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As filed with the Securities and Exchange Commission on September 29, 1998
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GABLES RESIDENTIAL TRUST
(Exact name of Registrant as specified in its charter)
Maryland 58-2077868
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2859 Paces Ferry Road
Overlook III, Suite 1450
Atlanta, Georgia 30339
(770) 436-4600
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
Marcus E. Bromley
Chief Executive Officer
GABLES RESIDENTIAL TRUST
2859 Paces Ferry Road
Overlook III, Suite 1450
Atlanta, Georgia 30339
(770) 436-4600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
GILBERT G. MENNA, P.C.
ETTORE A. SANTUCCI, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
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Approximate date of commencement of proposed sale to the public: From time to
time after April 1, 1999.
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, check the following box. X
---
If this form is used to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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, 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, please check the following box.__
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Amount to be Proposed Maximum Proposed Maximum Amount of
Title of Shares Being Registered Registered Offering Price Per Share(1) Aggregate Offering Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Common Shares of Beneficial
Interest, par value $.01 per share 2,348,416 $25.15625 $59,077,340 $17,427.82
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</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c) based on the average of the high and low sales prices on the
New York Stock Exchange on September 22, 1998.
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.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell nor the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PRELIMINARY PROSPECTUS DATED SEPTEMBER 29, 1998
SUBJECT TO COMPLETION
PROSPECTUS
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2,348,416 SHARES
GABLES RESIDENTIAL TRUST
COMMON SHARES OF BENEFICIAL INTEREST
(PAR VALUE $.01 PER SHARE)
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This prospectus relates to the offer and sale from time to time of up
to 2,348,416 common shares (the "Redemption Shares") of beneficial interest, par
value $.01 per share ("Common Shares"), of Gables Residential Trust (the
"Company") by certain holders thereof, or by pledgees, donees, transferees or
other successors in interest thereto (the "Selling Shareholders"). The Selling
Shareholders currently own 2,348,416 units (the "Acquired Units") of limited
partnership interest ("Units") in Gables Realty Limited Partnership (the
"Operating Partnership"), a Delaware limited partnership which the Company
controls through its ownership of the sole general partner thereof and in which
the Company owns a controlling limited partnership interest. The Redemption
Shares referred to in this Prospectus are the Common Shares that the Selling
Shareholders may acquire upon presentation by the Selling Shareholders of the
Acquired Units to the Operating Partnership for redemption, all in accordance
with the terms of the Operating Partnership's agreement of limited partnership,
as amended, and that certain registration rights and lock-up agreement dated
April 1, 1998 (the "Registration Rights Agreement"). Under the terms of the
Registration Rights Agreement, the Redemption Shares may not be acquired by the
Selling Shareholders until after April 1, 1999. The Acquired Units were issued
by the Operating Partnership in connection with the Company's acquisition of the
properties and operations of Trammell Crow Residential South Florida ("TCR/SF").
The Company is registering the Redemption Shares pursuant to the Company's
obligations under the Registration Rights Agreement but the registration of the
Redemption Shares does not necessarily mean that any of the Redemption Shares
will be offered or sold by the Selling Shareholders hereunder.
The Common Shares are listed on the New York Stock Exchange (the
"NYSE") under the symbol "GBP." To ensure that the Company maintains its
qualification as a Real Estate Investment Trust (a "REIT"), ownership by any
person is limited to 9.8% of the lesser of the number or value of outstanding
Common Shares, with certain exceptions. See "Description of Securities to be
Registered -- Restrictions on Transfers."
SEE "RISK FACTORS" ON PAGE 5 FOR CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN
THE COMMON SHARES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The Selling Shareholders from time to time may offer and sell any
Redemption Shares that may be acquired by them directly or through agents or
broker-dealers on terms to be determined at the time of sale. To the extent
required, the names of any agent or broker-dealer and applicable commissions or
discounts and any other required information with respect to any particular
offer will be set forth in an accompanying Prospectus Supplement. See "Plan of
Distribution." The Selling Shareholders reserve the right to accept or reject,
in whole or in part, any proposed purchase of the Redemption Shares to be made
directly or through agents.
The Selling Shareholders and any agents or broker-dealers that
participate with the Selling Shareholders in the distribution of the Redemption
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and any commission received by
them and any profit on the resale of the Redemption Shares may be deemed to be
underwriting commissions or discounts under the Securities Act. See
"Registration Rights" for a description of certain indemnification arrangements
between the Company and the Selling Shareholders.
The Company will not receive any proceeds from the sale of the
Redemption Shares by the Selling Shareholders but has agreed to bear certain
expenses of registration of such shares under federal and state securities laws.
The date of this Prospectus is October __, 1998
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FORWARD-LOOKING STATEMENTS
This Prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The words "believe," "expect," "anticipate,"
"intend," "estimate," "assume" and other similar expressions which are
predictions of or indicate future events and trends and which do not relate
solely to historical matters identify forward-looking statements. Reliance
should not be placed on forward-looking statements because they involve known
and unknown risks, uncertainties and other factors, which are in some cases
beyond the control of the Company and may cause the actual results, performance
or achievements of the Company to differ materially from anticipated future
results, performance or achievements expressed or implied by such
forward-looking statements.
Factors that might cause such a difference include, but are not limited
to, the following: the Company may fail to secure or abandon development
opportunities; construction costs of a community may exceed original estimates;
construction and lease-up may not be completed on schedule, resulting in
increased debt service expense and construction costs and reduced rental
revenues; occupancy rates and market rents may be adversely affected by local
economic and market conditions which are beyond management's control; financing
may not be available, or may not be available on favorable terms; the Company's
cash flow may be insufficient to meet required payments of principal and
interest; and existing indebtedness may mature in an unfavorable credit
environment, preventing such indebtedness from being refinanced, or, if
refinanced, causing such refinancing to occur on terms that are not as favorable
as the terms of existing indebtedness. In addition, the factors described under
"Risk Factors" commencing on page 5 of this Prospectus may result in such
differences. Prospective purchasers of the Common Shares offered hereby should
carefully review all of these factors.
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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 under Exchange Act file number 1-12590 reports and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; Midwest
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Northeast Regional Office, 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can be obtained at the
prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. In addition, the Company files such
material electronically with the Commission, and the Commission maintains a Web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants (including the Company)
that file electronically with the Commission. The Common Shares are listed on
the NYSE and such reports, proxy statements and other information concerning the
Company can also be inspected at the office of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Redemption Shares. For
further information with respect to the Company and the Redemption Shares
reference is made to the Registration Statement and exhibits thereto. Statements
contained in this Prospectus as to the contents of any contract or other
documents are not necessarily complete, and, in each instance, reference is made
to the copy of such contract or documents filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission are incorporated herein by reference: (a) Annual Report on Form 10-K
for the year ended December 31, 1997; Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998; and Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998; (b) Current Report on Form 8-K dated March 16, 1998;
Current Report on Form 8-K dated March 23, 1998; Current Report on Form 8-K
dated April 1, 1998 (and all amendments thereto); and Current Report on Form 8-K
dated June 18, 1998; and (c) the description of the Company's Common Shares
contained in its Registration Statement on Form 8-A filed with the Commission
pursuant to the Exchange Act, including all amendments and reports updating such
description.
In addition, all documents subsequently filed with the Commission by the
Company pursuant to Sections 13(a) and 13(c), Section 14 and Section 15(d) of
the Exchange Act prior to the filing of a post-effective amendment hereto that
indicates that all securities offered hereunder have been sold or that
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be a part hereof
from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
in any applicable Prospectus Supplement or in any other document subsequently
filed with the Commission which also is or is deemed to be incorporated by
reference herein 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.
Copies of all documents which are incorporated by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such document) will be provided without charge to
each person, including any beneficial owner, to whom this Prospectus is
delivered, upon written or oral request. Requests should be directed to Gables
Residential Trust, 2859 Paces Ferry Road, Overlook III, Suite 1450, Atlanta,
Georgia 30339, Attention: Chief Financial Officer (telephone number 770-
436-4600).
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information included elsewhere in this Prospectus or incorporated herein by
reference. Unless the context otherwise requires, all references in this
Prospectus to the "Company" shall mean Gables Residential Trust and its
subsidiaries on a consolidated basis (including Gables Realty Limited
Partnership and its subsidiaries) or, where the context so requires, Gables
Residential Trust only, and, as the context may require, their predecessors.
THE COMPANY
Gables Residential Trust is one of the largest owners, operators,
developers and acquirors of multifamily apartment communities in the
Southwestern and Southeastern region of the United States. The Company owns
multifamily apartment communities located in the following major metropolitan
markets in Texas, Georgia, Florida and Tennessee: Houston, Dallas, Austin, San
Antonio, Atlanta, Boca Raton, Orlando, Memphis and Nashville.
The Company provides a full range of integrated real estate services
through a staff of approximately 1,300 employees who have experience in property
operations, development, acquisition and construction. The Company maintains
offices in Atlanta, Houston, Dallas and Boca Raton, each with its own fully
integrated organization, including experienced in-house management, development
and acquisition staffs with specific knowledge of the particular markets served.
The finance, accounting and administrative functions for the Company are
controlled by a central staff located in Atlanta.
The Company operates as a real estate investment trust ("REIT") under
the Internal Revenue Code of 1986, as amended (the "Code"). Substantially all of
the Company's business is conducted through, and all of the Company's interests
in property are held by or through, Gables Realty Limited Partnership (the
"Operating Partnership"), of which the Company is currently a 79.5% economic
owner (excluding the Company's direct or indirect ownership of 100% of the
Operating Partnership's non-convertible preferred units) and which the Company
controls through a wholly-owned subsidiary that is the sole general partner of
the Operating Partnership.
The Company's executive offices are located at 2859 Paces Ferry Road, in
Atlanta, Georgia 30339 and its telephone number is (770) 436-4600. The Company's
Common Shares are listed on the New York Stock Exchange (the "NYSE") under the
symbol "GBP."
RISK FACTORS
An investment in Common Shares involves various risks, and prospective
investors should carefully consider the matters discussed under "Risk Factors"
prior to any investment in the Company.
TAX STATUS OF THE COMPANY
The Company intends at all times to operate so as to qualify as a REIT
under the Code. If and as long as the Company qualifies for taxation as a REIT,
the Company generally will not be subject to Federal income tax on that portion
of its ordinary income and capital gains that is currently distributed to its
shareholders. REITs are subject to a number of highly technical and complex
organizational and operational requirements. Although the Company believes it
has operated, and intends to continue to operate, in such a manner as to qualify
as a REIT under the Code, no assurance can be given that the Company has
qualified and will at all times so qualify. If the Company fails to qualify as a
REIT in any taxable year, the Company will be subject to Federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Even if the Company qualifies for taxation as a REIT,
the Company may be subject to certain state and local taxes on its income and
property and to Federal income and excise taxes on its undistributed income.
Certain subsidiaries of the Company are subject to Federal and state income tax
on their taxable income at regular corporate rates. See "Federal Income Tax
Considerations."
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SECURITIES TO BE OFFERED
This Prospectus relates to the possible offer and sale from time to time
of 2,348,416 Redemption Shares by the Selling Shareholders. The Redemption
Shares are Common Shares that may be issued to the Selling Shareholders in
exchange for Acquired Units owned by them. The Acquired Units were issued by the
Operating Partnership in connection with the Company's acquisition of the
properties and operations of TCR/SF. The Company is registering the sale by the
Selling Shareholders of the Redemption Shares pursuant to its obligations under
the Registration Rights Agreement.
The Company will not receive any proceeds from the sale of any
Redemption Shares.
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RISK FACTORS
An investment in Common Shares involves various risks. Prospective
investors should carefully consider the following information in conjunction
with the other information contained or incorporated by reference in this
Prospectus before making a decision to purchase Common Shares.
RISKS OF DEVELOPMENT, CONSTRUCTION AND ACQUISITION ACTIVITIES
The Company intends to actively continue development and construction of
multifamily apartment communities. There can be no assurance that the Company
will undertake to develop any particular site or that it will be able to
complete such development if it is undertaken. Risks associated with the
Company's development and construction activities include: development
opportunities may be abandoned; construction costs of a community may exceed
original estimates, possibly making the community uneconomical; occupancy rates
and rents at a newly completed community may not be sufficient to make the
community profitable; financing may not be available on favorable terms for
development of a community; and construction and lease-up may not be completed
on schedule, resulting in increased debt service and construction costs.
Development activities are also subject to risks relating to the inability to
obtain, or delays in obtaining, all necessary zoning, land-use, building,
occupancy and other required governmental permits and authorizations.
The Company intends to continue to acquire multifamily apartment
communities on a select basis. Acquisitions of multifamily apartment communities
entail risks that investments will fail to perform in accordance with
expectations. Estimates of the costs of improvements to bring an acquired
property up to standards established for the market position intended for that
property may prove inaccurate.
The Company anticipates that future developments and acquisitions will
be financed, in whole or in part, under existing credit facilities or loan
commitments or other lines of credit or other forms of secured or unsecured
financing or through the issuance of additional equity by the Company. The use
of equity financing, rather than debt, for future developments or acquisitions
could have a dilutive effect on the interest of existing shareholders of the
Company. If new developments are financed under existing lines of credit, there
is a risk that, unless substitute financing is obtained, further availability
under the lines of credit for new development may not be available or may be
available only on disadvantageous terms. In addition, there is a risk that upon
the maturity of such existing lines of credit, the lines of credit will not be
able to be refinanced or that the terms of such refinancing will not be as
favorable as the terms of the existing indebtedness.
REAL ESTATE FINANCING RISKS
No Limitation on Debt. The Company currently has a policy of incurring
debt only if upon such incurrence the ratio of debt to total market
capitalization (i.e., the total consolidated debt of the Company as a percentage
of the market value of issued and outstanding equity securities plus total
consolidated debt) would be 60% or less, but the organizational documents of the
Company do not contain any limitation on the amount of indebtedness the Company
may incur. Accordingly, the Company's Board of Trustees could alter or eliminate
this policy.
Existing Debt Maturities, Balloon Payments and Refinancing Risks. The
Company is subject to the risks normally associated with debt financing,
including the risk that the Company's cash flow will be insufficient to meet
required payments of principal and interest. Because the Company anticipates
that only a small portion of the principal of the Company's mortgage
indebtedness will be repaid prior to maturity, it will be necessary for the
Company to refinance debt. Accordingly, there is a risk that existing
indebtedness on the Communities will not be able to be refinanced or that the
terms of such refinancing will not be as favorable as the terms of the existing
indebtedness.
Risk of Rising Interest Rates. The Company incurred and expects in the
future to incur floating rate indebtedness in connection with the construction
of multifamily apartment communities, as well as for other purposes. In
addition, additional indebtedness that the Company incurs under the Company's
unsecured revolving credit facilities also bears interest at a floating rate.
Accordingly, increases in interest rates would increase the Company's interest
costs (to the extent that the related indebtedness was not protected by the
Company's interest rate protection arrangements).
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Bond Compliance Requirements. Certain of the Company's multifamily
apartment communities are or may be financed with obligations issued by various
local government agencies or instrumentalities, the interest on which is exempt
from Federal income taxation. These obligations are commonly referred to as
"tax-exempt bonds." Under the terms of such bonds, the Company must comply with
various restrictions on the use of the Company's multifamily apartment
communities, including the restriction that a percentage of apartments be made
available to low and middle income households. The bond compliance requirements
in effect, and the requirements of any future tax-exempt bond financing utilized
by the Company, may have the effect of limiting the Company's income from the
Company's multifamily apartment communities subject to the financing. In
addition, certain of the tax-exempt bond financing documents require that a
financial institution (the "credit enhancer") guarantee payment of principal of,
and interest on, the bonds, which may take the form of a letter of credit,
surety bond, guarantee agreement or other additional collateral. If the credit
enhancer defaults in its credit enhancement obligations, or the Company is
unable to renew the applicable credit enhancement or otherwise post satisfactory
collateral, a default will occur under the applicable tax-exempt bonds and the
property could be foreclosed upon.
REAL ESTATE INVESTMENT RISKS
General Risks. Real property investments are subject to varying degrees
of risk. If the Company's communities do not generate revenues sufficient to
meet operating expenses, including debt service and capital expenditures, the
Company's cash flow and ability to make distributions to its shareholders will
be adversely affected. A multifamily community's revenues and value may be
adversely affected by the general economic climate; the local economic climate
(including the fiscal condition of the relevant governmental bodies); local real
estate conditions (such as oversupply of or reduced demand for apartment homes);
the perceptions by prospective residents of the safety, convenience and
attractiveness of the communities or neighborhoods in which they are located and
the quality of local schools and other amenities; the ability of the owner to
provide adequate management, maintenance and insurance; and increased operating
costs (including real estate taxes and utilities). Certain significant
expenditures associated with each equity investment (such as mortgage payments,
if any, real estate taxes, insurance and maintenance costs) are generally not
reduced when circumstances cause a reduction in income from the investment.
Dependence on Primary Markets. The Company's multifamily apartment
communities are located in various metropolitan areas in the Southwestern and
Southeastern region of the United States, particularly Houston, Atlanta, Boca
Raton and Dallas, and the Company's performance and its ability to make
distributions to shareholders could be adversely affected by economic and social
conditions in these geographic areas.
Market Illiquidity. Equity real estate investments are relatively
illiquid. Such illiquidity will tend to limit the ability of the Company to vary
its portfolio promptly in response to changes in economic or other conditions.
In addition, the Code limits the Company's ability to sell properties held for
fewer than four years, which may affect the Company's ability to sell properties
without adversely affecting returns to holders of Common Shares.
Operating Risks. The Company's multifamily apartment communities are
subject to all operating risks common to multifamily apartment communities in
general, any and all of which might adversely affect apartment occupancy or
rental rates. Increases in unemployment in the areas in which the communities
owned or managed by the Company are located might adversely affect multifamily
occupancy or rental rates. Increases in operating costs due to inflation and
other factors may not necessarily be offset by increased rents. Residents may be
unable or unwilling to pay rent increases. Future enactment of rent control or
rent stabilization laws or other laws regulating multifamily housing may reduce
rental revenue or increase operating costs. If operating expenses increase, the
local rental market may limit the extent to which rents may be increased to meet
increased expenses without decreasing occupancy rates.
Competition. There are numerous housing alternatives that compete with
the Company's multifamily apartment communities in attracting residents. The
Company's multifamily apartment communities compete directly with other
multifamily rental apartments and single family homes that are available for
rent or purchase in the markets in which the Company's multifamily apartment
communities are located. In addition, other competitors for development and
acquisitions of properties, including other REITs, may have greater resources
than the Company. Increased supply of apartment homes in the Company's principal
markets over the past few
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years and the next few years may adversely affect the current favorable demand
environment for apartment homes, including occupancy and rental rates.
Affordable Housing Laws. Certain of the Company's multifamily apartment
communities are, and will be in the future, subject to Federal, state and local
statutes or other restrictions requiring that a percentage of apartments be made
available to low and middle income households. These laws and obligations, as
well as any changes thereto making it more difficult to meet such requirements,
or a reduction in or elimination of certain financing advantages available to
those persons satisfying such requirements, could adversely affect the Company's
profitability and its ability to develop certain communities in the future.
RISK OF FEE MANAGEMENT BUSINESS
The Company manages properties owned by third parties for a fee. Risks
associated with the management of properties owned by third parties include the
risk that the management contracts will be terminated and/or that the rental
revenues upon which management fees and based will decline, resulting in
decreased management fee income.
LIMITS ON CHANGES IN CONTROL
Certain provisions contained in the Company's Amended and Restated
Declaration of Trust (as amended, the "Declaration of Trust") and Second Amended
and Restated Bylaws (as amended, the "Bylaws") and under Maryland law may have
the effect of discouraging a third party from making an acquisition proposal for
the Company and may thereby inhibit a change in control of the Company. For
example, such provisions may (i) deter tender offers for Common Shares, which
offers may be attractive to the shareholders, or (ii) deter purchases of large
blocks of Common Shares, thereby limiting the opportunity for shareholders to
receive a premium for their Common Shares over then-prevailing market prices.
POSSIBLE ADVERSE CONSEQUENCES OF LIMITS ON OWNERSHIP OF COMMON SHARES
In order to maintain its qualification as a REIT, not more than 50% in
value of the outstanding shares of beneficial interest of the Company may be
owned, directly or indirectly, by five or fewer persons. In order to protect the
Company against the risk of losing its status as a REIT due to a concentration
of ownership among its shareholders, the Company has limited ownership of shares
of beneficial interest by any single shareholder to 9.8% of the outstanding
shares of beneficial interest. Although the Board of Trustees presently has no
intention of doing so, the Board of Trustees could waive this restriction if it
were satisfied, based upon the advice of tax counsel, that ownership in excess
of this limit would not jeopardize the Company's status as a REIT and the Board
of Trustees otherwise decided such action would be in the best interest of the
Company. This restriction also does not apply with respect to an offeror in the
event of an all-cash tender offer by it which has been accepted by shareholders
representing at least two-thirds of the Company's outstanding shares. Shares
acquired or transferred in breach of the limitation will be automatically
exchanged for shares not entitled to vote or to participate in dividends or
other distributions. In addition, shares acquired or transferred in breach of
the limitation may be purchased by the Company for the lesser of the price paid
and the market price (as determined in the manner set forth in the Declaration
of Trust).
COST OF COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT AND SIMILAR LAWS
Under the Americans with Disabilities Act of 1990 (the "ADA"), all
places of public accommodation are required to meet certain Federal requirements
related to access and use by disabled persons. Although management of the
Company believes that the Company's communities are substantially in compliance
with the present requirements of the ADA, the Company may incur additional costs
of complying with the ADA. A number of additional Federal, state and local laws
exist which also may require modifications to the Company's communities, or
restrict certain further renovations thereof, with respect to access thereto by
disabled persons. For example, the Fair Housing Act of 1988 (the "FHAA")
requires apartment communities first occupied after March 13, 1990 to be
accessible to the handicapped. Noncompliance with the FHAA could result in the
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imposition of fines or an award of damages to private litigants. Additional
legislation may impose further burdens or restrictions on owners with respect to
access by disabled persons.
The ultimate amount of the cost of compliance with the ADA or such
legislation is not currently ascertainable, and, while such costs are not
expected to have a material effect on the Company, such costs could be
substantial.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT; OTHER TAX LIABILITIES
The Company intends at all times to operate so as to qualify as a REIT
under the Code. Although management of the Company believes that the Company is
organized and operates in such a manner, no assurance can be given that the
Company qualifies or will remain qualified as a REIT. Qualification as a REIT
involves the application of highly technical and complex Code provisions for
which there are only limited judicial and administrative interpretations. The
determination of various factual matters and circumstances not entirely within
the Company's control may affect the Company's ability to qualify as a REIT. If
the Company fails to qualify as a REIT, it will be subject to Federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. In addition, unless entitled to relief under certain
statutory provisions, the Company will be disqualified from treatment as a REIT
for the four taxable years following the year during which qualification is
lost. The additional tax would significantly reduce the cash flow available for
distribution to shareholders.
POSSIBLE ADVERSE IMPACT OF MARKET CONDITIONS ON MARKET PRICE
The market value of the Common Shares could be substantially affected by
general market conditions, including changes in interest rates, government
regulatory action and changes in tax laws. An increase in market interest rates
may lead purchasers of the Common Shares to demand a higher annual yield, which
could adversely affect the market price of the Common Shares.
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various Federal, state and local environmental laws, a current or
previous owner or operator of real estate may be required (typically regardless
of knowledge or responsibility) to investigate and clean up hazardous or toxic
substances or petroleum product releases at such property and may be held liable
to a governmental entity or to third parties for property damage and for
investigation and clean-up costs incurred by such parties in connection with the
contamination, which may be substantial. The presence of such substances (or the
failure to properly remediate the contamination) may adversely affect the
owner's ability to borrow against, sell or rent such property.
8
<PAGE> 11
THE COMPANY
GENERAL
Gables Residential Trust is one of the largest owners, operators,
developers and acquirors of multifamily apartment communities in the
Southwestern and Southeastern region of the United States. The Company owns
multifamily apartment communities located in the following major metropolitan
markets in Texas, Georgia, Florida and Tennessee: Houston, Dallas, Austin, San
Antonio, Atlanta, Boca Raton, Orlando, Memphis and Nashville.
The Company provides a full range of integrated real estate services
through a staff of approximately 1,300 employees who have experience in property
operations, development, acquisition and construction. The Company maintains
offices in Atlanta, Houston, Dallas and Boca Raton, each with its own fully
integrated organization, including experienced in-house management, development
and acquisition staffs with specific knowledge of the particular markets served.
The finance, accounting and administrative functions for the Company are
controlled by a central staff located in Atlanta.
The Company operates as a REIT under the Code. Substantially all of the
Company's business is conducted through, and all of the Company's interests in
property are held by or through, the Operating Partnership, of which the Company
is currently a 79.5% economic owner (excluding the Company's direct or indirect
ownership of 100% of the Operating Partnership's non-convertible preferred
units) and which the Company controls through a wholly-owned subsidiary that is
the sole general partner of the Operating Partnership.
The Company's executive offices are located at 2859 Paces Ferry Road, in
Atlanta, Georgia 30339 and its telephone number is (770) 436-4600. The Company's
Common Shares are listed on the NYSE under the symbol "GBP."
9
<PAGE> 12
DESCRIPTION OF SECURITIES TO BE REGISTERED
The description of the Company's Common Shares set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Company's Declaration of Trust and Bylaws, copies of which are exhibits to the
Registration Statement of which this Prospectus is a part. See "Additional
Information."
GENERAL
Under the Declaration of Trust, the Company has authority to issue up to
171,000,000 shares of beneficial interest, consisting of 100,000,000 Common
Shares, par value $.01 per share, 51,000,000 "Excess Shares" (as described
below), par value $.01 per share, and 20,000,000 Preferred Shares, par value
$.01 per share. As of September 1, 1998, the Company had outstanding 25,885,131
Common Shares, 4,600,000 shares of 8.30% Series A Cumulative Redeemable
Preferred Shares and 180,000 shares of 5.00% Series Z Cumulative Redeemable
Preferred Shares. In addition, on such date, 6,656,484 common Units were
outstanding (other than those held directly or indirectly by the Company) and
may be exchanged for Common Shares on a one-for-one basis.
Under Maryland law, shareholders generally are not responsible for the
corporation's debts or obligations, and the Company's Declaration of Trust
specifically provides that no shareholder of the Company will be personally
liable for any obligations of the Company. The Company's Bylaws further provide
that the Company shall indemnify each shareholder against any claim or liability
to which the shareholder may become subject by reason of his being or having
been a shareholder, and that the Company shall reimburse each shareholder for
all legal and other expenses reasonably incurred by him in connection with any
such claim or liability. However, with respect to tort claims, contractual
claims where shareholder liability is not so negated, claims for taxes and
certain statutory liability, the shareholder may, in some jurisdictions,
including Texas, be personally liable to the extent that such claims are not
satisfied by the Company. Inasmuch as the Company will carry public liability
insurance which it considers adequate, any risk of personal liability to
shareholders is limited to situations in which the Company's assets plus its
insurance coverage would be insufficient to satisfy the claims against the
Company and its shareholders.
COMMON SHARES
All Common Shares which may be offered hereby will be duly authorized,
fully paid and nonassessable. Subject to the preferential rights of any other
shares or series of shares and to the provisions of the Company's Declaration of
Trust regarding Excess Shares, holders of Common Shares will be entitled to
receive distributions on Common Shares if, as and when authorized and declared
by the Board of Trustees of the Company out of assets legally available therefor
and to share ratably in the assets of the Company legally available for
distribution to its shareholders in the event of its liquidation, dissolution or
winding-up after payment of, or adequate provision for, all known debts and
liabilities of the Company.
Subject to the provisions of the Company's Declaration of Trust
regarding Excess Shares, each outstanding Common Share entitles the holder to
one vote on all matters submitted to a vote of shareholders, including the
election of trustees, and, except as otherwise required by law or except as
provided with respect to any other class or series of shares, the holders of
Common Shares will possess exclusive voting power. There is no cumulative voting
in the election of trustees, which means that the holders of a majority of the
outstanding Common Shares can elect all of the trustees then standing for
election, and the holders of the remaining Common Shares will not be able to
elect any trustee.
Holders of Common Shares have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
Subject to the provisions of the Company's Declaration of Trust
regarding Excess Shares, all Common Shares will have equal dividend,
distribution, liquidation and other rights, and will have no preference,
appraisal or exchange rights.
The Company's Declaration of Trust provides that the Company cannot
merge with or sell all or substantially all of the assets of the Company, except
pursuant to a resolution approved by shareholders holding a majority of the
shares entitled to vote on the resolution. In addition, the Operating
Partnership's agreement
10
<PAGE> 13
of limited partnership, as amended, requires that any merger or sale of all or
substantially all of the assets of the Operating Partnership be approved by
partners holding 75% of the common Units.
The transfer agent and registrar for the Common Shares is BankBoston,
N.A., Boston, Massachusetts.
PREFERRED SHARES
Preferred Shares may be issued from time to time, in one or more series,
as authorized by the Board of Trustees. Prior to issuance of shares of each
series, the Board of Trustees is required by the Maryland General Corporation
Law (the "MGCL") and the Company's Declaration of Trust to fix for each series,
subject to the provisions of the Company's Declaration of Trust regarding Excess
Shares, the terms, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
and terms or conditions of redemption, as are permitted by Maryland law. Such
rights, powers, restrictions and limitations could include the right to receive
specified dividend payments and payments on liquidation prior to any such
payments being made to the holders of some, or a majority, of the Common Shares.
The Board of Trustees could authorize the issuance of Preferred Shares with
terms and conditions that could have the effect of discouraging a takeover or
other transaction that holders of Common Shares might believe to be in their
best interests or in which holders of some, or a majority, of Common Shares
might receive a premium for their shares over the then-current market price of
such shares. As of the date hereof, the Company had outstanding 4,600,000 shares
of 8.30% Series A Cumulative Redeemable Preferred Shares and 180,000 shares of
5.00% Series Z Cumulative Redeemable Preferred Shares.
RESTRICTIONS ON TRANSFERS
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding shares of beneficial interest may
be owned, directly or indirectly, by five or fewer individuals (defined in the
Code to include certain entities) during the last half of a taxable year (other
than the first year), and such shares of beneficial interest must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months (other than the first year) or during a proportionate part of
a shorter taxable year. In order to protect the Company against the risk of
losing its status as a REIT due to a concentration of ownership among its
shareholders, the Declaration of Trust provides that no holder (other than
persons approved by the trustees at their option and in their discretion) may
own, or be deemed to own by virtue of the attribution provisions of the Code,
more than 9.8% (the "Ownership Limit") of the Company's shares of beneficial
interest. The Board of Trustees does not expect that it would waive the
Ownership Limit in the absence of the ruling from the Internal Revenue Service
or an opinion of counsel satisfactory to it that the changes in ownership will
not then or in the future jeopardize the Company's status as a REIT. Any
transfer of shares of beneficial interest or any security convertible into
shares of beneficial interest that would create a direct or indirect ownership
of shares of beneficial interest in excess of the Ownership Limit or that would
result in the disqualification of the Company as a REIT, including any transfer
that results in the shares of beneficial interest being owned by fewer than 100
persons or that results in the Company being "closely held" within the meaning
of Section 856(h) of the Code, shall be null and void, and the intended
transferee will acquire no rights to the shares of beneficial interest. The
foregoing restrictions on transferability and ownership will not apply if the
Board of Trustees determines that it is no longer in the best interest of the
Company to continue to qualify as a REIT. In addition, the foregoing
restrictions do not apply with respect to an offeror in the event of an all-cash
tender offer by it which has been accepted by shareholders representing at least
two-thirds of the Company's outstanding shares.
Shares of beneficial interest owned, or deemed to be owned, or
transferred to a shareholder in excess of the Ownership Limit will automatically
be exchanged for Excess Shares that will be transferred, by operation of law, to
the Company as trustee of a trust for the exclusive benefit of the transferees
to whom such shares of beneficial interest may be ultimately transferred without
violating the Ownership Limit. While the Excess Shares are held in trust, they
will not be entitled to vote, they will not be considered for purposes of any
shareholder vote or the determination of a quorum for such vote, and, except
upon liquidation, they will not be entitled to participate in dividends or other
distributions. Any dividend or distribution paid to a proposed transferee of
Excess Shares prior to the discovery by the Company that capital stock has been
transferred in violation of the provisions of the Company's Declaration of Trust
shall be repaid to the Company upon demand. The Excess Shares are not treasury
shares, but rather constitute a separate class of issued and outstanding shares
of beneficial interest of the Company. The original transferee-shareholder may,
at any time the Excess Shares are held by the Company in trust, transfer the
interest in the trust representing the Excess Shares to any
11
<PAGE> 14
individual whose ownership of the shares of beneficial interest exchanged into
such Excess Shares would be permitted under the Ownership Limit, at a price not
in excess of the price paid by the original transferee-shareholder for the
shares of beneficial interest that were exchanged for Excess Shares. Immediately
upon the transfer to the permitted transferee, the Excess Shares will
automatically be exchanged for shares of beneficial interest of the class from
which they were converted. If the foregoing transfer restrictions are determined
to be void or invalid by virtue of any legal decision, statute, rule or
regulation, then the intended transferee of any Excess Shares may be deemed, at
the option of the Company, to have acted as an agent on behalf of the Company in
acquiring the Excess Shares and to hold the Excess Shares on behalf of the
Company.
In addition to the foregoing transfer restrictions, the Company will
have the right, for a period of 90 days during the time any Excess Shares are
held by the Company in trust, to purchase all or any portion of the Excess
Shares from the original transferee-shareholder for the lesser of the price paid
for the shares of beneficial interest by the original transferee-shareholder or
the market price (as determined in the manner set forth in the Declaration of
Trust) of the shares of beneficial interest on the date the Company exercises
its option to purchase. The 90-day period begins on the date of the violative
transfer if the original transferee-shareholder gives notice to the Company of
the transfer or, if no such notice is given, the date the Board of Trustees
determines that a violative transfer has been made.
Every owner of more than 5% (or such lower percentage as required by the
Code or regulations thereunder) of the issued and outstanding Common Shares must
file a written notice with the Company containing the information specified in
the Declaration of Trust no later than January 30 of each year. Each shareholder
shall upon demand be required to disclose to the Company in writing any
information with respect to the direct, indirect and constructive ownership of
beneficial interests as the Board of Trustees deems necessary to comply with the
provisions of the Code applicable to REITs, to comply with the requirements of
any taxing authority or governmental agency or to determine any such compliance.
This ownership limitation may have the effect of precluding acquisition
of control of the Company unless the Board of Trustees determines that
maintenance of REIT status is no longer in the best interest of the Company.
12
<PAGE> 15
REGISTRATION RIGHTS
The registration of the Redemption Shares pursuant to the Registration
Statement of which this Prospectus is a part will discharge the Company's
obligations under the terms of the Registration Rights Agreement, which the
Company entered into in connection with its acquisition of the properties and
operations of TCR/SF. The following summary does not purport to be complete and
is qualified in its entirety by reference to the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company is obligated to
cause to be filed a registration statement under Rule 415 under the Securities
Act covering the sale by the Selling Shareholders of the Redemption Shares which
the Selling Shareholders may acquire in exchange for their Acquired Units. Under
the terms of the Registration Rights Agreement, the Redemption Shares may not be
acquired by the Selling Stockholders until after April 1, 1999. The Company is
further obligated to use reasonable efforts to cause such registration statement
to be declared effective by the Commission by April 1, 1999 and to keep such
registration statement continuously effective until the earliest of (a) the date
on which the Selling Shareholders no longer hold any Redemption Shares or
Acquired Units or (b) the date on which all of the Redemption Shares held or
subsequently acquired by the Selling Shareholders have become eligible for sale
pursuant to Rule 144(k) promulgated under the Securities Act and the Company has
delivered to the Selling Shareholders an opinion of counsel to such effect. As a
result of the filing and effectiveness of the Registration Statement of which
this Prospectus is a part, any Redemption Shares sold by the Selling
Shareholders pursuant to this Prospectus will no longer be entitled to the
benefits of the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the Company is obligated
to bear all expenses of effecting the registration of the Redemption Shares
(other than brokerage and underwriting commissions and taxes of any kind and
other than for any legal, accounting and other expenses incurred by the Selling
Shareholders). Under the Registration Rights Agreement, the Company also has
agreed to indemnify the Selling Shareholders and their respective officers,
directors and other affiliated persons and any person who controls a Selling
Shareholder against all losses, claims, damages, actions, liabilities, costs and
expenses arising under the securities laws in connection with the Registration
Statement or this Prospectus, subject to certain limitations. In addition, the
Selling Shareholders under the Registration Rights Agreement agree to indemnify
the Company and its respective trustees, officers and any person who controls
the Company against all losses, claims, damages, actions, liabilities, costs and
expenses arising under the securities laws insofar as such loss, claim, damage,
action, liability, cost or expense relates to written information furnished to
the Company by the Selling Shareholders for use in the Registration Statement or
Prospectus or an amendment or supplement thereto or the failure by the Selling
Shareholders to deliver or cause to be delivered this Prospectus or any
amendment or supplement thereto to any purchaser of shares covered by the
Registration Statement from the Selling Shareholders through no fault of the
Company.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to
continue to operate, in such manner as to qualify as a REIT under the Code, but
no assurance can be given that it will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions that
currently govern the Federal income tax treatment of the Company and its
shareholders. For the particular provisions that govern the Federal income tax
treatment of the Company and its shareholders, reference is made to Sections 856
through 860 of the Code and the regulations thereunder. The following summary is
qualified in its entirety by such reference.
Under the Code, if certain requirements are met in a taxable year, a
REIT generally will not be subject to Federal income tax with respect to income
that it distributes to its shareholders. If the Company fails to qualify during
any taxable year as a REIT, unless certain relief provisions are available, it
will be subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates, which could have a material adverse
effect upon its shareholders.
In any year in which the Company qualifies to be taxed as a REIT,
distributions made to its shareholders out of current or accumulated earnings
and profits will be taxed to shareholders as ordinary income except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term
13
<PAGE> 16
capital gain income to the shareholders. To the extent that distributions exceed
current or accumulated earnings and profits, they will constitute a return of
capital, rather than dividend or capital gain income, and will reduce the basis
for the shareholder's Common Shares with respect to which the distribution is
paid or, to the extent that they exceed such basis, will be taxed in the same
manner as gain from the sale of those Common Shares.
Investors are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the Common Shares offered hereby and
with respect to the tax consequences arising under Federal law and the laws of
any state, municipality or other taxing jurisdiction, including tax consequences
resulting from such investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax consequences
of an investment in the Company, including the possibility of United States
income tax withholding on Company distributions.
14
<PAGE> 17
THE SELLING SHAREHOLDERS
The following table provides certain information with respect to the
Selling Shareholders, including the number of Common Shares and Units
beneficially owned by the Selling Shareholders as of September 1, 1998, the
number of Common Shares offered hereby and the total number of Common Shares and
Units to be owned by the Selling Shareholders after completion of this offering.
The Common Shares set forth below as being offered hereby represent the
Redemption Shares that the Selling Shareholders may acquire upon presentation of
the Acquired Units to the Operating Partnership for redemption, all in
accordance with the agreement of limited partnership of the Operating
Partnership, as amended. The Acquired Units were issued by the Operating
Partnership in connection with the Company's acquisition of the properties and
operations of TCR/SF.
The Redemption Shares offered by this Prospectus will be offered from
time to time, at any time after April 1, 1999, by the Selling Shareholders named
below, or by pledgees, donees, transferees or other successors in interest
thereto. The amounts set forth below are based upon information provided to the
Company by representatives of the Selling Shareholders, or on the Company's
records, as of September 1, 1998 and are accurate to the Company's knowledge. It
is possible, however, that the Selling Shareholders may acquire or dispose of
additional Common Shares from time to time after the date of this Prospectus.
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY UNITS BENEFICIALLY COMMON SHARES AND
OWNED AS OF OWNED AS OF COMMON SHARES UNITS TO BE OWNED
NAME SEPTEMBER 1, 1998(1) SEPTEMBER 1, 1998(2) OFFERED HEREBY(3) AFTER OFFERING(4)
---- -------------------- -------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
James J. Billik 0 7,158 7,158 0
Clifford A. Breining 300 25,445 25,445 300
Brad D. Bryant(5) 0 72,864 72,864 0
CFP Residential, L.P.(6) 0 372,763 372,763 0
Ann Cash(7) 0 24,316 24,316 0
Harlan R. Crow 0 859(8) 459 400
Crow Residential Realty
Investors, L.P.(9) 0 49,665 49,665 0
Trammell S. Crow 0 1,707 680 1,027
Joseph B. Fraser III 0 1,080 1,080 0
Terence C. Golden 0 36,174 16,688 19,486
Michael M. Hefley(10) 0 98,714 98,714 0
Greg W. Iglehart(11) 0 230,000 230,000 0
JRT Holdings, Inc.(12) 0 27,223 27,223 0
J. Ronald Terwilliger
Grantor Trust(13) 0 49,665 49,665 0
William C. McDonald 0 52,433 52,433 0
W. Snowden Marshall 0 2,671 2,671 0
Randy J. Pace 10,733 133,051 56,671 87,113
RCS Development
Corporation(14) 0 31,804 31,804 0
Bettina Scherer(15) 0 22,228 22,228 0
Christopher Smiles(16) 0 24,043 24,043 0
Robert C. Speicher 0 131,650(17) 131,650 0
TCF Residential 0
Partnership, Ltd.(18) 140,266 140,266 0
J. Ronald Terwilliger 0 773,292(19) 263,459 509,833(20)
Patricia B. Terwilliger 0 192,300(21) 192,300 0
Chris D. Wheeler(22) 0 454,171 454,171 0
------ --------- --------- -------
TOTAL 11,033 2,955,542 2,348,416 618,159
====== ========= ========= =======
</TABLE>
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<PAGE> 18
(1) Does not include Common Shares that may be issued in exchange for Units
beneficially held as of September 1, 1998. Additionally, as of
September 1, 1998, none of the Selling Shareholders held options to
purchase Common Shares that were exercisable within 60 days.
(2) All Units (which include Acquired Units) listed in this column may be
exchanged, under certain circumstances, for an equal number of Common
Shares. Unless otherwise noted, all information is as of September 1,
1998.
(3) These Common Shares represent the Redemption Shares that the Selling
Shareholders may acquire upon presentation of the Acquired Units for
redemption, which may occur at any time after April 1, 1999.
(4) Assumes that all Redemption Shares issuable upon redemption of the
Acquired Units will be sold by the Selling Shareholders. Unless
otherwise noted, in the case of each Selling Shareholder, the
percentage of the Company's Common Shares that will be held by such
Selling Shareholder (assuming all remaining Units held by such person
are presented for redemption and are exchanged for Common Shares) after
completion of this offering will be less than one percent (1%). The
total number of Common Shares outstanding used in calculating such
percentage (i) is based on the total number of Common Shares
outstanding as of September 1, 1998 (25,885,131) and (ii) assumes that
none of the remaining Units held by other persons will be exchanged for
Common Shares.
(5) Mr. Bryant is a Vice President of (i) Gables GP, Inc. ("GGPI"), a
wholly-owned subsidiary of the Company and the sole general partner of
the Operating Partnership, and (ii) Gables East Construction, Inc.
("GECI"), a wholly-owned subsidiary of East Apartment Management, Inc.
("EAMI"), a corporation of which the Operating Partnership owns 100% of
the non-voting common stock and 1% of the voting common stock
(collectively representing 99% of the equity interests of EAMI).
(6) Crow Family, Inc. is the general partner of CFP Residential, L.P. The
chief executive officer of Crow Family, Inc. is Harlan R. Crow.
(7) Ms. Cash is a Vice President of EAMI.
(8) Does not include (i) 372,763 Units owned by CFP Residential, L.P., (ii)
49,665 Units owned by Crow Residential Realty Investors, L.P., (iii)
140,266 Units owned by TCF Residential Partnership, Ltd., (iv) 1,688
Units owned by TCF Interests Partnership, Ltd., (v) 263,402 Units owned
by CF/GBP, LLC or (vi) 483,410 Common Shares owned by Crow Family
Partnership, L.P. Mr. Crow is the chief executive officer of the
general partners of the entities referred to in clauses (i)-(iv) and
clause (vi) and is the chief executive officer of the general partner
of the managing member of the entity referred to in clause (v).
(9) Crow Family, Inc. is the general partner of Crow Residential Realty
Investors, L.P. The chief executive officer of Crow Family, Inc. is
Harlan R. Crow.
(10) Mr. Hefley is a Vice President of (i) EAMI and (ii) Central Apartment
Management, Inc. ("CAMI"), a corporation of which the Operating
Partnership owns 100% of the non-voting common stock and 1% of the
voting common stock (collectively representing 99% of the equity
interests of CAMI).
(11) Mr. Iglehart is a Vice President of (i) GGPI and (ii) GECI.
(12) The president of JRT Holdings, Inc. is J. Ronald Terwilliger.
(13) The sole trustee of the J. Ronald Terwilliger Grantor Trust is J.
Ronald Terwilliger.
(14) The president of RCS Development Corporation is Robert C. Speicher.
(15) Ms. Scherer is a non-officer employee of the Company.
(16) Mr. Smiles is a Vice President of EAMI.
(17) Does not include 31,804 Units owned by RCS Development Corporation, of
which Mr. Speicher is president.
(18) Mill Spring Holdings, Inc. is the general partner of TCF Residential
Partnership, Ltd. The chief executive officer of Mill Spring Holdings,
Inc. is Harlan R. Crow.
(19) Does not include (i) 27,223 Units owned by JRT Holdings, Inc., of which
Mr. Terwilliger is president, (ii) 49,665 Units owned by the J. Ronald
Terwilliger Grantor Trust, of which Mr. Terwilliger is the sole
trustee, or (iii) 192,300 Units owned by Patricia B. Terwilliger, Mr.
Terwilliger's spouse, as of September 28, 1998.
(20) Represents approximately 1.9% of the Common Shares outstanding as of
September 1, 1998 (assuming (i) all remaining Units held by Mr.
Terwilliger are presented for redemption and are exchanged for Common
Shares and (ii) none of the remaining Units held by other persons are
exchanged for Common Shares).
(21) Represents Units owned as of September 28, 1998. Does not include
773,292 Units owned by Mr. Terwilliger.
(22) Mr. Wheeler is a Trustee and a Senior Vice President of the Company and
GGPI.
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<PAGE> 19
USE OF PROCEEDS
The Company will not receive any of the proceeds of the sale of the
Redemption Shares offered hereby.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time of up to
an aggregate of 2,348,416 Common Shares by the Selling Shareholders, or by
pledgees, donees, transferees or other successors in interest thereto. If the
Selling Shareholders present Acquired Units to the Operating Partnership for
redemption, the Company may, at its election, acquire such Units in exchange for
Redemption Shares in accordance with the terms of the Operating Partnership's
agreement of limited partnership, as amended. The Company is registering the
Redemption Shares pursuant to the Company's obligations under the Registration
Rights Agreement, but the registration of the Redemption Shares does not
necessarily mean that any of the Redemption Shares will be offered or sold by
the Selling Shareholders hereunder. The Company will not receive any proceeds
from the offering of the Redemption Shares by the Selling Shareholders.
The distribution of the Redemption Shares may be effected from time to
time in one or more underwritten transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Any such
underwritten offering may be on a "best efforts" or a "firm commitment" basis.
In connection with any such underwritten offering, underwriters or agents may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders. Underwriters may sell the Redemption Shares to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents.
The Selling Shareholders and any underwriters, dealers or agents that
participate in the distribution of the Redemption Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the Redemption Shares by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be deemed
to be underwriting discounts and commissions under the Securities Act.
At a time a particular offer of Redemption Shares is made by the Selling
Shareholders, a Prospectus Supplement, if required, will be distributed that
will set forth the name and names of any underwriters, dealers or agents and any
discounts, commissions and other terms constituting compensation from the
Selling Shareholders and any other required information.
The sale of Redemption Shares by the Selling Shareholders may also be
effected from time to time by selling Redemption Shares directly to purchasers
or to or through broker-dealers. In connection with any such sale, any such
broker-dealer may act as agent for the Selling Shareholders or may purchase from
the Selling Shareholders all or a portion of the Redemption Shares as principal,
and may be made pursuant to any of the methods described below. Such sales may
be made on the NYSE or other exchanges on which the Common Shares are then
traded, in the over-the-counter market, in negotiated transactions or otherwise
at prices and at terms then prevailing or at prices related to the then-current
market prices or at prices otherwise negotiated.
The Redemption Shares may also be sold in one or more of the following
transactions: (a) block transactions (which may involve crosses) in which a
broker-dealer may sell all or a portion of such shares as agent but may position
and resell all or a portion of the block as principal to facilitate the
transaction; (b) purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to a Prospectus Supplement; (c)
a special offering, an exchange distribution or a secondary distribution in
accordance with applicable NYSE or other stock exchange rules; (d) ordinary
brokerage transactions and transactions in which any such broker-dealer solicits
purchasers; (e) sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such shares; and (f)
sales in other ways not involving market makers or established trading markets,
including direct sales to purchasers. In effecting sales, broker-dealers engaged
by the Selling Shareholders may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions or other compensation from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale that will
not exceed those customary in the types of transactions involved. Broker-dealers
may also receive compensation from purchasers of the Redemption Shares which is
not expected to exceed that customary in the types of transactions involved.
17
<PAGE> 20
In order to comply with the securities laws of certain states, if
applicable, the Redemption Shares may be sold only through registered or
licensed brokers or dealers. In addition, in certain states, Redemption Shares
may not be sold unless they have been registered or qualified for sale in such
state or an exemption from such registration or qualification requirement is
available and is complied with.
All expenses incident to the offering and sale of the Redemption Shares,
other than commissions, discounts and fees of underwriters, broker-dealers or
agents, shall be paid by the Company. The Company has agreed to indemnify the
Selling Shareholders against certain losses, claims, damages, actions,
liabilities, costs and expenses, including liabilities under the Securities Act.
See "Registration Rights."
EXPERTS
The financial statements and schedules incorporated by reference in this
Prospectus and the Registration Statement of which this Prospectus is a part
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
LEGAL MATTERS
The validity of the Common Shares offered hereby are being passed upon
for the Company by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
18
<PAGE> 21
================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE COMMON SHARES IN ANY JURISDICTION WHERE, 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 THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------------
SUMMARY TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION ................................................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ....................... 2
PROSPECTUS SUMMARY .................................................... 3
RISK FACTORS .......................................................... 5
THE COMPANY ........................................................... 9
DESCRIPTION OF SECURITIES TO BE REGISTERED ............................ 10
REGISTRATION RIGHTS ................................................... 13
FEDERAL INCOME TAX CONSIDERATIONS ..................................... 13
THE SELLING SHAREHOLDERS .............................................. 15
USE OF PROCEEDS ....................................................... 17
PLAN OF DISTRIBUTION .................................................. 17
EXPERTS ............................................................... 18
LEGAL MATTERS ......................................................... 18
---------------------------
================================================================================
================================================================================
2,348,416
SHARES
GABLES RESIDENTIAL
TRUST
COMMON SHARES
OF BENEFICIAL INTEREST
(PAR VALUE $.01 PER SHARE)
---------------------------
PROSPECTUS
---------------------------
OCTOBER __, 1998
================================================================================
<PAGE> 22
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
Registration fee -- Securities and Exchange Commission $17,428
Accountants' fees and expenses................................ 5,000
Blue Sky fees and expenses.................................... 1,500
Legal fees and expenses (other than Blue Sky)................. 7,500
Printing expenses............................................. 2,000
Miscellaneous................................................. 1,500
TOTAL......................................................... $34,928
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by the Company.
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
The Company's Declaration of Trust and the Operating Partnership's
agreement of limited partnership, as amended, provide certain limitations on the
liability of the Company's trustees and officers for monetary damages to the
Company. The Declaration of Trust and the Bylaws obligate the Company to
indemnify its trustees and officers, and permit the Company to indemnify its
employees and other agents, against certain liabilities incurred in connection
with their service in such capacities. These provisions could reduce the legal
remedies available to the Company and the shareholders against these
individuals.
The Company's Bylaws require it to indemnify, to the full extent of
Maryland law, any present or former trustee or officer (and such person's spouse
and children) (an "Indemnitee") who is or was a party or threatened to be made a
party to any proceeding by reason of his or her service in that capacity,
against all expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by him or her in connection with the proceeding,
provided that the Company shall have received a written affirmation by the
Indemnitee that he or she has met the standard of conduct necessary for
indemnification by the Company as authorized by the Bylaws. The Company shall
not be required to indemnify an Indemnitee if (a) it is established that (i) the
Indemnitee's act or omission was committed in bad faith or was the result of
active or deliberate dishonesty, (ii) the Indemnitee actually received an
improper personal benefit in money, property or services or (iii) in the case of
a criminal proceeding, the Indemnitee had reasonable cause to believe that the
Indemnitee's act or omission was unlawful, (b) the proceeding was initiated by
the Indemnitee, (c) the Indemnitee received payment for such expenses pursuant
to insurance or otherwise or (d) the proceeding arises under Section 16 of the
Exchange Act. Pursuant to the Bylaws, the Indemnitee is required to repay the
amount paid or reimbursed by the Company if it shall ultimately be determined
that the standard of conduct was not met. The Company's Bylaws permit the
Company to provide such other and further indemnification or payment or
reimbursement of expenses as may be permitted by the MGCL or to which the
Indemnitee may be entitled. The Bylaws of Gables GP, Inc., a Texas corporation
and wholly-owned subsidiary of the Company and the general partner of the
Operating Partnership ("GGPI"), contain similar provisions that are consistent
with Texas law.
Each of the Company's executive officers and trustees (the
"Indemnitees") has entered into an indemnification agreement with the Company,
the Operating Partnership and GGPI (the "Indemnitors"). The indemnification
agreements require, among other matters, that the Indemnitors indemnify the
Indemnitees to the fullest extent permitted by law and advance to the
Indemnitees 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 the Indemnitees seeking to
enforce their rights under the indemnification agreements and cover the
Indemnitees under the Company's trustees' and officers' liability insurance.
Although the form of indemnification agreement offers substantially the same
scope of coverage afforded by law, it provides assurance to the trustees and
executive officers that indemnification will be available because such
II-1
<PAGE> 23
contracts cannot be modified unilaterally in the future by the Board of Trustees
or the shareholders to eliminate the rights they provide.
The Registration Rights Agreement between the Company and the Selling
Shareholders provides for the indemnification of the Company, its officers,
trustees, and other persons for certain liabilities, including liabilities under
the Securities Act.
ITEM 16. EXHIBITS.
4.1 Amended and Restated Declaration of Trust of the Company (incorporated
herein by reference to the Company's Registration Statement on Form S-11
(File No. 33-70570), as amended).
4.2 Articles Supplementary to the Company's Amended and Restated Declaration
of Trust creating a series of preferred shares of beneficial interest,
par value $.01 per share, called the 8.30% Series A Cumulative
Redeemable Preferred Shares (incorporated herein by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K dated July 24, 1997
(File No. 1-12590)).
4.3 Articles of Amendment to the Company's Amended and Restated Declaration
of Trust (incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998 (File No.
1-12590)).
4.4 Articles Supplementary to the Company's Amended and Restated Declaration
of Trust creating a series of preferred shares of beneficial interest,
par value $.01 per share, called the 5.00% Series Z Cumulative
Redeemable Preferred Shares (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998 (File No. 1-12590)).
4.5 Second Amended and Restated Bylaws of the Company (incorporated herein
by reference to Exhibit 3.1 to the Company's Registration Statement on
Form 8-A/A-2 (File No. 1-12590)).
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities and interests being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Goodwin Procter & Hoar LLP (included as part of Exhibits 5.1
and 8.1).
24.1 Power of Attorney (included on the signature page hereof).
99.1 Registration Rights Agreement dated April 1, 1998.
99.2 Third Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (incorporated herein by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (File No. 1-12590)).
ITEM 17. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made pursuant to this Registration Statement, 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
II-2
<PAGE> 24
the aggregate, represent a fundamental change in the information set
forth in this Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) 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 Company pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this 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 Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered 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 trustees, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a trustee, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Company 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.
II-3
<PAGE> 25
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 Atlanta, State of Georgia on September 28, 1998.
GABLES RESIDENTIAL TRUST
By: /s/ Marcus E. Bromley
------------------------------------
Marcus E. Bromley
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Gables Residential Trust hereby severally constitute Marcus E.
Bromley and John T. Rippel, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement filed
herewith and any and all amendments to said Registration Statement, and
generally to do all such things in our names and in our capacities as officers
and directors to enable Gables Residential Trust to comply with the provisions
of the Securities Act of 1933 and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Marcus E. Bromley Chairman of the Board of Trustees September 28, 1998
- ----------------------------- and Chief Executive Officer
Marcus E. Bromley (Principal Executive Officer)
/s/ Marvin R. Banks, Jr. Chief Financial Officer (Principal Financial September 28, 1998
- ----------------------------- Officer and Principal Accounting Officer)
Marvin R. Banks, Jr.
/s/ John T. Rippel President, Chief Operating Officer September 28, 1998
- ----------------------------- and Trustee
John T. Rippel
/s/ Chris D. Wheeler Senior Vice President September 28, 1998
- ----------------------------- and Trustee
Chris D. Wheeler
Trustee September 28, 1998
- -----------------------------
David M. Holland
/s/ Lauralee E. Martin Trustee September 28, 1998
- -----------------------------
Lauralee E. Martin
/s/ John W. McIntyre Trustee September 28, 1998
- -----------------------------
John W. McIntyre
/s/ D. Raymond Riddle Trustee September 28, 1998
- -----------------------------
D. Raymond Riddle
</TABLE>
II-4
<PAGE> 26
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Amended and Restated Declaration of Trust of the Company
(incorporated herein by reference to the Company's Registration
Statement on Form S-11 (File No. 33-70570), as amended).
4.2 Articles Supplementary to the Company's Amended and Restated
Declaration of Trust creating a series of preferred shares of
beneficial interest, par value $.01 per share, called the 8.30%
Series A Cumulative Redeemable Preferred Shares (incorporated
herein by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated July 24, 1997 (File No. 1-12590)).
4.3 Articles of Amendment to the Company's Amended and Restated
Declaration of Trust (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (File No. 1-12590)).
4.4 Articles Supplementary to the Company's Amended and Restated
Declaration of Trust creating a series of preferred shares of
beneficial interest, par value $.01 per share, called the 5.00%
Series Z Cumulative Redeemable Preferred Shares (incorporated
herein by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998 (File No. 1-12590)).
4.5 Second Amended and Restated Bylaws of the Company (incorporated
herein by reference to Exhibit 3.1 to the Company's Registration
Statement on Form 8-A/A-2 (File No. 1-12590)).
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities and interests being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax
matters.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Goodwin Procter & Hoar LLP (included as part of
Exhibits 5.1 and 8.1).
24.1 Power of Attorney (included on the signature page hereof).
99.1 Registration Rights Agreement dated April 1, 1998.
99.2 Third Amended and Restated Agreement of Limited Partnership of
the Operating Partnership (incorporated herein by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 (File No. 1-12590)).
II-5
<PAGE> 1
Exhibit 5.1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 523-1231
September 29, 1998
Gables Residential Trust
2859 Paces Ferry Road
Atlanta, Georgia 30339
Ladies and Gentlemen:
This opinion is furnished in connection with the registration on Form
S-3 (the "Registration Statement") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), of 2,348,416 common shares of beneficial
interest, par value $.01 per share (the "Redemption Shares"), of Gables
Residential Trust, a Maryland real estate investment trust (the "Company"). The
Redemption Shares may be issued by the Company if and to the extent that certain
holders (the "Selling Shareholders") of units of limited partnership ("Units")
in Gables Realty Limited Partnership (the "Operating Partnership") tender such
Units to the Operating Partnership for redemption and the Company exercises its
contractual right to acquire such tendered Units for Redemption Shares.
In connection with rendering this opinion, we have examined the Amended
and Restated Declaration of Trust and Second Amended and Restated Bylaws of the
Company, each as amended to date; such records of the corporate proceedings of
the Company as we deemed material; and such other certificates, receipts,
records and documents as we considered necessary for the purposes of this
opinion. In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as certified, photostatic or facsimile copies, the authenticity
of the originals of such copies and the authenticity of telephonic confirmations
of public officials and others. As to facts material to our opinion, we have
relied upon certificates or telephonic confirmations of public officials and
certificates, documents, statements and other information of the Company or
representatives or officers thereof.
We are attorneys admitted to practice in The Commonwealth of
Massachusetts. We express no opinion concerning the laws of any jurisdictions
other than the laws of the United States of America and The Commonwealth of
Massachusetts and the Maryland General Corporation Law.
<PAGE> 2
GOODWIN, PROCTER & HOAR LLP
Gables Residential Trust
September 29, 1998
Page 2
Based upon the foregoing, we are of the opinion that when the
Redemption Shares being registered for the account of the Selling Shareholders
have been duly issued and exchanged for Units tendered to the Operating
Partnership for redemption by the Selling Shareholders as contemplated by the
Registration Statement, such Redemption Shares will be validly issued, fully
paid and nonassessable.
The foregoing assumes that all requisite steps were taken to comply
with the requirements of the Securities Act and applicable requirements of state
laws regulating the offer and sale of securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us with respect to this opinion
under the heading "Legal Matters" in the Prospectus which is a part of such
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
Exhibit 8.1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 523-1231
September 29, 1998
Gables Residential Trust
2859 Paces Ferry Road
Atlanta, Georgia 30339
Ladies and Gentlemen:
This opinion is furnished in our capacity as counsel to Gables
Residential Trust, a Maryland real estate investment trust (the "Company"), in
connection with the registration of 2,348,416 common shares of beneficial
interest, par value $.01 per share, pursuant to the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission. This opinion relates to the Company's qualification for
federal income tax purposes as a real estate investment trust (a "REIT") within
the meaning of Sections 856-860 of the Internal Revenue Code of 1986, as amended
(the "Code").
In rendering the following opinion, we have examined the Amended and
Restated Declaration of Trust and Second Amended and Restated Bylaws of the
Company, and such other records, certificates and documents as we have deemed
necessary or appropriate for purposes of rendering the opinion set forth herein.
We have reviewed the Registration Statement and the descriptions set
forth therein of the Company and its investments and activities. We have relied
upon the representations of the Company and its affiliates and certain officers
thereof (including, without limitation, representations contained in a
representation letter dated as of this date) regarding the manner in which the
Company has been and will continue to be owned and operated. We have neither
independently investigated nor verified such representations, and we assume that
such representations are true, correct and complete and that all representations
made "to the best of the knowledge and belief" of any person(s) or party(ies) or
with similar qualification are and will be true, correct and complete as if made
without such qualification. We assume that the Company has been and will be
operated in accordance with applicable laws and the terms and conditions of
applicable documents and that the descriptions of the Company and its
investments and the proposed investments, activities, operations and governance
of the Company set forth in the Registration Statement and all prior
registration statements filed with the Securities and Exchange Commission
continue to be true. In addition, we have relied on
<PAGE> 2
GOODWIN, PROCTER & HOAR LLP
Gables Residential Trust
September 29, 1998
Page 2
certain additional facts and assumptions described below. Capitalized terms not
otherwise defined herein shall have the meaning ascribed to such terms in the
Registration Statement.
In rendering the opinion set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us, and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. We also
have assumed, without investigation, that all documents, certificates,
warranties and covenants on which we have relied in rendering the opinion set
forth below and that were given or dated earlier than the date of this letter
continue to remain accurate, insofar as relevant to the opinion set forth
herein, from such earlier date through and including the date of this letter.
The discussion and conclusions set forth below are based upon the Code,
the Income Tax Regulations and Procedure and Administration Regulations
promulgated thereunder and existing administrative and judicial interpretations
thereof, all of which are subject to change. No assurance can therefore be given
that the federal income tax consequences described below will not be altered in
the future.
Based upon and subject to the foregoing, and provided that the Company
continues to meet the applicable asset composition, source of income,
shareholder diversification, distribution, recordkeeping and other requirements
of the Code necessary for a corporation to qualify as a REIT, we are of the
opinion that commencing with the Company's first taxable year ended December 31,
1994, the Company has been organized in conformity with the requirements for
qualification as a REIT under the Code, and the Company's method of operation,
as described in the representations referred to above, will enable it to
continue to meet the requirements for qualification and taxation as a REIT under
the Code.
<PAGE> 3
GOODWIN, PROCTER & HOAR LLP
Gables Residential Trust
September 29, 1998
Page 3
We express no opinions other than those expressly set forth herein. You
should recognize that our opinion is not binding on the IRS and that the IRS may
disagree with the opinion contained herein. Although we believe that our opinion
will be sustained if challenged, there can be no assurance that this will be the
case. The opinion expressed herein is based upon the law as it currently exists.
Consequently, future changes in the law may cause the federal income tax
treatment of the transactions described herein to be materially and adversely
different from that described above.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 6, 1998
included in Gables Residential Trust's (the "Company") Annual Report on Form
10-K for the year ended December 31, 1997, and our report dated May 15, 1998
included in the Company's Current Report on Form 8-K dated April 1, 1998, as
amended, and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 25, 1998
<PAGE> 1
Exhibit 99.1
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
This Registration Rights and Lock-Up Agreement (this "AGREEMENT") is
entered into as of April 1, 1998 by and between Gables Residential Trust, a
Maryland real estate investment trust (the "COMPANY"), and each of the persons
who are signatories hereto (each, a "HOLDER" and collectively, the "HOLDERS").
WHEREAS, each Holder is to receive the number of units (the "ACQUIRED
UNITS") of limited partnership interest ("UNITS") in Gables Realty Limited
Partnership, a Delaware limited partnership (the "OPERATING PARTNERSHIP"), set
forth next to such Holder's name on SCHEDULE A hereto, issued without
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in connection with the contribution to the Operating Partnership of
certain property pursuant to that certain Contribution Agreement, dated as of
March 16, 1998, by and among the Company, the Operating Partnership, and certain
other persons listed on the signature pages thereto (the "CONTRIBUTION
AGREEMENT");
WHEREAS, under the Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of July 24, 1997, holders of
Units may present such Units to the Operating Partnership for redemption, and
any Units so presented will be acquired by the Company, at the Company's option,
for cash or common shares of beneficial interest, par value $.01 per share
("COMMON SHARES"), of the Company;
WHEREAS, it is a condition precedent to the closing of the Contribution
Agreement that the Company provide the Holders with the registration rights set
forth in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, in addition to the other terms defined
herein, the following capitalized defined terms shall have the following
meanings:
"NASD" shall mean the National Association of Securities Dealers, Inc.
"PERSON" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government or agency or political subdivision
thereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement, and by
all other amendments and supplements to such prospectus,
<PAGE> 2
including post-effective amendments, and in each case including all material
incorporated by reference therein.
"REGISTRABLE SHARES" shall mean the Shares, excluding (i) Shares for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement, (ii) Shares sold pursuant to Rule 144 under the
Securities Act or (iii) Shares eligible for sale pursuant to Rule 144(k) under
the Securities Act. All references in this Agreement to Rule 144 and subsections
thereof shall refer to corresponding provisions of future law.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Shares and
the preparation of a Blue Sky Memorandum) and compliance with the rules of the
NASD; (iii) all expenses of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Shares on any
securities exchange or exchanges pursuant to Section 5 hereof; and (v) the fees
and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance and compliance.
Registration Expenses shall specifically exclude underwriting discounts and
commissions relating to the sale or disposition of Registrable Shares by a
selling Holder, the fees and disbursements of counsel representing a selling
Holder, and transfer taxes, if any, relating to the sale or disposition of
Registrable Shares by a selling Holder, all of which shall be borne by such
Holder in all cases.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers the resale of any of the Registrable Shares on an appropriate form, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"SHARES" shall mean any Common Shares issued or to be issued to the
Holders by the Company upon acquisition by the Company of any Acquired Units
presented to the Operating Partnership for redemption.
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<PAGE> 3
2. LOCK-UP AGREEMENT. Each Holder hereby agrees that for one (1)
year from the date hereof, without the prior written consent of the Company, it
will not offer, pledge, sell, contract to sell, grant any options for the sale
of, seek the redemption of or otherwise transfer of dispose of, directly or
indirectly, any Acquired Units (the "LOCK-UP PERIOD").
3. REGISTRATION.
(a) FILING OF SHELF REGISTRATION STATEMENT. Subject to the
conditions set forth in this Agreement, within six (6) months of the date
hereof, the Company shall cause to be filed a Registration Statement under Rule
415 under the Securities Act relating to the sale by the Holders of all of the
Registrable Shares in accordance with the terms hereof, and shall use its
commercially reasonable efforts to cause such Registration Statement to be
declared effective by the SEC by the expiration of the Lock-up Period. The
Company agrees to use its commercially reasonable efforts to keep the
Registration Statement continuously effective until the earliest of (a) the date
on which the Holders no longer hold any Registrable Shares or (b) the date on
which all of the Registrable Shares held or subsequently acquired by the Holders
have become eligible for sale pursuant to Rule 144(k) promulgated under the
Securities Act and the Company has delivered to each such Holder an opinion of
counsel to such effect (hereinafter referred to as the "SHELF REGISTRATION
EXPIRATION DATE").
(b) DEMAND REGISTRATION. Subject to the conditions set forth in
this Agreement, at any time after the Shelf Registration Expiration Date and
while any Registrable Shares are outstanding, the Company shall, at the written
request of any Holder who is unable to sell its Registrable Shares pursuant to
Rule 144(k) under the Securities Act, cause to be filed as soon as practicable
after the date of such request by such Holder a Registration Statement under
Rule 415 under the Securities Act relating to the sale by the Holder of all of
the Registrable Shares held by such Holder in accordance with the terms hereof,
and shall use its commercially reasonable efforts to cause such Registration
Statement to be declared effective by the SEC as soon as practicable thereafter.
The Company may, in its sole discretion, elect to file the Registration
Statement before receipt of notice from any Holder. The Company agrees to use
its commercially reasonable efforts to keep the Registration Statement
continuously effective thereafter until the date on which such Holder no longer
holds any Registrable Shares.
(c) PIGGYBACK REGISTRATION. If at any time after the Shelf
Registration Expiration Date and while any Registrable Shares are outstanding
and a Registration Statement applicable to Holders under Sections 3(a) or 3(b)
is not effective, the Company (in its sole discretion and without any obligation
to do so) proposes to file a registration statement under the Securities Act
with respect to an offering solely of Common Shares solely for cash (other than
a registration statement (i) on Form S-8 or any successor form to such Form or
in connection with any employee or director welfare, benefit or compensation
plan, (ii) on Form S-4 or any successor form to such Form or in connection with
an exchange offer, (iii) in connection with a rights offering exclusively to
existing holders of Common Shares, (iv) in connection with an offering solely to
employees of the Company or its subsidiaries, or (v) relating to a transaction
3
<PAGE> 4
pursuant to Rule 145 of the Securities Act), whether or not for its own account,
the Company shall give prompt written notice of such proposed filing to the
Holders. The notice referred to in the preceding sentence shall offer Holders
the opportunity to register such amount of Registrable Shares as each Holder may
request (a "PIGGYBACK REGISTRATION"). Subject to the provisions of Section 4
below, the Company shall include in such Piggyback Registration, in the
registration and qualification for sale under the blue sky or securities laws of
the various states and in any underwriting in connection therewith, all
Registrable Shares for which the Company has received written requests for
inclusion therein within fifteen (15) calendar days after the notice referred to
above has been given by the Company to the Holders. Holders of Registrable
Shares shall be permitted to withdraw all or part of the Registrable Shares from
a Piggyback Registration at any time prior to the effective date of such
Piggyback Registration. If a Piggyback Registration is an underwritten primary
registration on behalf of the Company and the managing underwriter advises the
Company that the total number of Common Shares requested to be included in such
registration exceeds the number of Common Shares that can be sold in such
offering without impairing the pricing or other commercial practicality of such
offering, the Company will include in such registration in the following
priority: (i) first, all Common Shares the Company proposes to sell, (ii)
second, up to the full number of applicable Common Shares requested to be
included in such registration by holders of Common Shares with prior or superior
piggyback registration rights and (iii) third, up to the full number of
applicable Registrable Shares and Common Shares requested to be included in such
registration by any Holders and other holders of Common Shares with piggyback
registration rights of similar priority which, in the opinion of such managing
underwriter, can be sold without adversely affecting the price range or
probability of success of such offering (with the number of such Registrable
Shares and other Common Shares of each Holder and such other holders,
respectively, to be included in the Piggyback Registration to be allocated pro
rata among the Holders and such other holders on the basis of the total number
of shares requested to be included in such registration by all such Holders of
Registrable Shares and such other holders of Common Shares).
(d) NOTIFICATION AND DISTRIBUTION OF MATERIALS. The Company shall
notify each Holder of the effectiveness of any Registration Statement applicable
to the Shares of such Holder and shall furnish to each such Holder such number
of copies of the Registration Statement (including any amendments, supplements
and exhibits), the Prospectus contained therein (including each preliminary
prospectus and all related amendments and supplements) and any documents
incorporated by reference in the Registration Statement or such other documents
as such Holder may reasonably request in order to facilitate its sale of the
Registrable Shares in the manner described in the Registration Statement.
(e) AMENDMENTS AND SUPPLEMENTS. The Company shall prepare and file
with the SEC from time to time such amendments and supplements to the
Registration Statement and Prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all the
Registrable Shares until the earlier of (a) such time as all of the
4
<PAGE> 5
Registrable Shares have been disposed of in accordance with the intended methods
of disposition by the Holders as set forth in the Registration Statement or (b)
the date on which the Registration Statement ceases to be effective in
accordance with the terms of this Section 3. Upon five (5) business days'
notice, the Company shall file any supplement or post-effective amendment to the
Registration Statement with respect to the plan of distribution or such Holder's
ownership interests in Registrable Shares that is reasonably necessary to permit
the sale of the Holder's Registrable Shares pursuant to the Registration
Statement. The Company shall file any necessary listing applications or
amendments to the existing applications to cause the Shares registered under any
Registration Statement to be then listed or quoted on the primary exchange or
quotation system on which the Common Shares are then listed or quoted.
(f) NOTICE OF SEC FILINGS, ETC. The Company shall promptly notify
each Holder of, and confirm in writing, the filing of the Registration Statement
applicable to the Shares of such Holder or any Prospectus, amendment or
supplement related thereto or any post-effective amendment to such Registration
Statement and the effectiveness of any post-effective amendment.
(g) NOTICE OF CERTAIN OTHER EVENTS. At any time when a Prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act by a Holder to a transferee, the Company shall immediately notify
each Holder of the happening of any event as a result of which the Prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In such event, the
Company shall promptly prepare and furnish to each Holder a reasonable number of
copies of a supplement to or an amendment of such Prospectus as may be necessary
so that, as thereafter delivered to the purchasers of Registrable Shares, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Company will, if necessary, amend the Registration Statement of
which such Prospectus is a part to reflect such amendment or supplement.
4. STATE SECURITIES LAWS. Subject to the conditions set forth in
this Agreement, the Company shall, in connection with the filing of any
Registration Statement hereunder, file such documents as may be necessary to
register or qualify the Registrable Shares under the securities or "Blue Sky"
laws of such states as any Holder may reasonably request, and the Company shall
use its best efforts to cause such filings to become effective; PROVIDED,
HOWEVER, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such state in which it is not
then qualified or to file any general consent to service of process in any such
state. Once effective, the Company shall use its best efforts to keep such
filings effective until the earlier of (a) such time as all of the Registrable
Shares have been disposed of in accordance with the intended methods of
disposition by the Holder as set forth in the Registration Statement, (b) in the
case of a particular state, a Holder
5
<PAGE> 6
has notified the Company that it no longer requires an effective filing in such
state in accordance with its original request for filing or (c) the date on
which the Registration Statement ceases to be effective. The Company shall
promptly notify each Holder of, and confirm in writing, the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Shares for sale under the securities or "Blue Sky" laws of
any jurisdiction or the initiation or threat of any proceeding for such purpose.
5. EXPENSES. The Company shall bear all Registration Expenses
incurred in connection with the registration of the Registrable Shares pursuant
to this Agreement, except that each Holder shall be responsible for any
brokerage or underwriting commissions and taxes of any kind (including, without
limitation, transfer taxes) with respect to any disposition, sale or transfer of
Registrable Shares sold by it and for any legal, accounting and other expenses
incurred by it.
6. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify each of the Holders and their respective officers, directors,
employees, agents, representatives and affiliates, and each person or entity, if
any, that controls a Holder within the meaning of the Securities Act, and each
other person or entity, if any, subject to liability because of his, her or its
connection with a Holder, and any underwriter and any person who controls the
underwriter within the meaning of the Securities Act (each an "INDEMNITEE")
against any and all losses, claims, damages, actions, liabilities, costs and
expenses (including without limitation reasonable fees, expenses and
disbursements of attorneys and other professionals), joint or several, arising
out of or based upon any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any Registration
Statement or Prospectus, or upon any untrue or alleged untrue statement of
material fact contained in the Registration Statement or any Prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, THAT the
Company shall not be liable to such Indemnitee or any person who participates as
an underwriter in the offering or sale of Registrable Shares or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement or in any such
Prospectus in reliance upon and in conformity with information regarding such
Indemnitee or its plan of distribution or ownership interests which was
furnished to the Company for use in connection with the Registration Statement
or the Prospectus contained therein by such Indemnitee or (ii) such Holder's
failure to send or give a copy of the final, amended or supplemented prospectus
furnished to the Holder by the Company at or prior to the time such action is
required by the Securities Act to the person claiming an untrue statement or
alleged untrue statement or omission or alleged omission if such statement or
omission was corrected in such final, amended or supplemented prospectus.
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<PAGE> 7
7. COVENANTS OF HOLDERS. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver or cause delivery of the Prospectus contained in the Registration
Statement to any purchaser of the shares covered by such Registration Statement
from the Holder and (c) to indemnify the Company, its officers, directors,
employees, agents, representatives and affiliates, and each person, if any, who
controls the Company within the meaning of the Securities Act, and each other
person, if any, subject to liability because of his connection with the Company,
against any and all losses, claims, damages, actions, liabilities, costs and
expenses arising out of or based upon (i) any untrue statement or alleged untrue
statement of material fact contained in either such Registration Statement or
the Prospectus contained therein, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, if and to the extent that such statement or omission occurs from
reliance upon and in conformity with written information regarding the Holder,
its plan of distribution or its ownership interests, which was furnished to the
Company by the Holder for use therein unless such statement or omission was
corrected in writing to the Company not less than two (2) business days prior to
the date of the final prospectus (as supplemented or amended, as the case may
be) or (ii) the failure by the Holder to deliver or cause to be delivered the
Prospectus contained in such Registration Statement (as amended or supplemented,
if applicable) furnished by the Company to the Holder to any purchaser of the
shares covered by such Registration Statement from the Holder through no fault
of the Company.
8. SUSPENSION OF REGISTRATION REQUIREMENT.
(a) The Company shall promptly notify each Holder of, and confirm
in writing, the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement with respect to such Holder's
Registrable Shares or the initiation of any proceedings for that purpose. The
Company shall use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such a Registration Statement at the earliest
possible moment.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use its best efforts
to cause the Registration Statement and any filings with any state securities
commission to become effective or to amend or supplement the Registration
Statement shall be suspended in the event and during such period as unforeseen
circumstances exist (including without limitation (i) an underwritten primary
offering by the Company if the Company is advised by the underwriters that the
sale of Registrable Shares under the Registration Statement would impair the
pricing or other commercial practicality of the primary offering or (ii) pending
negotiations relating to, or consummation of, a transaction or the occurrence of
an event that would require additional
7
<PAGE> 8
disclosure of material information by the Company in the Registration Statement
or such filing, as to which the Company has a BONA FIDE business purpose for
preserving confidentiality or which renders the Company unable to comply with
SEC requirements) (such unforeseen circumstances being hereinafter referred to
as a "Suspension Event") that would make it impractical or unadvisable to cause
the Registration Statement or such filings to become effective or to amend or
supplement the Registration Statement, but such suspension shall continue only
for so long as such event or its effect is continuing but in no event will that
suspension exceed 90 days. The Company shall notify the Holders of the existence
and, in the case of circumstances referred to in clause (i) of this Section
8(b), nature of any Suspension Event.
(c) Each Holder of Registrable Shares agrees, if requested by the
Company in the case of a Company-initiated nonunderwritten offering or if
requested by the managing underwriter or underwriters in a Company-initiated
underwritten offering, not to effect any public sale or distribution of any of
the securities of the Company of any class included in a Registration Statement,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act
(except as part of such Company-initiated registration), during the 15-day
period prior to, and during the 60-day period beginning on, the date of
effectiveness of each Company-initiated offering made pursuant to the
registration statement relating to such Company-initiated offering, to the
extent timely notified in writing by the Company or the managing underwriters;
PROVIDED, HOWEVER, that such 60-day period shall be extended by the number of
days from and including the date of the giving of any notice pursuant to Section
3(f) or (g) hereof to and including the date when each seller of Registrable
Shares covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 3(g) hereof.
9. BLACK-OUT PERIOD. Each Holder agrees that, following the
effectiveness of any Registration Statement relating to the Registrable Shares
of such Holder, such Holder will not effect any sales of the Registrable Shares
pursuant to such Registration Statement or any filings with any state securities
commission at any time after such Holder has received notice from the Company to
suspend sales as a result of the occurrence or existence of any Suspension Event
or so that the Company may correct or update the Registration Statement or such
filing. The Holder may recommence effecting sales of the Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than five
(5) days after the conclusion of any such Suspension Event.
10. ADDITIONAL SHARES. The Company, at its option, may register,
under any Registration Statement and any filings with any state securities
commissions filed pursuant to this Agreement, any number of unissued Common
Shares of the Company or any Common Shares of the Company owned by any other
shareholder or shareholders of the Company.
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<PAGE> 9
11. CONTRIBUTION. If the indemnification provided for in
Sections 6 and 7 is unavailable to an indemnified party with respect to any
losses, claims, damages, actions, liabilities, costs or expenses referred to
therein or is insufficient to hold the indemnified party harmless as
contemplated therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, actions,
liabilities, costs or expenses in such proportion as is appropriate to reflect
the relative fault of the Company, on the one hand, and the Indemnitee, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, actions, liabilities, costs or expenses as well as
any other relevant equitable considerations. The relative fault of the Company,
on the one hand, and of the Indemnitee, on the other hand, shall be determined
by reference to, among other factors, whether the untrue or alleged untrue
statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the Indemnitee and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; PROVIDED, HOWEVER, that in no event shall
the obligation of any indemnifying party to contribute under this Section 11
exceed the amount that such indemnifying party would have been obligated to pay
by way of indemnification if the indemnification provided for under Sections 6
or 7 hereof had been available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by PRO
RATA allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 11, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.
12. NO OTHER OBLIGATION TO REGISTER. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act.
13. AMENDMENTS AND WAIVERS. The provisions of this Agreement may
not be amended, modified, or supplemented or waived without the prior written
consent of the Company and Holders holding in excess of two-thirds of the
aggregate of all Registrable Shares then outstanding. Notwithstanding the
foregoing, the Company may amend SCHEDULE A hereto without the consent of
Holders to reflect (i) a transfer of Acquired Units or Registrable
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<PAGE> 10
Shares to a substitute or additional Holder in accordance with the terms hereof;
or (ii) a reduction in the number of Registrable Shares then held by the
Holders.
14. NOTICES. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the respective parties at
the following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof), and further provided that in case of
directions to amend the Registration Statement pursuant to Section 3(e) or
Section 7, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt:
If to the Company: Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attn: Marcus E. Bromley
Telecopy: (770) 438-5559
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Gilbert G. Menna, P.C.
Telecopy: (617) 523-1231
If to the Holders: As listed on the applicable Holder
Signature Page
In addition to the manner of notice permitted above, notices given pursuant to
Sections 3, 8 and 9 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement and the rights granted hereunder may not be assigned by
any Holder; provided, however, that a Holder may assign its rights and
obligations hereunder, following at least ten (10) days prior written notice to
the Company, to a permitted transferee in connection with a transfer of Units in
accordance with the terms of the Partnership Agreement, if such transferee
agrees in writing to be bound by all of the provisions hereof. Any attempted
assignment hereof by any Holder that is not in accordance with the foregoing
will be void and of no effect and shall terminate all obligations of the Company
hereunder.
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<PAGE> 11
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland applicable to
contracts made and to be performed wholly within said State.
18. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
19. ENTIRE AGREEMENT. This Agreement is intended by the parties as
a final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
-------------------------------
Name: Marvin R. Banks, Jr.
Title: Senior Vice President
[SIGNATURES OF HOLDERS]
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<PAGE> 13
SCHEDULE A (as amended)
List of Holders and Acquired Units
<TABLE>
<CAPTION>
HOLDERS ADDRESS FOR NOTICE NUMBER OF ACQUIRED UNITS
------- ------------------ ------------------------
<S> <C> <C>
1. James J. Billik 15702 Acorn Circle 7,158
Tavares, FL 32778
2. Clifford A. Breining Trammell Crow Residential 25,445
P.O. Box 9540
6552 Via Dos Valles
Rancho Santa Fe, CA 92067
3. Brad D. Bryant Gables Residential Trust 72,864
6551 Park of Commerce Blvd.
Suite 100
Boca Raton, FL 33487
4. CFP Residential, L.P. c/o Sarah Puckett 372,763
2001 Ross Avenue, Suite 3200
Dallas, TX 75201
5. Ann Cash Gables Residential Trust 24,316
6551 Park of Commerce Blvd.
Suite 100
Boca Raton, FL 33487
6. Harlan R. Crow Crow Family Holdings 459
2001 Ross Avenue, Suite 3200
Dallas, TX 75201
7. Crow Residential Realty c/o Sarah Puckett 49,665
Investors, L.P. 2001 Ross Avenue, Suite 3200
Dallas, TX 75201
8. Trammell S. Crow Crow Family Holdings 680
2001 Ross Avenue, Suite 3200
Dallas, TX 75201
9. Joseph B. Fraser III 51 Myrtle Island 1,080
Bluffton, SC 29910
</TABLE>
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<PAGE> 14
<TABLE>
<S> <C> <C>
10. Terence C. Golden Host Marriott Corporation 16,688
10400 Fernwood Road
Bethesda, MD 20817
11. Michael M. Hefley Gables Residential Trust 98,714
6551 Park of Commerce Blvd.
Suite 100
Boca Raton, FL 33487
12. Greg W. Iglehart Gables Residential Trust 230,000
6551 Park of Commerce Blvd.
Suite 100
Boca Raton, FL 33487
13. JRT Holdings, Inc. c/o J. Ronald Terwilliger 27,223
Trammell Crow Residential
2859 Paces Ferry Road
Suite 1400
Atlanta, GA 30339
14. J. Ronald Terwilliger c/o J. Ronald Terwilliger, Trustee 49,665
Trammell Crow Residential
2859 Paces Ferry Road
Suite 1400
Atlanta, GA 30339
15. William C. MacDonald Trammell Crow Residential 52,433
6010 Executive Blvd., Suite 200
Rockville, MD 20852
16. Snowden Marshall 5153 NW 30th Court 2,671
Margate, FL 33063
17. Randy J. Price Trammell Crow Residential 56,671
717 N. Harwood, Suite 1200
Lock Box 128
Dallas, TX 75201
18. RCS Development Corp. c/o Robert C. Speicher 31,804
The Castle Group
675 Mariners Island Blvd.
Suite 109
San Mateo, CA 94404
</TABLE>
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<PAGE> 15
<TABLE>
<S> <C> <C>
19. Bettina Scherer Gables Residential Trust 22,228
6551 Park of Commerce Blvd.
Suite 100
Boca Raton, FL 33487
20. Christopher Smiles Gables Residential Trust 24,043
6551 Park of Commerce Blvd.
Suite 100
Boca Raton, FL 33487
21. Robert C. Speicher The Castle Group 131,650
675 Mariners Island Blvd.
Suite 109
San Mateo, CA 94404
22. TCF Residential c/o Sarah Puckett 140,266
Partnership, Ltd. 2001 Ross Avenue, Suite 3200
Dallas, TX 75201
23. J. Ronald Terwilliger Trammell Crow Residential 263,459
2859 Paces Ferry Road
Suite 1400
Atlanta, GA 30339
24. Patricia B. Terwilliger Trammell Crow Residential 192,300
2859 Paces Ferry Road
Suite 1400
Atlanta, GA 30339
25. Chris D. Wheeler Gables Residential Trust 454,171
6551 Park of Commerce Blvd.
Suite 100
Boca Raton, FL 33487
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