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Exhibit 8.1
[Hogan & Hartson L.L.P. Letterhead]
August 11, 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 161,765 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 161,765 units of
Limited Partnership interests ("Units") in Charles E. Smith Residential Realty
L.P. (the "Operating Partnership"), which Units were issued by the Operating
Partnership on August 12, 1999 in exchange for all of the non-voting stock of
Combustioneer Corporation, a Maryland corporation, and all of the non-voting
common stock of AAS Environmental, Inc., a Delaware corporation. 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 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
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Charles E. Smith Residential Realty, Inc.
August 11, 2000
Page 2
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 August 7, 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, and the operating
agreements of the limited liability company 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 and limited
liability companies (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 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
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Charles E. Smith Residential Realty, Inc.
August 11, 2000
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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 and limited
liability company 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,
operating agreement, 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 or limited
liability companies that own the voting stock of the Property Services
Businesses (the "Voting Stock Entities") or their partners or members, on the
other, that are inconsistent with the relevant Voting Stock Entities 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 applicable laws of the state in which they are organized, the
Operating Partnership and each of the subsidiary partnerships are duly organized
and validly existing partnerships under the applicable laws of the state in
which they are organized, and each of the subsidiary limited liability companies
are duly organized and validly existing limited liability companies under the
applicable laws of the state in which they are organized.
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.
August 11, 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.
August 11, 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.
Hogan & Hartson L.L.P.
