As filed with the Securities and Exchange Commission on June 19, 1998
Registration No 333- _____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMLI RESIDENTIAL PROPERTIES TRUST
(Exact name of Registrant as specified in its charter)
Maryland 36-3925916
----------------------- ----------------------
(State of organization) (I.R.S. Employer
Identification Number)
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
(312) 443-1477
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Allan J. Sweet
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
(312) 443-1477
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy of service to:
Edward J. Schneidman
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Approximate date of commencement of proposed sale to the public:
From time to time after the Registration Statement becomes effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box: [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box:
[ X ]
<PAGE>
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
[ ] ______________________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____________________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO AMOUNT TO OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED BE REGISTERED PER SHARE (1) PRICE (1) FEE
- ------------------ ------------- --------------- ------------------ ------------
<S> <C> <C> <C> <C>
Common Shares of
Beneficial Interest,
par value $0.01 per
share 276,013 shares $21.72 $5,995,003 $1,768.53
<FN>
(1) In accordance with Rule 457(c), estimated solely for purposes of determining the registration fee on
the basis of the average of the high and low sale prices of the Common Shares of Beneficial Interest as reported
on the New York Stock Exchange on June 16, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY
ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 19, 1998
PROSPECTUS
- ----------
AMLI RESIDENTIAL PROPERTIES TRUST
276,013 Common Shares
This Prospectus relates to 276,013 Common Shares of Beneficial
Interest, par value $.01 per share (the "Common Shares" and such 276,013
Common Shares, the "Shares"), of AMLI Residential Properties Trust, a
Maryland real estate investment trust (the "Company"), which may be offered
from time to time by certain selling shareholders (the "Selling
Shareholders"). The Shares may be issued from time to time upon exchange
of 276,013 limited partnership interests ("Units") in AMLI Residential
Properties, L.P. (the "Operating Partnership") which were issued to the
Selling Shareholders, as consideration in the acquisition by the Operating
Partnership of certain assets. See "Selling Shareholders." The Shares are
being registered to permit public secondary trading of the Shares from time
to time after the date of this Prospectus, but the registration of the
Shares does not necessarily mean that any of the Shares will be offered or
sold by the Selling Shareholders.
The Common Shares are listed on the New York Stock Exchange (the
"NYSE") under the symbol "AML." To ensure that the Company maintains its
qualification as a real estate investment trust ("REIT"), ownership by any
person is limited to 5% of the outstanding Common Shares and preferred
shares of beneficial interest of the Company, with certain exceptions. See
"Description of Capital Shares-Description of Common Shares-Restrictions on
Transfer."
The Selling Shareholders may from time to time offer and sell the
Shares on the NYSE or otherwise at market prices then prevailing or at
prices and upon terms then obtainable. Sales may be made in ordinary
brokerage transactions, in block transactions, in privately negotiated
transactions, pursuant to Rule 144 ("Rule 144") under the Securities Act of
1933, as amended (the "Securities Act"), or otherwise. If the Shares are
sold through brokers, customary brokerage commissions and charges are
expected to be paid by the Selling Shareholders.
The Company will not receive any of the proceeds from the sale of any
of the Shares by the Selling Shareholders but has agreed to bear certain
expenses of registration and sale of the Shares.
On June 17, 1998, the last reported sale price of the Common Shares
on the NYSE was $22 per share.
<PAGE>
_________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
_________________
The date of this Prospectus is June 19, 1998
<PAGE>
No person is authorized in connection with any offering made hereby
to give any information or to make any representation not contained in this
Prospectus, and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company or the Selling
Shareholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Common Shares
offered hereby, nor does it constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby to any person in
any jurisdiction in which it is unlawful to make such an offer or
solicitation to such person. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstance create any implication
that the information contained herein is correct as of any date subsequent
to the date hereof.
THE COMPANY
The Company and its affiliates constitute a self-administered and
self-managed REIT which was organized in February 1994 to continue and
expand the multifamily property business conducted by AMLI Realty Co. and
its affiliates ("ARC") since 1980. The Company and its affiliates own,
manage, lease, acquire and develop institutional quality apartment
communities. The Company's communities (the "Communities") are located in
specific markets in the Southwest, Southeast and Midwest areas of the
United States. The Company also holds interests in co-investment ventures
involving residential apartment communities (the "Co-Investment
Communities"). Additionally, the Company engages in development activities
on its own and through co-investment joint ventures.
The business of the Company is operated through the Operating
Partnership, AMLI Management Company (the "Management Company"), AMLI
Institutional Advisors, Inc. ("AIA") and AMLI Residential Construction,
Inc. ("Amrescon" and together with the Management Company and AIA, the
"Service Companies"). The Company is the sole general partner of the
Operating Partnership, a Delaware limited partnership, through which it
owns the Communities and its interests in the Co-Investment Communities.
As of June 17, 1998, the Company owned 85.1% of the Units in the Operating
Partnership. The Management Company provides management and leasing
services to each of the Communities, the Co-Investment Communities and
several additional properties in which the Company has no interest. AIA, a
"QPAM" (qualified professional asset manager), renders real estate
investment advice to institutional capital sources, primarily pension
plans, endowments, foundations and insurance companies. The Company
actively pursues co-investments through relationships administered by AIA,
in this way seeking to diversify the sources of its equity capital for
investment in apartment communities. Amrescon provides general
contracting, construction management and landscaping services to the
Company and its managed ventures.
The Company was formed as a Maryland real estate investment trust on
December 16, 1993. The Company's executive offices are located at 125
South Wacker Drive, Suite 3100, Chicago, Illinois 60606 and its telephone
number is (312) 443-1477. The Company's principal office is in Chicago,
Illinois with regional offices in Dallas, Texas and Atlanta, Georgia.
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds of the sale of the
Shares offered hereby. All proceeds from the sale of the Shares will be
received by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table provides the name of each Selling Shareholder
and, assuming in each case the conversion into Common Shares of all Units
held by the Selling Shareholder, the total number of Common Shares held by
each Selling Shareholder before the offering, the total number of Common
Shares held by each Selling Shareholder which are offered hereby and the
number of Common Shares (based on the total number of Common Shares and
Units held by the Selling Shareholder as of the date hereof) which will be
held by each Selling Shareholder after the offering assuming that all
Common Shares offered hereby are sold. If, however, all the Common Shares
offered hereby are sold by the Selling Shareholders, no Selling Shareholder
(based on the total number of Common Shares and Units held by the Selling
Shareholders as of the date hereof and assuming conversion into Common
Shares of all Units held by the Selling Shareholders) would hold one
percent or more of the outstanding Common Shares.
Number of
Number of Common Shares
Common Shares Maximum Beneficially
Beneficially Number of Held After
Held Prior Common Shares Completion
to the Offered of the
Name Offering Hereby Offering
- ---- ----------- ------------ ------------
Windsong Apartments, Inc. 446 446 0
Albert Zale 11,173 11,173 0
Edward Zale 43,072 43,072 0
CFP Residential LP 6,382 6,382 0
Brian K. Cranor(1) 11,573 7,139 4,434
Trammel S. Crow 55 55 0
David J. Elwell 2,213 2,213 0
David J. Hubbard 26,019 26,019 0
J. Ronald Terwilliger
Grantor Trust 20,484 20,484 0
Leonard W. Wood Family
Limited Partnership 39,194 39,194 0
Leonard W. Wood Family
Limited Partnership
Grantor Trust 19,747 19,747 0
Randy J. Pace 6,640 6,640 0
Perry M. Parrott, Jr. 13,666 13,666 0
TCF Residential
Partnership, Ltd. 21,111 21,111 0
J. Ronald Terwilliger 28,043 28,043 0
James E. Thomas, Jr.(2) 12,991 8,541 4,450
Leonard W. Wood 1,084 1,084 0
Crow Residential Realty
Investors, L.P. 21,004 21,004 0
<PAGE>
(1) Since January 2, 1998, Brian K. Cranor has served as Senior
Vice President of the Company and as Senior Vice President of AIA.
(2) Since December 22, 1997, James E. Thomas, Jr. has served as
Senior Vice President of the Company and as Senior Vice President of
Amrescon.
DESCRIPTION OF CAPITAL SHARES
SHARES OF BENEFICIAL INTEREST AND SHAREHOLDER LIABILITY
The Company's Amended and Restated Declaration of Trust (the
"Declaration of Trust") provides that the Company may issue up to
150,000,000 shares of beneficial interest, par value $.01 per share. No
holder of any class of shares of beneficial interest of the Company will
have any preemptive right to subscribe for any securities of the Company
except as may be granted by the Board of Trustees in authorizing the
issuance of a class of preferred shares of beneficial interest. Any class
of preferred shares which may be issued in the future, together with the
Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, par
value $.01 per share, and the Series B Cumulative Redeemable Preferred
Shares of Beneficial Interest, par value $.01 per share, are referred to
herein as "Preferred Shares." The Company's Declaration of Trust
authorizes the Trustees to classify or reclassify any unissued Common
Shares or Preferred Shares by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption.
Both Maryland statutory law governing real estate investment trusts
organized under the laws of that state and the Company's Declaration of
Trust provide that no shareholder of the Company will be personally liable
for any obligations of the Company. The Company's Declaration of Trust
further provides, with certain limited exceptions, that the Company shall
indemnify each shareholder against claims or liabilities to which the
shareholder may become subject by reason of his being or having been a
shareholder and that the Company shall reimburse each shareholder for all
legal and other expenses reasonably incurred by him in connection with any
such claim or liability. In addition, it is the Company's policy to
include a clause in its contracts, including the partnership agreement of
the Operating Partnership, which provides that shareholders assume no
personal liability for obligations entered into on behalf of the Company.
However, with respect to tort claims, contractual claims where shareholder
liability is not so negated, claims for taxes and certain statutory
liability, a shareholder may, in some jurisdictions, be personally liable
to the extent that such claims are not satisfied by the Company. Inasmuch
as the Company will carry public liability insurance which it considers
adequate, any risk of personal liability to shareholders is limited to
situations in which the Company's assets plus its insurance coverage would
be insufficient to satisfy the claims against the Company and its
shareholders.
<PAGE>
DESCRIPTION OF COMMON SHARES
GENERAL
The summary of certain terms and provisions of the Common Shares
contained in this Prospectus does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the terms and provisions
of the Company's Declaration of Trust and Bylaws, as amended (the
"Bylaws"), which are incorporated by reference herein.
All outstanding Common Shares issued are duly authorized, fully paid
and, except as described under "-Shares of Beneficial Interest and
Shareholder Liability," non-assessable. Subject to the provisions of the
Company's Declaration of Trust regarding Excess Shares (as defined below),
each outstanding Common Share entitles the holder thereof to one vote on
all matters voted on by shareholders, including the election of Trustees.
Holders of Common Shares do not have the right to cumulate their votes in
the election of Trustees, which means that the holders of a majority of the
outstanding Common Shares can elect all of the Trustees then standing for
election. Distributions may be paid to the holders of Common Shares if and
when declared by the Board of Trustees of the Company out of funds legally
available therefor, subject to the provisions of the Company's Declaration
of Trust regarding Excess Shares. The Company currently pays regular
quarterly dividends. Holders of Common Shares have no conversion,
redemption, preemptive or exchange rights to subscribe to any securities of
the Company. If the Company is liquidated, each outstanding Common Share
will be entitled to participate pro rata in the assets remaining after
payment of, or adequate provision for, all known debts and liabilities of
the Company and the rights of holders of any Preferred Shares. The rights
of holders of Common Shares are subject to the rights and preferences
established by the Board of Trustees for any Preferred Shares which have
been or may be issued by the Company.
RESTRICTIONS ON TRANSFER
The Company's Declaration of Trust contains certain restrictions on
the number of Common Shares and Preferred Shares that individual
shareholders may own. For the Company to qualify as a REIT under the
Internal Revenue Service Code of 1986, as amended (the "Code"), no more
than 50% in value of its shares of beneficial interest (after taking into
account options to acquire shares of beneficial interest) may be owned,
directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities and constructive ownership among specified
family members) during the last half of a taxable year (other than the
first taxable year) or during a proportionate part of a shorter taxable
year. The shares of beneficial interest must also be beneficially owned
(other than during the first taxable year) by 100 or more persons during at
least 335 days of a taxable year or during a proportionate part of a
shorter taxable year. Because the Company expects to qualify as a REIT,
the Declaration of Trust of the Company contains restrictions on the
acquisition of Common Shares and Preferred Shares intended to ensure
compliance with these requirements.
<PAGE>
Subject to certain exceptions specified in the Company's Declaration
of Trust, no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than 5% (the "Ownership Limit") of
the number or value of the issued and outstanding shares of beneficial
interest of the Company. The Company's Board of Trustees, upon receipt of
a ruling from the Internal Revenue Service, an opinion of counsel or other
evidence satisfactory to the Board of Trustees, and upon such other
conditions as the Board of Trustees may direct, may also exempt a proposed
transferee from the Ownership Limit. As a condition of such exemption, the
intended transferee must give written notice to the Company of the proposed
transfer no later than the fifteenth day prior to any transfer which, if
consummated, would result in the intended transferee owning shares in
excess of the Ownership Limit. The Board of Trustees of the Company may
require such opinions of counsel, affidavits, undertakings or agreements as
it may deem necessary or advisable in order to determine or ensure the
Company's status as a REIT. Any transfer of Common Shares or Preferred
Shares that would (i) create a direct or indirect ownership of shares in
excess of the Ownership Limit, (ii) result in the shares being beneficially
owned by fewer than 100 persons as provided in Section 856(a) of the Code
or (iii) result in the Company being "closely held" within the meaning of
Section 856(h) of the Code, shall be null and void, and the intended
transferee will acquire no rights to the shares. The foregoing
restrictions on transferability and ownership will not apply if the Board
of Trustees determines, which determination must be approved by the
shareholders, that it is no longer in the best interests of the Company to
attempt to qualify, or to continue to qualify, as a REIT.
The Company's Board of Trustees by resolution has excluded from the
foregoing ownership restriction UICI, a NASDAQ National Market traded
holding company with interests in insurance, financial services and
technology which in November of 1996 acquired ARC, and Gregory T. Mutz, who
collectively may own up to 34.9% of the outstanding shares of beneficial
interest of the Company as a group, or, subject to certain limitations,
individually (subject to the group restrictions) up to 29.9% of the
outstanding shares of beneficial interest of the Company in the case of
UICI and up to 24.9% in the case of Gregory T. Mutz. The Company's
Declaration of Trust excludes certain investors (and their transferees)
from whom apartment communities were obtained in exchange for Units or
Common Shares in connection with the formation of the Company and who would
exceed the Ownership Limit as a result of the ownership of such Common
Shares or the exchange of such Units for Common Shares. In no event will
such persons be entitled to acquire additional shares of beneficial
interest of the Company such that the five largest beneficial owners of
shares of beneficial interest of the Company hold more than 50% of the
total outstanding shares.
Any purported transfer of shares that would result in a person owning
shares in excess of the Ownership Limit or cause the Company to become
"closely held" under Section 856(h) of the Code that is not otherwise
permitted as provided above will constitute excess shares ("Excess
Shares"), which will be transferred pursuant to the Declaration of Trust to
the Company as trustee for the exclusive benefit of the person or persons
to whom the Excess Shares are ultimately transferred, until such time as
the purported transferee retransfers the Excess Shares. While these Excess
<PAGE>
Shares are held in trust, they will not be entitled to vote or to share in
any dividends or other distributions. Subject to the Ownership Limit, the
Excess Shares may be transferred by the purported transferee to any person
(if the Excess Shares would not be Excess Shares in the hands of such
person) at a price not to exceed the price paid by the purported transferee
(or, if no consideration was paid, fair market value), at which point the
Excess Shares will automatically be exchanged for the shares to which the
Excess Shares are attributable. In addition, such Excess Shares held in
trust are subject to purchase by the Company at a purchase price equal to
the lesser of the price paid for the shares by the purported transferee
(or, if no consideration was paid, fair market value) and the fair market
value of the shares of beneficial interest (as reflected in the last
reported sales price reported on the NYSE on the trading day immediately
preceding the relevant date, or if not then traded on the NYSE, the last
reported sales price of such shares on the trading day immediately
preceding the relevant date as reported on any exchange or quotation system
over which such shares may be traded, or if not then traded over any
exchange or quotation system, then the market price of such shares on the
relevant date as determined in good faith by the Board of Trustees of the
Company) on the date the Company elects to purchase.
All certificates representing shares of beneficial interest will bear
a legend referring to the restrictions described above.
TRANSFER AGENT AND REGISTRAR
Harris Trust and Savings Bank has been appointed as transfer agent
and registrar for the Common Shares.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of the material Federal income tax
consequences to the Company and its shareholders of the treatment of the
Company as a REIT. The discussion is general in nature and not exhaustive
of all possible tax considerations, nor does the discussion give a detailed
description of any state, local, or foreign tax considerations. The
discussion does not discuss all aspects of Federal income tax law that may
be relevant to a prospective shareholder in light of his particular
circumstances or to certain types of shareholders (including insurance
companies, financial institutions or broker-dealers, tax exempt
organizations, foreign corporations and persons who are not citizens or
residents of the United States) subject to special treatment under the
federal income tax laws.
THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX
PLANNING, AND EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH ITS TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO IT OF THE PURCHASE,
OWNERSHIP AND SALE OF THE COMMON SHARES, INCLUDING THE FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP AND
SALE, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
If certain detailed conditions imposed by the REIT provisions of the
Code are met, entities, such as the Company, that invest primarily in real
estate and that otherwise would be treated for Federal income tax purposes
as corporations, are generally not taxed at the corporate level on their
"REIT taxable income" that is currently distributed to shareholders. This
treatment substantially eliminates the "double taxation" (i.e., at both the
corporate and shareholder levels) that generally results from the use of
corporations.
<PAGE>
If the Company fails to qualify as a REIT in any year, however, it
will be subject to Federal income taxation as if it were a domestic
corporation, and its shareholders will be taxed in the same manner as
shareholders of ordinary corporations. In this event, the Company could be
subject to potentially significant tax liabilities, and therefore the
amount of cash available for distribution to its shareholders would be
reduced or eliminated.
The Company has elected REIT status effective for the taxable year
ended December 31, 1994, and the Board of Trustees of the Company believes
that the Company has operated and expects that the Company will continue to
operate in a manner that will permit the Company to elect REIT status in
each taxable year thereafter. There can be no assurance, however, that
this belief or expectation will be fulfilled, since qualification as a REIT
depends on the Company continuing to satisfy numerous asset, income and
distribution tests described below, which in turn will be dependent in part
on the Company's operating results.
TAXATION OF THE COMPANY
GENERAL. In any year in which the Company qualifies as a REIT it
will not, in general, be subject to Federal income tax on that portion of
its REIT taxable income or capital gain which is distributed to
shareholders. The Company may, however, be subject to tax at normal
corporate rates upon any taxable income or capital gain not distributed.
Under recently enacted legislation, to the extent that the Company elects
to retain and pay income tax on its net long-term capital gain,
shareholders are required to include their proportionate share of the
Company's undistributed long-term capital gain in income but receive a
credit for their share of any taxes paid on such gain by the Company.
Notwithstanding its qualification as a REIT, the Company may also be
subject to taxation in certain other circumstances. If the Company should
fail to satisfy either the 75% or the 95% gross income test (as discussed
below), and nonetheless maintains its qualification as a REIT because
certain other requirements are met, it will be subject to a 100% tax on the
greater of the amount by which the Company fails to satisfy either the 75%
test or the 95% test, multiplied by a fraction intended to reflect the
Company's profitability. The Company will also be subject to a tax of 100%
on net income from any "prohibited transaction" as described below, and if
the Company has (i) net income from the sale or other disposition of
"foreclosure property" which is held primarily for sale to customers in the
ordinary course of business or (ii) other non-qualifying income from
foreclosure property, it will be subject to tax on such income from
foreclosure property at the highest corporate rate. In addition, if the
Company should fail to distribute during each calendar year at least the
sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its
REIT capital gain net income for such year, and (iii) any undistributed
taxable income from prior years, the Company would be subject to a 4%
excise tax on the excess of such required distribution over the amounts
actually distributed. To the extent that the Company elects to retain and
pay income tax on its long-term capital gain, such retained amounts will be
treated as having been distributed for purposes of the 4% excise tax. The
Company may also be subject to the corporate alternative minimum tax, as
well as tax in certain situations not presently contemplated. Each of the
Management Company, Amrescon and AIA will be taxed on its income at regular
corporate rates. The Company will use the calendar year both for Federal
income tax purposes and for financial reporting purposes.
<PAGE>
In order to qualify as a REIT, the Company must meet, among others,
the following requirements:
SHARE OWNERSHIP TESTS. The Company's shares of beneficial interest
must be held by a minimum of 100 persons for at least 335 days in each
taxable year (or a proportional number of days in any short taxable year).
In addition, at all times during the second half of each taxable year, no
more than 50% in value of the outstanding shares of beneficial interest of
the Company may be owned, directly or indirectly and by applying certain
constructive ownership rules, by five or fewer individuals, which for this
purpose includes certain tax-exempt entities. However, for purposes of
this test, any stock held by a qualified domestic pension or other
retirement trust will be treated as held directly by its beneficiaries in
proportion to their actuarial interest in such trust rather than by such
trust.
In order to attempt to ensure compliance with the foregoing share
ownership tests, the Company has placed certain restrictions on the
ownership and transfer of its shares of beneficial interest to prevent
additional concentration of share ownership. Moreover, to evidence
compliance with these requirements, under Treasury regulations the Company
must maintain records which disclose the actual ownership of its
outstanding shares of beneficial interest. In fulfilling its obligations
to maintain records, the Company must and will demand written statements
each year from the record holders of designated percentages of its shares
of beneficial interest disclosing the actual owners of such shares of
beneficial interest (as prescribed by Treasury regulations). If the Company
complies with the Treasury regulations for ascertaining its actual
ownership and did not know, or exercising reasonable diligence would not
have reason to know, that more than 50% in value of its outstanding shares
of stock were held, actually or constructively, by five or fewer
individuals, then the Company will be treated as meeting such requirement.
A list of those persons failing or refusing to comply with such demand must
be maintained as a part of the Company's records. A shareholder failing or
refusing to comply with the Company's written demand must submit with his
tax return a similar statement disclosing the actual ownership of Company
shares of beneficial interest and certain other information. In addition,
the Company's Declaration of Trust provides restrictions regarding the
ownership and transfer of its shares of beneficial interest that are
intended to assist the Company in continuing to satisfy the share ownership
requirements. See "Description of Capital Shares-Description of Common
Shares-Restrictions on Transfer."
ASSET TESTS. At the close of each quarter of the Company's taxable
year, the Company must satisfy two tests relating to the nature of its
assets (with "assets" being determined in accordance with generally
accepted accounting principles). First, at least 75% of the value of the
Company's total assets must be represented by interests in real property,
interests in mortgages on real property, shares in other REITs, cash, cash
items, government securities and qualified temporary investments. Second,
although the remaining 25% of the Company's assets generally may be
invested without restriction, securities in this class may not exceed
(i) in the case of securities of any one non-government issuer, 5% of the
<PAGE>
value of the Company's total assets or (ii) 10% of the outstanding voting
securities of any one such issuer (the "10% Voting Stock Test"). See "-
Proposed Tax Legislation." Where the Company invests in a partnership
(such as the Operating Partnership), it will be deemed to own a
proportionate share of the partnership's assets. See "-Tax Aspects of the
Company's Investments in Partnerships-General." Accordingly, the Company's
investment in the Communities and the Co-Investment Communities through its
interest in the Operating Partnership is intended to constitute an
investment in qualified assets for purposes of the 75% asset test.
The Operating Partnership owns 100% of the non-voting preferred stock
of each of the Management Company, Amrescon and AIA and 5% of the voting
common stock of each of the Management Company, Amrescon and AIA. See "The
Company." By virtue of its partnership interest in the Operating
Partnership, the Company is deemed to own its pro rata share of the assets
of the Operating Partnership, including the securities of the Management
Company, Amrescon and AIA, as described above. Because the Operating
Partnership owns only 5% of the voting securities of each of the Management
Company, Amrescon and AIA and the preferred stock's approval right in the
case of each of the Management Company, Amrescon and AIA is limited to
certain fundamental corporate actions that could adversely affect the
preferred stock as a class, the 10% limitation on holdings of voting
securities of any one issuer should not be exceeded.
Based upon its analysis of the total estimated value of the
Management Company stock, Amrescon stock and AIA stock and the subordinated
notes of the Management Company and AIA (each, "Subordinated Note"),
respectively, owned by the Operating Partnership relative to the estimated
value of the total assets owned by the Operating Partnership and the other
assets of the Company, the Company believes that the Company's pro rata
share of the non-voting preferred stock, voting common stock and
Subordinated Note of the Management Company owned by the Operating
Partnership does not exceed, on the date of this Prospectus, 5% of the
value of the Company's total assets, that the Company's pro rata share of
the non-voting preferred stock and voting common stock of Amrescon owned by
the Operating Partnership does not exceed, on the date of this Prospectus,
5% of the value of the Company's total assets, and that the Company's pro
rata share of the non-voting preferred stock, voting common stock and
Subordinated Note of AIA owned by the Operating Partnership does not
exceed, on the date of this Prospectus, 5% of the value of the Company's
total assets. As to the securities of any Service Company, this 5%
limitation must be satisfied not only as of the date that the Company
(directly or through the Operating Partnership) acquired securities of the
Management Company, Amrescon or AIA, but also at the end of any quarter in
which the Company increases its interest in the Management Company,
Amrescon or AIA or so acquires other property. In this respect, if the
holder of a right to exchange Units for Common Shares exercises such
rights, the Company will thereby increase its proportionate (indirect)
ownership interest in the Management Company, Amrescon and AIA, thus
requiring the Company to meet the 5% test in any quarter in which such
conversion option is exercised. Although the Company plans to take steps
to ensure that it satisfies the 5% value test for any quarter with respect
to which retesting is to occur, there can be no assurance that such steps
will always be successful or will not require a reduction in the Operating
Partnership's overall interest in the Management Company, Amrescon or AIA.
<PAGE>
GROSS INCOME TESTS. There are currently three separate percentage
tests relating to the sources of the Company's gross income which must be
satisfied for each taxable year. For purposes of these tests, where the
Company invests in a partnership, the Company will be treated as receiving
its share of the income and loss of the partnership, and the gross income
of the partnership will retain the same character in the hands of the
Company as it has in the hands of the partnership. See "-Tax Aspects of
the Company's Investments in Partnerships-General" below. The three tests
are as follows:
THE 75% TEST. At least 75% of the Company's gross income for the
taxable year must be "qualifying income." Qualifying income generally
includes (i) rents from real property (except as modified below);
(ii) interest on obligations secured by mortgages on, or interests in, real
property; (iii) gains from the sale or other disposition of interests in
real property and real estate mortgages, other than gain from property held
primarily for sale to customers in the ordinary course of the Company's
trade or business ("dealer property"); (iv) dividends or other
distributions on shares in other REITs, as well as gain from the sale of
such shares; (v) abatements and refunds of real property taxes; (vi) income
from the operation, and gain from the sale, of property acquired at or in
lieu of a foreclosure of the mortgage secured by such property
("foreclosure property"); (vii) commitment fees received for agreeing to
make loans secured by mortgages on real property or to purchase or lease
real property; and (viii) certain qualified temporary investment income
attributable to the investment of new capital received by the Company in
exchange for its shares during the one-year period following the receipt of
such capital.
Rents received from a tenant will not, however, qualify as rents from
real property in satisfying the 75% test (or the 95% gross income test
described below) if the Company, or an owner of 10% or more of the Company,
directly or constructively owns 10% or more of such tenant. In addition,
if rent attributable to personal property leased in connection with a lease
of real property is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will
not qualify as rents from real property. Moreover, an amount received or
accrued will not qualify as rents from real property (or as interest
income) for purposes of the 75% and 95% gross income tests if it is based
in whole or in part on the income or profits of any person, although an
amount received or accrued generally will not be excluded from "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Finally, for rents received to qualify
as rents from real property for purposes of the 75% and 95% gross income
tests, the Company generally must not operate or manage the property or
furnish or render services to tenants, other than through an "independent
contractor" from whom the Company derives no income, except that the
"independent contractor" requirement does not apply to the extent that the
services provided by the Company are "usually or customarily rendered" in
connection with the rental of space for occupancy only, or are not
otherwise considered "rendered to the occupant for his convenience." For
taxable years beginning after August 5, 1997, a REIT is permitted to render
a DE MINIMIS amount of impermissible services to tenants, or in connection
with the management of property, and still treat amounts received with
respect to that property as rent from real property. The amount received
or accrued by the Company during the taxable year for the impermissible
services with respect to a property may not exceed one percent of all
amounts received or accrued by the Company directly or indirectly from the
<PAGE>
property. The amount received for any service (or management operation)
for this purpose shall be deemed to be not less than 150% of the direct
cost of the REIT in furnishing or rendering the service (or providing the
management or operation).
The Management Company (which does not satisfy the independent
contractor standard) provides management and leasing services to each of
the Communities and each of the Co-Investment Communities and may provide
certain services on any newly acquired properties of the Operating
Partnership. The Company believes for purposes of the 75% and 95% gross
income tests, that the services provided by the Management Company on the
Operating Partnership's properties and any other services and amenities
provided by the Operating Partnership or its agents with respect to such
properties are and will continue to be of the type usually or customarily
rendered in connection with the rental of space for occupancy only. The
Company intends to monitor the services and amenities provided by the
Management Company as management agent as well as by others, if any, on the
properties of the Operating Partnership. The Company intends that services
that cannot be provided directly by the Operating Partnership, the
Management Company or other agents will be performed by independent
contractors.
THE 95% TEST. In addition to deriving 75% of its gross income from
the sources listed above, at least 95% of the Company's gross income for
the taxable year must be derived from the above-described qualifying
income, or from dividends, interest, or gains from the sale or other
disposition of stock or other securities that are not dealer property.
Dividends and interest on any obligations not collateralized by an interest
in real property are included for purposes of the 95% test, but not for
purposes of the 75% test.
For purposes of determining whether the Company complies with the 75%
and the 95% gross income tests, gross income does not include income from
prohibited transactions. A "prohibited transaction" is a sale of dealer
property (excluding foreclosure property); however, it does not include a
sale of property if such property is held by the Company for at least four
years and certain other requirements (relating to the number of properties
sold in a year, their tax bases, and the cost of improvements made thereto)
are satisfied. See "-Taxation of the Company-General" and "-Tax Aspects of
the Company's Investments in Partnerships-Sale of the Communities and Co-
Investment Communities."
The Company believes that, for purposes of both the 75% and the 95%
gross income tests, its investment in the Communities and the Co-Investment
Communities through the Operating Partnership will in major part give rise
to qualifying income in the form of rents, and that gains on sales of the
Communities and the Co-Investment Communities, or of the Company's interest
in the Operating Partnership, generally will also constitute qualifying
income.
The Management Company receives and anticipates continuing to receive
fee income in consideration of the performance of property management and
other services with respect to properties not owned by the Company or the
Operating Partnership, Amrescon receives and anticipates continuing to
receive fee income in consideration of the performance of general
contracting and construction management services, and AIA receives and
anticipates continuing to receive fee income for providing investment
advisory services; however, substantially all income derived by the Company
<PAGE>
from the Management Company, Amrescon and AIA will be in the form of
dividends on the preferred stock and common stock of each of the Service
Companies owned by the Operating Partnership and interest on the
Subordinated Notes. Such dividends and interest income will satisfy the
95%, but not the 75%, gross income test (as discussed above). In addition,
the Company's share of any income realized on interest rate swap or cap
agreements, including income received at the time of entering into such
agreements, generally will satisfy the 95%, but not the 75%, gross income
test. The Company intends to closely monitor its non-qualifying income and
anticipates that non-qualifying income on its other investments and
activities, including such dividend income, interest income and interest
rate swap or cap income (if any), will not result in the Company failing
either the 75% or 95% gross income test.
Even if the Company fails to satisfy one or both of the 75% or 95%
gross income tests for any taxable year, it may still qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions will generally be available if: (i) the Company's
failure to comply was due to reasonable cause and not to willful neglect;
(ii) the Company reports the nature and amount of each item of its income
included in the tests on a schedule attached to its tax return; and
(iii) any incorrect information on this schedule is not due to fraud with
intent to evade tax. If these relief provisions apply, however, the
Company will nonetheless be subject to a 100% tax on the greater of the
amount by which it fails either the 75% or 95% gross income test,
multiplied by a fraction intended to reflect the Company's profitability.
ANNUAL DISTRIBUTION REQUIREMENTS. In order to qualify as a REIT, the
Company is required to distribute dividends (other than capital gain
dividends) to its shareholders each year in an amount at least equal to
(A) the sum of (i) 95% of the Company's REIT taxable income (computed
without regard to the dividends paid deduction and the Company's net
capital gain) and (ii) 95% of the net income (after tax), if any, from
foreclosure property, minus (B) the sum of certain items of non-cash
income. To the extent that the Company does not distribute all of its net
capital gain or distributes at least 95%, but less than 100%, of its REIT
taxable income, as adjusted, it will be subject to tax on the undistributed
amount at regular capital gains or ordinary corporate tax rates, as the
case may be. For taxable years beginning after August 5, 1997, a REIT is
permitted, with respect to undistributed net long-term capital gains it
received during the taxable year, to designate in a notice mailed to
shareholders within 60 days of the end of the taxable year (or in a notice
mailed with its annual report for the taxable year) such amount of such
gains which its shareholders are to include in their taxable income as
long-term capital gains. Thus, if the Company made this designation, the
shareholders of the Company would include in their income as long-term
capital gains their proportionate share of the undistributed net capital
gains as designated by the Company and the Company would have to pay the
tax on such gains within 30 days of the close of its taxable year. Each
shareholder of the Company would be deemed to have paid such shareholder's
share of the tax paid by the Company on such gains, which tax would be
credited or refunded to the shareholder. A shareholder would increase his
tax basis in the Company stock by the difference between the amount of
income to the holder resulting from the designation less the holder's
credit or refund for the tax paid by the Company.
<PAGE>
The Company intends to make timely distributions sufficient to
satisfy the annual distribution requirements. In this regard, the Amended
and Restated Partnership Agreement of the Operating Partnership, as amended
(the "Partnership Agreement"), authorizes the Company, as general partner,
to take such steps as may be necessary to cause the Operating Partnership
to distribute to its partners an amount sufficient to permit the Company to
meet these distribution requirements. It is possible that the Company may
not have sufficient cash or other liquid assets to meet the 95%
distribution requirement, due to timing differences between the actual
receipt of income and actual payment of expenses on the one hand, and the
inclusion of such income and deduction of such expenses in computing the
Company's REIT taxable income on the other hand; due to the Operating
Partnership's inability to control cash distributions with respect to any
properties as to which it does not have decision making control; or for
other reasons. To avoid a problem with the 95% distribution requirement,
the Company will closely monitor the relationship between its REIT taxable
income and cash flow and, if necessary, intends to borrow funds (or cause
the Operating Partnership or other affiliates to borrow funds) in order to
satisfy the distribution requirement. However, there can be no assurance
that such borrowing would be available at such time.
If the Company fails to meet the 95% distribution requirement as a
result of an adjustment to the Company's tax return by the Internal Revenue
Service, the Company may retroactively cure the failure by paying a
"deficiency dividend" (plus applicable penalties and interest) within a
specified period.
FAILURE TO QUALIFY. If the Company fails to qualify for taxation as
a REIT in any taxable year and the relief provisions do not apply, the
Company will be subject to tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates.
Distributions to shareholders in any year in which the Company fails to
qualify as a REIT will not be deductible by the Company, nor generally will
they be required to be made under the Code. In such event, to the extent
of current and accumulated earnings and profits, all distributions to
shareholders will be taxable as ordinary income, and, subject to certain
limitations in the Code, corporate distributes may be eligible for the
dividends received deduction. Unless entitled to relief under specific
statutory provisions, the Company also will be disqualified from
re-electing taxation as a REIT for the four taxable years following the
year during which qualification was lost.
TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS
GENERAL. The Company holds a partnership interest in the Operating
Partnership. See "The Company." In general, a partnership is a
"pass-through" entity which is not subject to Federal income tax. Rather,
partners are allocated their proportionate shares of the items of income,
gain, loss, deduction and credit of a partnership, and are potentially
subject to tax thereon, without regard to whether the partners receive a
distribution from the partnership. The Company will include its
proportionate share of the foregoing partnership items for purposes of the
various REIT gross income tests and in the computation of its REIT taxable
income. See "-Taxation of the Company-General" and "-Gross Income Tests."
<PAGE>
Accordingly, any resultant increase in the Company's REIT taxable
income from its interest in the Operating Partnership (whether or not a
corresponding cash distribution is also received from the Operating
Partnership) will increase its distribution requirements (see "-Taxation of
the Company-Annual Distribution Requirements"), but will not be subject to
Federal income tax in the hands of the Company provided that an amount
equal to such income is distributed by the Company to its shareholders.
Moreover, for purposes of the REIT asset tests (see "-Taxation of the
Company-Asset Tests"), the Company will include its proportionate share of
assets held by the Operating Partnership.
ENTITY CLASSIFICATION. The Company's interest in the Operating
Partnership involves special tax considerations, including the possibility
of a challenge by the Internal Revenue Service of the status of the
Operating Partnership as a partnership (as opposed to an association
taxable as a corporation for Federal income tax purposes). If the
Operating Partnership were to be treated as an association, it would be
taxable as a corporation and therefore subject to an entity-level tax on
its income. In such a situation, the character of the Company's assets and
items of gross income would change, which would preclude the Company from
satisfying the REIT asset tests and the REIT gross income tests (see "-
Taxation of the Company-Asset Tests" and "-Gross Income Tests"), which in
turn would prevent the Company from qualifying as a REIT. (See "-Taxation
of the Company-Failure to Qualify" above, for a discussion of the effect of
the Company's failure to meet such tests.)
TAX ALLOCATIONS WITH RESPECT TO THE COMMUNITIES. Pursuant to
Section 704(c) of the Code, income, gain, loss and deduction attributable
to appreciated or depreciated property that is contributed to a partnership
in exchange for an interest in the partnership (such as certain of the
Communities), must be allocated in a manner such that the contributing
partner is charged with, or benefits from, respectively, the unrealized
gain or unrealized loss associated with the property at the time of the
contribution. The amount of such unrealized gain or unrealized loss is
generally equal to the difference between the fair market value of the
contributed property at the time of contribution, and the adjusted tax
basis of such property at the time of contribution (a "Book-Tax
Difference"). Such allocations are solely for Federal income tax purposes
and do not affect the book capital accounts or other economic arrangements
among the partners. The formation of the Operating Partnership included
contributions of appreciated property (including certain Communities or
interests therein). Consequently, the Partnership Agreement requires
certain allocations to be made in a manner consistent with Section 704(c)
of the Code.
In general, certain contributors of certain of the Communities or
interests therein will be allocated lower amounts of depreciation
deductions for tax purposes and increased taxable income and gain on sale
by the Operating Partnership on the contributed assets (including certain
of the Communities). This will tend to eliminate the Book-Tax Difference
over the life of the Operating Partnership. However, the special
allocation rules of Section 704(c) do not always entirely rectify the
Book-Tax Difference on an annual basis or with respect to a specific
taxable transaction such as a sale or a deemed sale, and accordingly
variations from normal Section 704(c) principles may arise, which could
result in the allocation of additional taxable income to the Company in
excess of corresponding cash proceeds in certain circumstances.
<PAGE>
Treasury regulations issued under Section 704(c) of the Code provide
partnerships with a choice of several methods of accounting for Book-Tax
Differences, including retention of the method under current law. The
Operating Partnership and the Company will use the remedial method for
making allocations under Section 704(c) with respect to the existing
Communities.
With respect to any property purchased by the Operating Partnership
subsequent to the admission of the Company to the Operating Partnership, in
general, such property will initially have a tax basis equal to its fair
market value and Section 704(c) of the Code will not apply.
SALE OF THE COMMUNITIES AND CO-INVESTMENT COMMUNITIES. The Company's
share of any gain realized by the Operating Partnership on the sale of any
dealer property generally will be treated as income from a prohibited
transaction that is subject to a 100% penalty tax. See "-Taxation of the
Company-General" and "-Gross Income Tests-The 95% Test." Under existing
law, whether property is dealer property is a question of fact that depends
on all the facts and circumstances with respect to the particular
transaction. The Operating Partnership intends to hold the Communities and
Co-Investment Communities for investment with a view to long-term
appreciation, to engage in the business of acquiring, owning, operating and
developing the Communities, Co-Investment Communities and other multifamily
residential properties, and to make such occasional sales of the
Communities, Co-Investment Communities and other properties acquired
subsequent to the date hereof as are consistent with the Company's
investment objectives. Based upon the Company's investment objectives, the
Company believes that overall the Communities and Co-Investment Communities
should not be considered dealer property and that the amount of income from
prohibited transactions, if any, will not be material.
TAXATION OF SHAREHOLDERS
TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS. As long as the Company
qualifies as a REIT, distributions made to the Company's taxable domestic
shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends or retained capital gains) will be
taken into account by them as ordinary income and will not be eligible for
the dividends received deduction for corporations. Distributions (and for
tax years beginning after August 5, 1997, undistributed amounts) that are
designated as capital gain dividends will be taxed as long-term capital
gains (to the extent they do not exceed the Company's actual net capital
gain for the taxable year) without regard to the period for which the
shareholder has held its shares of beneficial interest of the Company.
However, corporate shareholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income. To the extent that the
Company makes distributions in excess of current and accumulated earnings
and profits, these distributions are treated first as a tax-free return of
capital to the shareholder, reducing the tax basis of a shareholder's
shares of beneficial interest by the amount of such excess distribution
(but not below zero), with distributions in excess of the shareholder's tax
basis being taxed as capital gains (if the shares of beneficial interest
are held as a capital asset). In addition, any dividend declared by the
Company in October, November or December of any year and payable to a
shareholder of record on a specific date in any such month shall be treated
as both paid by the Company and received by the shareholder on December 31
of such year, provided that the dividend is actually paid by the Company
during January of the following calendar year. Shareholders may not
include in their individual income tax returns any net operating losses or
<PAGE>
capital losses of the Company. Federal income tax rules may also require
that certain minimum tax adjustments and preferences be apportioned to
Company shareholders.
In general, any loss upon a sale or exchange of shares of beneficial
interest by a shareholder who has held such shares of beneficial interest
for six months or less (after applying certain holding period rules) will
be treated as a long-term capital loss, to the extent of distributions from
the Company required to be treated by such shareholder as long-term capital
gains.
The Company is permitted under the Code to retain and pay income tax
on its net capital gain for any taxable year. Under the Taxpayer Relief
Act of 1997 (the "1997 Act"), however, if the Company so elects, a
shareholder must include in income such shareholder's proportionate share
of the Company's undistributed capital gain for the taxable year, and will
be deemed to have paid such shareholder's proportionate share of the income
tax paid by the Company with respect to such undistributed capital gain.
Such tax would be credited against the shareholder's tax liability and
subject to normal refund procedures. In addition, each shareholder's basis
in such shareholder's Common Shares would be increased by the amount of
undistributed capital gain (less the tax paid by the Company) included in
the shareholder's income.
The 1997 Act also made certain changes to the Code with respect to
taxation of net capital gains for individuals (and for certain trusts and
estates). Gain from the sale or exchange of Common Shares held for more
than 18 months will be taxed at a maximum capital gain rate of 20%. The
1997 Act also provide a maximum rate of 25% for "unrecaptured Section 1250
gain" recognized on the sale or exchange of certain real estate assets held
for more than 18 months, introduces special rules for "qualified 5-year
gain," and makes certain other changes to prior law.
On November 10, 1997, the Internal Revenue Service issued Notice 97-
64, which provides generally that the Company may classify portions of its
designated capital gain dividends and deemed distributions of retained
capital gains as (i) a 20% rate gain distribution (which would be taxed as
capital gain in the 20% group), (ii) an unrecaptured Section 1250 gain
distribution (which would be taxed as capital gain in the 25% group) or
(iii) a 28% rate gain distribution (which would be taxed as capital gain in
the 28% group). If no designation is made, the entire designated capital
gain dividend will be treated as a 28% rate capital gain distribution.
Notice 97-64 provides that the Company must determine the maximum amounts
that it may designate as 20% and 25% rate capital gain dividends by
performing the computation required by the Code as if the Company were an
individual whose ordinary income was subject to a marginal tax rate of at
least 28%.
In general, any loss upon a sale or exchange of Common Shares by a
shareholder who has held such Common Shares for six months or less (after
applying certain holding period rules) will be treated as a long-term
capital loss, to the extent of distribution from the Company required to be
treated by such shareholders as long-term capital gains.
<PAGE>
Shareholders of the Company should consult their tax advisor with
regard to (i) the application of the changes made by the 1997 Act with
respect to taxation of capital gains and capital gain dividends and (ii)
state, local and foreign taxes on capital gains.
BACKUP WITHHOLDING. The Company will report to its domestic
shareholders and to the Internal Revenue Service the amount of dividends
paid for each calendar year, and the amount of tax withheld, if any, with
respect thereto. Under the backup withholding rules, a shareholder may be
subject to backup withholding at the rate of 31% with respect to dividends
paid unless such shareholder (i) is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact or
(ii) provides a 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 shareholder that does not
provide the Company with its correct taxpayer identification number may
also be subject to penalties imposed by the Internal Revenue Service. Any
amount paid as backup withholding is available as a credit against the
shareholder's income tax liability. In addition, the Company may be
required to withhold a portion of capital gain distributions made to any
shareholders who fail to certify their non-foreign status to the Company.
See "Certain United States Tax Considerations for Non-U.S. Shareholders-
Distributions from the Company-Capital Gain Dividends" below.
TAXATION OF TAX-EXEMPT SHAREHOLDERS. The Internal Revenue Service
has issued a revenue ruling in which it held that amounts distributed by a
REIT to a tax-exempt employees' pension trust do not constitute unrelated
business taxable income ("UBTI"). Subject to the discussion below
regarding a "pension-held REIT," based upon such ruling and the statutory
framework of the Code, distributions by the Company to a shareholder that
is a tax-exempt entity should not constitute UBTI, provided that the
tax-exempt entity has not financed the acquisition of its shares with
"acquisition indebtedness" within the meaning of the Code, that the shares
are not otherwise used in an unrelated trade or business of the tax-exempt
entity, and that the Company, consistent with its present intent, does not
hold a residual interest in a real estate mortgage investment conduit.
However, if any pension or other retirement trust that qualifies
under Section 401(a) of the Code ("qualified pension trust") holds more
than 10% by value of the interests in a "pension-held REIT" at any time
during a taxable year, a portion of the dividends paid to the qualified
pension trust by such REIT may constitute UBTI. For these purposes, a
"pension-held REIT" is defined as a REIT if (i) such REIT would not have
qualified as a REIT but for the provisions of the Code which look through
such a qualified pension trust in determining ownership of shares of the
REIT and (ii) at least one qualified pension trust holds more than 25% by
value of the interests of such REIT or one or more qualified pension trusts
(each owning more than a 10% interest by value in the REIT) hold in the
aggregate more than 50% by value of the interests in such REIT.
<PAGE>
OTHER TAX CONSIDERATIONS
THE MANAGEMENT COMPANY, AMRESCON AND AIA; OTHER CONSIDERATIONS. A
portion of the cash to be used by the Operating Partnership to fund
distributions to partners, including the Company, is expected to come from
the Management Company, Amrescon and AIA through dividends on the common
and preferred stock of the Management Company, Amrescon and AIA held by the
Operating Partnership and from interest on the Subordinated Notes. In
addition, the Management Company, Amrescon and AIA will each receive income
from the Company, the Operating Partnership and unrelated third parties.
Because the Company, the Operating Partnership, the Management Company,
Amrescon and AIA are related through stock or partnership ownership, income
of the Management Company, Amrescon or AIA from services performed for the
Company and the Operating Partnership may be subject to certain rules under
which additional income may be allocated to the Management Company,
Amrescon or AIA. On account of such ownership relationships, the
allocation of certain expenses and reimbursements thereof among the
Company, the Management Company, the Operating Partnership, Amrescon and
AIA could be subject to additional scrutiny by the Internal Revenue
Service.
Each of the Management Company, Amrescon and AIA will pay Federal and
state income taxes at the full applicable corporate rates on its income
prior to payment of any dividends. Each of the Management Company,
Amrescon and AIA will attempt to minimize the amount of such taxes, but
there can be no assurance whether or the extent to which measures taken to
minimize taxes will be successful. To the extent that the Management
Company, Amrescon and AIA are required to pay Federal, state, or local
taxes, the cash available for distribution by the Company to shareholders
will be reduced accordingly.
In addition, to the extent that tax exempt entities and foreign
persons hold shares of beneficial interest of the Company, the interest
expense deductions of the Management Company and AIA on the Subordinated
Notes could be reduced.
RECENT PROPOSED TAX LEGISLATION
On February 2, 1998, the Clinton administration released its budget
proposal for fiscal year 1999. The proposal includes a number of
provisions affecting REITs. One proposed provision would amend the 10%
Voting Stock Test described above. Pursuant to the Clinton administration
proposal, a REIT would remain subject to the current restriction and would
also be precluded from owning more than 10% of the value of all classes of
stock of any one issuer. If the proposal were enacted as currently
drafted, it would be effective with respect to stock acquired on or after
the date of the first committee action. To the extent that the Company's
current stock ownership in a subsidiary is grandfathered by virtue of this
effective date, the grandfathered status would terminate with respect to
the subsidiary if the subsidiary engaged in a new trade or business or
acquired substantial new assets.
<PAGE>
Because the Company owns more than 10% of the value of the securities
of each of the Management Company, Amrescon and AIA, it could not presently
satisfy the new 10% value limitation with respect to such corporations.
Accordingly, if the proposal were enacted as currently drafted and the
Management Company, Amrescon or AIA were to engage in a new trade or
business or acquire substantial new assets, the grandfathered status of the
Company's ownership of stock in these entities would terminate and the
Company would fail to qualify as a REIT. Moreover, the Company would not
be able to own more than 10% of the vote or value of any subsidiary formed
after the effective date of the proposal. Thus, the proposal, if enacted
as currently drafted, would materially impede the ability of the Company to
engage in new third-party management or similar activities.
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX
CONSEQUENCES. Prospective shareholders should recognize that the present
Federal income tax treatment of investment in the Company may be modified
by legislative, judicial or administrative action at any time and that any
such action may affect investments and commitments previously made. The
rules dealing with Federal income taxation are constantly under review by
persons involved in the legislative process and by the Internal Revenue
Service and the Treasury Department, resulting in revisions of regulations
and revised interpretations of established concepts as well as statutory
changes. No assurance can be given as to the form or content (including
with respect to effective dates) of any tax legislation which may be
enacted. Revisions in Federal tax laws and interpretations thereof could
adversely affect the tax consequences of investment in the Company.
STATE AND LOCAL TAXES. The Company and its shareholders may be
subject to state or local taxation, and the Company and the Operating
Partnership may be subject to state or local tax withholding requirements,
in various jurisdictions, including those in which it or they transact
business or reside. The state and local tax treatment of the Company and
its shareholders may not conform to the Federal income tax consequences
discussed above. Consequently, prospective shareholders should consult
their own tax advisors regarding the effect of state and local tax laws on
an investment in shares of beneficial interest of the Company.
CERTAIN UNITED STATES TAX CONSIDERATIONS
FOR NON-U.S. SHAREHOLDERS
The following is a discussion of certain anticipated U.S. Federal
income and U.S. Federal estate tax consequences of the ownership and
disposition of shares of beneficial interest applicable to Non-U.S.
Shareholders of such shares. A "Non-U.S. Shareholder" is (i) any
individual who is neither a citizen nor resident of the United States, (ii)
any corporation or partnership other than a corporation or partnership
created or organized in the United States or under the laws of the United
States or any state thereof or under the laws of the District of Columbia
or (iii) any estate or trust that is not "resident" in the United States.
The discussion is based on current law and is for general information only.
The discussion does not address other aspects of U.S. Federal taxation
other than income and estate taxation or all aspects of U.S. Federal income
and estate taxation. The discussion does not consider any specific facts
or circumstances that may apply to a particular Non-U.S. Shareholder.
<PAGE>
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND
OTHER TAX CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF BENEFICIAL
INTEREST.
DISTRIBUTIONS FROM THE COMPANY
ORDINARY DIVIDENDS. The portion of dividends received by Non-U.S.
Shareholders payable out of the Company's earnings and profits that are not
attributable to capital gains of the Company and that are not effectively
connected with a U.S. trade or business of the Non-U.S. Shareholder will be
subject to U.S. withholding tax at the rate of 30% (unless reduced by
treaty or the Non-U.S. Shareholder files an Internal Revenue Service Form
4224 with the Company certifying that the investment to which the
distribution relates is effectively connected to a United States trade or
business of such Non-U.S. Shareholder). Under certain limited
circumstances, the amount of tax withheld may be refundable, in whole or in
part, because of the tax status of certain partners or beneficiaries of
Non-U.S. Shareholders that are either foreign partnerships or foreign
estates or trusts. In general, Non-U.S. Shareholders will not be
considered engaged in a U.S. trade or business solely as a result of their
ownership of shares of beneficial interest. In cases where the dividend
income from a Non-U.S. Shareholder's investment in shares of beneficial
interest is (or is treated as) effectively connected with the Non-U.S.
Shareholder's conduct of a U.S. trade or business, the Non-U.S. Shareholder
generally will be subject to U.S. tax at graduated rates, in the same
manner as U.S. shareholders are taxed with respect to such dividends (and
may also be subject to the 30% branch profits tax (unless reduced by
treaty) in the case of a Non-U.S. Shareholder that is a foreign
corporation).
Under current Treasury Regulations, dividends paid to an address in a
foreign country are presumed to be paid to a resident of that country
(unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of the
Treasury Regulations, for purposes of determining the applicability of a
tax treaty rate. However, under recently finalized Treasury Regulations
effective for dividends paid after December 31, 1999 (the "New
Regulations"), a Non-U.S. Shareholder who wishes to claim the benefit of an
applicable treaty rate will be required to satisfy applicable certification
requirements on Internal Revenue Service Form W-8. The New Regulations
will also permit a reduced rate of withholding on payments of dividends to
foreign partnerships whose partners are entitled to a reduced rate of
withholding if the partners and the foreign partnership supply the
appropriate Internal Revenue Service certifications or if the foreign
partnership elects to be treated as a "qualified intermediary" for
withholding tax purposes. Under the New Regulations, Non-U.S. Shareholders
who claim that the dividends are effectively connected with the conduct of
a U.S. trade or business will have to supply Form W-8A in lieu of Form 4224
(Form W-8A to date has only been issued in proposed form and is subject to
change).
<PAGE>
CAPITAL GAIN DIVIDENDS. Under the Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA"), any distribution made by the Company
to a Non-U.S. Shareholder, to the extent attributable to gains from
dispositions of United States Real Property Interests ("USRPIs") by the
Company ("USRPI Capital Gains"), will be considered effectively connected
with a U.S. trade or business of the Non-U.S. Shareholder and subject to
U.S. income tax at the rates applicable to U.S. individuals or
corporations, without regard to whether such distribution is designated as
a capital gain dividend. In addition, the Company will be required to
withhold tax equal to 35% of the amount of such distribution to the extent
it constitutes USRPI Capital Gains. Such distribution may also be subject
to the 30% branch profits tax (unless reduced by treaty) in the case of a
Non-U.S. Shareholder that is a foreign corporation.
NON-DIVIDEND DISTRIBUTIONS. Any distributions by the Company that
exceed both current and accumulated earnings and profits of the Company
will not be taxed as either ordinary dividends or capital gain dividends.
See "Federal Income Tax Considerations Relating to the Company's Treatment
as a REIT-Taxation of Shareholders-Taxation of Taxable Domestic
Shareholders." However, if it cannot be determined at the time a
distribution is made whether or not such distribution will be in excess of
current and accumulated earnings and profits, the distribution will be
subject to withholding. Should this occur, the Non-U.S. Shareholder may
seek a refund of over withholding from the Internal Revenue Service once it
is subsequently determined that such distribution was, in fact, in excess
of current and accumulated earnings and profits of the Company.
DISPOSITIONS OF SHARES OF BENEFICIAL INTEREST
Unless the shares of beneficial interest constitute USRPIs, a sale or
exchange of shares of beneficial interest by a Non-U.S. Shareholder
generally will not be subject to U.S. taxation under FIRPTA. The shares of
beneficial interest will not constitute USRPIs if the Company is a
"domestically controlled REIT." A domestically controlled REIT is a REIT
in which, at all times during a specified testing period, less than 50% in
value of its shares is held directly or indirectly by Non-U.S.
Shareholders. It is currently anticipated that the Company will be a
domestically controlled REIT and, therefore, that the sale of shares of
beneficial interest will not be subject to taxation under FIRPTA. No
assurance can be given that the Company will continue to be a domestically
controlled REIT.
If the Company does not constitute a domestically controlled REIT, a
Non-U.S. Shareholder's sale or exchange of shares of beneficial interest
generally will still not be subject to tax under FIRPTA as a sale of USRPIs
provided that (i) the Company's shares of beneficial interest are
"regularly traded" (as defined by applicable Treasury regulations) on an
established securities market (e.g., the NYSE, on which the Common Shares
are listed) and (ii) the selling Non-U.S. Shareholder held 5% or less of
the Company's outstanding shares of beneficial interest at all times during
a specified testing period.
<PAGE>
If gain on the sale or exchange of shares of beneficial interest were
subject to taxation under FIRPTA, the Non-U.S. Shareholder would be subject
to U.S. income tax at the rates applicable to U.S. individuals or
corporations, and the purchaser of shares of beneficial interest could be
required to withhold 10% of the purchase price and remit such amount to the
Internal Revenue Service. The branch profits tax would not apply to such
sales or exchanges.
Capital gains not subject to FIRPTA will nonetheless be taxable in
the United States to a Non-U.S. Shareholder in two cases: (i) if the Non-
U.S. Shareholder's investment in shares of beneficial interest is
effectively connected with a U.S. trade or business conducted by such Non-
U.S. Shareholder, the Non-U.S. Shareholder will be subject to the same
treatment as U.S. shareholders with respect to such gain, (ii) if the Non-
U.S. Shareholder is a nonresident alien individual who was present in the
United States for 183 days or more during the taxable year and has a "tax
home" in the United States, the nonresident alien individual will be
subject to 30% tax on the individual's capital gain (unless reduced or
eliminated by treaty) or (iii) if the Non-U.S. Shareholder is subject to
tax pursuant to the Code provisions applicable to certain U.S. expatriates.
FEDERAL ESTATE TAX
Shares of beneficial interest owned or treated as owned by an
individual who is not a citizen or "resident" (as specifically defined for
U.S. Federal estate tax purposes) of the United States at the time of death
will be includable in the individual's gross estate for U.S. Federal estate
tax purposes, unless an applicable estate tax treaty provides otherwise.
Such individual's estate may be subject to U.S. Federal estate tax on the
property includable in the estate for U.S. Federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Internal Revenue Service and
to each Non-U.S. Shareholder the amount of dividends (including any capital
gain dividends) paid to, and the tax withheld with respect to, each Non-
U.S. Shareholder. These reporting requirements apply regardless of whether
withholding was reduced or eliminated by an applicable tax treaty. Copies
of these returns may also be made available under the provisions of a
specific treaty or agreement with the tax authorities in the country in
which the Non-U.S. Shareholder resides.
U.S. backup withholding (which generally is imposed at the rate of
31% on certain payments to persons that fail to furnish the information
required under the U.S. information reporting requirements) and information
reporting will generally not apply to dividends (including any capital gain
dividends) paid on shares of beneficial interest to a Non-U.S. Shareholder
at an address outside the United States. However, under the New
Regulations, a Non-U.S. Shareholder may be required to provide
certification on Form W-8 to be exempt from backup withholding.
<PAGE>
The payment of the proceeds from the disposition of shares of
beneficial interest to or through a U.S. office of a broker will be subject
to information reporting and backup withholding unless the owner, under
penalties of perjury, certifies, among other things, its status as a Non-
U.S. Shareholder, or otherwise establishes an exemption. The payment of
the proceeds from the disposition of shares of beneficial interest to or
through a non-U.S. office of a non-U.S. broker generally will not be
subject to backup withholding and information reporting, except as noted
below. In the case of a payment of proceeds from the disposition of shares
of beneficial interest to or through a non-U.S. office of a broker which is
(i) a U.S. person, (ii) a "controlled foreign corporation" for U.S. Federal
income tax purposes or (iii) a foreign person 50% or more of whose gross
income for certain periods is derived from a U.S. trade or business,
information reporting (but not backup withholding) will apply unless the
broker has documentary evidence in its files that the holder is a Non-U.S.
Shareholder (and the broker has no actual knowledge to the contrary) and
certain other conditions are met, or the holder otherwise establishes an
exemption. A payment of the proceeds from the disposition of shares of
beneficial interest to or through such broker will be subject to backup
withholding if such broker has actual knowledge that the holder is a U.S.
person.
Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules will be refunded or credited against the
Non-U.S. Shareholder's U.S. Federal income tax liability, provided that
required information is furnished to the Internal Revenue Service.
These backup withholding and information reporting rules are
currently under review by the Treasury Department, and their application to
shares of beneficial interest is subject to change.
PLAN OF DISTRIBUTION
The Selling Shareholders may from time to time offer and sell the
Shares on the NYSE or otherwise at market prices then prevailing or at
prices and upon terms then obtainable. Sales may be made in ordinary
brokerage transactions, in block transactions, in privately negotiated
transactions, pursuant to Rule 144 or otherwise. If the Shares are sold
through brokers, customary brokerage commissions and charges are expected
to be paid by the Selling Shareholders. The Shares are being registered to
permit public secondary trading of the Shares from time to time after the
date of this Prospectus. The Company will bear all expenses (other than
selling commissions, underwriting discounts and fees and expenses of
counsel to any Selling Shareholder) of the Selling Shareholders in
connection with the registration and sale of the Shares. The Company is
registering the Shares pursuant to or as required by the provisions of the
agreements between the Operating Partnership and certain of the Selling
Shareholders.
The Selling Shareholders and any dealer, broker or other agent
selling securities offered hereby for a Selling Shareholder or purchasing
any such securities from a Selling Shareholder for purposes of resale may
be deemed to be an underwriter under the Securities Act and any
compensation received by the Selling Shareholder, dealer, broker or other
agent may be deemed underwriting compensation. The amount of such
compensation cannot currently be estimated. The Company knows of no
existing arrangements between any Selling Shareholder and any other dealer,
broker or other agent.
<PAGE>
To comply with certain states' securities laws, if applicable, the
Shares offered hereby may be sold in such states only through brokers or
dealers. In addition, in certain states the Shares may not be sold unless
they have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied
with.
EXPERTS
The consolidated financial statements and schedule of AMLI
Residential Properties Trust as of December 31, 1997 and 1996, and for each
of the years in the three-year period ended December 31, 1997, have been
incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, which report is incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. To
the extent that KPMG Peat Marwick LLP audits and reports on financial
statements of AMLI Residential Properties Trust issued at future dates, and
consents to the use of their report thereon, such financial statements also
will be incorporated by reference in the Registration Statement in reliance
upon their report and said authority.
LEGAL MATTERS
Certain legal matters relating to the validity of the Shares offered
pursuant to this Prospectus will be passed upon for the Company by Mayer,
Brown & Platt. Mayer, Brown & Platt has in the past represented and is
currently representing the Company and certain of its affiliates.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
material and other information concerning the Company can be inspected and
copied at the offices of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its regional offices, Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center,
New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, such material
can also be obtained from the Commission's Web site at http://www.sec.gov.
The Company's outstanding Common Shares are listed on the NYSE under the
symbol "AML", and all such reports, proxy material and other information
filed by the Company with the NYSE may be inspected at the offices of the
NYSE at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are omitted in accordance
with the rules and regulations of the Commission. Statements made in this
<PAGE>
Prospectus as to the content of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed or incorporated by reference as
an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. For
further information, reference is hereby made to the Registration Statement
which may be inspected and copied in the manner and at the sources
described above.
INCORPORATION BY REFERENCE
The following documents filed by the Company with the Commission
(File No. 1-12784) pursuant to the Exchange Act are incorporated by
reference in this Prospectus:
(i) The Company's Annual Report on Form 10-K, for the fiscal year
ended December 31, 1997;
(ii) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1998;
(iii) The Company's Current Report on Form 8-K filed on February 25,
1998; and
(iv) Description of the Common Shares included in the Registration
Statement on Form 8-A (filed February 1, 1994).
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering made hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document which is or is deemed to be incorporated by
reference herein, modifies or supersedes any such statement. Any such
statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the request of
such person, a copy of any of the foregoing documents incorporated herein
by reference (other than the exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be directed to AMLI Residential Properties Trust, 125 South
Wacker Drive, Chicago, Illinois 60606, Attention: Secretary, telephone
(312) 443-1477.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities registered hereby, all
of which will be paid by the Registrant:
SEC registration fee . . . . . . . . . . . . . . $ 1,769
Printing and duplicating expenses. . . . . . . . 1,000
Legal fees and expenses. . . . . . . . . . . . . 10,000
Accounting fees and expenses . . . . . . . . . . 3,500
Miscellaneous expenses . . . . . . . . . . . . . 1,500
Total. . . . . . . . . . . . $17,769
=======
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
The Registrant's officers and Trustees are and will be indemnified
under the Declaration of Trust and Bylaws of the Registrant, and the
Partnership Agreement of the Operating Partnership against certain
liabilities. The Declaration of Trust requires the Registrant to indemnify
its Trustees and officers, among others, against claims and liabilities and
reasonable expenses actually incurred by them in connection with any claim
or liability by reason of their services in those or other capacities
unless it is established that the act or omission of the Trustee or officer
was material to the matter giving rise to the proceeding and was committed
in bad faith or was the result of active and deliberate dishonesty, or the
Trustee or officer actually received an improper personal benefit, or, in
the case of any criminal proceeding, the Trustee or officer had reasonable
cause to believe that the act or omission was unlawful. Additionally, the
Company has entered into indemnification agreements with the Company's
officers and Trustees providing substantially the same scope of coverage
afforded by provisions in the Declaration of Trust.
As permitted by Maryland Law, the Declaration of Trust provides that
a Trustee or officer of the Registrant shall not be liable for monetary
damages to the Registrant or its shareholders for any act or omission in
the performance of his duties, except to the extent that (1) the person
actually received an improper benefit or (2) the person's action or failure
to act was the result of active and deliberate dishonesty and was material
to the cause of action adjudicated.
The Partnership Agreement of the Operating Partnership also provides
for indemnification of the Registrant and its officers and Trustees to the
same extent indemnification is provided to officers and Trustees of the
Registrant in its Declaration of Trust, and limits the liability of the
Registrant to the Operating Partnership and its partners to the same extent
the liability of the officers and Trustees of the Registrant to the
Registrant and its shareholders is limited under the Registrant's
Declaration of Trust.
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See Exhibit Index included herewith which is incorporated herein by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and 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
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do
not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-
3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(b) 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.
(c) 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.
<PAGE>
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
The undersigned Registrant hereby undertakes to supplement the
applicable prospectus supplement, after the expiration of the subscription
period, to set forth the results of the subscription offer, the
transactions by the underwriters during the subscription period, the amount
of unsubscribed securities to be purchased by the underwriters, and the
terms of any subsequent reoffering thereof. If any public offering by the
underwriters is to be made on terms differing from those set forth on the
cover page of the applicable prospectus supplement, a post-effective
amendment will be filed to set forth the terms of such offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the provisions set forth
or described in Item 15 of this Registration Statement, or otherwise, the
Registrant 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 the Registrant of expenses incurred or paid by a
Trustee, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of AMLI Residential
Properties Trust, a Maryland real estate investment trust, and each of the
undersigned Trustees and officers of AMLI Residential Properties Trust,
hereby constitutes and appoints Gregory T. Mutz, John E. Allen, Allan J.
Sweet and Charles C. Kraft, its, his or her true and lawful attorneys-in-
fact and agents, for it, him or her and in its, his or her name, place and
stead, in any and all capacities, with full power to act alone, to sign any
and all amendments to this Registration Statement, and to file each such
amendment to this Registration Statement with all exhibits thereto, and any
and all documents in connection therewith, with the Securities and Exchange
Commission, hereby granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform any and all acts
and things required and necessary to be done, as fully and to all intents
and purposes as it, he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them,
may lawfully do or cause to be done by virtue hereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets
all 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 Chicago, State of Illinois on
June 19, 1998.
AMLI RESIDENTIAL PROPERTIES TRUST
By: /s/ JOHN E. ALLEN
------------------------------
John E. Allen
Its: Vice Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 19, 1998.
Name Title
- ---- -----
/s/ GREGORY T. MUTZ
- ------------------------------ Chairman of the Board of Trustees
Gregory T. Mutz (Principal Executive Officer)
/s/ ROBERT J. CHAPMAN
- ------------------------------ Executive Vice President
Robert J. Chapman (Principal Financial Officer)
/s/ CHARLES C. KRAFT
- ------------------------------ Treasurer
Charles C. Kraft (Principal Accounting Officer)
/s/ JOHN E. ALLEN
- ------------------------------
John E. Allen Vice-Chairman of the Board of Trustees
/s/ ALLAN J. SWEET
- ------------------------------
Allan J. Sweet Trustee and President
/s/ LAURA D. GATES
- ------------------------------
Laura D. Gates Trustee
/s/ MARC S. HEILWEIL
- ------------------------------
Marc S. Heilweil Trustee
- ------------------------------
Stephen G. McConahey Trustee
<PAGE>
Name Title
- ---- -----
/s/ QUINTIN E. PRIMO III
- ------------------------------
Quintin E. Primo III Trustee
/s/ JOHN G. SCHREIBER
- ------------------------------
John G. Schreiber Trustee
/s/ PHILIP N. TAGUE
- ------------------------------
Philip N. Tague Trustee
<PAGE>
INDEX TO EXHIBITS
Exhibit Document Description
- ------- ----------------------
3.1 Amended and Restated Declaration of Trust of the Registrant
(Incorporated by reference to Exhibit 3.1 to Registration Statement No. 33-
71566).
3.1(a) Articles Supplementary to the Amended and Restated Declaration
of Trust of the Registrant Classifying Unissued Shares of Beneficial
Interest in the Registrant as Series A Cumulative Convertible Preferred
Shares of Beneficial Interest (Incorporated by Reference to Exhibit 4.9 to
the Registrant's Current Report on Form 8-K dated January 30, 1996).
3.1(b) Articles Supplementary to the Amended and Restated Declaration
of Trust of the Registrant Classifying Unissued Shares of Beneficial
Interest in the Registrant as Series B Cumulative Convertible Preferred
Shares of Beneficial Interest (Incorporated by reference to Exhibit 4 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998).
3.2 Amended and Restated By-laws of the Registrant (Incorporated by
reference to Exhibit 3.2 to Registration Statement No. 33-71566).
4.3 Amended and Restated Agreement of Limited Partnership of AMLI
Residential Properties, L.P. (Incorporated by reference to Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994).
4.3(a) First Amendment to the Amended and Restated Agreement of
Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by
reference to Exhibit 10.1(a) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
4.3(b) Second Amendment to the Amended and Restated Agreement of
Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by
reference to Exhibit 10.1(b) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
4.3(c) Third Amendment to the Amended and Restated Agreement of
Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by
reference to Exhibit 10.1(c) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996).
4.3(d) Fourth Amendment to the Amended and Restated Agreement of
Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by
reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1998).
<PAGE>
Exhibit Document Description
- ------- ----------------------
4.4 Form of Common Share Certificate (Incorporated by reference to
Exhibit 4.1 to Registration Statement No. 33-71566).
5.1 Opinion of Mayer, Brown & Platt.
8.1 Tax Opinion of Mayer, Brown & Platt.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Mayer, Brown & Platt (Included in the opinions filed
as Exhibits 5.1 and 8.1 to this Registration Statement).
24.1 Power of Attorney (Included on the page of the Registration
Statement immediately preceding the signature page).
EXHIBIT 5.1
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[Mayer, Brown & Platt Letterhead]
June 19, 1998
The Board of Trustees
AMLI Residential Properties Trust
125 South Wacker Drive
Chicago, Illinois 60606
Ladies and Gentlemen:
We have acted as counsel to AMLI Residential Properties Trust, a Maryland
real estate investment trust (the "Company"), in connection with the
proceedings (the "Company Proceedings") taken and to be taken relating to
the registration by the Company of an aggregate of 276,013 common shares of
beneficial interest of the Company, par value $.01 per share (the
"Shares"), with the Securities and Exchange Commission (the "SEC") for
resale by certain selling shareholders who may obtain the Shares upon
exchange of limited partnership units in AMLI Residential Properties, L.P.
We have also participated in the preparation and filing with the SEC under
the Securities Act of 1933, as amended, of a registration statement on Form
S-3 (the "Registration Statement"), relating to the Shares.
As special counsel to the Company, we have examined originals or copies
certified to our satisfaction of the Company's Amended and Restated
Declaration of Trust, as amended and supplemented (the "Declaration of
Trust"), and Amended and Restated Bylaws, resolutions of the Company's
Board of Trustees, and such other Company records, instruments,
certificates and documents and such questions of law as we considered
necessary or appropriate to enable us to express this opinion. As to
certain facts material to our opinion, we have relied, to the extent we
deem such reliance proper, upon certificates of public officials and
officers of the Company. In rendering this opinion, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity to authentic original documents of
photostatic copies.
Based upon and subject to the foregoing and to the assumptions, limitations
and conditions set forth herein, we are of the opinion that, upon
completion of the Company Proceedings, the Shares have been duly authorized
for issuance, and when the Shares are issued and delivered in accordance
with the Company Proceedings and the resolutions authorizing their
issuance, the Shares will be validly issued, fully paid and, except as
described below, nonassessable.
<PAGE>
The Board of Trustees
AMLI Residential Properties Trust
June 19, 1998
Page 2
Our opinion relating to the nonassessability of the Shares does not pertain
to the potential liability of shareholders of the Company for debts and
liabilities of the Company. Section 5-350 of the Maryland Courts and
Judicial Proceedings Code provides that "a shareholder . . . of a real
estate investment trust . . . is not personally liable for the obligations
of the real estate investment trust." The Declaration of Trust provides
that no shareholder shall be personally liable in connection with the
Company's property or the affairs of the Company. The Declaration of Trust
further provides that the Company shall indemnify and hold harmless
shareholders against all claims and liabilities and related reasonable
expenses to which they become subject by virtue of their status as current
or former shareholders. In addition, we have been advised that the
Company, as a matter of practice, inserts a clause in its business,
management and other contracts that provides that shareholders shall not be
personally liable thereunder. Accordingly, no personal liability should
attach to the Company's shareholders for contract claims under any contract
containing such a clause where adequate notice is given. However, with
respect to tort claims, contract claims where shareholder liability is not
so negated, claims for taxes and certain statutory liability, the
shareholders may, in some jurisdictions, be personally liable for such
claims and liabilities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters".
Very truly yours,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
EXHIBIT 8.1
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June 19, 1998
The Board of Trustees
Amli Residential Properties Trust
125 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
Re:
Partnership Classification; Status
as a Real Estate Investment Trust ("REIT");
Information in the Registration Statement under
"FEDERAL INCOME TAX CONSIDERATIONS" and
"CERTAIN UNITED STATES TAX CONSIDERATIONS FOR
NON-U.S. SHAREHOLDERS"
- --------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Amli Residential Properties Trust, a
Maryland real estate investment trust ("ARPT"), in connection with the
registration of 276,013 common shares of beneficial interest of ARPT (the
"Common Shares"), all of which Common Shares may be offered and sold by
certain selling shareholders from time to time as set forth in the
prospectus (the "Prospectus") which forms a part of the Registration
Statement on Form S-3 filed with the Securities and Exchange Commission on
June 19, 1998, as amended through the date hereof (the "Registration
Statement"). Unless otherwise specifically defined herein, all capitalized
terms have the meanings assigned to them in the Registration Statement.
In connection with the registration of the Common Shares, you have
requested our opinions concerning (i) the treatment of Amli Residential
Properties, L.P. (the "Operating Partnership") as a partnership for Federal
income tax purposes, and not as an association taxable as a corporation;
(ii) the qualification and taxation for Federal income tax purposes of the
Company as a REIT; and (iii) the information in the Registration Statement
under the headings "FEDERAL INCOME TAX CONSIDERATIONS" and "CERTAIN UNITED
STATES TAX CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS."
<PAGE>
The Board of Trustees
June 19, 1998
Page 2
In formulating our opinions, we have reviewed and relied upon the
partnership agreement of the Operating Partnership, the Registration
Statement, other documents and information provided by you, and such
applicable provisions of law and other documents as we have considered
necessary or desirable for purposes of the opinions expressed herein.
In addition, we have relied upon the Company's certificate (the "Officer's
Certificate"), executed by a duly appointed officer of the Company, setting
forth certain representations relating to the organization and actual and
proposed operation of the Company, the Operating Partnership, the
Management Company, AIA, Amrescon and each of the partnerships in which the
Operating Partnership will directly or indirectly hold an interest and
which actually owns an interest in real property (the "Property
Partnerships"). For purposes of our opinions, we have not made an
independent investigation of the facts set forth in such documents, the
Officer's Certificate, the partnership agreements for the Operating
Partnership or the Property Partnerships, or the Registration Statement.
We have, consequently, relied upon your representations that the
information presented in such documents or otherwise furnished to us
accurately and completely describes all material facts. No facts have come
to our attention, however, that would cause us to question the accuracy or
completeness of such facts or documents in a material way.
In rendering these opinions, we have assumed that the transactions
contemplated by the foregoing documents will be consummated in accordance
with the operative documents, and that such documents accurately reflect
the material facts of such transactions. In addition, the opinions are
based on the assumption that the Company, the Operating Partnership, the
Management Company, AIA, Amrescon and the Property Partnerships have
operated and will continue to each be operated in the manner described in
the applicable partnership agreement or other organizational documents and
in the Registration Statement, and all terms and provisions of such
agreements and documents have been and will continue to be complied with by
all parties thereto. Our opinions expressed herein are based on the
applicable laws of the States of Maryland and Delaware, the Code, Treasury
regulations promulgated thereunder, and interpretations of the Code and
such regulations by the courts and the Internal Revenue Service, all as
they are in effect and exist at the date of this letter. It should be
noted that statutes, regulations, judicial decisions, and administrative
interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change that is made
after the date hereof in any of the foregoing bases for our opinions could
adversely affect our conclusions.
<PAGE>
The Board of Trustees
June 19, 1998
Page 3
Based upon and subject to the foregoing, it is our opinion that:
1. The Operating Partnership will be treated, for Federal income tax
purposes, as a partnership, and not as an association taxable as a
corporation.
2. Beginning with the Company's taxable year ending December 31, 1994, the
Company has been organized in conformity with the requirements for
qualification as a REIT under the Code, and the Company's actual and
proposed method of operation, as described in the Registration Statement
and as represented in the Officer's Certificate, has enabled it and will
continue to enable it to satisfy the requirements for qualification as a
REIT.
3. The information in the Registration Statement under the headings
"FEDERAL INCOME TAX CONSIDERATIONS" and "CERTAIN UNITED STATES TAX
CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS," to the extent that it
constitutes matters of law or legal conclusions, has been reviewed by us
and is correct in all material respects.
Other than as expressly stated above, we express no opinion on any issue
relating to the Company, the Operating Partnership, any Property
Partnership or to any investment therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein and
under the caption "FEDERAL INCOME TAX CONSIDERATIONS" in the Registration
Statement.
Very truly yours,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
EXHIBIT 23.1
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CONSENT OF KPMG PEAT MARWICK LLP
--------------------------------
The Board of Trustees and Shareholders
AMLI Residential Properties Trust:
We consent to incorporation by reference in the registration statement on
Form S-3 of AMLI Residential Properties Trust of our report dated
February 23, 1998, relating to the consolidated balance sheets of AMLI
Residential Properties Trust as of December 31, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity and
cash flows for each of the years in the three-year period ended December
31, 1997, and the related schedule, which report appears in the December
31, 1997 annual report on Form 10-K of AMLI Residential Properties Trust
and to the reference to our firm under the heading "Experts" in the
prospectus.
/S/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Chicago, Illinois
June 18, 1998
