<PAGE> 1
Filed pursuant to Rule 424(b)(2)
of the Securities Act of 1933.
(File No. 333-39037)
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 30, 1997)
869,587 SHARES
BAY APARTMENT COMMUNITIES, INC.
COMMON STOCK
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This Prospectus Supplement and the attached Prospectus relate to the
offering and sale of 869,587 shares (the "Shares") of common stock, par value
$.01 per share (the "Common Stock"), of Bay Apartment Communities, Inc. (the
"Company") to one or more institutional investors at a purchase price per share
of $39.125, for an aggregate purchase price of approximately $34,022,591 (the
"Offering"). The purchase price per share represents approximately 98% of the
average reported last sale price of the Common Stock on the New York Stock
Exchange (the "NYSE") for the ten trading days immediately preceding the
determination of the purchase price per share. On December 8, 1997, the reported
last sale price of the Common Stock on the NYSE was $40.25 per share.
In connection with the Offering, the Company has agreed to pay a fee in the
amount of $530,452 to PaineWebber Incorporated ("PaineWebber") for its services
as a finder in connection with the Shares to be sold in the Offering. Such fee
represents, on a weighted average basis, approximately 1.56% of the gross
proceeds of the sale of the Shares in the Offering. In addition, the Company has
agreed to indemnify PaineWebber against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See "Plan of
Distribution."
The Company currently owns, or holds substantially all of the ownership
interests in, and manages 48 apartment communities (the "Communities")
containing 12,822 apartment homes, including homes delivered at Toscana, a
partially developed community. A substantial majority of the Communities, 36 out
of 48, are located in Northern California (principally in the San Francisco Bay
Area), with a concentration in the counties of San Francisco, San Mateo, Alameda
and Santa Clara (the "Primary Markets"), while ten Communities are located in
Southern California and two Communities are located in the State of Washington.
In addition to the Communities, the Company owns six land sites on which it is
building, or plans to commence building in the future, six communities (the
"Current Development Communities"), which will contain an aggregate of
approximately 1,698 apartment homes, including the remaining apartment homes
under construction at Toscana.
The Common Stock is, and the Shares will be, listed on the NYSE and the
Pacific Exchange under the symbol "BYA."
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SEE "RISK FACTORS" COMMENCING ON PAGE S-2 FOR A DISCUSSION OF CERTAIN RISK
FACTORS RELEVANT TO AN INVESTMENT IN THE SHARES.
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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 SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus Supplement is December 8, 1997.
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RISK FACTORS
Unless the context otherwise requires, all references in this Prospectus
Supplement to the "Company" refer to Bay Apartment Communities, Inc. and its
subsidiaries on a consolidated basis. This Prospectus Supplement contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The Company's actual results could differ materially from those set
forth in the forward-looking statements. The Company cautions the reader,
however, that this list may not be exhaustive.
DEVELOPMENT AND ACQUISITION RISKS
The Company intends to continue to pursue the development and construction
of apartment home communities in accordance with the Company's development and
underwriting policies. Risks associated with the Company's development and
construction activities may include: the abandonment of development and
acquisition opportunities explored by the Company; construction costs of a
community may exceed original estimates due to increased materials, labor or
other expenses, which could make completion of the community uneconomical;
occupancy rates and rents at a newly completed community are dependent on a
number of factors, including market and general economic conditions, and may not
be sufficient to make the community profitable; financing may not be available
on favorable terms for the development of a community; and construction and
lease-up may not be completed on schedule, resulting in increased debt service
expense and construction costs. Development activities are also subject to risks
relating to the inability to obtain, or delays in obtaining, all necessary
zoning, land-use, building, occupancy, and other required governmental permits
and authorizations. The occurrence of any of the events described above could
adversely affect the Company's ability to achieve its projected yields on
communities under development or reconstruction and could prevent the Company
from making expected distributions. See "-- Real Estate Investment Risks."
For new development communities, the Company's goal, on average, is to
achieve projected earnings before interest, income taxes, depreciation and
amortization ("EBITDA") as a percentage of total budgeted construction cost of
approximately 10%. Projected EBITDA as a percentage of total budgeted
construction cost represents EBITDA projected to be received in the first
calendar year after a community reaches stabilized occupancy (i.e., the first
month when the community has a weighted average physical occupancy of at least
95%), based on current market rents, less projected stabilized property
operating and maintenance expenses, before interest, income taxes, depreciation
and amortization. Total budgeted construction cost is based on current
construction costs, including interest capitalized during the construction
period. Market rents and construction costs reflect those prevailing in the
community's market at the time the Company's development budgets are prepared
while taking into consideration certain changes to those market conditions
anticipated by the Company at the time. Although the Company attempts to
anticipate changes in market conditions, the Company cannot predict with
certainty what those changes will be. For example, upon the acquisition of the
Toscana land site in May 1996, the Company estimated that the total budgeted
construction cost for this Current Development Community would be $95.7 million.
Since that time, the Company has obtained bids for the construction of the first
two phases of this four-phase project. Construction costs are increasing and
management believes that when the last two phases are bid in late 1997,
the total construction cost for this development will be higher than the
original budget. Nonetheless, because of increases in prevailing market rents
management believes that it will still be able to achieve projected EBITDA as a
percentage of total budgeted construction cost of at least 10%. Management
believes that it will experience similar increases in construction costs and
market rents with respect to the CentreMark and Paseo Alameda Current
Development Communities. However, there can be no assurances that market rents
in effect at the time the Current Development Communities are leased-up will be
sufficient to offset any increased construction costs.
Acquisitions entail risks that investments will fail to perform in
accordance with expectations and that judgments with respect to the costs of
improvements to bring an acquired community up to standards established for the
market position intended for that community will prove inaccurate, as well as
general investment risks associated with any new real estate investment.
Although the Company undertakes an evaluation of the physical condition of each
new community before it is acquired, certain defects or necessary repairs may
not be detected until after the community is acquired, which could significantly
increase the Company's total acquisition costs.
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As described above, construction costs are increasing and the cost to
reposition Communities that have been acquired has, in some cases, exceeded
management's original estimates. Management believes that it may experience
similar increases in the future. There can be no assurances that the Company
will be able to charge rents upon completing the repositioning of the
Communities that will be sufficient to fully offset the effects of any increases
in construction costs.
REAL ESTATE INVESTMENT RISKS
General Risks. Real property investments are subject to varying degrees of
risk. The yields available from equity investments in real estate depend on the
amount of income generated and expenses incurred. If the Communities do not
generate revenues sufficient to meet operating expenses, including debt service
and capital expenditures, the Company's cash flow and ability to pay
distributions to its stockholders will be adversely affected.
An apartment community's revenues and value may be adversely affected by a
number of factors, including the national economic climate; the local economic
climate (which may be adversely impacted by plant closings, industry slowdowns,
military base closings and other factors); local real estate conditions (such as
an oversupply of or a reduced demand for apartment homes); the perceptions by
prospective residents of the safety, convenience and attractiveness of the
community; the ability of the owner to provide adequate management, maintenance
and insurance; and increased operating costs (including real estate taxes and
utilities). Certain significant expenditures associated with each equity
investment (such as mortgage payments, if any, real estate taxes, insurance and
maintenance costs) are generally not reduced when circumstances cause a
reduction in income from the investment. If a community is mortgaged to secure
payment of indebtedness, and if the Company is unable to meet its mortgage
payments, a loss could be sustained as a result of foreclosure on the community
or the exercise of other remedies by the mortgagee. In addition, real estate
values and income from communities are also affected by such factors as the cost
of compliance with government regulation, including zoning and tax laws,
interest rate levels and the availability of financing.
Operating Risks. Each of the Communities is subject to all operating risks
common to apartment communities in general, any and all of which might adversely
affect apartment home occupancy or rental rates. Increases in unemployment and a
decline in household formation in Northern or Southern California, or the State
of Washington, generally might adversely affect occupancy or rental rates.
Increases in operating costs due to inflation and other factors may not be
offset by increased rents. Residents may be unable or unwilling to pay rent
increases. Rent control or rent stabilization laws or other laws regulating
housing are applicable in certain of the cities in the Primary Markets where the
Company owns Communities and may be enacted in the future in the jurisdictions
in which one or more communities are located or may be acquired; if enacted,
compliance with these laws may prevent the Company from raising rents to offset
increases in operating costs. Similarly, the local rental market may limit the
extent to which rents may be increased to meet increased expenses without
decreasing occupancy rates. If any of the above occurs, the Company's ability to
achieve its desired yields on the Communities and to make expected distributions
to stockholders could be adversely affected.
Market Illiquidity. Equity real estate investments are relatively illiquid.
Such illiquidity will tend to limit the ability of the Company to vary its
portfolio promptly in response to changes in economic or other conditions. In
addition, the Internal Revenue Code of 1986, as amended (the "Code"), limits the
Company's ability to sell properties held for fewer than four years, which may
affect the Company's ability to sell properties without adversely affecting
returns to holders of Common Stock.
Competition. There are numerous housing alternatives that compete with the
Communities in attracting residents. The Communities compete directly with other
rental apartments and single-family homes that are available for rent in the
markets in which the Communities are located. The Communities also compete for
residents with the new and existing home markets. The number of competitive
residential properties in a particular area could have a material adverse effect
on the Company's ability to lease apartment homes and on the rents charged. In
addition, competitors for acquisitions and development projects may have greater
resources than the Company, thereby putting the Company at a competitive
disadvantage.
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Affordable Housing Laws or Restrictions. A number of the Communities are,
and will be in the future, subject to federal, state and local statutes or other
restrictions requiring that a percentage of apartment homes be made available to
residents satisfying certain income requirements. The Company must comply with
these restrictions as a condition to obtaining tax-exempt financing for these
Communities. These laws and restrictions, as well as any changes thereto making
it more difficult to meet such requirements, or a reduction in or elimination of
certain financing advantages available in some instances to persons satisfying
such requirements, could adversely affect the Company's profitability and its
development and acquisition projects in the future.
DEPENDENCE ON NORTHERN CALIFORNIA AND PRIMARY MARKETS
Although the Company may expand further outside of Northern California, and
intends to make additional selective acquisitions in Southern California and the
State of Washington from time to time, currently a substantial majority of the
Communities are located in Northern California (primarily in the San Francisco
Bay Area), where the Company has most of its acquisition, development,
construction and marketing expertise. The Company's performance, therefore, is
dependent upon economic conditions in these markets. A decline in the economy in
these markets may adversely affect the ability of the Company to make expected
distributions to stockholders. Similarly, a decline in demand for discretionary
consumer goods and leisure travel, as well as heightened competition in high
technology industries, could have an adverse impact upon Northern California.
Reductions in the level of government spending in the defense industry may also
have an impact upon employment and demand for residential real estate in the
Primary Markets.
NEW MARKETS IN SOUTHERN CALIFORNIA AND WASHINGTON
In 1996, the Company expanded beyond Northern California and has since
acquired ten Communities located in Southern California (including Orange, Los
Angeles and San Diego Counties) and two Communities located in the State of
Washington (i.e., King County). The Company also intends to make other selective
acquisitions in these markets from time to time. The Company's historical
experience is in Northern California, primarily in the San Francisco Bay Area,
and it is possible that the Company's expertise in those markets may not assist
the Company in its new markets. In such event, the Company may be exposed to,
among others, risks associated with (i) a lack of market knowledge and
understanding of the local economy, (ii) an inability to access land and
property acquisition opportunities, (iii) an inability to obtain construction
tradespeople, (iv) sudden adverse shifts in supply and demand factors and (v) an
unfamiliarity with local governmental procedures.
NATURAL DISASTERS
Many of the Communities are located in the general vicinity of active
earthquake faults. In June 1997, the Company obtained a seismic risk analysis
from an engineering firm which estimated the probable maximum loss ("PML") for
each of the 41 Communities owned at that time and Toscana, a Current Development
Community, individually and for all of such Communities and Toscana combined. To
establish a PML, the engineers first define a severe earthquake event for the
applicable geographic area, which is an earthquake that has only a 10%
likelihood of occurring over a 50-year period. The PML is determined as the
structural and architectural damage and business interruption loss that has a
10% probability of being exceeded in the event of such an earthquake. Because
the Communities are concentrated in the San Francisco Bay Area, the engineers'
analysis defined an earthquake on the San Andreas Fault with a Richter Scale
magnitude of 8.0 as a severe earthquake with a 10% probability of occurring
within a 50-year period, and established an aggregate PML at that time of $63.8
million for the 41 Communities owned at that time and Toscana, which is a PML
level that is expected to be exceeded only 10% of the time in the event of such
a severe earthquake. The actual aggregate PML could be higher as a result of
variations in soil classifications and structural vulnerabilities. Two of the
Communities had individual PMLs of 30%, while seven Communities had PMLs of 25%,
and the remaining 32 Communities owned at such time and Toscana each had PMLs of
20% or less. The Company has obtained an individual PML assessment for each of
the six Communities acquired since June 1997. One Community had an individual
PML of 30%, another had an individual PML of 24%, two had PMLs of 20%, one had
an individual PML of 15% and the sixth Community had an individual PML of 10%.
While the Company has not yet obtained an engineers' analysis establishing an
aggregate PML for all of the Communities
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combined, the Company currently intends to do so on an annual basis in order to
assist it in evaluating appropriate levels of insurance coverage. No assurance
can be given that an earthquake would not cause damage or losses greater than
the PML assessments indicate, that future PML levels will not be higher than the
current PML levels for the Communities, or that future acquisitions or
developments will not have PML assessments indicating the possibility of greater
damage or losses than currently indicated.
In July 1997, the Company renewed its earthquake insurance, both for
physical damage and lost revenues, with respect to the 41 Communities then owned
and Toscana. In addition, the six Communities acquired subsequent to June 1997
are included under the Company's earthquake insurance policy. For any single
occurrence, the Company self-insures the first $25 million of loss, and has in
place $35 million of coverage above this amount, with a 5% deductible subject to
a maximum deductible of $2.43 million. In addition, the Company's general
liability and property casualty insurance provides coverage for personal
liability and fire damage. In the event that an uninsured disaster or a loss in
excess of insured limits were to occur, the Company could lose its capital
invested in the affected Community, as well as anticipated future revenue from
such Community, and would continue to be obligated to repay any mortgage
indebtedness or other obligations related to the Community. Any such loss could
materially and adversely affect the business of the Company and its financial
condition and results of operations.
REAL ESTATE FINANCING RISKS
Risks Relating to the Credit Enhancement. As of September 30, 1997, the
Company was obligated for certain mortgage indebtedness funded by tax-exempt
bonds (the "Bonds") in the aggregate principal amount of approximately $224
million on 12 Communities (Waterford, Villa Mariposa, Fairway Glen, Foxchase,
Barrington Hills, Crossbrook, Rivershore, Canyon Creek, Sea Ridge, City Heights,
Countrybrook and Larkspur Canyon). Principal and interest payments due to
holders of the Bonds are secured by a first deed of trust on the Community
associated with the respective Bond issue.
Scheduled principal and interest payments due on the Bonds financing
Foxchase, Fairway Glen, Waterford and Villa Mariposa (the "1994 Bonds") are
guaranteed by an insurance policy (the "FGIC Credit Enhancement") issued by
Financial Guaranty Insurance Company ("FGIC"). The FGIC Credit Enhancement will
terminate on March 17, 2004 and, if the FGIC Credit Enhancement is not renewed
or replaced, the 1994 Bond documents may require balloon payments in 2004
aggregating approximately $87.4 million, less any unscheduled principal
amortization. Scheduled interest and principal payments due on the Bonds
financing Barrington Hills, Crossbrook, Rivershore, Canyon Creek, Sea Ridge,
City Heights and Larkspur Canyon are supported by a 30-year credit enhancement,
expiring June 15, 2025 (the "FNMA Credit Enhancement" and, together with the
FGIC Credit Enhancement, the "Credit Enhancements"), provided by the Federal
National Mortgage Association ("FNMA"). The Bonds financing Countrybrook are
also supported by a credit enhancement provided by FNMA through April 1, 2002.
Each of the Credit Enhancements contains certain provisions under which a
default of certain payment obligations or covenants would entitle FGIC or FNMA,
as the case may be, to declare a default under its respective Credit Enhancement
documents and exercise its remedies (including foreclosure) under mortgages that
encumber 11 of the 12 Bond-financed Communities and eight additional
Communities, with a consequent loss of income and asset value to the Company. In
addition, gross rents collected from the residents of these 19 Communities have
been and will continue to be deposited in cash collateral accounts established
with financial institutions acceptable to FGIC or FNMA, as applicable. The
Company does not have access to these funds until all required monthly debt
service payments due on the Bonds and certain other payments are made. A default
under either of the Credit Enhancements or the Bond documents may adversely
affect the ability of the Company to make expected distributions to
shareholders, including distributions required to maintain its REIT status. See
"Certain Federal Income Tax Considerations."
Bond Compliance Requirements. The 12 Bond-financed Communities are subject
to deed restrictions or restrictive covenants relating to tax-exempt bond
financing. In addition, the Code and the regulations promulgated thereunder
impose various restrictions, conditions and requirements relating to the
exclusion from gross income for federal income tax purposes of interest on
qualified Bond obligations, including requirements
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that at least 20% of apartment homes be made available to residents with gross
incomes that do not exceed 80% of the median income (50% in the case of the
Canyon Creek, City Heights and Sea Ridge Communities) in the area, measured
annually. Some of the Communities financed with Bonds are also subject to a
requirement that the rental rates for the 20% of the apartment homes that are
subject to the foregoing requirement may not exceed 30% of one-half of the
applicable median income. In addition to federal requirements, certain state and
local authorities have imposed rental restrictions. The Bond compliance
requirements and the requirements of any future tax-exempt bond financing
utilized by the Company may have the effect of limiting the Company's income
from the Bond-financed Communities if the Company is required to lower its
rental rates materially to attract residents who satisfy the median income test.
If the required number of apartment homes are not reserved for residents
satisfying these income requirements, the tax-exempt status of the Bonds may be
terminated, the obligations of the Company under the Bond documents may be
accelerated and other contractual remedies against the Company may be available.
Risk of Rising Interest Rates. As of September 30, 1997, the Company had
variable rate indebtedness aggregating approximately $291 million, consisting of
$204 million of tax-exempt financing and $87 million of borrowings under the
Company's $200 million (increased to $350 million in November 1997) unsecured
line of credit from Union Bank of Switzerland and other participating banks (the
"Unsecured Credit Facility"). All of the Company's $204 million of variable rate
tax-exempt financing had been fixed through interest rate swap agreements, of
which an aggregate of $87.4 million had been fixed at an all-inclusive interest
rate of 5.88% until March 2004, an aggregate of $88.3 million had been fixed at
an all-inclusive interest rate of 6.48% until June 2010, $20.7 million had been
fixed at an all-inclusive interest rate of 5.80% until July 2007 and $7.6
million had been fixed at an all-inclusive interest rate of 5.5% until September
2002. Additional indebtedness that the Company may incur under the Unsecured
Credit Facility will also bear interest at a variable rate. To the extent the
Company uses variable rate debt for future financings, and with respect to the
portion of the Company's outstanding indebtedness that will bear interest at a
variable rate, increases in these interest rates could adversely affect the
Company's ability to make distributions to stockholders. Consideration will be
given to acquiring interest rate hedging or protection agreements, if
appropriate and cost effective, with respect to future variable rate
indebtedness to reduce exposure to interest rate increases on such debt.
POTENTIAL ENVIRONMENTAL LIABILITIES
Under various federal, state and local environmental laws, a current or
previous owner or operator of real estate may be required (typically regardless
of knowledge or responsibility) to investigate and remediate the effects of
hazardous or toxic substances or petroleum product releases at such property,
and may be held liable to a governmental entity or to third parties for property
damage and for investigation and remediation costs incurred by such parties in
connection with the contamination, which costs may be substantial. The presence
of such substances (or the failure to properly remediate the contamination) may
adversely affect the owner's ability to borrow against, sell or rent such
property.
Certain federal, state and local laws and regulations govern the removal,
encapsulation or disturbance of asbestos-containing materials ("ACMs") when such
materials are in poor condition or in the event of construction, remodeling,
renovation or demolition of a building. Such laws may impose liability for
release of ACMs and may provide for third parties to seek recovery from owners
or operators of real properties for personal injury associated with ACMs. In
connection with its ownership and operation of the Communities, the Company
potentially may be liable for such costs. The Company is not aware that any ACMs
were used in connection with the construction of the Communities developed by
the Company, all of which were constructed after 1983. The Company is aware that
ACMs were used in connection with the construction of the following Communities
acquired by the Company: Regatta Bay, Sea Ridge, Village Square, Sunset Towers,
Mill Creek, Crowne Ridge (formerly Channing Heights), Lafayette Place (formerly
Martinique Gardens), SummerWalk (formerly Rancho Penasquitos), TimberWood
(formerly The Village), SunScape (formerly Banbury Cross), Cardiff Gardens,
Mission Woods (formerly Genesee Gardens), Cedar Ridge (formerly Regency), The
Park, Lakeside and Creekside. The Company does not anticipate that it will incur
any material liabilities in connection with the presence of ACMs at the
Communities. The Company currently has in place or intends to implement an
operations and maintenance program for ACMs at the Regatta Bay, Sea Ridge,
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Village Square, Sunset Towers, Mill Creek, Crowne Ridge, Lafayette Place,
SummerWalk, TimberWood, SunScape, Cardiff Gardens, Mission Woods, Cedar Ridge,
The Park, Lakeside and Creekside Communities.
All of the Communities, and all of the Current Development Communities,
have been subjected to a Phase I or similar environmental assessment (which
involves general inspections without soil sampling or groundwater analysis and
generally without radon testing). These assessments have not revealed any
environmental liability that the Company believes would have a material adverse
effect on the Company's business, assets or results of operations. However, one
Community and one Current Development Community are subject to soil and
groundwater remediation of contamination from adjacent landowners. In the case
of one of the Current Development Communities, Toscana, National Semiconductor
Corporation is causing remediation to occur and has provided an indemnity which
the Company may rely upon for certain environmental liabilities. Additionally,
another Current Development Community, Paseo Alameda, required underground
storage tank removal and other environmental cleanup. The Company is also aware
that certain of the Communities have lead paint and the Company is undertaking
or intends to undertake appropriate remediation activity. Nevertheless, it is
possible that the assessments do not reveal all environmental liabilities or
there are material environmental liabilities of which the Company is unaware. No
assurances can be given that (i) future laws, ordinances or regulations will not
impose material environmental liability, or (ii) the current environmental
condition of the Communities or the Current Development Communities will not be
affected by the condition of land or operations in the vicinity of such
communities (such as the presence of underground storage tanks), or by third
parties unrelated to the Company.
THE OFFERING
Securities Offered.......... 869,587 shares of Common Stock
Trading..................... The Common Stock is, and the Shares will be,
approved for listing on the New York Stock
Exchange and the Pacific Exchange under the symbol
"BYA."
CONCURRENT OFFERING OF COMMON STOCK
Concurrently with the Offering of 869,587 shares of Common Stock by the
Company to a number of institutional investors pursuant to this Prospectus
Supplement, the Company is offering 156,600 shares of Common Stock in an
underwritten public offering. No assurances can be given that any or all of the
shares of Common Stock offered in the concurrent offering will be sold.
USE OF PROCEEDS
The net proceeds to the Company from the sale of 869,587 shares of Common
Stock pursuant to this Prospectus Supplement are estimated at approximately
$33,472,139. The Company will use the net proceeds from this Offering to reduce
borrowings under its Unsecured Credit Facility, which were used to fund the
acquisition and development of additional apartment communities, including
amounts borrowed to fund the acquisition of the Gallery Place, Landing West and
Creekside Communities and one land site in San Jose, California. The Unsecured
Credit Facility bears interest at the London Interbank Offered Rate (based on a
maturity selected by the Company) plus 0.90% per annum (6.81% per annum as of
September 30, 1997) and matures in May 2000.
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PLAN OF DISTRIBUTION
The Company will sell the Common Stock offered hereby directly to one or
more institutional investors. In connection with the sale of the Common Stock
offered hereby, PaineWebber will be paid a fee in the amount of $530,452 in
consideration of its services as a finder in connection with the sale. Such fee
represents, on a weighted average basis, approximately 1.56% of the gross
proceeds of the sale of the Shares in the Offering.
In addition, the Company has agreed to indemnify PaineWebber against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments PaineWebber may be required to make in
respect thereof.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Goodwin,
Procter & Hoar LLP, Boston, Massachusetts as securities and tax counsel to the
Company.
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No dealer, salesperson or other individual has been authorized to give any
information or make any representations not contained in this Prospectus
Supplement or the accompanying Prospectus. If given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any other person. This Prospectus Supplement and the accompanying Prospectus
do not constitute an offer to sell, or a solicitation of an offer to buy, any of
the Securities offered hereby to any person or by anyone in any jurisdiction in
which it is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus Supplement nor the accompanying Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Risk Factors........................................................ S-2
The Offering........................................................ S-7
Concurrent Offering of Common Stock................................. S-7
Use of Proceeds..................................................... S-7
Plan of Distribution................................................ S-8
Legal Matters....................................................... S-8
PROSPECTUS
Available Information............................................... 2
Incorporation of Certain Documents by
Reference......................................................... 2
The Company......................................................... 3
Use of Proceeds..................................................... 4
Ratios of Earnings to Fixed Charges and
Preferred Stock Dividends......................................... 4
Description of Preferred Stock...................................... 4
Description of Common Stock......................................... 10
Restrictions on Transfers of Capital Stock.......................... 11
Plan of Distribution................................................ 12
Legal Matters....................................................... 14
Experts............................................................. 14
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869,587 SHARES
BAY APARTMENT
COMMUNITIES, INC.
COMMON STOCK
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PROSPECTUS SUPPLEMENT
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DECEMBER 8, 1997
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