<PAGE>
As filed with the Securities and Exchange Commission on March 24, 2000
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 24, 2000
EQUITY RESIDENTIAL PROPERTIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
MARYLAND 1-12252 13-3675988
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION FILE NUMBER IDENTIFICATION NO.)
TWO NORTH RIVERSIDE PLAZA, SUITE 400
CHICAGO, ILLINOIS 60606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (312) 474-1300
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
===============================================================================
<PAGE>
ITEM 7. Financial Statements, PRO FORMA Financial Information and Exhibits
Exhibit
NUMBER EXHIBIT
8 Opinion of Piper Marbury Rudnick & Wolfe which is
being filed pursuant to Regulation 601(b)(8) as an
exhibit to the Registrant's registration statements
on Form S-3, SEC file nos. 333-80835, 333-72961,
333-45533, 333-39289, 333-12983, 333-06873,
33-97680 and 33-84974 (the "Registration
Statements") under the Securities Act of 1933, as
amended, and which, as this Form 8-K filing is
incorporated by reference in such registration
statements, is set forth in full in each such
registration statement, which opinion relates to
the discussion under the heading "Federal Income
Tax Considerations" set forth in the Registrant's
Annual Report on Form 10-K for the year ending
December 31, 1999, which discussion is incorporated
by reference into each of the Registration
Statements and replaces and supersedes any prior
discussion of "Federal Income Tax Considerations"
set forth in or incorporated by reference into each
of the Registration Statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITY RESIDENTIAL PROPERTIES TRUST
Date: March 24, 2000 By:/s/ MICHAEL J. MCHUGH
-------------------------------------------
Michael J. McHugh, Executive Vice President,
Chief Accounting Officer and Treasurer
2
<PAGE>
[Letterhead of Piper Marbury Rudnick & Wolfe]
March 24, 2000
(312) 368-4000
Board of Trustees
Equity Residential Properties Trust
Two North Riverside Plaza, Suite 400
Chicago, Illinois 60606
Re: TAX OPINION - REIT STATUS
Ladies and Gentlemen:
We are acting as special tax counsel to Equity Residential Properties
Trust, a Maryland real estate investment trust ("EQR"), in connection with its
registration statements on Form S-3 (SEC File Nos. 333-80835, 333-72961,
333-45533, 333-39289, 333-12983, 333-06873, 33-97680, 33- 84974) (the
"Registration Statements") previously declared effective by the Securities and
Exchange Commission relating to the proposed public offerings of various
securities of EQR. In connection with the filing of EQR's annual report on Form
10-K for the year ended December 31, 1999 (the "Annual Report"), the discussion
of "Federal Income Tax Considerations" under that heading in the Annual Report,
and the incorporation by reference of such information into the Registration
Statements, you have requested our opinion as to certain federal income tax
matters described below in order to enable EQR to fulfill the requirements of
Item 601(b)(8) of Regulation S-K, 17 C.F.R. Section 229.601(b)(8) in connection
with the Registration Statements.
In connection with rendering the opinions expressed below, we have
examined originals (or copies identified to our satisfaction as true copies of
the originals) of the following documents (collectively, the "Reviewed
Documents"):
(a) The Fifth Amended and Restated Limited Partnership Agreement
of ERP Operating Limited Partnership, dated as of August 1,
1998, (the "ERP Operating Limited Partnership Agreement");
(b) The Second Amended and Restated Declaration of Trust of EQR,
dated May 30, 1997, as amended (the "EQR Declaration of
Trust");
<PAGE>
Equity Residential Properties Trust
March 24, 2000
Page 2
(c) The Third Amended and Restated Bylaws of EQR, adopted June 23,
1999 (the "EQR Bylaws");
(d) The Annual Report; and
(e) Such other documents as may have been presented to us by EQR
from time to time.
In addition, we have relied upon the factual representations contained
in EQR's certificate, dated March 24, 2000 (the "EQR Officer's Certificate"),
executed by a duly appointed officer of EQR, which is attached hereto as Exhibit
A, setting forth certain representations relating to the organization and
operation of EQR, ERP Operating Limited Partnership, and their respective
subsidiaries.
For purposes of our opinion, we have not made an independent
investigation of the facts set forth in the documents we reviewed. We
consequently have assumed that the information presented in such documents or
otherwise furnished to us accurately and completely describes all material facts
relevant to our opinion. Any representation or statement in any document upon
which we rely that is made "to the best of knowledge" or otherwise similarly
qualified is assumed to be correct. Any alteration of such facts may adversely
affect our opinions. In the course of our representation of EQR, no information
has come to our attention that would cause us to question the accuracy or
completeness of the representations contained in the Officer's Certificate or of
the Reviewed Documents in a material way.
In our review, we have assumed, with your consent, that all of the
representations and statements of a factual nature set forth in the documents we
reviewed are true and correct, and all of the obligations imposed by any such
documents on the parties thereto have been and will be performed or satisfied in
accordance with their terms. We have also assumed the genuineness of all
signatures, the proper execution of all documents, the authenticity of all
documents submitted to us as originals, the conformity to originals of documents
submitted to us as copies, and the authenticity of the originals from which any
copies were made.
In rendering these opinions, we have assumed that the transactions
contemplated by the Reviewed Documents will be consummated in accordance with
the terms and provisions of such documents, and that such documents accurately
reflect the material facts of such transactions. In addition, the opinions are
based on the correctness of the following specific assumptions:
(i) EQR, ERP Operating Limited Partnership and their respective
subsidiaries will each be operated in the manner described in
the EQR Declaration of Trust, the EQR Bylaws, the ERP
Operating Limited Partnership Agreement, the other
organizational
<PAGE>
Equity Residential Properties Trust
March 24, 2000
Page 3
documents of each such entity, as the case may be, and all
terms and provisions of such agreements and documents will be
complied with by all parties thereto;
(ii) EQR is a duly formed real estate investment trust under the
laws of the State of Maryland;
(iii) ERP Operating Limited Partnership is a duly organized and
validly existing limited partnership under the laws of the
state of Illinois;
(iv) There has been no change in the applicable laws of the State
of Maryland, or in the Internal Revenue Code of 1986, as
amended (the "Code"), the regulations promulgated thereunder
by the United States Department of the Treasury, and the
interpretations of the Code and such regulations by the courts
and the Internal Revenue Service, all as they are in effect
and exist at the date of this letter.
With respect to the last assumption, it should be noted that statutes,
regulations, judicial decisions, and administrative interpretations are subject
to change at any time and, in some circumstances, with retroactive effect. A
material change that is made after the date hereof in any of the foregoing bases
for our opinions could affect our conclusions. Furthermore, if the facts vary
from those relied upon (including any representations, warranties, covenants or
assumptions upon which we have relied are inaccurate, incomplete, breached or
ineffective), our opinion contained herein could be inapplicable. Moreover, the
qualification and taxation of EQR as a real estate investment trust (a "REIT")
depends upon its ability to meet, through actual annual operating results,
distribution levels and diversity of share ownership and the various
qualification tests imposed under the Code, the results of which will not be
reviewed by the undersigned. Accordingly, no assurance can be given that the
actual results of the operations of EQR for any one taxable year will satisfy
such requirements.
Based upon and subject to the foregoing, it is our opinion that:
(i) EQR was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code for
its taxable years ended December 31, 1992 through December 31,
1999, and EQR's organization and proposed method of operation
should enable it to continue to satisfy the requirements for
qualification and taxation as a REIT under the Code for its
taxable years ending after the date of this opinion.
(ii) The statement of federal income tax matters and consequences
described in the Annual Report under the heading "Federal
Income Tax Considerations," to the extent that it constitutes
matters of federal income tax law or legal conclusions, is
accurate in all material respects.
<PAGE>
Equity Residential Properties Trust
March 24, 2000
Page 4
The foregoing opinion is limited to the matters specifically discussed
herein, which are the only matters to which you have requested our opinion.
Other than as expressly stated above, we express no opinion on any issue
relating to EQR and the ERP Operating Limited Partnership, or to any investment
therein.
For a discussion relating the law to the facts and the legal analysis
underlying the opinions set forth in this letter, we incorporate by reference
the discussion of federal income tax issues, which we assisted in preparing, in
the section of the Annual Report under the heading "Federal Income Tax
Considerations." We assume no obligation to advise you of any changes in the
foregoing subsequent to the date of this opinion letter, and we are not
undertaking to update the opinion letter from time to time. You should be aware
that an opinion of counsel represents only counsel's best legal judgment, and
has no binding effect or official status of any kind, and that no assurance can
be given that contrary positions may not be taken by the Internal Revenue
Service or that a court considering the issues would not hold otherwise.
This opinion is rendered only to you and may not be quoted in whole or
in part or otherwise referred to, used by, nor be filed with, or furnished to,
any other person or entity in connection with the Registration Statements. We
hereby consent to the filing of this opinion on Form 8-K pursuant to Item
601(b)(8) of Regulation S-K, 17 C.F.R Section 229.601(b)(8) as an exhibit to the
Registration Statements under the Securities Act of 1933, as amended, and the
reference to Piper Marbury Rudnick & Wolfe contained in the section of the
Annual Report under the heading "Federal Income Tax Considerations." In giving
this consent, we do not admit that we are included in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
PIPER MARBURY RUDNICK & WOLFE
<PAGE>
EXHIBIT A
OFFICER'S CERTIFICATE
(See Attached)
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
March 24, 2000
Piper Marbury Rudnick & Wolfe
203 North LaSalle Street
Suite 1800
Chicago, Illinois 60601-1293
Re: OFFICER'S CERTIFICATE -TAX OPINION FOR REIT STATUS
Ladies and Gentlemen:
In connection with (i) the registration statements on Form S-3 (SEC
File Nos. 333-80835, 333-72961, 333-45533, 333-39289, 333-12983, 333-06873,
33-97680, 33-84974) (the "Registration Statements") of Equity Residential
Properties Trust, a Maryland real estate investment trust ("EQR"), previously
declared effective by the Securities and Exchange Commission relating to the
proposed public offerings of various securities of EQR, (ii) the filing of EQR's
annual report on Form 10-K for the year ended December 31, 1999 (the "Annual
Report"), (iii) the discussion of "Federal Income Tax Considerations" under that
heading in the Annual Report, and (iv) the incorporation by reference of such
information into the Registration Statements, we have requested your opinion as
to the qualification and taxation of EQR as a real estate investment trust (a
"REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), for
its taxable years ending on or after December 31, 1992 in order to enable EQR to
fulfill the requirements of Item 601(b)(8) of Regulation S-K, 17 C.F.R. Section
229.601(b)(8) in connection with the Registration Statements.
In connection with the issuance of your legal opinion as described
above, EQR and/or ERP Operating Limited Partnership, an Illinois limited
partnership ("ERP Operating Limited Partnership"), hereby make the
representations set forth below (intending that Piper Marbury Rudnick & Wolfe
will rely on such representations in rendering its opinion). All representations
made by EQR and ERP Operating Limited Partnership are made for all periods of
their existence (unless otherwise set forth below):
1. No interests in ERP Operating Limited Partnership held by a
general partner or limited partner have ever been traded on an
established securities market or exchange (including an
over-the-counter market) or the substantial equivalent
thereof, and EQR has no intention to permit any interest in
ERP Operating Limited Partnership to be traded on an
established securities market or exchange (including an
over-the-counter market) or the substantial equivalent
thereof.
<PAGE>
March 24, 2000
Page 2
2. Commencing with its taxable year ending December 31, 1992, EQR
timely and properly filed an election to be taxed as a "real
estate investment trust" under Code Section 856(c)(1). EQR has
not revoked such election and has no present intention to
revoke such election.
3. EQR has been managed by one or more of its trustees during all
taxable years of its existence, and EQR has no present
intention to not be managed by one or more trustees in the
future.
4. Beneficial ownership in EQR has been evidenced by transferable
shares during all taxable years of EQR's existence, and EQR
intends that beneficial ownership in EQR will continue to be
evidenced by transferable shares.
5. At no time during the last half of any taxable year of EQR
have more than 50% in value of EQR's outstanding beneficial
interests been owned, directly or indirectly, by or for five
or fewer individuals as determined by applying the Attribution
Rules.
6. EQR will take all measures within its control to ensure that
at no time during the last half of any taxable year ending
after December 31, 1999, are more than 50% in value of EQR's
outstanding beneficial interests owned, directly or
indirectly, by or for five or fewer individuals as determined
by applying the Attribution Rules.
7. Beneficial ownership in EQR was held by 100 or more persons
during at least 335 days for the taxable year ending December
31, 1992 (or during a proportionate part of such taxable year
if such taxable year was less than twelve months) and for all
periods thereafter. EQR will take all measures within its
control to ensure that beneficial ownership in EQR is held by
100 or more persons at all times from and after December 31,
1999.
8. Commencing with EQR's taxable year ending December 31, 1992,
and for all taxable years ending thereafter, at least
ninety-five percent (95%) of the gross income of EQR
(excluding gross income from Prohibited Transactions) has been
and is expected to be derived from (i) dividends, (ii)
interest, (iii) rents from real property, (iv) gain from the
sale or other disposition of stock, securities and real
property (including Interests in Real Property and interests
on mortgages on real property), but excluding gain on real
property which is Code Section 1221(1) Property, (v)
abatements and refunds of taxes on real property, (vi) income
and gain derived from
<PAGE>
March 24, 2000
Page 3
Foreclosure Property, (vii) amounts (other than amounts, the
determination of which depends in whole or in part on income
or profits of any person) received or accrued as consideration
for entering into agreements (A) to make loans secured by
mortgages on real property or on Interests in Real Property,
or (B) to purchase or lease real property (including Interests
in Real Property and interests in mortgages on real property),
and (viii) gain from the sale or other disposition of Real
Estate Assets that is not a Prohibited Transaction.
9. Commencing with EQR's taxable year ending December 31, 1992,
and for all taxable years ending thereafter, at least
seventy-five (75%) of the gross income of EQR (excluding gross
income from Prohibited Transactions) has been and is expected
to be derived from (i) rents from real property, (ii) interest
on obligations secured by mortgages on real property or on
Interests in Real Property, (iii) gain from the sale or
disposition of real property (including Interests in Real
Property and interests in mortgages on real property), but
excluding gain from real property which is Code Section
1221(1) Property, (iv) dividends or other distributions on,
and gain (other than gain from Prohibited Transactions) from
the sale or other disposition of, transferable shares or
beneficial certificates in other Real Estate Investment
Trusts, (v) abatements and refunds of taxes on real property,
(vi) income and gain derived from Foreclosure Property, (vii)
amounts (other than amounts, the determination of which
depends in whole or in part on the income or profits of any
person) received or accrued as consideration for entering into
agreements (A) to make loans secured by mortgages on real
property or on Interests in Real Property or (B) to purchase
or lease real property (including Interests in Real Property
and interests in mortgages on real property), (viii) gain from
the sale or other disposition of a Real Estate Asset which is
not a Prohibited Transaction, and (ix) Qualified Temporary
Investment Income.
10. Less than 30% of the gross income of EQR in its taxable years
ending on or before December 31, 1997 was derived from the
sale or other disposition of (i) stock or securities held for
less than one year; (ii) property in a Prohibited Transaction;
and (iii) real property (including Interests in Real Property
and interests in mortgages on real property) held for less
than four years other than property compulsorily or
involuntarily converted (by means of destruction, theft,
seizure, requisition, condemnation or threat of imminence
thereof) and Foreclosure Property.
11. Neither EQR nor ERP Operating Limited Partnership has entered
into any agreement or arrangement (and each has taken all
measures within its control to ensure that no
<PAGE>
March 24, 2000
Page 4
subsidiary of EQR 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 EQR, ERP
Operating Limited Partnership, any Related Entity or QRS 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).
12. From and after the date hereof, neither EQR nor ERP Operating
Limited Partnership will enter into any agreement or
arrangement (and each will take all measures within its
control to ensure that no Related Entity or QRS will enter
into any agreement or arrangement) in connection with the
rental of real property under which amounts payable to EQR,
ERP Operating Limited Partnership, any Related Entity or QRS
will depend 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).
13. Neither EQR nor ERP Operating Limited Partnership has rendered
services themselves or through a Related Entity or any other
affiliate with respect to any real property in which EQR,
directly or through ERP Operating Limited Partnership or a
Related Entity, had an interest that is less than or equal to
50% unless EQR (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 EQR to fail to meet the
tests described in representations (8) and (9) above.
14. Neither EQR nor ERP Operating Limited Partnership will render
services themselves or through a Related Entity or any other
affiliate (excluding any Taxable REIT Subsidiary ("TRS")) with
respect to any real property currently owned or acquired in
the future in which EQR, directly or through ERP Operating
Limited Partnership or a Related Entity, has an interest that
is less than or equal to 50% unless EQR (i) obtains either a
ruling from the Internal Revenue Service or an opinion of
counsel that the provision of such services will not
disqualify the income from such real property as rents from
real property or (ii) determines that, if the income from such
real property did not qualify as rents from real property,
such income (along with
<PAGE>
March 24, 2000
Page 5
other nonqualifying income) would not cause EQR to fail to
meet the tests described in representations (8) and (9) above.
15. For each of EQR's taxable years ending on or before December
31, 1999: (i) less than 15% of the rent received by EQR, ERP
Operating Limited Partnership, any Related Entity or QRS in
regard to each of the Properties was attributable to personal
property; and (ii) all personal property contained in the
Properties was leased under or in connection with a lease of
the real property contained in the Properties.
16. EQR and ERP Operating Limited Partnership expect that, and
each will take all measures within its control to ensure that,
for any taxable year ending after December 31, 1999: (i) less
than 15% of the rent received by EQR, ERP Operating Limited
Partnership, any Related Entity or QRS in regard to each of
the Properties will be attributable to personal property; and
(ii) all personal property contained in the Properties will be
leased under or in connection with a lease of real property
contained in the Properties.
17. For each of EQR's taxable years ending on or before December
31, 1999, no more than a DE MINIMIS amount of rent received by
EQR, ERP Operating Partnership or any Related Entity for the
Properties was received or accrued directly or indirectly from
any person in which EQR owns (i) in the case of a corporation,
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
shares of all classes of stock; or (ii) in the case of an
entity other than a corporation, an interest of 10% or more in
the assets or net profits of such entity. For purposes of this
representation, ownership will be determined by taking into
account the Modified Attribution Rules.
18. EQR will take all measures within its control to ensure that,
for any of its taxable years ending on or before December 31,
2000, no more than a DE MINIMIS amount of rent received by
EQR, ERP Operating Partnership, any Related Entity or QRS for
the Properties will be received or accrued directly or
indirectly from any person in which EQR owns (i) in the case
of a corporation, 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; or (ii)
in the case of an entity other than a corporation, an interest
of 10% or more in the assets or net profits of such entity.
For purposes of this representation, ownership will be
determined by taking into account the Modified Attribution
Rules.
<PAGE>
March 24, 2000
Page 6
19. Except with respect to rent received by EQR, ERP Operating
Partnership, any Related Entity or QRS from a TRS as described
in representation (20) below, EQR will take all measures
within its control to ensure that, for any of its taxable
years ending after December 31, 2000, no more than a DE
MINIMIS amount of rent received by EQR, ERP Operating
Partnership, any Related Entity or QRS for the Properties
will be received or accrued directly or indirectly from any
person in which EQR owns (i) in the case of a corporation,
10% or more of the total combined voting power of all
classes of stock entitled to vote, or 10% or more of the
total value of shares of all classes of stock; or (ii) in
the case of an entity other than a corporation, an interest
of 10% or more in the assets or net profits of such entity.
For purposes of this representation, ownership will be
determined by taking into account the Modified Attribution
Rules.
20. For taxable years beginning after December 31, 2000, EQR
expects that all amounts paid to EQR, ERP Operating Limited
Partnership, a Related Entity or a QRS as rent from real
property by a TRS will either: (A) be paid by the TRS with
respect to its leasing of space of a Property of which at
least ninety percent (90%) of the leased space is rented to
persons other than TRSs and other persons described in clauses
(i) or (ii) of representation (19) above and the rent paid by
such TRS is comparable to that paid by other tenants at such
Property, or (B) be paid with respect to a Property which
constitutes a Qualified Lodging Facility leased by EQR to a
TRS and such Qualified Lodging Facility is operated on
behalf of such TRS by an Eligible Independent Contractor.
21. Neither EQR, ERP Operating Limited Partnership, nor any
Related Entity (excluding any entity with respect to which EQR
and such entity intend to jointly elect TRS status beginning
January 1, 2001) or QRS or affiliate of any of them has
entered into or has any present intention to enter into any
agreement or arrangement for the performance of services to
tenants of the Properties, other than for services which are
(a) not rendered primarily for the convenience of the tenants
of the Properties, and (b) customarily furnished or rendered
in connection with the rental of real property. Any services
provided to tenants of the Properties 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 or TRS, and in the case
of services rendered or to be rendered by an Independent
Contractor, neither EQR, ERP Operating Limited Partnership,
Related Entity, QRS or affiliate of any of them has derived or
has any present intention to derive any income from such
Independent Contractor.
<PAGE>
March 24, 2000
Page 7
22. At the close of each calender quarter during its existence, at
least 75% of the value of the Total Assets of EQR consisted of
Real Estate Assets, cash and cash items (including receivables
which arise in the ordinary course of EQR's operation but not
receivables purchased from another person) and government
securities, and not more than 25% of the value of its assets
was represented by securities (other than government
securities).
23. EQR will take all measures within its control to ensure that,
at the close of each quarter during each taxable year ending
after the December 31, 1999, at least 75% of the value of its
Total Assets of EQR will consist of Real Estate Assets, cash
and cash items (including receivables which arise in the
ordinary course of EQR's operation but not receivables
purchased from another person) and government securities, and
that not more than 25% of the value of its assets will be
represented by securities (other than government securities).
24. At the close of each quarter during its existence, EQR has not
owned (either directly or indirectly through ERP Operating
Limited Partnership, or any Related Entity or other
affiliate), securities in any one issuer having an aggregate
value in excess of 5% of the value of the Total Assets of EQR.
25. EQR will take all measures within its control to ensure that,
at the close of each quarter of each taxable year ending after
December 31, 1999, it does not own (either directly or
indirectly through ERP Operating Limited Partnership, or any
Related Entity or other affiliate) securities in any one
issuer having an aggregate value in excess of 5% of the value
of the Total Assets of EQR. Notwithstanding the foregoing, for
taxable years ending after December 31, 2000, EQR may own
securities in any one TRS having an aggregate value in excess
of 5% of the value of the Total Assets of EQR.
26. At no time has EQR owned (either directly or indirectly
through ERP Operating Limited Partnership, any Related Entity
or other affiliate) any securities in any issuer representing
in excess of 10% of the outstanding voting securities of such
issuer, unless such issuer is a QRS.
27. EQR will take all measures within its control to ensure that,
at the close of each quarter of each taxable year ending after
December 31, 1999, it will not own or be deemed to own (either
directly, or indirectly, through ERP Operating Limited
Partnership, any Related Entity or other affiliate) any
securities in any issuer
<PAGE>
March 24, 2000
Page 8
representing in excess of 10% of the outstanding voting
securities of such issuer, unless such issuer is a QRS.
Notwithstanding the foregoing, for taxable years ending after
December 31, 2000, EQR may own securities in any one TRS
representing in excess of 10% of the outstanding voting
securities of such TRS.
28. EQR will take all measures within its control to ensure that,
at the close of each quarter of each taxable year ending after
December 31, 2000, it will not own or be deemed to own (either
directly, or indirectly, through ERP Operating Limited
Partnership, any Related Entity or other affiliate) any
securities (other than Straight Debt) of any issuer other than
a TRS representing in excess of 10% of the total value of the
outstanding securities (excluding Straight Debt) of any one
insurer, unless such issuer is a QRS.
29. EQR will take all measures within its control to ensure that,
at the close of each quarter of each taxable year ending after
December 31, 2000, not more than twenty percent (20%) of its
Total Assets is represented by securities of one or more TRS.
30. For taxable years beginning after December 31, 2000, EQR
expects it will not directly, or indirectly through an entity
that would otherwise qualify as a TRS, operate or manage a
Lodging Facility or a Health Care Facility.
31. EQR, ERP Operating Limited Partnership and each of the Related
Entities have at all times during their existence held the
Properties (and all other assets) for investment purposes and
not as (i) stock in trade or other property of a kind which
would properly be included in inventory if on hand at the
close of the taxable year, or (ii) property held primarily for
sale to customers in the ordinary course of its trade or
business.
32. EQR, ERP Operating Limited Partnership, and each of the
Related Entities will at all times after the date hereof hold
the Properties (and all other assets) for investment purposes
and not as (i) stock in trade or other property of a kind
which would properly be included in inventory if on hand at
the close of the taxable year, or (ii) property held primarily
for sale to customers in the ordinary course of its trade or
business.
33. For each of EQR's taxable years ending on or before December
31, 1999, EQR has paid dividends (without regard to capital
gains dividends) equal to or in excess of the
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March 24, 2000
Page 9
sum of (i) ninety-five percent (95%) of EQR's REIT Taxable
Income for such year (determined without regard to the
deduction for dividends paid and by excluding any net capital
gain), and (ii) ninety-five percent (95%) of the net income
from Foreclosure Property (after the tax imposed thereon by
Section 857(b)(4)(A) of the Code), minus (iii) any Excess
Noncash Income.
34. EQR will take all measures within its control to ensure that,
for each taxable year ending on or before December 31, 2000,
it pays dividends (without regard to capital gains dividends)
equal to or in excess of the sum of (i) ninety-five percent
(95%) of EQR's REIT Taxable Income for the year (determined
without regard to the deduction for dividends paid and by
excluding any net capital gain), and (ii) ninety-five percent
(95%) of the net income from Foreclosure Property (after the
tax imposed thereon by Section 857(b)(4)(A) of the Code),
minus (iii) any Excess Noncash Income.
35. EQR will take all measures within its control to ensure that,
for each taxable year ending after December 31, 2000, it pays
dividends (without regard to capital gains dividends) equal to
or in excess of the sum of (i) ninety percent (90%) of EQR's
REIT Taxable Income for the year (determined without regard to
the deduction for dividends paid and by excluding any net
capital gain), and (ii) ninety percent (90%) of the net income
from Foreclosure Property (after the tax imposed thereon by
Section 857(b)(4)(A) of the Code), minus (iii) any Excess
Noncash Income.
36. At the close of each calender year during its existence, EQR
has not had any earnings and profits accumulated in any
Non-REIT Year.
37. EQR will take all measures within its control to ensure that,
for each taxable year ending after December 31, 1999, it does
not have any earnings and profits accumulated in any Non-REIT
Year.
38. As required by Regulation Section 1.857-8, for each year
commencing with EQR's taxable year ending December 31, 1992,
EQR (i) has maintained and will maintain the necessary records
relating to the actual ownership of its stock, (ii) has made
and will make the requisite information requests of its
shareholders regarding stock ownership, and (iii) has
maintained and will maintain a list of the persons failing or
refusing to comply in whole or in part with EQR's demand for
statements regarding stock ownership.
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March 24, 2000
Page 10
39. Any representations herein as to the Properties will also be
true with respect to properties acquired by ERP Operating
Limited Partnership or any Related Entity or other affiliate
after the date hereof.
40. None of the liabilities incurred by EQR, ERP Operating Limited
Partnership or any Related Entity during the two-year period
immediately preceding the date hereof were incurred in
anticipation of any of the transactions described in the
Annual Report.
41. No Related Entity or other subsidiary of EQR that was formed
under State law as a partnership, joint venture or limited
liability company has elected to be taxed as a corporation for
federal tax purposes.
42. Neither EQR, ERP Operating Limited Partnership, nor any
Related Entity or other affiliate was notified by the IRS in
writing on or before May 8, 1996, that the entity's
classification for federal income tax purposes was under
examination.
43. The undersigned is familiar with the requirements for
qualification as a REIT under the Code and believes that (i)
EQR has satisfied such requirements for all periods of its
existence and (ii) EQR will satisfy such requirements for all
periods after the date hereof.
44. The undersigned is a duly elected officer of EQR. 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 EQR and the ERP
Operating Limited Partnership regarding such factual matters,
none of whom have disagreed in any respect with any of the
representations set forth above.
45. EQR has advised you of any matter of which it has been advised
by independent legal counsel or accounting advisors or of
which EQR or its employees is aware that could, if adversely
decided, adversely affect EQR's ability to satisfy the
requirement for continued taxation as a REIT under the Code.
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
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March 24, 2000
Page 11
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.
Very truly yours,
EQUITY RESIDENTIAL PROPERTIES
TRUST
By:/s/ MICHAEL J. MCHUGH
---------------------------------
Name: MICHAEL J. MCHUGH
----------------------------
Its: EXECUTIVE VICE PRESIDENT
------------------------------
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EXHIBIT A
DEFINITIONS
"ATTRIBUTION RULES": the rules of ownership described in Section 856(h)
of the Code.
"CONSTRUCTIVE" or "CONSTRUCTIVELY": the constructive stock ownership
rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code.
"ELIGIBLE INDEPENDENT CONTRACTOR": means, with respect to any Qualified
Lodging Facility, any Independent Contractor if, at the time such Independent
Contractor enters into a management agreement or other similar service contract
with a Taxable REIT Subsidiary to operate the Qualified Lodging Facility, such
Independent Contractor (or any related person) is actively engaged in the trade
or business of operating Qualified Lodging Facilities for any person who is not
a Related Person with respect to the REIT or the Taxable REIT Subsidiary.
"EXCESS NONCASH INCOME": the excess of (i) the sum of (A) all interest,
original issue discount and other income includible in income with respect to
debt instruments received upon the sale of property over the money and fair
market value of property received with respect to such instruments and (B)
income recognized upon the disposition of real estate if there is a
determination that Section 1031 of the Code (like-kind exchanges) does not apply
to the disposition and the failure to satisfy the requirements of Section 1031
of the Code was due to reasonable cause and not willful neglect, over (ii) five
percent (5%) of REIT Taxable Income (without regard for the deduction for
dividends paid and excluding any net capital gain).
"FORECLOSURE PROPERTY": any real property (including Interests in Real
Property), and personal property incident to such real property, acquired by EQR
and/or its affiliates as a result of EQR and/or its affiliates having bid in
such property at foreclosure, or having otherwise reduced such property to
ownership or possession by agreement or process of law, after there was default
(or default was imminent) on a lease of such property or on an indebtedness
which such property secured; provided that an election for foreclosure property
status under Section 856(e)(5) of the Code is in effect with respect to such
property and such election has not been terminated under Section 856(e)(4) of
the Code. Such term does not include property acquired by EQR and/or its
affiliates as a result of indebtedness arising from the sale or other
disposition of property of EQR and/or its affiliates which is Section 1221(1)
Property which was not originally acquired as foreclosure property.
"HEALTH CARE FACILITY": means a hospital, nursing facility, assisted
living facility, congregate care facility, qualified continuing care facility
(as defined in Code Section 7872(g)(4)), or other licensed facility which
extends medical or nursing or ancillary services to patients and which,
immediately before the termination, expiration, default, or breach of the lease
of or mortgage secured
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by such facility, was operated by a provider of such services which was eligible
for participation in the medicade program under title XVIII of the Social
Security Act with respect to such facility.
"INDEPENDENT CONTRACTOR": means any person other than (i) any person
owning (actually or Constructively) more than 35% of the shares of EQR; (ii) any
corporation in which persons owning 35% or more of the shares of EQR own
(actually or Constructively) more than 35% of the voting power with respect to
the stock of such corporation; or (iii) any entity other than a corporation in
which persons owning 35% or more of the shares of EQR own actually or
Constructively) more than a 35% interest in the assets or net profits of such
entity.
"INTERESTS IN REAL PROPERTY": includes fee ownership and co-ownership
of land or improvements thereon, leaseholders of land or improvements thereon,
options to acquire land or improvements thereon, and options to acquire
leaseholds of land or improvements thereon, but does not include mineral, oil or
gas royalty interests.
"LODGING FACILITY": a hotel, motel, or other establishment more than
one-half (1/2) of the dwelling units in which are used on a transient basis.
"MODIFIED ATTRIBUTION RULES": the rules of ownership described in Code
Section 318 as modified by Code Section 856(d)(5).
"NON-REIT YEAR": any taxable year to which the provisions of Section
856 through Section 860 of the Code do not apply to an entity.
"PROHIBITED TRANSACTION": the sale or other disposition of Section
1221(1) Property, other than Foreclosure Property, unless (i) the property sold
was a Real Estate Asset; (ii) EQR and/or its affiliates held the Real Estate
Asset for at least four years; (iii) the aggregate expenditures made by EQR
and/or its affiliates during the four (4) year period preceding the date of the
sale which are includible in the basis of the Real Estate Asset does not exceed
thirty percent (30%) of the net selling price of such asset; (iv) (A) during the
taxable year EQR and/or its affiliates did not make more than seven sales of
property (other than Foreclosure Property) or (B) the aggregate adjusted bases
(as determined for purposes of computing earnings and profits) of the REIT's
property (other than Foreclosure Property) sold during the taxable year does not
exceed ten percent (10%) of the aggregate adjusted bases (as so determined) of
all the assets of the REIT as of the beginning of the taxable year; (v) in the
case of property, which consists of land or improvements, not acquired through
foreclosure (or deed in lieu of foreclosure), or lease termination, EQR and/or
its affiliates has held the property for not less than four (4) years for
production of rental income; and (vi) if the requirement of clause (iv)(A) is
not satisfied, substantially all of the marketing and development expenditures
with respect to the property were made through an Independent Contractor from
whom EQR and/or its affiliates does not directly or indirectly derive gross
income (including but not
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limited to dividends). For purposes of clause (iv)(B) of the preceding sentence,
the REIT will be treated as owning its proportionate share of the adjusted bases
of assets owned by its affiliates.
"PROPERTIES": the real properties owned directly or indirectly and/or
leased by any of EQR, ERP Operating Limited Partnership, any Related Entity or
QRS.
"QUALIFIED LODGING FACILITY": means any Lodging Facility, unless
wagering activities are conducted at or in connection with such facility by any
person who is engaged in the business in accepting wagers and who is legally
authorized to engage in such business at or in connection with such facility.
"QUALIFIED REIT SUBSIDIARY": any corporation (other than a Taxable REIT
Subsidiary) if 100 percent of the stock of such corporation is held by EQR
and/or any wholly-owned subsidiary of EQR that is disregarded for federal income
tax purposes (including any Qualified REIT Subsidiary of EQR).
"QUALIFIED TEMPORARY INVESTMENT INCOME": any income which (i) is
attributable to stock, or a bond, debenture, note, certificate or other evidence
of indebtedness (excluding any annuity contract which depends (in whole or in
substantial part) on the life expectancy of one or more individuals, or is
issued by an insurance company subject to tax under subchapter L of the Code (1)
in a transaction in which there is no consideration other than cash or another
annuity contract meeting the requirements of this definition, (2) pursuant to
the exercise of an election under an insurance contract by a beneficiary owner
thereof on the death of the insured party under such contract, or (3) in a
transaction involving a qualified pension or employee benefit plan), (ii) is
attributable to the temporary investment of new capital (amounts received upon
the issuance of stock of EQR or upon a public offering of debt obligations of
EQR having maturities of at least five years) received by EQR and (iii) is
received or accrued during the one year period beginning on the date EQR
received such capital.
"REAL ESTATE ASSET": real property (including Interests in Real
Property and interests in mortgages on real property) and shares (or
transferable certificates of beneficial interest) in other Real Estate
Investment Trusts. Such term also includes any property (not otherwise a Real
Estate Asset) attributable to the temporary investment of new capital (amounts
received upon the issuance of stock of EQR or upon a public offering of debt
obligations of EQR having maturities of at least five years), but only if such
property is stock or a debt instrument, and only for the one-year period
beginning on the date EQR receives such capital.
"REAL ESTATE INVESTMENT TRUST": a real estate investment trust which
meets the requirements of Sections 856 through 860 of the Code.
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"REIT TAXABLE INCOME": "Real estate investment trust taxable income" as
defined in Section 857(b) of the Code, which generally equals the taxable income
of EQR, computed with the dividends-paid deduction as defined in Section 561 of
the Code (except that the portion of such deduction attributable to net income
from Foreclosure Property is excluded), excluding any net income from
Foreclosure Property, and computed with a deduction for any tax imposed under
Section 857(b)(5) of the Code (I.E., tax on the failure to meet the seventy-five
percent (75%) or ninety-five percent (95%) income tests).
"RELATED ENTITY": any entity classified as a partnership for federal
tax purposes in which EQR or ERP Operating Limited Partnership, directly or
indirectly owns an interest and any entity, other than a Qualified REIT
Subsidiary, in which EQR owns an interest that is treated as a disregarded
entity under Section 301.7701-2 of the Regulations promulgated by the United
States Treasury Department.
"RELATED PERSON": persons are considered "Related Persons" if such
persons are treated as a single employer under subsection (a) or (b) of Code
Section 52.
"SECTION 1221(1) PROPERTY": stock in trade of EQR and/or its affiliates
or other property of a kind which would properly be included in inventory of EQR
and/or its affiliates if on hand at the close of the taxable year, or property
held by EQR and/or its affiliates primarily for sale to customers in the
ordinary course of its trade or business.
"STRAIGHT DEBT": means (A) any written unconditional promise to pay on
demand or on a specified date a sum certain in money if: (1) the interest rate
(and interest payment dates) are not contingent on profits, the borrower's
discretion, or similar factors and (2) there is no convertibility (directly or
indirectly) into stock; provided that, (B) (i) the issuer of a security is an
individual, (ii) the only securities of an issuer which are held by the REIT or
a Taxable REIT Subsidiary of the REIT are described in (A), or (iii) the issuer
is a partnership and the REIT holds at least a twenty percent (20%) profits
interest in the partnership.
"TAXABLE REIT SUBSIDIARY": means (i) a corporation (other than a REIT)
in which EQR directly or indirectly owns stock and EQR and such corporation
jointly elect that such corporation shall be treated as a taxable REIT
subsidiary of EQR and (ii) any corporation (other than a REIT) in which a
taxable REIT subsidiary owns: (X) securities possessing more than thirty-five
percent (35%) of the total voting power of the outstanding securities of such
corporation, or (Y) securities having a value of more than thirty-five percent
(35%) of the total value of the outstanding securities of such corporation. The
term "Taxable REIT Subsidiary" shall not include: (A) any corporation which
directly or indirectly operates or manages a Lodging Facility or Health Care
Facility, and (B) any corporation which directly or indirectly provides to any
other person (under a franchise, license, or otherwise) rights to any brand name
under which any Lodging Facility or Health Care Facility is operated (this
clause (B) shall not apply to rights provided to an Eligible Independent
Contractor to
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operate or manage a Lodging Facility if such rights are held by such corporation
as a franchisee, licensee, or in a similar capacity and such Lodging Facility is
either owned by such corporation or is leased to such corporation from the Real
Estate Investment Trust).
"TOTAL ASSETS": the gross assets of EQR determined in accordance with
generally accepted accounting principles.
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