such
other subjects or matters as may be fixed by resolution of the Board of
Directors or duly authorized committee thereof. The Preferred Stock will, when
issued, be fully paid and nonassessable and will not have, or be subject to, any
preemptive or similar rights.
Reference is made to the prospectus supplement relating to the class or
series of Preferred Stock offered thereby for specific terms, including:
(1) The class or series, title and stated value of such Preferred
Stock;
(2) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Stock;
(4) Whether dividends on such Preferred Stock shall be cumulative or
not and, if cumulative, the date from which dividends on such
Preferred Stock shall accumulate;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) Provisions for a sinking fund, if any, for such Preferred Stock;
(7) Provisions for redemption, if applicable, of such Preferred
Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such
Preferred Stock will be convertible into Common Stock of the
Company, including the conversion price (or manner of calculation
thereof);
(10) Whether interests in such Preferred Stock will be represented by
Depositary Shares;
(11) A discussion of certain federal income tax considerations
applicable to such Preferred Stock;
(12) In addition to those limitations described below, any other
limitations on direct or beneficial ownership and restrictions on
transfer of such Preferred Stock and, if convertible, the related
Common Stock, in each case as may be appropriate to preserve the
status of the Company as a REIT; and
(13) Any other material terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
RANK
Unless otherwise specified in the prospectus supplement, the Preferred
Stock will, with respect to (as applicable) dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of common stock and excess stock of the Company and to all
equity securities of the Company the terms of which provide that such equity
securities are subordinated to the Preferred Stock; (ii) on a parity with all
equity securities of the Company other than those referred to in clauses
(i) and (iii) and (iii) junior to all equity securities of the Company which the
terms of such Preferred Stock provide will rank senior to it. As used in the
Company's charter for these purposes, the term "equity securities" does not
include convertible debt securities.
DIVIDENDS
Holders of shares of the Preferred Stock of each class or series shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of assets of the Company legally available for payment, cash
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 stock transfer books of the Company on such record dates
as shall be fixed by the Board of Directors of the Company.
Dividends on any class or series of the Preferred Stock may be cumulative
or non-cumulative, as provided in the applicable prospectus supplement.
Dividends, if cumulative, will accumulate from and after the date set forth
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in the applicable prospectus supplement. If the Board of Directors of the
Company fails to declare a dividend payable on a dividend payment date on any
class or series of the Preferred Stock for which dividends are noncumulative,
then the holders of such class or series of the Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company will have no obligation to pay the
dividend accrued for such period, whether or not dividends on such class or
series are declared payable on any future dividend payment date.
If any shares of the Preferred Stock of any class or series are
outstanding, no full dividends shall be declared or paid or set apart for
payment on the preferred stock of the Company of any other class or series
ranking, as to dividends, on a parity with or junior to the Preferred Stock of
such class or series for any period unless (i) if such class or series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Preferred Stock of such
class or series for all past dividend periods and the then current dividend
period or (ii) if such class or series of Preferred Stock does not have a
cumulative dividend, full dividends for the then current dividend period have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Preferred Stock of
such class or series. When dividends are not paid in full (or a sum sufficient
for such full payment is not so set apart) upon the shares of Preferred Stock of
any class or series and the shares of any other class or series of preferred
stock ranking on a parity as to dividends with the Preferred Stock of such class
or series, all dividends declared upon shares of Preferred Stock of such class
or series and any other class or series of preferred stock ranking on a parity
as to dividends with such Preferred Stock shall be declared pro rata so that the
amount of dividends declared per share on the Preferred Stock of such class or
series and such other class or series of preferred stock shall in all cases bear
to each other the same ratio that accrued and unpaid dividends per share on the
shares of Preferred Stock of such class or series (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods if such
Preferred Stock does not have a cumulative dividend) and such other class or
series of preferred stock bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such class or series of Preferred Stock has a cumulative dividend, full
cumulative dividends on the Preferred Stock of such class or 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 class or series of Preferred Stock does
not have a cumulative dividend, full dividends on the Preferred Stock of such
class or series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set aside for payment for the then
current dividend period, no dividends (other than in common stock or other stock
ranking junior to the Preferred Stock of such class or series as to dividends
and upon liquidation, dissolution or winding up of the Company) shall be
declared or paid or set aside for payment or other distribution shall be
declared or made upon the common stock, excess stock or any other stock of the
Company ranking junior to or on a parity with the Preferred Stock of such class
or series as to dividends or upon liquidation, nor shall any common stock,
excess stock or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such class or series as to dividends or upon
liquidation, dissolution or winding up of the Company 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 shares of any such stock)
by the Company (except by conversion into or exchange for other stock of the
Company ranking junior to the Preferred Stock of such class or series as to
dividends and upon liquidation, dissolution or winding up of the Company).
Any dividend payment made on shares of a class or series of Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such class or series which remains payable.
REDEMPTION
If so provided in the applicable prospectus supplement, the shares of
Preferred Stock will be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such prospectus supplement.
The prospectus supplement relating to a class or series of Preferred Stock
that is subject to mandatory redemption will specify the number of shares of
such Preferred Stock that shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with
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an amount equal to all accrued and unpaid dividends thereon (which shall not, if
such Preferred Stock does not have a cumulative dividend, include any
accumulation in respect of unpaid dividends for prior dividend periods) to the
date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable prospectus supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of stock of the Company, the terms of such Preferred
Stock may provide that, if no such stock shall have been issued or to the extent
the net proceeds from any issuance are insufficient to pay in full the aggregate
redemption price then due, such Preferred Stock shall automatically and
mandatorily be converted into shares of the applicable stock of the Company
pursuant to conversion provisions specified in the applicable prospectus
supplement.
Notwithstanding the foregoing, unless (i) if such class or series of
Preferred Stock has a cumulative dividend, full cumulative dividends on all
shares of any class or series of Preferred Stock shall have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past dividend periods and the then
current dividend period and (ii) if such class or series of Preferred Stock does
not have a cumulative dividend, full dividends on the Preferred Stock of any
class or 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 class or series of Preferred Stock
shall be redeemed unless all outstanding shares of Preferred Stock of such class
or series are simultaneously redeemed; provided, however, that the foregoing
shall not prevent the purchase or acquisition of shares of Preferred Stock of
such class or series pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of Preferred Stock of such class or
series; and, unless (i) if such class or series of Preferred Stock has a
cumulative dividend, full cumulative dividends on all outstanding shares of any
class or series of Preferred Stock have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period and
(ii) if such class or series of Preferred Stock does not have a cumulative
dividend, full dividends on the Preferred Stock of any class or series have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for the then current dividend period,
the Company shall not purchase or otherwise acquire directly or indirectly any
shares of Preferred Stock of such class or series (except by conversion into or
exchange for stock of the Company ranking junior to the Preferred Stock of such
class or series as to dividends and upon liquidation, dissolution or winding up
of the Company).
If fewer than all of the outstanding shares of Preferred Stock of any class
or series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
by such holders (with adjustments to avoid redemption of fractional shares) or
any other equitable method determined by the Company that will not result in the
issuance of any Excess Preferred Stock (as hereinafter defined).
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 a share of Preferred
Stock of any class or series to be redeemed at the address shown on the stock
transfer books of the Company. Each notice shall state: (i) the redemption date;
(ii) the number of shares and class or series of the Preferred Stock to be
redeemed; (iii) the redemption price; (iv) the place or places where
certificates for such Preferred Stock are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vi) the date upon which the holder's
conversion rights, if any, as to such shares shall terminate. If fewer than all
the shares of Preferred Stock of any class or series are to be redeemed, the
notice mailed to each such holder thereof shall also specify the number of
shares of Preferred Stock to be redeemed from each such holder. If notice of
redemption of any shares of Preferred Stock has been given and if the funds
necessary for such redemption have been set apart by the Company in trust for
the benefit of the holders of any shares of Preferred Stock so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such shares of Preferred Stock, such shares of Preferred Stock 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.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, then, before any distribution or payment shall be made to the
holders of any common stock, excess stock or any other class or series of stock
of the Company ranking junior to such class or series of Preferred Stock in the
distribution of
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assets upon any liquidation, dissolution or winding up of the Company, the
holders of each class or series of Preferred Stock shall be entitled to receive
out of assets of the Company legally available for distribution to stockholders
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 class or
series of Preferred Stock does not have a cumulative dividend). After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of such class or series of Preferred Stock will have no right or claim
to any of the remaining assets of the Company. In the event that, upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the legally available assets of the Company are insufficient to pay the amount
of the liquidating distributions on all outstanding shares of such class or
series of Preferred Stock and the corresponding amounts payable on all shares of
other classes or series of stock of the Company ranking on a parity with such
class or series of Preferred Stock in the distribution of assets upon any
liquidation, dissolution or winding up of the Company, then the holders of such
class or series of Preferred Stock and all other such classes or series of stock
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
shares of such class or series of Preferred Stock, the remaining assets of the
Company shall be distributed among the holders of any other classes or series of
stock ranking junior to such class or series of Preferred Stock upon any
liquidation, dissolution or winding up of the Company, according to their
respective rights and preferences and in each case according to their respective
number of shares. For such purposes, neither the consolidation or merger of the
Company with or into any other corporation nor the sale, lease, transfer or
conveyance of all or substantially all of the property or business of the
Company shall be deemed to constitute a liquidation, dissolution or winding up
of the Company.
VOTING RIGHTS
Holders of such class or series of Preferred Stock will not have any voting
rights, except as set forth below or as otherwise from time to time required by
law or as indicated in the applicable prospectus supplement.
Whenever dividends on any shares of such class or series of Preferred Stock
shall be in arrears for six or more quarterly periods, regardless of whether
such quarterly periods are consecutive, the holders of such shares of such class
or series of Preferred Stock (voting separately as a class with all other
classes or series of preferred stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
additional directors of the Company at a special meeting called by an officer of
the Company at the request of a holder of such class or series of Preferred
Stock or, if such special meeting is not called by an officer of the Company
within 30 days, at a special meeting called by a holder of such class or series
of Preferred Stock designated by the holders of record of at least 10% of the
shares of any such class or series of Preferred Stock (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the stockholders), or at the next annual meeting of stockholders, and
at each subsequent annual meeting until (i) if such class or series of Preferred
Stock has a cumulative dividend, all dividends accumulated on such shares of
Preferred Stock for the past dividend periods and the then current dividend
period shall have been fully paid or declared and a sum sufficient for the
payment thereof set apart for payment or (ii) if such class or series of
Preferred Stock does not have a cumulative dividend, four consecutive quarterly
dividends shall have been fully paid or declared and a sum sufficient for the
payment thereof set apart for payment. In such case, the entire Board of
Directors of the Company will be increased by two directors.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least two-thirds of the shares
of each class or series of Preferred Stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such class or series
voting separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of stock ranking senior to
such class or series of Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up of the
Company or reclassify any authorized stock 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 charter in respect of such class or series of Preferred
Stock, whether by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of such class
or series of Preferred Stock or the holders thereof; provided, however, that any
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increase in the amount of the authorized Preferred Stock or the creation or
issuance of any other class or series of Preferred Stock, or any increase in the
amount of authorized shares of such class or series, in each case ranking on a
parity with or junior to the Preferred Stock of such class or series with
respect to payment of dividends and 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 class or series of Preferred Stock
shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been irrevocably deposited in trust to effect such
redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any class or series
of Preferred Stock are convertible into Common Stock, Debt Securities or another
series of Preferred Stock will be set forth in the applicable prospectus
supplement relating thereto. Such terms will include the number of shares of
Common Stock or such other series of Preferred Stock or the principal amount of
Debt Securities into which the Preferred Stock is 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 such class or
series of Preferred Stock or the Company, the events requiring an adjustment of
the conversion price and provisions affecting conversion in the event of the
redemption of such class or series of Preferred Stock.
RESTRICTIONS ON OWNERSHIP
As discussed above under "Description of Common Stock--Restrictions on
Ownership," for the Company to qualify as a REIT under the Code, not more than
50% in value of its outstanding stock may be owned, actually or constructively,
by five or fewer individuals (as defined in the Code to include certain
entities) during the last half of a taxable year, and the stock must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months (or during a proportionate part of a shorter taxable year). In
addition, rent from Related Party Tenants (as defined above) is not qualifying
income for purposes of the gross income tests under the Code. Therefore, the
applicable articles supplementary for each class or series of Preferred Stock
will contain certain provisions restricting the ownership and transfer of such
class or series of Preferred Stock (the "Preferred Stock Ownership Limit
Provision"). Except as otherwise described in the applicable prospectus
supplement relating thereto, the provisions of each applicable articles
supplementary relating to the applicable Preferred Stock Ownership Limit will
provide as follows:
The Preferred Stock Ownership Limit Provision will provide that, subject to
certain exceptions contained in the applicable articles supplementary, no holder
of such class or series of Preferred Stock may own, or be deemed to own by
virtue of the constructive ownership provisions of the Code, Preferred Stock in
excess of the Preferred Stock Ownership Limit, which will be equal to 9.8% of
the outstanding Preferred Stock of any class or series. The constructive
ownership rules are complex and may cause Preferred Stock owned actually or
constructively by a group of related individuals and/or entities to be deemed to
be constructively owned by one individual or entity. As a result, the
acquisition of less than 9.8% of any class or series of Preferred Stock (or the
acquisition of an interest in an entity which owns Preferred Stock) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 9.8% of such class or
series of Preferred Stock, and thus subject such Preferred Stock to the
Preferred Stock Ownership Limit.
The Board of Directors will be entitled to waive the Preferred Stock
Ownership Limit with respect to a particular stockholder if evidence
satisfactory to the Board of Directors, with advice of the Company's tax
counsel, is presented that such ownership will not then or in the future
jeopardize the Company's status as a REIT. As a condition of such waiver, the
Board of Directors may require opinions of counsel satisfactory to it and/or an
undertaking from the applicant with respect to preserving the REIT status of the
Company.
Such articles supplementary will provide that a transfer of the class or
series of Preferred Stock that results in a person actually or constructively
owning shares of Preferred Stock in excess of the Preferred Stock Ownership
Limit, or which would cause the Company to be "closely held" within the meaning
of the Code or would otherwise result in failure to qualify as a REIT, will be
null and void as to the intended transferee, and the intended transferee will
acquire no rights or economic interest in those shares. In addition, shares
actually or constructively owned by a person in excess of the Preferred Stock
Ownership Limit, or which would otherwise cause the Company to be "closely held"
within the meaning of the Code or would otherwise result in failure to
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qualify as a REIT, will be automatically exchanged for shares of a separate
class of preferred stock that will be transferred, by operation of law to the
Company as trustee of a trust for the exclusive benefit of the transferee or
transferees to whom the shares are ultimately transferred (without violating the
Preferred Stock Ownership Limit) (the "Excess Preferred Stock"). While held in
trust, a class of Excess Preferred Stock will not be entitled to vote, it will
not be considered for purposes of any stockholder vote or the determination of a
quorum for such vote, and it will not be entitled to participate in any
distributions made by the Company (except upon liquidation). The intended
transferee or owner may, at any time a class of Excess Preferred Stock is held
by the Company in trust, transfer the class of Excess Preferred Stock to any
person whose ownership of such class or series of Excess Preferred Stock would
be permitted under the Preferred Stock Ownership Limit, at a price not to exceed
either (i) the price paid by the intended transferee or owner in the purported
transfer which resulted in the issuance of such class of Excess Preferred Stock
or (ii) if the intended transferee did not give full value for such class of
Excess Preferred Stock, a price equal to the market price on the date of the
purported transfer or the other event that resulted in the issuance of such
class of Excess Preferred Stock, at which time such class of Excess Preferred
Stock would automatically be exchanged for the corresponding class or series of
Preferred Stock. In addition, the Company would have the right, for a period of
90 days during the time a class of Excess Preferred Stock is held by the Company
in trust, to purchase all or any portion of such class of Excess Preferred Stock
from the intended transferee or owner at a price equal to the lesser of the
price paid for the stock by the intended transferee or owner (or, if the
intended transferee did not give full value for such class of Excess Preferred
Stock, a price equal to the market price on the date of the purported transfer
or other event that resulted in the issuance of such class of Excess Preferred
Stock) and the closing market price for the corresponding class of Preferred
Stock on the date the Company exercises its option to purchase the stock. This
period commences on the date of the violative transfer of ownership if the
intended transferee or owner gives notice of the transfer to the Company, or the
date the Board of Directors determines that a violative transfer or ownership
has occurred if no notice is provided.
All certificates representing shares of a class or series of Preferred
Stock will bear a legend referring to the restrictions described above.
The Preferred Stock Ownership Limit Provision is set as a percentage of the
number of outstanding shares of any class or series of Preferred Stock. As a
result, if the number of shares of any class or series of Preferred Stock is
reduced on a non-pro rata basis among all holders of such class or series,
Excess Preferred Stock may be created as a result of such reduction. In the
event that the Company's action causes such reduction of shares, the Company has
agreed to exercise its option to repurchase such shares of such class or series
of Excess Preferred Stock if the intended owner notifies the Company that it is
unable to sell its rights to such class or series of Excess Preferred Stock.
All persons who own a specified percentage (or more) of the outstanding
stock of the Company must file an affidavit with the Company containing
information regarding their ownership of stock as set forth in the Treasury
Regulations. Under current Treasury Regulations, the percentage is set between
one-half of one percent and five percent, depending on the number of record
holders of stock. In addition, each stockholder shall upon demand be required to
disclose to the Company in writing such information with respect to the actual
and constructive ownership of shares of stock of the Company as the Board of
Directors deems necessary to comply with the provisions of the Code applicable
to a REIT or to comply with the requirements of any taxing authority or
governmental agency.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue Depositary Shares, each of which will represent a
fractional interest of a share of a particular class or series of Preferred
Stock, as specified in the applicable prospectus supplement. Shares of a class
or series of Preferred Stock represented by Depositary Shares will be deposited
under a separate Deposit Agreement (each, a "Deposit Agreement") among the
Company, the depositary named therein (the "Preferred Stock Depositary") and the
holders from time to time of the depositary receipts issued by the Preferred
Stock Depositary which will evidence the Depositary Shares ("Depositary
Receipts"). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest of
a share of a particular class or series of Preferred Stock represented by the
Depositary Shares evidenced by such Depositary Receipt, to all the rights and
preferences of the class or series of Preferred Stock represented by such
Depositary Shares (including dividend, voting, conversion, redemption and
liquidation rights).
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The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of a class or series of Preferred Stock by the Company to the
Preferred Stock Depositary, the Company will cause the Preferred Stock
Depositary to issue, on behalf of the Company, the Depositary Receipts. Copies
of the applicable form of Deposit Agreement and Depositary Receipt may be
obtained from the Company upon request, and the statements made hereunder
relating to the Deposit Agreement and the Depositary Receipts to be issued
thereunder are summaries of certain provisions thereof and do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all of the provisions of the applicable Deposit Agreement and related Depositary
Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of a class or series of Preferred Stock
to the record holders of Depositary Receipts evidencing the related Depositary
Shares in proportion to the number of such Depositary Receipts owned by such
holders, subject to certain obligations of holders to file proofs, certificates
and other information and to pay certain charges and expenses to the Preferred
Stock Depositary.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Stock Depositary, unless the Preferred Stock
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Stock Depositary may, with the approval of the Company,
sell such property and distribute the net proceeds from such sale to such
holders.
No distribution will be made in respect of any Depositary Share to the
extent that it represents any class or series of Preferred Stock converted into
Excess Preferred Stock or otherwise converted or exchanged.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary (unless the related Depositary Shares have
previously been called for redemption or converted into Excess Preferred Stock
or otherwise), the holders thereof will be entitled to delivery at such office,
to or upon such holder's order, of the number of whole or fractional shares of
the class or series of Preferred Stock and any money or other property
represented by the Depositary Shares evidenced by such Depositary Receipts.
Holders of Depositary Receipts will be entitled to receive whole or fractional
shares of the related class or series of Preferred Stock on the basis of the
proportion of Preferred Stock represented by each Depositary Share as specified
in the applicable prospectus supplement, but holders of such shares of Preferred
Stock will not thereafter be entitled to receive Depositary Shares therefor. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
shares of Preferred Stock to be withdrawn, the Preferred Stock Depositary will
deliver to such holder at the same time a new Depositary Receipt evidencing such
excess number of Depositary Shares.
REDEMPTION
Whenever the Company redeems shares of a class or series of Preferred Stock
held by the Preferred Stock Depositary, the Preferred Stock Depositary will
redeem as of the same redemption date the number of Depositary Shares
representing shares of such class or series of Preferred Stock so redeemed,
provided the Company shall have paid in full to the Preferred Stock Depositary
the redemption price of the Preferred Stock to be redeemed plus an amount equal
to any accrued and unpaid dividends thereon to the date fixed for redemption.
The redemption price per Depositary Share will be equal to the corresponding
proportion of the redemption price and any other amounts per share payable with
respect to such class or series of Preferred Stock. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected pro rata (as nearly as may be practicable without creating
fractional Depositary Shares) or by any other equitable method determined by the
Company that will not result in the issuance of any Excess Preferred Stock.
From and after the date fixed for redemption, all dividends in respect of
the shares of a class or series of Preferred Stock so called for redemption will
cease to accrue, the Depositary Shares so called for redemption will
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no longer be deemed to be outstanding and all rights of the holders of the
Depositary Receipts evidencing the Depositary Shares so called for redemption
will cease, except the right to receive any moneys payable upon such redemption
and any money or other property to which the holders of such Depositary Receipts
were entitled upon such redemption and surrender thereof to the Preferred Stock
Depositary.
VOTING
Upon receipt of notice of any meeting at which the holders of a class or
series of Preferred Stock deposited with the Preferred Stock Depositary are
entitled to vote, the Preferred Stock Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Receipts evidencing the Depositary Shares which represent such class or series
of Preferred Stock. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for such class or series of Preferred Stock) will be entitled to instruct
the Preferred Stock Depositary as to the exercise of the voting rights
pertaining to the amount of Preferred Stock represented by such holder's
Depositary Shares. The Preferred Stock Depositary will vote the amount of such
class or series of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting the amount of such class or
series of Preferred Stock represented by such Depositary Shares to the extent it
does not receive specific instructions from the holders of Depositary Receipts
evidencing such Depositary Shares. The Preferred Stock Depositary shall not be
responsible for any failure to carry out any instruction to vote, or for the
manner or effect of any such vote made, as long as any such action or non-action
is in good faith and does not result from negligence or willful misconduct of
the Preferred Stock Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipt, as set forth in the applicable prospectus supplement.
CONVERSION
The Depositary Shares, as such, are not convertible into Common Stock or
any other securities or property of the Company, except in connection with
certain conversions in connection with the preservation of the Company's status
as a REIT. See "Description of Preferred Stock--Restrictions on Ownership."
Nevertheless, if so specified in the applicable prospectus supplement relating
to an offering of Depositary Shares, the Depositary Receipts may be surrendered
by holders thereof to the Preferred Stock Depositary with written instructions
to the Preferred Stock Depositary to instruct the Company to cause conversion of
a class or series of Preferred Stock represented by the Depositary Shares
evidenced by such Depositary Receipts into whole shares of Common Stock, other
shares of a class or series of Preferred Stock (including Excess Preferred
Stock) of the Company or other shares of stock, and the Company has agreed that
upon receipt of such instructions and any amounts payable in respect thereof, it
will cause the conversion thereof utilizing the same procedures as those
provided for delivery of Preferred Stock to effect such conversion. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in part
only, a new Depositary Receipt or Receipts will be issued for any Depositary
Shares not to be converted. No fractional shares of Common Stock will be issued
upon conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the last
business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Stock and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Stock
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts or that would be materially and
adversely inconsistent with the rights granted to
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the holders of the related class or series of Preferred Stock will not be
effective unless such amendment has been approved by the existing holders of at
least two thirds of the Depositary Shares evidenced by the Depositary Receipts
then outstanding. No amendment shall impair the right, subject to certain
exceptions in the Deposit Agreement, of any holder of Depositary Receipts to
surrender any Depositary Receipt with instructions to deliver to the holder the
related class or series of Preferred Stock and all money and other property, if
any, represented thereby, except in order to comply with law. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Receipt, to consent and agree to
such amendment and to be bound by the Deposit Agreement as amended thereby.
The Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the Preferred Stock Depositary if (i) such
termination is necessary to preserve the Company's status as a REIT or (ii) a
majority of each class or series of Preferred Stock subject to such Deposit
Agreement consents to such termination, whereupon the Preferred Stock Depositary
shall deliver or make available to each holder of Depositary Receipts, upon
surrender of the Depositary Receipts held by such holder, such number of whole
or fractional shares of each such class or series of Preferred Stock as are
represented by the Depositary Shares evidenced by such Depositary Receipts
together with any other property held by the Preferred Stock Depositary with
respect to such Depositary Receipts. The Company has agreed that if the Deposit
Agreement is terminated to preserve the Company's status as a REIT, then the
Company will use its best efforts to list each class or series of Preferred
Stock issued upon surrender of the related Depositary Shares on a national
securities exchange. In addition, the Deposit Agreement will automatically
terminate if (i) all outstanding Depositary Shares issued thereunder shall have
been redeemed, (ii) there shall have been a final distribution in respect of
each class or series of Preferred Stock subject to such Deposit Agreement in
connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such class or series of
Preferred Stock or (iii) each share of Preferred Stock subject to such Deposit
Agreement shall have been converted into stock of the Company not so represented
by Depositary Shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Stock Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary. A successor
Preferred Stock Depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of a class or
series of Preferred Stock represented by the Depositary Shares), gross
negligence or
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willful misconduct, and the Company and the Preferred Stock Depositary will not
be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Receipts, Depositary Shares or shares of a class or series of
Preferred Stock represented thereby unless satisfactory indemnity is furnished.
The Company and the Preferred Stock Depositary may rely on written advice of
counsel or accountants, or information provided by persons presenting shares of
a class or series of Preferred Stock represented thereby for deposit, holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information, and on documents believed in good faith to be genuine and
signed by a proper party.
In the event the Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on the
one hand, and the Company, on the other hand, the Preferred Stock Depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the six months ended
June 30, 1998 and for the years ended December 31, 1997, 1996, 1995, 1994 and
1993 was 3.0, 3.5, 3.5, 2.8, 2.9 and 2.7, respectively. The Company's ratio of
earnings to combined fixed charges and preferred stock dividend requirements for
the six months ended June 30, 1998 and for the years ended December 31, 1997,
1996, 1995, 1994 and 1993 was 2.2, 2.3, 2.3, 2.2, 2.3 and 2.5, respectively.
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before income
taxes and extraordinary items. Fixed charges consist of interest costs, whether
expensed or capitalized, the interest component of rental expense, and
amortization of debt discounts and issue costs, whether expensed or capitalized.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TO THE COMPANY OF ITS REIT ELECTION
The following summary of certain federal income tax considerations to the
Company is based on current law, is for general information only, and is not tax
advice. The tax treatment of a holder of any of the Offered Securities will vary
depending upon the terms of the specific securities acquired by such holder, as
well as his particular situation, and this discussion does not attempt to
address any aspects of federal income taxation relating to holders of Offered
Securities. Certain federal income tax considerations relevant to holders of the
Offered Securities will be provided in the applicable prospectus supplement
relating thereto.
EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT,
AS WELL AS HIS OWN TAX ADVISOR, REGARDING THE TAX CONSEQUENCES TO HIM OF THE
ACQUISITION, OWNERSHIP AND SALE OF THE OFFERED SECURITIES, INCLUDING THE
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION,
OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY AS A REIT
General. The Company has elected to be taxed as a real estate investment
trust under Sections 856 through 860 of the Code, commencing with its taxable
year beginning January 1, 1992. The Company believes that, commencing with its
taxable year beginning January 1, 1992, it has been organized and is operating
in such a manner as to qualify for taxation as a REIT under the Code commencing
with such taxable year, and the Company intends to continue to operate in such a
manner, but no assurance can be given that it has operated or will operate in a
manner so as to qualify or remain qualified.
These sections of the Code and the corresponding Treasury Regulations are
highly technical and complex. The following sets forth the material aspects of
the sections that govern the Federal income tax treatment of a REIT. This
summary is qualified in its entirety by the applicable Code provisions, rules
and regulations promulgated thereunder, and administrative and judicial
interpretations thereof. Latham & Watkins has acted as tax counsel to the
Company in connection with the Offering and the Company's election to be taxed
as a REIT.
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As a condition to the closing of each offering of Offered Securities, other
than offerings of medium term notes and as otherwise specified in the applicable
prospectus supplement, tax counsel to the Company will render an opinion to the
underwriters of such offering to the effect that, commencing with the Company's
taxable year which began January 1, 1992, the Company has been organized in
conformity with the requirements for qualification as a REIT, and its proposed
method of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code. It must be emphasized that
this opinion will be based on various assumptions and will be conditioned upon
certain representations to be made by the Company as to factual matters and that
such tax counsel to the Company undertakes no obligation hereby to update any
such opinion subsequent to its date. In addition, this opinion will be based
upon the factual representations of the Company as set forth in this prospectus
and assumes that the actions described in this prospectus are completed in a
timely fashion. Moreover, such qualification and taxation as a REIT depends upon
the Company's ability to meet, through actual annual operating results,
distribution levels and diversity of stock ownership, the various qualification
tests imposed under the Code discussed below, the results of which have not been
and will not be reviewed by such tax counsel to the Company. Accordingly, no
assurance can be given that the actual results of the Company's operation of any
particular taxable year will satisfy such requirements. See"--Failure to
Qualify." Further, the anticipated income tax treatment described in this
prospectus may be changed, perhaps retroactively, by legislative, administrative
or judicial action at any time.
If the Company qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently
distributed to stockholders. This treatment substantially eliminates the "double
taxation" (at the corporate and stockholder levels) that generally results from
investment in a regular corporation. However, the Company will be subject to
federal income tax as follows: First, the Company will be taxed at regular
corporate rates on any undistributed real estate investment trust taxable
income, including undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the "alternative minimum tax" on
its items of tax preference. Third, if the Company has (i) net income from the
sale or other disposition of "foreclosure property" (defined generally as
property acquired by the Company through foreclosure or otherwise after a
default on a loan secured by the property or a lease of the property) which is
held primarily for sale to customers in the ordinary course of business or (ii)
other non-qualifying income from foreclosure property, it will be subject to tax
at the highest corporate rate on such income. Fourth, if the Company has net
income from prohibited transactions (which are, in general, certain sales or
other dispositions of property held primarily for sale to customers in the
ordinary course of business other than foreclosure property), such income will
be subject to a 100% tax. Fifth, if the Company should fail to satisfy the 75%
gross income test or the 95% gross income test (as discussed below), but has
nonetheless maintained its qualification as a real estate investment trust
because certain other requirements have been met, it will be subject to a 100%
tax on an amount equal to (a) the gross income attributable to the greater of
the amount by which the Company fails the 75% or 95% test, multiplied by (b) a
fraction intended to reflect the Company's profitability. Sixth, if the Company
should fail to distribute during each calendar year at least the sum of (i) 85%
of its real estate investment trust ordinary income for such year, (ii) 95% of
its real estate investment trust capital gain net income for such year, and
(iii) any undistributed taxable income from prior periods, the Company would be
subject to a 4% excise tax on the excess of such required distribution over the
amounts actually distributed. Seventh, if during the 10-year period (the
"Recognition Period") beginning on the first day of the first taxable year for
which the Company qualified as a REIT, the Company recognizes gain on the
disposition of any asset held by the Company as of the beginning of such
Recognition Period, then, to the extent of the excess of (a) the fair market
value of such asset as of the beginning of such Recognition Period over (b) the
Company's adjusted basis in such asset as of the beginning of such Recognition
Period (the "Built-in Gain"), such gain will be subject to tax at the highest
regular corporate rate pursuant to Internal Revenue Service ("IRS") regulations
that have not yet been promulgated. Eighth, if the Company acquires any asset
from a C Corporation (i.e., generally a corporation subject to full
corporate-level tax) in certain transactions in which the basis of the asset in
the hands of the Company is determined by reference to the basis of the asset
(or any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the Recognition Period
beginning on the date on which such asset was acquired by the Company, then, to
the extent of the Built-in Gain, such gain will be subject to tax at the highest
regular corporate rate pursuant to IRS regulations that have not yet been
promulgated. The results described above with respect to the recognition of
Built-In Gain assume that the Company will make an election pursuant to IRS
Notice 88-19.
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Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors,
(2) the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest, (3) which would be taxable as
a domestic corporation, but for Sections 856 through 859 of the Code, (4) which
is neither a financial institution nor an insurance company subject to certain
provisions of the Code, (5) the beneficial ownership of which is held by 100 or
more persons, (6) during the last half of each taxable year, not more than 50%
in value of the outstanding stock of which is owned, directly or constructively,
by five or fewer individuals (as defined in the Code to include certain
entities) and (7) which meets certain other tests, described below, regarding
the nature of its income, assets and the amount of its distrubition. The Code
provides that conditions (1) to (4) must be met during the entire taxable year
and that condition (5) must be met during at least 335 days of a taxable year of
12 months, or during a proportionate part of a taxable year of less than 12
months. Conditions (5) and (6) will not apply until after the first taxable year
for which an election is made to be taxed as a real estate investment trust. For
purposes of condition (6), pension funds and certain other tax-exempt entities
are treated as individuals, subject to a "look-through" exception.
The Company has satisfied condition (5) and believes that it has issued
sufficient shares to allow it to satisfy condition (6). In addition, the
Company's charter provides (and the Articles Supplementary for any series of
Preferred Stock will provide) for restrictions regarding ownership and transfer
of the Company's capital stock, which restrictions are intended to assist the
Company in continuing to satisfy the share ownership requirements described in
(5) and (6) above. The ownership and transfer restrictions pertaining generally
to the Common Stock and the Preferred Stock are described in "Description of
Common Stock--Restrictions on Ownership and Transfer" and "Description of
Preferred Stock--Restrictions on Ownership and Transfer" or, to the extent such
restrictions differ from those described in this prospectus, such restrictions
will be described in the applicable prospectus supplement. There can be no
assurance, however, that such transfer restrictions will in all cases prevent a
violation of the stock ownership provisions described in (5) and (6) above. If
the Company fails to satisfy such share ownership requirements, the Company's
status as a REIT will terminate, provided, however, if the Company complies with
the rules contained in the applicable Treasury Regulations requiring the Company
to attempt to ascertain the actual ownership of its shares, and the Company does
not know, and would not have known through the exercise of reasonable diligence,
whether it failed to meet the requirement set forth in condition (6) above, the
Company will be treated as having met such requirement. See "--Failure to
Qualify." In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. The Company has a calendar year.
The Company owns and operates a number of properties through subsidiaries.
Code Section 856(i) provides that a corporation which is a "qualified REIT
subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a "qualified REIT
subsidiary" shall be treated as assets, liabilities and such items (as the case
may be) of the REIT. Thus, in applying the requirements described herein, the
Company's "qualified REIT subsidiaries" will be ignored, and all assets,
liabilities and items of income, deduction, and credit of such subsidiaries will
be treated as assets, liabilities and items of the Company. The Company has
received a ruling from the IRS to the effect that all of the subsidiaries that
were held by the Company prior to January 1, 1992, the effective date of its
election to be taxed as a REIT, will be "qualified REIT subsidiaries" upon such
effective date of the Company's REIT election. Moreover, with respect to each
subsidiary of the Company formed subsequent to January 1, 1992, the Company has
owned 100% of the stock of such subsidiary at all times during the period such
subsidiary has been in existence. Therefore, all of the Company's subsidiaries
are "qualified REIT subsidiaries" within the meaning of the Code. For tax years
of the Company beginning on or after January 1, 1998, any corporation wholly
owned by a REIT is permitted to be treated as a "qualified REIT subsidiary"
regardless of whether such subsidiary has always been owned by the REIT.
In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character of the
assets and gross income of the partnership will retain the same character in the
hands of the real estate investment trust for purposes of Section 856 of the
Code, including satisfying the gross income tests and the asset tests. Thus, the
Company's proportionate share of the assets, liabilities and items of income of
the partnerships in which the Company is a
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partner will be treated as assets, liabilities and items of income of the
Company for purposes of applying the requirements described herein.
Income Tests. In order to maintain qualification as a REIT, the Company
annually must satisfy two gross income requirements. First, at least 75% of the
Company's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the Company's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments, dividends, interest and gain
from the sale or disposition of stock or securities (or from any combination of
the foregoing).
Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a real estate investment trust
described above only if several conditions are met. First, the amount of rent
must not be based in whole or in part on the income or profits of any person.
However, an amount received or accrued generally will not be excluded from the
term "rents from real property" solely by reason of being based on a fixed
percentage or percentages of receipts or sales. Second, the Code provides that
rents received from a tenant will not qualify as "rents from real property" in
satisfying the gross income tests if the real estate investment trust, or an
actual or constructive owner of 10% or more of the real estate investment trust,
directly or constructively owns 10% or more of such tenant (a "Related Party
Tenant"). Third, if rent attributable to personal property leased in connection
with a lease of real property is greater than 15% of the total rent received
under the lease, then the portion of rent attributable to such personal property
will not qualify as "rents from real property." Finally, for rents received to
qualify as "rents from real property," the real estate investment trust
generally must not operate or manage the property or furnish or render services
to the tenants of such property (subject to a 1% de minimis exception), other
than through an independent contractor from whom the real estate investment
trust derives no revenue; provided, however, the Company may directly perform
certain services that are "usually or customarily rendered" in connection with
the rental of space for occupancy only and are not otherwise considered
"rendered to the occupant" of the property. The Company has not charged and will
not charge rent for any property that is based in whole or in part on the income
or profits of any person (except by reason of being based on a percentage of
receipts or sales, as described above), the Company has not and will not rent
any property to a Related Party Tenant, and the Company has not and will not
derive rental income attributable to personal property (other than personal
property leased in connection with the lease of real property, the amount of
which is less than 15% of the total rent received under the lease). The Company
directly performs services under certain of its leases. The Company has received
a ruling from the IRS providing that the performance of the types of services
provided by the Company will not cause the rents received with respect to such
leases to fail to qualify as "rents from real property." Notwithstanding the
foregoing, the Company may have taken and may continue to take certain of the
actions set forth above to the extent such actions will not, based on the advice
of tax counsel to the Company, jeapordize the Company's status as a REIT.
The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales.
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a real estate
investment trust for such year if it is entitled to relief under certain
provisions of the Code. These relief provisions will generally be available if
the Company's failure to meet such tests was due to reasonable cause and not due
to willful neglect, the Company attaches a schedule of the sources of its income
to its Federal income tax return, and any incorrect information on the schedule
was not due to fraud with intent to evade tax. It is not possible, however, to
state whether in all circumstances the Company would be entitled to the benefit
of these relief provisions. As discussed above under "--General," even if these
relief provisions apply, a tax would be imposed with respect to the excess net
income.
Any gain realized by the Company on the sale of any property held as
inventory or other property held primarily for sale to customers in the ordinary
course of business will be treated as income from a prohibited transaction that
is subject to a 100% penalty tax. Such prohibited transaction income may also
have an adverse
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effect upon the Company's ability to satisfy the income tests for qualification
as a REIT. Under existing law, whether property is held as inventory or
primarily for sale to customers in the ordinary course of business is a question
of fact that depends on all the facts and circumstances with respect to the
particular transaction. The Company holds the Properties for investment with a
view to long-term appreciation, engaged in the business of acquiring,
developing, owning and operating the Properties (and other properties) and makes
such occasional sales of the Properties as are consistent with the Company's
investment objectives. There can be no assurance, however, that the IRS might
not contend that one or more of such sales is subject to the 100% penalty tax.
Asset Tests. The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by real
estate assets (including (i) assets held by the Company's qualified REIT
subsidiaries and the Company's allocable share of real estate assets held by
partnerships in which the Company owns an interest and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Company),
cash, cash items and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those in the
75% asset class. Third, of the investments included in the 25% asset class, the
value of any one issuer's securities owned by the Company may not exceed 5% of
the value of the Company's total assets and the Company may not own more than
10% of any one issuer's outstanding voting securities.
The Company currently has numerous direct and indirect wholly-owned
subsidiaries. As set forth above, the ownership of more than 10% of the voting
securities of any one issuer by a REIT is prohibited by the asset tests.
However, if the Company's subsidiaries are "qualified REIT subsidiaries" as
defined in the Code, such subsidiaries will not be treated as separate
corporations for federal income tax purposes. Thus, the Company's ownership of
stock of a "qualified REIT subsidiary" will not cause the Company to fail the
asset tests.
The Company owns 100% of the nonvoting preferred stock of Kimco Realty
Service, Inc. (the "Management Company"). The Company does not and will not own
any of the voting securities of the Management Company, and therefore the
Company will not be considered to own more than 10% of the voting securities of
the Management Company. In addition, the Company believes (and has represented
to counsel to the Company for purposes of its opinion, as discussed below) that
the value of the securities of the Management Company to be held by the Company
did not exceed at any time up to and including the date of this prospectus 5% of
the total value of the Company's assets and will not exceed such amount in the
future. Tax counsel to the Company, in rendering its opinion as to the
qualification of the Company as a REIT, will be relying on representations of
the Company to such effect with respect to the value of such securities and
assets. No independent appraisals will be obtained to support this conclusion.
There can be no assurance that the IRS will not contend that the value of the
securities of the Management Company held by the Company exceeds the 5% value
limitation.
After initially meeting the asset tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset values.
If the failure to satisfy the asset tests results from an acquisition of
securities or other property during a quarter, the failure can be cured by the
disposition of sufficient nonqualifying assets within 30 days after the close of
the quarter. The Company intends to maintain adequate records of the value of
its assets to ensure compliance with the asset tests and to take such other
actions within 30 days after the close of any quarter as may be required to cure
any noncompliance. If the Company fails to cure noncompliance with the asset
tests within such time period, the Company would cease to qualify as a REIT.
Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its stockholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Company's net capital gain) and (ii) 95% of the excess of the
net income, if any, from foreclosure property over the tax imposed on such
income, minus (B) the excess of the sum of certain items of non-cash income
(i.e., income attributable to leveled stepped rents, original issue discount or
purchase money discount debt, or a like-kind exchange that is later determined
to be taxable) over 5% of "REIT taxable income" as described in clause (A)(i)
above. In addition, if the Company disposes of any asset during its Recognition
Period, the Company will be required, pursuant to IRS regulations which have not
yet been promulgated, to distribute at least 95% of the
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Built-in Gain (after tax), if any, recognized on the disposition of such asset.
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable year if declared before the Company timely files its tax
return for such year and if paid on or before the first regular dividend payment
after such declaration. The amount distributed must not be preferential--i.e.,
each holder of shares of Common Stock and each holder of shares of each class of
Preferred Stock must receive the same distribution per share. To the extent that
the Company does not distribute all of its net capital gain or distributes at
least 95%, but less than 100%, of its "real estate investment trust taxable
income," as adjusted, it will be subject to tax thereon at regular ordinary and
capital gain corporate tax rates. Furthermore, if the Company should fail to
distribute during each calendar year at least the sum of (i) 85% of its real
estate investment trust ordinary income for such year, (ii) 95% of its real
estate investment trust capital gain income for such year, and (iii) any
undistributed taxable income from prior periods, the Company would be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. The Company intends to make timely distributions
sufficient to satisfy this annual distribution requirement.
It is possible that the Company, from time to time, may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement due to
timing differences between (i) the actual receipt of income and actual payment
of deductible expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at taxable income of the Company. In the event that
such timing differences occur, in order to meet the 95% distribution
requirement, the Company may find it necessary to arrange for short-term, or
possibly long-term, borrowings or to pay dividends in the form of taxable stock
dividends.
Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a year by paying "deficiency dividends"
to stockholders in a later year, which may be included in the Company's
deduction for dividends paid for the earlier year. Thus, the Company may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Company will be required to pay interest based upon the amount of any
deduction taken for deficiency dividends and would be subject to any applicable
penalty provisions.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Such a failure to qualify for taxation as a REIT could
have an adverse effect on the market value and marketability of the Offered
Securities. Distributions to stockholders in any year in which the Company fails
to qualify will not be deductible by the Company nor will they be required to be
made. As a result, the Company's failure to qualify as a REIT would
substantially reduce the cash available for distribution by the Company to its
stockholders. In such event, to the extent of current and accumulated earnings
and profits, all distributions to stockholders will be taxable as ordinary
income and, subject to certain limitations of the Code, corporate distributees
may be eligible for the dividends received deduction. Unless entitled to relief
under specific statutory provisions, the Company will also be disqualified from
taxation as a REIT for the four taxable years following the year during which
qualification was lost. It is not possible to state whether in all circumstances
the Company would be entitled to such statutory relief.
OTHER TAX MATTERS
Certain of the Company's investments are through partnerships which may
involve special tax risks. Such risks include possible challenge by the IRS of
(a) allocations of income and expense items, which could affect the computation
of income of the Company and (b) the status of the partnerships as partnerships
(as opposed to associations taxable as corporations) for income tax purposes.
Treasury Regulations that are effective as of January 1, 1997 provide that a
domestic partnership is generally taxed as a partnership unless it elects to be
taxed as an association taxable as a corporation. None of the partnerships in
which the Company is a partner has made or intends to make such an election.
Such Regulations provide, however, that a partnership's claimed classification
will be respected for periods prior to such date if the entity had a reasonable
basis for its claimed classification, and such partnership had not been notified
in writing on or before May 8, 1996 that the classification of such entity was
under examination. If any of the partnerships were treated as an association for
a
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prior period, and (i) if the Company's ownership in any such partnership
exceeded 10% of the partnership's voting interest or (ii) the value of such
interest exceeded 5% of the value of the Company's assets, the Company would
cease to qualify as a REIT for such period and possibly future periods. See
"--Failure to Qualify." Moreover, the deemed change in classification of such a
partnership from an association to a partnership effective as of January 1, 1997
would be a taxable event. The Company believes that each of the partnerships
have been properly treated for tax purposes as a partnership (and not as an
association taxable as a corporation). However, no assurance can be given that
the IRS may not successfully challenge the status of any of the partnerships.
The Company may be subject to state or local taxation in various state or
local jurisdictions, including those in which it transacts business. The state
or local tax treatment of the Company may not conform to the federal income tax
consequences described above. Consequently, prospective investors should consult
their own tax advisors regarding the effect of state and local tax laws on an
investment in the Company.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Securities will be named in the applicable prospectus
supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices
at the time of sale or at negotiated prices. The Company also may, from time to
time, authorize underwriters acting as the Company's agents to offer and sell
the Offered Securities upon the terms and conditions as are set forth in the
applicable prospectus supplement. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent. Underwriters may sell Offered 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 agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable prospectus supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Securities may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.
If so indicated in the applicable prospectus supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such prospectus supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such prospectus supplement.
Each Contract will be for an amount not less than, and the aggregate
principal amount of Offered Securities sold pursuant to Contracts shall be not
less nor more than, the respective amounts stated in the applicable prospectus
supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but will in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Offered Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Offered Securities
are being sold to underwriters, the Company shall have sold to such underwriters
the total principal amount of the Offered Securities less the principal amount
thereof covered by Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
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EXPERTS
The Company's consolidated balance sheet as of December 31, 1997 and 1996
and the consolidated statements of income, stockholders' equity and cash flows
for each of the years in the three year period ended December 31, 1997 and the
related financial statement schedules and the combined historical summary of
revenue and certain operating expenses of certain acquired properties (the "1997
Acquired Properties") for the year ended December 31, 1996 and the combined
historical summary of revenue and certain operating expenses of certain acquired
properties (the "1998 Acquired Properties") for the year ended December 31, 1997
and the historical summary of revenues of certain acquired Metropolitan Life
properties (the "Met Life Properties") for the year ended December 31, 1997 and
the combined historical summary of revenues and certain operating expenses of
certain acquired properties (the "Second 1998 Acquired Properties") for the year
ended December 31, 1997, all incorporated by reference in this prospectus
supplement and the accompanying prospectus have been incorporated herein and
therein in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements of The Price REIT, Inc. included in
The Price REIT, Inc.'s Annual Report (Form 10-K) for the year ended December 31,
1997, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company
by Latham & Watkins, New York, New York and for any underwriters, dealers or
agents by Brown & Wood LLP, New York, New York. Latham & Watkins and Brown &
Wood LLP will rely on Ballard Spahr Andrews & Ingersoll, Baltimore, Maryland, as
to certain matters of Maryland law. Certain members of Latham & Watkins and
their families own beneficial interests in less than 1% of the common stock of
the Company.
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$100,000,000
[KIMCO REALTY CORPORATION LOGO]
% SENIOR NOTES DUE 2009
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
CHASE SECURITIES INC.
LEHMAN BROTHERS
FEBRUARY , 1999
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