As filed with the Securities and Exchange Commission on November 10, 1997
Registration No. 333-34605
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM S-4/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CARRAMERICA REALTY CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
Maryland 6798 52-1796339
-------- ---- ----------
<S> <C> <C>
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of Incorporation or Organization) Classification
Code Number)
</TABLE>
CARRAMERICA REALTY, L.P.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
Delaware 6798 52-1976308
-------- ---- ----------
<S> <C> <C>
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of Incorporation or Organization) Classification
Code Number)
</TABLE>
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
(202) 624-7500
--------------------------------------------------------------------------
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrants' Principal Executive Offices)
Brian K. Fields
Chief Financial Officer
CarrAmerica Realty Corporation
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
(202) 624-7500
--------------------------------------------------------------------------
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
----------------
Copies to:
J. Warren Gorrell, Jr., Esq.
David W. Bonser, Esq.
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Approximate date of commencement of proposed sale to the public: As soon as
possible after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Regulation G, check the following box. | |
================================================================================
The Registrants hereby amend the Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrants shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted before the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful before
registration or qualification under the securities laws of any such State.
<PAGE>
Subject to Completion
Dated November 10, 1997
PROSPECTUS
[CarrAmerica Logo]
CARRAMERICA REALTY CORPORATION
CARRAMERICA REALTY, L.P.
Offer to Exchange
7.20% Exchange Notes due 2004 for Any and All Outstanding 7.20% Notes due 2004
and
7.375% Exchange Notes due 2007 for Any and All Outstanding 7.375% Notes due 2007
The Exchange Offer and Withdrawal Rights Will Expire at 5:00 p.m.,
New York City Time, on December [ ], 1997, Unless Extended
CarrAmerica Realty Corporation, a Maryland corporation (the "Company"),
and CarrAmerica Realty, L.P., a Delaware limited partnership (the "Guarantor"
and, together with the Company, the "Issuers"), hereby offer, upon the terms and
subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange $1,000 principal amount of the Company's 7.20% Exchange Notes due 2004
(the "New Seven-Year Notes") for each $1,000 principal amount of the Company's
issued and outstanding 7.20% Notes due 2004 (the "Old Seven-Year Notes" and,
together with the New Seven-Year Notes, the "Seven-Year Notes") and $1,000
principal amount of the Company's 7.375% Exchange Notes due 2007 (the "New
Ten-Year Notes") for each $1,000 principal amount of the Company's issued and
outstanding 7.375% Notes due 2007 (the "Old Ten-Year Notes" and, together with
the New Ten-Year Notes, the "Ten-Year Notes"). All of such Notes are guaranteed
by the Guarantor. As of the date of this Prospectus, there were outstanding
$150,000,000 principal amount of Old Seven-Year Notes and $125,000,000 principal
amount of Old Ten-Year Notes (collectively, the "Old Notes"). The terms of the
New Seven-Year Notes and the New Ten-Year Notes (collectively, the "New Notes"
and, together with the Old Notes, the "Notes") are identical in all material
respects to the Old Notes, except that the New Notes will be freely transferable
by their holders (except as described herein). The New Notes evidence the same
debt as the Old Notes and will be issued and entitled to the same benefits under
the Indenture relating to the Old Notes.
Interest on the Notes is payable semiannually on January 1 and July 1
of each year, commencing January 1, 1998. Holders who exchange their Old Notes
for New Notes in the Exchange Offer will receive interest accrued on their Old
Notes and interest accrued on their New Notes in one interest payment, payable
on January 1, 1998. The Notes are redeemable, in whole or in part, at the option
of the Company at any time at a redemption price equal to the sum of (i) the
principal amount of the Notes being redeemed plus (ii) accrued interest thereon
to the date of redemption plus (iii) the Make-Whole Amount (as defined), if any.
The Notes are senior unsecured obligations of the Company and rank equally with
each other and with the Company's other unsecured and unsubordinated
indebtedness. The Notes are effectively subordinated to mortgages and other
secured indebtedness of the Company as well as to indebtedness and other
liabilities of the Company's subsidiaries. The Company's obligations under the
Notes are unconditionally guaranteed by the Guarantor.
The Old Notes originally were issued and sold on July 1, 1997 in a
transaction not registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on the exemptions provided in Section 4(2) of and
Rule 144A under the Securities Act. The Issuers are making the Exchange Offer in
reliance on positions of the staff of the U.S. Securities and Exchange
Commission (the "SEC") set forth in certain no-action letters issued to other
parties in other transactions. The Issuers have not sought their own no-action
letter, however, and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the
(Cover continued on next page)
---------------------
See "Risk Factors" beginning on page 9 for a discussion of certain risk
factors that should be considered by holders before deciding whether or not to
tender their Old Notes in the Exchange Offer.
---------------------
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 November , 1997.
<PAGE>
(Cover continued from previous page)
Exchange Offer. Based upon such positions of the SEC staff, the Issuers believe
that the New Notes issued in the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by the holders thereof
(other than a holder that is a broker-dealer, as set forth below, or an
"affiliate" of the Issuers within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and such holder has no arrangement or
understanding with any person to participate in a distribution of such New
Notes. Holders of Old Notes accepting the Exchange Offer are required to
represent to the Issuers in the Letter of Transmittal that such conditions have
been met. Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Issuers will use their reasonable
best efforts to make this Prospectus available to any such broker-dealer for use
in connection with any such resale for such period of time as broker-dealers
must deliver a prospectus, up to 90 days after the consummation of the Exchange
Offer.
The New Notes are new securities for which there currently is no
trading market. The Issuers do not intend to apply for listing of the New Notes
on any securities exchange or for quotation through the Nasdaq quotation system.
The Initial Purchasers (as defined) have advised the Company that they currently
intend to make a market in the New Notes after the Exchange Offer as permitted
by applicable laws and regulations, although they are not obligated to do so and
may discontinue any market making activity at any time without notice.
Accordingly, there can be no assurance that a trading market for the New Notes
will develop or, if one does develop, that it will be sustained. If an active
trading market for the New Notes fails to develop or be sustained, the trading
price of the New Notes could be materially adversely affected.
Any Old Notes not tendered and accepted in the Exchange Offer will
remain subject to the existing restrictions on transfer of the Old Notes, and
the Issuers will have no further obligations to the holders (other than to the
Initial Purchasers) of such Old Notes to provide for their registration under
the Securities Act. It is not expected that a trading market in the Old Notes
will develop while they are subject to restrictions on transfer. In addition, a
holder's ability to sell Old Notes could be adversely affected to the extent
that Old Notes are tendered and accepted in the Exchange Offer.
The Issuers will accept for exchange any and all Old Notes that are
validly tendered and not withdrawn on or before 5:00 p.m., New York City time,
on the date the Exchange Offer expires, which will be December [ ], 1997 (the
"Expiration Date"), unless the Exchange Offer is extended by the Issuers in
their sole discretion, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended. Tenders of Old
Notes may be withdrawn at any time before 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Offer is not conditioned upon any minimum amount
of Old Notes being tendered for exchange, but the Exchange Offer is subject to
certain conditions that may be waived by the Issuers and to certain other terms
and conditions. Old Notes may be tendered only in denominations of $1,000 and
integral multiples thereof. The Issuers have agreed to pay all of the expenses
incurred by them in connection with the Exchange Offer.
The Issuers will not receive any cash proceeds from the issuance of the
New Notes in the Exchange Offer.
This Prospectus, together with the Letter of Transmittal, is being
first sent to all registered holders of Old Notes on or about November , 1997.
<PAGE>
TABLE OF CONTENTS
Information Incorporated by Reference................. 2
Available Information................................. 2
Summary............................................... 3
Risk Factors.......................................... 9
The Exchange Offer.................................... 16
Description of Notes.................................. 22
Note Guarantees .................................... 30
Certain Federal Income Tax Consequences............... 31
The Company........................................... 32
Capitalization........................................ 35
Ratios of Earnings to Fixed Charges.................... 36
Recent Developments................................... 36
Plan of Distribution.................................. 37
Legal Matters......................................... 37
Experts............................................... 37
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The documents listed below have been filed by the Issuers with
the U.S. Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and are incorporated
herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
3. The Company's Current Reports on Form 8-K filed with the SEC on
January 3, 1997; January 23, 1997 (and a Form 8-K/A related thereto
filed on January 27, 1997); January 27, 1997; January 31, 1997;
February 12, 1997; March 26, 1997; April 21, 1997; June 20, 1997; June
25, 1997; June 27, 1997; July 1, 1997; July 11, 1997; August 4, 1997
(and a Form 8-K/A related thereto filed on August 8, 1997); August 12,
1997; August 14, 1997; August 28, 1997; October 30, 1997 (two filings);
October 31, 1997; and November 6, 1997;
4. The Guarantor's Registration Statement on Form 10 filed with the SEC
on October 8, 1997; and
5. The Guarantor's Current Report on Form 8-K filed with the SEC on
October 20, 1997.
All documents filed with the SEC after the filing of this Prospectus by
each of the Company and the Guarantor pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act and before termination of the Exchange Offer shall be
deemed to be incorporated by reference in this Prospectus and be a part hereof
from the time of filing of such document.
Any statement in this Prospectus or in a document incorporated or
deemed to be incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that
another statement in a subsequently filed document that is incorporated or
deemed to be incorporated by reference in this Prospectus modifies or supersedes
the first 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. Subject to the foregoing, all information appearing in this
Prospectus is qualified in its entirety by the information appearing in the
documents incorporated by reference.
AVAILABLE INFORMATION
The Issuers will provide without charge to any person to whom a copy of
this Prospectus is delivered, upon their written or oral request, a copy of any
or all of the documents incorporated by reference in this Prospectus (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference in such documents). Written requests for such copies should be
addressed to Secretary, CarrAmerica Realty Corporation, 1700 Pennsylvania
Avenue, N.W., Washington, D.C. 20006, telephone number (202) 624-7500.
The Issuers are subject to the informational requirements of the
Exchange Act, and, in accordance therewith, file reports and other information
with the SEC. Such reports and other information can be inspected at the Public
Reference Rooms maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the following regional offices of the SEC: 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such information can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Certain of such information
may be accessed electronically at the SEC's World Wide Web site at
http://www.sec.gov. In addition, the Company's Common Stock is listed on the New
York Stock Exchange and the reports filed by the Company with the SEC and other
information concerning
<PAGE>
the Company can be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
The Issuers have filed with the SEC a registration statement on
Form S-4 (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 securities offered hereby. 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 SEC.
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 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 securities offered hereby, 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 and accessed electronically at
the SEC's World Wide Web site at the address set forth in the previous
paragraph.
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information and financial statements, including the notes thereto,
appearing elsewhere in this Prospectus or incorporated herein by reference.
Unless the context indicates or requires otherwise, references in this
Prospectus to the "Company" are to CarrAmerica Realty Corporation, a Maryland
corporation, and its subsidiaries, references to the "Guarantor" are to
CarrAmerica Realty, L.P., a Delaware limited partnership, and references to the
"Issuers" are to the Company and the Guarantor collectively.
Special Note Regarding Forward-Looking Statements
Certain Statements in this Prospectus and in the documents incorporated
by reference herein, including those set forth under "Risk Factors" herein,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
national and local economic, business and real estate conditions that will,
among other things, affect demand for office properties, availability and
creditworthiness of prospective tenants, the level of lease rents and the
availability of financing for both tenants and the Company, adverse changes in
the real estate markets including, among other things, competition with other
companies, risks of real estate acquisition and development (including the
failure of pending acquisitions to close and pending developments to be
completed on time and within budget), governmental actions and initiatives, and
environmental/safety requirements.
The Company
The Company is a publicly-traded real estate investment trust ("REIT")
that focuses primarily on the acquisition, development, ownership and operation
of office properties in select suburban markets across the United States. As of
October 31, 1997, the Company owned interests in 232 operating properties
containing approximately 17.9 million square feet of office space, 16 projects
under construction that it intends to own and operate that will contain
approximately 2.7 million square feet of office space, and land and options to
acquire land that will support the future development of up to 4.6 million
square feet of office space. The operating properties owned by the Company as of
September 30, 1997 were 96.5% leased as of that date.
The following table provides an overview of the Company's portfolio by
market as of October 31, 1997:
<TABLE>
<CAPTION>
Square % of Total
Number of Footage of Portfolio Square Footage Buildable
Operating Operating Square Under Square
Market Properties Properties Footage (1) Construction Footage (2)
------ ---------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Northern California
San Francisco Bay Area 57 3,736,000 20.9% 726,000 --
Sacramento 8 314,000 1.7 -- --
Metropolitan Washington, D.C.
Downtown 10 2,404,000 13.4 -- 221,000
Suburban 7 1,273,000 7.1 -- --
Suburban Atlanta 43 1,891,000 10.6 204,000 216,000
Southern California
Orange County/Los Angeles 29 1,357,000 7.6 -- 181,000
San Diego 4 250,000 1.4 -- --
Suburban Chicago 10 1,571,000 8.8 91,000 620,000
Southeast Denver 12 1,210,000 6.8 238,000 562,000
Suburban Dallas 10 965,000 5.4 357,000 422,000
Suburban Seattle 17 741,000 4.1 376,000 278,000
Austin, Texas 10 709,000 4.0 313,000 1,309,000
Suburban Salt Lake City 8 463,000 2.6 -- 242,000
Suburban Phoenix 4 457,000 2.6 137,000 120,000
Florida 2 444,000 2.5 188,000 388,000
Suburban Portland, Oregon 1 81,000 0.5 46,000 --
--- ------ --- ------ ---------
Total 232 17,866,000 100.0% 2,676,000 4,559,000
=== ========== ===== ========= =========
</TABLE>
3
<PAGE>
- -----------------
(1) Represents the percentage of total square footage of the consolidated
properties.
(2) Represents buildable square footage of land (including land subject to
options but excluding square footage under construction) that is held for
development.
The Company has maintained a strategic alliance with Security Capital
U.S. Realty, a European real estate company (together with its wholly-owned
subsidiary, "SC-USREALTY") since November 1995. As of September 30, 1997,
SC-USREALTY owned approximately 42.6% of the outstanding common stock, par value
$.01 per share ("Common Stock"), of the Company (38.2% on a fully diluted
basis).
The Company and its predecessor, The Oliver Carr Company ("OCCO"), have
been in the real estate business in the Washington, D.C. metropolitan area for
more than 35 years. In late 1995, the Company shifted its focus from downtown
Washington, D.C. to a national business strategy. The Company provides a full
range of real estate services through a staff of over 1,000 employees located
throughout the United States. See "The Company."
Summary Selected Financial Information
The following table sets forth selected financial and operating
information for the Company as of and for the years ended December 31, 1996,
1995 and 1994. This information is derived from and should be read in
conjunction with the audited financial statements of the Company, which
statements have been audited by KPMG Peat Marwick LLP, independent public
accountants, and are incorporated in this Prospectus by reference. In addition,
the following tables set forth selected financial and operating information for
the Company as of and for the nine months ended September 30, 1997 and September
30, 1996, which information is derived from the unaudited financial statements
of the Company incorporated in this Prospectus by reference.
The following table also sets forth pro forma financial information for
the Company as of and for the nine months ended September 30, 1997 and for the
year ended December 31, 1996, giving effect to (i) the acquisitions of office
properties and land that have been consummated since the beginning of the
periods presented and the acquisitions of other office properties and land that
the Company expects to consummate in the near future, (ii) sales of Common
Stock, preferred stock and unsecured notes during 1996 and 1997, and (iii) the
repayment of certain outstanding indebtedness.
The following selected financial and operating information should be
read in conjunction with the discussion under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's most
recent annual report on Form 10-K and quarterly reports on Form 10-Q
incorporated herein by reference:
4
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------------------------- -----------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
---------- ------------------------- --------- -----------------------
1997 1997 1996 1996 1996 1995
---------- ---------- ---------- --------- ---------- --------
(IN THOUSANDS, EXCEPT PER SHARE AND PROPERTY DATA)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Real estate operating revenue:
Rental revenue.......................... $ 272,321 $ 231,832 $ 100,639 $334,927 $ 154,165 $ 89,539
Real estate service revenue............. 11,512 11,512 9,265 12,512 12,512 11,315
OmniOffices Executive Suites Revenue.... 34,084 5,000 42,019
Real estate operating expenses:
Property operating expenses............. 93,808 81,920 33,371 104,932 51,927 31,579
Interest expense........................ 40,774 37,266 21,857 54,281 31,630 21,873
Executive Suites Operating Expenses..... 28,697 4,124 36,718
General and administrative expenses..... 15,777 15,777 10,661 17,528 15,228 10,711
Depreciation and amortization........... 64,615 54,561 25,744 78,263 38,264 18,495
Net income............................... 69,346 50,663 15,502 78,217 24,318(1) 12,067(1)
Dividends paid to common stockholders.... 74,103 27,367 42,914 23,344
PER SHARE DATA:
Net income before extraordinary item..... $ 0.79 $ 0.87 $ 0.70 $ 0.81 $ 0.90 $ 0.90
Dividends paid to common stockholders.... 1.3125 1.3125 1.75 1.75
Weighted average shares outstanding(2)... 58,001 53,886 27,723 57,827 31,999 13,338
BALANCE SHEET DATA (AT PERIOD END):
Real estate, before accumulated
depreciation............................ $2,600,042 $2,309,069 $1,062,500 $1,539,998 $480,589
Real estate, after accumulated
depreciation............................ 2,432,580 2,141,607 946,791 1,420,341 381,716
Total assets............................. 2,635,010 2,351,017 1,043,908 1,536,564 458,860
Mortgages payable........................ 574,699 481,058 354,069 440,449 317,374
Senior Unsecured Notes................... 275,000 275,000
Other indebtedness....................... 133,678 147,000 72,000 215,000
Total indebtedness....................... 983,377 903,058 426,069 655,449 317,374
Minority interest........................ 120,444 67,331 51,611 50,597 34,850
Total stockholders' equity............... 1,458,101 1,308,114 545,748 787,478 95,543
OTHER DATA:
Net cash provided by operating
activities.............................. $ 95,904 $ 47,352 $ 82,300 $ 35,277
Net cash used by investing activities.... (745,313) (484,623) (876,947) (81,635)
Net cash provided by financing
activities.............................. 647,575 442,292 813,067 37,113
Funds from operations before minority
interest of the Unitholders of Carr
Partnerships(3)......................... $ 137,196 $ 107,592 $ 43,289 $160,098 $ 64,496(1) $ 33,190(1)
Weighted average shares and Units
outstanding(4).......................... 66,580 61,013 27,723 66,502 32,263 18,157
Number of properties (at period end)..... 243 230 87 243 159 13
Square footage (in thousands, at period
end).................................... 18,973 17,628 10,043 18,973 12,430 3,326
Percent leased (at period end)........... 96.5% 92.0% 93.6% 93.5%
EBITDA(5)................................ $ 181,972 $ 148,856 $ 67,482 $217,681 $ 99,428 $ 57,652
Ratio of EBITDA to interest expense...... 4.46x 4.00x 3.09x 4.01x 3.14x 2.64x
Ratio of earnings to fixed charges....... 2.05x 2.01x 1.74x 1.89x 1.74x 1.91x
<PAGE>
<CAPTION>
1994
--------
<S> <C>
OPERATING DATA:
Real estate operating revenue:
Rental revenue........................... $ 82,665
Real estate service revenue.............. 8,890
OmniOffices Executive Suites Revenue.....
Real estate operating expenses:
Property operating expenses.............. 29,707
Interest expense......................... 21,366
Executive Suites Operating Expenses......
General and administrative expenses...... 9,535
Depreciation and amortization............ 14,419
Net income................................ 12,097
Dividends paid to common stockholders..... 20,204
PER SHARE DATA:
Net income before extraordinary item...... $ 1.06
Dividends paid to common stockholders..... 1.75
Weighted average shares outstanding(2).... 11,387
BALANCE SHEET DATA (AT PERIOD END):
Real estate, before accumulated
depreciation............................. $429,537
Real estate, after accumulated
depreciation............................. 341,129
Total assets.............................. 407,948
Mortgages payable......................... 254,933
Senior Unsecured Notes....................
Other indebtedness........................
Total indebtedness........................ 254,933
Minority interest......................... 38,644
Total stockholders' equity................ 106,042
OTHER DATA:
Net cash provided by operating
activities............................... $ 29,908
Net cash used by investing activities..... (67,046)
Net cash provided by financing
activities............................... 32,652
Funds from operations before minority
interest of the Unitholders of Carr
Partnerships(3).......................... $ 30,640
Weighted average shares and Units
outstanding(4)........................... 15,878
Number of properties (at period end)...... 11
Square footage (in thousands, at period
end)..................................... 2,706
Percent leased (at period end)............ 95.9%
EBITDA(5)................................. $ 53,606
Ratio of EBITDA to interest expense....... 2.51x
Ratio of earnings to fixed charges........ 1.81 (6)
</TABLE>
- --------------------
(1) Net income and funds from operations include non-recurring deductions of
approximately $2.3 million and $1.9 million in 1996 and 1995, respectively,
related to the write-off of the unamortized purchase price of certain third
party real estate service contracts that were terminated in 1996 and the
termination of an agreement to acquire the development business of The
Evans Company in 1995.
(2) Weighted average shares outstanding used in calculating net income (loss)
per share includes Common Stock and stock equivalents and, when dilutive,
stock options and units of partnership interest.
(3) The Company believes that funds from operations is helpful to investors as
a measure of the performance of an equity REIT because, along with cash
flow from operating activities, financing activities and investing
activities, it provides investors with an indication of the ability of the
Company to incur and service debt, to make capital expenditures, and to
fund other cash needs. In accordance with the final National Association of
Real Estate Investment Trusts (NAREIT) White Paper on Funds From Operations
as approved by the Board of Governors of NAREIT on March 3, 1995, funds
from operations represents net income (loss) (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from
debt restructuring or sales of property, plus depreciation and amortization
of assets uniquely significant to the real estate industry and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments
for unconsolidated partnerships and joint ventures are calculated to
reflect funds from operations on the same basis. For purposes of
calculating the Company's funds from operations, the Company has added back
to net income the amortization expense associated with the goodwill
amortization related to the purchase of the assets of OmniOffices, Inc., by
an affiliate of the Company. The Company computes funds from operations in
accordance with standards established by NAREIT, which may or may not be
comparable to funds from operation reported by other REITs that do not
define the term in accordance with the current NAREIT definition, or that
interpret the current NAREIT definition differently than the Company. The
Company's funds from operations in 1994 have been restated to conform to
the NAREIT definition of funds from operations. Funds from operations does
not represent net income or cash flow generated from operating activities
in accordance with generally accepted accounting principles and, as such,
should not be considered an alternative to net income as an indication of
the Company's performance or to cash flow as a measure of liquidity or the
Company's ability to make distributions.
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(4) Includes shares of Common Stock and convertible preferred stock outstanding
plus units of partnership interest in the Guarantor and Carr Realty, L.P.,
a majority-owned subsidiary of the Company ("Carr Realty, L.P.") that the
holders thereof have a right to have redeemed for cash equal to the value
of a share of Common Stock for each unit redeemed or, at the option of the
Company, for shares of Common Stock on a one-for-one basis. Such units
include non-dividend paying units.
(5) EBITDA is calculated as net operating income before minority interest and
extraordinary items, plus interest expense, depreciation and amortization,
and income taxes, if any.
The Exchange Offer
<TABLE>
<CAPTION>
<S> <C>
The Exchange Offer.......................... The Issuers are offering to exchange up to $150,000,000 aggregate principal amount of
the Company's 7.20% Exchange Notes due 2004 and up to $125,000,000 aggregate
principal amount of the Company's 7.375% Exchange Notes due 2007 (the "New Notes")
for up to $150,000,000 aggregate principal amount of the Company's outstanding 7.20%
Notes due 2004 and up to $125,000,000 aggregate principal amount of the Company's
outstanding 7.375% Notes due 2007 (the "Old Notes"), respectively, on a $1,000
principal amount for $1,000 principal amount basis.
Procedures for Tendering Old Notes.......... See "The Exchange Offer--Procedures for Tendering."
Minimum Condition........................... The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes
being tendered for exchange, but Old Notes may be tendered only in denominations of
$1,000 or integral multiples thereof.
Expiration.................................. The Exchange Offer will expire at 5:00 p.m., New York City time, on December [ ],
1997, or such later date and time to which it is extended. Any Old Notes not accepted
for exchange for any reason will be returned without expense to the tendering holder
thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
Exchange Date............................... The date of acceptance of the Old Notes for exchange will be the first business day
following the Expiration Date.
Withdrawal Rights........................... A tender of Old Notes in the Exchange Offer may be withdrawn at any time before the
Expiration Date.
Federal Income Tax
Consequences.............................. An exchange of Old Notes for New Notes in the Exchange Offer will not be a taxable
exchange for federal income tax purposes, and exchanging holders should not recognize
any taxable gain or loss or any interest income as a result of an exchange. See
"Certain Federal Income Tax Consequences."
Use of Proceeds............................. The Issuers will not receive any cash proceeds from the issuance of the New Notes in
the Exchange Offer.
Exchange Agent.............................. Bankers Trust Company is serving as Exchange Agent in connection with the Exchange
Offer.
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Effect on Holders of Old Notes.............. Upon the acceptance of Old Notes for exchange in the Exchange Offer, holders of Old
Notes will have no further registration or other rights, except in certain limited
circumstances, under the Registration Rights Agreement dated July 1, 1997 (the
"Registration Rights Agreement") among the Issuers and J.P. Morgan Securities Inc.,
Goldman, Sachs & Co. and Lehman Brothers Inc. (the "Initial Purchasers"). Holders of
Old Notes who do not tender them in the Exchange Offer will continue to be entitled
to all the rights applicable thereto under the Indenture dated as of July 1, 1997
among the Issuers and Bankers Trust Company, as trustee (the "Trustee"), which
relates to both the Old Notes and the New Notes (the "Indenture"), but will continue
to be subject to the restrictions on transfer of the Old Notes provided for in the
Old Notes and in the Indenture. See "Risk Factors--Consequences of Failure to
Exchange."
</TABLE>
The New Notes
The terms of the New Notes will be identical in all material respects
(including principal amount, interest rate, maturity and ranking) to the
terms of the Old Notes for which they are exchanged, except that the New
Notes will be freely transferable except as described herein. See "The
Exchange Offer--Terms of the Exchange" and "--Terms and Conditions of the
Letter of Transmittal."
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<CAPTION>
<S> <C>
Notes Offered............................ Up to $150,000,000 aggregate principal amount of 7.20% Exchange Notes due 2004 (the
"New Seven-Year Notes") and up to $125,000,000 aggregate principal amount of 7.375%
Exchange Notes due 2007 (the "New Ten-Year Notes" and, together with the New
Seven-Year Notes, the "New Notes").
Maturity Date............................ The New Seven-Year Notes will mature on July 1, 2004 and the New Ten-Year Notes will
mature on July 1, 2007.
Scheduled Interest
Payment Dates.......................... January 1 and July 1, commencing January 1, 1998. Holders whose Old Notes are
accepted for exchange will receive interest on such Old Notes accrued from July 1,
1997, the date of issuance of the Old Notes, to the date of the issuance of the New
Notes, with such interest payable with the first interest payment on the New Notes.
Consequently, holders who exchange their Old Notes for New Notes will receive the
same interest payment payable on January 1, 1998 (the first interest payment date
with respect to the Old Notes and the New Notes) that they would have received had
they not accepted the Exchange Offer.
Optional Redemption...................... The New Notes will be redeemable, in whole or in part, at any time, at the option of
the Company at a redemption price equal to the sum of (i) the principal amount of the
Notes being redeemed plus (ii) accrued interest thereon to the date of redemption
plus (iii) the Make-Whole Amount
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(as defined), if any. See "Description of the Notes--Optional Redemption."
Ranking.................................. The New Notes will be senior unsecured obligations of the Company and rank equally
with each other and with the Company's other unsecured and unsubordinated
indebtedness. The New Notes will be effectively subordinated to mortgages and other
secured indebtedness of the Company as well as to indebtedness and other liabilities
of the Company's subsidiaries. As of September 30, 1997, such mortgages and other
secured indebtedness aggregated approximately $481 million (approximately $575
million on a pro forma basis) and the Company's unsecured and unsubordinated
indebtedness (including the Notes) aggregated approximately $422 million
(approximately $134 million on a pro forma basis). See "Capitalization--Debt
Financing."
Covenants................................ The Indenture for the New Notes, among other things, contains restrictions (with
certain exceptions) on the ability of the Company and its Subsidiaries (as defined)
to: (i) incur Indebtedness (as defined) in excess of 60% of their assets; (ii) incur
Indebtedness secured by Encumbrances (as defined) in excess of 40% of their assets;
(iii) incur Indebtedness of Consolidated Income Available for Debt Service (as
defined) in excess of 1.5 times debt service for the four most recent fiscal
quarters; and (iv) own Total Unencumbered Assets (as defined) equal to less than 150%
of Unsecured Indebtedness (as defined) of the Company and its Subsidiaries on a
consolidated basis.
Risk Factors............................. Holders should carefully consider the matters set forth under "Risk Factors" before
deciding whether or not to tender their Old Notes in the Exchange Offer.
Note Guarantees.......................... The obligations of the Company under the New Notes are unconditionally guaranteed by
the Guarantor. The obligations of the Guarantor on the Notes (the "Note Guarantees")
are unsecured obligations of the Guarantor, which are limited so as to avoid being
considered as a fraudulent conveyance under applicable law. See "The Note
Guarantees."
</TABLE>
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RISK FACTORS
Holders of Old Notes should carefully consider, among other factors,
the matters described below before deciding whether or not to tender their Old
Notes in the Exchange Offer.
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes for New Notes
in the Exchange Offer will continue to be subject to the existing restrictions
on transfer of the Old Notes as set forth in the legend thereon, and, except in
certain limited circumstances applying to the Initial Purchasers only, the
Issuers will have no further obligations to provide for the registration of the
Old Notes under the Securities Act. In general, the Old Notes may not be offered
or sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the registration provisions
of the Securities Act and applicable state securities laws. The Issuers do not
intend to register the Old Notes under the Securities Act. The Issuers believe
that, based upon positions taken by the staff of the SEC, New Notes issued in
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
or otherwise transferred by the holder thereof (other than a holder that is a
broker-dealer, as set forth below, or an "affiliate" of the Issuers within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holder's
business and such holder has no arrangement or understanding with any person to
participate in a distribution of such New Notes. Eligible holders wishing to
accept the Exchange Offer must represent to the Issuers in the Letter of
Transmittal that such conditions have been met and must represent, if such
holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, that neither such holder
nor the person receiving such New Notes, if other than the holder, is engaged in
or intends to participate in a distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must represent that the Old Notes tendered in exchange therefor
were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with the resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Issuers
will use their reasonable best efforts to make this Prospectus, as amended or
supplemented, available to any such broker-dealer for use in connection with any
such resale for such period of time as broker-dealers must deliver a prospectus,
up to 90 days after the consummation of the Exchange Offer. See "Plan of
Distribution." To comply with any applicable securities laws of certain
jurisdictions, however, the New Notes may not be offered or sold unless they
have been registered or qualified for sale in such jurisdictions or an exemption
from registration or qualification is available and is complied with. The
Issuers currently do not intend to take any action to register or qualify the
New Notes for resale in any such jurisdictions. In addition, the tender of Old
Notes pursuant to the Exchange Offer will reduce the principal amount of the Old
Notes outstanding, which may have an adverse effect upon, and increase the
volatility of, the market price of the Old Notes due to a reduction of
liquidity.
Absence of Public Market
The New Notes are new securities for which there currently is no
trading market. The Issuers do not intend to apply for listing of the New Notes
on any securities exchange or for quotation through the Nasdaq quotation system.
The Initial Purchasers have advised the Company that they currently intend to
make a market in the New Notes after the Exchange Offer as permitted by
applicable law and regulations, although they are not obligated to do so and may
discontinue any market
9
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making activity at any time without notice. Accordingly, there can be no
assurance that a market for the New Notes will develop or, if one does develop,
that it will be sustained. If an active trading market for the New Notes fails
to develop or be sustained, the trading price of the New Notes could be
materially adversely affected.
Real Estate Investment Risks
General. Investments in real property are subject to varying degrees of
risk. The yields available from equity investments in real estate and the
Company's ability to service debt will depend in large part on the amount of
income generated, expenses incurred and capital expenditures required by its
real property investments. The Company's income from office properties may be
adversely affected by a number of factors, including the general economic
climate and local real estate conditions, an over-supply of, or a reduction in
demand for, office space in the areas where its properties are located and the
attractiveness of the properties to prospective tenants. Income from properties
and real estate values also are affected by such factors as the cost of
compliance with government regulation, including zoning and tax laws and the
potential for liability under applicable laws. Certain significant expenditures
associated with each equity investment by the Company in a property (such as
operating expenses and capital expenditures costs) may not be reduced when
circumstances cause a reduction in income from the property.
Renewal of Leases and Reletting of Space. The Company is subject to the
risks that upon expiration of leases for space located at its properties, the
space may not be relet or, if relet, the terms of the renewal or reletting
(including the cost of required renovations or concessions to tenants) may be
less favorable than current lease terms. Although the Company has established an
annual budget for renovation and reletting costs that it believes is reasonable
in light of each property's situation, no assurance can be given that this
budget will be sufficient to cover these costs. If the Company is unable
promptly to relet or renew leases for all or substantially all of the space at
its properties, if the rental rates upon such renewal or reletting are
significantly lower than expected, or if the Company's reserves for these
purposes prove inadequate, then the Company's cash provided by operating
activities and ability to make debt service payments or expected distributions
to stockholders could be adversely affected.
Possible Environmental Liabilities. Under various federal, state and
local laws, ordinances and regulations, a current or previous owner or operator
of real estate may be required to investigate and clean up certain hazardous
substances released at the property, and may be held liable to a governmental
entity or to third parties for property damage and for investigation and cleanup
costs incurred by such parties in connection with the contamination. In
addition, some environmental laws create a lien on the contaminated site in
favor of the government for damages and costs it incurs in connection with the
contamination. The presence of contamination or the failure to remediate
contamination may adversely affect the owner's ability to sell or lease real
estate or to borrow using the real estate as collateral. The owner or operator
of a site may be liable under common law to third parties for damages and
injuries resulting from environmental contamination emanating from the site. The
Company has not been notified by any governmental authority of any material
non-compliance, liability or other claim in connection with any of its
properties, and the Company is not aware of any other material environmental
condition with respect to any of its properties. No assurance, however, can be
given that no prior owner created any material environmental condition not known
to the Company, that no material environmental condition with respect to any
property has occurred during the Company's ownership thereof, or that future
uses or conditions (including, without limitation, changes in applicable
environmental laws and regulations) will not result in imposition of
environmental liability against the Company.
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Real Estate Financing Risks
Debt Financing. The Company is subject to the risks associated with
debt financing, including the risk that the cash provided by the Company's
operating activities will be insufficient to meet required payments of principal
and interest, the risk of rising interest rates on the Company's floating rate
debt that is not hedged, the risk that the Company will not be able to repay or
refinance existing indebtedness (which generally will not have been fully
amortized at maturity) or that the terms of such refinancing will not be as
favorable as the terms of existing indebtedness. In the event the Company is
unable to secure refinancing of such indebtedness on acceptable terms, the
Company might be forced to dispose of properties upon disadvantageous terms,
which might result in losses to the Company, or to obtain financing at
unfavorable terms, either of which might adversely affect the cash flow
available to meet debt service obligations or for distribution to equity
holders. In addition, if a property or properties are mortgaged to secure
payment of indebtedness and the Company is unable to meet required mortgage
payments, the mortgage securing the property could be foreclosed upon by, or the
property could be otherwise transferred to, the mortgagee with a consequent loss
of income and asset value to the Company.
Degree of Leverage. At September 30, 1997, on a consolidated basis, the
Company's Indebtedness was $903 million and the ratio of its Indebtedness to
Total Assets was 36.5%. The degree to which the Company is leveraged could have
important consequences to holders of the Notes, including affecting the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, development or other general
corporate purposes and making the Company more vulnerable to a downturn in its
business or the economy generally. The Indenture (as hereinafter defined)
contains financial and operating covenants including, among other things,
limitations on the Company's ability to incur other indebtedness, pay
distributions, engage in transactions with affiliates, sell assets and engage in
mergers and consolidations and certain acquisitions. If the Company fails to
comply with these covenants, the holders of the Notes will be able to accelerate
the maturity of the applicable indebtedness.
Acquisition and Development Risks
The Company intends to continue acquiring and developing office
properties in markets where it believes that such acquisition or development is
consistent with the business strategies of the Company. Acquisitions entail
risks that investments will fail to perform in accordance with expectations and
that judgments with respect to the costs of improvements to bring an acquired
property up to standards established for the market position intended for that
property will prove inaccurate, as well as general investment risks associated
with any new real estate investment. See "Real Estate Investment Risks" above.
New office development also is subject to a number of risks, including, but not
limited to, construction delays or cost overruns that may increase project
costs, financing risks as described above, the failure to meet anticipated
occupancy or rent levels, failure to receive required zoning, occupancy and
other governmental permits and authorizations and changes in applicable zoning
and land use laws, which may result in the incurrence of development costs in
connection with projects that are not pursued to completion. In addition,
because the Company must distribute 95% of its taxable income in order to
maintain its qualification as a REIT, the Company anticipates that new
acquisitions and developments will be financed primarily through periodic equity
and debt offerings, lines of credit or other forms of secured or unsecured
financing. If permanent debt or equity financing is not available on acceptable
terms, further acquisitions or development activities may be curtailed or cash
available to meet debt service obligations or for distribution to stockholders
may be adversely affected.
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Change in Business Strategy; Risks Associated with Acquisition of Substantial
Number of New Properties
In late 1995, the Company shifted its emphasis from downtown
Washington, D.C. properties toward a more national business strategy, focusing
primarily on office properties in suburban growth markets across the United
States. This change represents a significant shift in the business strategy of
the Company. Although the Board believes that such a shift in strategy was
warranted in light of the opportunities available to the Company, there is no
assurance that the Company's efforts to implement its national business strategy
will continue to be successful. Consistent with the Company's strategy of
acquiring office properties in suburban growth markets, the Company
significantly expanded its portfolio of office properties in 1996 and has
continued to do so through the date of this Prospectus. These properties have a
relatively short operating history under the Company's management and they may
have characteristics or deficiencies unknown to the Company affecting their
valuation or revenue potential.
Substantial Ownership of Common Stock
As of September 30, 1997, SC-USREALTY owned 42.6% of the outstanding
shares of the Company's Common Stock (38.2% of the Common Stock on a
fully-diluted basis), and SC-USREALTY has the right to nominate a proportionate
number of the directors of the Board based upon its ownership of stock on a
fully-diluted basis, rounded down to the nearest whole number (but in no event
more than 40% of the directors). As a result, SC-USREALTY is the largest single
stockholder of the Company, and no other stockholder is permitted to own more
than 5% of the Company's Common Stock, subject to certain exceptions set forth
in the Articles of Incorporation or approved by the Board. Although certain
standstill provisions preclude SC-USREALTY from increasing its percentage
interest in the Company above 45% until at least April 30, 2001 (subject to
certain exceptions) and the Articles of Incorporation preclude SC-USREALTY from
increasing such percentage interest thereafter, and SC-USREALTY agreed to
certain limitations on its voting rights with respect to its shares of Common
Stock, SC-USREALTY nonetheless has a substantial influence over the affairs of
the Company.
Limitations on Corporate Actions
In conjunction with the transaction in which SC-USREALTY acquired its
initial interest in the Company, the Company agreed to certain limitations on
its operations, including restrictions relating to incurrence of additional
indebtedness, retention of third-party managers for the Company's properties,
investments in properties other than office buildings, issuances of limited
partnership interests ("CRLP Units") of Carr Realty, L.P., a partnership that
owns certain of the Company's properties, and certain other matters. The Company
may take actions relating to these matters only with the consent of SC-USREALTY.
In addition, the Company is contractually obligated to abide by certain
limitations on the amount of assets that it owns indirectly through other
entities and the manner in which it conducts its business (including the types
of assets that it can acquire and own and the manner in which such assets are
operated). These limitations (which were designed to permit SC-USREALTY to
comply with certain requirements of the Internal Revenue Code of 1986, as
amended (the "Code"), applicable to foreign corporations with U.S. shareholders)
limit the flexibility of the Company to structure transactions that might
otherwise be advantageous to the Company, and may impair the Company's ability
to conduct its business in the future.
Conflicts of Interest
Certain members of the Company's board of directors (the "Board") and
officers of the Company own CRLP Units and, thus, may have interests that
conflict with stockholders of the Company with respect to business decisions
affecting the Company and Carr Realty, L.P. In particular, a holder of CRLP
Units may suffer different and/or more adverse tax consequences than the Company
upon the sale or
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refinancing of some of the properties owned by Carr Realty, L.P. as a result of
unrealized gain attributable to certain properties. These CRLP Unit holders and
the Company, therefore, may have different objectives regarding the appropriate
pricing and timing of a sale or refinancing of properties. Although the Company,
as the sole general partner of Carr Realty, L.P., has the exclusive authority to
determine whether and on what terms to sell or refinance an individual property,
these CRLP Unit holders might seek to influence the Company not to sell or
refinance a property, even though such a sale might otherwise be financially
advantageous to the Company, or may seek to influence the Company to refinance a
property with a higher level of debt than would be in the best interests of the
Company. Although the Company believes that the change in 1996 in its
operational structure from an "UPREIT" to a "DownREIT" has and should continue
to reduce, over time, these potential conflicts of interest, assets will
continue to be owned by Carr Realty, L.P., diminishing the effects of this
structural modification.
Management, Leasing and Brokerage Risks
The Company is subject to the risks associated with the property
management, leasing and brokerage businesses. These risks include the risk that
management contracts or service agreements with third-party owners will be lost
to competitors, that a property will be sold and the Company will lose the
contract, that contracts will not be renewed upon expiration or will not be
renewed on terms consistent with current terms and that leasing and brokerage
activity generally may decline. Each of these developments could adversely
affect the ability of the Company to make debt service payments or expected
distributions to stockholders.
Lack of Voting Control of Operating Subsidiaries
The Company does not have voting control of Carr Real Estate Services,
Inc. ("Carr Services, Inc."), CarrAmerica Development & Construction, Inc.
("CarrAmerica Development & Construction") or OmniOffices, Inc., and may acquire
economic interests in similarly structured companies in the future
(collectively, the "Operating Subsidiaries"). Carr Services, Inc., which
conducts primarily fee-based management and leasing, has capital stock which is
divided into two classes: voting common stock, approximately 92% and 8% of which
is held by OCCO and Carr Realty, L.P., respectively; and nonvoting common stock,
approximately 95% and 5% of which is held by Carr Realty, L.P. and OCCO,
respectively. OCCO, as the holder of 92% of the voting common stock, has the
ability to elect the board of directors of Carr Services, Inc. CarrAmerica
Development & Construction, which conducts primarily fee-based development, has
capital stock which is divided into two classes: voting common stock, 99% and 1%
of which is held by OCCO and the Company, respectively; and nonvoting common
stock, 96% and 4% of which is held by the Company and OCCO, respectively. OCCO,
as the holder of 99% of the voting common stock, has the ability to elect the
board of directors of CarrAmerica Development & Construction. Oliver T. Carr,
Jr., who is Chairman of the Board and a significant stockholder of the Company,
beneficially owns a majority of the voting stock of OCCO, which controls the
election of directors of Carr Services, Inc. and CarrAmerica Development &
Construction. OmniOffices, Inc., which conducts executive suites rentals and fee
based services, has capital stock which is divided into two classes: voting
common stock and nonvoting common stock. The voting stock is owned 17% by OCCO,
35% by SC-US REALTY and 48% by an entity comprised of the six executive officers
of the Company. The nonvoting stock is 100% owned by the Company. Each of the
three voting stockholders may appoint one member to the board of directors of
OmniOffices, Inc. The remaining three seats on the board of directors are
determined by the majority vote of the stockholders which is not controlled by
any one stockholder.
Although neither the right of Carr Realty, L.P. or the Company, as
applicable, to receive distributions with respect to its equity interests in the
Operating Subsidiaries nor the terms of the promissory notes made by each of the
Operating Subsidiaries and held by Carr Realty, L.P. or the Company, as
applicable, can be changed by the holder of the majority of the voting common
stock, the Company will not be able to elect directors of each of the Operating
Subsidiaries, and its ability
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to influence the day-to-day decisions of the Operating Subsidiaries is limited.
As a result, the board of directors and management of each of the Operating
Subsidiaries may implement business policies or decisions that might not have
been implemented by persons elected by the Company and that are adverse to the
interests of the Company or that lead to adverse financial results, which could
adversely impact the Company's operating income and funds from operations.
Specifically, the Operating Subsidiaries may implement business policies or
decisions which may result in a breach of certain covenants of the Company under
the Indenture (as defined below) or an "Event of Default" with respect to the
Notes under the Indenture. See "Description of Notes."
Changes in Policies
The major policies of the Company, including its policies with respect
to development, acquisitions, financing, growth, operations, debt capitalization
and distributions, are determined by its Board. The Board may amend or revise
these and other policies from time to time without a vote of the stockholders of
the Company. A change in these policies could adversely affect the Company's
financial condition, results of operations, funds available for distributions to
stockholders, debt service or the market price of the Notes. The Company cannot
change its policy of seeking to maintain its qualification as a REIT without the
approval of the holders of a majority of its Common Stock.
Certain Tax Risks
Tax Liabilities as a Consequence of the Failure to Qualify as a REIT.
The Company believes that it has operated so as to qualify and has qualified as
a REIT under the Code, commencing with its taxable year ended December 31, 1993,
and intends to continue to so operate. No assurance, however, can be given that
the Company has so qualified or will be able to remain so qualified.
Qualification as a REIT involves the application of highly technical and complex
Code provisions as to which there are only limited judicial and administrative
interpretations. Certain facts and circumstances that may be wholly beyond the
Company's control may affect its ability to qualify or to continue to qualify as
a REIT. In addition, no assurance can be given that new legislation, Treasury
Regulations, administrative interpretations or court decisions will not
significantly change the tax laws with respect to the Company's qualification as
a REIT or the federal income tax consequences of such qualification to the
Company. If the Company fails to qualify as a REIT, it will be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates and it will not be entitled to a
deduction for dividends paid to its stockholders. In addition, unless entitled
to relief under certain statutory provisions, the Company would be disqualified
from treatment as a REIT for the four taxable years following the year during
which qualification is lost. The additional tax incurred in such event would
significantly reduce the cash flow available to meet debt service obligations.
REIT Distribution Requirements and Potential Impact of Borrowings. To
obtain the favorable tax treatment associated with qualifying as a REIT under
the Code, the Company generally is required each year to distribute to its
shareholders at least 95% of its real estate investment trust taxable income. In
addition, the Company will be subject to a 4% nondeductible excise tax on the
amount, if any, by which certain distributions paid by it with respect to any
calendar year are less than the sum of 85% of its ordinary income, 95% of its
capital gain net income and 100% of its real estate investment trust taxable
income from prior years that is not deemed to have been distributed under the
Code. Differences in timing between the receipt of income, the payment of
expenses and the inclusion of such income and the deduction of such expenses in
arriving at taxable income (of the Company or its subsidiaries), or the effect
of nondeductible capital expenditures, the creation of reserves or required debt
or amortization payments, could require the Company, directly or through its
subsidiaries, to borrow funds on a short-term basis to meet the distribution
requirements that are necessary to achieve the tax benefits associated with
qualifying as a REIT. In such instances, the Company might need to borrow funds
in order to avoid adverse tax consequences even if manage-
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ment believed that then prevailing market conditions were not generally
favorable for such borrowings.
Other Tax Liabilities. Even if the Company qualifies as a REIT, the
Company and certain of its subsidiaries will be subject to certain federal,
state and local taxes on its income and property.
Consequences of Failure of the Guarantor, Carr Realty, L.P. or other
Partnerships to be Treated as a Partnership. The Company believes that the
Guarantor, Carr Realty, L.P. and each other partnership and limited liability
company in which it holds an interest are properly treated as partnerships for
federal income tax purposes. If the Internal Revenue Service (the "IRS") were to
challenge successfully the tax status of the Guarantor or Carr Realty, L.P., or
any other partnership or limited liability company in which the Company holds an
interest, as a partnership for federal income tax purposes, the Guarantor, Carr
Realty, L.P. or the affected partnership or limited liability company would be
taxable as a corporation. In such event, since the value of the Company's
ownership interest in each of the Guarantor and Carr Realty, L.P. exceeds, and
the value of the Company's ownership interest in each affected partnership could
exceed, 5% of the Company's assets, the Company could cease to qualify as a
REIT. In addition, the imposition of a corporate tax on the Guarantor, Carr
Realty, L.P. or any of the other partnerships or limited liability companies in
which the Company holds an interest would reduce the amount of funds available
to meet debt service obligations.
Restrictions on Acquisition and Change in Control
Various provisions of the Company's Articles of Incorporation restrict
the possibility for an acquisition or change in control of the Company, even if
the acquisition or change in control were in its stockholders' interest,
including limits on the ownership of shares of capital stock of the Company,
staggered terms of the Company's directors and the ability of the Board to
authorize the issuance of preferred stock without stockholder approval.
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THE EXCHANGE OFFER
Terms of the Exchange Offer; Period for Tendering Old Notes
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the Exchange Offer), the Issuers will accept for exchange Old Notes
that are validly tendered on or before the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on December [ ], 1997; provided, however, that if the Issuers,
in their sole discretion, have extended the period of time for which the
Exchange Offer is open, the term "Expiration Date" means the latest time and
date to which the Exchange Offer is extended.
As of the date of this Prospectus, $275,000,000 aggregate principal
amount of the Old Notes was outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about the date set forth on the
cover page to all holders of Old Notes at the addresses set forth in the
security register with respect to Old Notes maintained by the Trustee. The
Issuers' obligation to accept Old Notes for exchange in the Exchange Offer is
subject to certain conditions as set forth under "Certain Conditions to the
Exchange Offer" below.
The Issuers expressly reserve the right, at any time or from time to
time, to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance of any Old Notes, by giving oral or written notice of
such extension to the Exchange Agent (as defined below) and notice of such
extension to the holders as described below. During any such extension, all Old
Notes previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Issuers. Any Old Notes not accepted for exchange
for any reason will be returned without expense to the tendering holders thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer. The Issuers also expressly reserve the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified below under "Certain Conditions to the Exchange Offer."
The Issuers will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the Old Notes as promptly as
practicable, such notice in the case of any extension to be issued by means of a
press release or other public announcement no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
Holders of Old Notes do not have any appraisal or dissenters' rights
under the Maryland General Corporation Law, the Delaware Revised Uniform Limited
Partnership Act or the Indenture in connection with the Exchange Offer. The
Issuers intend to conduct the Exchange Offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder.
Procedures for Tendering Old Notes
Except as set forth below, in order for Old Notes to be validly
tendered in the Exchange Offer, Banker's Trust Company (the "Exchange Agent")
must receive a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) or an Agent's Message (as defined in the next paragraph),
together with any required signature guarantees and other required documents, at
one of the addresses set forth below under "Exchange Agent" on or before the
Expiration Date. In addition, either (i) the Exchange Agent must receive the
certificates for such Old Notes, (ii) such Old Notes must be tendered pursuant
to the procedures for book-entry transfer set forth below and a book-entry
confirmation, including an Agent's Message if the tendering holder has not
delivered a Letter of Transmittal, must be received by the Exchange Agent, in
each case on or before the Expiration Date,
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<PAGE>
or (iii) the guaranteed delivery procedures described below must be complied
with. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF EACH HOLDER. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY OR THE GUARANTOR.
The term "Agent's Message" means a message transmitted by the
Depository Trust Company ("DTC") to, and received by, the Exchange Agent and
forming a part of a book-entry confirmation, which states that DTC has received
an express acknowledgement from the tendering participant, which acknowledgement
states that such participant has received and agrees to be bound by the terms of
the Letter of Transmittal and that the Company may enforce the Letter of
Transmittal against such particpant.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of a
firm or other entity identified in SEC Rule 17Ad-15 as an "eligible guarantor
institution," including (as such terms are defined therein), (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (an
"Eligible Institution"). In the event that signatures on a Letter of Transmittal
or a notice of withdrawal, as the case may be, are required to be guaranteed,
such guarantees must be by an Eligible Institution. If Old Notes are registered
in the name of a person other than the person signing the Letter of Transmittal,
the Old Notes surrendered for exchange must be endorsed, or be accompanied, by a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by the Issuers in their sole discretion, duly executed by the
registered holder and signed exactly as the name or names of the registered
holder or holders appear on the Old Notes and with any signature thereon
guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Issuers in their sole discretion, which determination shall be final and
binding. The Issuers reserve the absolute right to reject any and all tenders of
any particular Old Notes not properly tendered or to not accept any particular
Old Notes the acceptance of which might, in the judgment of the Issuers or their
counsel, be unlawful. The Issuers also reserve the absolute right in their sole
discretion to waive any defects or irregularities or conditions of the Exchange
Offer as to any particular Old Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Old Notes in the Exchange Offer). The interpretation of the terms and
conditions of the Exchange Offer as to any particular Old Notes either before or
after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Issuers shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with the tenders of
Old Notes for exchange must be cured within such reasonable period of time as
the Issuers determine. Neither the Issuers, the Exchange Agent nor any other
person is under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor will any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal or any Old Notes or separate written
instruments of transfer or exchange are signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and, unless waived by the Issuers, submit proper evidence
satisfactory to the Issuers of the person's authority to so act.
By tendering, each holder will represent to the Issuers that, among
other things, (i) the New Notes acquired pursuant to the Exchange Offer are
being acquired in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the holder, (ii) neither the holder nor
any other person has an arrangement or understanding with any person to
participate in a distribution of such New Notes, (iii) if the holder is not a
broker-dealer, or is a broker-dealer but
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<PAGE>
will not receive New Notes for its own account in exchange for Old Notes,
neither the holder nor any other person is engaged in or intends to participate
in a distribution of such New Notes and (iv) neither the holder nor any other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
either of the Issuers. If the tendering holder is a broker-dealer (whether or
not it is also an "affiliate") that will receive New Notes for its own account
in exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, it will be required to acknowledge that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. By acknowledging that it will
deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes, the holder will
not be deemed to admit that it is an "Underwriter" within the meaning of the
Securities Act.
Book-Entry Transfer
Any financial institution that is a participant in the DTC system may
utilize DTC's Automated Tender Offer Program ("ATOP") to tender Old Notes. The
Exchange Agent will make a request to establish a book-entry transfer facility
at DTC for purposes of the Exchange Offer promptly after the date of this
Prospectus. Financial institution participants in DTC's system may make
book-entry delivery of Old Notes by causing the book-entry transfer facility to
transfer such Old Notes into the Exchange Agent's account in accordance with the
book-entry transfer facility's ATOP procedures for transfer. The exchange for
the Old Notes so tendered will only be made, however, after timely confirmation
of such book-entry transfer of Old Notes into the Exchange Agent's account, and
timely receipt by the Exchange Agent of an Agent's Message and any other
documents required by the Letter of Transmittal.
Guaranteed Delivery Procedures
If a registered holder of the Old Notes desires to tender such Old
Notes and the Old Notes are not immediately available, or time will not permit
such holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) on or before the Expiration Date, the
Exchange Agent receives from such Eligible Institution a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Issuers (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates of all
physically tendered Old Notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required by the Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a book-entry confirmation, as the case may be, and
all other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.
Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time before the Expiration
Date.
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<PAGE>
For a withdrawal to be effective, a written notice of withdrawal must
be received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of the
person who tendered the Old Notes to be withdrawn, identify the Old Notes to be
withdrawn (including the principal amount of such Old Notes), include a
statement that such holder is withdrawing its election to have such Old Notes
exchanged and the name of the registered holder of such Old Notes, and must be
signed by the holder in the same manner as the original signature on the Letter
of Transmittal (including any required signature guarantees) or be accompanied
by evidence satisfactory to the Issuers that the person withdrawing the tender
has succeeded to the beneficial ownership of the Old Notes being withdrawn. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, before the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the book-entry transfer facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Issuers, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes that have been tendered for exchange but that are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the book-entry transfer facility in accordance with the
book-entry transfer procedures described above, such Old Notes will be credited
to an account maintained with such book-entry transfer facility for the Old
Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "Procedures for
Tendering" above at any time on or before the Expiration Date.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Issuers will accept, promptly after the Expiration Date, all Old
Notes properly tendered and will issue the New Notes promptly after acceptance
of the Old Notes. See "Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Issuers will be deemed to have accepted
properly tendered Old Notes for exchange when, as and if the Issuers have given
oral or written notice thereof to the Exchange Agent.
In all cases, delivery of New Notes in exchange for Old Notes that are
tendered and accepted for exchange in the Exchange Offer will be made only after
timely receipt by the Exchange Agent of (i) Old Notes or a book-entry
confirmation of a book-entry transfer of Old Notes into the Exchange Agent's
account at DTC, (ii) a Letter of Transmittal (or facsimile thereof) or Agent's
Message in lieu thereof, properly completed and duly executed, with any required
signature guarantees, and (iii) any other documents required by the Letter of
Transmittal. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if certificates
representing Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfers into the Exchange Agent's account at the
book-entry transfer facility in accordance with the book-entry transfer
procedures described below, such non-exchanged Old Notes will be credited to an
account maintained with such book-entry transfer facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
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<PAGE>
Certain Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, the Issuers
will not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, such acceptance or issuance would violate applicable
law or any interpretation of the staff of the SEC.
The foregoing condition is for the sole benefit of the Issuers and may
be asserted by the Issuers regardless of the circumstances giving rise to such
condition or may be waived by the Issuers in whole or in part at any time and
from time to time in their sole discretion. The failure by the Issuers at any
time to exercise the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Issuers will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order is threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended.
Exchange Agent
Bankers Trust Company has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent, addressed as follows:
Deliver to:
BANKERS TRUST COMPANY, EXCHANGE AGENT
By Mail:
BT Services Tennessee, Inc.
P.O. Box 292737
Nashville, Tennessee 37229-2737
(registered or certified mail recommended)
By Hand:
Bankers Trust Company
Corporate Trust & Agency Group
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
By Overnight Courier:
BT Services Tennessee, Inc.
Corporate Trust & Agency Group
Reorganization Group
648 Grassmere Park Road
Nashville, Tennessee 37211
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By Facsimile:
(615) 835-3701 (Confirm by Telephone: (615) 835-3572)
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
Fees and Expenses
The principal solicitation of acceptances of the Exchange Offer is
being made by mail; however, additional solicitations may be made by telegraph,
telephone or in person by officers and regular employees of the Issuers and
their affiliates. No additional compensation will be paid to any such officers
and employees who engage in soliciting tenders. The Issuers will not make any
payment to brokers, dealers, or others soliciting acceptances of the Exchange
Offer. The Issuers, however, will pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith.
The estimated cash expenses to be incurred in connection with the
Exchange Offer will be paid by the Issuers.
Transfer Taxes
Holders who tender their Old Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Issuers to register New Notes in the name of, or request that Old
Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes for New Notes
in the Exchange Offer will continue to be subject to the restrictions on
transfer of the Old Notes as set forth in the legend thereon and, except in
certain limited circumstances, will no longer have any registration rights with
respect to the Old Notes. In general, the Old Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Issuers do not intend to register the Old Notes under
the Securities Act or any state securities laws. The Issuers believe that, based
upon positions taken by the staff of the SEC, the New Notes issued in the
Exchange Offer in exchange for Old Notes may be offered for resale, resold or
otherwise transferred by each holder thereof (other than a broker-dealer, as set
forth below, and any such holder who is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holder's New Notes are acquired in the ordinary course of the holder's
business and the holder has no arrangement or understanding with any person to
participate in a distribution of such New Notes. If any holder has any
arrangement or understanding with respect to a distribution of the New Notes to
be acquired in Exchange Offer, such holder (i) could not rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes must acknowledge that it
will deliver a prospectus in connection with any resale of the New Notes. See
"Plan of Distribution." In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the New Notes may not be offered or sold
unless they have been registered or qualified for sale in any such jurisdiction
or an exemption from registration or qualification is available and the terms
and conditions of the exemption are satisfied. The Company does not currently
intend to take any action to register or qualify the New Notes for resale in any
jurisdiction.
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DESCRIPTION OF NOTES
The Old Notes have been issued, and the New Notes will be issued, under
the Indenture, which is an agreement among the Company, the Guarantor and the
Trustee. A copy of the Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. See "Available
Information." The Indenture is subject to, and governed by, the Trust Indenture
Act of 1939, as amended. The statements made hereunder relating to the Indenture
and the Notes are summaries of certain provisions thereof, do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all provisions of the Indenture and the Notes. Capitalized terms used but not
defined herein have the respective meanings set forth in the Indenture. As used
under this heading, the term "Company" means CarrAmerica Realty Corporation and
not any of its subsidiaries unless otherwise expressly stated or the context
otherwise requires.
General
The Notes constitute two series for purposes of the Indenture. The
Seven-Year Notes are limited to an aggregate principal amount of $150,000,000,
and the Ten-Year Notes are limited to an aggregate principal amount of
$125,000,000. The Notes are direct, senior unsecured obligations of the Company
and rank equally with each other and with all other unsecured and unsubordinated
indebtedness of the Company from time to time outstanding. The Notes are
effectively subordinated to mortgages and other secured indebtedness of the
Company and to indebtedness and other liabilities of the Company's Subsidiaries.
Accordingly, this prior indebtedness would have to be satisfied in full before
holders of the Notes would be able to realize any value from encumbered
properties or properties held by Subsidiaries (as defined below).
As of September 30, 1997, after giving effect to the original sale of
the Old Notes and the application of the proceeds from that sale, the Company
had approximately $983 million of outstanding indebtedness, of which
approximately $575 million was secured by properties owned directly or
indirectly by the Company. The Company may incur additional indebtedness,
including secured indebtedness, subject to the provisions described below under
"--Certain Covenants--Limitations on Incurrence of Indebtedness."
The Notes are guaranteed as to principal, premium, if any, and interest
by the Guarantor, as described below under "Note Guarantees."
The Notes may only be issued in fully registered form in minimum
denominations of $1,000 and integral multiples thereof.
Principal and Interest
The Seven-Year Notes bear interest at 7.20% per annum and will mature
on July 1, 2004; the Ten-Year Notes bear interest at 7.375% per annum and will
mature on July 1, 2007. The Notes bear interest from their respective original
dates of issue or from the immediately preceding Interest Payment Date (as
defined below) to which interest has been paid, payable semi-annually in arrears
on January 1 and July 1 of each year, commencing on January 1, 1998 (each, an
"Interest Payment Date"), to the persons in whose name the applicable Notes are
registered in the Security Register on the preceding December 15 or June 15
(whether or not a Business Day, as defined below), as the case may be (each, a
"Regular Record Date"). Interest on the Notes is computed on the basis of a
360-day year of twelve 30-day months.
The New Notes will bear interest from their date of issuance. The
Company will issue the New Notes promptly after expiration of the Exchange Offer
and acceptance of the Old Notes tendered for the New Notes. Holders of Old Notes
whose Old Notes are accepted for exchange will receive interest on such Old
Notes accrued from July 1, 1997, the date of issuance of the Old Notes, to
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<PAGE>
the date of issuance of the New Notes, with such interest payable with the first
interest payment on the New Notes. Consequently, holders who exchange their Old
Notes for New Notes will receive the same interest payment on January 1, 1998
(the first interest payment date with respect to the Old Notes and the New
Notes) that they would have received had they not accepted the Exchange Offer.
If any Interest Payment Date or Stated Maturity falls on a day that is
not a Business Day, the required payment is to be made on the next Business Day
as if it were made on the date the payment was due and no interest will accrue
on the amount so payable for the period from and after the Interest Payment Date
or the Maturity Date, as the case may be. "Business Day" means any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
banks in the City of New York or in the City of Chicago are required or
authorized by law, regulation or executive order to close.
The Notes are payable at the corporate trust office or agency
maintained for that purpose in the City of New York, New York, or elsewhere as
provided in the Indenture (the "Paying Agent"), 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 that person at an account maintained within the United
States.
Certain Covenants
Under the Indenture, neither the Company nor any Subsidiary may incur
any Indebtedness (as defined below) if, immediately after giving effect to the
incurrence of that additional Indebtedness and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Indebtedness of the
Company and its Subsidiaries on a consolidated basis determined in accordance
with GAAP is greater than 60% of the sum of (without duplication) (i) the Total
Assets (as defined below) of the Company and its Subsidiaries 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
SEC (or, if the filing is not permitted under the Exchange Act, with the
Trustee) before the incurrence of the additional Indebtedness and (ii) the
purchase price of any real estate assets or mortgages receivable acquired and
the amount of any securities offering proceeds received (to the extent that the
proceeds were not used to acquire real estate assets or mortgages receivable or
used to reduce Indebtedness), by the Company or any Subsidiary since the end of
the calendar quarter, including those proceeds obtained in connection with the
incurrence of the additional Indebtedness.
In addition to the foregoing limitation on the incurrence of
Indebtedness, neither the Company nor any Subsidiary may incur any Indebtedness
secured by any Encumbrance upon any of the property of the Company or any
Subsidiary if, immediately after giving effect to the incurrence of the
additional Indebtedness and the application of the proceeds thereof, the
aggregate principal amount of all outstanding Indebtedness of the Company and
its Subsidiaries on a consolidated basis which is secured by any Encumbrance on
property of the Company or any Subsidiary is greater than 40% of the sum of
(without duplication) (i) the Total Assets of the Company and its Subsidiaries
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 SEC (or, if the filing is not permitted under the Exchange Act,
with the Trustee) before the incurrence of the additional Indebtedness and (ii)
the purchase price of any real estate assets or mortgages receivable acquired
and the amount of any securities offering proceeds received (to the extent that
the proceeds were not used to acquire real estate assets or mortgages receivable
or used to reduce Indebtedness), by the Company or any Subsidiary since the end
of the calendar quarter, including those proceeds obtained in connection with
the incurrence of the additional Indebtedness.
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The Company and its Subsidiaries may not at any time own Total
Unencumbered Assets (as defined below) equal to less than 150% of the aggregate
outstanding principal amount of the Unsecured Indebtedness (as defined below) of
the Company and its Subsidiaries on a consolidated basis.
In addition to the foregoing limitations on the incurrence of
Indebtedness, neither the Company nor any Subsidiary may incur any Indebtedness
if the ratio of Consolidated Income Available for Debt Service (as defined
below) to the Annual Service Charge (as defined below) for the four consecutive
fiscal quarters most recently ended before the date on which the additional
Indebtedness is to be incurred shall have been less than 1.5:1 on a pro forma
basis after giving effect thereto and to the application of the proceeds
therefrom, and calculated on the assumption that (i) the Indebtedness and any
other Indebtedness incurred by the Company and its Subsidiaries since the first
day of the four-quarter period and the application of the proceeds therefrom,
including Indebtedness to refinance other Indebtedness, had occurred at the
beginning of the period, (ii) the repayment or retirement of any other
Indebtedness by the Company and its Subsidiaries since the first day of the
four-quarter period had been repaid or retired at the beginning of that period
(except that, in making the computation, the amount of Indebtedness under any
revolving credit facility is to be computed based upon the average daily balance
of the Indebtedness during that period), (iii) in the case of Acquired
Indebtedness (as defined below) or Indebtedness incurred in connection with any
acquisition since the first day of the four-quarter period, the related
acquisition had occurred as of the first day of the period with the appropriate
adjustments with respect to the acquisition being included in the pro forma
calculation, and (iv) in the case of any acquisition or disposition by the
Company or its Subsidiaries of any asset or group of assets since the first day
of the four-quarter period, whether by merger, stock purchase or sale, or asset
purchase or sale, the acquisition or disposition and any related repayment of
Indebtedness had occurred as of the first day of the period with the appropriate
adjustments with respect to the acquisition or disposition being included in the
pro forma calculation.
As used herein, and in the Indenture:
"Acquired Indebtedness" means Indebtedness of a person (i) existing at
the time the person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from the person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, the person becoming a
Subsidiary or that acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any person or the
date the acquired person becomes a Subsidiary.
"Annual Service Charge" for any period means the aggregate interest
expense for the period in respect of, and the amortization during the period of
any original issue discount of, Indebtedness of the Company and its Subsidiaries
and the amount of dividends which are payable during the period in respect of
any Disqualified Stock.
"Capital Stock" means, with respect to any person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of the person and any rights (other
than debt securities convertible into or exchangeable for corporate stock),
warrants or options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations (as defined below) of the Company and its Subsidiaries
plus amounts which have been deducted, and minus amounts which have been added,
for the following (without duplication): (i) interest expense on Indebtedness of
the Company and its Subsidiaries; (ii) provision for taxes of the Company and
its Subsidiaries based on income; (iii) amortization of debt discount; (iv)
provisions for gains and losses on properties and property depreciation and
amortization; (v) the effect of any noncash charge resulting from a change in
accounting principles in determining Earnings from Operations for the period;
and (vi) amortization of deferred charges.
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"Disqualified Stock" means, with respect to any person, any Capital
Stock of the person which by the terms of that Capital Stock (or by the terms of
any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock), (ii) is convertible into or exchangeable or exercisable for Indebtedness
or Disqualified Stock or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for Capital Stock which is not Disqualified Stock or the
redemption price of which may, at the option of that person, be paid in Capital
Stock which is not Disqualified Stock), in each case on or before the Stated
Maturity of the Notes; provided, however, that equity interests whose holders
have (or will have after the expiration of an initial holding period) the right
to have such equity interests redeemed for cash in an amount determined by the
value of the Common Stock (including, without limitation, certain equity
interests in the Guarantor and Carr Realty, L.P.) do not constitute Disqualified
Stock.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items, and property
valuation losses, net, as reflected in the financial statements of the Company
and its Subsidiaries for the period determined on a consolidated basis in
accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind, except any mortgage, lien, charge, pledge or security
interest of any kind which secures debt of the Guarantor owed to the Company.
"Indebtedness" 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 indebtedness evidenced by bonds, notes, debentures or similar
instruments, (ii) borrowed money or indebtedness evidenced by bonds, notes,
debentures or similar instruments secured by any Encumbrance existing on
property owned by the Company or any Subsidiary, (iii) reimbursement obligations
in connection with any letters of credit actually issued or amounts representing
the balance deferred and unpaid of the purchase price of any property or
services, except any such balance that constitutes an accrued expense or trade
payable, or all conditional sale obligations or obligations under any title
retention agreement, (iv) the amount of all obligations of the Company or any
Subsidiary with respect to redemption, repayment or other repurchase of any
Disqualified Stock, and (v) any lease of property by the Company or any
Subsidiary as lessee which is reflected on the Company's consolidated balance
sheet as a capitalized lease in accordance with GAAP, to the extent, in the case
of items of indebtedness under (i) through (iv) above, that any such items
(other than letters of credit) would appear as a liability on the Company's
consolidated balance sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation of 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 Indebtedness shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or the Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Subsidiary" means a corporation, partnership or other entity a
majority of the voting power of the voting equity securities or the outstanding
equity interests of which are owned, directly or indirectly, by the Company or
by one or more other Subsidiaries of the Company. For the purposes of this
definition, "voting equity securities" means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
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"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with GAAP (but excluding
intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on that date, before depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"Unsecured Indebtedness" means Indebtedness which is not secured by any
Encumbrance upon any of the properties of the Company or any Subsidiary.
The Indenture also contains certain other covenants which require the
Company to maintain its corporate existence, maintain the condition of the
Company's material properties and insurance on properties against loss or
damage, pay or discharge all taxes, assessments, charges and claims, provide
certain financial information to holders of the Notes and limit the ability of
each of the Company and the Guarantor to merge, consolidate or convey all or
substantially all of their assets.
Optional Redemption
The Notes may be redeemed at any time at the option of the Company, in
whole or in part, at a redemption price equal to the sum of (i) the principal
amount of the Notes being redeemed plus (ii) accrued interest thereon to the
redemption date plus (iii) the Make-Whole Amount (as defined below), if any,
with respect to those Notes (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes called for redemption shall have been made available on
the redemption date referred to in the notice, the Notes will cease to bear
interest on the date fixed for the redemption specified in the notice and the
only right of the holders of the Notes will be to receive payment of the
Redemption Price.
Notice of any optional redemption of any Notes is to be given to
holders of the Notes at their addresses, as shown in the Security Register, not
more than 60 nor less than 30 days before the date fixed for redemption. The
notice of redemption is required to specify, among other items, the Redemption
Price and the principal amount of the Notes held by the holder to be redeemed.
If less than all of the Notes are to be redeemed at the option of the
Company, the Company must notify the Trustee at least 45 days before the giving
of the notice of redemption to the holders of the Notes (or such shorter period
as is satisfactory to the Trustee) of the aggregate principal amount of Notes to
be redeemed and their redemption date. The Trustee is required to select, in
such manner as it deems fair and appropriate, Notes to be redeemed in part.
Notes may be redeemed, in part, in the minimum authorized denomination for Notes
or in any integral multiple thereof.
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of the redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of the dollar if the redemption or accelerated
payment had not been made, determined by discounting, on a semi-annual basis,
the principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date the notice of redemption is given or declaration
of acceleration is made) from the respective dates on which the principal and
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interest would have been payable if the redemption or accelerated payment had
not been made, over (ii) the aggregate principal amount of the Notes being
redeemed or paid.
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one
percent) plus the arithmetic mean of the yields under the respective headings
"This Week" and "Last Week" published in the Statistical Release under the
caption "Treasury Constant Maturities" for the maturity (rounded to the nearest
month) corresponding to the remaining life to maturity of the applicable Notes,
as of the payment date of the principal being redeemed or paid. If no maturity
exactly corresponds to that maturity, yields for the two published maturities
most closely corresponding to that maturity are to be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate is to be interpolated
or extrapolated from those yields on a straight-line basis, rounding in each of
the relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published before the date
of determination of the Make-Whole Amount is to be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if the
statistical release is not published at the time of any determination of the
Make-Whole Amount, then such other reasonably comparable index which shall be
designated by the Company.
Global Securities
The Notes may be issued in fully-registered form only.
Each series of the New Notes will be evidenced by one or more global
Notes (the "Global Securities"), which will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York ("DTC") and registered in the
name of Cede & Co. ("Cede"), as DTC's nominee.
Holders of the New Notes who are not participants in DTC
("Participants") may beneficially own interests in a Global Security held by DTC
only through Participants, including certain banks, brokers, dealers, trust
companies and other parties that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly, and have
indirect access to the DTC system ("Indirect Participants"). So long as Cede, as
the nominee of DTC, is the registered owner of any Global Security, Cede for all
purposes will be considered the sole holder of such Global Security. Except as
provided below, owners of beneficial interests in a Global Security will not be
entitled to have certificates registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form, and
will not be considered the holder thereof.
Neither the Issuers nor the Trustee (nor any registrar or paying agent)
will have any responsibility for the performance by DTC or its Participants or
Indirect Participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised the Company that it will
take any action permitted to be taken by a holder of Notes only at the direction
of one or more Participants whose accounts are credited with DTC interests in a
Global Security.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among Participants in
deposited securities through electronic book-entry changes to accounts of its
Participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corpora-
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tions and certain other organizations. Certain of such Participants (or their
representatives), together with other entities, own DTC. The rules applicable to
DTC and its Participants are on file with the SEC.
Purchases of Notes under the DTC system must be made by or through
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each Note (a "Beneficial Owner")
is in turn to be recorded on the Participants' and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Participant or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Notes are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in Notes,
except in the event that use of the book-entry system for the Notes is
discontinued.
The deposit of Notes with DTC and their registration in the name of
Cede effect no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Notes; DTC's records reflect only the identity
of the Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the Global Security.
Conveyance of notices and other communications by DTC to Participants,
by Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Principal and interest payments on the Notes will be made to DTC by
wire transfer of immediately available funds. DTC's practice is to credit
Participants' accounts on the payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
and not of DTC or the Issuers, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Company or the Guarantor, as the
case may be, disbursement of such payments to Participants is the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants. Neither the Issuers
nor the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
DTC may discontinue providing its services as securities depository
with respect to the Notes at any time by giving reasonable notice to the
Company. In the event that DTC notifies the Company that it is unwilling or
unable to continue as depository for any Global Security or if at any time DTC
ceases to be a clearing agency registered as such under the Exchange Act when
DTC is required to be so registered to act as such depository and no successor
depository shall have been appointed within 90 days of such notification or of
the Company becoming aware of DTC's ceasing to be so registered, as the case may
be, certificates for the relevant Notes will be printed and delivered in
exchange for interests in such Global Security. Any Global Security that is
exchangeable pursuant to
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the preceding sentence shall be exchangeable for relevant Notes registered in
such names as DTC shall direct. It is expected that such instructions will be
based upon directions received by DTC from its Participants with respect to
ownership of beneficial interests in such Global Security.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
certificates representing the Notes will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Issuers believe to be reliable,
but the Issuers do not take responsibility for the accuracy thereof.
Events of Default
The Indenture provides that the following events are "Events of
Default" with respect to the Notes: (a) default for 30 days in the payment of
any interest due and payable on any Notes; (b) default in the payment of the
principal of (or premium or Make-Whole Amount, if any, on) any Notes when due
and payable; (c) (i) default in the performance, or breach, of any other
covenant or warranty of the Company or the Guarantor contained in the Indenture
with respect to the Notes, or (ii) the failure by any Subsidiary to comply with
the provisions of the covenants described under "Certain Covenants--Limitations
on Incurrence of Indebtedness" above, in each case, continued for 60 days after
written notice as provided in the Indenture; (d) default under any bond,
debenture, note, or other evidence of indebtedness for money borrowed by the
Company or any of its Subsidiaries (including obligations under leases required
to be capitalized on the balance sheet of the lessee under GAAP) representing
recourse indebtedness or indebtedness guaranteed by such party in an aggregate
principal amount in excess of $5,000,000, or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any of its
Subsidiaries (including the leases) representing recourse indebtedness or
indebtedness guaranteed by such party in an aggregate principal amount in excess
of $5,000,000, whether the indebtedness existed at the date of the Indenture or
was created afterwards, which default shall have resulted in the indebtedness
becoming or being declared due and payable before the date on which it would
otherwise have become due and payable, or the obligations being accelerated,
without the acceleration having been rescinded or annulled; and (e) certain
events of bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Company or any Significant Subsidiary or
for all or substantially all of the property of the Company or any Significant
Subsidiary. The Term "Significant Subsidiary" has the meaning ascribed to the
term in Regulation S-X promulgated by the SEC under the Securities Act.
If an Event of Default described in clause (e) above relating to the
Company or any Significant Subsidiary occurs, the principal amount of, and the
Make-Whole Amount (if any) on, all outstanding Notes will become due and payable
without any declaration or other act on the part of the Trustee of the holders.
Defeasance and Covenant Defeasance
The Company may discharge any and all of its obligations to holders of
the Notes at any time ("defeasance"), but may not thereby avoid its duty to
register the transfer or exchange of the Notes, to replace any temporary,
mutilated, destroyed, lost or stolen Notes or to maintain an office or agency in
respect of the Notes. The Company may instead be released from the obligations
imposed by certain provisions of the Indenture (which contain the covenants
described above limiting incurrence of indebtedness and other matters) and omit
to comply with such provisions without creating an Event of Default ("covenant
defeasance"). Defeasance or covenant defeasance may be effected only if, among
other things: (i) the Company irrevocably deposits with the Trustee cash or
Government Obligations (as defined in the Indenture), as trust funds, an amount
certified to be sufficient to pay at maturity (or upon redemption) the
principal, premium, if any, and interest on the outstanding
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Notes and (ii) the Company delivers to the Trustee an opinion of counsel to the
effect that the holders of the Notes will not recognize income, gain or loss for
United States federal income tax purposes as a result of such defeasance or
covenant defeasance and that defeasance or covenant defeasance will not
otherwise alter such holders' United States federal income tax treatment of
principal, premium and interest payments on the Notes. In the case of a
defeasance, such opinion must be based on a ruling of the IRS or a change in
United States federal income tax law occurring after the date of the Indenture,
since such a result would not occur under current tax law.
No Personal Liability of Shareholders, Officers or Directors
The Indenture provides that no recourse may be had against any past,
present or future shareholder, officer or director of the Company, the Guarantor
or any successor entity under or upon any obligation, covenant or agreement
contained in the Indenture or in any Note, or because of any indebtedness
evidenced thereby.
Note Guarantees
The Notes are guaranteed irrevocably and unconditionally as to
principal, premium, if any, and interest by the Guarantor, as described below
under "The Note Guarantees."
Same-Day Settlement and Payment
All payments of principal and interest in respect of Notes in the form
of Global Securities will be made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing house or next-day funds. In contrast,
Notes represented by a Global Security will trade in DTC's Same-Day Funds
Settlement System until maturity or until the Notes are issued in certificated
form, and secondary market trading activity in such Notes will therefore be
required by DTC to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
Governing Law
The Indenture is governed by and is to be construed in accordance with
the laws of the State of New York.
NOTE GUARANTEES
The Notes are guaranteed irrevocably and unconditionally as to
principal, premium, if any, and interest by the Guarantor. If the Company
defaults in the payment of the principal of or premium or interest on the Notes
when and as the same becomes due, whether upon maturity, acceleration, call for
redemption, or otherwise, the Guarantor is required promptly to make such
payment in full, without the necessity of action by the Trustee or any holder.
The Indenture provides that the Guarantor is to be released from its obligations
as guarantor under the Notes under certain circumstances. The obligations of the
Guarantor under its guarantee will be limited so as to avoid their performance
being considered a fraudulent conveyance under applicable law.
The Guarantor is a partnership in which the Company indirectly serves
as sole general partner and owned, as of September 30, 1997, approximately 87.7%
of the partnership interests.
The Note Guarantees are unsecured obligations of the Guarantor, and are
effectively subordinated to mortgage and other secured indebtedness of the
Guarantor. See "Capitalization--Debt Financing."
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The Guarantor was organized in March 1996. Its activities include the
acquisition, development, ownership and operation of office properties,
primarily in select suburban growth markets across the United States. The
Guarantor's portfolio, as of October 31, 1997 consisted of (i) 47 operating
properties containing approximately 4.0 million square feet of office space
located in Austin, Texas, Southeast Denver, suburban Dallas, suburban Salt Lake
City, suburban Chicago, Northern California and Southern California, (ii) four
projects under construction that will contain approximately 414,000 square foot
of office space, and (iii) land and options to acquire land that will support
the development of up to 1.2 million square feet of office space. The
Guarantor's properties owned as of September 30, 1997 were 92.3% leased as of
that date. Each of these properties is wholly owned by the Guarantor.
The Guarantor is subject to the informational requirements of the
Exchange Act, and files reports and other information with the SEC. See
"Available Information."
The Guarantor is capitalized through the issuance of units of limited
partnership interest ("Partnership Units"). As of September 30, 1997, the
partners' capital in the Guarantor was approximately $320 million. The Company
indirectly serves as the sole general partner of the Guarantor by reason of its
ownership of all the outstanding capital stock of the Guarantor's general
partner, CarrAmerica Realty GP Holdings, Inc., a Delaware corporation ("GP
Holdings"). GP Holdings owns a 1.0% general partner interest (in the form of
Partnership Units) in the Guarantor. In addition, the Company, through its
wholly owned subsidiary, CarrAmerica Realty LP Holdings, Inc., a Delaware
corporation, owned an approximate 86.7% limited partnership interest (in the
form of Partnership Units) in the Guarantor as of September 30, 1997. The
remaining Partnership Units are owned by persons who received Partnership Units
in connection with the contribution to the Guarantor of interests in certain
Properties. The Guarantor has approximately 70 employees, including
approximately 50 on-site employees.
Generally, the Company currently acquires office properties through the
Guarantor if they are located in its Austin, Texas, Southeast Denver, suburban
Dallas and suburban Salt Lake City target markets. In addition, the Company
currently utilizes the Guarantor as the acquisition vehicle in transactions
where some or all of the sellers desire to receive consideration in the form of
partnership interests rather than cash. As of October 31, 1997, such
transactions have been effected in the Southeast Denver, Austin, Texas, suburban
Salt Lake City, suburban Chicago and Southern California markets. The Company
currently expects that future acquisitions will be effected through the
Guarantor in the circumstances described above, although there can be no
assurance that the Company will elect to acquire any additional office
properties through the Guarantor, or that the Company will not acquire office
properties through the Guarantor under different circumstances. All such
decisions will be made by the Company, either directly or indirectly.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain U.S. federal income tax
considerations applicable to the exchange of Old Notes for New Notes. This
discussion is based on laws, regulations, rulings and decisions now in effect,
all of which are subject to change, possibly retroactively. The discussion does
not cover all aspects of federal income taxation that may be relevant to holders
of the Notes, in light of their specific circumstances, particularly holders who
own 10% or more of the stock of the Company or holders subject to special
treatment under the federal income tax laws (such as insurance companies,
financial institutions, tax exempt organizations, foreign persons and taxpayers
subject to the alternative minimum tax). It also does not address state, local,
foreign or other tax laws.
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Exchange of Notes
The exchange of Old Notes for New Notes in the Exchange Offer should
not be treated as an "exchange" for U.S. federal income tax purposes because the
New Notes should not be considered to differ materially in kind or extent from
the Old Notes and because the exchange will occur by operation of the terms of
the Old Notes. As a result, there should be no federal income tax consequences
to holders exchanging Old Notes for New Notes in the Exchange Offer, and a
holder will have the same adjusted basis and holding period in the New Notes as
it had in the Old Notes immediately before the exchange.
EACH HOLDER SHOULD CONSULT HIS OR HER TAX OWN ADVISOR IN DETERMINING
THE FEDERAL, STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES TO THE PARTICULAR
HOLDER OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES.
THE COMPANY
The Company is a publicly-traded REIT that focuses primarily on the
acquisition, development, ownership and operation of suburban office properties
in select suburban markets across the United States. As of October 31, 1997, the
Company owned interests in 232 operating properties containing approximately
17.9 million square feet of office space, 16 projects under construction that it
intends to own and operate that will contain approximately 2.7 million square
feet of office space, and land and options to acquire land that will support the
development of up to 4.6 million square feet of office space. The operating
properties owned by the Company as of September 30, 1997 were 96.5% leased as of
that date.
The Company has maintained a strategic alliance with SC-USREALTY since
November 1995. As of September 30, 1997, SC-USREALTY owned approximately 42.6%
of the outstanding Common Stock of the Company (38.2% on a fully diluted basis).
The Company is the exclusive strategic investment of SC-USREALTY in the
commercial office property business in the United States.
The Company and its predecessor, OCCO, have been in the real estate
business in the Washington, D.C. metropolitan area for more than 35 years. In
late 1995, the Company shifted its focus from downtown Washington, D.C. to a
national business strategy. The Company provides a full range of real estate
services through a staff of over 1,000 employees located throughout the United
States.
The Company is a Maryland corporation that was formed in July 1992. The
principal executive offices of the Company are located at 1700 Pennsylvania
Avenue, N.W., Washington, D.C. 20006, and its telephone number is (202)
624-7500.
Business Strategy
The Company's primary business objective is to achieve long-term
sustainable cash flow growth through a strategy of (i) acquiring, developing,
owning and operating office properties primarily in suburban markets throughout
the United States that exhibit strong, long-term growth characteristics and (ii)
developing a national operating system that satisfies and capitalizes on the
financial and operational demands of corporate office space users. The Company
believes that many growth-oriented companies are relocating to and expanding in
suburban locations that offer lower operating costs, greater convenience and a
higher quality of life than traditional central business districts. The Company
seeks to provide suburban office space that will meet the changing needs of
these corporate users of office space.
Target Markets. The Company has focused its acquisition and development
activity in the Pacific, Mountain, Central and Southeast regions of the United
States, regions which generally possess strong growth characteristics. Within
these regions, the Company is targeting specific submarkets in which operating
costs for businesses are relatively low, long-term population and job growth
generally are expected to exceed the national average, large, well-educated
employment pools exist,
32
<PAGE>
and barriers to entry exist for new supplies of office space. The Company has
established a local presence in each of its existing target markets through its
investment activity and through the relationships established by its experienced
market officers. The Company's target markets include the following: San
Francisco Bay Area; Sacramento; metropolitan Washington, D.C.; suburban Atlanta;
suburban Chicago; Southeast Denver; suburban Dallas; suburban Seattle; Orange
County/Los Angeles; San Diego; Austin, Texas; suburban Salt Lake City; suburban
Phoenix; Florida; and suburban Portland, Oregon.
For each identified target market, the Company has established a set of
general guidelines and physical characteristics to evaluate acquisition
opportunities. All investment decisions are driven by real estate research,
focusing on variables such as economic base analysis, job growth and supply and
demand fundamentals. The Company's goal is to become one of the major owners and
operators of office space in each of its selected target markets. By achieving
such critical mass, the Company believes that it will be able to better serve
its customers' needs and realize certain operating efficiencies.
Acquisitions of Operating Properties. The Company has implemented a
major initiative to acquire operating properties in order to establish the
operating platform for its national business strategy. Between January 1, 1996
and October 31, 1997, the Company acquired 218 operating properties containing
approximately 14.5 million square feet of office space, resulting in an
approximately 425% increase in the total square footage of operating properties
in which the Company has a majority interest. These properties were acquired for
an aggregate purchase price of approximately $1.7 billion. See "Recent
Developments."
Development Program. The Company's development program is becoming an
increasingly important component of its growth strategy as a result of the
influx of capital into the office property market. The Company now believes that
long-term investment returns resulting from developing office properties
generally will exceed those from acquiring office properties, and without the
Company assuming significantly increased investment risks. The Company minimizes
its development risk by employing extensively trained and experienced
development personnel, by not assuming significant entitlement risk in
conjunction with land acquisitions and by entering into guaranteed maximum price
(GMP) construction contracts with seasoned and credible contractors. Most
importantly, the Company carefully analyzes the supply and demand
characteristics of its target markets before commencing inventory development in
a given market. In general, the Company will only undertake inventory
development in markets with strong real estate fundamentals and then, the
Company will construct prototypical office buildings attractive to a wide range
of office users. Furthermore, because the Company's development projects will
typically be between 125,000 and 150,000 square feet in size, these projects
individually are not significant to the Company. The Company does not intend to
have concentrations of inventory development exceeding 250,000 rentable square
feet in any of its target markets at any given time. Although the Company has no
pre-set leasing guidelines for inventory development, on average, the Company
expects that its development projects, in the aggregate, at any time will be
between 60% and 75% leased or committed. The Company's research-driven
development program enables it to tailor its development activities in each
target market, from inventory development to build-to-suit projects to holding
raw land for future opportunities.
To implement its national development program, the Company acquired a
substantial economic interest in CarrAmerica Development & Construction and its
experienced development staff in May 1996 and has since employed additional
development professionals in the Company's market offices where development is
taking place. The Company's development team currently consists of approximately
40 persons who have an average of over 15 years of experience in developing
office properties across the United States. Since January 1, 1997, the Company
has placed in service two development property containing approximately 290,000
rentable square feet. In addition, as of October 31, 1997, the Company had 16
other projects under construction (with an estimated development cost of $372.9
million) that it intends to own and operate. The 16 projects will contain
33
<PAGE>
approximately 2.7 million rentable square feet. As of October 31, 1997, these 16
projects were 60% pre-leased. See "Recent Developments--Recent Acquisitions and
Development Activity."
Investments in Land for Future Development. Owning a sufficient
inventory of land for future development is critical to the Company's
development program; therefore, the Company will continue to invest in land for
future development. The Company's goal is to allocate approximately 5% of its
invested capital to investments in land. In addition to its portfolio of
operating properties and projects currently under development, the Company owned
or controlled, as of October 31, 1997, 238 acres of land for future development
in ten of its target markets. The Company also had, as of October 31, 1997,
entered into binding agreements (subject to certain conditions) and non-binding
letters of intent to acquire an additional 156 acres of land for future
development in five of its target markets. No assurance can be given that any of
these potential land acquisitions will be consummated. The Company believes that
acquiring land to support future development provides it with a competitive
advantage in responding to customers' needs for office space in markets with low
vacancy rates.
Asset Optimization. As a component of the Company's business strategy,
it may sell assets that are inconsistent with its long-term strategic or return
objectives or where market conditions for sale are favorable, and redeploy the
proceeds into other office properties (utilizing tax-deferred exchanges where
possible). Consistent with this strategy, the Company recently sold First State
Bank Tower, its 2% interest in the limited partnership that owned 1575 Eye
Street, N.W., Washington, D.C. and its 5% interest in the limited partnership
that owns 1776 Eye Street, N.W., Washington, D.C. The Company also may consider
selling additional properties or interests in properties, some of which may be
significant.
National Operating System. As part of its business strategy, the
Company is implementing a national operating system to provide nationally
coordinated customer service, marketing and development. The Company's national
operating system consists of three components: (i) a Market Officer Group,
currently consisting of ten market officers focused on developing and
maintaining strong local relationships with the Company's customers and the
brokerage community and identifying investment opportunities for the Company;
(ii) a National Marketing Group, which, is dedicated to marketing the Company's
products and services to a targeted list of major corporate users of office
space; and (iii) a National Development Group, which is responsible for
developing suburban office properties, build-to-suit facilities and business
parks. The Company's national operating system is designed to satisfy and
capitalize on the financial and operational demands of corporate office space
users. The Company believes that through its existing portfolio of operating
properties, property development opportunities and land acquired for future
development, the Company can generate incremental demand through the relocation
and expansion needs of many of its customers, both within a target market and in
multiple target markets.
Financing Strategy
In order to meet its capital requirements at a reasonable cost, the
Company will require access to diverse sources of capital, including the common
and preferred stock markets, the private market for operating partnership units,
and the public and private debt markets. In order to ensure access to these
capital sources, the Company's financial strategy is predicated on conservative
financial policies.
Common Stock, including operating partnership units that may be
redeemed for shares of Common Stock, is and will continue to be the largest
component of the Company's capital structure. Since January 1996, the Company
has raised more than $1.0 billion from the sale of shares of Com-
34
<PAGE>
mon Stock and $43.5 million from the issuance of operating partnership units. Of
the total Common Stock sold since SC-USREALTY'S initial investment in the
Company, SC-USREALTY has purchased $232 million, or 30.0%. The Company expects
that SC-USREALTY will continue to participate in future Common Stock offerings,
although it is not obligated to do so.
To date, preferred stock has been only a small component of the
Company's capital structure. As of November 7, 1997, the Company had 780,000
shares of Series A Cumulative Convertible Redeemable Preferred Stock
outstanding, 8 million shares of Series B Cumulative Redeemable Preferred Stock
outstanding and 6 million depositary shares of Series C Cumulative Redeemable
Preferred Stock Outstanding. The Company currently does not expect that its
preferred stock capitalization will exceed 20% of its total equity
capitalization. See "Recent Developments--Financing Activity."
Debt from the public and private debt markets is also a key component
of the Company's capital structure. In June 1997, the Company sold the Old
Notes, which are unsecured, to institutional investors for net proceeds of
approximately $272 million. In formulating its debt capitalization strategy, the
Company considers a number of factors, including the benefits of Company-based
financings versus asset-specific financings, floating rate debt exposure, debt
maturity management, coverage ratios and total debt outstanding as compared to
asset values. Although the Company may from time to time assume mortgage debt in
connection with property acquisitions, the Company, in accordance with its debt
capitalization strategy, plans to primarily utilize Company-based financings in
the form of long-term, unsecured, fixed rate bonds, rather than asset-specific
mortgage financings. The maturities of bonds issued will be staggered in order
to produce normalized maturities and therefore mitigate refinancing risk. For
short-term debt capitalization, the Company will continue to utilize its
unsecured, floating rate, revolving line of credit to provide the necessary
capital for acquisitions and development. With respect to floating rate debt
exposure, the Company plans to keep its average unhedged floating rate debt
outstanding to an amount less than 10% of total asset value. The Company expects
to continue operating with adequate debt service coverage ratios and to continue
maintaining a sufficient pool of unencumbered assets to service the Company's
unsecured debt.
The Company's financing strategy may be changed from time to time by
its Board of Directors without the consent of its stockholders or other
securityholders.
Real Estate Services
The Company generally provides real estate operating services for its
properties. In certain circumstances, however, such as during a transitional
period following the acquisition of a property, the Company may use a
third-party real estate service provider. As of October 31, 1997, the Company
provided its own real estate operating services for 17.5 million square feet (or
98%) of its portfolio. The Company, through certain subsidiaries, also provides
fee-based real estate services for related and unrelated parties.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1997 on an historical basis and on a pro forma basis, giving
effect to (i) the acquisitions of office properties and land that the Company
has consummated since September 30, 1997 and expects to consummate in the near
future, (ii) sale of Preferred Stock since September 30, 1997 and (iii) the
repayment of certain of the Company's outstanding indebtedness.
35
<PAGE>
<TABLE>
<CAPTION>
September 30, 1997
------------------------------------------
Historical Pro Forma
------------------- -------------------
(in thousands)
<S> <C> <C>
Mortgage Debt $ 481,058 $ 574,699
Lines of credit 147,000 133,678
Senior Unsecured Notes due 2004 and 2007 275,000 275,000
Other liabilities 72,514 73,088
Total liabilities 975,572 1,056,465
Minority Interest 67,331 120,444
Stockholders' equity:
Preferred Stock, $.01 par value; 15,000,000 shares authorized:
Series A Preferred Shares, 780,000 issued and outstanding 8 8
Series B Preferred Shares, 8,000,000 issued and outstanding 80 80
Series C Depositary Preferred Shares, 6,000,000 issued and
outstanding -- 60
Common Stock, $.01 par value, 90,000,000 shares authorized; 582 582
58,168,602 shares issued and outstanding;
Additional paid-in capital 1,381,214 1,526,029
Cumulative dividends paid in excess of net income (73,770) (68,658)
----------- -----------
Total stockholders' equity 1,308,114 1,458,101
----------- -----------
Total capitalization $ 2,351,017 $ 2,635,010
=========== ===========
</TABLE>
Debt Financing
As of September 30, 1997, certain of the 232 operating office
properties that were consolidated for financial statement purposes were subject
to existing mortgage indebtedness in an aggregate principal amount of $481
million (encumbering 48 of such properties), and unsecured indebtedness of
approximately $147 million, which bore a floating interest rate. As of September
30, 1997, the Company's fixed rate debt (comprising an aggregate principal
amount of $756 million) bears an effective weighted average interest rate of
7.9% and a weighted average maturity of 6.4 years (assuming loans callable
before maturity are called as early as possible).
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the period from
February 16, 1993 (commencement of operations) to December 31, 1993, for the
years ended December 31, 1994, 1995 and 1996 and for the nine months ended
September 30, 1997 were 1.75x, 1.81x, 1.91x, 1.74x, 1.74x and 2.01x,
respectively. See "Summary--Summary Selected Financial Information" for pro
forma information on the Company's ratios of earnings to fixed charges.
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings consist of income (loss)
before gains from sales of property and extraordinary items plus fixed charges.
Fixed charges consist of interest expense (including interest costs
capitalized), the amortization of debt issuance costs and rental expense deemed
to represent interest expense.
RECENT DEVELOPMENTS
Recent Acquisitions and Development Activity
Between July 1 and October 31, 1997 the Company acquired 23 operating
properties containing approximately 1.6 million square feet of office space for
an aggregate purchase price of approximately $231 million. In addition, as of
October 31, 1997, the Company had 16 other projects under construction that it
intends to own and operate. These 16 projects will contain approximately 2.7
million square feet of rentable office space.
On August 25, 1997, an affiliate of the Company ("OmniOffices")
acquired substantially all of the assets of OmniOffices, Inc. and its
subsidiaries for an aggregate purchase price of approximately $50 million in
cash. OmniOffices is one of the nation's leading providers of executive office
suites to commercial customers throughout the United States, operating 28
executive suites centers located in 14 markets. The Company believes that there
is significant potential for growth in this business because the demand for
executive offices suites is likely to increase as corporations seek greater
flexibility and alternative workplace solutions for their staffing and business
plan requirements. The Company believes that this acquisition has provided
OmniOffices with the operating platform necessary to expand its business and
assist the Company in meeting the changing office space needs of the Company's
national customers. The Company expects that OmniOffices will expand its
business through development and acquisitions financed principally by the
Company until such expansion can be financed through third-party financing
sources. Because of limitations under the tax laws relating to REITs,
OmniOffices is structured as a taxable "C" corporation in which the Company owns
95% of the economic interest, but none of the voting stock.
Financing Activity
Since January 1997, the Company has completed two separate offerings of
shares of Common Stock to the public and SC-USREALTY for aggregate net proceeds
of approximately $238 million. In August 1997, the Company sold shares of
preferred stock to institutional investors for net proceeds of approximately
$194 million. In November 1997, the Company sold depositary shares of preferred
stock for net proceeds of approximately $145 million.
36
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account
in the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making or other trading
activities. The Issuers will make this Prospectus, as amended or supplemented,
available to any such broker-dealer for use in connection with any such resale
for a period of up to 90 days after the consummation of the Exchange Offer. The
Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own accounts
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or in a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resales may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For period of 90 days after the consummation of the Exchange
Offer the Company will promptly send additional copies of this Prospectus and
any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal.
The Company has agreed in the Registration Rights Agreement to
indemnify each broker-dealer reselling New Notes pursuant to this Prospectus,
and their officers, directors and controlling persons, against certain
liabilities in connection with the offer and sale of the New Notes, including
liabilities under the Securities Act, or to contribute to payments that such
broker-dealers may be required to make in respect thereof.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
the Issuers by Hogan & Hartson L.L.P., Washington, D.C.
EXPERTS
The consolidated financial statements and schedule of CarrAmerica
Realty Corporation and subsidiaries as of December 31, 1996 and 1995 and for
each of the years in the three-year period ended December 31, 1996 and the
financial statements and schedule of CarrAmerica Realty L.P. as of December 31,
1996 and for the period from March 6, 1996 (date of inception) to December 31,
1996, each incorporated by reference in this Prospectus, have been incorporated
in reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, which are also incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
37
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
The Company's officers and directors are and will be indemnified under
Maryland and Delaware law, the charter and by-laws of the Company, the
partnership agreement of Carr Realty, L.P. and the partnership agreement of the
Guarantor.
The charter and by-laws of the Company require the Company, to the
fullest extent permitted by Section 2-418 of the Maryland General Corporation
Law (the "MGCL") as in effect from time to time, to indemnify any person who is
or was, or is the personal representative of a deceased person who was, a
director or officer of the Company against any judgments, penalties, fines,
settlements and reasonable expenses and any other liabilities; provided that,
unless applicable law otherwise requires, indemnification shall be contingent
upon a determination by the Board (by a majority vote of a quorum consisting of
directors who are not at the time parties to the proceeding or, if such a quorum
cannot be obtained, then by a majority vote of a committee of the Board
consisting solely of two or more directors who are not at the time parties to
the proceeding and who were duly designated to act in the matter by a majority
vote of the full Board in which the designated directors who are parties may
participate) or by special legal counsel selected by the Board that
indemnification is proper in the circumstances because such director or officer
has met the applicable standard of conduct prescribed by Section 2-418(b) of the
MGCL.
Under Maryland law, a corporation formed in Maryland is permitted to
limit, by provision in its charter, the liability of directors and officers so
that no director or officer of the corporation will be liable to the corporation
or to any stockholder for money damages except to the extent that (i) the
director or officer actually received an improper benefit in money, property or
services, for the amount of the benefit or profit in money, property or services
actually received, or (ii) a judgment or other final adjudication adverse to the
director or officer is entered in a proceeding based on a finding in a
proceeding that the director's or officer's action was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in the
proceeding.
The partnership agreement of Carr Realty, L.P. also provides for
indemnification of the Company and its officers and directors against any and
all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of the
partnership as set forth in the partnership agreement in which any indemnitee
may be involved, or is threatened to be involved, unless it is established that
(i) the act or mission of the indemnitee was material to the matter giving rise
to the proceeding and either was committed in bad faith or was the result of
active and deliberate dishonesty, (ii) the indemnitee actually received an
improper personal benefit in money, property or services, or (iii) in the case
of a criminal proceeding, the indemnitee had cause to believe that the act or
omission was unlawful. The termination of any proceeding by judgment, order or
settlement does not create a presumption that the indemnitee did not meet the
requisite standard of conduct set forth in the respective partnership agreement
section on indemnification. The termination of any proceeding by conviction or
upon a plea of nolo contendere or its equivalent, or an entry of an order of
probation before judgment creates a rebuttable presumption that the indemnitee
acted in a manner contrary to that specified in the indemnification section of
the partnership agreement. Any indemnification pursuant to the Carr Realty, L.P.
partnership agreement may only be made out of the assets of the partnership.
II-1
<PAGE>
In general, the partnership agreement of the Guarantor provides for
indemnification of each Indemnitee (as hereinafter defined) against any losses,
claims, damages, liabilities, joint or several, expenses (including legal fees
and expenses), judgments, fines, settlements, and other amounts that relate to
the operations of the partnership in which such Indemnitee may be involved, or
is threatened to be involved, as a party or otherwise, unless it is established
that: (i) the act or omission of the Indemnitee was material to the matter
giving rise to the proceeding and either was committed in bad faith or was the
result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. Under certain circumstances,
reasonable expenses incurred by an Indemnitee who is a party to a proceeding may
be paid or reimbursed by the Guarantor in advance of the final disposition of
the proceeding. In general, an "Indemnitee" is (i) any person made a party to a
proceeding by reason of his status as (A) the general partner (i.e., GP
Holdings) or an affiliate of the general partner (e.g., CarrAmerica and LP
Holdings), (B) a limited partner of the Guarantor, and (C) a director or officer
of an entity described in (A), and (ii) such other persons (including affiliates
of the general partner or the Guarantor) as the general partner may designate
from time to time (whether before or after the event giving rise to potential
liability) in its sole and absolute discretion.
GP Holdings' officers and directors are and will be indemnified under
Delaware law and the charter and bylaws of GP Holdings. The charter and bylaws
of GP Holdings require GP Holdings, to the fullest extent authorized by the
Delaware General Corporation Law (the "DGCL") as in effect from time to time, to
indemnify any person who is or was, or is the legal representative a person who
was, a director or officer of GP Holdings against any expenses, liabilities and
losses, as long as the person seeking indemnification in connection with a
proceeding was authorized by the board of directors of GP Holdings.
Under Delaware law, a corporation formed in Delaware is permitted to
limit, by provision in its bylaws, the liability of directors and officers so
that no director or officer of GP Holdings shall be liable to GP Holdings or to
any shareholder for money damages except liability (a) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the DGCL, or (d) for any
transaction from which the director derived an improper personal benefit.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
The exhibits to this Registration Statement are listed in the
Exhibit Index, which appears immediately after the signature
page and is incorporated herein by this reference.
(b) Financial Statement Schedules
Independent Auditors' Report of the Company (found at page
F-21 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and incorporated herein by
reference)
Independent Auditors' Report of the Guarantor (found at page
F-21 of the Guarantor's Registration Statement on Form 10
filed on October 8, 1997 and incorporated herein by reference)
II-2
<PAGE>
Schedule III of the Guarantor: Real Estate and Accumulated
Depreciation as of December 31, 1996 (found at page F-22 of
the Guarantor's Registration Statement on Form 10 filed on
October 8, 1997 and incorporated herein by reference)
All other schedules are omitted because they are not
applicable, or because the required information is included in
the financial statements of the Company or the Guarantor or
notes thereto incorporated herein by reference.
(c) Reports, Opinions and Appraisals
Not Applicable.
Item 22. Undertakings
The undersigned registrants hereby undertake that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
annual report of a registrant pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the provisions discussed in Item 20 or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a registrant
of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each of the registrants will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
after the effective date of this Registration Statement through the date of
responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
The undersigned registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrants
have duly caused this Registration Statement to be signed on their behalf by the
undersigned, thereunto duly authorized, in Washington, D.C., on November 10,
1997.
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ Brian K. Fields
-----------------------------------
Brian K. Fields
Chief Financial Officer
CARRAMERICA REALTY, L.P.,
a Delaware limited partnership
By: CarrAmerica Realty GP Holdings, Inc.,
its general partner
By: /s/ Brian K. Fields
-----------------------------------
Brian K. Fields
Chief Financial Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below on November 10, 1997:
Name Title
---- -----
* Chairman of the Board and Director of the
- ----------------------------- Company
Oliver T. Carr, Jr.
* President and Chief Executive Officer and
- ----------------------------- Director of the Company; President
Thomas A. Carr (Principal Executive Officer) and
Director of GP Holdings
II-4
<PAGE>
* Chief Financial Officer (Principal
- ----------------------------- Financial and Accounting Officer) of the
Brian K. Fields Company; Chief Financial Officer
(Principal Financial and Accounting
Officer), Treasurer, Vice President
and Director of G.P. Holdings
* Director of the Company
- -----------------------------
Andrew F. Brimmer
* Director of the Company
- -----------------------------
A. James Clark
* Director of the Company
- -----------------------------
Wesley S. Williams
* Director of the Company
- -----------------------------
Caroline McBride
* Director of GP Holdings
- -----------------------------
Philip L. Hawkins
*By: /s/ Brian K. Fields
-----------------------
Brian K. Fields
As Attorney-in-Fact
(See Exhibit 24.1)
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------ ----------------------
3.1 Articles of Amendment and Restatement of Articles of
Incorporation of the Company (incorporated by reference to
Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996)
3.2 Second Amendment and Restatement of By-Laws of the Company
(incorporated by reference to Exhibit 3.2 of the Company's
Current Report on Form 8-K filed on February 12, 1997)
3.3 Second Amended and Restated Agreement of Limited Partnership of
the Guarantor (incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997)
4.1 Indenture dated as of July 1, 1997 among the Issuers and the
Trustee (incorporated by reference to Exhibit 4.1 of the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997)
5.1** Opinion of Hogan & Hartson L.L.P.
10.1 Stockholders Agreement, dated April 30, 1996, by and among Carr
Realty Corporation, Carr Realty, L.P., Security Capital
Holdings, S.A. and Security Capital U.S. Realty (incorporated by
reference to Exhibit 2.2 of Security Capital U.S. Realty's
Schedule 13D dated April 30, 1996)
10.2 Amended and Restated Credit Agreement, dated August 23, 1996, by
and among the Company, the Guarantor, Carr Realty, L.P. and
Morgan Guaranty Trust Company of New York (incorporated by
reference to Exhibit 10.15 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996)
10.3 First Amendment to Amended and Restated Revolving Credit
Agreement, dated October 18, 1996, by and among the Company, the
Guarantor, Carr Realty, L.P., Morgan Guaranty Trust Company of
New York, Commerzbank Aktiengesellschaft, New York Branch,
NationsBank, N.A., Wells Fargo Realty Advisors Funding, Inc.
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated and filed October 24, 1996).
12.1** Computation of Ratios of Earnings to Fixed Charges of the
Company
21.1 List of Subsidiaries of the Company (incorporated by reference
to Exhibit 21.1 of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996)
21.2 List of Subsidiaries of the Guarantor (incorporated by reference
to Exhibit 21.1 of the Guarantor's Registration Statement on
Form 10 filed on August 27, 1997)
23.1** Consent of KPMG Peat Marwick LLP
23.2** Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
24.1 Powers of Attorney (incorporated by reference to Exhibit 24.1 of
this Registration Statement, filed August 29, 1997)
25.1** Statement of Eligibility of Trustee on Form T-1
99.1 Certificate of Incorporation of CarrAmerica Realty GP Holdings
(incorporated by reference to Exhibit 99.1 of the Guarantor's
Registration Statement on Form 10 filed on August 27, 1997)
<PAGE>
99.2 Bylaws of CarrAmerica Realty GP Holdings (incorporated by
reference to Exhibit 99.2 of the Guarantor's Registration
Statement on Form 10 filed on August 27, 1997)
99.3** Form of Letter of Transmittal
99.4 Form of Notice of Guaranteed Delivery (incorporated by reference
to Exhibit 99.4 of this Registration Statement, filed August 29,
1997)
99.5 Instruction to Registered Holder and/or Book-Entry Transfer of
Participant (incorporated by reference to Exhibit 99.5 of this
Registration Statement, filed August 29, 1997)
99.6 Form of Letter to Clients (incorporated by reference to Exhibit
99.6 of this Registration Statement, filed August 29, 1997)
99.7 Form of Letter to Registered Holders and Depository Trust
Company Participants (incorporated by reference to Exhibit 99.7
of this Registration Statement, filed August 29, 1997)
- ---------------------
* To be filed by amendment.
** Filed herewith.
Exhibit 5.1
HOGAN & HARTSON L.L.P
COLUMBIA SQUARE
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
TEL (202)-637-5600
FAX (202) 637-5910
November 10, 1997
CarrAmerica Realty Corporation
CarrAmerica Realty, L.P.
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Ladies and Gentlemen:
We are acting as counsel to CarrAmerica Realty Corporation, a
Maryland corporation (the "Company"), and CarrAmerica Realty, L.P., a Delaware
limited partnership ("CarrAmerica Realty" and, together with the Company, the
"Issuers"), in connection with the Issuers' registration statement on Form S-4,
as amended (the "Registration Statement"), filed with the Securities and
Exchange Commission relating to the proposed offer by the Issuers to exchange
(the "Exchange Offer") the Company's 7.20% Exchange Notes due 2004 and 7.375%
Exchange Notes due 2007 (together, the "New Notes") for a like principal amount
of any or all the Company's outstanding 7.20% Notes due 2004 and 7.375% Notes
due 2007 (together, the "Old Notes"). CarrAmerica Realty has guaranteed payment
of the principal of (and premium, if any) and interest on the Old Notes, and
would so guarantee the New Notes upon issuance. This opinion letter is furnished
to you at your request to enable you to fulfill the requirements of Item
601(b)(5) of Regulation S-K, 17 C.F.R. ss. 229.601(b)(5), in connection with the
Registration Statement.
For purposes of this opinion letter, we have examined copies of
the following documents:
1. Executed copy of the Registration Statement.
2. Executed copy of the Indenture for the Old Notes and the New
Notes dated as of July 1, 1997 (the "Indenture") among the
Company, CarrAmerica Realty (as guarantor) and Bankers Trust
Company (as trustee) (the "Trustee").
3. Articles of Amendment and Restatement of Articles of
Incorporation of the Company, as amended, as certified by
the State Department of Assessments and Taxation of the
State of Maryland (the "Department") on October 30, 1997 and
as certified by the Assistant Secretary of the Company on
the date hereof as then being complete, accurate and in
effect.
<PAGE>
CarrAmerica Realty Corporation
CarrAmerica Realty, L.P.
November 10, 1997
Page 2
4. Second Amendment and Restatement of the Company's By-Laws,
as certified by the Assistant Secretary of the Company on
the date hereof as then being complete, accurate and in
effect.
5. Certificate of Limited Partnership of CarrAmerica Realty, as
amended, as certified by the Secretary of State of Delaware
on October 30, 1997 and as certified by the Assistant
Secretary of CarrAmerica Realty GP Holdings, Inc. ("GP
Holdings"), the general partner of CarrAmerica Realty, on
the date hereof as then being complete, accurate and in
effect.
6. Second Amended and Restated Agreement of Limited Partnership
of CarrAmerica Realty, as amended, as certified by the
Assistant Secretary of GP Holdings on the date hereof as
then being complete, accurate and in effect.
7. Certificate of Incorporation of GP Holdings, as certified by
the Secretary of State on October 30, 1997 and as certified
by the Assistant Secretary of GP Holdings on the date hereof
as being complete, accurate and in effect.
8. By-Laws of GP Holdings, as certified by the Assistant
Secretary of GP Holdings on the date hereof as being
complete, accurate and in effect.
9. Certain resolutions of the Board of Directors of the Company
adopted at a meeting held on June 26, 1997 relating to
authorization of the Old Notes, the New Notes, the Exchange
Offer, the Registration Statement and arrangements in
connection therewith, as certified by the Assistant
Secretary of the Company on the date hereof as being
complete, accurate and in effect.
10. Certain resolutions of the Board of Directors of GP Holdings
adopted on June 26, 1997 relating to authorization of the
guarantee of the Old Notes and New Notes and of the Exchange
Offer and Registration Statement, as certified by the
Assistant Secretary of GP Holdings on the date hereof as
then being complete, accurate and in effect.
<PAGE>
CarrAmerica Realty Corporation
CarrAmerica Realty, L.P.
November 10, 1997
Page 3
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of all documents submitted to us, and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. This opinion letter is
given, and all statements herein are made, in the context of the foregoing.
For purposes of this opinion letter, we have assumed that (i) the
Trustee has all requisite power and authority under all applicable laws,
regulations and governing documents to execute, deliver and perform its
obligations under the Indenture, (ii) the Trustee has duly authorized, executed
and delivered the Indenture, (iii) the Trustee is validly existing and in good
standing in all necessary jurisdictions, (iv) the Indenture constitutes a valid
and binding obligation, enforeable against the Trustee in accordance with its
terms and (v) there has been no material mutual mistake of fact or
misunderstanding or fraud, duress or undue influence, in connection with the
negotiation, execution or delivery of the Indenture.
This opinion letter is based as to matters of law solely on (i)
the General Corporation Law of the State of Maryland, as amended, (ii) the
Delaware Revised Uniform Limited Partnership Act, as amended, (iii) the General
Corporation Law of the State of Delaware, as amended, and (iv) New York contract
law (but not including any statutes, ordinances, administrative decisions, rules
or regulations of any political subdivision of the State of New York), and we
express no opinion as to any other laws, statutes, ordinances, rules or
regulations (such as state securities or "blue sky" laws).
Based upon, subject to and limited by the foregoing, and assuming
the due execution and delivery of the New Notes, we are of the opinion that
following (i) effectiveness of the Registration Statement, (ii) execution,
authentication and delivery of the New Notes in accordance with the Indenture,
and delivery in exchange for the Old Notes in accordance with the Exchange
Offer, the New Notes will be binding obligations of the Company, and the Note
Guarantees will be binding obligations of CarrAmerica Realty, both in accordance
with their terms. In expressing the foregoing opinion, we have assumed that the
New Notes and the Note Guarantees will conform as to form to the forms thereof
included as annexes to the Indenture.
* * * *
<PAGE>
CarrAmerica Realty Corporation
CarrAmerica Realty, L.P.
November 10, 1997
Page 4
The opinions expressed above with respect to the enforceability of
the Notes and the Note Guarantees, respectively, (i) are each subject to the
exception that enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights (including,
without limitation, the effect of statutory and other law regarding fraudulent
conveyances, fraudulent transfers and preferential transfers), and (b) the
exercise of judicial discretion and the application of principles of equity
including, without limitation, requirements of good faith, fair dealing,
conscionability and materiality (regardless of whether such agreement is
considered in a proceeding in equity or at law) and (ii) shall be understood to
mean only that if there is a default in performance of an obligation, (a) if a
failure to pay or other damage can be shown and (b) if the defaulting party can
be brought into a court which will hear the case and apply the governing law,
then, subject to the availability of defenses, and to the exceptions set forth
in the immediately preceding clause (i), the court will provide a money damage
(or perhaps an injunctive or specific performance) remedy.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion letter. This opinion letter
has been prepared solely for your use in connection with the filing of the
Registration Statement on the date of this opinion letter and should not be
quoted in whole or in part or otherwise be referred to, nor filed with or
furnished to any governmental agency or other person or entity, without the
prior written consent of this firm.
We hereby consent to the filing of this opinion letter as Exhibit
5.1 to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
---------------------------
HOGAN & HARTSON L.L.P.
Exhibit 12.1
CarrAmerica Realty Corporation
Computation of Ratios of Earnings to Fixed Charges
9/30/97 and 12/31/96
<TABLE>
<CAPTION>
1996 1997
----------------------------- -------------------------------
Ratio of earnings Ratio of earnings
to to
Pro forma fixed charges Pro forma fixed charges
--------- ----------------- --------- ----------------
<S> <C> <C> <C> <C>
NI before MI and extraodinary items 72,601 29,534 76,579 57,029
Extraord Charges -- -- -- --
Fixed Charges except Cap Interest and PS Div 55,970 32,946 42,621 39,113
Fixed Charges unconsol sub 778 778 1,285 1,285
- except cap interest
Gain on sale of assets -- -- (353) (353)
------- ------- ------- -------
Adjusted NI 141,885 63,258 120,132 97,074
Fixed Charges and pref stock div
Int Exp (consol) 54,281 31,630 40,774 37,266
Int Cap (consol) 18,198 2,664 15,391 7,850
Amort of DFC (consol) 1,376 1,003 1,449 1,449
Interest expense unconsol 50% owned sub 766 766 1,273 1,273
Amort of DFC unconsol 50% owned sub 12 12 12 12
Rent deemed as interest 313 313 398 398
------- ------- ------- -------
Total Fixed Charges 74,946 36,388 59,297 48,248
Ratio of earn to fixed charges 1.89 1.74 2.03 2.01
</TABLE>
Exhibit 23.1
The Board of Directors
CarrAmerica Realty Corporation
The Partners
CarrAmerica Realty, L.P.:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the registration statement
on S-4.
KPMG Peat Marwick LLP
Washington, D.C.
November 10, 1997
Exhibit 25.1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)_______________
----------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
- ----------------------------------------- -------------------
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
- -------------------- -----------
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
-----------------------------------
CarrAmerica Realty Corporation
(Exact name of obligor as specified in its charter)
Maryland 52-1796339
---------------------------- ------------------
(State or other jurisdiction (I.R.S. employer
Incorporation or organization) Identification no.)
1700 Pennsylvania Avenue, N.W. 20006
----------------------------------------- ---------
Washington, D.C. (Zip Code)
(Address of principal executive offices)
CarrAmerica Realty Corporation
150,000,000 7.20% Notes due 2004
125,000,000 7.375% Notes due 2007
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3.-15. Not Applicable.
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 - Incorporated
herein by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated June 19,
1997, copy attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein by
reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as
amended on February 18, 1997, Incorporated herein by
reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 333-24509-01.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. - Incorporated herein by
reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust
Company dated as of March 31, 1997. Incorporated by
reference to Exhibit 7 with Form T-1 Statement,
Registration No. 333-25843.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, "hereunto duly
authorized, all in The City of New York, and State of New York, on the 19th day
of August, 1997.
BANKERS TRUST COMPANY
By: /s/ Sandra J. Shaffer
--------------------------
Sandra J. Shaffer
Assistant Vice President
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, "hereunto duly
authorized, all in The City of New York, and State of New York, on the 19th day
of August, 1997.
BANKERS TRYST COMPANY
By: /s/ Sandra J. Shaffer
-----------------------
Sandra J. Shaffer
Assistant Vice President
-5-
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 27th day of June in the Year of our Lord one thousand nine hundred
and ninety-seven.
/s/ Manuel Kursky
-----------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE>
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
/s/ James T. Byrne, Jr.
--------------------------
James T. Byrne, Jr.
Managing Director
/s/ Lea Lahtinen
--------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificates that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
/s/ Lea Lahtinen
--------------------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
/s/ Sandra L. West
- --------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
Exhibit 99.3
LETTER OF TRANSMITTAL
Offer to Exchange
7.20% Exchange Notes due 2004
for Any and All Outstanding 7.20% Notes due 2004
and
7.375% Exchange Notes due 2007
for Any and All Outstanding 7.375% Notes due 2007
of
CARRAMERICA REALTY CORPORATION
and
CARRAMERICA REALTY, L.P.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON DECEMBER , 1997
(THE "EXPIRATION DATE")
UNLESS EXTENDED BY CARRAMERICA REALTY CORPORATION AND
CARRAMERICA REALTY, L.P.
The Exchange Agent for the Exchange Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
P.O. Box 292737 Corporate Trust & Agency Group Corporate Trust & Agency Group
Nashville, Tennessee 37229-2737 Receipt & Delivery Window Reorganization Group
(registered or certified mail 123 Washington Street, 1st Floor 648 Grassmere Park Road
recommended) New York, New York 10006 Nashville, Tennessee 37211
Facsimile Transmission: Confirm by Telephone:
(615) 835-3701 (615) 835-3572
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated November ,
1997 (the "Prospectus") of CarrAmerica Realty Corporation and CarrAmerica
Realty, L.P. (collectively, the "Issuers") which, together with this Letter of
Transmittal (the "Letter of Transmittal"), describes the Issuers' offer (the
"Exchange Offer") to exchange $1,000 in principal amount of a new series of
7.20% Exchange Notes due 2004 (the "New Seven-Year Notes") for each $1,000 in
principal amount of outstanding 7.20% Notes due 2004 (the "Old Seven-Year
Notes") and $1,000 in principal amount of a new series of 7.375% Exchange Notes
due 2007 (the "New Ten-Year Notes" and, together with the New Seven-Year Notes,
the "New Notes") for each $1,000 in principal amount of outstanding 7.375% Notes
due 2007 (the "Old Ten-Year Notes" and, together with the Old Seven-Year Notes,
the "Old Notes").
The terms of the New Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the Old
Notes for which they may be exchanged pursuant to the Exchange Offer, except
that the New Notes will be freely transferable (except as described in the
Prospectus).
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
<PAGE>
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OR TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule and affixed to this
Letter of Transmittal.
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
<TABLE>
<CAPTION>
Aggregate
Principal
Name(s) and Address(es) Amount Principal
of Registered Holder(s) Series of Certificate Represented Amount
(Please fill in) Note(s) Number(s)* by Notes* Tendered**
- ----------------------- --------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Total
-----
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by Old Notes. See Instruction 2.
This Letter of Transmittal is to be used either if certificates for Old
Notes are to be forwarded herewith or if delivery of Old Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company ("DTC"), pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" in the Prospectus. Delivery of documents to
a book-entry transfer facility does not constitute delivery to the Exchange
Agent.
Unless the context requires otherwise, the term "holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered on the books of the Issuers or any other person who has obtained a
properly completed bond power from the registered holder or any person whose Old
Notes are held of record by DTC who desires to deliver such Old Notes by
book-entry transfer at DTC.
Holders whose Old Notes are not immediately available or who cannot
deliver their Old Notes and all other documents required hereby to the Exchange
Agent on or before the Expiration Date may tender their Old Notes according to
the guaranteed delivery procedure set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures."
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ________________________________________
Depository Trust Company Account Number ______________________________
Transaction Code Number ______________________________________________
-2-
<PAGE>
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) _________________________________________
Name of Eligible Institution that Guaranteed Delivery ________________
______________________________________________________________________
If Delivered by Book-Entry Transfer:
Account Number _______________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ________________________________________________________________
Address: _____________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuers the above-described principal amount
of Old Notes. Subject to, and effective upon, the acceptance for exchange of the
Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Issuers all right, title and interest in
and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that said Exchange Agent acts as the agent
of the undersigned in connection with the Exchange Offer) to cause the Old Notes
to be assigned, transferred and exchanged. The undersigned represents and
warrants that it has full power and authority to tender, exchange, assign and
transfer the Old Notes and to acquire New Notes issuable upon the exchange of
such tendered Old Notes, and that, when the same are accepted for exchange, the
Issuers will acquire good and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Issuers to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Old Notes or transfer ownership of such Old Notes on the
account books maintained by the DTC.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer." The undersigned recognizes
that as a result of these conditions (which may be waived, in whole or in part,
by the Issuers), as more particularly set forth in the Prospectus, the Issuers
may not be required to exchange any of the Old Notes tendered hereby and, in
such event, the Old Notes not exchanged will be returned to the undersigned at
the address shown below the signature of the undersigned.
By tendering, each holder of Old Notes represents to the Issuers that
(i) the New Notes acquired in the Exchange Offer are being acquired in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is the holder, (ii) neither the holder of Old Notes nor any such
other person has an arrangement or understanding with any person to participate
in a distribution of such New Notes, (iii) if the holder is not a
broker-dealer, or is a broker-dealer but will not receive new Notes for its own
account in exchange for Old Notes, neither the holder nor any such other person
is engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the holder nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act of 1933, as amended (the "Act"), of the
Issuers. If the tendering holder is a broker-dealer (whether or not it is also
an "affiliate") that will receive New Notes for its own account in exchange for
Old Notes, it represents that the Old Notes to be exchanged for the New Notes
were acquired by it as a result of market-making or other trading activities,
and acknowledges that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes, the undersigned is not deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
-3-
<PAGE>
All authority herein conferred or agreed to be conferred shall survive
the death, bankruptcy or incapacity of the undersigned and every obligation of
the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Tendered Old Notes
may be withdrawn at any time before the Expiration Date.
Certificates for all New Notes delivered in exchange for tendered Old
Notes and any Old Notes delivered herewith but not exchanged, in each case
registered in the name of the undersigned, will be delivered to the undersigned
at the address shown below the signature of the undersigned.
TENDERING HOLDER(S) SIGN HERE
Signature(s) of Holder(s)
Dated: _________________________________, 199__
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Old Notes or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith or, if the Old
Notes are held of record by DTC, the person in whose name such Old Notes are
registered on the books of DTC. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please set forth the
full title of such person.)
See Instruction 3.
Name(s): ______________________________________________________________________
(Please Print)
Capacity (full title): ________________________________________________________
Address: ______________________________________________________________________
(Including Zip Code)
Area Code and Telephone No. ___________________________________________________
Tax Identification No. ______________
GUARANTEE OF SIGNATURE(S)
(If Required--See Instruction 3)
Authorized Signature: _________________________________________________________
Name: _________________________________________________________________________
Title: ________________________________________________________________________
Address: ______________________________________________________________________
Name of Firm: _________________________________________________________________
Area Code and Telephone No. ___________________________________________________
Dated: _________________, 199__
4
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: CARRAMERICA REALTY CORPORATION
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE FORM W-9 Name (If joint names, list first and circle the name of the person or entity whose
number you enter in Part I below.)
Department of the Treasury
Internal Revenue Service
-----------------------------------------------------------------------------------
Address
-----------------------------------------------------------------------------------
City, State and Zip Code
-----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Part I - PLEASE PROVIDE YOUR TAXPAYER Social Security Number or
IDENTIFICATION NUMBER ("TIN") IN THE BOX AT RIGHT Employer Identification
AND CERTIFY BY SIGNING AND DATING BELOW Number
-----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Part II - If exempt from backup witholding, check the box to the right. / /
Also provide your TIN in Part I and sign and date this form in Part III.
-----------------------------------------------------------------------------------
Part III - Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), AND
2. I am not subject to backup witholding: (a) I am exempt from backup witholding;
or (b) I have not been notified by the Internal Revenue Service that I am
subject to backup witholding as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am no longer subject to
backup witholding.
-----------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS: You must cross out item 2 above if you have been notified
by the IRS that you are currently subject to backup witholding because of
underreporting interest or dividends on your tax return.
Signature: _____________________________________ Date: _________________
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures. This Letter of Transmittal is to be completed if either (a)
certificates evidencing Old Notes are to be forwarded herewith or (b) tenders
are to be made pursuant to the procedures for tender by book-entry transfer set
forth under "The Exchange Offer--Procedures for Tendering Old Notes" in the
Prospectus and an Agent's Message is not delivered. Certificates, or timely
book-entry confirmation of a book-entry transfer of Old Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or a facsimile
hereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at its address set forth herein on or before
the Expiration Date. Tenders by book-entry transfer may also be made by
delivering an Agent's Message in lieu of this Letter of Transmittal. The term
"book-entry confirmation" means a timely confirmation of book-entry transfer of
Old Notes into the Exchange Agent's account at DTC. The term "Agent's Message"
means a message transmitted by DTC to and received by the Exchange Agent and
forming a part of a book-entry confirmation, which states that DTC has received
an express acknowledgment from the tendering participant, which acknowledgment
states that such participant has received and agrees to be bound by the Letter
of Transmittal (including the representations contained herein) and that the
Issuers may enforce the Letter of Transmittal against such participant. Old
Notes may be tendered in whole or in part in the principal amount of $1,000 and
integral multiples of $1,000.
The method of delivery of this Letter of Transmittal, the Old Notes and
any other required documents is at the election and risk of the holder and,
except as otherwise provided below, the delivery will be deemed made only when
actually received by the Exchange Agent. If such delivery is by mail, it is
suggested that registered mail with return receipt requested, properly insured,
be used.
Holders who wish to tender their Old Notes and (i) whose Old Notes are
not immediately available or (ii) who cannot deliver their Old Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent on
or before the Expiration Date or (iii) who cannot complete the procedures for
delivery of book-entry transfer on or before the Expiration Date, may tender
their Old Notes by properly completing and duly executing a Notice of Guaranteed
Delivery in accordance with the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." Pursuant
to such procedures: (i) such tender must be made by or through an Eligible
Institution (as defined therein); (ii) the Exchange Agent must have received a
properly completed and duly executed Notice of Guaranteed Delivery substantially
in the form made available by the Issuers on or before the Expiration Date; and
(iii) the Exchange Agent must have received the certificates evidencing the
tendered Old Notes in proper form for transfer (or a book-entry confirmation of
the transfer of the Old Notes) into the Exchange Agent's account at DTC)
together with a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees and any other
documents required by this Letter of Transmittal, within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures."
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Old Notes to be properly tendered pursuant to the guaranteed delivery
procedures, the Exchange Agent must receive a Notice of Guaranteed Delivery on
or before the Expiration Date. As used in this Letter of Transmittal and in the
Prospectus, "Eligible Institution" means a firm or other entity identified in
SEC Rule 17Ad-15 as "an eligible guarantor institution," including (as such
terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency, or (v) a savings association that is a
participant in a Securities Transfer Association.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile hereof), will waive any right to receive notice of the acceptance of
the Old Notes for exchange.
2. Partial Tenders; Withdrawals. Tenders of Old Notes will be accepted in
all denominations of $1,000 and integral multiples in excess thereof. If less
than the entire principal amount of Old Notes evidenced by a submitted
certificate is tendered, the tendering holder must fill in the principal amount
tendered in the box entitled "Principal Amount Tendered." A newly issued
certificate for the principal amount of Old Notes submitted but not tendered
will be sent to such holder as soon as practicable after the Expiration Date.
All Old Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Tenders of Old Notes pursuant to the Exchange Offer are irrevocable,
except that Old Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time before the Expiration Date. To be effective, a written, telegraphic
or facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent. Any such notice of withdrawal must specify the person named in
the Letter of Transmittal as having tendered Old Notes to be withdrawn, the
certificate numbers of the Old Notes to be withdrawn, the principal amount of
Old Notes delivered for exchange, a statement that such a holder is withdrawing
its election to have such Old Notes exchanged, and the name of the registered
holder of such Old Notes, and must be signed by the holder in the same manner as
the original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Issuers
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Old Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly following receipt of notice of withdrawal. If Old
Notes have been tendered pursuant to the procedure for book-entry transfer, any
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawn Old Notes or otherwise comply with DTC's
procedures. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer, and no New Notes will be issued
with respect thereto unless the Old Notes so withdrawn are
-6-
<PAGE>
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described herein at any time
on or before the Expiration Date.
3. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal is signed
by the registered holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of certificates without any
alteration, enlargement or change whatsoever.
If Old Notes are tendered by the registered holder of such Old Notes and
the certificates for New Notes to be issued in exchange therefor are to be
issued (or any untendered amount of Old Notes are to be reissued) to the
registered holder, the signature on this Letter of Transmittal need not be
guaranteed. In any other case, the tendered Old Notes must be endorsed or
accompanied by written instrument of transfer in form satisfactory to the
Issuers and duly executed by the registered holder and the signature on the
endorsement or instrument of transfer must be guaranteed by an Eligible
Institution.
If any of the Old Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered holder or
holders of Old Notes listed and tendered hereby, no endorsements of certificates
or separate written instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Old Notes listed, such Notes must be
endorsed or accompanied by separate written instruments of transfer or exchange
in form satisfactory to the Issuers and duly executed by the registered holder,
in either case signed exactly as the name or names of the registered holder or
holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Issuers, proper evidence
satisfactory to the Issuers of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written
instruments of transfer or exchange required by this Instruction 3 must be
guaranteed by an Eligible Institution.
4. Transfer Taxes. The Issuers will pay all transfer taxes, if any,
applicable to the transfer and exchange of Old Notes to them or their order
pursuant to the Exchange Offer. If, however, New Notes are to be delivered to,
or are to be registered or issued in the name of, any person other than the
registered holder of the Old Notes tendered hereby, or if a transfer tax is
imposed for any reason other than the transfer of Old Notes to the Issuers or
their order pursuant to the Exchange Offer, the amount of any such transfer
taxes (whether imposed on the registered holder or any other person) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exception therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
5. Waiver of Conditions. The Issuers reserve the absolute right to waive,
in whole or in part, any of the conditions to the Exchange Offer set forth in
the Prospectus.
-7-
<PAGE>
6. Mutilated, Lost, Stolen or Destroyed Notes. Any holder whose Old Notes
have been mutilated, lost, stolen or destroyed should contact the Exchange Agent
at the address indicated below for further instructions.
7. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth below. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to the
Issuers at CarrAmerica Realty Corporation, 1700 Pennsylvania Ave., N.W.,
Washington, D.C. 20006, Attention: Assistant Secretary, (202) 624-7500.
8. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal, notices
of withdrawal and Old Notes will be resolved by the Issuers, whose determination
will be final and binding. The Issuers reserve the absolute right to reject any
or all Letters of Transmittal or tenders that are not in proper form or the
acceptance of which would, in the opinion of the Issuers or their counsel, be
unlawful. The Issuers also reserve the right to waive any irregularities or
conditions of tender as to the particular Old Notes covered by or tendered
pursuant to any Letter of Transmittal. None of the Issuers, the Exchange Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification. The Issuers' interpretation of the terms and conditions of the
Exchange Offer shall be final and binding.
9. Definitions. Capitalized terms used in this Letter of Transmittal and not
otherwise defined have the meanings given in the Prospectus.
10. Tax Identification Number. Federal income tax law requires that a holder
of any Old Notes which are accepted for exchange must provide CarrAmerica Realty
Corporation (as payor) with its correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is his or her social
security number. If CarrAmerica Realty Corporation is not provided with the
correct TIN, the holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. (If withholding results in an overpayment of taxes, a refund
may be obtained.) Certain holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements; however, these holders still must submit the Substitute
Form W-9. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
To prevent backup withholding, each tendering Holder must provide such
Holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
The Form must be signed, even if the holder is exempt from backup withholding.
If the Old Notes are registered in more than one name or not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for information on which TIN to
report.
CarrAmerica Realty Corporation reserves the right in its sole discretion
to take whatever steps are necessary to comply with its obligation regarding
backup withholding.
11. IMPORTANT: This Letter of Transmittal or a facsimile hereof or an
Agent's Message must be received by the Exchange Agent on or before the
Expiration Date. In addition, the Exchange Agent must receive any certificates
evidencing Old Notes to be tendered, a book-enty confirmation of a transfer to
its account at DTC of Old Notes to be tendered, or a Notice of Guaranteed
Delivery before the Expiration Date.
