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Exhibit 8.1
September 25, 2000
Equity Residential Property Trust
Two North Riverside Plaza
Chicago, Illinois 60606
ERP Operating Limited Partnership
Two North Riverside Plaza
Chicago, Illinois 60606
Ladies and Gentlemen:
We have acted as counsel to Grove Property Trust, a Maryland real estate
investment trust (the "Company"), and Grove Operating, L.P., a Delaware limited
partnership (the "Operating Partnership"), in connection with the Registration
Statement on Form S-4 (No. 333-44576) (the "Registration Statement"), of ERP
Operating Limited Partnership and Equity Residential Properties Trust, relating
to the offering of the units of limited partnership interest (the "Units") for
which the Registration Statement was filed. In connection therewith, you have
requested our opinion that: (i) commencing with the Company's taxable year ended
December 31, 1994 and continuing for its taxable years ending on each December
31 thereafter through 1999, the Company was organized and has operated in
conformity with the requirements for qualification as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"),
and its current organization and method of operation during calendar year 2000
to the date of this letter will enable it to continue to meet the requirements
for qualification and taxation as a REIT, and (ii) the Operating Partnership has
been during and since 1997 and continues to be treated for federal income tax
purposes as a partnership and not as a corporation or association taxable as a
corporation.
All defined terms used herein shall have the same meaning as in the
Registration Statement.
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FACTS AND ASSUMPTIONS RELIED UPON
In rendering the opinions expressed herein, we have examined such documents
as we have deemed appropriate, including, but not limited to, the Registration
Statement, a letter, dated August 24, 2000, from John Collins of Ernst & Young
to Mr. Robert Pisker, Chief, Quality Measurement Section, Connecticut-Rhode
Island District, Internal Revenue Service, requesting a closing agreement from
the Internal Revenue Service (the "Closing Agreement") and the analyses of
qualifying income and assets prepared by the Company with the assistance of the
Company's accountants. We have also received an Officer's Certificate
representing the accuracy of certain facts pertaining to the operations of the
Company, the Operating Partnership and its subsidiary partnerships.
In our examination of documents, we have assumed, with your consent, that
the Internal Revenue Service concludes that the Company did not lose its REIT
status by virtue of any of the actions disclosed in the Closing Agreement, all
documents submitted to us are authentic originals, or if submitted as
photocopies or telecopies, that they faithfully reproduce the originals thereof,
that all such documents have been or will be duly executed to the extent
required, that all representations and statements set forth in such documents
are true and correct, and that all obligations imposed by any such documents on
the parties thereto have been or will be performed or satisfied in accordance
with their terms. We have also obtained such additional information and
representations as we have deemed relevant and necessary through consultation
with officers of the Company and with the Company's accountants.
OPINIONS
Based upon and subject to the foregoing, we are of the following opinions:
(1) Commencing with the Company's taxable year ended December 31, 1994, and
continuing for its taxable years ending on each December 31 thereafter through
1999, the Company was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code, and its current
organization and method of operation during calendar year 2000 to the date of
this letter will enable it to continue to meet the requirements for
qualification and taxation as a REIT.
(2) The Operating Partnership has been during and since 1997 and continues
to be treated for federal income tax purposes as a partnership and not as a
corporation or association taxable as a corporation.
(3) The statement of federal income tax matters and consequences described
in the Registration Statement under the headings "Summary-Tax Consequences,"
"Summary-Risk Factors," "Risk Factors-Grove L.P. Limited Partners Who are
Subject to a Deficit
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Restoration Obligation to Grove L.P. and Who Elect to Receive ERP Units May
Recognize Taxable Gain as a Result of the Partnership Merger if They Do Not
Enter into a Deficit Restoration Obligation with ERP," "Risk Factors-Limited
Partners of Grove L.P. Who Elect to Receive ERP Units May Recognize Taxable Gain
If They Are Relieved of an Amount of Liabilities in Excess of Their Tax Basis in
the ERP Units They Receive," "Risk Factors-Limited Partners of Grove L.P. Who
Contributed Partnership Interests in Any of Grove's Retail Properties to Grove
L.P. and Who Do Not Participate in the Retail Sale Transaction May Recognize
Substantial Tax Gain as a Result of the Retail Sale Transaction," and "Material
Federal Income Tax Consequences," to the extent it constitutes matters of
federal income tax law or legal conclusions insofar as they relate to the
consequences of both the retail sale transaction and the partnership merger to
the partners of the Operating Partnership, and the entity classification of both
the Company and the Operating Partnership for federal tax purposes, is accurate
in all material respects.
The opinions expressed herein are based upon the Code, the U.S. Treasury
Regulations promulgated thereunder, current administrative positions of the U.S.
Internal Revenue Service, and existing judicial decisions, any of which could be
changed at any time, possibly on a retroactive basis. Any such changes could
adversely affect the opinions rendered herein and the tax consequences to the
Company and the investors in the Units. In addition, as noted above, our
opinions are based solely on the documents that we have examined, the additional
information that we have obtained, and the representations that have been made
to us, and in the event that any of the facts contained in such documents or in
such additional information is, or later becomes, inaccurate or if any of the
representations made to us is, or later becomes, inaccurate our opinion could be
adversely affected. After reasonable inquiry, however, we are not aware of any
facts or circumstances contrary to or inconsistent with the information,
assumptions, and representations upon which we have relied for purposes of this
opinion.
This opinion is given as of the date hereof, and we assume no obligation to
update this opinion to reflect any fact or circumstances that may hereafter come
to our attention or any change in law or regulation that may hereafter occur.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to us in the Registration Statement under the
heading "Material Federal Income Tax Consequences".
Very truly yours,
/s/ Cummings & Lockwood
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GROVE PROPERTY TRUST
OFFICER'S CERTIFICATE
TO
CUMMINGS & LOCKWOOD
Re: Registration Statement on Form S-4;
ERP Operating Limited Partnership
Dear Sir or Madam:
This Certificate is supplied to you in connection with the issuance of your
tax opinion contemplated in the Registration Statement on Form S-4 (No.
333-44576) (the "Registration Statement"), of ERP Operating Limited Partnership
and Equity Residential Property Trust, relating to the offering of the units of
limited partnership interest for which the Registration Statement was filed. All
Section references, unless otherwise indicated, are to the Internal Revenue Code
of 1986, as amended to the date hereof (the "Code").
I, the undersigned Chief Operating Officer of Grove Property Trust (which,
along with its wholly owned subsidiary corporations, limited liability
companies, partnerships and Grove Operating, L.P. are hereinafter referred to as
the "Company"), hereby certify, on behalf of Company, and its affiliates, to
Cummings & Lockwood for the purpose of making the following representations upon
which Cummings & Lockwood is entitled to rely in rendering its legal opinion
regarding certain federal income tax issues, that the following statements are
true and correct for the period beginning on April 4, 1994 through the date
hereof:
A. With respect to the Company's residential properties, the Company's
activities have been and continue to be limited to the following:
1. Company administers the leases, including negotiating the terms of the
leases, collecting rent, and advertising.
2. Company maintains and repairs the common areas of its properties.
Maintenance services include pest control, landscaping, lighting, painting, snow
removal, trash collection, and janitorial services. Company repairs and replaces
the following systems: heating, ventilation and air conditioning, electrical,
plumbing, fire protection, security alarm, and storm and drainage. Company
paints and refurbishes vacated apartments, undertakes minor emergency repairs,
and authorizes and supervises any tenant improvements.
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3. The properties generally offer free parking facilities for use by the
tenants and their guests. At some properties, tenants may reserve parking spaces
for a small fee, and are charged for the right to park more than one vehicle.
The facilities have no attendants and Company provides only lighting, security
and general lot maintenance.
4. Some properties offer recreational facilities for the use of the
tenants, and for a nominal fee, their guests. Such facilities include
clubhouses, pools, tennis courts, exercise rooms and picnic areas. Most
facilities do not have lockers, and except as required by local law, the pools
do not have pool attendants. Tenants may rent the clubhouses for a nominal fee.
Company represents that similar properties in the surrounding geographic areas
offer comparable facilities.
5. Company provides and does not separately bill for heat and hot water.
Electricity and sometimes gas are separately metered by unit. When separately
metered, tenant pays the cost of electricity and gas directly to the utility
companies, without profit to Company. Company represents that such billing
arrangements are customary in the surrounding geographic area.
6. Company does not realize any cable TV or telephone commission income.
7. Company first rented 10 furnished "corporate" apartment units at its
Riverbend complex in 1997 with terms ranging from three to twelve months. The
rent for such units are slightly higher than comparable nonfurnished units. No
maid service is provided to the residents of such corporate units.
The services identified above are usually rendered in connection with the
rental of apartments for occupancy in the surrounding geographical areas where
the properties are located.
8. The Company provides laundry facilities at all of its properties and
either collects all revenues for its own account, or is paid a commission by
unrelated third parties who provide and maintain the equipment.
The services identified above are usually rendered in connection with the
rental of apartments for occupancy in the surrounding geographical areas where
the properties are located.
B. With respect to its nonresidential properties, Company's activities have
been and continue to be limited to the following:
1. Company performs property maintenance and repair services, including
landscaping, sweeping, snow removal, and other general maintenance of common
areas, assures the integrity of the roofing systems and the parking lots.
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2. Company administers a marketing fund. A marketing fund consists of
amounts paid by the tenants under the terms of their leases as a "marketing
charge" or "marketing dues" together with an amount contributed by Company.
Promotional activities will be conducted through such means as institutional
advertising campaigns, special events, shows, displays, songs, billboards,
seasonal events, and the distribution of promotional literature. Company does
not conduct promotional activities primarily for the benefit of a single tenant
or a few tenants but rather promotes and markets the various properties in
general to induce the shopping public to frequent them.
3. Company may undertake construction projects to expand certain existing
properties. Company may also undertake other construction projects involving
tenant improvements or customizing leased premises as an inducement for a tenant
to enter into or to extend a lease. Company does not earn a profit on these
projects. Company may also install heating, ventilation, and air conditioning
systems (HVAC) and sprinkler systems in leased premises and provide temporary
trash removal services to tenants prior to the commencement of the lease. Tenant
improvements may be designed and constructed by the tenant or by Company, or
through Independent Contractors, on behalf of the tenant. Company's
construction, architectural, and engineering employees (or independent
contractors) will review construction and tenant improvement design proposals.
This review will be necessary for Company to ensure that improvements will not
impair the value of leased premises, all work is completed in compliance with
building codes and zoning restrictions, and the design is aesthetically
pleasing.
4. Company employees will periodically inspect leased premises to confirm
that tenants are complying with their maintenance obligations. Company employees
will also perform "exit inspections" each time a tenant vacates leased space in
one of the properties. Any damage caused by a tenant that is discovered during
the exit inspection will have to be repaired either by the tenant or by Company
at the tenant's expense. Company employees will also assist in leasing
activities by providing prospective tenants with access to vacant space.
Company will also make repairs and perform certain services with respect to
vacant space after the termination of a lease and before making the premises
available to new tenants. While these repairs and services may vary from
premises to premises, they generally will consist of painting, HVAC repair or
replacement, carpet replacement, and other miscellaneous repairs.
5. Company allows local telephone companies to install pay telephones at
some of the properties. Company does not receive a commission from the telephone
companies from the pay telephones installed on the properties' premises. Company
does not own or lease the telephones and is not responsible for the repair or
maintenance of the telephones. In addition, Company will allow other vendors to
install newspaper racks, soda machines, and other similar vending machines in
common areas of the properties. Company is not responsible for the repairs or
maintenance of the vending machines.
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6. Company will provide parking areas at the properties for the tenants and
their employees and customers. Use of parking stalls will be offered on an
unreserved, complimentary basis. Company, however, will provide reserved
handicapped parking stalls as mandated by federal, state, or local law. Company
will provide customary maintenance, cleaning, snow removal, and lighting for the
parking lots. Company will not provide attendants, reserved parking, or any
significant services in connection with the parking areas.
7. Company will provide utility services such as electricity, gas, water,
and sewage treatment to its tenants. All such services are individually metered,
or no charge is made for the service. Except for de minimus amounts, Company
earns no commissions or other income from tenants or utility providers with
respect to the provision of utility services. The rents that have been or will
be received by the Company (directly or indirectly) with respect to the
Properties have not, and will not, depend in whole or in part on the income or
profits derived by any person (including a tenant or subtenant) from such
Properties (except that such amounts may be based on a fixed percentage or
percentages of gross receipts or sales).
The above described services are customarily provided to tenants of a
similar class of building in the relevant geographical markets in which the
properties are located.
C. As to organizational and other operational matters:
1. Commencing with its taxable year ending December 31, 1994, Company
timely and properly filed an election to be taxed as a "real estate investment
trust" under Code Section 856(c)(1). Company has not revoked any such election
and has no present intention to revoke such election.
2. The Company has been managed by one or more trustees for its entire
existence.
3. The beneficial ownership of Company has been evidenced by transferable
shares for its entire existence.
4. At all times during the period beginning January 1, 1995 through the
date hereof, Company has had at least one hundred shareholders of record.
5. At no time during Company's existence was more than fifty percent of the
value of the Company shares owned by five or fewer individuals (taking into
account the constructive ownership rules of Section 856(h) of the Code). (The
foregoing stock ownership test is referred to herein as the "personal holding
company ownership test.") For purposes of this representation, the Company
understands that organizations described in Section 501(c)(17) of the Code
(relating to certain supplemental
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unemployment compensation funds) and Section 509(a) of the Code (relating to
certain private foundations), and a trust (or portion thereof) permanently set
aside to be used exclusively for the charitable purposes described in Section
642(c) of the Code or corresponding provision of a prior income tax law will be
considered to be an "individual." The Company also understands that the
following constructive ownership rules apply in determining whether the personal
holding company ownership test is satisfied:
(a) Shares of the Company that are owned, directly or indirectly, by
or for a corporation, partnership, trust or estate are considered to be owned
proportionately by such entity's shareholders, partners, or beneficiaries (the
"entity attribution rule"). If a trust (including a pension trust qualifying
under Section 401(a) of the Code) owns, directly or indirectly, any shares of
the Company, its beneficiaries will be treated as owning such shares based on
their respective actuarial interests in the trust.
(b) An individual is considered to own shares of the Company that
are owned, directly or indirectly, by or for his family (the "family
attribution rule"). "Family" is defined to include only the individual's
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants.
(c) If a person has an option to acquire shares of the Company, such
person is treated as owning the shares subject to the option (the "option
attribution rule"). This rule would apply, for example, to stock options issued
by the Company.
(d) Shares of the Company that are treated as constructively owned
by a person under the entity or option attribution rules are treated as
actually owned by such person for purposes of again applying the entity and
family attribution rules.
(e) The family and option attribution rules are applied only if the
effect would be to cause the Company to meet the personal holding company
ownership test and thus fail to qualify as a REIT.
6. The schedules prepared by the Company, with the assistance of Ernst &
Young, regarding the Company's compliance with the 95% and 75% gross income
tests under Section 856(c) of the Code for each Taxable Year and the 30% gross
income tests under Section 856(c) of the Code for each Taxable Year beginning on
or before August 5, 1997 are true and accurate in all material respects. Those
schedules indicate that more than 95% of the total gross income of the Company,
including its share of such income derived from Grove Operating, L.P. (the
"Operating Partnership"), for such period consisted of the following types of
gross income, each of which it has determined constitutes qualifying income for
purposes of the 95% gross income test of Section 856(c) of the Code:
(a) Rents from rental of apartment units (other than rents received from
residents of "corporate" apartment units).
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(b) Rents from residents of corporate units (excluding the portion of such
rents that is estimated to be attributable to personal property leased in
connection with such units and which therefore constitutes non-qualifying
income).
(c) Clubhouse and storage room rentals.
(d) Garage and parking fees.
(e) Administration, application, and cleaning fees charged to residents at
the inception of a lease.
(f) Late fees, returned check fees, and forfeited security deposits.
(g) Laundry income.
(h) Other interest income.
Neither Company nor Operating Partnership has entered into any agreement or
arrangement (and each has taken all measures within its control to ensure that
no subsidiary of Company classified as a qualified REIT subsidiary ("QRS") and
no related partnership, has entered into any agreement or arrangement) in
connection with the rental of real property under which amounts payable to the
Company, the Operating Partnership or any related entity are dependent in whole
or in part on the income or profits derived from any tenant (or subtenant) of
such properties (except that such amounts may be based on a fixed percentage or
percentages of gross receipts or sales)
7. Neither Company nor Operating Partnership has rendered services
themselves or through a related entity or any other affiliate with respect to
any real property in which Company, directly or through Operating Partnership or
a related entity, had an interest that is less than or equal to 50% unless
Company (i) obtained either a ruling from the Internal Revenue Service or an
opinion of counsel that the provision of such services would not disqualify the
income from such real property as rents from real property or (ii) determined
that, if the income from such real property did not qualify as rents from real
property, such income (along with other nonqualifying income) would not cause
Company to fail to meet the tests described in representation C.6 above.
8. The gross income schedules referred to above indicate that more than 75%
of the total gross income of the Company (including its share of such income
derived from the Operating Partnership) for the Company's initial REIT year
consisted of (i) income described in paragraphs 6(a) through (h) above.
9. With respect to each property in which the Company or the Operating
Partnership has owned an interest during each taxable year of their existence
(whether directly or as previously held through Subsidiary Partnerships), the
Company
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determined that the "Personal Property Adjusted Basis Ratio" (as defined below)
was less than or equal to 15% for each Taxable Year and all personal property
was leased under or in connection with a lease of the real property owned by the
Company. With respect to any such property, the Personal Property Adjusted Basis
Ratio for any taxable year equals (i) the average of the adjusted basis of the
personal property leased to the tenants of such property under substantially
similar leases as of the beginning of each taxable year (or, if later, the date
on which the Company or the Operating Partnership acquired the property) and as
of the last day of the taxable year, divided by (ii) the average of the adjusted
basis of all property (both real and personal) leased under such leases as of
such dates. The Company understands that, for purposes of this calculation,
leases of furnished apartments (such as corporate and guest apartments) are not
substantially similar to leases of unfurnished apartments and therefore have not
been included in the Personal Property Adjusted Basis Ratio determination.
10. The Company and the Operating Partnership has maintained and will
maintain appropriate records to determine the amount of time and expenses
incurred by its employees on activities relating to the management and
landscaping of the properties and has and will continue to charge a reasonable
fee for any such services and other overhead-type services. The Company expects
that, and will take all steps within its control to ensure that, the fees that
it has charged or will charge for any such management and landscaping services
will not cause the Company to fail to satisfy the 95% gross income test of
Section 856(c) of the Code.
11. For each of its taxable years the Company has paid dividends equal to
at least the sum of ninety-five percent of its taxable income for such year
computed without regard to dividend distributions and excluding net capital
gain, plus ninety-five percent of the excess of net income from foreclosure
property over the tax on such income, minus any excess non-cash income.
12. With respect to each subsequent taxable year, the Company will take all
measures within its control to ensure that sufficient distributions are made on
a timely basis to its shareholders to satisfy the annual distribution
requirements of Section 857 of the Code.
13. All dividends declared during October, November or December of each
taxable year to shareholders of record on the specified date within such month
that were paid by January 31st of the following taxable year have been treated
as dividends paid in the preceding taxable year for purposes of the preceding
representation.
14. All dividend distributions have been pro rata as to all shareholders in
proportion to their common stock ownership and no shareholders have received any
preferential distributions.
15. With respect to any tenant or subtenant from whom the Company or the
Operating Partnership has received or will receive rents (directly or
indirectly), neither
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the Company nor the Operating Partnership has owned or will own, directly or
indirectly, (i) in the case of any corporate tenant or subtenant, 10% or more of
the total combined voting power of all classes of stock entitled to vote or 10%
or more of the total number of shares of all classes of stock of such tenant or
subtenant, or (ii) in the case of any noncorporate tenant or subtenant, an
interest of 10% or more of the assets or net profits of such tenant or
subtenant, taking into account the constructive ownership rules of Section
856(d) of the Code.
16. With respect to each taxable year ending on or before December 31,
1997, less than 30% of the Company's recognized gross income (taking into
account its allocable share of Operating Partnership's gross income) for such
year was derived from the sale or other disposition of (i) stock or securities
(including interest rate swap agreements) held by the Company for less than one
year at the time of sale or other disposition, and (ii) real property (including
interests in mortgage loans secured by real property) held by the Company for
less than four years at the time of sale or other disposition.
17. On December 31, 1999 and on the last day of each subsequent calendar
quarter thereafter through June 30, 2000 (the "testing dates"), at least 75% of
the fair market value of the total gross assets of the Company (taking into
account its allocable share of the Operating Partnership's gross assets) on such
testing dates consisted of the following types of assets:
(a) Land.
(b) Buildings, including wiring, plumbing systems, elevators,
escalators, and other structural components thereof, but not including any
personal property associated with such real property (such as apartment or
resident manager's office furnishings, draperies, carpets and appliances).
(c) Loans (including accrued interest thereon) directly secured by a
duly recorded mortgage on real property of the type described in paragraphs (a)
or (b) above.
(d) Cash and cash items, including cash on hand, time and demand
deposits with financial institutions, and receivables arising in the ordinary
course of the Company's operations other than those purchased from another
person, but not including bankers' acceptances or repurchase agreements.
(e) Securities (including accrued interest thereon) issued or
guaranteed by the United States or by a person controlled or supervised by
and acting as an instrumentality of the United States, pursuant to any
authority granted by Congress, or any certificate of deposit for any of the
foregoing.
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(f) Any stock or debt instruments attributable to the temporary
investment of new equity capital. The Company understands that this category
of qualifying real estate asset applies only for the one-year period
beginning on the date the Company received the equity capital in question.
18. On each of the testing dates, not more than 25% of the fair market
value of the total gross assets of the Company (taking into account its
allocable share of the Operating Partnership's gross assets) consisted of
securities (other than securities of the type referred to in paragraphs 17(c),
(d), (e) and (f) above.
19. At the close of each testing date, the Company did not own debt and
equity securities of any one issuer having a fair market value greater than 5%
of the fair market value of the Company's total gross assets as of such date,
taking into account the Company's allocable share of the Operating Partnership's
gross assets. In particular, as of the close of each testing date, the combined
fair market value of the debt and equity securities that were owned by the
Operating Partnership was substantially less than 5% of the fair market value of
the Operating Partnership's total gross assets on each such date. The Company
will take all necessary measures to ensure that the aggregate fair market value
of such debt and equity securities will not exceed 5% of the fair market value
of the Operating Partnership's total gross assets at any time in the future.
20. At the close of each testing date, the Company did not own securities
of any one issuer representing more than 10% of the outstanding voting
securities of such issuer.
21. With respect to the representations in paragraphs C. 17., 18., and 19.
above, the Company determined the fair market values of its assets at the close
of each testing date in good faith, and in the case of securities, used market
quotations to determine the value of such securities except where such
quotations were not available.
22. The Company has maintained and will continue to maintain sufficient
records to establish that it has complied with the 75% asset test.
23. Neither Company, Operating Partnership, nor any related entity has
entered into or has any present intention to enter into any agreement or
arrangement for the performance of services to tenants, other than for services
which are (a) not rendered primarily for the convenience of the tenants, and (b)
customarily furnished or rendered in connection with the rental of real
property. Any services provided to tenants that are rendered primarily for the
convenience of the tenants or that are not customarily furnished or rendered in
connection with the rental of real property have been and will be in the future
provided by an Independent Contractor, and in the case of services rendered or
to be rendered by an Independent Contractor, neither Company, Operating
Partnership, related entity, or affiliate of any of them has derived or has any
present intention to derive any income from such Independent Contractor.
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24. The Company did not have any earnings and profits at the end of any
taxable year that were attributable to taxable years of the Company beginning
prior to 1994, or to taxable years of any predecessor corporation, for which a
REIT election was not in effect.
25. No independent contractor providing services to the Company's tenants
has owned thirty-five percent or more of the Company's shares. No person who
owns thirty-five percent or more of the Company's shares owns thirty-five
percent or more of the total combined voting power of any such independent
contractor, nor thirty-five percent or more of the interest in assets or net
profits of such an independent contractor that is not a corporation.
26. No such independent contractor was an employee of the Company; has ever
had common employees, officers, or directors with the Company; nor has the
Company received any income from any such independent contractor.
27. All such independent contractors received fair market compensation for
the services performed, bore all costs for non customary services provided by
the independent contractor to the Company's tenants, and received and retained a
separate charge from the tenants for such services.
28. All of the Company's assets have been acquired other than through
foreclosure.
29. Neither the Company nor any of its subsidiary partnerships owns any
shares in any corporate entity, except with respect to the shares in corporate
entities which serve as the sole general partner of those subsidiary
partnerships and as to which: (i) all of the shares of such corporate entities
have been 100% directly owned by the Company throughout the period of existence
of such corporate entity; or (ii) were the subject of a Section 338 election in
connection with their purchase.
30. Neither the Company nor any of its subsidiary corporations have been a
party to any tax-free reorganizations.
31. The Operating Partnership has been and will continue to be operated in
accordance with the terms of the Partnership Agreement and the Delaware Revised
Uniform Limited Partnership Act.
32. Each of the Subsidiary Partnerships was operated in accordance with the
terms of its respective partnership agreement and the Revised Uniform Limited
Partnership Act.
33. No limited partnership interests in the Operating Partnership ("Units")
or interests in any Subsidiary Partnership were traded on (a) any national
securities exchange which is either registered under the Securities Exchange Act
of 1934
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or exempted from registration because of the limited volume of transactions; (b)
any local exchange, (c) any over-the-counter market characterized by an
interdealer quotation system which regularly disseminates quotations of
obligations by identified brokers or dealers; by electronic means or otherwise,
or (d) any substantial equivalent thereof, and Company has no intention to
permit any Units or interests in any Subsidiary Partnership to be so traded.
34. No Units have been or will be issued in an offering of Units registered
under the Securities Act of 1933, and the Operating Partnership at no time has
had or will have more than 500 partners (taking into account as a partner each
person who indirectly owns an interest through a partnership, a grantor trust,
or an S corporation).
35. No interests in any Subsidiary Partnership were issued in a transaction
registered under the Securities Act of 1933, and no Subsidiary Partnership at
any time had more than 500 partners (taking into account as a partner each
person who indirectly owns an interest through a partnership, a grantor trust,
or an S corporation).
34. The Company and the Operating Partnership has not added any substantial
new line of business since March 17, 1997 (the date that the Operating
Partnership first acquired commercial property and the Company began to provide
management services) other than the development or acquisition of apartment
communities.
36. The undersigned is familiar with the requirements for qualification as
a REIT under the Code and believes that (i) Company has satisfied such
requirements for all periods of its existence and (ii) Company will satisfy such
requirements for all periods after the date hereof.
37. The undersigned is a duly elected officer of Company. In such capacity,
the undersigned has access to relevant information regarding each of the factual
matters set forth above and has consulted with other employees and officers of
Company and the Operating Partnership regarding such factual matters, none of
whom have disagreed in any respect with any of the representations set forth
above.
38. Company has advised you of any matter of which it has been advised by
independent legal counsel or accounting advisors or of which Company or its
employees is aware that could, if adversely decided, adversely affect Company's
ability to satisfy the requirement for continued taxation as a REIT under the
Code.
D. None of the Company's residential properties or nonresidential
properties are listed for sale, and the Company has no present intention of
selling any such properties.
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Finally, all factual statements and representations contained in both (i)
the letter (the "IRS Letter") dated August 24, 2000 from John Collins of Ernst &
Young to Mr. Robert Pisker, Chief, Quality Measurement Section,
Connecticut-Rhode Island District, Internal Revenue Service requesting a closing
agreement from the Internal Revenue Service, and (ii) the form of closing
agreement attached to the IRS Letter (the "Form of Closing Agreement") are true
and correct, and for purposes of rendering your opinion you may assume that the
Internal Revenue Service has entered into the Form of Closing Agreement with the
Company.
The foregoing is provided in connection with the preparation of your
opinion. We understand that your opinion will be premised on the basis that all
of the facts, representations and assumptions on which you are relying, whether
contained herein or elsewhere, are accurate and complete and will be accurate
and complete on and after the date hereof.
I have executed this Certificate as of this 25th day of September, 2000.
GROVE PROPERTY TRUST
By: /s/ Edmund Navarro
-----------------------------
Name: Edmund Navarro
(Corporate Seal) Its: Chief Operating Officer
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