As filed with the Securities and Exchange Commission on December 20, 2000
Registration Statement No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
___________________________
GABLES RESIDENTIAL TRUST
(Exact name of Registrant as specified in its charter)
Maryland 58-2077868
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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)
Chris D. Wheeler
President and 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 public: From time to time
after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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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
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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.
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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.
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If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box.
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Amount to be Offering Price Per Aggregate Offering Amount of
Shares Being Registered Registered Share (1) Price (1) Registration Fee
----------------------- ------------ ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Common Shares of Beneficial
Interest, par value $.01 per Share 469,738 $27.25 $12,800,361 $3,379
<FN>
(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 December 18, 2000.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
Subject to Completion. Dated December 20, 2000.
Prospectus
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
469,738 Shares
GABLES RESIDENTIAL TRUST
Common Shares
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The selling shareholders identified in this prospectus, and any of their
pledgees, donees, transferees or other successors in interest, may offer to sell
up to an aggregate of 469,738 common shares of Gables Residential Trust. The
selling shareholders may only offer these shares for sale if they exercise their
right to tender their units of Gables Realty Limited Partnership, our operating
partnership, for cash, and we exercise our right to issue common shares to them
instead of cash. We will not receive any of the proceeds from the sale of the
shares by the selling shareholders, but we have agreed to bear the expenses of
registering such shares.
Our common shares are listed on the New York Stock Exchange under the
symbol GBP.
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Investing in our common shares involves risk. In considering whether to
invest, you should carefully consider the matters discussed under "Risk Factors"
beginning on page 4 of this prospectus.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL
YOU OTHERWISE.
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The date of this prospectus is December , 2000.
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<PAGE>
PROSPECTUS SUMMARY
This summary only highlights the more detailed information appearing
elsewhere in this prospectus or incorporated herein by reference. As this is a
summary, it may not contain all information that is important to you. You should
read this entire prospectus carefully before deciding whether to invest in our
common shares.
Unless the context otherwise requires, all references to "we," "us" or "our
company" in this prospectus refer collectively to Gables Residential Trust, a
Maryland real estate investment trust, and its subsidiaries, including Gables
Realty Limited Partnership, a Delaware limited partnership, and their respective
predecessor entities for the applicable periods, considered as a single
enterprise.
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GABLES RESIDENTIAL TRUST
* We are one of the largest owners, operators, developers and acquirors of
multifamily apartment communities in markets that have high job growth and
have shown resiliency to national economic downturns in the United States.
We have a strategic focus on the ownership of Class AA/A multifamily
apartment communities that are situated in urban locations or
master-planned communities near major employment centers in these regions.
* We obtain ownership in apartment communities by developing vacant land into
a new community or by acquiring an existing community which we sometimes
reposition or redevelop. In selecting sites for development, redevelopment
or acquisition, we focus on locations with close proximity to expanding
employment centers and convenience to recreation areas, entertainment,
shopping and dining. As a result, we believe that the communities we
currently own and the land parcels on which we have the right to develop
communities are attractive to the type of residents we seek.
* We are a real estate investment trust that was organized under the laws of
the State of Maryland in 1993 to continue and expand the operations of our
privately owned predecessor organization. We have elected to be taxed as a
real estate investment trust for federal income tax purposes and operate
principally through Gables Realty Limited Partnership, a Delaware limited
partnership. We are currently a 77.6% economic owner of the common equity
of Gables Realty Limited Partnership. We control Gables Realty Limited
Partnership through Gables GP, Inc., a Texas corporation and a wholly-owned
subsidiary, which is the sole general partner of Gables Realty Limited
Partnership.
* Our executive offices are located at 2859 Paces Ferry Road in Atlanta,
Georgia 30339 and our telephone number is (770) 436-4600.
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THE OFFERING
This prospectus relates to up to 469,738 common shares that may be offered
for sale by the selling shareholders if, and to the extent that, they tender
their common units of Gables Realty Limited Partnership for cash, and we
exercise our right to issue common shares to them instead of cash. Gables Realty
Limited Partnership issued these units to the selling shareholders on January 1,
2000 as deferred payment of a portion of the purchase price associated with our
April 1998 acquisition of the properties and operations of Trammell Crow
Residential South Florida. In connection with the issuance of these units, we
entered into a registration rights and lock-up agreement with the selling
shareholders, who are some of the former owners of Trammell Crow Residential
South Florida. Under the terms of that agreement, the selling shareholders may
not tender these units for redemption until after January 1, 2001. We are
registering the common shares covered by this prospectus in order to fulfill our
contractual obligations under the registration rights and lock-up agreement.
Registration of these shares does not necessarily mean that all or any portion
of such shares will be offered for sale by the selling shareholders.
Pursuant to the Fourth Amended and Restated Agreement of Limited
Partnership of Gables Realty Limited Partnership, unitholders may tender their
common units of Gables Realty Limited Partnership for cash equal to the value of
an equivalent number of our common shares. In lieu of delivering cash, however,
we may, at our option, choose to acquire any units so tendered by issuing common
shares in exchange for the units. The shares will be exchanged for units on a
one-for-one basis. This one-for-one exchange ratio may be adjusted to prevent
dilution.
We have agreed to bear the expenses of the registration of the common
shares under federal and state securities laws, but we will not receive any
proceeds from the sale of any common shares offered under this prospectus.
TAX STATUS OF GABLES RESIDENTIAL TRUST
We have elected to qualify as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code. As long as we qualify for taxation
as a real estate investment trust, we generally will not be subject to federal
income tax on that portion of our ordinary income and capital gains that is
currently distributed to our shareholders. Even if we qualify for taxation as a
real estate investment trust, we may be subject to state and local taxes on our
income and property and to federal income and excise taxes on our undistributed
income.
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RISK FACTORS
Before you invest in our common shares, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors together with all of the information included or incorporated
by reference in this prospectus before you decide to purchase our common shares.
This section includes or refers to certain forward-looking statements. You
should refer to the explanation of the qualifications and limitations on
forward-looking statements discussed on page 11.
DEVELOPMENT AND CONSTRUCTION RISKS COULD IMPACT OUR PROFITABILITY.
We intend to continue to develop and construct multifamily apartment home
communities. Our development and construction activities may be exposed to the
following risks:
* we may be unable to obtain, or face delays in obtaining, necessary zoning,
land-use, building, occupancy, and other required governmental permits and
authorizations, which could result in increased costs and could require us
to abandon our activities entirely with respect to the project for which we
are unable to obtain permits or authorizations;
* we may abandon development opportunities that we have already begun to
explore and as a result we may fail to recover expenses already incurred in
connection with exploring such development opportunities;
* we may incur construction costs for a community which exceed our original
estimates due to increased materials, labor or other costs, which could
make completion of the community uneconomical and we may not be able to
increase rents to compensate for the increase in construction costs;
* occupancy rates and rents at a newly completed development may fluctuate
depending on a number of factors, including market and economic conditions,
and may result in the community not being profitable;
* we may not be able to obtain financing with favorable terms for the
development of a community, which may make us unable to proceed with its
development; and
* we may be unable to complete construction and lease-up of a community on
schedule, resulting in increased debt service expense and construction or
reconstruction costs.
Construction costs have been increasing in our target markets, and the cost
to update acquired communities has, in some cases, exceeded our original
estimates. We may experience similar cost increases in the future. Our inability
to charge rents that will be sufficient to offset the effects of any increases
in reconstruction costs may impact our profitability.
ACQUISITIONS MAY NOT YIELD ANTICIPATED RESULTS.
We intend to continue to acquire multifamily apartment home communities on
a select basis. Our acquisition activities and their success may be exposed to
the following risks:
* the acquired property may fail to perform as we expected in analyzing our
investment; and
* our estimate of the costs of repositioning or redeveloping the acquired
property may prove inaccurate.
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POLICY OF LIMITING DEBT LEVEL MAY BE CHANGED.
While our current policy is not to incur debt that would make a ratio of
debt-to-total-market- capitalization greater than 60%, our Amended and Restated
Declaration of Trust, as amended, and Second Amended and Restated Bylaws, as
amended, do not contain any such limitations. Our ratio of debt to total market
capitalization as of September 30, 2000 was approximately 44.8%. Throughout this
prospectus we will refer to our Amended and Restated Declaration of Trust, as
amended, as our "declaration of trust" and to our Second Amended and Restated
Bylaws, as amended, as our "bylaws." Because we do not have any debt incurrence
restrictions in our declaration of trust or bylaws, we could increase the amount
of outstanding debt at any time. In the event that the price of our common
shares increases, we could incur additional debt without increasing the ratio of
debt to total market capitalization and without a concurrent increase in our
ability to service such additional debt.
INCURRENCE OF ADDITIONAL DEBT AND RELATED ISSUANCE OF EQUITY MAY BE DILUTIVE TO
SHAREHOLDERS.
Future issuance of equity may dilute the interest of existing shareholders.
To the extent that additional equity securities are issued to finance future
developments and acquisitions instead of incurring additional debt, the
interests of our existing shareholders could be diluted. Our ability to execute
our business strategy depends on our access to an appropriate blend of debt
financing, including unsecured lines of credit and other forms of secured and
unsecured debt, and equity financing, including common and preferred equity.
INSUFFICIENT CASH FLOW COULD AFFECT OUR DEBT FINANCING AND CREATE REFINANCING
RISK.
We are subject to the risks normally associated with debt financing,
including the risk that our cash flow will be insufficient to meet required
payments of principal and interest. We anticipate that only a small portion of
the principal of our debt will be repaid prior to maturity. Although we may be
able to use cash flow to make future principal payments, we cannot assure you
that sufficient cash flow will be available to make all required principal
payments. Therefore, we are likely to need to refinance at least a portion of
our outstanding debt as it matures. There is a risk that we may not be able to
refinance existing debt or that the terms of any refinancing will not be as
favorable as the terms of the existing debt.
RISING INTEREST RATES WOULD INCREASE INTEREST COSTS AND COULD AFFECT THE MARKET
PRICE OF OUR COMMON SHARES.
We expect to incur variable rate debt under credit facilities in connection
with the acquisition, construction and reconstruction of multifamily apartment
communities in the future, as well as for other purposes. Accordingly, if
interest rates increase, so will our interest costs to the extent the variable
rate increase is not hedged effectively. In addition, an increase in market
interest rates may lead purchasers of our common shares to demand a higher
annual yield, which could adversely affect the market price of our outstanding
common shares.
INTEREST RATE HEDGING CONTRACTS MAY INVOLVE MATERIAL CHANGES AND MAY NOT PROVIDE
ADEQUATE PROTECTION.
From time to time when we anticipate offerings of debt securities, we may
seek to decrease our exposure to fluctuations in interest rates during the
period prior to the pricing of the securities by entering into interest rate
hedging contracts. We may do so to increase the predictability of our financing
costs. Also, from time to time we rely on interest rate hedging contracts to
offset our exposure to moving interest rates with respect to debt financing
arrangements at variable interest rates. The settlement of interest rate hedging
contracts has in the past and may in the future involve charges to earnings that
may be material in amount. Such charges are typically driven by the extent and
timing of fluctuations in interest rates. Despite our efforts to minimize our
exposure to interest rate fluctuations, there is no guarantee that we will be
able to maintain our hedging contracts at their existing levels of coverage or
that the amount of coverage maintained will cover all of our outstanding
indebtedness at any such time. If our efforts are unsuccessful, we may not meet
our objective of reducing the extent of our exposure to interest rate
fluctuations.
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<PAGE>
BOND COMPLIANCE REQUIREMENTS COULD LIMIT INCOME AND RESTRICT USE OF COMMUNITIES
AND CAUSE FAVORABLE FINANCING TO BECOME UNAVAILABLE.
Some of our multifamily apartment communities are 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." The bond compliance requirements for our
current tax-exempt bonds, and the requirements of any future tax-exempt bond
financing, may have the effect of limiting our income from communities subject
to such financing. Under the terms of our tax-exempt bonds, we must comply with
various restrictions on the use of the communities financed by such bonds,
including a requirement that a percentage of apartments be made available to low
and middle income households.
In addition, some of our tax-exempt bond financing documents require that a
financial institution guarantee payment of the principal of, and interest on,
the bonds. The guarantee may take the form of a letter of credit, surety bond,
guarantee agreement or other additional collateral. If the financial institution
defaults in its guarantee obligations, or we are unable to renew the applicable
guarantee or otherwise post satisfactory collateral, a default will occur under
the applicable tax-exempt bonds and the community could be foreclosed upon.
FAILURE TO GENERATE SUFFICIENT REVENUE COULD LIMIT CASH FLOW AVAILABLE FOR
DISTRIBUTIONS TO SHAREHOLDERS.
If our communities do not generate revenues sufficient to meet our
operating expenses, including debt service and capital expenditures, our cash
flow and ability to pay distributions to our shareholders will be adversely
affected. The following factors, among others, may adversely affect the revenues
generated by our apartment communities:
* the national and local economic climates;
* local real estate market conditions, such as oversupply of apartment homes;
* the perceptions by prospective residents of the safety, convenience and
attractiveness of our communities and the neighborhoods where they are
located;
* our ability to provide adequate management, maintenance and insurance; and
* increased operating costs, including real estate taxes and utilities.
Significant expenditures associated with each investment such as debt
service payments, if any, real estate taxes, insurance and maintenance costs are
generally not reduced when circumstances cause a reduction in income from a
community. For example, if we mortgage a community to secure payment of debt and
are unable to meet the mortgage payments, we could sustain a loss as a result of
foreclosure on the community or the exercise of other remedies by the mortgagee.
UNFAVORABLE CHANGES IN MARKET AND ECONOMIC CONDITIONS COULD HURT OCCUPANCY OR
RENTAL RATES.
The market and economic conditions in metropolitan areas of our current
markets of the United States may significantly affect apartment home occupancy
or rental rates. Occupancy and rental rates in those markets, in turn, may
significantly affect our profitability and our ability to satisfy our financial
obligations. The risks that may affect conditions in those markets include the
following:
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<PAGE>
* the economic climate which may be adversely impacted by plant closings,
industry slowdowns and other factors;
* real estate conditions such as an oversupply of, or a reduced demand for,
apartment homes;
* a decline in household formation that adversely affects occupancy or rental
rates;
* the inability or unwillingness of residents to pay rent increases;
* the potential effect of rent control or rent stabilization laws, or other
laws regulating housing, on any of our communities, which could prevent us
from raising rents to offset increases in operating costs; and
* the rental market which may limit the extent to which rents may be
increased to meet increased expenses without decreasing occupancy rates.
Any of these risks could adversely affect our ability to achieve our
desired yields on our communities and to make expected distributions to
shareholders.
DIFFICULTY OF SELLING APARTMENT COMMUNITIES COULD LIMIT FLEXIBILITY.
Real estate in the metropolitan areas of the United States can be hard to
sell, especially if market conditions are poor. This may limit our ability to
change our portfolio promptly in response to changes in economic or other
conditions. In addition, federal tax laws limit our ability to sell communities
that we have owned for fewer than four years, and this may affect our ability to
sell communities without adversely affecting returns to our shareholders.
INCREASED COMPETITION COULD LIMIT OUR ABILITY TO LEASE APARTMENT HOMES OR
INCREASE OR MAINTAIN RENTS.
Our apartment communities in metropolitan areas compete with numerous
housing alternatives in attracting residents, including other rental apartments
and single-family homes that are available for rent, as well as new and existing
single-family homes for sale. Competitive residential housing in a particular
area could adversely affect our ability to lease apartment homes and to increase
or maintain rents.
SIGNIFICANT NEW OPERATIONS AND ACQUIRED COMMUNITIES UNDER MANAGEMENT REQUIRE
INTEGRATION WITH THE EXISTING BUSINESS AND, IF NOT PROPERLY INTEGRATED, COULD
CREATE INEFFICIENCIES.
Our ability to manage growth effectively will require us, among other
things, to successfully apply our experience in managing our existing portfolio
of multifamily apartment communities to a larger number of properties. In
addition, we must be able to successfully manage the integration of new
management and operations personnel as our organization grows in size and
complexity.
FAILURE TO SUCCEED IN NEW MARKETS MAY LIMIT GROWTH.
We may make selected acquisitions outside of our current market areas from
time to time, if appropriate opportunities arise. Our historical experience in
our current markets located in the United States does not ensure that we will be
able to operate successfully in other market areas new to us. We may be exposed
to a variety of risks if we choose to enter into new markets. These risks
include, among others:
* a lack of market knowledge and understanding of the local economies;
* an inability to obtain land for development or to identify acquisition
opportunities;
* an inability to obtain construction tradespeople; and
* an unfamiliarity with local governmental and permitting procedures.
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DECREASE OF FEE MANAGEMENT BUSINESS WOULD RESULT IN DECREASE IN REVENUES.
We manage properties owned by third parties for a fee. Most of our
management contracts are terminable upon 30-days notice. There is a risk that
the management contracts will be terminated and/or that the rental revenues upon
which management fees are based will decline and management fee income will
decrease accordingly.
SHARE OWNERSHIP LIMIT MAY PREVENT TAKEOVERS BENEFICIAL TO SHAREHOLDERS.
For us to maintain our qualification as a real estate investment trust for
federal income tax purposes, not more than 50% in value of our outstanding
shares of beneficial interest may be owned, directly or indirectly, by five or
fewer individuals. As defined for federal income tax purposes, the term
"individuals" includes a number of specified entities. See "Federal Income Tax
Considerations and Consequences of Your Investment" beginning on page 21. Our
declaration of trust includes restrictions regarding transfers of our shares of
beneficial interest and ownership limits that are intended to assist us in
satisfying such limitations. The ownership limit may have the effect of
delaying, deferring or preventing someone from taking control of us, even though
such a change of control could involve a premium price for our shareholders or
otherwise could be in our shareholders' best interests. See "Limits on Ownership
of Shares of Beneficial Interest" beginning on page 16.
LIMITS ON CHANGES IN CONTROL MAY DISCOURAGE TAKEOVER ATTEMPTS BENEFICIAL TO
SHAREHOLDERS.
Our declaration of trust, our bylaws and Maryland law may have the effect
of discouraging a third party from attempting to acquire us which makes a change
in control more unlikely. The result may be a limitation on the opportunity for
shareholders to receive a premium for their common shares over then-prevailing
market prices. See "Important Provisions of Maryland Law and Our Declaration of
Trust and Bylaws" beginning on page 18.
COMPLIANCE OR FAILURE TO COMPLY WITH AMERICANS WITH DISABILITIES ACT AND OTHER
SIMILAR LAWS COULD RESULT IN SUBSTANTIAL COSTS.
The Americans with Disabilities Act generally requires that public
accommodations, including office buildings and hotels be made accessible to
disabled persons. Noncompliance could result in imposition of fines by the
federal government or the award of damages to private litigants. If, pursuant to
the Americans with Disabilities Act, we are required to make substantial
alterations and capital expenditures in one or more of our properties, including
the removal of access barriers, it could adversely affect our financial
condition and results of operations, as well as the amount of cash available for
distribution to our shareholders.
A number of additional federal, state and local laws exist that impact our
communities with respect to access thereto by disabled persons. For example, the
Fair Housing Act of 1988 requires that apartment communities first occupied
after March 13, 1990 be accessible to the handicapped. Noncompliance with the
Fair Housing Act of 1988 could result in the imposition of fines or an award of
damages to private litigants.
We cannot predict the ultimate cost of compliance with the Americans with
Disabilities Act or other similar legislation. The costs could be substantial.
FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST WOULD CAUSE US TO BE TAXED
AS A CORPORATION WHICH WOULD SIGNIFICANTLY LOWER FUNDS AVAILABLE FOR
DISTRIBUTION TO SHAREHOLDERS.
If we fail to qualify as a real estate investment trust for federal income
tax purposes, we will be taxed as a corporation. We believe that we are
organized and qualified as a real estate investment trust, and intend to operate
in a manner that will allow us to continue to qualify as a real estate
investment trust. However, we cannot assure you that we are qualified as such,
or that we will remain qualified as such in the future. This is because
qualification as a real estate investment trust involves the application of
highly technical and complex provisions of the Internal Revenue Code as to which
there are only limited judicial and administrative interpretations, and involves
the determination of various factual matters and circumstances not entirely
within our control. In addition, future legislation, new regulations,
administrative interpretations or court decisions may significantly change the
tax laws or the application of the tax laws with respect to qualification as a
real estate investment trust for federal income tax purposes or the federal
income tax consequences of such qualification.
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If, in any taxable year, we fail to qualify as a real estate investment
trust, we will be subject to federal income tax on our taxable income at regular
corporate rates, plus any applicable alternative minimum tax. In addition,
unless we are entitled to relief under applicable statutory provisions, we would
be disqualified from treatment as a real estate investment trust for the four
taxable years following the year in which we lose our qualification. The
additional tax liability resulting from the failure to qualify as a real estate
investment trust would significantly reduce or eliminate the amount of funds
available for distribution to our shareholders. Furthermore, we would no longer
be required to make distributions to our shareholders. See "Federal Income Tax
Considerations and Consequences of Your Investment" beginning on page 21.
POTENTIAL LIABILITY FOR ENVIRONMENTAL CONTAMINATION COULD RESULT IN SUBSTANTIAL
COSTS.
We are in the business of acquiring, owning, operating and developing real
estate properties. From time to time we will sell to third parties some of our
properties. Under various federal, state and local environmental laws, we may be
required, often regardless of our knowledge or responsibility but solely because
of our current or previous ownership or operation of real estate, to investigate
and remediate the effects of hazardous or toxic substances or petroleum product
releases at our properties. We may also be held liable to a governmental entity
or to third parties for property damage and for investigation and clean-up costs
incurred by us in connection with any contamination. These costs could be
substantial. The presence of such substances or the failure to properly
remediate the contamination may materially and adversely affect our ability to
borrow against, sell or rent the affected property. In addition, applicable
environmental laws create liens on contaminated sites in favor of the government
for damages and costs it incurs in connection with the contamination.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information electronically with the Securities and Exchange Commission. You may
read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., Chicago, Illinois, and New York, New York. Please call the SEC
at 1-800-SEC-0330 for further information about the public reference rooms. Our
SEC filings are also available to the public from the SEC's Web site at
http://www.sec.gov. In addition, you may look at our SEC filings at the offices
of the New York Stock Exchange, which is located at 20 Broad Street, New York,
New York 10005. Our SEC filings are available at the New York Stock Exchange
because our common shares are listed and traded on the New York Stock Exchange.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus is part of a registration statement that we have filed with
the SEC to register the common shares offered in this prospectus. This
prospectus does not repeat important information that you can find in our
registration statement and its exhibits or in the reports and other documents
that we file with the SEC. Our SEC file number is 001-12590. The SEC allows us
to "incorporate by reference" the information we file with them. This means that
we can disclose important information to you by referring you to other documents
that are legally considered to be part of this prospectus, and information that
we file later with the SEC will automatically update and supersede the
information in this prospectus and the documents listed below.
We incorporate by reference the documents listed below, which we have
already filed with the SEC, and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all of the common shares offered in this prospectus are sold:
* our Annual Report on Form 10-K for the year ended December 31, 1999;
* our Proxy Statement dated March 31, 2000 prepared in connection with our
Annual Meeting of Shareholders held on May 16, 2000;
* our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000; and
* the description of our common shares contained in our Registration
Statement on Form 8-A, including all amendments and reports updating such
description.
YOU MAY REQUEST A COPY OF THESE DOCUMENTS INCORPORATED BY REFERENCE, AND
ANY EXHIBITS WE HAVE SPECIFICALLY INCORPORATED BY REFERENCE TO AN EXHIBIT IN
THIS PROSPECTUS, AT NO COST BY WRITING OR TELEPHONING US AT THE FOLLOWING
ADDRESS: GABLES RESIDENTIAL TRUST, 2859 PACES FERRY ROAD, OVERLOOK III, SUITE
1450, ATLANTA, GEORGIA 30339, ATTENTION: CHIEF FINANCIAL OFFICER. OUR TELEPHONE
NUMBER IS (770) 436-4600.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus or the documents incorporated by reference is accurate as of any date
other than the date on the front of this prospectus or those documents.
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FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference into
this prospectus, contains statements that are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. When we use the words "believe," "expect,"
"anticipate," "intend," "estimate," "assume" and other similar expressions, they
are generally forward-looking statements. These statements include, among other
things, statements regarding our intent, belief or expectations with respect to:
* our declaration or payment of distributions;
* our potential developments or acquisitions or dispositions of properties,
assets or other public or private companies;
* our policies regarding investments, indebtedness, acquisitions,
dispositions, financings, conflicts of interest and other matters;
* our qualification as a real estate investment trust under the Internal
Revenue Code;
* the real estate markets in which we operate;
* the availability of debt and equity financing;
* interest rates;
* general economic conditions; and
* trends affecting our financial condition or results of operations.
You should not rely on forward-looking statements, because they involve
known and unknown risks, uncertainties and other factors, some of which are
beyond our control. These risks, uncertainties and other factors may cause our
actual results, performance or achievements to differ materially from the
anticipated future results, performance or achievements expressed or implied by
the forward-looking statements. In addition to the factors discussed under the
preceding "Risk Factors" section, some of the factors that might cause these
differences include, but are not limited to, the following:
* we may abandon or fail to secure 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 our control;
* financing may not be available to us, or may not be available on favorable
terms;
* our cash flow may be insufficient to meet required payments of principal
and interest; and
* our 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 the existing indebtedness.
We caution you that, while forward-looking statements reflect our good
faith beliefs, they are not guarantees of future performance. In addition, we
disclaim any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
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OUR COMPANY
GABLES RESIDENTIAL TRUST
* We are one of the largest owners, operators, developers and acquirors of
multifamily apartment communities in markets that have high job growth and
have shown resiliency to national economic downturns in the United States.
We have a strategic focus on the ownership of Class AA/A multifamily
apartment communities that are situated in urban locations or
master-planned communities near major employment centers in these regions.
* We obtain ownership in apartment communities by developing vacant land into
a new community or by acquiring an existing community which we sometimes
reposition or redevelop. In selecting sites for development, redevelopment
or acquisition, we focus on locations with close proximity to expanding
employment centers and convenience to recreation areas, entertainment,
shopping and dining. As a result, we believe that the communities we
currently own and the land parcels on which we have the right to develop
communities are attractive to the type of residents we seek.
* We are a real estate investment trust that was organized under the laws of
the State of Maryland in 1993 to continue and expand the operations of our
privately owned predecessor organization. We have elected to be taxed as a
real estate investment trust for federal income tax purposes and operate
principally through Gables Realty Limited Partnership, a Delaware limited
partnership. We are currently a 77.6% economic owner of the common equity
of Gables Realty Limited Partnership. We control Gables Realty Limited
Partnership through Gables GP, Inc., a Texas corporation and a wholly-owned
subsidiary, which is the sole general partner of Gables Realty Limited
Partnership.
* Our executive offices are located at 2859 Paces Ferry Road in Atlanta,
Georgia 30339 and our telephone number is (770) 436-4600.
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DESCRIPTION OF COMMON SHARES
The following is a description of the material terms and provisions of our
common shares. It may not contain all the information that is important to you.
You can access complete information by referring to our declaration of trust and
bylaws.
GENERAL
Under our declaration of trust, we have authority to issue 100,000,000
common shares, par value $.01 per share. As of December 1, 2000, 23,098,352
common shares were outstanding. In addition, as of December 1, 2000, 6,663,210
common units of Gables Realty Limited Partnership which are exchangeable for
common shares on a one-for-one basis were outstanding. All common shares, when
issued, will be duly authorized, fully paid and nonassessable. This means that
the full price for the outstanding common shares will have been paid at the time
of issuance and that any holder of our common shares will not later be required
to pay us any additional money for such common shares.
DIVIDENDS
Subject to the preferential rights of any other shares of beneficial
interest or the provisions of our declaration of trust regarding excess shares,
holders of common shares may receive distributions out of assets that we can
legally use to pay distributions, when and if, they are authorized and declared
by our Board of Trustees. Each common shareholder shares in the same proportion
as other common shareholders out of assets that we can legally use to pay
distributions after we pay or make adequate provision for all of our known debts
and liabilities in the event we are liquidated, dissolved or our affairs are
wound up.
VOTING RIGHTS
Subject to the provisions of our declaration of trust regarding excess
shares, holders of common shares will have the exclusive power to vote on all
matters presented to our shareholders, including the election of trustees,
except as otherwise provided by Maryland law or as provided with respect to any
other shares of beneficial interest. Holders of common shares are entitled to
one vote per share. There is no cumulative voting in the election of our
trustees, which means that at any meeting of our shareholders, the holders of a
majority of the outstanding common shares can cast all of their votes for each
trustee to be elected at such meeting, elect all of the trustees then standing
for election and the votes held by the holders of the remaining common shares
will not be sufficient to elect any trustee.
OTHER RIGHTS
Subject to the provisions of our declaration of trust regarding excess
shares, all common shares have equal dividend, distribution, liquidation and
other rights, and have no preference, appraisal or exchange rights, except for
any appraisal rights provided by Maryland law.
Holders of common shares have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any of our securities.
Our declaration of trust prohibits us from merging or selling all or
substantially all of our assets without the approval of a majority of the
outstanding shares that are entitled to vote on such matters. In addition,
Gables Realty Limited Partnership's partnership agreement requires that such
actions also be approved by partners holding 75% of the common units of Gables
Realty Limited Partnership.
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RESTRICTIONS ON OWNERSHIP
For us to qualify as a real estate investment trust under the Internal
Revenue Code, no more than 50% in value of our outstanding shares of beneficial
interest may be owned, directly or indirectly, by five or fewer individuals
during the last half of a taxable year. To assist us in meeting this
requirement, we may take actions such as the automatic exchange of shares in
excess of this ownership restriction into excess shares to limit the beneficial
ownership of our outstanding equity securities, directly or indirectly, by one
individual. See "Limits on Ownership of Shares of Beneficial Interest" beginning
on page 16.
TRANSFER AGENT
The transfer agent and registrar for our common shares is Fleet National
Bank.
PREFERRED SHARES
Under our declaration of trust, we have authority to issue up to 20,000,000
preferred shares. At December 1, 2000, we 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. Additionally, we have
reserved 2,000,000 shares of 8.625% Series B Cumulative Redeemable Preferred
Shares, none of which are currently outstanding but which may be issued upon
exchange of preferred units of Gables Realty Limited Partnership, as described
below. The general terms of our cumulative redeemable preferred shares are as
follows:
* 8.30% Series A Cumulative Redeemable Preferred Shares. We currently have
outstanding 4,600,000 Series A shares. Dividends are cumulative from the
date of original issuance and are payable quarterly at the rate of 8.30%
per annum of the $25.00 liquidation preference. The Series A shares rank as
to rights to dividends and in liquidation on a parity with the Series B
shares and senior to the Series Z shares. We may redeem the Series A shares
at any time on or after July 24, 2002 for cash at a redemption price of
$25.00 per share, plus all accrued and unpaid dividends. The Series A
shares have no stated maturity and are not subject to any sinking fund or
mandatory redemption and are not convertible into any other of our
securities.
* 8.625% Series B Cumulative Redeemable Preferred Shares. We have reserved
2,000,000 Series B shares, none of which are currently outstanding, for
issuance upon exercise by the holders of Gables Realty Limited
Partnership's 2,000,000 Series B preferred units of their right to exchange
Series B preferred units for the Series B shares on a one-for-one basis.
Holders may exercise their exchange right in whole but not in part (a) at
any time on or after November 15, 2008, (b) at any time if full quarterly
distributions are not made for six quarters, or (c) upon the occurrence of
particular specified events related to the treatment of the Series B
preferred units for federal income tax purposes. Distributions on the
Series B preferred units are, and dividends on the Series B shares, if, and
when issued, will be, cumulative from the date of original issuance and
are, or will be, payable quarterly at the rate of 8.625% per annum of the
$25.00 liquidation preference. The Series B shares rank as to rights to
dividends and in liquidation on a parity with the Series A shares and
senior to the Series Z shares. We may redeem the Series B preferred units
and the Series B shares at any time on or after November 15, 2003 for cash
at a redemption price of $25.00 per unit or share, plus all accumulated,
accrued and unpaid distributions or dividends. We may redeem the Series B
preferred units before November 15, 2003 if the holders elect to exchange
them for Series B shares. The Series B preferred units and the Series B
shares have no stated maturity, are not subject to any sinking fund or
mandatory redemption, and are not convertible into any other of our
securities.
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* 5.00% Series Z Cumulative Redeemable Preferred Shares. We currently have
outstanding 180,000 Series Z shares. Dividends on the Series Z shares are
cumulative from the date of original issuance and are payable on June 18 of
each year, commencing June 18, 2008, at the rate of 5.00% per annum of the
$25.00 liquidation preference. We may redeem the Series Z shares at any
time for cash at a redemption price of $25.00 per share, plus all accrued
and unpaid dividends. The Series Z shares are subject to mandatory
redemption on June 18, 2018 and are not subject to any sinking fund or
convertible into any other of our securities. With respect to dividends and
liquidation distributions, the Series Z shares currently rank junior to all
other designated preferred shares, including the Series A shares and the
Series B shares.
We do not have any other preferred shares outstanding as of the date of
this prospectus. We may issue preferred shares from time to time, in one or more
series, as authorized by our Board of Trustees. Prior to issuance of shares of
each series, the Board of Trustees is required by the Maryland General
Corporation Law and our declaration of trust to fix for each series, subject to
the provisions of our 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. The preferred shares
will, when issued, be fully paid and nonassessable and will have no preemptive
rights. 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 the common shares
might receive a premium for their shares over the then market price of such
common shares.
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LIMITS ON OWNERSHIP OF SHARES OF BENEFICIAL INTEREST
OWNERSHIP LIMIT
For us to qualify as a real estate investment trust under the Internal
Revenue Code, among other things, not more than 50% in value of our outstanding
shares of beneficial interest may be owned, directly or indirectly, by five or
fewer individuals 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 us against the risk of losing our status as a real estate
investment trust due to a concentration of ownership among our shareholders, our
declaration of trust provides that no holder may own, or be deemed to own by
virtue of the attribution provisions of the Internal Revenue Code, more than
9.8% of our shares of beneficial interest. Notwithstanding the preceding
sentence, the trustees at their option and in their discretion may approve such
ownership by selected persons. The Board of Trustees does not expect that it
would waive the 9.8% 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 our status as a
real estate investment trust. Any transfer of shares of beneficial interest
including warrants 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 9.8% ownership limit or that would result
in our disqualification as a real estate investment trust, including any
transfer that results in the shares of beneficial interest being owned by fewer
than 100 persons or that results in us being "closely held" within the meaning
of Section 856(h) of the Internal Revenue Code, shall be void and have no
effect. The intended transferee will acquire no rights to the shares of
beneficial interest. The foregoing restrictions will not apply if our Board of
Trustees determines that it is no longer in our best interests to attempt to
qualify, or to continue to qualify, as a real estate investment trust. 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 at least
two-thirds of our outstanding shares.
SHARES OWNED IN EXCESS OF OWNERSHIP LIMIT
Shares of beneficial interest owned, or deemed to be owned, or transferred
to a shareholder in excess of the 9.8% ownership limit will automatically be
exchanged for excess shares that will be transferred, by operation of law, to us
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 9.8% 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 dividends or distributions paid to a proposed transferee of excess
shares prior to our discovery that shares of beneficial interest have been
transferred in violation of the provisions of our declaration of trust are
required to be repaid to us upon demand. The excess shares are not treasury
shares, but rather constitute a separate class of our issued and outstanding
shares of beneficial interest. The original transferee-shareholder may, at any
time the excess shares are held by us in trust, transfer the interest in the
trust representing the excess shares to any individual whose ownership of the
shares of beneficial interest exchanged into such excess shares would be
permitted under the 9.8% 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 our option, to have acted as
an agent on our behalf in acquiring the excess shares and to hold the excess
shares on our behalf.
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RIGHT TO PURCHASE EXCESS SHARES
In addition to the foregoing transfer restrictions, we have the right, for
a period of 90 days during the time any excess shares are held by us 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
of the shares of beneficial interest on the date we exercise our option to
purchase. The market price will be determined in the manner set forth in our
declaration of trust. The 90-day period begins on the date of the violative
transfer if the original transferee-shareholder gives notice to us of the
transfer or, if no such notice is given, the date on which the Board of Trustees
determines that a violative transfer has been made.
Every owner of more than 5% of the issued and outstanding common shares
must file a written notice with us containing the information specified in our
declaration of trust no later than January 30 of each year. Owners of 5% or less
of the issued and outstanding common shares may be required by the Internal
Revenue Code or regulations thereunder to file such notice. Each shareholder
will upon demand be required to disclose to us in writing any information with
respect to the direct, indirect and constructive ownership of shares of
beneficial interest as the Board of Trustees deems necessary to comply with the
provisions of the Internal Revenue Code applicable to real estate investment
trusts, 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 the acquisition
of control of Gables Residential Trust unless the Board of Trustees determines
that our maintenance of real estate investment trust status is no longer in our
best interests.
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IMPORTANT PROVISIONS OF MARYLAND LAW AND
OUR DECLARATION OF TRUST AND BYLAWS
The following is a summary of important provisions of Maryland law and our
declaration of trust and bylaws which affect us and our shareholders. The
description below is intended as only a summary. You can access complete
information by referring to Maryland General Corporation Law and our declaration
of trust and bylaws.
MARYLAND BUSINESS COMBINATION STATUTE
Maryland law establishes special requirements with respect to "business
combinations" between Maryland corporations and "interested shareholders" unless
exemptions are applicable. Among other things, the law prohibits for a period of
five years a merger and other specified or similar transactions between a
company and an interested shareholder and requires a supermajority vote for such
transactions after the end of the five-year period.
"Interested shareholders" are all persons owning beneficially, directly or
indirectly, more than 10% of the outstanding voting stock of the Maryland
corporation. "Business combinations" include any merger or similar transaction
subject to a statutory vote and additional transactions involving transfers of
assets or securities in specified amounts to interested shareholders or their
affiliates. Unless an exemption is available, transactions of these types may
not be consummated between a Maryland corporation and an interested shareholder
or its affiliates for a period of five years after the date on which the
shareholder first became an interested shareholder. Thereafter, the transaction
may not be consummated unless recommended by the board of directors and approved
by the affirmative vote of at least 80% of the votes entitled to be cast by all
holders of outstanding voting shares and two-thirds of the votes entitled to be
cast by all holders of outstanding voting shares other than the interested
shareholder. A business combination with an interested shareholder that is
approved by the board of directors of a Maryland corporation at any time before
an interested shareholder first becomes an interested shareholder is not subject
to the special voting requirements. An amendment to a Maryland corporation's
charter electing not to be subject to the foregoing requirements must be
approved by the affirmative vote of at least 80% of the votes entitled to be
cast by all holders of outstanding voting shares and two-thirds of the votes
entitled to be cast by holders of outstanding voting shares who are not
interested shareholders. Any such amendment is not effective until 18 months
after the vote of shareholders and does not apply to any business combination of
a corporation with a shareholder who was an interested shareholder on the date
of the shareholder vote.
MARYLAND CONTROL SHARE ACQUISITION STATUTE
Maryland law provides that "control shares" of a Maryland real estate
investment trust acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the votes entitled to
be cast on the matter, excluding shares of beneficial interest owned by the
acquiror or by officers or trustees who are employees of the trust. "Control
shares" are voting shares of beneficial interest which, if aggregated with all
other such shares of beneficial interest previously acquired by the acquiror or
in respect of which the acquiror is able to exercise or direct the exercise of
voting power except solely by revocable proxy, would entitle the acquiror to
exercise voting power in electing trustees within one of the following ranges of
voting power: (1) one-fifth or more but less than one-third, (2) one-third or
more but less than a majority, or (3) a majority of all voting power. Control
shares do not include shares of beneficial interest the acquiring person is then
entitled to vote as a result of having previously obtained shareholder approval.
A "control share acquisition" means the acquisition of control shares, subject
to applicable exceptions.
A person who has made or proposes to make a control share acquisition may
compel the board of trustees to call a special meeting of shareholders to be
held within 50 days of demand to consider voting rights for the shares, upon
satisfaction of relevant conditions, including an undertaking to pay expenses.
If no request for a meeting is made, the trust may itself present the question
at any shareholders meeting.
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If voting rights for control shares are not approved at the meeting or if
the acquiring person does not deliver an acquiring person statement as required
by the statute with respect to the control shares, then, subject to applicable
conditions and limitations, the trust may redeem any or all of the control
shares for fair value determined, without regard to the absence of voting rights
for the control shares, as of the date of the last control share acquisition by
the acquiror or of any meeting of shareholders at which the voting rights of
such shares are considered and not approved. If voting rights for control shares
are approved at a shareholders meeting and the acquiror becomes entitled to vote
a majority of the shares of beneficial interest entitled to vote, all other
shareholders may exercise appraisal rights. The fair value of the shares of
beneficial interest as determined for purposes of such appraisal rights may not
be less than the highest price per share paid by the acquiror in the control
share acquisition.
The control share acquisition statute does not apply to shares acquired in
a merger, consolidation or share exchange if the trust is a party to the
transaction, or to acquisitions approved or exempted by the declaration of trust
or bylaws of the trust.
The business combination statute and the control share acquisition statute
could have the effect of discouraging offers to acquire us and of increasing the
difficulty of consummating any such offer.
LIMITATION OF SHAREHOLDERS' LIABILITY
Under Maryland law, shareholders generally are not responsible for the
corporation's debts or obligations, and our declaration of trust specifically
provides that no shareholder of ours will be personally liable for any of our
obligations. Our bylaws further provide that we will indemnify each shareholder
against any claim or liability to which the shareholder may become subject by
reason of his or her being or having been a shareholder, and that we will
reimburse each shareholder for all legal and other expenses reasonably incurred
by him or her 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 particular statutory liability, the shareholder
may, in some jurisdictions, including Texas, be personally liable to the extent
that such claims are not satisfied by us. Inasmuch as we will carry public
liability insurance which we consider adequate, any risk of personal liability
to shareholders is limited to situations in which our assets plus our insurance
coverage would be insufficient to satisfy the claims against us and our
shareholders.
LIMITATION OF TRUSTEES' AND OFFICERS' LIABILITY
Under Maryland law, a real estate investment trust formed in Maryland is
permitted to limit, by provision in its declaration of trust, the liability of
trustees and officers so that none of its trustees or officers shall be liable
to it or to any shareholder for money damages except to the extent that:
* the trustee or officer actually received an improper benefit in money,
property, or services, for the amount of the benefit or profit in money,
property, or services actually received, or
* a judgment or other final adjudication adverse to the trustee or officer is
entered in a proceeding based on a finding in a proceeding that the
trustee's or officer's action was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding.
Our declaration of trust has incorporated the provisions of such law
limiting the liability of trustees and officers. Gables GP, Inc.'s articles of
incorporation contain similar provisions that are consistent with Texas law.
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Our bylaws require us to indemnify, to the full extent of Maryland law, any
present or former trustee or officer and such person's spouse and children 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 we have received a written
affirmation by the person to be indemnified that he or she has met the standard
of conduct necessary for indemnification by us as authorized by our bylaws. We
shall not be required to indemnify such person if:
* it is established that (1) such person's act or omission was committed in
bad faith or was the result of active or deliberate dishonesty, (2) such
person actually received an improper personal benefit in money, property or
services or (3) in the case of a criminal proceeding, such person had
reasonable cause to believe that the Indemnitee's act or omission was
unlawful;
* the proceeding was initiated by such person;
* such person received payment for such expenses pursuant to insurance or
otherwise; or
* the proceeding arises under Section 16 of the Securities Exchange Act of
1934.
Pursuant to our bylaws, the person to be indemnified is required to repay
the amount paid or reimbursed by us if it shall ultimately be determined that
the standard of conduct was not met. Our bylaws also permit us to provide such
other and further indemnification or payment or reimbursement of expenses as may
be permitted by the Maryland General Corporation Law or to which the person to
be indemnified may be entitled. Gables GP, Inc.'s bylaws contain similar
provisions that are consistent with Texas law.
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with each of our trustees
and officers. The indemnification agreements require, among other things, that
we indemnify our trustees and officers to the fullest extent permitted by law
and advance to our trustees and officers all related expenses, subject to
reimbursement if it is subsequently determined that indemnification is not
permitted. Under these agreements, we must also indemnify and advance all
expenses incurred by our trustees and officers seeking to enforce their rights
under the indemnification agreements and cover our trustees and officers under
our directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by our declaration of trust and our bylaws, it provides greater
assurance to our trustees and officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the future by our
Board of Trustees or by our shareholders to eliminate the rights it provides.
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FEDERAL INCOME TAX CONSIDERATIONS AND CONSEQUENCES OF YOUR INVESTMENT
The following is a general summary of the material federal income tax
considerations and consequences associated with an investment in our common
shares. The following discussion is not exhaustive of all possible tax
considerations and is not tax advice. Moreover, this summary does not deal with
all tax aspects or consequences that might be relevant to you in light of your
personal circumstances; nor does it deal with particular types of shareholders
that are subject to special treatment under the Internal Revenue Code, such as
insurance companies, financial institutions and broker-dealers. The Internal
Revenue Code provisions governing the federal income tax treatment of real
estate investment trusts are highly technical and complex, and this summary is
qualified in its entirety by the applicable Internal Revenue Code provisions,
rules and regulations promulgated thereunder, and administrative and judicial
interpretations thereof. The following discussion is based on current law and on
representations from us concerning our compliance with the requirements for
qualification as a real estate investment trust.
WE URGE YOU, AS A PROSPECTIVE INVESTOR, TO CONSULT YOUR OWN TAX ADVISOR
WITH RESPECT TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO YOU OF THE PURCHASE, HOLDING AND SALE OF OUR COMMON SHARES.
FEDERAL INCOME TAXATION
In the opinion of our tax counsel, Goodwin, Procter & Hoar LLP, commencing
with our first taxable year ended December 31, 1994, we have been organized in
conformity with the requirements for qualification as a real estate investment
trust under the Internal Revenue Code, and our method of operation will enable
us to continue to meet the requirements for qualification and taxation as a real
estate investment trust under the Internal Revenue Code, provided that we have
operated and continue to operate in accordance with various assumptions and
factual representations made by us concerning our business, properties and
operations. We may not, however, have met or continue to meet such requirements.
Qualification as a real estate investment trust depends upon us having met and
continuing to meet the various requirements imposed under the Internal Revenue
Code through actual operating results. Goodwin, Procter & Hoar LLP has relied on
our representations regarding our operations and has not and will not review
these operating results. No assurance can be given that actual operating results
have met or will meet these requirements.
If we have qualified and continue to qualify for taxation as a real estate
investment trust, we generally will not be subject to federal corporate income
taxes on that portion of our ordinary income or capital gain that is currently
distributed to shareholders. The real estate investment trust provisions of the
Internal Revenue Code generally allow a real estate investment trust to deduct
dividends paid to its shareholders. This deduction for dividends paid to
shareholders substantially eliminates the federal double taxation on earnings
that usually results from investments in a corporation. "Double taxation" refers
to taxation of income once at the corporate level when earned and once again at
the shareholder level when distributed. Additionally, a real estate investment
trust may elect to retain and pay taxes on a designated amount of its net
long-term capital gains, in which case the shareholders of the real estate
investment trust will include their proportionate share of the undistributed
long-term capital gains in income and receive a credit or refund for their share
of the tax paid by the real estate investment trust.
FAILURE TO QUALIFY
If we fail to qualify for taxation as a real estate investment trust in any
taxable year and the relief provisions do not apply, we will be subject to tax
on our taxable income at regular corporate rates, including any applicable
alternative minimum tax. Distributions to shareholders in any year in which we
fail to qualify will not be deductible by us nor will they be required to be
made. In such event, to the extent of current or accumulated earnings and
profits, all distributions to shareholders will be dividends, taxable as
ordinary income, and subject to limitations of the Internal Revenue Code,
corporate distributees may be eligible for the dividends-received deduction.
Unless we are entitled to relief under specific statutory provisions, we also
will be disqualified from taxation as a real estate investment trust for the
four taxable years following the year during which qualification was lost. It is
not possible to state whether in all circumstances we would be entitled to such
statutory relief. For example, we must derive a minimum percent of our gross
income from specified sources in order to qualify as a real estate investment
trust. If we fail to satisfy these gross income tests because nonqualifying
income that we intentionally incur exceeds the limit on such income, the
Internal Revenue Service could conclude that our failure to satisfy the tests
was not due to reasonable cause, which is a condition to qualification for
relief from the four-year disqualification rule.
21
<PAGE>
TAXATION OF UNITED STATES SHAREHOLDERS AND POTENTIAL TAX CONSEQUENCES OF THEIR
INVESTMENT IN THE COMMON SHARES
When we refer to a United States shareholder, we mean a holder of common
shares that is for federal income tax purposes
* an individual who is a citizen or resident of the United States;
* a corporation created or organized in or under the laws of the United
States, any state thereof or the District of Columbia; or
* a partnership, trust or estate treated as a domestic partnership, trust or
estate.
For any taxable year for which we qualify for taxation as a real estate
investment trust, amounts distributed to taxable United States shareholders will
be taxed as follows.
DISTRIBUTIONS GENERALLY. Distributions other than capital gain dividends to
United States shareholders will be taxable as dividends to the extent of our
current or accumulated earnings and profits as determined for federal income tax
purposes. For purposes of determining whether distributions are out of current
or accumulated earnings and profits, our earnings and profits will be allocated
first to any of our outstanding preferred shares and then to our common shares.
Such dividends will be taxable to the shareholders as ordinary income and will
not be eligible for the dividends-received deduction for corporations. To the
extent that we make a distribution to a United States shareholder in excess of
current or accumulated earnings and profits, the distribution will be treated
first as a tax-free return of capital with respect to the shares, reducing the
United States shareholder's tax basis in the shares, and the distribution in
excess of a United States shareholder's tax basis in the shares will be taxable
as gain realized from the sale of the shares. Dividends declared by us in
October, November or December of any year payable to a shareholder of record on
a specified date in any such month shall be treated as both paid by us and
received by the shareholder on December 31 of the year, provided that the
dividend is actually paid by us during January of the following calendar year.
United States shareholders may not include on their own federal income tax
returns any of our tax losses.
CAPITAL GAIN DIVIDENDS. Dividends to United States shareholders that are
properly designated by us as capital gain dividends will be treated as long-term
capital gains, to the extent they do not exceed our actual net capital gains,
for the taxable year without regard to the period for which the shareholder has
held his common shares. However, corporate shareholders may be required to treat
up to 20% of particular capital gain dividends as ordinary income. Capital gain
dividends are not eligible for the dividends-received deduction for
corporations.
RETAINED CAPITAL GAINS. A real estate investment trust may elect to retain,
rather than distribute, its net long-term capital gains received during the
year. To the extent designated by the real estate investment trust in a notice
to its shareholders, the real estate investment trust will pay the income tax on
such gains and the real estate investment trust shareholders must include their
proportionate share of the undistributed long-term capital gains so designated
in income. Each real estate investment trust shareholder will be deemed to have
paid his share of the tax paid by the real estate investment trust, which will
be credited or refunded to the shareholder. The basis of each shareholder's real
estate investment trust shares will be increased by his proportionate amount of
the undistributed long-term capital gains, net of the tax paid by the real
estate investment trust, included in such shareholder's long-term capital gains.
22
<PAGE>
PASSIVE ACTIVITY LOSS AND INVESTMENT INTEREST LIMITATIONS. Distributions,
including deemed distributions of undistributed long-term capital gains, from us
and gain from the disposition of the common shares will not be treated as
passive activity income, and therefore shareholders may not be able to apply any
passive losses against such income. Dividends from us, to the extent they do not
constitute a return of capital, will generally be treated as investment income
for purposes of the investment income limitation on the deductibility of
investment interest. However, net capital gain from the disposition of the
common shares or capital gain dividends, including deemed distributions of
undistributed long-term capital gains, generally will be excluded from
investment income.
SALE OF THE COMMON SHARES. Upon the sale or exchange of the common shares,
the United States shareholder will generally recognize gain or loss equal to the
difference between the amount realized on such sale and the tax basis of the
common shares sold or exchanged. Assuming such shares are held as a capital
asset, such gain or loss will be a long-term capital gain or loss if the shares
have been held for more than one year. However, any loss recognized by a United
States shareholder on the sale of common shares held for not more than six
months and with respect to which capital gains were required to be included in
such shareholder's income will be treated as a long-term capital loss to the
extent of the amount of such capital gains so included.
In general, the maximum tax rate imposed on the long-term capital gains of
non-corporate taxpayers is 20%, although a 25% maximum tax rate is imposed on
the portion of such gains attributable to the prior depreciation claimed in
respect of depreciable real property held for more than one year to the extent
such gain is not otherwise characterized as ordinary income under the
"recapture" provisions of Section 1250 of the code. The Secretary of the
Treasury has the authority to prescribe regulations on how the capital gains
rates will apply to sales and exchanges by partnerships and REITs and of
interests in partnerships and REITs. Pursuant to this authority, the Secretary
of the Treasury issued regulations relating to the taxation of capital gains in
the case of sales and exchanges of interests in partnerships. As of this time,
the Secretary of the Treasury has not issued regulations relating to the
taxation of capital gains in the case of sales or exchanges of interests in
REITs. Accordingly, you are urged to consult with your tax advisors with respect
to your capital gain tax liability resulting from any sale or taxable exchange
by you of our common shares.
TREATMENT OF TAX-EXEMPT SHAREHOLDERS. Distributions, including deemed
distributions of undistributed long-term capital gains, from us to a tax-exempt
employee pension trust or other domestic tax-exempt shareholder generally will
not constitute unrelated business taxable income unless the shareholder has
borrowed to acquire or carry his common shares. However, certain qualified
trusts that hold more than 10% by value of the shares of a particular real
estate investment trust may be required to treat a specified percentage of these
distributions, including deemed distributions of undistributed long-term capital
gains, as unrelated business taxable income.
BACKUP WITHHOLDING
Under the backup withholding rules, a United States shareholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
on, and gross proceeds from the sale of, the common shares unless such
shareholder (1) is a corporation or comes within other specific exempt
categories and, when required, demonstrates this fact or (2) provides a correct
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A United States shareholder who does not provide us with his
current taxpayer identification number may be subject to penalties imposed by
the Commissioner of the Internal Revenue Service. Any amount paid as backup
withholding will be creditable against the shareholder's income tax liability.
We will report to shareholders and the Internal Revenue Service the amount
of any reportable payments, including any dividends paid, and any amount
withheld with respect to the common shares during the calendar year.
STATE AND LOCAL TAX
Gables Residential Trust and our shareholders may be subject to state and
local tax in various states and localities, including those in which we or our
shareholders transact business, own property or reside. The tax treatment of us
and our shareholders in such jurisdictions may differ from the federal income
tax treatment described above. CONSEQUENTLY, AS A PROSPECTIVE INVESTOR, YOU
SHOULD CONSULT YOUR OWN TAX ADVISORS REGARDING THE EFFECT OF STATE AND LOCAL TAX
LAWS ON AN INVESTMENT IN OUR COMMON SHARES.
23
<PAGE>
REGISTRATION RIGHTS OF THE SELLING SHAREHOLDERS
The following is a summary of the material terms and provisions of the
registration rights and lock-up agreement, which we entered into in connection
with the issuance of common units of Gables Realty Limited Partnership to the
selling shareholders on January 1, 2000. It may not contain all the information
that is important to you. You can access complete information by referring to
the registration rights and lock-up agreement.
Under the registration rights and lock-up agreement, we are obligated to
file a registration statement covering the sale by the selling shareholders of
the common shares that they may acquire in exchange for the common units of
Gables Realty Limited Partnership that they received on January 1, 2000 as
deferred payment of a portion of the purchase price associated with our April
1998 acquisition of Trammell Crow Residential South Florida. Under the terms of
the registration rights and lock-up agreement, the selling shareholders may not
exchange their units for common shares until after January 1, 2001. Under the
registration rights and lock-up agreement, we also must use reasonable efforts
to cause the registration statement to be declared effective by the Securities
and Exchange Commission and to keep the registration statement continuously
effective until the earliest of (1) the date on which the selling shareholders
no longer hold any exchanged common shares or any units issued in connection
with the Trammell Crow Residential South Florida acquisition or (2) the date on
which all of the exchanged common shares held or acquired in the future by the
selling shareholders have become eligible for sale under Rule 144(k) of the
Securities Act of 1933. Any common shares sold by the selling shareholders
pursuant to this prospectus will no longer be entitled to the benefits of the
registration rights and lock-up agreement.
The registration rights and lock-up agreement requires that we bear all
expenses of registering the common shares with the exception of brokerage and
underwriting commissions and taxes of any kind and any legal, accounting and
other expenses incurred by the selling shareholders. We also agreed to indemnify
the selling shareholders and their 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 agreed to indemnify us and our trustees, officers and any person
who controls our company against all losses, claims, damages, actions,
liabilities, costs and expenses arising under the securities laws if they result
from (1) written information furnished to us by the selling shareholders for use
in the registration statement or this prospectus or any amendments to the
registration statement or any prospectus supplements or (2) the selling
shareholders' failure to deliver, or cause to be delivered, this prospectus or
any amendments or prospectus supplements to any purchaser of common shares
covered by this prospectus from the selling shareholders through no fault of
ours.
24
<PAGE>
THE SELLING SHAREHOLDERS
The following table sets forth the number of common shares and units
beneficially owned by the selling shareholders as of December 1, 2000, the
number of common shares covered by this prospectus and the total number of
common shares and units which the selling shareholders will beneficially own
upon completion of this offering. This table assumes that the selling
shareholders exchange for common shares all of the units issued by Gables Realty
Limited Partnership as deferred payment of a portion of the purchase price
associated with our April 1998 acquisition of the properties and operations of
Trammell Crow Residential South Florida, and that the selling shareholders offer
for sale all of those common shares.
The common shares offered by the prospectus will be offered from time to
time by the selling shareholders named below, or by any of their pledges,
donees, transferees or other successors in interest. The amounts set forth below
are based upon information provided to us by representatives of the selling
shareholders, or on our records, as of December 1, 2000 and are accurate to the
best of our knowledge. It is possible, however, that the selling shareholders
may acquire or dispose of additional common shares or units from time to time
after the date of this prospectus.
<TABLE>
<CAPTION>
Common Shares Units
Beneficially Beneficially Common Shares and
Owned as of Owned as of Common Shares Units to be Owned
Name December 1, 2000(1) December 1, 2000(2) Offered Hereby (3) After Offering(4)
---------------- ------------------- ------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Brad D. Bryant(5) 17,700 81,042 8,178 90,564
CFP Residential, L.P. 0 480,466 107,703 372,763(6)
Ann Cash(7) 0 28,502 11,186 17,316
Michael M. Hefley(8) 18,700 142,018 43,304 117,414
Greg W. Iglehart(9) 16,700 290,590 60,590 246,700(10)
Randy J. Pace 10,733 145,318 12,267 143,784
Christopher Smiles(11) 0 35,049 11,006 24,043
J. Ronald Terwilliger 0 289,469(12) 107,752 181,717
Chris D. Wheeler(13) 93,866 561,923 107,752 548,037(14)
--------- ---------- --------- ---------
TOTAL 157,699 2,054,377 469,738 1,742,338
========= ========== ========= =========
25
<PAGE>
<FN>
(1) Does not include common shares that may be issued in exchange for units
beneficially held as of December 1, 2000.
(2) All units listed in this column may be exchanged, under certain
circumstances, for an equal number of common shares. All information is as
of December 1, 2000.
(3) These common shares represent the common shares that the selling
shareholders may acquire upon presentation of the units for redemption,
which may occur at any time after January 1, 2001.
(4) Assumes that all common shares issuable upon redemption of the units will
be sold by the selling shareholders. Unless otherwise noted, in the case of
each selling shareholder, the percentage of our 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 (1) is based on the total number of common shares outstanding as
of December 1, 2000 (23,098,352) and (2) 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 (1) Gables GP, Inc., a wholly-owned
subsidiary of Gables Residential Trust and the sole general partner of
Gables Realty Limited Partnership, (2) Gables Residential Services, Inc., a
corporation of which Gables Realty Limited Partnership owns 100% of the
non-voting common stock and 1% of the voting common stock (collectively
representing 99% of the equity interests of Gables Residential Services,
Inc.), and (3) Gables East Construction, Inc. and Gables Central
Construction, Inc., wholly-owned subsidiaries of Gables Residential
Services, Inc. Mr. Bryant's indicated ownership of common shares includes
options to purchase 4,200 common shares which are exercisable within sixty
(60) days of December 1, 2000.
(6) Represents approximately 1.6% of the common shares outstanding as of
December 1, 2000 (assuming (1) all remaining units held by CFP Residential,
L.P. are presented for redemption and are exchanged for common shares and
(2) none of the remaining units held by other persons are exchanged for
common shares).
(7) Ms. Cash is a Regional Vice President of Gables GP, Inc. and Gables
Residential Services, Inc.
(8) Mr. Hefley is a Senior Vice President and Chief Operating Officer of Gables
Residential Trust, Gables GP, Inc., and Gables Residential Services, Inc.
Mr. Hefley's indicated ownership of common shares includes options to
purchase 4,200 common shares which are exercisable within sixty (60) days
of December 1, 2000.
(9) Mr. Iglehart is a Senior Vice President of Gables Residential Trust, Gables
GP, Inc., Gables Residential Services, Inc., and Gables East Construction,
Inc. Mr. Iglehart's indicated ownership of common shares includes options
to purchase 4,200 common shares which are exercisable within sixty (60)
days of December 1, 2000.
(10) Represents approximately 1.1% of the common shares outstanding as of
December 1, 2000 (assuming (1) all remaining units held by Mr. Iglehart are
presented for redemption and are exchanged for common shares and (2) none
of the remaining units held by other persons are exchanged for common
shares).
(11) Mr. Smiles is a Regional Vice President of Gables GP, Inc. and Gables
Residential Services, Inc.
(12) Does not include (1) 27,223 units owned by JRT Holdings, Inc., of which Mr.
Terwilliger is president, (2) 49,665 units owned by the J. Ronald
Terwilliger Grantor Trust, of which Mr. Terwilliger is the sole trustee,
(3) 192,300 units owned by Patricia B. Terwilliger, Mr. Terwilliger's
spouse, or (4) 200,000 Units owned by JRT Guaranty, LLC, of which Mr.
Terwilliger is the sole member.
(13) Mr. Wheeler is the Chairman of the Board, President and Chief Executive
Officer of Gables Residential Trust, Gables GP, Inc., Gables Residential
Services, Inc., Gables East Construction, Inc., and Gables Central
Construction, Inc. Mr. Wheeler's indicated ownership of common shares
includes options to purchase 70,866 common shares which are exercisable
within sixty (60) days of December 1, 2000.
(14) Represents approximately 2.3% of the common shares outstanding as of
December 1, 2000 (assuming (1) all remaining units held by Mr. Wheeler are
presented for redemption and are exchanged for common shares and (2) none
of the remaining units held by other persons are exchanged for common
shares).
</FN>
</TABLE>
26
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds of the sale by the selling
shareholders of the common shares covered by this prospectus.
PLAN OF DISTRIBUTION
This prospectus relates to the possible sale from time to time of up to an
aggregate of 469,738 common shares by the selling shareholders, or any of their
pledgees, donees, transferees or other successors in interest. If the selling
shareholders present units to Gables Realty Limited Partnership for redemption,
we may, at our election, acquire such units in exchange for common shares in
accordance with the terms of Gables Realty Limited Partnership's agreement of
limited partnership, as amended. We are registering the common shares pursuant
to our obligations under the registration rights and lock-up agreement, but the
registration of the common shares does not necessarily mean that any of the
common shares will be offered or sold by the selling shareholders.
The distribution of the common 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 prevailing market prices or at negotiated prices. Any underwritten offering
may be on a "best efforts" or a "firm commitment" basis. In connection with any
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from the selling shareholders.
Underwriters may sell the common 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 common shares may be deemed to be
underwriters under the Securities Act of 1933, and any profit on the sale of the
common shares by them and any discounts, commissions or concessions received by
any underwriters, dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. At any time a particular offer
of common shares is made by the selling shareholders, a prospectus supplement,
if required, will be distributed that will, where applicable:
* identify any underwriter, dealer or agent;
* describe any compensation in the form of discounts, concessions,
commissions or otherwise received by each underwriter, dealer or agent and
in the aggregate to all underwriters, dealers and agents;
* identify the amounts underwritten;
* identify the nature of the underwriter's obligation to take the common
shares; and
* provide any other required information.
The sale of common shares by the selling shareholders may also be effected
by selling common 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 common shares as principal, and may be made pursuant to any of
the methods described below. Such sales may be made on the New York Stock
Exchange 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.
27
<PAGE>
Common shares may also be sold in one or more of the following
transactions:
* block transactions 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;
* purchases by any such broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to any supplement to this
prospectus;
* a special offering, an exchange distribution or a secondary distribution in
accordance with applicable New York Stock Exchange or other stock exchange
rules;
* ordinary brokerage transactions and transactions in which any such
broker-dealer solicits purchasers;
* 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
* 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 common shares which is not expected to exceed that
customary in the types of transactions involved.
To comply with applicable state securities laws, the common shares will be
sold, if necessary, in such jurisdictions only through registered or licensed
brokers or dealers. In addition, common shares may not be sold in some states
unless they have been registered or qualified for sale in the state or an
exemption from such registration or qualification requirement is available and
is complied with.
All expenses relating to the offering and sale of the common shares, other
than commissions, discounts and fees of underwriters, broker-dealers or agents,
will be paid by us. We have agreed to indemnify the selling shareholders against
some losses, claims, damages, actions, liabilities, costs and expenses,
including liabilities under the Securities Act of 1933. See "Registration Rights
of the Selling Shareholders."
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference in this
prospectus in reliance upon the authority of said firm as experts in giving said
reports.
VALIDITY OF COMMON SHARES
The validity of the common shares we are offering will be passed upon for
us by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
28
<PAGE>
You should rely only on the information contained in this prospectus,
incorporated herein by reference or contained in a prospectus supplement.
Neither we nor the selling shareholders have authorized anyone else to provide
you with different or additional information. The selling shareholders are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus, or
incorporated herein by reference, or in any prospectus supplement is accurate as
of any date other than the date on the front of those documents.
TABLE OF CONTENTS
Page
----
Prospectus Summary................................ 2
Risk Factors ..................................... 4
Where You Can Find More Information ..............10
Incorporation of Documents By Reference...........10
Forward Looking Statements........................11
Our Company.......................................12
Description of Common Shares......................13
Limits on Ownership of Shares of
Beneficial Interest............................16
Important Provisions of Maryland Law and
Our Declaration of Trust and Bylaws............18
Federal Income Tax Considerations and
Consequences of Your Investment................21
Registration Rights of the Selling
Shareholders...................................24
The Selling Shareholders..........................25
Use of Proceeds...................................27
Plan of Distribution..............................27
Experts...........................................28
Validity of Securities............................28
469,738 Shares
GABLES RESIDENTIAL TRUST
Common Shares
-------------
Prospectus
-------------
December , 2000
------
<PAGE>
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 $ 3,379
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 $ 20,879
========
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by Gables Residential Trust.
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
Gables Residential Trust's declaration of trust and Gables Realty Limited
Partnership's agreement of limited partnership, as amended, provides limitations
on the liability of Gables Residential Trust's trustees and officers for
monetary damages to Gables Residential Trust. The declaration of trust and the
bylaws obligate Gables Residential Trust to indemnify its trustees and officers,
and permit Gables Residential Trust to indemnify its employees and other agents,
against particular liabilities incurred in connection with their service in such
capacities. These provisions could reduce the legal remedies available to Gables
Residential Trust and the shareholders against these individuals.
Gables Residential Trust'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 Gables Residential Trust shall have received a written
affirmation by the Indemnitee that he or she has met the standard of conduct
necessary for indemnification by Gables Residential Trust as authorized by the
bylaws. Gables Residential Trust shall not be required to indemnify an
Indemnitee if (a) it is established that (1) the Indemnitee's act or omission
was committed in bad faith or was the result of active or deliberate dishonesty,
(2) the Indemnitee actually received an improper personal benefit in money,
property or services or (3) 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 Securities Exchange Act of 1934.
Pursuant to the bylaws, the Indemnitee is required to repay the amount paid or
reimbursed by Gables Residential Trust if it shall ultimately be determined that
the standard of conduct was not met. Gables Residential Trust's bylaws permit
Gables Residential Trust to provide such other and further indemnification or
payment or reimbursement of expenses as may be permitted by the Maryland General
Corporation Law or to which the Indemnitee may be entitled. The bylaws of Gables
GP, Inc., a Texas corporation and wholly-owned subsidiary of Gables Residential
Trust and the general partner of Gables Realty Limited Partnership, contain
similar provisions that are consistent with Texas law.
II-1
<PAGE>
Each of Gables Residential Trust's executive officers and trustees has
entered into an indemnification agreement with Gables Residential Trust, Gables
Realty Limited Partnership and Gables GP, Inc. The indemnification agreements
require, among other matters, that Gables Residential Trust, Gables Realty
Limited Partnership and Gables GP, Inc. indemnify Gables Residential Trust's
executive officers and trustees to the fullest extent permitted by law and
advance to Gables Residential Trust's executive officers and trustees all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Gables Residential Trust must also indemnify
and advance all expenses incurred by Gables Residential Trust's executive
officer and trustees seeking to enforce their rights under the indemnification
agreements and cover them under Gables Residential Trust'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 contracts cannot be modified unilaterally in the future
by the Board or the shareholders to eliminate the rights they provide.
The registration rights and lock-up agreement between Gables Residential
Trust and the selling shareholders provides for the indemnification of Gables
Residential Trust, its officers, trustees, and other persons for certain
liabilities, including liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS.
--------
4.1 Amended and Restated Declaration of Trust of Gables Residential Trust
(incorporated herein by reference to Gables Residential Trust's
Registration Statement on Form S-11 (File No. 33-70570), as amended).
4.2 Articles Supplementary to Gables Residential Trust's Amended and Restated
Declaration of Trust creating the 8.30% Series A Cumulative Redeemable
Preferred Shares (incorporated herein by reference to Exhibit 4.1 to Gables
Residential Trust's Current Report on Form 8-K dated July 24, 1997 (File
No. 1-12590)).
4.3 Articles of Amendment to Gables Residential Trust's Amended and Restated
Declaration of Trust (incorporated herein by reference to Gables
Residential Trust's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (File No. 1-12590)).
4.4 Articles Supplementary to Gables Residential Trust's Amended and Restated
Declaration of Trust creating the 5.00% Series Z Cumulative Redeemable
Preferred Shares (incorporated herein by reference to Gables Residential
Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(File No. 1-12590)).
4.5 Articles Supplementary to Gables Residential Trust's Amended and Restated
Declaration of Trust creating the 8.625% Series B Cumulative Redeemable
Preferred Shares (incorporated herein by reference to Exhibit 4.1 to Gables
Residential Trust's Current Report on Form 8-K dated November 12, 1998
(File No. 1-12590)).
4.6 Second Amended and Restated Bylaws of Gables Residential Trust, as amended
(incorporated herein by reference to Exhibit 3.1(ii)(a) to Gables
Residential Trust's Annual Report on Form 10-K for the year ended December
31, 1999 (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.
*23.2Consent 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).
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<PAGE>
*99.1 Registration Rights and Lock-Up Agreement dated January 1, 2000.
99.2 Fourth Amended and Restated Agreement of Limited Partnership of Gables
Realty Limited Partnership (incorporated herein by reference to Exhibit 4.2
to Gables Residential Trust's Current Report on Form 8-K dated November 12,
1998 (File No. 1-12590)).
-----------------------
* Filed herewith
ITEM 17. UNDERTAKINGS.
------------
(a) Gables Residential Trust 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 the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the
maximum aggregate offerng price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in 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
Securities and Exchange Commission by Gables Residential Trust 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) Gables Residential Trust hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of Gables Residential Trust'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.
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<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Gables Residential Trust pursuant to the
foregoing provisions, or otherwise, Gables Residential Trust has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by Gables Residential Trust of expenses incurred or paid
by a trustee, officer or controlling person of Gables Residential
Trust 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, Gables Residential Trust 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 Securities Act of 1933 and will be governed
by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia on December 20, 2000.
GABLES RESIDENTIAL TRUST
By: /s/ Chris D. Wheeler
--------------------
Chris D. Wheeler
President 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 Chris D.
Wheeler and Marvin R. Banks, Jr., 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.
Signature Capacity Date
----------------------- ------------------------ ------------------
/s/ Chris D. Wheeler Chairman of the Board of Trustees, December 20, 2000
----------------------- President and Chief Executive
Chris D. Wheeler Officer (Principal Executive Officer)
/s/ Marvin R. Banks, Jr. Senior Vice President and Chief December 20, 2000
----------------------- Financial Officer (Principal
Marvin R. Banks, Jr. Financial Officer)
/s/ Dawn H. Severt Vice President and Chief Accounting
----------------------- Officer (Principal Accounting December 20, 2000
Dawn H. Severt Officer)
/s/ Marcus E. Bromley Trustee December 20, 2000
-----------------------
Marcus E. Bromley
/s/ C. Jordan Clark Senior Vice President, Chief December 20, 2000
----------------------- Investment Officer and Trustee
C. Jordan Clark
/s/ David M. Holland Trustee December 20, 2000
-----------------------
David M. Holland
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<PAGE>
/s/ Lauralee E. Martin Trustee December 20, 2000
-----------------------
Lauralee E. Martin
/s/ John W. McIntyre Trustee December 20, 2000
-----------------------
John W. McIntyre
s/ Michael E. Miles Trustee December 20, 2000
-----------------------
Michael E. Miles
/s/ James D. Motta Trustee December 20, 2000
-----------------------
James D. Motta
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
DESCRIPTION
4.1 Amended and Restated Declaration of Trust of Gables Residential Trust
(incorporated herein by reference to Gables Residential Trust's
Registration Statement on Form S-11 (File No. 33-70570), as amended).
4.2 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 8.30% Series A Cumulative
Redeemable Preferred Shares (incorporated herein by reference to
Exhibit 4.1 to Gables Residential Trust's Current Report on Form 8-K
dated July 24, 1997 (File No. 1-12590)).
4.3 Articles of Amendment to Gables Residential Trust's Amended and
Restated Declaration of Trust (incorporated herein by reference to
Gables Residential Trust's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998 (File No. 1-12590)).
4.4 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 5.00% Series Z Cumulative
Redeemable Preferred Shares (incorporated herein by reference to
Gables Residential Trust's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998 (File No. 1-12590)).
4.5 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 8.625% Series B Cumulative
Redeemable Preferred Shares (incorporated herein by reference to
Exhibit 4.1 to Gables Residential Trust's Current Report on Form 8-K
dated November 12, 1998 (File No. 1-12590)).
4.6 Second Amended and Restated Bylaws of Gables Residential Trust, as
amended (incorporated herein by reference to Exhibit 3.1(ii)(a) to
Gables Residential Trust's Annual Report on Form 10-K for the year
ended December 31, 1999 (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 and Lock-Up Agreement dated January 1, 2000.
99.2 Fourth Amended and Restated Agreement of Limited Partnership of Gables
Realty Limited Partnership (incorporated herein by reference to
Exhibit 4.2 to Gables Residential Trust's Current Report on Form 8-K
dated November 12, 1998 (File No. 1-12590)).
----------------------------
* Filed herewith
II-7
