As filed with the Securities and Exchange Commission on October 15, 1997
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida 59-3191743
(State or other jurisdiction
of incorporation) (I.R.S. Employer Identification No.)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(904) 356-7000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Martin E. Stein, Jr.,
President and Chief Executive Officer
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(904) 356-7000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
Charles E. Commander III
Linda Y. Kelso
Foley & Lardner
200 Laura Street
Jacksonville, Florida 32202
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act of 1933, please check the following box. [_]
<TABLE>
Calculation of Registration Fee
<CAPTION>
Title of each Proposed Proposed
class of maximum maximum
securities to be Amount to be offering price aggregate Amount of regis-
registered registered per unit(1) offering price(1) tration fee(1)
<S> <C> <C> <C> <C>
Preferred Stock, (2) (2) (2) (2)
$0.01 par value(3)
Depositary Shares (2) (2) (2) (2)
Common Stock, (2) (2) (2) (2)
$0.01 par value(4)
Debt Securities (2) (2) (2) (2)
Total $400,000,000 100% $400,000,000(5)(6) $121,212
(Footnotes on next page)
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant 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.
(1) The proposed maximum offering price per unit will be determined from
time to time by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder.
(2) Not applicable pursuant to General Instruction II.D. of Form S-3.
(3) Subject to note (6) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold,
from time to time, by the Registrant.
(4) Subject to note (6) below, there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from
time to time, by the Registrant. There is also being registered
hereunder an indeterminate number of shares of Common Stock as shall
be issuable upon conversion of Preferred Stock or Debt Securities
registered hereunder.
(5) Such amount represents the liquidation preference of any Preferred
Stock, the amount computed pursuant to Rule 457(c) for any Common
Stock, the exercise price of any Common Stock issuable upon the
conversion of Preferred Stock, and the aggregate principal amount of
any Debt Securities.
(6) In no event will the aggregate initial offering price of all
securities issued from time to time pursuant to this Registration
Statement exceed $400,000,000. The securities registered hereunder
may be sold separately or as units with other securities registered
hereunder.
<PAGE>
SUBJECT TO COMPLETION - DATED OCTOBER 15, 1997
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. 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 prior to 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 by any sale of these securities in any
State in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
PROSPECTUS
Regency Realty Corporation
Preferred Stock, Depositary Shares, Common Stock and Debt Securities
Regency Realty Corporation (the "Company"), may offer from time to time,
together or separately, in one or more series (a) shares of the Company's
preferred stock, par value $0.01 per share ("Preferred Stock"),
(b) depositary shares representing entitlement to all rights and
preferences of a fraction of a share of Preferred Stock of a specified
series ("Depositary Shares"), (c) shares of the Company's common stock,
par value $0.01 per share ("Common Stock") and (d) debt securities (the
"Debt Securities") (the Preferred Stock, Depositary Shares, Common Stock
and Debt Securities are collectively referred to as the "Securities"),
separately or together, at an aggregate initial offering price not to
exceed U.S. $400,000,000 (or the equivalent in foreign currencies or
currency units), in amounts, at prices and on terms to be determined at
the time of sale.
The specific terms of any Securities offered pursuant to this Prospectus
will be set forth in an accompanying supplement to this Prospectus (a
"Prospectus Supplement"), together with the terms of the offering of such
Securities and the initial price and the net proceeds to the Company from
the sale thereof. The Prospectus Supplement will include, with regard to
the particular Securities, the following information: (a) in the case of
Preferred Stock, the designation, number of shares, liquidation preference
per share, initial offering price, dividend rate (or method of calculation
thereof), dates on which dividends shall be payable and dates from which
dividends shall accrue, any redemption or sinking fund provisions, and any
conversion or exchange rights; (b) in the case of Depositary Shares, the
fractional share of Preferred Stock represented by each Depositary Share,
(c) in the case of Common Stock, the number of shares and the terms of the
offering and sale thereof; (d) in the case of Debt Securities, the
specific title, aggregate principal amount, currency, form (which may be
registered or bearer, or certificated or global), authorized
denominations, maturity, interest rate (or manner of calculation thereof)
and time of payment of interest, any terms for redemption at the option of
the Company or repayment at the option of the holder, terms for any
sinking fund payments, any terms for conversion into Common Stock,
Preferred Stock or Debt Securities of another series, and any initial
public offering price and (e) in the case of all Securities, whether such
Securities will be offered separately or as a unit with other Securities.
The Prospectus Supplement will also contain information, where applicable,
about material United States federal income tax considerations relating
to, and any listing on a securities exchange of, the Securities covered by
such Prospectus Supplement.
The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "REG." Any Common Stock offered pursuant to a
Prospectus Supplement will be listed on such exchange, subject to official
notice of issuance.
The Company may sell Securities directly through agents, underwriters or
dealers designated from time to time. If any agents, underwriters or
dealers are involved in the sale of the Securities, the names of such
agents, underwriters or dealers and any applicable commissions or
discounts and the net proceeds to the Company from such sale will be set
forth in the applicable Prospectus Supplement.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
See "Risk Factors" on pages 4 to 8 for a discussion of certain material
factors which should be considered in connection with an investment in the
Securities offered hereby.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL
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 ________, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports and other
information concerning the Company may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following regional offices of the Commission: New York Office, Seven
World Trade Center, 13th Floor, New York, New York 10048 and Chicago
Office, Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may also be obtained
from the public reference section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. The Commission also
maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants, including the
Company, that file electronically with the Commission. The address of
such Web site is http://www.sec.gov. In addition, the Company's Common
Stock is listed on the NYSE and similar information concerning the Company
can be inspected and copied at the offices of the NYSE, 20 Broad Street,
New York, New York 10005.
This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto which the Company has filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"), to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated in this Prospectus by
reference, except as superseded or modified herein:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended by Form 10-K/A filed April 28, 1997.
2. The Company's Current Report on Form 8-K dated December 31, 1996.
3. The Company's Current Report on Form 8-K dated March 7, 1997, as
amended by Form 8-K/A filed March 20, 1997, 8-K/A-2 filed May 12, 1997
and 8-K/A-3 filed July 10, 1997.
4. The Company's Current Report on Form 8-K dated March 31, 1997.
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
6. The Company's Current Report on Form 8-K dated June 6, 1997, as
amended by Form 8-K/A filed August 13, 1997.
7. The Company's Current Report on Form 8-K dated June 30, 1997.
8. The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997.
9. The description of Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the Commission on
August 30, 1993, and declared effective on October 29, 1993, including
portions of the Company's Registration Statement on Form S-11 (No. 33-
67258) incorporated by reference therein.
Each document filed by the Company subsequent to the date of this
Prospectus pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act and prior to the termination of the offering of the Securities shall
be deemed to be incorporated in this Prospectus by reference and to be a
part hereof from the date of the filing of such document. Any statement
contained in a document incorporated by reference shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed incorporated
document or in an accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request of any such
person, a copy of any document described above that has been incorporated
in this Prospectus by reference and not delivered with this Prospectus or
any preliminary Prospectus distributed in connection with the offering of
the Securities, other than exhibits to such document referred to above
unless such exhibits are specifically incorporated by reference herein.
Requests should be directed to Ms. Brenda Paradise, the Company's Director
of Shareholder Relations, 121 West Forsyth Street, Suite 200,
Jacksonville, Florida 32202 (telephone: (904) 356-7000).
RISK FACTORS
Prospective investors should carefully consider the following
information in conjunction with the other information contained in this
Prospectus and the applicable Prospectus Supplement before purchasing
Securities. This Prospectus and the applicable Prospectus Supplement may
include certain statements that may be deemed to be "forward-looking
statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. All statements, other than statements of
historical facts, included in this Prospectus that address activities,
events or developments that the Company expects, believes or anticipates
will or may occur in the future, including such matters as future capital
expenditures, dividends and acquisitions (including the amount and nature
thereof), expansion and other development trends of the real estate
industry, business strategies, expansion and growth of the Company's
operations and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical
trends, current conditions, expected future developments and other factors
it believes are appropriate. Such statements are subject to a number of
assumptions, risks and uncertainties, including the risk factors discussed
below, general economic and business conditions, the business
opportunities that may be presented to and pursued by the Company, and
changes in laws or regulations and other factors, many of which are beyond
the control of the Company. Prospective investors are cautioned that any
such statements are not guarantees of future performance and that actual
results or developments may differ materially from those anticipated in
the forward-looking statements.
Significant Reliance on Major Tenants
The Company derives significant revenues from certain anchor tenants
that occupy more than one center. The Company could be adversely affected
in the event of the bankruptcy or insolvency of, or a downturn in the
business of, any of it major tenants, or in the event that any such tenant
does not renew its leases as they expire or renews at lower rental rates.
Vacated anchor space not only would reduce rental revenues if not
retenanted at the same rental rates but also could adversely affect the
entire shopping center because of the loss of the departed anchor tenant's
customer drawing power. Loss of customer drawing power also can occur
through the exercise of the right that most anchors have to vacate and
prevent retenanting by paying rent for the balance of the lease term, or
the departure of an anchor tenant that owns its own property.
Tenants may seek the protection of the bankruptcy laws, which could
result in the rejection and termination of their leases and thereby cause
a reduction in the cash flow available for distribution by the Company.
Such reduction could be material if a major tenant files bankruptcy.
General Risks Relating to Real Estate Investments
Value of Real Estate Dependent on Numerous Factors. Real property
investments are subject to varying degrees of risk. Real estate values
are affected by a number of factors, including changes in the general
economic climate, local conditions (such as an oversupply of space or a
reduction in demand for real estate in an area), the quality and
philosophy of management, competition from other available space, the
ability of the owner to provide adequate maintenance and insurance and to
control variable operating costs. Shopping centers, in particular, may be
affected by changing perceptions of retailers or shoppers regarding the
safety, convenience and attractiveness of the shopping center and by the
overall climate for the retail industry generally. Real estate values are
also affected by such factors as government regulations, interest rate
levels, the availability of financing and potential liability under, and
changes in, environmental, zoning, tax and other laws. As substantially
all of the Company's income is derived from rental income from real
property, the Company's income and cash flow would be adversely affected
if a significant number of the Company's tenants were unable to meet their
obligations to the Company, or if the Company were unable to lease on
economically favorable terms a significant amount of space in its
properties. In the event of default by a tenant, the Company may
experience delays in enforcing, and incur substantial costs to enforce,
its rights as landlord.
Equity real estate investments are relatively illiquid and therefore
may tend to limit the ability of the Company to react promptly in response
to changes in economic or other conditions. In addition, certain
significant expenditures associated with each equity investment (such as
mortgage payments, real estate taxes and maintenance costs) are generally
not reduced when circumstances cause a reduction in income from the
investment.
Difficulties and Costs Associated with Renting Unleased and Vacated
Space. The ability of the Company to rent unleased or vacated space will
be affected by many factors, including certain covenants restricting the
use of other space at a property found in certain leases with shopping
center tenants. If the Company is able to relet vacated space, there is
no assurance that rental rates will be equal to or in excess of current
rental rates. In addition, the Company may incur substantial costs in
obtaining new tenants, including leasing commissions and tenant
improvements.
Restrictions on, and Risks of, Unsuccessful Development Activities.
The Company intends to selectively pursue development activities as
opportunities arise. Such development activities generally require
various government and other approvals, the receipt of which cannot be
assured. The Company will incur risks associated with any such
development activities. These risks include the risk that development
opportunities explored by the Company may be abandoned; the risk that
construction costs of a project may exceed original estimates, possibly
making the project unprofitable; lack of cash flow during the construction
period; and the risk that occupancy rates and rents at a completed project
will not be sufficient to make the project profitable. In case of an
unsuccessful development project, the Company's loss could exceed its
investment in the project. Also, there are competitors seeking properties
for development, some of which may have greater resources than the
Company.
Adverse Effect of Market Interest Rates on Stock Prices
One of the factors that may influence the trading price of the
Company's Common Stock or any class or series of Preferred Stock or
Depositary Shares that may be issued in the future is the annual dividend
rate on such stock as a percentage of its market price. An increase in
market interest rates may lead purchasers of shares of such stock to
demand a higher annual dividend rate, which could adversely affect the
market price of such stock and the Company's ability to raise additional
equity in the public markets.
Uncertainty of Availability of Refinancing
The Company does not expect to generate sufficient funds from
operations to make balloon principal payments when due on its
indebtedness. There can be no assurance that the Company will be able to
refinance such indebtedness or to otherwise obtain funds to make such
payments by selling assets or raising equity. An inability to make such
balloon payments when due could cause the mortgage lenders to foreclose on
the properties securing such indebtedness, which would have a material
adverse effect on the Company. In addition, interest rates and other
terms on any loans obtained to refinance such indebtedness may be less
favorable than the rates on the current indebtedness.
Federal Income Tax Considerations
There are a number of issues associated with an investment in a REIT
that are related to the federal income tax laws, including, but not
limited to, the consequences of failing to continue to qualify as a REIT.
See "Federal Income Tax Considerations."
Concentration of Ownership of Company Common Stock
Security Capital Holdings S.A. (together with its parent company,
Security Capital U.S. Realty, "SC-USREALTY") owned 9,499,439 shares of
Common Stock as of September 30, 1997, constituting 40.9% of the Common
Stock outstanding on that date. SC-USREALTY is the Company's single
largest shareholder and has participation rights entitling it to maintain
its percentage ownership of the Common Stock. SC-USREALTY has the right
to nominate a proportionate number of the directors of the Company's
Board, rounded down to the nearest whole number, based upon its ownership
of outstanding shares of Common Stock, but not to exceed 49% of the Board.
Although certain standstill provisions preclude SC-USREALTY from
increasing its percentage interest in the Company for a period of at least
five years (subject to certain exceptions) and SC-USREALTY is subject to
certain limitations on its voting rights with respect to its shares of
Common Stock during that time, SC-USREALTY nonetheless has substantial
influence over the Company's affairs. This concentration of ownership in
one shareholder could be disadvantageous to other shareholders' interests.
The director nomination, voting and other rights granted to SC-USREALTY,
although subject to certain limitations during the standstill period, may
make it more difficult for other shareholders to challenge the Company's
director nominees, elect their own nominees as directors, or remove
incumbent directors and may render the Company a less attractive target
for an unsolicited acquisition by an outsider. If the standstill period
or any standstill extension term terminates, SC-USREALTY could be in a
position to control the election of the Board or the outcome of any
corporate transaction or other matter submitted to the shareholders for
approval.
The Company has agreed with SC-USREALTY to certain limitations on the
Company's operations, including restrictions relating to (i) incurrence of
total indebtedness exceeding 60% of the gross book value of the Company's
consolidated assets, (ii) investments in properties other than shopping
centers in specified states in the Southeastern and Mid-Atlantic states
and the southern regions of Indiana and Ohio, and (iii) certain other
matters. In addition, the Company has agreed to 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 type of assets
that it can acquire and own and the manner in which such assets are
operated). These restrictions, which are intended to permit SC-USREALTY
to comply with certain requirements of the Internal Revenue Code of 1986
(the "Code") and other countries' tax laws applicable to foreign
investors, limit somewhat the flexibility of the Company to structure
transactions that might otherwise be advantageous to the Company.
Although the Company does not believe that the limitations imposed on the
Company's activities will materially impair the Company's ability to
conduct its business, there can be no assurance that these limitations
will not adversely affect the Company's operations in the future.
Pursuant to its participation rights to acquire Common Stock at the
same price as shares issued to third parties, so long as SC-USREALTY's
ownership of Common Stock on a fully diluted basis does not drop below 15%
for more than 180 days (subject to certain conditions), in the event that
the Company issues shares of capital stock (including securities
convertible into or exchangeable or redeemable for capital stock of the
Company and including capital stock to be issued pursuant to the
conversion, exchange or redemption of other securities), SC-USREALTY will
be entitled to a participation right to purchase or subscribe for that
proportion of the total number of shares to be issued, including shares to
be issued to SC-USREALTY pursuant to the rights described in this
paragraph, equal to SC-USREALTY's proportionate holdings of Common Stock
outstanding prior to such issuance (but not to exceed 37.5% of the capital
stock issued). All purchases pursuant to such participation rights will
be at the same price and on the same terms and conditions as are
applicable to other purchasers.
Unsuitable Investment for Non-U.S. Investors
Section 5.14 of the Company's Articles of Incorporation (the
"Articles") contains provisions designed to preserve the Company's status
as a domestically controlled REIT. Section 5.14 of the Articles prohibits
the issuance or transfer of the Company's capital stock if it would result
in the fair market value of all capital stock owned directly or indirectly
by Non-U.S. Persons (as defined in the Articles) to comprise 50% or more
of the fair market value of the Company's outstanding capital stock. For
purposes of applying this limitation, SC-USREALTY and its affiliates are
presumed to be Non-U.S. Persons and to own 45% of the outstanding Common
Stock on a fully diluted basis. Any shares issued or transferred in
violation of this restriction will be void, or if such remedy is invalid,
will be subject to the provisions for "Excess Shares" described in
"Capital Stock -- Restrictions on Ownership." Accordingly, the purchase
of Common Stock, Preferred Stock, Depositary Shares or convertible Debt
Securities in an offering is not a suitable investment for a Non-U.S.
Person (whether or not such person presently owns any shares of Common
Stock) or an entity owned directly or indirectly by a Non-U.S. Person.
Anti-Takeover Effect of Ownership Limit, Staggered Board, Preferred Stock,
Florida Business Corporation Act and Certain Other Matters
Ownership of more than 7% by value of the Company's outstanding capital
stock by certain persons has been restricted for the purpose of
maintaining the Company's qualification as a REIT, with certain
exceptions. See "Capital Stock--Restrictions on Ownership." This 7%
limitation may discourage a change in control of the Company and may also
(i) deter tender offers for the capital stock, which offers may be
attractive to the shareholders, or (ii) limit the opportunity for
shareholders to receive a premium for their capital stock that might
otherwise exist if an investor attempted to assemble a block in excess of
7% of the outstanding capital stock or to effect a change in control of
the Company. Additionally, the division of the Company's Board of
Directors into three classes with staggered three-year terms may have the
effect of deterring certain potential acquisitions of the Company because
control of the Company's Board of Directors could not be obtained at a
single annual meeting of shareholders.
The Company's Articles authorize the Board of Directors to issue up to
10,000,000 shares of Preferred Stock and 10,000,000 shares of Special
Common Stock and to establish the preferences and rights of any shares
issued. The issuance of Preferred Stock or Special Common Stock could
have the effect of delaying or preventing a change in control of the
Company even if a change in control were in the shareholders' interest.
The provisions of the Florida Business Corporation Act regarding control
share acquisitions and affiliated transactions could also deter potential
acquisitions of the Company by preventing the acquiring party from voting
the Common Stock it acquires or consummating a merger or other
extraordinary corporate transaction without the approval of the
disinterested shareholders.
Potential Environmental Liability
Under various federal, state and local laws, ordinances and
regulations, an owner or manager of real estate may be liable for the
costs of removal or remediation of certain hazardous or toxic substances
on or in such property. Such laws often impose such liability without
regard to whether the owner knew of, or was responsible for, the presence
of such hazardous or toxic substances. The cost of any required
remediation and the owner's liability therefor could exceed the value of
the property and/or the aggregate assets of the owner. The presence of
such substances, or the failure to properly remediate such substances, may
adversely affect the owner's ability to sell or rent such property or
borrow using such property as collateral.
THE COMPANY
The Company is a self-administered and self-managed REIT which
acquires, owns, develops, and manages neighborhood and community shopping
centers in targeted in fill markets in the Southeast, the Mid-Atlantic and
the lower Midwest.
The Company's executive offices are located at 121 West Forsyth Street,
Suite 200, Jacksonville, Florida 32202, and its telephone number is (904)
356-7000. The Company operates additional offices in Ft. Lauderdale,
Tampa and Stuart, Florida and in Atlanta, Georgia.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the
net proceeds from the sale of the Securities will be used for general
corporate purposes, which may include the repayment of outstanding
indebtedness, the acquisition of shopping centers as suitable
opportunities arise, the expansion and improvement of certain properties
in the Company's portfolio and payment of development costs for new
centers.
CONSOLIDATED RATIOS OF
EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The Company's ratios of earnings to fixed charges for the six months
ended June 30, 1997 and the years ended December 31, 1996, 1995 and 1994
and the period from November 5, 1993 (the closing date of the Company's
initial public offering) to December 31, 1993 were 1.8, 1.8, 1.5, 1.8 and
2.5, respectively. The Company's ratios of earnings to combined fixed
charges and Preferred Stock dividends for the years ended December 31,
1996, 1995 and 1994 were 1.8, 1.5, and 1.7, respectively. The Company did
not have any Preferred Stock outstanding prior to June 29, 1994 or after
June 29, 1996.
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges, and the ratios of earnings to combined fixed
charges and Preferred Stock dividends were computed by dividing earnings
by the sum of fixed charges and Preferred Stock dividends. For purposes
of computing these ratios, earnings have been calculated by adding fixed
charges (excluding capitalized interest) to net income from operations.
Fixed charges consist of interest costs (whether expensed or capitalized)
and amortization of deferred debt costs.
Prior to the Company's initial public offering in November 1993, the
Company's predecessor, The Regency Group, Inc., was privately held, and
its properties were encumbered by significantly higher levels of
indebtedness bearing interest at higher rates than the levels and rates
applicable to the Company. The Company's predecessor had net losses for
the period from January 1, 1993 to November 4, 1993, and for the years
ended December 31, 1992, 1991 and 1990, and earnings were not adequate to
cover fixed charges during such periods. The ratios of earnings to fixed
charges for such periods are not meaningful in light of the equity
provided by the Company's initial public offering and the concurrent
refinancing of the predecessor's mortgage debt.
CAPITAL STOCK
The authorized capital stock of the Company consists of 150,000,000
shares of Common Stock, par value $0.01 per share, 10,000,000 shares of
Special Common Stock, par value $0.01 per share, and 10,000,000 shares of
Preferred Stock, par value $0.01 per share. The summary description of
the Company's capital stock set forth herein does not purport to be
complete and is qualified in its entirety by reference to the Company's
Articles and the applicable articles of amendment designating a class or
series of Preferred Stock (the "Preferred Stock Designation"). As of
September 30, 1997, 23,250,697 shares of the Company's Common Stock and
2,500,000 shares of the Company's Class B non-voting Common Stock
(constituting a class of the Special Common Stock) were issued and
outstanding.
Common Stock
For a description of the Company's Common Stock, see "Description of
Common Stock" below.
Special Common Stock
Under the Company's Articles, the Board of Directors is authorized,
without further shareholder action, to provide for the issuance of up to
10 million shares of Special Common Stock from time to time in one or more
classes or series. The Special Common Stock will bear dividends in such
amounts as the Board of Directors may determine with respect to each class
or series. All such dividends must be pari passu with dividends on the
Common Stock. Upon the dissolution of the Company, the Special Common
Stock will participate pari passu with the Common Stock in liquidating
distributions. Shares of Special Common Stock will have one vote per
share and vote together with the holders of Common Stock (and not
separately as a class except where otherwise required by law), unless the
Board of Directors creates classes or series with more limited voting
rights or without voting rights. The Board will have the right to
determine whether shares of Special Common Stock may be converted into
shares of any other class or series or be redeemed, and, if so, the
conversion or redemption price and the terms and conditions of conversion
or redemption, and to determine such other rights as may be allowed by
law. Holders of Special Common Stock will not be entitled, as a matter of
right, to preemptive rights. As all Special Common Stock is expected to
be closely held, it is anticipated that most classes or series would be
convertible into Common Stock for liquidity purposes.
The Company has outstanding as of the date of this Prospectus 2,500,000
shares of a non-voting class of Special Common Stock in the form of Class
B Common Stock, which were issued in a private placement to an
institutional investor. The Class B Common Stock receives dividends pari
passu with the Common Stock at a rate equivalent to 1.03 times the Common
Stock dividend rate and participates pari passu with the Common Stock in
any liquidation of the Company. Beginning December 20, 1998, 1/6th of the
Class B Common Stock originally issued may be converted into Common Stock
at the election of the holder during any three-month period, but the
holder may not at any time be the beneficial owner of more than 4.9% of
the outstanding Common Stock. Accelerated conversion may take place in
the event of certain extraordinary occurrences, including certain changes
in senior management. A total of 2,975,468 shares of Common Stock are
issuable upon conversion of the Class B Common Stock.
Preferred Stock
For a description of the Company's Preferred Stock, see "Description of
Preferred Stock" below.
Restrictions on Ownership
Restrictions Relating to REIT Qualification. For the Company to
qualify as a REIT under the Code, not more than 50% in value of its
outstanding capital stock may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year, its stock must be beneficially
owned (without reference to attribution rules) by 100 or more persons
during at least 335 days in a taxable year of 12 months or during a
proportionate part of a shorter taxable year, and certain other
requirements must be satisfied (see "Federal Income Tax Considerations-
Requirements for Qualification").
To assure that five or fewer individuals do not Beneficially Own (as
defined in the Company's Articles to include ownership through the
application of certain stock attribution provisions of the Code) more than
50% in value of the Company's outstanding capital stock, the Company's
Articles provide that, subject to certain exceptions, no holder may own,
or be deemed to own (by virtue of certain of the attribution provisions of
the Code), more than 7% by value (the "Ownership Limit") of the Company's
outstanding capital stock. Certain existing holders specified in the
Articles and those to whom Beneficial Ownership of their capital stock is
attributed, whose Beneficial Ownership of capital stock exceeds the
Ownership Limit ("Existing Holders"), may continue to own such percentage
by value of outstanding capital stock (the "Existing Holder Limit") and
may increase their respective Existing Holder Limits through benefit plans
of the Company, dividend reinvestment plans, additional asset sales or
capital contributions to the Company or acquisitions from other Existing
Holders, but may not acquire additional shares from such sources such that
the five largest Beneficial Owners of capital stock hold more than 49.5%
by value of the outstanding capital stock, and in any event may not
increase their respective Existing Holder Limits through acquisition of
capital stock from any other sources. In addition, because rent from a
related tenant (any tenant 10% of which is owned, directly or
constructively, by the REIT) is not qualifying rent for purposes of the
gross income tests under the Code (see "Federal Income Tax Considerations-
Requirements for Qualification-Income Tests"), the Articles provide that
no constructive owner of stock in the Company who owns, directly or
indirectly, a 10% interest in any tenant of the Company (a "Related Tenant
Owner") may own, or constructively own by virtue of certain of the
attribution provisions of the Code (which differ from the attribution
provisions applied to determine Beneficial Ownership), more than 9.8% by
value of the outstanding capital stock of the Company (the "Related Tenant
Limit"). The Board of Directors may waive the Ownership Limit, the
Existing Holder Limit and the Related Tenant Limit if evidence
satisfactory to the Board of Directors is presented that such ownership
will not then or in the future jeopardize the Company's status as a REIT.
As a condition of such waiver, the Board of Directors may require opinions
of counsel satisfactory to it and/or an undertaking from the applicant
with respect to preserving the REIT status of the Company.
Preservation of Status as a Domestically Controlled REIT. Section 5.14
of the Articles contains provisions designed to preserve the Company's
status as a domestically controlled REIT. Section 5.14 of the Articles
prohibits the issuance or transfer of the Company's capital stock if it
would result in the fair market value of all capital stock owned directly
or indirectly by Non-U.S. Persons (as defined in the Articles) to comprise
50% or more of the fair market value of the Company's outstanding capital
stock. For purposes of applying this limitation, SC-USREALTY and its
affiliates are presumed (i) to be Non-U.S. Persons, (ii) to own 45% of the
outstanding Common Stock on a fully diluted basis, and (iii) to own shares
of other classes of capital stock which they have the right to acquire as
well as shares of such other classes which they actually own. A Non-U.S.
Person is defined in the Articles as any person who is not (i) a citizen
or resident of the United States, (ii) a partnership or corporation
created or organized in the United States or under the laws of the United
States or any state therein (including the District of Columbia), or (iii)
any estate or trust (other than a foreign estate or trust) within the
meaning of Section 7701(a)(31) of the Code.
Any shares issued or transferred in violation of the foregoing
restriction will be void, or if such remedy is invalid, will be subject to
the provisions for "Excess Shares" described below. Accordingly, the
purchase of Common Stock, Preferred Stock, Depositary Shares or
convertible Debt Securities which may be offered hereby may not be a
suitable investment for a Non-U.S. Person (whether or not such person
presently owns any shares of Common Stock).
Remedies. If (i) shares of capital stock in excess of the applicable
Ownership Limit, Existing Holder Limit, or Related Tenant Limit, or (ii)
shares which (a) would cause the REIT to be beneficially owned by fewer
than 100 persons (without application of the attribution rules), (b) would
result in the Company being "closely held" within the meaning of Section
856(h) of the Code, or (c) would result in the fair market value of
capital stock owned directly or indirectly (including capital stock
presumed to be owned by SC-USREALTY) by Non-U.S. Persons to comprise 50%
or more of the fair market value of the Company's outstanding capital
stock, are issued or transferred to any person or retained by any person
after becoming a Related Tenant Owner, such issuance, transfer, or
retention shall be null and void to the intended holder, and the intended
holder will have no rights to the stock. Capital stock transferred,
proposed to be transferred, or retained in excess of the Ownership Limit,
the Existing Holder Limit, or the Related Tenant Limit or which would
otherwise jeopardize the Company's REIT status or status as a domestically
controlled REIT ("excess shares") will be deemed held in trust on behalf
of and for the benefit of the Company. The Board of Directors will,
within six months after receiving notice of such actual or proposed
transfer, either (i) direct the holder of such shares to sell all shares
held in trust for the Company for cash in such manner as the Board of
Directors directs, or (ii) redeem such shares for a price equal to the
lesser of (a) the price paid by the holder from whom shares are being
redeemed and (b) the average of the last reported sales prices on the NYSE
of the relevant class of capital stock on the 10 trading days immediately
preceding the date fixed for redemption by the Board of Directors, or if
such class of capital stock is not then traded on the NYSE, the average of
the last reported sales prices of such class of capital stock (or, if
sales prices are not reported, the average of the closing bid and asked
prices) on the 10 trading days immediately preceding the relevant date as
reported on any exchange or quotation system over which such class of
capital stock may be traded, or if such class of capital stock is not then
traded over any exchange or quotation system, then the price determined in
good faith by the Board of Directors of the Company as the fair market
value of such class of capital stock on the relevant date. If the Board
of Directors directs the intended holder to sell the shares, the holder
shall receive such proceeds as the trustee for the Company and pay the
Company out of the proceeds of such sale all expenses incurred by the
Company in connection with such sale, plus any remaining amount of such
proceeds that exceeds the amount originally paid by the intended holder
for such shares. The intended holder shall not be entitled to
distributions, voting rights or any other benefits with respect to such
excess shares except the amounts described above. Any dividend or
distribution paid to an intended holder on excess shares pursuant to the
Company's Articles must be repaid to the Company upon demand.
Miscellaneous. All certificates representing capital stock will bear a
legend referring to the restrictions described above. The transfer
restrictions described above shall not preclude the settlement of any
transaction entered through the facilities of the NYSE.
The Articles provide that every shareholder of record of more than 5%
of the outstanding capital stock and every Actual Owner (as defined in the
Articles) of more than 5% of the outstanding capital stock held by a
nominee must give written notice to the Company of information specified
in the Articles within 30 days after December 31 of each year. In
addition, each Beneficial Owner of capital stock and each person who holds
capital stock for a Beneficial Owner must provide to the Company such
information as the Company may request, in good faith, in order to
determine the Company's status as a REIT.
The ownership limitations described above may have the effect of
precluding acquisition of control of the Company by a third party even if
the Board of Directors determines that maintenance of REIT status is no
longer in the best interests of the Company. The Board of Directors has
the right under the Articles (subject to contractual restrictions,
including covenants made with SC-USREALTY) to revoke the REIT status of
the Company if the Board of Directors determines that it is no longer in
the best interest of the Company to attempt to qualify, or to continue to
qualify, as a REIT. In the event of such revocation, the ownership
limitations in the Articles will remain in effect. Any change in the
ownership limitations would require an amendment to the Articles.
Staggered Board of Directors
The Company's Articles and Bylaws divide the Board of Directors into
three classes of directors, with each class constituting approximately
one-third of the total number of directors and with classes serving
staggered three-year terms. The classification of directors will have the
effect of making it more difficult for shareholders to change the
composition of the Board of Directors. The Company believes, however,
that the longer time required to elect a majority of a classified Board of
Directors helps to insure continuity and stability of the Company's
management and policies.
The classification provisions could also have the effect of
discouraging a third party from accumulating large blocks of the Company's
stock or attempting to obtain control of the Company, even though such an
attempt might be beneficial to the Company and its shareholders.
Accordingly, shareholders could be deprived of certain opportunities to
sell their shares of capital stock at a higher market price than might
otherwise be the case.
Advance Notice Provisions for Shareholder Nominations and Shareholder
Proposals
The Bylaws establish an advance notice procedure for shareholders to
make nominations of candidates for election as directors or to bring other
business before any meeting of shareholders of the Company. Any
shareholder nomination or proposal for action at an upcoming shareholder
meeting must be delivered to the Company no later than the deadline for
submitting shareholder proposals pursuant to Rule 14a-8 under the Exchange
Act. The presiding officer at any shareholder meeting is not required to
recognize any proposal or nomination which did not comply with such
deadline.
The purpose of requiring shareholders to give the Company advance
notice of nominations and other business is to afford the Board of
Directors a meaningful opportunity to consider the qualifications of the
proposed nominees or the advisability of the other proposed business and,
to the extent deemed necessary or desirable by the Board of Directors, to
inform shareholders and make recommendations about such qualifications or
business, as well as to provide a more orderly procedure for conducting
meetings of shareholders. Although the Bylaws do not give the Board of
Directors any power to disapprove timely shareholder nominations for the
election of directors or proposals for action, they may have the effect of
precluding a contest for the election of directors or the consideration of
shareholder proposals if the proper procedures are not followed, and of
discouraging or deterring the third party from conducting a solicitation
of proxies to elect its own slate of directors or to approve its own
proposal.
Certain Provisions of Florida Law
The Company is subject to several anti-takeover provisions under
Florida law that apply to a public corporation organized under Florida law
unless the corporation has elected to opt out of such provisions in its
articles of incorporation or (depending on the provision in question) its
bylaws. The Company has not elected to opt out of these provisions. The
Florida Business Corporation Act (the "Florida Act") contains a provision
that prohibits the voting of shares in a publicly held Florida corporation
which are acquired in a "control share acquisition" unless the board of
directors approves the control share acquisition or the holders of a
majority of the corporation's voting shares (exclusive of shares held by
officers of the corporation, inside directors or the acquiring party)
approve the granting of voting rights as to the shares acquired in the
control share acquisition. A control share acquisition is defined as an
acquisition that immediately thereafter entitles the acquiring party to
vote in the election of directors within each of the following ranges of
voting power: (i) one-fifth or more but less than one-third of such voting
power, (ii) one-third or more but less than a majority of such voting
power and (iii) a majority or more of such voting power.
The Florida Act also contains an "affiliated transaction" provision
that prohibits a publicly held Florida corporation from engaging in a
broad range of business combinations or other extraordinary corporate
transactions with an "interested shareholder" unless (i) the transaction
is approved by a majority of disinterested directors before the person
becomes an interested shareholder, (ii) the interested shareholder has
owned at least 80% of the Company's outstanding voting shares for at least
five years, or (iii) the transaction is approved by the holders of
two-thirds of the Company's voting shares other than those owned by the
interested shareholder. An interested shareholder is defined as a person
who, together with affiliates and associates, beneficially owns (as
defined in Section 607.0901(1)(e), Florida Statutes) more than 10% of the
Company's outstanding voting shares.
Limitation of Liability of Directors
The Florida Act provides that a director will not be personally liable
for monetary damages to the Company or any other person except for
liability for breach of such person's duties as a director involving (1) a
violation of criminal law (unless the director reasonably believed his or
her conduct was lawful or had no reasonable cause to believe that it was
unlawful), (2) a transaction from which the director derived an improper
personal benefit, or (3) an unlawful dividend or stock redemption.
However, equitable remedies such as an injunction or rescission continue
to be available against directors who breach their duty of care as
directors.
Indemnification Agreements
The Company has entered into indemnification agreements with each of
the Company's officers and directors. The indemnification agreements
require, among other things, that the Company indemnify its officers and
directors to the fullest extent permitted by law, and advance to the
officers and directors all related expenses, subject to reimbursement if
it is subsequently determined that indemnification is not permitted. The
Company must also indemnify and advance all expenses incurred by officers
and directors seeking to enforce their rights under the indemnification
agreements.
DESCRIPTION OF COMMON STOCK
Common Stock
The holders of the Company's Common Stock are entitled to one vote per
share on all matters voted on by shareholders, including elections of
directors, and, except as otherwise required by law or provided in any
resolution adopted by the Board of Directors with respect to any series of
Preferred Stock establishing the powers, designations, preferences and
relative, participating, option or other special rights of such series,
the holders of Common Stock (together with the holders of any class or
series of Special Common Stock that does not have limited voting rights)
exclusively possess all voting power. The Articles do not provide for
cumulative voting in the election of directors. Subject to any
preferential rights of any outstanding series of Preferred Stock, the
holders of Common Stock are entitled to such dividends as may be declared
from time to time by the Board of Directors from funds legally available
therefor, and upon liquidation are entitled to receive pro rata all assets
of the Company available for distribution to such holders. All shares of
Common Stock offered hereby, upon issuance against full payment of the
purchase price therefor, will be fully paid and nonassessable and the
holders thereof will not have preemptive rights. The Company's Common
Stock is listed on the NYSE under the symbol "REG."
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Common Stock is First Union
National Bank.
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions
of the Preferred Stock. The particular terms of any class or series of
Preferred Stock will be described in the applicable Prospectus Supplement.
If so indicated in a Prospectus Supplement, the terms of any such class or
series may differ from the terms set forth below. The summary of terms of
any class or series of the Company's Preferred Stock contained in this
Prospectus does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Articles and the
applicable Preferred Stock Designation, which will be filed as an exhibit
to or incorporated by reference in the Registration Statement of which
this Prospectus is a part at or prior to the time of issuance of such
class or series of Preferred Stock.
Under the Company's Articles, the Board of Directors is authorized,
without further shareholder action, to provide for the issuance of up to
10,000,000 shares of Preferred Stock, par value $0.01 per share. The
Preferred Stock authorized by the Articles may be issued, from time to
time, in one or more series in such amounts and with such designations,
powers, preferences or other rights, qualifications, limitations and
restrictions as may be fixed by the Board of Directors. Under certain
circumstances, the issuance of Preferred Stock could have the effect of
delaying, deferring or preventing a change of control of the Company and
may adversely affect the voting and other rights of the holders of Common
Stock. The Company has no shares of Preferred Stock outstanding as of the
date of this Prospectus.
Preferred Stock Offered Hereby
The Preferred Stock offered hereby shall have the dividend,
liquidation, redemption, voting and other rights set forth below unless
otherwise described in a Prospectus Supplement relating to a particular
class or series of Preferred Stock. The applicable Prospectus Supplement
will describe the following terms of the class or series of Preferred
Stock offered thereby: (1) the designation of such class or series and the
number of shares offered; (2) the liquidation preference of such class or
series; (3) the initial public offering price at which such class or
series will be issued; (4) the dividend rate (or method of calculation),
the dates on which dividends shall be payable and the dates from which
dividends shall commence to accumulate, if any; (5) any redemption or
sinking fund provisions; (6) any conversion or exchange rights; (7) any
additional voting, dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions;
(8) any listing of such Preferred Stock on any securities exchange; (9) a
discussion of federal income tax considerations applicable to such class
or series; (10) the relative ranking and preferences of such class or
series as to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company; (11) any limitations on issuance
of any class or series of Preferred Stock ranking senior to or on a parity
with such class or series as to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of the Company;
(12) any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve the status of the
Company as a REIT and a domestically controlled REIT for federal tax
purposes; and (13) any other specific terms, preferences, rights,
limitations or restrictions of such series.
The Preferred Stock offered hereby will be issued in one or more class
or series. The Preferred Stock, upon issuance against full payment of the
purchase price therefor, will be fully paid and nonassessable. The
liquidation preference is not indicative of the price at which the
Preferred Stock will actually trade on or after the date of issuance.
Rank
The Preferred Stock shall, with respect to dividend rights and rights
upon liquidation, dissolution and winding up of the Company, rank prior to
the Common Stock, the Special Common Stock and all other classes and
series of equity securities of the Company now or hereafter authorized,
issued or outstanding (the Common Stock and such other classes and series
of equity securities collectively may be referred to herein as the "Junior
Stock"), other than any classes or series of equity securities of the
Company which by their terms specifically provide for a ranking on a
parity with (the "Parity Stock") or senior to (the "Senior Stock") the
Preferred Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the Company. The Preferred Stock shall be
junior to all outstanding debt of the Company. The Preferred Stock shall
be subject to creation of Senior Stock, Parity Stock and Junior Stock to
the extent not expressly prohibited by the Company's Articles.
Dividends
Holders of Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors, out of assets of the Company
legally available therefor, dividends or distributions in cash, property
or other assets of the Company or in securities of the Company or from any
other source as the Board of Directors in its discretion shall determine
and at such dates and at such rates per share per annum as described in
the applicable Prospectus Supplement. Such rate may be fixed or variable
or both. Each declared dividend shall be payable to holders of record as
they appear at the close of business on the books of the Company on such
record dates (which by law must be not more than 70 calendar days
preceding the payment dates therefor) as are determined by the Board of
Directors (each of such dates, a "Record Date").
Dividends on a class or series of Preferred Stock may be cumulative or
noncumulative. If dividends on a class or series of Preferred Stock are
noncumulative and if the Board of Directors fails to declare a dividend
for a dividend period with respect to such class or series, then holders
of such Preferred Stock will have no right to receive a dividend for such
dividend period, and the Company will have no obligation to pay the
dividend for such period, whether or not dividends are declared payable on
any future dividend payment dates. If dividends of a class or series of
Preferred Stock are cumulative, the dividends on such shares will accrue
from and after the date set forth in the applicable Preferred Stock
Designation.
No full dividends shall be declared or paid or set apart for payment on
any class or series of Preferred Stock ranking, as to dividends, on a
parity with or junior to the class or series of Preferred Stock offered by
the applicable Prospectus Supplement for any period unless full dividends
for the immediately preceding dividend period on such Preferred Stock
(including any accumulation in respect of unpaid dividends for prior
dividend periods, if dividends on such Preferred Stock are cumulative)
have been or are contemporaneously declared and paid or are declared and a
sum sufficient for the payment thereof is set apart for such payment.
When dividends are not so paid in full (or a sum sufficient for such full
payment is not so set apart) on such Preferred Stock and any Parity Stock
of the Company ranking on a parity as to dividends with such Preferred
Stock, dividends on such Preferred Stock and dividends on such Parity
Stock shall be declared pro rata so that the amount of dividends declared
per share on such Preferred Stock and such Parity Stock shall in all cases
bear to each other the same ratio that accrued dividends for the
then-current dividend period per share on such Preferred Stock (including
any accumulation in respect of unpaid dividends for prior dividend
periods, if dividends on such Preferred Stock are cumulative) and accrued
dividends, including required or permitted accumulations, if any, on
shares of such Parity Stock, bear to each other. No interest, or sum of
money in lieu of interest, shall be payable with respect to any dividend
payment(s) on Preferred Stock which may be in arrears. Unless full
dividends on the class or series of Preferred Stock offered by the
applicable Prospectus Supplement have been declared and paid or set apart
for payment for the immediately preceding dividend period (including any
accumulation with respect to unpaid dividends for prior dividend periods,
if dividends on such Preferred Stock are cumulative), (a) no cash dividend
or distribution (other than in shares of Junior Stock) may be declared,
set aside or paid on the Junior Stock, (b) the Company may not, directly
or indirectly, repurchase, redeem or otherwise acquire any shares of its
Junior Stock (or pay any monies into a sinking fund for the redemption of
any shares of its Junior Stock) except by conversion into or exchange for
Junior Stock, and (c) the Company may not, directly or indirectly,
repurchase, redeem or otherwise acquire any such Preferred Stock or any
Parity Stock ranking on parity with such Preferred Stock (or pay any
monies into a sinking fund for the redemption of any shares of any such
stock) otherwise than pursuant to pro rata offers to purchase or a
concurrent redemption of all, or a pro rata portion, of such Preferred
Stock and such Parity Stock (except by conversion into or exchange for
Junior Stock).
Any dividend payment made on a class or series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such class or series.
Redemption
The terms, if any, on which Preferred Stock of any class or series may
be redeemed will be set forth in the applicable Prospectus Supplement.
Conversion Rights
The terms and conditions, if any, upon which shares of any class or
series of Preferred Stock will be convertible into Common Stock will be
set forth in the applicable Prospectus Supplement. Such terms will
include the number of shares of Common Stock into which the Preferred
Stock is convertible, the conversion price (or manner of calculation
thereof), the conversion period, provisions as to whether conversion will
be at the option of the holders of the Preferred Stock or the Company, the
events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such Preferred
Stock.
Liquidation
In the event of a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, the holders of a class or series
of Preferred Stock will be entitled, subject to the rights of creditors,
but before any distribution or payment to the holders of Common Stock,
Special Common Stock or any Junior Stock on liquidation, dissolution or
winding up of the Company, to receive a liquidating distribution in the
amount of the liquidation preference per share as set forth in the
applicable Prospectus Supplement, plus accrued and unpaid dividends for
the then-current dividend period (including any accumulation in respect of
unpaid dividends for prior dividend periods, if dividends on such class or
series of Preferred Stock are cumulative). If the amounts available for
distribution with respect to a class or series of Preferred Stock and all
other outstanding Parity Stock are not sufficient to satisfy the full
liquidation rights of all such Preferred Stock outstanding and such other
Parity Stock outstanding, then the holders of each such class or series
will share ratably in any such distribution of assets in proportion to the
full respective preferential amounts (which in the case of Preferred Stock
may include accumulated dividends) to which they are entitled. Unless
otherwise provided in the applicable Preferred Stock Designation for a
particular class or series of Preferred Stock, after payment of the full
amount of the liquidating distribution, the holders of Preferred Stock
will not be entitled to any further participation in any distribution of
assets by the Company.
Voting
The Preferred Stock of a class or series will not be entitled to vote,
except as described in the applicable Prospectus Supplement or as required
by Florida law, e.g. in connection with a proposed reclassification
thereof.
No Other Rights
The shares of a class or series of Preferred Stock will not have any
preferences, voting powers or relative, participating, optional or other
special rights except as set forth above or described in the applicable
Prospectus Supplement, set forth in the Company's Articles or in the
applicable Preferred Stock Designation or as otherwise required by law.
Transfer Agent and Registrar
The transfer agent for each class or series of Preferred Stock will be
described in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than a full share of Preferred Stock.
In such event, receipts ("Depositary Receipts") will be issued for such
Depositary Shares, each of which will represent a fraction of a share of a
particular class or series of Preferred Stock, as described in the
applicable Prospectus Supplement.
Any class or series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and the depositary (the "Depositary"). The Prospectus
Supplement relating to a series of Depositary Shares will set forth the
name and address of the Depositary with respect to such Depositary Shares.
Subject to the terms of the Deposit Agreement, each owner of a Depositary
Share will be entitled, in proportion to the applicable fraction of a
share of Preferred Stock represented by such Depositary Share, to all the
rights and preferences of the Preferred Stock represented thereby
(including dividend and liquidation rights).
The description set forth above and in any Prospectus Supplement of
certain provisions of the Deposit Agreement, the Depositary Shares and the
Depositary Receipts does not purport to be complete and is qualified in
its entirety by reference to the forms of Deposit Agreement and Depositary
Receipts relating to each class or series of Preferred Stock which will be
filed with the Commission at or prior to the time of the offering of such
class or series of Preferred Stock. If so indicated in a Prospectus
Supplement, the terms of any class or series of Depositary Shares may
differ from the terms set forth herein.
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash
distributions received with respect to the Preferred Stock to the record
holders of Depositary Shares relating to such Preferred Stock in
proportion to the number of Depositary Shares owned by such holders on the
relevant Record Date. The Depositary shall distribute only such amount,
however, as can be distributed without attributing to any holder of
Depositary Shares a fraction of one cent, and the balance not so
distributed shall be added to and treated as part of the next sum received
by the Depositary for distribution to record holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary
Shares in an equitable manner, unless the Depositary determines that it is
not feasible to make such distribution, in which case the Depositary may
sell such property and distribute the net proceeds from such sale to such
holders.
The Deposit Agreement will also contain provisions relating to the
manner in which any subscription or similar rights offered by the Company
to holders of Preferred Stock shall be made available to the holders of
Depositary Shares.
Redemption of Depositary Shares
If a class or series of Preferred Stock represented by Depositary
Shares is subject to redemption, the Depositary Shares will be redeemed
from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of such class or series of Preferred
Stock held by the Depositary. The Depositary shall mail notice of
redemption not less than 30 and not more than 60 days prior to the date
fixed for redemption to the record holders of the Depositary Shares to be
so redeemed at their respective addresses appearing on the Depositary's
books. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with respect
to such class or series of Preferred Stock. Whenever the Company redeems
Preferred Stock held by the Depositary, the Depositary will redeem as of
the same redemption date the number of Depositary Shares representing
Preferred Stock so redeemed. If fewer than all the Depositary Shares are
to be redeemed, the Depositary Shares to be redeemed will be selected by
lot or pro rata as may be determined to be equitable by the Depositary.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be outstanding and all rights of the holders
of the Depositary Shares will cease, except the right to receive the
money, securities, or other property payable upon such redemption and any
money, securities, or other property to which the holders of such
Depositary Shares were entitled upon such redemption upon surrender to the
Depositary of the Depositary Receipts evidencing such Depositary Shares.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the
Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notices of meeting to the record holders of
the Depositary Shares relating to such Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the
same date as the record date for the Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining
to the amount of the Preferred Stock represented by such holder's
Depositary Shares. The Depositary will endeavor, insofar as practicable,
to vote the number of shares of Preferred Stock represented by such
Depositary Shares in accordance with such instructions, and the Company
will agree to take all reasonable action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. The Depositary
will abstain from voting the Preferred Stock to the extent it does not
receive specific instructions from the holder of Depositary Shares
representing such shares of Preferred Stock.
Amendment and Termination of the Deposit Agreement
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may be amended at any time by agreement
between the Company and the Depositary. However, any amendment which
materially and adversely alters the rights of the holders of Depositary
Shares will not be effective unless such amendment has been approved by
the holders of at least a majority of the Depositary Shares then
outstanding. The Deposit Agreement will only terminate if (i) all
outstanding Depositary Shares related thereto have been redeemed,
(ii) there has been a final distribution in respect of the Preferred Stock
in connection with any liquidation, dissolution or winding up of the
Company and such distribution has been distributed to the holders of the
related Depositary Shares, (iii) such termination is necessary to preserve
the Company's status as a REIT or a domestically controlled REIT, (iv)
each share of the related Preferred Stock shall have been converted into
securities of the Company not so represented by Depositary Shares, or (v)
a majority of each series of Preferred Stock affected by such termination
consents to such termination, whereupon the Depositary shall deliver or
make available to each holder of Depositary Receipts, upon surrender of
the Depositary Receipts held by such holder, such number of whole or
fractional shares of Preferred Stock as are represented by the Depositary
Shares evidenced by such Depositary Receipts together with any other
property held by the Depositary with respect to such Depositary Receipts.
Charges of Depositary
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary arrangements.
The Company will pay charges of the Depositary in connection with the
initial deposit of the Preferred Stock and issuance of Depositary
Receipts, all withdrawals of Preferred Stock by owners of Depositary
Shares and any redemption of the Preferred Stock. Holders of Depositary
Receipts will pay all other transfer and other taxes and governmental
charges and such other charges as are expressly provided in the Deposit
Agreement to be paid by the holders.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to the Company
notice of its election to do so, and the Company may at any time remove
the Depositary, any such resignation or removal to take effect upon the
appointment of a successor Depositary and such successor Depositary's
acceptance of the appointment. A successor Depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and
must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
Restrictions on Ownership
In order to safeguard the Company against loss of status as a REIT or a
domestically controlled REIT, the Deposit Agreement will contain
provisions restricting the ownership and transfer of Depositary Shares.
Such restrictions will be described in the applicable Prospectus
Supplement and will be referenced on the applicable Depositary Receipts.
Miscellaneous
The Depositary will forward all reports and communications from the
Company which are delivered to the Depositary and which the Company is
required or otherwise determines to furnish to the holders of the
Preferred Stock.
Neither the Depositary nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations
of the Company and the Depositary under the Deposit Agreement will be
limited to performance in good faith of their duties thereunder and they
will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Shares or Preferred Stock unless satisfactory
indemnity is furnished. They may rely upon written advice of counsel or
accountants, or information provided by persons presenting Preferred Stock
for deposit, holders of Depositary Shares or other persons believed to be
competent and on documents believed to be genuine.
DESCRIPTION OF DEBT SECURITIES
The Company may issue Debt Securities under one or more trust
indentures (each an "Indenture") to be executed by the Company and one or
more trustees (each a "Trustee") meeting the requirements of a trustee
under the Trust Indenture Act of 1939, as amended (the "TIA"). The
Indentures will be qualified under the TIA.
The following description sets forth certain anticipated general terms
and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement (which terms may be different than those stated
below) and the extent, if any, to which such general provisions may apply
to the Debt Securities so offered will be described in the Prospectus
Supplement relating to such Debt Securities. Accordingly, for a
description of the terms of a particular issue of Debt Securities,
reference must be made to both the Prospectus Supplement relating thereto
and the following description.
General
The Debt Securities will be direct obligations of the Company and may
be either senior Debt Securities ("Senior Securities") or subordinated
Debt Securities ("Subordinated Securities"). Except as set forth in the
applicable Indenture and described in a Prospectus Supplement relating
thereto, the Debt Securities may be issued without limit as to aggregate
principal amount, in one or more series, secured or unsecured, in each
case as established from time to time in or pursuant to authority granted
by a resolution of the Board of Directors of the Company or as established
in the applicable Indenture. All Debt Securities of one series need not
be issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the holders of the Debt Securities of
such series, for issuances of additional Debt Securities of such series.
The Prospectus Supplement relating to any series of Debt Securities
being offered will contain the specific terms thereof, including, without
limitation:
(1) the title of such Debt Securities and whether such Debt Securities
are Senior Securities or Subordinated Securities;
(2) the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the
portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof, or (if applicable) the portion
of the principal amount of such Debt Securities which is convertible
into Common Stock or Preferred Stock, or the method by which any such
portion shall be determined;
(4) if convertible, any applicable limitations (for purposes of
preserving the Company's status as a REIT and a domestically
controlled REIT) on the ownership or transferability of the Common
Stock or Preferred Stock into which such Debt Securities are
convertible;
(5) the date(s), or the method for determining such date(s), on which the
principal of such Debt Securities will be payable;
(6) the rate(s) (which may be fixed or variable), or the method for
determining such rate(s), at which such Debt Securities will bear
interest, if any;
(7) the date(s), or the method for determining such date(s), from which
any interest will accrue, the interest payment dates on which any
such interest will be payable, the regular record dates for such
interest payment dates, or the method by which any such date(s) shall
be determined, the person to whom such interest shall be payable, and
the basis upon which interest shall be calculated if other than that
of a 360-day year of twelve 30-day months;
(8) the place(s) where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for conversion or registration of
transfer or exchange, and notices or demands to or upon the Company
with respect to such Debt Securities and the applicable Indenture may
be served;
(9) the period(s) within which, the price(s) at which and the terms and
conditions upon which such Debt Securities may be redeemed, as a
whole or in part, at the option of the Company, if the Company is to
have such an option;
(10) the obligation, if any, of the Company to redeem such Debt Securities
pursuant to any sinking fund or analogous provision or at the option
of a holder thereof, and the period(s) within which, the price(s) at
which and the terms and conditions upon which such Debt Securities
will be redeemed, as a whole or in part, pursuant to such obligation;
(11) if other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating
thereto;
(12) whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula
or method may, but need not be, based on a currency, currencies,
currency unit or units, or a composite currency or currencies) and
the manner in which such amounts shall be determined;
(13) any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to the Events of Default or
covenants set forth in the Indenture;
(14) any provisions for collateral security for repayment of such Debt
Securities;
(15) whether such Debt Securities will be issued in certificated and/or
book-entry form;
(16) whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than
$1,000 and any integral multiple thereof and, if in bearer form, the
denominations thereof and terms and conditions relating thereto;
(17) the applicability, if any, of defeasance and covenant defeasance
provisions of the applicable Indenture;
(18) the terms, if any, upon which such Debt Securities may be convertible
into Common Stock or Preferred Stock and the terms and conditions
upon which such conversion will be effected, including, without
limitation, the initial conversion price or rate and the conversion
period;
(19) whether and under what circumstances the Company will pay additional
amounts as contemplated in the Indenture on such Debt Securities in
respect of any tax, assessment or governmental charge and, if so,
whether the Company will have the option to redeem such Debt
Securities in lieu of making such payment; and
(20) any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the
maturity thereof ("Original Issue Discount Securities"). Special federal
income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable Prospectus
Supplement.
Except as set forth in the applicable Indenture, the applicable
Indenture will not contain any provisions that would limit the ability of
the Company to incur indebtedness or that would afford holders of Debt
Securities protection in the event of a highly leveraged or similar
transaction involving the Company or in the event of a change of control.
Restrictions on ownership and transfers of the Company's Common Stock and
Preferred Stock are designed to preserve its status as a REIT and,
therefore, may act to prevent or hinder a change of control. See "Capital
Stock - Restrictions on Ownership." Reference is made to the applicable
Prospectus Supplement for information with respect to any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company that are described below, including any addition of a covenant or
other provision providing event risk or similar protection.
The Company's properties are owned through its subsidiaries.
Therefore, the rights of the Company and its creditors, including holders
of Debt Securities, to participate in the assets of such subsidiaries upon
the latters' liquidation or recapitalization or otherwise will be subject
to the prior claims of such subsidiaries' respective creditors (except to
the extent that claims of the Company itself as a creditor may be
recognized).
Denomination, Registration and Transfer
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000
and integral multiples thereof.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable
for any authorized denomination of other Debt Securities of the same
series and of a like aggregate principal amount and tenor upon surrender
of such Debt Securities at the corporate trust office of the applicable
Trustee or at the office of any transfer agent designated by the Company
for such purpose. In addition, subject to certain limitations imposed
upon Debt Securities issued in book-entry form, the Debt Securities of any
series may be surrendered for conversion or registration of transfer or
exchange thereof at the corporate trust office of the applicable Trustee
or at the office of any transfer agent designated by the Company for such
purpose. Every Debt Security surrendered for conversion, registration of
transfer or exchange must be duly endorsed or accompanied by a written
instrument of transfer, and the person requesting such action must provide
evidence of title and identity satisfactory to the applicable Trustee or
transfer agent. No service charge will be made for any registration of
transfer or exchange of any Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. If the applicable Prospectus Supplement
refers to any transfer agent (in addition to the applicable Trustee)
initially designated by the Company with respect to any series of Debt
Securities, the Company may at any time rescind the designation of any
such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Company will be required to
maintain a transfer agent in each place of payment for such series. The
Company may at any time designate additional transfer agents with respect
to any series of Debt Securities.
Neither the Company nor any Trustee shall be required (i) to issue,
register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before the day of
mailing a notice of redemption of any Debt Securities that may be selected
for redemption and ending at the close of business on the day of such
mailing; (ii) to register the transfer of or exchange any Debt Security,
or portion thereof, so selected for redemption, in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part;
or (iii) to issue, register the transfer of or exchange any Debt Security
that has been surrendered for repayment at the option of the holder,
except the portion, if any, of such Debt Security not to be so repaid.
Merger, Consolidation or Sale
It is expected that the Indenture will provide that the Company may
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into, any other corporation, provided that
(a) either the Company shall be the continuing corporation, or (if other
than the Company) the successor corporation resulting from any such
consolidation or merger or which shall have received the transfer of such
assets shall expressly assume payment of the principal of (and premium, if
any), and interest on, all of the applicable Debt Securities and the due
and punctual performance and observance of all of the covenants and
conditions contained in the applicable Indenture; (b) immediately after
giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any subsidiary as a result thereof
as having been incurred by the Company or such subsidiary at the time of
such transaction, no Event of Default under the applicable Indenture, and
no event which, after notice or lapse of time, or both, would become an
Event of Default, shall have occurred and be continuing; and (c) an
officer's certificate and legal opinion covering such conditions shall be
delivered to the Trustee.
Covenants
The Indenture will contain covenants requiring the Company to take
certain actions and prohibiting the Company from taking certain actions.
The covenants with respect to any series of Debt Securities will be
described in the Prospectus Supplement relating thereto.
Events of Default, Notice and Waiver
Each Indenture will describe specific "Events of Default" with respect
to any series of Debt Securities issued thereunder. Such Events of
Default are likely to include (with grace and cure periods): (i) default
in the payment of any installment of interest on any Debt Security of such
series; (ii) default in the payment of principal of (or premium, if any)
on any Debt Security of such series at its maturity; (iii) default in
making any required sinking fund payment for any Debt Security of such
series; (iv) default in the performance of any other covenant of the
Company contained in the applicable Indenture (other than a covenant added
to the Indenture solely for the benefit of a series of Debt Securities
issued thereunder other than such series), continued for a specified
period of days after written notice as provided in the applicable
Indenture; (v) default in the payment of specified amounts of indebtedness
of the Company or under any mortgage, indenture or other instrument
pursuant to which such indebtedness is issued or by which such
indebtedness is secured, such default having occurred after the expiration
of any applicable grace period and having resulted in the acceleration of
the maturity of such indebtedness, but only if such indebtedness is not
discharged or such acceleration is not rescinded; (vi) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Company or any Significant
Subsidiary (as defined in Regulation S-X under the Securities Act) or of
either of its property, and (vii) any other event of default provided with
respect to a particular series of Debt Securities.
If an Event of Default under any Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing,
then in every such case the applicable Trustee or the holders of not less
than 25% of the principal amount of the outstanding Debt Securities of
that series will have the right to declare the principal amount (or, if
the Debt Securities of that series are Original Issue Discount Securities
or indexed securities, such portion of the principal amount as may be
specified in the terms thereof) of all the Debt Securities of that series
to be due and payable immediately by written notice thereof to the Company
(and to the applicable Trustee if given by the holders). However, at any
time after such a declaration of acceleration with respect to Debt
Securities of such series (or of all Debt Securities then outstanding
under any Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the holders of not less than a majority in principal
amount of outstanding Debt Securities of such series (or of all Debt
Securities then outstanding under the applicable Indenture, as the case
may be) may rescind such declaration and its consequences if (a) the
Company shall have deposited with the applicable Trustee all required
payments of the principal of (and premium, if any) and interest on the
Debt Securities of such series (or of all Debt Securities then outstanding
under the applicable Indenture, as the case may be), plus certain fees,
expenses, disbursements and advances of the applicable Trustee and (b) all
Events of Default, other than the nonpayment of accelerated principal (or
specified portion thereof), with respect to Debt Securities of such series
(or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be) have been cured or waived as provided in
such Indenture. Each Indenture also will provide that the holders of not
less than a majority in principal amount of the outstanding Debt
Securities of any series (or of all Debt Securities then outstanding under
the applicable Indenture, as the case may be) may waive any past default
with respect to such series and its consequences, except a default (x) in
the payment of the principal of (or premium, if any) or interest on any
Debt Security of such series or (y) with respect to a covenant or
provision contained in the applicable Indenture that cannot be modified or
amended without the consent of the holder of each outstanding Debt
Security affected thereby.
Each Trustee will be required to give notice to the holders of Debt
Securities within 90 days of a default under the applicable Indenture
unless such default shall have been cured or waived; provided, however,
that such Trustee may withhold notice to the holders of any series of Debt
Securities of any default with respect to such series (except a default in
the payment of the principal of (or premium, if any) or any sinking fund
payment with respect to any Debt Security of such series) if specified
responsible officers of such Trustee consider such withholding to be in
the interest of such holders.
Each Indenture will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect
to such Indenture or for any remedy thereunder, unless the applicable
Trustee shall have failed to act for 60 days after it has received a
written request to institute proceedings with respect to an Event of
Default from the holders of not less than 25% in principal amount of the
outstanding Debt Securities of such series, as well as an offer of
indemnity reasonably satisfactory to it. However, this provision will not
prevent any holder of Debt Securities from instituting suit for the
enforcement of payment of the principal of (and premium, if any) and
interest on such Debt Securities at the respective due dates thereof.
Subject to provisions in each Indenture relating to its duties in case
of a default, no Trustee will be under any obligation to exercise any of
its rights or powers under an Indenture at the request or direction of any
holders of any series of Debt Securities then outstanding under such
Indenture, unless such holders shall have offered to the Trustee
reasonable security or indemnity. The holders of not less than a majority
in principal amount of the outstanding Debt Securities of any series (or
of all Debt Securities then outstanding under an Indenture, as the case
may be) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable
Trustee, or of exercising any trust or power conferred upon such Trustee.
However, a Trustee may refuse to follow any direction which is in conflict
with any law or the applicable Indenture, which may involve such Trustee
in personal liability or which may be unduly prejudicial to the holders of
Debt Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Company will
be required to deliver to each Trustee a certificate, signed by one of
several specified officers, stating whether or not such officer has
knowledge of any default under the applicable Indenture and, if so,
specifying each such default and the nature and status thereof.
Modification of the Indentures
It is anticipated that amendments to an Indenture may be made by the
Company and the Trustee, with the consent of the holders of not less than
a majority in aggregate principal amount of each series of the outstanding
Debt Securities issued under the Indenture which are affected by the
amendment, provided that no such amendment may, without the consent of
each holder of such Debt Securities affected thereby: (1) change the
stated maturity date of the principal of (or premium, if any) or any
installment of interest on any such Debt Security; (2) reduce the
principal amount of (or premium, if any) or the interest on any such Debt
Security or the principal amount due upon acceleration of an Original
Issue Discount Security; (3) change the place or currency of payment of
principal of (or premium, if any) or interest on any such Debt Security;
(4) impair the right to institute suit for the enforcement of any such
payment with respect to any such Debt Security; (5) reduce the
above-stated percentage of holders of Debt Securities necessary to amend
the Indenture; or (6) modify the foregoing requirements or reduce the
percentage of outstanding Debt Securities necessary to waive compliance
with certain provisions of the Indenture or for waiver of certain
defaults.
The holders of not less than a majority in principal amount of
outstanding Debt Securities of each series affected thereby will have the
right to waive compliance by the Company with certain covenants in such
Indenture.
Modifications and amendment of an Indenture may be made by the Company
and the Trustee without the consent of any holder of Debt Securities for
any of the following purposes: (i) to evidence the succession of another
person to the Company as obligor under the Indenture; (ii) to add to the
covenants of the Company for the benefit of the holders of all or any
series of Debt Securities or to surrender any right or power conferred
upon the Company in the Indenture; (iii) to add events of default for the
benefit of the holders of all or any series of Debt Securities; (iv) to
add or change any provisions of the Indenture to facilitate the issuance
of Debt Securities in bearer form, or to permit or facilitate the issuance
of Debt Securities in uncertificated form, provided that such action shall
not adversely affect the interests of the holders of the Debt Securities
of any series in any material respect; (v) to change or eliminate any
provisions of the Indenture, provided that any such change or elimination
shall become effective only when there are not Debt Securities outstanding
of any series created prior thereto which are entitled to the benefit of
such provision; (vi) to secure the Debt Securities; (vii) to establish the
form or terms of Debt Securities of any series, including the provision
and procedures, if applicable, or the conversion of such Debt Securities
into Common Stock or Preferred Stock; (viii) to provide for the acceptance
of appointment by a successor Trustee or facilitate the administration of
the trust under the Indenture by more than one Trustee; (ix) to cure any
ambiguity, defect or inconsistency in the Indenture, provided that such
action shall not adversely affect the interests of holders of Debt
Securities of any series in any material respect; (x) to supplement any of
the provisions of the Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities,
provided that such action shall not adversely affect the interests of the
holders of the Debt Securities of any series in any material respect.
Each Indenture will contain provisions for convening meetings of the
holders of Debt Securities of a series for the purpose of taking permitted
action.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company will be permitted, at its option, to discharge certain obligations
to holders of any series of Debt Securities issued under any Indenture
that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or will become
due and payable within one year (or scheduled for redemption within one
year) by irrevocably depositing with the applicable Trustee, in trust,
funds in such currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are payable in an
amount sufficient to pay the entire indebtedness on such Debt Securities
in respect of principal (and premium, if any) and interest to the date of
such deposit (if such Debt Securities have become due and payable) or to
the stated maturity or redemption date, as the case may be.
Unless otherwise indicated in the applicable Prospectus Supplement,
each Indenture will provide that the Company may elect either (i) to
defease and be discharged from any and all obligations with respect to
such Debt Securities (except for the obligation to pay additional amounts,
if any, upon the occurrence of certain events of tax, assessment or
governmental charge with respect to payments on such Debt Securities and
the obligations to register the transfer or exchange of such Debt
Securities, to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities, to maintain an office or agency in respect of such Debt
Securities, to hold moneys for payment in trust and, with respect to
Subordinated Debt Securities which are convertible or exchangeable, the
right to convert or exchange) ("defeasance"); or (ii) to be released from
its obligations with respect to such Debt Securities under the applicable
Indenture (being the restrictions described under "--Covenants"), if
provided in the applicable Prospectus Supplement, its obligations with
respect to any other covenant, and any omission to comply with such
obligations shall not constitute an event of default with respect to such
Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Company with the applicable Trustee, in trust,
of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable
at stated maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities, which through the scheduled payment of
principal and interest in accordance with their terms will provide money
in an amount sufficient to pay the principal of (and premium, if any) and
interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Company has delivered to the applicable Trustee an opinion of
counsel (as specified in the applicable Indenture) to the effect that the
holders of such Debt Securities will not recognize income, gain or loss
for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, will be required to refer to and be based upon a ruling
received from or published by the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after the date
of the Indenture. In the event of such defeasance, the holders of such
Debt Securities would thereafter be able to look only to such trust fund
for payment of principal (and premium, if any) and interest.
"Government Obligations" means securities that are (i) direct
obligations of the United States of America or the government which issued
the foreign currency in which the Debt Securities of a particular series
are payable, for the payment of which its full faith and credit is
pledged; or (ii) obligations of a person controlled or supervised by and
acting as an agency or instrumentality of the United States of America or
such government which issued the foreign currency in which the Debt
Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank or trust company
as custodian with respect to any such Government Obligation or a specific
payment of interest on or principal of any such Government Obligation held
by such custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of
the Government Obligation or the specific payment of interest on or
principal of the Government Obligation evidenced by such depository
receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Company has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities
of any series, (i) the holder of a Debt Security of such series is
entitled to, and does, elect pursuant to the applicable Indenture or the
terms of such Debt Security to receive payment in a currency, currency
unit or composite currency other than that in which such deposit has been
made in respect of such Debt Security; or (ii) a Conversion Event (as
defined below) occurs in respect of the currency, currency unit or
composite currency in which such deposit has been made, the indebtedness
represented by such Debt Security will be deemed to have been, and will
be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become
due out of the proceeds yielded by converting the amount so deposited in
respect of such Debt Security into the currency, currency unit or
composite currency in which such Debt Security becomes payable as a result
of such election or such cessation of usage based on the applicable market
exchange rate. "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of
the country which issued such currency and for the settlement of
transactions by a central bank or other public institutions of or within
the international banking community; (ii) the ECU both within the European
Monetary System and for the settlement of transactions by public
institutions of or within the European Communities; or (iii) any currency
unit or composite currency other than the ECU for the purposes for which
it was established. Unless otherwise provided in the applicable
Prospectus Supplement, all payments of principal of (and premium, if any)
and interest on any Debt Security that is payable in a foreign currency
that ceases to be used by its government of issuance shall be made in
U.S. dollars.
In the event the Company effects covenant defeasance with respect to
any Debt Securities and such Debt Securities are declared due and payable
because of the occurrence of any event of default other than the event of
default described in clause (iv) under "--Events of Default, Notice and
Waiver" with respect to specified sections of an Indenture (which sections
would no longer be applicable to such Debt Securities) or described in
clause (vii) under "--Events of Default, Notice and Waiver" with respect
to any other covenant as to which there has been covenant defeasance, the
amount in such currency, currency unit or composite currency in which such
Debt Securities are payable, and Government Obligations on deposit with
the applicable Trustee, will be sufficient to pay amounts due on such Debt
Securities at the time of their stated maturity but may not be sufficient
to pay amounts due on such Debt Securities at the time of the acceleration
resulting from such event of default. However, the Company would remain
liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance,
including any modifications to the provisions described above, with
respect to the Debt Securities of or within a particular series.
Redemption of Securities
The applicable Indenture will provide that the Debt Securities may be
redeemed at any time at the option of the Company, in whole or in part,
for certain reasons intended to protect the Company's status as a REIT.
Debt Securities may also be subject to optional or mandatory redemption on
terms and conditions described in the applicable Prospectus Supplement.
From and after notice has been given as provided in the applicable
Indenture, if funds for the redemption of any Debt Securities called for
redemption shall have been made available on such redemption date, such
Debt Securities will cease to bear interest on the redemption date
specified in such notice, and the only right of the holders of the Debt
Securities will be to receive payment of the redemption price.
Conversion of Securities
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Stock or Preferred Stock will be set forth in the
applicable Prospectus Supplement. Such terms will include whether Debt
Securities are convertible into Common Stock or Preferred Stock, the
conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the
holders or the Company, the events requiring an adjustment of the
conversion price, provisions affecting conversion in the event of the
redemption of such Debt Securities and any restrictions on conversion,
including restrictions directed at maintaining the Company's status as a
REIT and a domestically controlled REIT.
Payment
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series
of Debt Securities will be payable at the corporate trust office of the
Trustee, the address of which will be stated in the applicable Prospectus
Supplement; 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 applicable register for such Debt Securities
or by wire transfer of funds to such person at an account maintained
within the United States.
All moneys paid by the Company to a paying agent or a Trustee for the
payment of the principal of or any premium or interest on any Debt
Security which remain unclaimed at the end of two years after such
principal, premium or interest has become due and payable will be repaid
to the Company, and the holder of such Debt Security thereafter may look
only to the Company for payment thereof.
Global Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that
will be deposited with, or on behalf of, a depositary identified in the
applicable Prospectus Supplement relating to such series. Global
Securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depositary
arrangement with respect to a series of Debt Securities will be described
in the applicable Prospectus Supplement relating to such series.
Subordination
The terms and conditions, if any, upon which the Debt Securities are
subordinated to other indebtedness of the Company will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will
include a description of the indebtedness ranking senior to the Debt
Securities, the restrictions on payments to the holders of such Debt
Securities while a default with respect to such senior indebtedness is
continuing, the restrictions, if any, on payments to the holders of such
Debt Securities following an event of default and provisions requiring
holders of such Debt Securities to remit certain payments to holders of
senior indebtedness.
PLAN OF DISTRIBUTION
The Securities may be sold through underwriters or dealers, directly to
one or more purchasers, or through agents. The Prospectus Supplement with
respect to the Securities will set forth the terms of the offering of the
Securities, including the name or names of any underwriters, dealers or
agents, the purchase price of the Securities and the proceeds to the
Company from such sale, any delayed delivery arrangements, any
underwriting discounts and other items constituting underwriters'
compensation, the initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers, and any securities
exchanges on which the Securities may be listed.
If underwriters are used in the sale of the Securities, the Securities
may be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The Securities may be offered to the
public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as
underwriters. The underwriter(s) with respect to a particular underwritten
offering of Securities will be named in the Prospectus Supplement relating
to such offering, and if an underwriting syndicate is used, the managing
underwriter(s) will be set forth on the cover of such Prospectus
Supplement. Unless otherwise set forth in the Prospectus Supplement
relating thereto, the obligations of the underwriters or agents to
purchase the Securities will be subject to conditions precedent, and the
underwriters will be obligated to purchase all the Securities if any are
purchased. The initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from
time to time.
If dealers are utilized in the sale of Securities with respect to which
this Prospectus is delivered, such Securities will be sold to the dealers
as principals. The dealers may then resell such Securities to the public
at varying prices to be determined by such dealers at the time of resale.
The names of the dealers and the terms of the transaction will be set
forth in the Prospectus Supplement relating thereto.
Securities may be sold directly by the Company or through agents
designated by the Company from time to time at fixed prices, which may be
changed, or at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the Securities with respect to which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement
relating thereto. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment.
In connection with the sale of the Securities, underwriters or agents
may receive compensation from the Company or from purchasers of Securities
for whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters, agents and dealers participating in the
distribution of the Securities may be deemed to be underwriters and any
discounts or commissions received by them from the Company and any profit
on the resale of the Securities by them may be deemed to be underwriting
discounts or commissions under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters, or dealers to solicit offers from certain
types of institutions to purchase Securities from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a
specified date in the future. Such contracts will be subject only to
those conditions set forth in the Prospectus Supplement, and the
Prospectus Supplement will set forth the commission payable for
solicitation of such contracts.
Agents, dealers, and underwriters may be entitled under agreements
entered into with the Company to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act,
or to contribution with respect to payments that such agents, dealers or
underwriters may be required to make with respect thereto. Agents,
dealers and underwriters may be customers of, engage in transactions with,
or perform services for the Company in the ordinary course of business.
The Preferred Stock, the Depositary Shares and the Debt Securities may
or may not be listed on a national securities exchange. The Common Stock
currently trades on the NYSE, and any Common Stock offered hereby will be
listed on the NYSE, subject to an official notice of issuance. No
assurances can be given that there will be a market for the Securities.
Pursuant to its participation rights to acquire Common Stock at the
same price as shares issued to third parties, so long as SC-USREALTY's
ownership of Common Stock on fully diluted basis does not drop below 15%
for more than 180 days (subject to certain conditions), in the event that
the Company issues shares of capital stock (including securities
convertible into or exchangeable or redeemable for capital stock of the
Company and including capital stock to be issued pursuant to the
conversion, exchange or redemption of other securities), SC-USREALTY will
be entitled to a participation right to purchase or subscribe for that
proportion of the total number of shares to be issued, including shares to
be issued to SC-USREALTY pursuant to the rights described in this
paragraph, equal to SC-USREALTY's proportionate holdings of Common Stock
outstanding prior to such issuance (but not to exceed 37.5% of the capital
stock issued). All purchases pursuant to such participation rights will
be at the same price and on the same terms and conditions as are
applicable to other purchasers.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain of the material federal income
tax considerations regarding the Company and is based on current law, is
for general information only and is not tax advice. This discussion does
not purport to deal with all aspects of taxation that may be relevant to
particular investors in light of their personal investment or tax
circumstances, or to certain types of holders (including insurance
companies, tax-exempt organizations, financial institutions or
broker-dealers, foreign corporations, persons who are not citizens or
residents of the United States and persons who own Securities as part of a
conversion transaction, as part of a hedging transaction or as a position
in a straddle for tax purposes) subject to special treatment under the
federal income tax laws. This summary does not give a detailed discussion
of any state, local, or foreign tax considerations. This summary is
qualified in its entirety by the applicable Code provisions, rules and
regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as of the date hereof and all of which are
subject to change (which change may apply retroactively). The Taxpayer
Relief Act of 1997 (the "1997 Act") was enacted on August 5, 1997. The
1997 Act contains many provisions which generally make it easier to
operate and to continue to qualify as a REIT for taxable years beginning
after the date of enactment (which, for the Company, would be applicable
commencing with its taxable year beginning January 1, 1998). Certain
federal income tax considerations relevant to the holders of Securities
will be provided in the applicable Prospectus Supplement.
As used in this section, the term "Company" refers to the Company and
all qualified subsidiaries (a wholly-owned subsidiary which is not treated
as a separate entity for federal income tax purposes) but excludes Regency
Realty Group, Inc. and Regency Realty Group II, Inc. and their
subsidiaries (collectively, the "Management Companies") (which are treated
as separate entities for federal income tax purposes, although their
results are consolidated with those of the Company for financial reporting
purposes).
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT THE APPLICABLE
PROSPECTUS SUPPLEMENT AS WELL AS HIS OR HER OWN TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE, OWNERSHIP AND
SALE OF SECURITIES IN AN ENTITY ELECTING TO BE TAXED AS A REAL ESTATE
INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER
TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
General
The Company made an election to be taxed as a REIT under Sections 856
through 860 of the Code commencing with its taxable year ending December
31, 1993. The Company believes that it has been organized and operated in
such a manner as to qualify for taxation as a REIT under the Code for such
taxable year and all subsequent taxable years to date, and the Company
intends to continue to operate in such a manner in the future. However,
no assurance can be given that the Company will operate in a manner so as
to qualify or remain qualified as a REIT.
The following sets forth only a summary of the material aspects of the
Code sections that govern the federal income tax treatment of a REIT and
its shareholders.
It is the opinion of Foley & Lardner that the Company has been
organized in conformity with the requirements for qualification and
taxation as a REIT commencing with the Company's taxable year that ended
December 31, 1993 and for all subsequent taxable years to date, and its
method of operation will enable it to continue to be taxed as a REIT. It
must be emphasized that this opinion is based on various assumptions and
is conditioned upon certain representations made by the Company as to
factual matters including, but not limited to, those set forth below in
this discussion of "Federal Income Tax Considerations," those concerning
its business and properties, and certain matters relating to the Company's
manner of operation. Foley & Lardner is not aware of any facts or
circumstances that are inconsistent with these representations and
assumptions. The qualification and taxation as a REIT depends upon the
Company's ability to meet, through actual annual operating results, the
various income, asset, distribution, stock ownership and other tests
discussed below, the results of which will not be reviewed by nor be under
the control of Foley & Lardner. Accordingly, no assurance can be given
that the actual results of the Company's operation for any particular
taxable year will satisfy such requirements. For a discussion of the tax
consequences of failure to qualify as a real estate investment trust, see
"-- Failure to Qualify."
Taxation of the Company
As a REIT, the Company generally is not subject to federal corporate
income tax on its net income that is currently distributed to
shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder levels) that generally results
from an investment in a corporation. However, the Company will be subject
to federal income tax in the following circumstances. First, the Company
will be taxed at regular corporate rates on any undistributed REIT taxable
income, including undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the "corporate alternative
minimum tax" on its items of tax preference. Third, if the Company has
(i) net income from the sale or other disposition of "foreclosure
property" (which is, in general, property acquired by the Company by
foreclosure or otherwise on default of a loan secured by the property)
which is held primarily for sale to customers in the ordinary course of
business or (ii) other non-qualifying net income from foreclosure
property, it will be subject to tax on such income at the highest
corporate rate. Fourth, if the Company has net income from "prohibited
transactions" (which are, in general, certain sales or other dispositions
of property held primarily for sale to customers in the ordinary course of
business other than foreclosure property), such income will be subject to
a 100% tax. Fifth, if the Company should fail to satisfy the 75% gross
income test or the 95% gross income test (as discussed below), and has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the net
income attributable to the greater of the amount by which the Company
fails the 75% or 95% test, multiplied by a fraction intended to reflect
the Company's profitability. Sixth, if the Company should fail to
distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain net
income for such year, and (iii) any undistributed taxable income from
prior years, it will be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. Seventh, if
during the 10-year period (the "Recognition Period") beginning on the
first day of the first taxable year for which the Company qualified as a
REIT, the Company recognizes gain on the disposition of any asset held by
the Company as of the beginning of such Recognition Period, then, to the
extent of the excess of (a) the fair market value of such asset as of the
beginning of such Recognition Period over (b) the Company's adjusted basis
in such asset as of the beginning of such Recognition Period (the
"Built-in Gain"), such gain will be subject to tax at the highest regular
corporate rate. Because the Company initially acquired its properties in
connection with its initial public offering in fully taxable transactions,
it is not anticipated that the Company will own any assets with
substantial Built-in Gain. Eighth, if the Company acquires any asset from
a C corporation (i.e., generally a corporation subject to full
corporate-level tax) in a transaction in which the basis of the asset in
the Company's hands is determined by reference to the basis of the asset
(or any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the Recognition
Period beginning on the date on which such asset was acquired by the
Company, then, to the extent of the Built-in Gain, such gain will be
subject to tax at the highest regular corporate rate. The result
described above with respect to the recognition of Built-in Gain during
the Recognition Period assumes the Company will make an election in
accordance with Notice 88-19 issued by the Internal Revenue Service
("IRS"). In addition, the Management Companies are taxed on their income
at regular corporate rates.
Requirements for Qualification
A REIT is defined in the Code as a corporation, trust or association:
(1) which is managed by one or more trustees or directors; (2) the
beneficial ownership of which is evidenced by transferable shares or by
transferable certificates of beneficial interest; (3) which would be
taxable as a domestic corporation, but for Sections 856 through 859 of the
Code; (4) which is neither a financial institution nor an insurance
company subject to certain provisions of the Code; (5) the beneficial
ownership of which is held by 100 or more persons (determined without
reference to any rules of attribution); (6) not more than 50% in value of
the outstanding stock of which is owned during the last half of each
taxable year, directly or indirectly, by or for "five or fewer"
individuals (as defined in the Code to include certain entities); and (7)
which meets certain income and asset tests described below. Conditions
(1) to (4), inclusive, must be met during the entire taxable year and
condition (5) must be met during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than 12
months. The Company has previously issued sufficient shares to allow it
to satisfy conditions (5) and (6). The Company's Articles of
Incorporation provide restrictions regarding the transfer of its shares
which are intended to assist the Company in continuing to satisfy the
stock ownership requirements described in (5) and (6) above. Moreover,
pursuant to the 1997 Act, for the Company's taxable years commencing on or
after January 1, 1998, if the Company complies with regulatory rules
pursuant to which it is required to send annual letters to certain of its
shareholders requesting information regarding the actual ownership of its
stock, but does not know, or exercising reasonable diligence would not
have known, whether it failed to meet the requirement that it not be
closely held, the Company will be treated as having met the "five or
fewer" requirement. If the Company were to fail to comply with these
regulatory rules for any year, it would be subject to a $25,000 penalty.
If the Company's failure to comply was due to intentional disregard of the
requirements, the penalty would be increased to $50,000. However, if the
Company's failure to comply was due to reasonable cause and not willful
neglect, no penalty would be imposed.
Section 856(i) of the Code provides that a corporation, 100% of whose
stock is held by a REIT at all times during the corporation's existence,
is a "qualified REIT subsidiary." For taxable years of the Company
beginning on or after January 1, 1998, the Company must own all of the
stock of a subsidiary but not from the commencement of the subsidiary's
existence, in order for a subsidiary to be a "qualified REIT subsidiary."
A qualified REIT subsidiary is not treated as a separate corporation, and
all assets, liabilities and items of income, deduction and credit of a
qualified REIT subsidiary are treated as assets, liabilities and such
items (as the case may be) of the REIT. Thus, in applying the
requirements described herein, the Company's qualified REIT subsidiaries
will be ignored, and all assets, liabilities and items of income,
deduction and credit of such subsidiaries will be treated as assets,
liabilities and items of the Company. The Company has not, however,
sought or received a ruling from the IRS that any of the Company's
subsidiaries is a "qualified REIT subsidiary." The Company currently owns
all of its properties indirectly through qualified REIT subsidiaries.
While this summary generally does not address state tax consequences, some
states may not recognize a qualified REIT subsidiary, which could cause a
subsidiary to be taxed or could cause the Company to fail to qualify as a
REIT under such state law. Most of the properties which are not owned
directly by qualified REIT subsidiaries of the Company are held by
property partnerships all the interests in which are currently owned by
qualified REIT subsidiaries or by property partnerships with third parties
in which the Company's interests are owned by qualified REIT subsidiaries.
In the case of a REIT which is a partner in a partnership either
directly or indirectly through a qualified REIT subsidiary, Treasury
Regulations provide that the REIT will be deemed to own its proportionate
share of the assets of the partnership and will be deemed to be entitled
to the income of the partnership attributable to such share. In addition,
the character of the assets and gross income of the partnership will
retain the same character in the hands of the REIT for purposes of Section
856 of the Code, including satisfying the gross income tests and asset
tests. Thus, the Company's proportionate share of the assets, liabilities
and items of income of the property partnerships through which the Company
owns many of its properties ("Property Partnerships") (other than certain
properties held by the Management Companies), is treated as assets,
liabilities and items of income of the Company for purposes of applying
the requirements described below.
Income Tests. In order for the Company to maintain its qualification
as a REIT, it must satisfy three gross income requirements annually.
First, at least 75% of the Company's gross income (excluding gross income
from prohibited transactions) for each taxable year must be derived
directly or indirectly from investments relating to real property or
mortgages on real property, including "rents from real property" and, in
certain circumstances, "interest," or from certain types of temporary
investments.
Second, at least 95% of the Company's gross income (excluding gross
income from prohibited transactions) for each taxable year must be derived
from real estate investments and from dividends, interest and gain from
the sale or disposition of stock or securities or from any combination of
the foregoing.
Third, for the tax years prior to 1998, short-term gain from the sale
or other disposition of stock or securities, gain from prohibited
transactions and gain on the sale or other disposition of real property
held for fewer than four years (apart from involuntary conversions and
sales of foreclosure property) must represent less than 30% of the
Company's gross income (including gross income from prohibited
transactions) for each taxable year.
Rents received by the Company qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only
if the following conditions are met. First, the amount of rent must not
be based in whole or in part on the income or profits derived by any
person from such property, although an amount received or accrued
generally will not be excluded from the term "rents from real property"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales. The Company does not anticipate charging rent for any
portion of any property that is based in whole or in part on the income or
profits of any person (except by reason of being based on a percentage of
receipts for sales, which is permitted by the Code). Second, the Code
provides that rents received from a tenant will not qualify as "rents from
real property" in satisfying the gross income tests if (i) the Company
directly or constructively owns a 10% or greater interest in such tenant
or (ii) any Related Tenant Owner directly or constructively owns 10% or
more by value of the Company. Constructive ownership is determined under
the attribution rules of Section 318 of the Code, as modified by Section
856(d)(5) of the Code. The Company does not anticipate receiving rents
from such a tenant. Additionally, pursuant to the Articles of
Incorporation, Related Tenant Owners are prohibited from acquiring
constructive ownership of more than 9.8% by value of the Company. Third,
rent attributable to personal property leased in connection with a lease
of real property will not qualify if it is greater than 15% of the total
rent received under the lease. Fourth, the Company generally must not
operate or manage the property or furnish or render services to the
tenants of such property, other than through an independent contractor
from whom the Company derives no income. The independent contractor
requirement, however, does not apply to the extent services performed by
the Company are "usually or customarily rendered" in connection with the
rental of space for occupancy and are not otherwise considered "rendered
to the occupant." In addition, for its 1998 taxable year and thereafter,
the Company is permitted to receive up to 1% of its gross income from the
provision of non-customary services and still treat all other amounts
received from such property as "rents from real property." The Company
provides certain services with respect to the properties that the Company
believes complies with the "usually or customarily rendered" requirement.
The Company will hire independent contractors from whom the Company
derives no income to perform such services, to the extent that the
performance of such services by the Company would cause amounts received
from its tenants to be excluded from rents from real property.
The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount
depends in whole or in part on the income or profits of any person.
However, an amount received or accrued generally will not be excluded from
the term "interest" solely by reason of being based on a fixed percentage
or percentages of receipts or sales.
It is possible that, from time to time, the Company or a Property
Partnership will enter into hedging transactions with respect to one or
more of its assets or liabilities. Any such hedging transactions could
take a variety of forms. If the Company or a Property Partnership enters
into an interest rate swap or cap contract to hedge any variable rate
indebtedness incurred to acquire or carry real estate assets, any periodic
income or gain from the disposition of such contract should be qualifying
income for purposes of the 95% gross income test but not for the 75% gross
income test. For the Company's taxable year which begins on January 1,
1998, and for all taxable years thereafter, income from hedging
transactions which is qualifying income for the 95% gross income test also
includes payments to the Company under an option, futures contract,
forward rate agreement, or any similar financial instrument. Furthermore,
for the Company's 1997 taxable year any such contract would be considered
a "security" for purposes of applying the 30% gross income test. To the
extent that the Company or a Property Partnership hedges with other types
of financial instruments or in other situations, it may not be entirely
clear how the income from those transactions will be treated for purposes
of the various income tests that apply to REITs under the Code. The
Company intends to structure any hedging transactions in a manner that
does not jeopardize its status as a REIT.
The Management Companies receive fees in consideration of the
performance of management and administrative services with respect to
properties that are not owned by the Company. Distributions received by
the Company from the Management Companies of their earnings do not qualify
under the 75% gross income test. The Company believes that the aggregate
amount of the distributions from the Management Companies together with
all other non-qualifying income in any taxable year will not cause the
Company to exceed the limits on non-qualifying income under the 75%, 95%
and 30% gross income tests.
The Company believes that it has satisfied the 75% and 95% gross income
tests for taxable years ended prior to the date of this Prospectus and
intends to operate in such a manner so as to satisfy such tests in the
future. If the Company fails to satisfy one or both of the 75% or 95%
gross income tests for any taxable year, it may nevertheless qualify as a
REIT for such year if it is entitled to relief under certain provisions of
the Code. These relief provisions generally will be available if the
Company's failure to meet such tests was due to reasonable cause and not
due to willful neglect, the Company attaches a schedule of the sources of
its income to its federal income tax return, and any incorrect information
on the schedule was not due to fraud with intent to evade tax. It is not
possible to state whether in all circumstances the Company would be
entitled to the benefit of those relief provisions. As discussed above,
even if those relief provisions apply, a tax would be imposed with respect
to the excess net income.
Asset Tests. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets.
First, at least 75% of the value of the Company's total assets must be
represented by real estate assets (including (i) its allocable share of
real estate assets which are held by the Property Partnerships or which
are held by "qualified REIT subsidiaries" of the Company and (ii) stock or
debt instruments held for not more than one year purchased with the
proceeds of a stock offering or long-term (at least five years) debt
offering of the Company), cash, cash items and government securities.
Second, not more than 25% of the value of the Company's total assets may
be represented by securities other than those in the 75% asset class.
Third, of the investments included in the 25% asset class, the value of
any one issuer's debt and equity securities owned by the Company may not
exceed (at the end of the quarter in which any of such securities are
acquired) 5% of the value of the Company's total assets and (subject to
limited exceptions) the Company may not own more than 10% of any one
issuer's outstanding voting securities.
The Company owns 100% of the non-voting preferred stock and 5% of the
voting common stock of Regency Realty Group, Inc. ("RRG 1") and a Property
Partnership owns 100% of the non-voting preferred stock and 5% of the
voting common stock of Regency Realty Group II, Inc. ("RRG 2"). The
Company represents that the value of the stock held by the Company in RRG
1 and RRG 2, respectively, did not exceed, at the date that the Company
acquired such stock and for any applicable quarter prior to the date of
this Prospectus, 5% of the total value of the Company's assets. No
independent appraisals have been obtained to support the Company's
estimate of value, however, and Foley & Lardner, in issuing its opinion on
the Company's qualification as a REIT, is relying on the Company's
representation as to the limited value of the stock interests in RRG 1 and
RRG 2. Although the Company plans to take steps to ensure that it will
continue to satisfy the 5% value test for any subsequent quarter with
respect to which retesting is to occur, there can be no assurance that
such steps will always be successful or will not require a reduction in
the Company's overall interest in the Management Companies. See "--
Failure to Qualify."
Annual Distribution Requirements. The Company, in order to qualify as
a REIT, is required to distribute dividends (other than capital gains
dividends) to its shareholders in an amount at least equal to: (a) the sum
of (i) 95% of the Company's "REIT taxable income" (computed without regard
to the dividends paid deduction and the Company's net capital gain) and
(ii) 95% of the net income (after tax), if any, from foreclosure property;
minus (b) the sum of certain items of non-cash income. In addition, if,
during the applicable Recognition Period, the Company disposes of any
asset with Built-in Gain, the Company will be required, pursuant to
Treasury Regulations which have not yet been promulgated, to distribute at
least 95% of the Built-in Gain (after tax), if any, recognized on the
disposition of such asset. Such distribution must be paid in the taxable
year to which it relates, or in the following taxable year if declared
before the Company timely files its tax return for such prior year and if
paid on or before the first regular dividend payment date after such
declaration. To the extent that the Company does not distribute all of
its net capital gain or distributes at least 95%, but less than 100%, of
its "REIT taxable income," as adjusted, it will be subject to tax thereon
at regular ordinary and capital gains corporate tax rates. For the
Company's taxable year beginning on January 1, 1998 and for all taxable
years thereafter, undistributed capital gains may be so designated by the
Company and in such event will be includable in the income of the holders
of shares of Common Stock. Such holders will be treated as having paid
the capital gains tax imposed on the Company on the designated amounts
included in their income as long-term capital gains. Such stockholders
would get an increase in their basis for income recognized and a decrease
in their basis for taxes paid by the Company. Furthermore, if the Company
should fail to distribute during each calendar year at least the sum of
(i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT
capital gain income for such year and (iii) any undistributed taxable
income from prior periods, the Company will be subject to a 4% excise tax
on the excess of such required distribution over the amounts actually
distributed.
The Company intends to make timely distributions sufficient to satisfy
this annual distribution requirement in the future. It is possible that
the Company, from time to time, may not have sufficient cash or other
liquid assets to meet the 95% distribution requirement due to timing
differences between the actual receipt of income and the actual payment of
deductible expenses and the inclusion of such income and deduction of such
expenses in arriving at the taxable income of the Company, or if the
amount of nondeductible expenses such as principal amortization or capital
expenditures exceeds the amount of noncash deductions. In the event that
such timing differences occur, in order to meet the 95% distribution
requirement, the Company may find it necessary to arrange for short-term,
or possibly long-term, borrowings to permit the payment of required
dividends or to pay dividends in the form of taxable stock dividends.
Under certain circumstances, the Company may be able to rectify a
failure to meet the distribution requirement for a certain year by paying
"deficiency dividends" to shareholders in a later year, which may be
included in the Company's deduction for dividends paid for the earlier
year. Thus, the Company may be able to avoid being taxed on amounts
distributed as deficiency dividends; however, the Company will be required
to pay to the IRS interest based upon the amount of any deduction taken
for deficiency dividends.
Failure to Qualify
If the Company fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, the Company will be subject
to tax (including any applicable corporate alternative minimum tax) on its
taxable income at regular corporate rates. Such a failure could have an
adverse effect on the market value and marketability of the Securities.
Distributions to shareholders in any year in which the Company fails to
qualify will not be deductible by the Company nor will they be required to
be made. In such event, to the extent of current and accumulated earnings
and profits, all distributions to shareholders will be taxable as ordinary
income, and, subject to certain limitations of the Code, corporate
distributees may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, the Company will
also be disqualified from taxation as a REIT for the four taxable years
following the year during which qualification was lost. It is not
possible to state whether the Company would be entitled to such statutory
relief.
Taxation of Taxable Domestic Shareholders
As long as the Company qualifies as a REIT, distributions made to its
taxable domestic shareholders out of current or accumulated earnings and
profits (and not designated as capital gains dividends) will result in
ordinary income. Corporate shareholders will not be entitled to the
dividends received deduction. Distributions that are designated as
capital gains dividends will be taxed as gain from the sale or exchange of
a capital asset held for more than one year to the extent they do not
exceed the Company's actual net capital gain for the taxable year without
regard to the period for which the shareholder has held its stock. It is
not clear under the 1997 Act whether, for a U.S. stockholder who is an
individual or an estate or trust, such amounts will be taxable at the rate
applicable to mid-term capital gain (i.e., gains from the sale of capital
assets held for more than one year but not more than 18 months) or at the
rate applicable to long-term capital gains (i.e., gains from the sale of
capital assets held for more than 18 months). This uncertainty may be
clarified by future legislation or regulations. However, corporate
shareholders may be required to treat up to 20% of certain capital gains
dividends as ordinary income. Distributions in excess of current and
accumulated earnings and profits will not be taxable to the extent that
they do not exceed the adjusted basis of the shareholder's shares, but
rather will reduce a shareholder's adjusted basis in such shares. To the
extent that such distributions exceed the adjusted basis of a
shareholder's shares, they will be included in income as long-term capital
gain (or short-term capital gain if the shares have been held for one year
or less), assuming the shares are a capital asset in the hands of the
shareholder. In addition, any dividend declared by the Company in
October, November or December of any year payable to a shareholder of
record on a specific date in any such month shall be treated as both paid
by the Company and received by the shareholder on December 31 of such
year, provided that the dividend is actually paid by the Company during
January of the following calendar year.
Shareholders may not include any net operating losses or capital losses
of the Company in their individual income tax returns. In general, any
loss upon the sale or exchange of shares by a shareholder who has held
such shares for six months or less (after applying certain holding period
rules) will be treated as a long-term capital loss to the extent
distributions from the Company on such shares were required to be treated
by such shareholder as long-term capital gain.
Taxation of Tax-Exempt Shareholders
In Revenue Ruling 66-106, 1966-1 C.B. 151, the IRS ruled that amounts
distributed by a REIT to a tax-exempt employees' pension trust did not
constitute "unrelated business taxable income" ("UBTI"). Revenue rulings
are interpretive in nature and subject to revocation or modification by
the IRS. Based upon Revenue Ruling 66-106 and the analysis therein,
except as noted below, distributions to tax-exempt shareholders should not
constitute UBTI where (a) the shareholder has not financed the acquisition
of its shares with "acquisition indebtedness" within the meaning of the
Code, and (b) the shares are not used by the shareholder in an unrelated
trade or business.
Under the Omnibus Budget Reconciliation Act of 1993, certain pension
trusts holding more than 10% by value of a REIT at any time during a
taxable year are treated as having UBTI which bears the same ratio to the
aggregate dividends paid (or treated as paid) by the REIT to such trust as
(i) the gross income of the REIT (less any direct expenses related
thereto) which would be treated as UBTI if the REIT were a pension trust,
bears to (ii) the gross income of the REIT (less any direct expenses
related thereto), but only if such ratio is at least 5%. This rule for
UBTI only applies to pension trusts investing in a REIT which would have
been considered "closely held" under Section 542(a)(2) of the Code, had
such section not been amended by the Omnibus Budget Reconciliation Act of
1993. In addition, the rule only applies where at least one pension trust
holds more than 25% by value of the REIT or where one or more pension
trusts (each owning more than 10% by value of the REIT) hold in aggregate
more than 50% by value of the REIT.
Other Tax Consequences
Some of the Company's investments are through the Property
Partnerships. These partnerships may involve special tax risks. Such
risks include possible challenge by the IRS of (i) allocations of income
and expense items, which could affect the computation of taxable income of
the Company, and (ii) the status of the Property Partnerships as
partnerships (as opposed to associations taxable as corporations or
entities that may be disregarded as entities separate from their owners or
as qualified REIT subsidiaries) for income tax purposes. In the opinion
of Foley & Lardner, which is based on (i) analysis of the partnership
agreements for each Property Partnership, and (ii) the representations of
the Company that such agreements fully reflect all amendments and
modifications to such agreements as of the date of this Prospectus, the
partnership allocations of income and expense items for the Property
Partnerships (classified as partnerships for federal income tax purposes)
have substantial economic effect under Section 704(b) of the Code and the
Treasury Regulations thereunder, and each of the Property Partnerships has
been and will continue to be treated for federal income tax purposes as
(i) a partnership, (ii) a qualified REIT subsidiary under the Code or
(iii) an entity that may be disregarded as an entity separate from its
owner under Treasury Regulation Section 301.7701-3. See "-- Requirements
for Qualification."
The Company and its Security Holders may be subject to state or local
taxation in various state or local jurisdictions, including those in which
it or they transact business or reside. The state and local tax treatment
of the Company and its Security Holders may not conform to the federal
income tax consequences discussed above. Consequently, prospective
Security Holders should consult their own tax advisors regarding the
effect of state and local tax laws on an investment in the Company.
Backup Withholding
The Company will report to its domestic shareholders and to the IRS the
amount of dividends paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a shareholder may
be subject to backup withholding at the rate of 31% with respect to
dividends paid unless such shareholder (a) is a corporation or another
form of entity exempt from backup withholding and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number,
certifies to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
shareholder that does not provide the Company with a correct taxpayer
identification number may also be subject to penalties imposed by the IRS.
Any amount paid as backup withholding will be creditable against the
shareholder's income tax liability. In addition, the Company may be
required to withhold a portion of capital gain distributions to any
shareholders who fail to certify their non-foreign status to the Company.
ERISA CONSIDERATIONS
The following is a summary of material considerations arising under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the prohibited transactions provisions of Section 4975 of the Code that
may be relevant to a prospective purchaser. This discussion does not
purport to deal with all aspects of ERISA or Section 4975 of the Code that
may be relevant to particular shareholders (including plans subject to
Title I of ERISA, other retirement plans and Individual Retirement
Accounts ("IRA's") subject to the prohibited transaction provisions of
Section 4975 of the Code, and governmental plans or church plans that are
exempt from ERISA and Section 4975 of the Code but that may be subject to
the prohibited transaction provisions of Section 503 of the Code and to
state law requirements) in light of their particular circumstances.
A FIDUCIARY MAKING THE DECISION TO INVEST IN SECURITIES ON BEHALF OF A
PROSPECTIVE PURCHASER WHICH IS AN EMPLOYEE BENEFIT PLAN, A TAX QUALIFIED
RETIREMENT PLAN, OR AN IRA IS ADVISED TO CONSULT ITS OWN LEGAL ADVISOR
REGARDING THE SPECIFIC CONSIDERATIONS ARISING UNDER ERISA, SECTIONS 4975
AND 503 OF THE CODE, AND STATE LAW WITH RESPECT TO THE PURCHASE,
OWNERSHIP, OR SALE OF THE SHARES BY SUCH PLAN OR IRA.
Employee Benefit Plans, Tax Qualified Retirement Plans and IRA's
Each fiduciary of a pension, profit sharing, or other employee benefit
plan subject to Title I of ERISA (an "ERISA Plan") should carefully
consider whether an investment in the Securities is consistent with his
fiduciary responsibilities under ERISA. The fiduciary must make its own
determination as to whether an investment in the Securities (i) is
permissible under the documents governing the ERISA Plan, (ii) is
appropriate for the ERISA Plan under the general fiduciary standards of
investment prudence and diversification, taking into account the overall
investment policy of the ERISA Plan and the composition of the ERISA
Plan's investment portfolio, and (iii) would result in a nonexempt
prohibited transaction under ERISA and the Code.
The fiduciary of an IRA or of a qualified retirement plan not subject
to Title I of ERISA because it is a governmental or church plan or because
it does not cover common law employees (a "Non-ERISA Plan") should
consider that such an IRA or Non-ERISA Plan may only make investments that
are authorized by the appropriate governing documents and under applicable
state law. The fiduciary should also consider the applicable prohibited
transaction rules of Sections 4975 and 503 of the Code.
Status of the REIT
The following section discusses certain principles that apply in
determining whether the fiduciary requirements of ERISA and the prohibited
transaction provisions of ERISA and the Code apply to an entity because
one or more investors in the entity's equity interests is an ERISA Plan or
is a Non-ERISA Plan or IRA subject to Section 4975 of the Code. An ERISA
Plan fiduciary should also consider the relevance of these principles to
ERISA's prohibition on improper delegation of control over or
responsibility for "plan assets" and ERISA's imposition of co-fiduciary
liability on a fiduciary who participates in, permits (by action or
inaction) the occurrence of, or fails to remedy a known breach by another
fiduciary.
Under the Department of Labor regulations as to what constitutes assets
of an employee benefit plan (the "DOL Regulations"), if an ERISA Plan
acquires an equity interest in an entity, which interest is neither a
"publicly offered security" nor a security issued by an investment company
registered under the Investment Company Act of 1940, as amended, the ERISA
Plan assets would include, for purposes of the fiduciary responsibility
provisions of ERISA, both the equity interest and an undivided interest in
each of the entity's underlying assets unless certain specified exceptions
apply. The DOL Regulations define a publicly offered security as a
security that is "widely held," "freely transferable," and either part of
a class of securities registered under the Securities Exchange Act of
1934, or sold pursuant to an effective registration statement under the
Securities Act (provided the securities are registered under the
Securities Exchange Act of 1934 within 120 days after the end of the
fiscal year of the issuer during which the offering occurred). The equity
Securities offered hereby will be sold in an offering registered under the
Securities Act and are or are expected to be registered under the
Securities Exchange Act of 1934.
The DOL Regulations provide that a security is "widely held" only if it
is part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another. A security will not fail to
be "widely held" because the number of independent investors falls below
100 as a result of events beyond the issuer's control. The Common Stock
is "widely held."
The DOL Regulations provide that whether a security is "freely
transferable" is a factual question to be determined on the basis of all
relevant facts and circumstances. The DOL Regulations further provide
that when a security is part of an offering in which the minimum
investment is $10,000 or less, as is expected to be the case with this
offering, certain restrictions ordinarily will not, alone or in
combination, affect the finding that such securities are freely
transferable. The Company believes that restrictions imposed under the
Articles of Incorporation on the transfer of its capital stock are limited
to the restrictions on transfers generally permitted under the DOL
Regulations and are not likely to result in the failure of its capital
stock to be "freely transferable." The DOL Regulations only establish a
presumption in favor of the finding of free transferability, and,
therefore, no assurance can be given that the Department of Labor and the
U.S. Treasury Department will not reach a contrary conclusion.
LEGAL MATTERS
The validity of the Securities to which this Prospectus relates and
certain tax matters described under "Federal Income Tax Considerations"
and "ERISA Considerations" will be passed upon for the Company by Foley &
Lardner, Jacksonville, Florida. Attorneys with Foley & Lardner
representing the Company with respect to this offering beneficially owned
approximately 4,100 shares of Common Stock as of the date of this
Prospectus.
EXPERTS
The consolidated financial statements and schedule of the Company 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 included in
the Company's Current Report on Form 8-K/A dated June 6, 1997, have been
incorporated by reference herein and in the Registration Statement in
reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. To the
extent that KPMG Peat Marwick LLP audits and reports on consolidated
financial statements of the Company issued at future dates, and consents
to the use of their report thereon, such consolidated financial statements
also will be incorporated by reference in the Registration Statement in
reliance upon their reports and said authority.
The audited historical financial statements of Branch Properties, L.P.
incorporated in this Prospectus by reference to the Current Report on Form
8-K/A-2 of the Company dated March 7, 1997 (filed May 12, 1997) have been
so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
<PAGE>
No dealer, salesperson or any
other person has been authorized
to give any information or to
make any representations other
than those contained in this
Prospectus in connection with
the offer made by this
Prospectus and, if given or Regency Realty
made, such information or Corporation
representations must not be
relied upon as having been _____________
authorized by the Company or by
any of the Underwriters. This PROSPECTUS
Prospectus does not constitute _____________
an offer to sell or the
solicitation of any offer to buy
securities other than the Preferred Stock
Securities offered by this
Prospectus, nor shall it Depositary Shares
constitute an offer to sell or a
solicitation of any offer to buy Common Stock
the Securities by anyone in any
jurisdiction in which such offer Debt Securities
or solicitation is not
authorized or in which the
person making such offer or
solicitation is not qualified to
do so or to any person to whom
it is unlawful to make such
offer or solicitation. Neither
the delivery of this Prospectus
nor any sale made hereunder
shall, under any circumstances,
create an implication that the __________, 1997
information contained herein is
correct as of any time
subsequent to the date hereof.
TABLE OF CONTENTS
Page
Available Information . . . . 2
Incorporation of Certaion
Documents by Reference. . . 2
Risk Factors . . . . . . . . 4
The Company . . . . . . . . . 8
Use of Proceeds . . . . . . . 8
Consolidated Ratio of
Earnings to Fixed Charges
and Preferred Stock
Dividends . . . . . . . . . 8
Capital Stock . . . . . . . . 9
Description of Common Stock . 14
Description of Preferred
Stock . . . . . . . . . . . 15
Description of Depository
Shares . . . . . . . . . . 19
Description of Debt
Securities. . . . . . . . . 22
Plan of Distribution. . . . . 31
Federal Income Tax
Considerations. . . . . . . 33
ERISA Considerations. . . . . 42
Legal Matters . . . . . . . . 44
Experts . . . . . . . . . . . 44
<PAGE>
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the approximate amount of fees and
expenses payable by the Registrant in connection with the issuance and
distribution of the securities registered hereby.
Securities and Exchange Commission
Registration Fee $121,212
NASD Fee $ 30,500*
Exchange Listing Fee $ 52,500*
Transfer Agent's Fees $ 5,000*
Printing and Delivery $ 50,000*
Legal Fees and Expenses $120,000*
Accounting Fees and Expenses $ 50,000*
Blue Sky Fees and Expenses $ 10,000*
Depositary's Fees $ 5,000*
Trustee's Fees $ 10,000*
Fees of Rating Agencies $ 70,000*
Miscellaneous $ 50,788*
Total $575,000*
* Estimated
Item 15. Indemnification of Directors and Officers.
The Florida Business Corporation Act (the "Florida Act") permits a
Florida corporation to indemnify a present or former director or officer
of the corporation (and certain other persons serving at the request of
the corporation in related capacities) for liabilities, including legal
expenses, arising by reason of service in such capacity if such person
shall have acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and in any
criminal proceeding if such person had no reasonable cause to believe his
conduct was unlawful. However, in the case of actions brought by or in the
right of the corporation, no indemnification may be made with respect to
any matter as to which such director or officer shall have been adjudged
liable, except in certain limited circumstances.
Article X of the Registrant's Bylaws provides that the Registrant shall
indemnify directors and executive officers to the fullest extent now or
hereafter permitted by the Florida Act. In addition, the Registrant has
entered into Indemnification Agreements with its directors and executive
officers in which the Registrant has agreed to indemnify such persons to
the fullest extent now or hereafter permitted by the Florida Act.
Item 16. Exhibits.
*1.1 Form of Underwriting Agreement (Common Stock)
*1.2 Form of Underwriting Agreement (Preferred Stock)
*1.3 Form of Underwriting Agreement (Debt Securities)
*1.4 Form of Underwriting Agreement (Depositary Shares)
*4.1 Form of Preferred Stock Certificate of Designation
*4.2 Form of Indenture relating to Senior Securities
*4.3 Form of Indenture relating to Subordinated Securities
*4.4 Form of Deposit Agreement
*4.5 Form of Depositary Receipt
*4.6 Form of Debt Security
*5. Opinion of Foley & Lardner as to the legality of the securities to be
issued
*8. Opinion of Foley & Lardner as to tax aspects of the offering
(included in Exhibit 5)
12. Statement re Computation of Ratios
*23.1 Consent of Foley & Lardner (included in Opinion filed as Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Price Waterhouse LLP
24.1 Powers of Attorney (included on Signature Page of Registration
Statement)
*25.1 Statement of Eligibility and Qualification of Senior Trustee
*25.2 Statement of Eligibility and Qualification of Subordinated
Trustee
_______________
*If applicable, to be filed by post-effective amendment or by a current
report on Form 8-K pursuant to the Securities Exchange Act of 1934, as
appropriate.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (i) to
include any prospectus required by section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act of 1933, if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement, and (iii) to include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the 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 the 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,
the Registrant 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.
(d) The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
Section 310(a) of the Trust Indenture Act (the "TIA") in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the TIA.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Jacksonville, State of Florida,
on October 14, 1997.
REGENCY REALTY CORPORATION
By: /s/ Martin E. Stein, Jr.
Martin E. Stein, Jr., Chairman of the Board,
President and Chief Executive Officer
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears on the Signature Page to this Registration Statement constitutes
and appoints Martin E. Stein, Jr., Bruce M. Johnson, J. Christian Leavitt
and Robert L. Miller, Jr., and each or any of them, his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, including any
amendment or registration statement filed pursuant to Rule 462, and to
file the same, with all exhibits hereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and grants unto
said attorneys-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or his or her substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: October 14, 1997 /s/ Martin E. Stein, Jr.
Martin E. Stein, Jr., Chairman of the
Board, President and Chief Executive
Officer
Date: October 14, 1997 /s/ Bruce M. Johnson
Bruce M. Johnson, Managing Director and
Principal Financial Officer
Date: October 14, 1997 /s/ J. Christian Leavitt
J. Christian Leavitt, Vice President,
Secretary, Treasurer and
Principal Accounting Officer
Date: October 14, 1997 /s/ Joan W. Stein
Joan W. Stein, Chairman Emeritus and
Director
Date: October 14, 1997 /s/ Richard W. Stein
Richard W. Stein, Director
Date: October 14, 1997 /s/ Edward L. Baker
Edward L. Baker, Director
Date: October 14, 1997 /s/ Raymond L. Bank
Raymond L. Bank, Director
Date: October 14, 1997 /s/ J. Alexander Branch III
J. Alexander Branch III, Director
Date: October 14, 1997 /s/ A.R. Carpenter
A.R. Carpenter, Director
Date: October 14, 1997 /s/ J. Dix Druce, Jr.
J. Dix Druce, Jr., Director
Date: October 14, 1997 /s/ Albert Ernest, Jr.
Albert Ernest, Jr., Director
Date: October 14, 1997 /s/ Douglas S. Luke
Douglas S. Luke, Director
Date: October 14, 1997 /s/ Mary Lou Rogers
Mary Lou Rogers, Director
Date: October 14, 1997 /s/ Robert S. Underhill
Robert S. Underhill, Director
<PAGE>
EXHIBIT INDEX
Sequential
Page No.
*1.1 Form of Underwriting Agreement (Common Stock)
*1.2 Form of Underwriting Agreement (Preferred Stock)
*1.3 Form of Underwriting Agreement (Debt Securities)
*1.4 Form of Underwriting Agreement (Depositary Shares)
*4.1 Form of Preferred Stock Certificate of Designation
*4.2 Form of Indenture relating to Senior Securities
*4.3 Form of Indenture relating to Subordinated Securities
*4.4 Form of Deposit Agreement
*4.5 Form of Depositary Receipt
*4.6 Form of Debt Security
*5. Opinion of Foley & Lardner as to the legality of the securities to be
issued
*8. Opinion of Foley & Lardner as to tax aspects of the offering
(included in Exhibit 5)
12. Statement re Computation of Ratios
*23.1 Consent of Foley & Lardner (included in Opinion filed as Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Price Waterhouse LLP
24.1 Powers of Attorney (included on Signature Page of Registration
Statement)
*25.1 Statement of Eligibility and Qualification of Senior Trustee
*25.2 Statement of Eligibility and Qualification of Subordinated
Trustee
_______________
*If applicable, to be filed by post-effective amendment or by a current
report on Form 8-K pursuant to the Securities Exchange Act of 1934, as
appropriate.
Exhibit 12
<TABLE>
Ratio of Earnings to Fixed Charges
<CAPTION>
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
Earnings:
Net income 8,764,000 9,965,000 5,585,000 5,384,000 896,000
Add: Fixed Charges 10,422,000 11,858,000 9,708,000 6,806,000 612,000
Deduct: Capitalized
Interest (200,000) (381,000) (285,000) (216,000) --
---------- ---------- ---------- ---------- ---------
18,986,000 21,442,000 15,008,000 11,974,000 1,508,000
---------- ---------- ---------- ---------- ---------
Fixed Charges (a) 10,422,000 11,858,000 9,708,000 6,806,000 612,000
---------- ---------- ---------- ---------- ---------
Ratio 1.8 1.8 1.5 1.8 2.5
========== ========== ========== ========== =========
(a) Includes interest expense and amortization of debt expense,
whether expensed or capitalized.
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93
Earnings:
Net income 8,764,000 9,965,000 5,585,000 5,384,000 896,000
Add: Fixed Charges 10,422,000 11,915,000 10,299,000 7,090,000 612,000
Deduct: Capitalized
Interest (200,000) (381,000) (285,000) (216,000) --
Deduct: Preferred
Stock Dividends -- (57,000) (591,000) (284,000) --
---------- ---------- ---------- ---------- ---------
18,986,000 21,442,000 15,008,000 11,974,000 1,508,000
---------- ---------- ---------- ---------- ---------
Fixed Charges (b) 10,422,000 11,915,000 10,299,000 7,090,000 612,000
---------- ---------- ---------- ---------- ---------
Ratio 1.8 1.8 1.5 1.7 2.5
========== ========== ========== ========== =========
(b) Includes interest expense and amortization of debt expense,
whether expensed or capitalized, and preferred stock dividend
requirements paid.
</TABLE>
Exhibit 23.2
Accountants' Consent
The Board of Directors
Regency Realty Corporation:
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
Prospectus.
KPMG Peat Marwick LLP
Certified Public Accountants
Jacksonville, Florida
October 13, 1997
Exhibit 23.3
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-3 of Regency
Realty Corporation of our report dated March 7, 1997 relating to the
financial statements of Branch Properties, L.P., which appears in the
Current Report on Form 8-K/A-2 of Regency Realty Corporation dated March
7, 1997 (filed on May 12, 1997). We also consent to the reference to us
under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Atlanta, Georgia
October 13, 1997
