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Exhibit 8.1
[Letterhead of Hogan & Hartson L.L.P.]
July 14, 2000
Board of Directors
Charles E. Smith Residential Realty, Inc.
2345 Crystal Drive
Crystal City
Arlington, VA 22202
Ladies and Gentlemen:
We have acted as counsel to Charles E. Smith Residential
Realty, Inc., a Maryland corporation (the "Company"), in connection with the
registration statement on Form S-3 (the "Registration Statement") and the
prospectus included therein (the "Prospectus") filed by the Company with the
Securities and Exchange Commission relating to the possible issuance by the
Company of up to 594,956 shares of the Company's common stock, par value $.01
per share (the "Redemption Shares"), if, and to the extent that, the Company
elects to issue such Redemption Shares to the holders of up to 594,956 units of
Limited Partnership interests ("Units") in Charles E. Smith Residential Realty
L.P. (the "Operating Partnership"), 7,797 of which Units were issued by the
Operating Partnership in exchange for partnership interests in Orleans
Associates Limited Partnership, a Virginia limited partnership, 178,190 of which
Units were issued by the Operating Partnership in connection with the
acquisition of Countryside Apartments located in Palatine, Illinois, and 408,969
of which Units were issued by the Operating Partnership in connection with the
acquisition of Somerset Apartments (currently known as Stonegate Apartments)
located in Glendale Heights, Illinois. In connection with the Registration
Statement, we have been asked to provide you with our opinion on certain federal
income tax matters. Capitalized terms used in this letter and not otherwise
defined herein have the meanings set forth in the Registration Statement.
BASES FOR OPINIONS
The opinions set forth in this letter are based on relevant
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations thereunder (including proposed and temporary
Treasury Regulations), and interpretations of the foregoing as expressed in
court decisions, existing
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Charles E. Smith Residential Realty, Inc.
July 14, 2000
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administrative rulings and practices of the Internal Revenue Service (the "IRS")
(including the private letter ruling issued by the IRS to the Company on June 8,
1994, as supplemented by the ruling letter dated June 16, 1995, and the private
letter ruling issued by the IRS to the Company on August 27, 1997), and
legislative history, all as of the date hereof. These provisions and
interpretations are subject to changes, which may or may not be retroactive in
effect, that might result in material modifications of our opinions.
In rendering the following opinions, we have examined such
statutes, regulations, records, certificates and other documents as we have
considered necessary or appropriate as a basis for such opinions, including the
following: (1) the Registration Statement; (2) the First Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, as amended as of
January 31, 1995, as certified by the Secretary of the Company on the date
hereof as being a true, correct and complete copy and as being in full force and
effect; (3) the Amended and Restated Articles of Incorporation of the Company
dated as of June 27, 1994, as certified by the Department of Assessments and
Taxation of the State of Maryland on June 22, 2000, and by the Secretary of the
Company on the date hereof as being a true, correct and complete copy and as
being in full force and effect; (4) the agreements of limited partnership of the
partnership subsidiaries of the Operating Partnership; (5) the articles of
organization and stock ownership records of the four operating companies (Smith
Realty Company, Smith Management Construction, Inc., Combustioneer Corporation,
and Consolidated Engineering Services, Inc.) which provide property services to
the properties owned by the Operating Partnership and to other multifamily,
retail, and office properties (collectively, the "Property Service Businesses");
(6) the articles of incorporation of the wholly-owned subsidiaries of the
Company that serve as the general partners of the various subsidiary financing
partnerships (the "REIT Subs"); and (7) other necessary documents. The opinions
set forth in this letter also are premised on certain written representations of
the Company contained in a letter to us dated as of the date hereof (the
"Management Representation Letter"). Any variation or difference in the facts
from those set forth in the documents that we have reviewed and upon which we
have relied (including, in particular, those set forth in the Management
Representation Letter) may adversely affect the conclusions stated herein.
We have made such factual and legal inquiries, including
examination of the documents set forth above, as we have deemed necessary or
appropriate for purposes of our opinion. For purposes of rendering our opinion,
however, we have
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Charles E. Smith Residential Realty, Inc.
July 14, 2000
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not made an independent investigation or audit of the facts set forth in the
above referenced documents, including the Management Representation Letter. We
consequently have relied upon representations in the Management Representation
Letter that the information presented in such documents or otherwise furnished
to us accurately and completely describes all material facts relevant to our
opinion. We are not aware, however, of any material facts or circumstances
inconsistent with the representations we have relied upon as described herein or
other assumptions set forth herein.
Moreover, we have assumed that (i) the Company, the Operating
Partnership, each of the REIT Subs, each of the partnership subsidiaries, and
each of the Property Services Businesses have been and will continue to be
operated in the manner described in the relevant partnership agreement, articles
(or certificate) of incorporation, or other organizational documents; (ii) as
represented by the Company, there are no agreements or understandings between
the Company or the Operating Partnership, on the one hand, and the partnerships
that own the voting stock of the Property Services Businesses (the "Voting Stock
Partnerships") or their partners, on the other, that are inconsistent with the
relevant Voting Stock Partnership being considered to be both the record and
beneficial owner of more than 90% of the outstanding voting stock of the
respective Property Services Businesses; and (iii) the Company is a validly
organized and duly incorporated corporation under the laws of the State of
Maryland, each of the Property Services Businesses and each of the REIT Subs are
validly organized and duly incorporated corporations under the laws of the State
of Delaware or the Commonwealth of Virginia (as applicable), and the Operating
Partnership and each of the subsidiary partners are duly organized and validly
existing partnerships under the applicable laws of the State of Delaware.
In our review, we have assumed that all of the representations
and statements set forth in the documents that we reviewed (including the
Management Representation Letter) are true and correct, and all of the
obligations imposed by any such documents on the parties thereto, including
obligations imposed under the Articles of Incorporation of the Company, have
been and will continue to be performed or satisfied in accordance with their
terms. We also have assumed the genuineness of all signatures, the proper
execution of all documents, the authenticity of all documents submitted to us as
originals, the conformity to originals of documents submitted to us as copies,
and the authenticity of the originals from which any copies were made.
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Charles E. Smith Residential Realty, Inc.
July 14, 2000
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OPINIONS
Based upon, subject to, and limited by the assumptions and
qualifications set forth herein, we are of the opinion as follows:
1. The Company was organized and has operated in conformity with the
requirements for qualification and taxation as a real estate investment
trust ("REIT") under the Code for its taxable years ending December 31,
1995, December 31, 1996, December 31, 1997, December 31, 1998, and
December 31, 1999, and the Company's current organization and method of
operation, as described in the Management Representation Letter, will
enable it to continue to meet the requirements for qualification and
taxation as a REIT; and
2. The discussions in the Prospectus under the headings "Federal Income
Tax Considerations" and "Redemption of Units - Tax Consequences of
Redemption," to the extent that they describe provisions of federal
income tax law, are correct in all material respects.
Our opinion letter is limited to the opinions described above.
Our opinion does not, and is not intended to, address the tax consequences to
any Unitholder with respect to the acquisition, ownership, redemption, or
disposition of its Units.
We assume no obligation to advise you of any changes in our
opinions subsequent to the delivery of this opinion letter. The Company's
qualification and taxation as a REIT depend upon the Company's ability to meet
on a continuing basis, through actual annual operating and other results, the
various requirements under the Code with regard to, among other things, the
sources of its gross income, the composition of its assets, the level of its
distributions to stockholders, and the diversity of its stock ownership. Hogan &
Hartson L.L.P. has relied upon representations of the Company with respect to
these matters and will not review the Company's compliance with these
requirements on a continuing basis. Accordingly, no assurance can be given that
the actual results of the Company's operations, the sources of its income, the
nature of its assets, the level of its distributions to stockholders and the
diversity of its stock ownership for any given taxable year will satisfy the
requirements under the Code for qualification and taxation as a REIT.
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Charles E. Smith Residential Realty, Inc.
July 14, 2000
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An opinion of counsel merely represents counsel's best
judgment with respect to the probable outcome on the merits and is not binding
on the IRS or the courts. There can be no assurance that positions contrary to
our opinion will not be taken by the IRS, or that a court considering the issue
would not hold contrary to such opinion. Furthermore, no assurance can be given
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of the
opinion expressed herein. Nevertheless, we undertake no responsibility to advise
you of any such changes.
We hereby consent to the filing of this opinion letter as
Exhibit 8.1 to the Registration Statement and to the use of the name of the firm
therein. In giving the consent, we do not thereby admit that we are an "expert"
within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
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Hogan & Hartson L.L.P.
