<PAGE> 1
As filed with the Securities and Exchange Commission on June 11, 1996
Registration Statement No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
BEACON PROPERTIES CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 04-3224258
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 ROWES WHARF
BOSTON, MASSACHUSETTS 02110
(617) 330-1400
(Address and Telephone Number of Principal Executive Offices)
ALAN M. LEVENTHAL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BEACON PROPERTIES CORPORATION
50 ROWES WHARF
BOSTON, MASSACHUSETTS 02110
(617) 330-1400
(Name, Address and Telephone Number,
Including Area Code, of Agent for Service)
--------------------
copy to:
GILBERT G. MENNA, P.C.
KATHRYN I. MURTAGH, ESQ.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MA 02109
(617) 570-1433
--------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after this registration statement becomes effective, as determined by the
Registering Stockholders.
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/
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. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
====================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
Being Registered Registered Offering Price Per Aggregate Offering Price Registration Fee
Share
(1)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 3,297,882 $25.69 $84,722,589 $29,215.00
====================================================================================================
<FN>
(1) This estimate is based on the average of the high ($25.875) and low
($25.50) sales prices on the New York Stock Exchange of the Common Stock of
Beacon Properties Corporation on June 6, 1996, pursuant to Rule 457(c)
under the Securities Act of 1933, as amended, and is made solely for
purposes of determining the registration fee.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
<PAGE> 2
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 NOR 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.
PROSPECTUS
- ----------
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 11, 1996
3,297,882 SHARES
BEACON PROPERTIES CORPORATION
COMMON STOCK
---------------
Beacon Properties Corporation along with its subsidiaries (the "Company")
owns a portfolio of Class A office properties and other commercial properties
located primarily in the greater Boston and Atlanta metropolitan areas, as well
as commercial real estate development, construction, acquisition, leasing,
design and management businesses. The Company owns or has an interest in 58
income producing commercial properties encompassing approximately 10.0 million
rentable square feet (each, a "Property" and collectively, the "Properties").
The Company is a self-administered and self-managed real estate investment trust
(a "REIT").
All of the shares of common stock (the "Redemption Shares") of the Company,
par value $.01 per share ("Common Stock"), offered hereby are being registered
for the account of certain persons named herein (collectively, the "Registering
Stockholders"), who received or will receive such shares in exchange for units
of limited partnership interest ("Units") in Beacon Properties, L.P. (the
"Operating Partnership'), of which the Company is the sole general partner. The
Units were issued in connection with the formation of the Company in May 1994.
See "Plan of Distribution" and "Registering Stockholders." Each of the
Registering Stockholders, directly or through agents, dealers or underwriters
designated from time to time, may sell all or a portion of the shares of Common
Stock offered hereby from time to time on terms to be determined at the time of
sale. To the extent required, the specific shares of Common Stock to be sold,
the names of the Registering Stockholders, the respective purchase prices and
public offering prices, the names of any such agent, dealer or underwriter, and
any applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying prospectus supplement. See "Plan of
Distribution." Each Registering Stockholder reserves the sole right to accept
and, together with such Registering Stockholder's agents, dealers or
underwriters from time to time, to reject, in whole or in part, any proposed
purchase of shares of Common Stock to be made directly or through agents,
dealers or underwriters.
The Company anticipates that it generally will elect to acquire directly
Units tendered for redemption and to issue Common Stock in exchange therefor
rather than paying cash. As a result, the Company may from time to time issue up
to 3,297,882 Redemption Shares upon the acquisition of Units tendered to the
Operating Partnership for redemption. Accordingly, the Company is registering
the Redemption Shares to provide Unitholders with freely tradeable securities
upon redemption.
The aggregate proceeds to the Registering Stockholders from the sale of the
shares of Common Stock offered hereby (the "Offering") will be the purchase
price of the shares of Common Stock sold less the aggregate agents' commissions
and underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. The Company will pay all of the expenses
of the Offering other than agents' commissions and underwriters' discounts with
respect to the shares of Common Stock offered hereby, and transfer taxes, if
any.
The Registering Stockholders and any agents, dealers or underwriters that
participate with the Registering Stockholders in the distribution of the shares
of Common Stock may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), in which case any
commissions received by such agents, dealers or underwriters and any profit on
the resale of the shares of Common Stock purchased by them may be deemed
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for indemnification arrangements between the Company and the
Registering Stockholders.
Pursuant to the agreement of limited partnership of the Operating
Partnership (the "Partnership Agreement"), a Unitholder may tender all or a
portion of its Units to the Operating Partnership for redemption for the cash
equivalent of an equivalent number of shares of Common Stock; provided, however,
that the Company may, in its sole and absolute discretion, acquire any Units so
tendered for an equivalent number of shares of Common Stock or for the cash
equivalent of an equivalent number of shares of Common Stock.
<PAGE> 3
The Company will not receive any proceeds from the issuance of any
Redemption Shares, but will acquire Units tendered to the Operating Partnership
for redemption for which it elects to issue Redemption Shares. With each such
acquisition, the Company's interest in the Operating Partnership will increase.
The Common Stock is listed on the New York Stock Exchange ("NYSE") under
the symbol "BCN." To ensure that the Company maintains its qualification as a
Real Estate Investment Trust (a "REIT"), ownership by any single person is
limited to 6.0%, or 9.9% for certain stockholders, of the value of the
outstanding capital stock of the Company.
SEE "RISK FACTORS" FOR CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN THE COMMON
STOCK.
-------------------
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 __, 1996.
2
<PAGE> 4
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC" or "Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Redemption Shares. This Prospectus, which constitutes part
of the Registration Statement, omits certain of the information contained in the
Registration Statement and the exhibits thereto on file with the Commission
pursuant to the Securities Act and the rules and regulations of the Commission
thereunder. The Registration Statement, including exhibits thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048, and Northwestern Atrium Center, 500 W. Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and copies may be obtained at the prescribed
rates from the Public Reference Section of the Commission at its principal
office in Washington, D.C. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
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 proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the locations described above. Copies of such materials
can be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
In addition, the Common Stock is listed on the New York Stock Exchange (the
"NYSE"), and such materials can be inspected and copied at the NYSE, 20 Broad
Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1995, filed with the Commission pursuant to the Exchange Act.
2. The Company's Current Report on Form 8-K, dated February 20, 1996, filed
with the Commission pursuant to the Exchange Act, including all amendments
thereto.
3. The Company Quarterly Report on Form 10-Q for the three months ended
March 31, 1996, filed with the Commission pursuant to the Exchange Act.
4. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission pursuant to the
Exchange Act, including all amendments and reports updating such description.
In addition, all documents subsequently filed with the Commission by the
Company pursuant to Section 13(a) and 13(c), Section 14 and Section 15(d) of the
Exchange Act prior to the filing of a post-effective amendment hereto that
indicates that all shares of Common Stock registered hereunder have been sold or
that deregisters all shares of Common Stock then remaining unsold, shall be
deemed to be incorporated by reference in this registration statement and to be
a part hereof from the date of filing of such documents.
Any statement contained in this Prospectus or 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 that also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, EXCEPT FOR THE EXHIBITS TO SUCH DOCUMENTS. WRITTEN REQUESTS
SHOULD BE MAILED TO KATHLEEN M. MCCARTHY, BEACON PROPERTIES CORPORATION, 50
ROWES WHARF, BOSTON, MASSACHUSETTS 02110. TELEPHONE REQUESTS MAY BE DIRECTED TO
(617) 330-1400.
3
<PAGE> 5
RISK FACTORS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed below.
An investment in the Common Stock involves various risks. Unitholders and other
prospective investors should carefully consider the following information in
conjunction with the other information contained in this Prospectus before
making an investment decision regarding the Redemption Shares.
TAX CONSEQUENCES TO UNITHOLDERS OF EXCHANGE OF UNITS
Tax Consequences of Exchange of Units. In the event that the Company
exercises its right to acquire Units tendered for redemption in exchange for
cash or Redemption Shares, the Company's acquisition of such Units will be
treated for tax purposes as a sale of the Units. Such a sale will be fully
taxable to the Unitholder and the Unitholder will be treated as realizing for
tax purposes an amount equal to the sum of the cash received or the value of the
Redemption Shares received in the exchange plus the amount of any Operating
Partnership liabilities allocable to the exchanged Units at the time of the
redemption or exchange. It is possible that the amount of gain recognized or
even the tax liability resulting from such gain could exceed the amount of cash
and the value of other property (e.g., Redemption Shares) received upon such
disposition. See "Description of Units and Redemption of Units --Tax
Consequences of Redemption." In addition, the ability of the Unitholder to sell
a substantial number of Redemption Shares in order to raise cash to pay tax
liabilities associated with the redemption of Units may be limited as a result
of fluctuations in the market price of the Common Stock, and the price the
Unitholder receives for such shares may not equal the value of its Units at the
time of redemption or exchange.
In the event that the Company does not exercise its right to acquire Units
tendered for redemption in exchange for cash or Redemption Shares, and such
Units are redeemed by the Operating Partnership for cash, the tax consequences
may differ. See "Description of Units and Redemption of Units."
Potential Change in Investment Upon Redemption of Units. If a Unitholder
exercises its right to require the redemption of all or a portion of its Units,
the Unitholder may receive cash or, at the option of the Company, Redemption
Shares in exchange for its Units. If the Unitholder receives cash from either
the Operating Partnership or the Company, the Unitholder will not have any
interest in the Company or the Operating Partnership (except to the extent that
it retains Units) and will not benefit from any subsequent increases in the
value of Common Stock and will not receive any future distributions from the
Company or the Operating Partnership (unless the Unitholder retains or acquires
in the future additional Common Stock or Units). If the Unitholder receives
Common Stock, the Unitholder will become a stockholder of the Company rather
than a holder of Units in the Operating Partnership. See "Description of Units
and Redemption of Units--Comparison of Ownership of Units and Common Stock."
RISKS INVOLVED IN JOINT OWNERSHIP OF PROPERTIES
The Company holds (i) a 76% general and limited partner interest in the
property partnership that owns the Center Plaza Property, (ii) a 50% general
partner interest in the property partnership that owns the One Post Office
Square Property, (iii) a 90% limited partner interest (through Beacon Property
Management Corporation and Beacon Construction Company, Inc.) in Rowes Wharf
Limited Partnership, a limited partnership that owns a 50% general partner
interest in Rowes Wharf Associates, the entity that owns the hotel space and
leases the office and retail space at the Rowes Wharf Property, (iv) a 10%
general and limited partner interest in the property partnership that owns the
Polk and Taylor Buildings Property and (v) approximately 51.6% of the common
stock of a private REIT which holds a direct fee interest in the 75-101 Federal
Street Property.
The Company is the sole general partner with full management responsibility
for the partnership that owns the Center Plaza Property. For One Post Office
Square, Rowes Wharf and the Polk and Taylor Buildings, the Company is either a
limited partner without partnership management responsibility (in the case of
the Rowes Wharf Property) or a co-venturer or co-general partner with shared
responsibility for managing the affairs of the joint venture (in the case of the
One Post Office Square and Polk and Taylor Buildings Properties). In the case of
75-101 Federal Street, the Company is an approximately 51.6% stockholder in a
private REIT that holds the Property. Therefore, the Company is not in a
position to exercise sole decision making authority regarding
4
<PAGE> 6
One Post Office Square, Rowes Wharf, the Polk and Taylor Buildings or 75-101
Federal Street. However, the Company is responsible for the day-to-day affairs
of each such Property. In the One Post Office Square and Rowes Wharf Properties,
the other investors in the Properties are institutional investors who, together
with the Company, have participated in the Properties for at least 15 years and
nine years, respectively.
Joint ownership of Properties may, under certain circumstances, involve
risks not otherwise present, including the possibility that the Company's
partners or co-investors might become bankrupt, that such partners or
co-investors might at any time have economic or other business interests or
goals that are inconsistent with the business interests or goals of the Company,
and that such partners or co-investors may be in a position to take action
contrary to the instructions or the requests of the Company or contrary to the
Company's policies or objectives, including the Company's policy with respect to
maintaining its qualification as a REIT. Such investments may also have the
potential risk of impasse on decisions, such as a sale, because neither the
Company nor the partners or co-investors would have full control over the entity
owning the Property. Consequently, actions by such partners or co-investors
might result in subjecting jointly-owned Properties to additional risk. The
Company will, however, seek to maintain sufficient control of the entities
holding jointly- owned Properties to permit the Company's business objectives to
be achieved. Any capital contribution by the Company or the Operating
Partnership to the property partnerships that own (directly or indirectly) the
Rowes Wharf and Center Plaza Properties requires the approval of the Directors
of the Company who are neither officers of the Company nor affiliated with The
Beacon Companies and its affiliates ("Beacon"). There is no limitation under the
Company's organizational documents as to the amount of available funds that may
be invested in partnerships, joint ventures or co-investments.
REAL ESTATE FINANCING RISKS
Debt Financing and Existing Debt Maturities. The Company intends to finance
the acquisition of additional properties through the use of debt and equity
financing. The Company is subject to the risks normally associated with debt
financing, including the risk that the Company's cash flow will be insufficient
to meet required payments of principal and interest, the risk that existing
indebtedness on the Properties (which in most cases will not have been fully
amortized at maturity) will not be able to be refinanced or that the terms of
such refinancing will not be as favorable as the terms of the existing
indebtedness.
Currently, the Company's total consolidated debt is approximately $403.2
million, and its total consolidated debt plus its proportionate share of total
unconsolidated debt (other than Rowes Wharf) is approximately $496.6 million.
The Company (together with an affiliate of the Company (a "Beacon Affiliate"))
and the Equitable Life Assurance Society of the United States, on behalf of its
Prime Property Fund ("Equitable"), the Company's joint venture partner in Rowes
Wharf Associates, each holds one-half of the mortgage debt on the Rowes Wharf
Property. The Company's current indebtedness of approximately $496.6 million has
maturities ranging from 1998 through 2006. The Company's current outstanding
consolidated debt consists of approximately $403.2 million secured by Properties
owned 100% by the Company. Currently, there is no outstanding balance under the
Company's floating-rate credit facility provided by The First National Bank of
Boston, N.A., as agent (the "Credit Facility"). The Company's proportionate
share of its current total unconsolidated debt (excluding Rowes Wharf) consists
of approximately $47.0 million on the One Post Office Square Property (in which
the Company has a 50% general partner interest) and approximately $46.4 million
on the 75-101 Federal Street Property (in which the Company owns approximately
51.6% of the common stock of a private REIT that owns the Property).
The Company currently has a policy of incurring debt only if upon such
incurrence the Company's Debt to Market Capitalization Ratio (as defined below)
would be 50% or less. For purposes of this policy, the Company's Debt to Market
Capitalization Ratio is calculated as the Company's proportionate share of total
consolidated and unconsolidated debt (excluding Rowes Wharf) as a percentage of
the sum of the market value of outstanding shares of stock of the Company and
Units plus the Company's proportionate share of total consolidated and
unconsolidated debt (excluding Rowes Wharf). As noted, the Company (together
with a Beacon Affiliate) currently holds one-half of the Rowes Wharf mortgage
indebtedness. Although the Company has adopted a Debt to Market Capitalization
Ratio policy, the organizational documents of the Company do not contain any
limitation on the amount of indebtedness the Company may incur. Accordingly, the
Board of Directors could alter or eliminate this policy and would do so, for
example, if it were necessary in order for the Company to continue to qualify as
a REIT.
5
<PAGE> 7
The Company anticipates that only a small portion of the principal of the
Company's mortgage indebtedness will be repaid prior to maturity. However, the
Company may not have funds sufficient to repay such indebtedness at maturity and
it may be necessary for the Company to refinance indebtedness through additional
debt financing or equity offerings. If the Company is unable to refinance this
indebtedness on acceptable terms, the Company may be forced to dispose of
Properties upon disadvantageous terms, which could result in losses to the
Company and adversely affect the amount of cash available for distribution to
stockholders. If prevailing interest rates or other factors result in higher
interest rates at a time when the Company must refinance its indebtedness, the
Company's interest expense would increase, which would adversely affect the
Company's results of operations and its ability to pay expected distributions to
stockholders. Further, if a Property or Properties are mortgaged to secure
payment of indebtedness and the Company is unable to meet mortgage payments, the
Property or Properties could be foreclosed upon by or otherwise transferred to
the mortgagee with a consequent loss of income and asset value to the Company.
Even with respect to nonrecourse indebtedness, the lender may have the right to
recover deficiencies from the Company in certain circumstances, including fraud
and environmental liabilities.
Risk of Rising Interest Rates. Outstanding advances under the Credit
Facility bear interest at a variable rate. In addition, the Company may incur
indebtedness in the future that also bears interest at a variable rate.
Accordingly, increases in interest rates could increase the Company's interest
expense, which could adversely affect the Company's results of operations and
its ability to pay expected distributions to stockholders or cause the Company
to be in default under certain Credit Facility covenants.
LIMITED GEOGRAPHIC DIVERSIFICATION
Approximately 53% and 41% of the Company's proportionate share of the
rentable square feet of the Properties is located in the greater Boston
metropolitan area and the northern suburbs of Atlanta, Georgia, respectively.
Consequently, the Company will continue to rely upon the demand for office and
other commercial space in the greater Boston and Atlanta metropolitan areas.
Although the Boston and Atlanta areas continue to recover from a severe economic
downturn in real estate markets that occurred in the late 1980s and early 1990s,
there can be no assurance that economic conditions in the Boston and Atlanta
areas will continue to improve.
POSSIBLE ADVERSE CONSEQUENCES OF LIMITS ON OWNERSHIP OF COMMON STOCK
In order to maintain its qualification as a REIT, not more than 50% in
value of the outstanding capital stock of the Company may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Internal Revenue
Code of 1986, as amended (the "Code"), to include certain entities) during the
last half of a taxable year (other than the first year) (the "Five or Fewer
Requirement"). In order to protect the Company against the risk of losing REIT
status due to a concentration of ownership among its stockholders, the Articles
of Incorporation of the Company limit ownership of the issued and outstanding
Common Stock by any single stockholder to 6.0% of the aggregate value of the
Company's shares of capital stock from time to time; provided, however, that
entities whose ownership of Common Stock is attributed to the beneficial owners
of such entities for purposes of the Five or Fewer Requirement, such as pension
trusts qualifying under Section 401(a) of the Code, United States investment
companies registered under the Investment Company Act of 1940, as amended,
partnerships, trusts and corporations, will be limited by the Company's Articles
of Incorporation to holding no more than 9.9% of the aggregate value of the
Company's shares of capital stock. The Articles of Incorporation provide that
the Board of Directors can waive this restriction if it is satisfied, based upon
the advice of tax counsel, that ownership in excess of this limit will not
jeopardize the Company's status as a REIT and the Board of Directors otherwise
decides such action would be in the best interests of the Company. A transfer of
shares to a person who, as a result of the transfer, violates the ownership
limitations will be void. Shares acquired or transferred in breach of the
ownership limitations will be automatically converted into shares not entitled
to vote or to participate in dividends or other distributions. In addition,
shares acquired or transferred in breach of the ownership limitations may be
purchased by the Company for the lesser of the price paid and the average
closing price for the ten trading days immediately preceding redemption.
RISKS OF ACQUISITION, DEVELOPMENT AND CONSTRUCTION ACTIVITIES
The Company intends to acquire existing office and commercial properties to
the extent that they can be acquired on advantageous terms and meet the
Company's investment criteria. In light of current conditions in the Company's
target market areas, the Company anticipates that in the near future additional
properties will be added to the Company's portfolio through acquisitions rather
than new development and construction.
6
<PAGE> 8
Acquisitions of commercial properties entail general investment risks associated
with any real estate investment, including the risk that investments will fail
to perform as expected or that estimates of the cost of improvements to bring an
acquired property up to standards established for the intended market position
may prove inaccurate.
The Company also intends to continue the development and construction of
office and other commercial properties, in accordance with the Company's
development and underwriting policies as opportunities arise in the future.
Risks associated with the Company's development and construction activities
include the risk that: the Company may abandon development opportunities after
expending resources to determine feasibility; construction costs of a project
may exceed original estimates; occupancy rates and rents at a newly completed
property may not be sufficient to make the properties profitable; financing may
not be available on favorable terms for development of a property; 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. If any of the foregoing
occurs, the Company's ability to make expected distributions to stockholders
could be adversely affected. In addition, new development activities, regardless
of whether or not they are ultimately successful, typically require a
substantial portion of management's time and attention.
The Company anticipates that future development will be financed, in whole
or in part, through equity offerings or under lines of credit or other forms of
secured or unsecured construction financing which will result in a risk that,
upon completion of construction, permanent financing for newly developed
properties may not be available or may be available only on disadvantageous
terms. If a project is unsuccessful, the Company's losses may exceed its
investment in the project.
REAL ESTATE INVESTMENT RISKS
General Risks. Investments of the Company are subject to the risks incident
to the ownership and operation of commercial real estate generally. The yields
available from equity investments in real estate depend on the amount of income
generated and expenses incurred. If the Company's Properties do not generate
revenues sufficient to meet operating expenses, including debt service and
capital expenditures, the Company's results of operations and ability to make
distributions to its stockholders will be adversely affected.
A commercial property's revenues and value may be adversely affected by a
number of factors, including the national, state and local economic climate and
real estate conditions (such as oversupply of or reduced demand for space and
changes in market rental rates); the perceptions of prospective tenants of the
safety, convenience and attractiveness of the properties; the ability of the
owner to provide adequate management, maintenance and insurance; the ability
timely to collect all rent from tenants; the expense of periodically renovating,
repairing and reletting spaces; and increasing operating costs (including real
estate taxes and utilities) which may not be passed through to tenants. Certain
significant expenditures associated with investments in real estate (such as
mortgage payments, real estate taxes, insurance and maintenance costs) are
generally not reduced when circumstances cause a reduction in rental revenues
from the property. If a property is mortgaged to secure the 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 property or the exercise of
other remedies by the mortgagee. In addition, real estate values and income from
properties are also affected by such factors as compliance with laws, including
tax laws, interest rate levels and the availability of financing.
Tenant Defaults. Substantially all of the Company's income is derived from
rental income from real property. Consequently, the Company's results of
operations and ability to make expected distributions to stockholders would be
adversely affected if a significant number of tenants at the Properties failed
to meet their lease obligations. In the event of a default by a lessee, the
Company may experience delays in enforcing its rights as lessor and may incur
substantial costs in protecting its investment. Additionally, as a significant
number of the Company's tenants are in the financial services, legal and
accounting businesses, the Company's results of operations and ability to make
expected distributions to stockholders would be adversely affected if these
industries experienced a significant reduction in workforce. At any time, a
tenant of the Properties may also seek protection under the bankruptcy laws,
which could result in rejection and termination of such tenant's lease and
thereby cause a reduction in the cash available for distribution by the Company.
If a tenant rejects its lease, the Company's claim for breach of the lease would
(absent collateral securing the claim) be treated as a general unsecured claim.
The amount of the claim would be capped at the amount owed for unpaid
pre-petition lease payments unrelated to the rejection, plus the greater of one
year's lease payment or 15% of the remaining lease
7
<PAGE> 9
payments payable under the lease (but not to exceed the amount of three years'
lease payments). No assurance can be given that the Company will not experience
significant tenant defaults in the future.
Ground Leases. Two of the Properties are the subject of long-term ground
leases. In the case of the lease on the office and retail portions of the Rowes
Wharf Property, the landlord becomes the owner of the portion of the Property
subject to the lease at the expiration of the term of the lease or at the
earlier termination by reason of a breach of the lease by the tenant. The lease
on the Rowes Wharf Property, which expires in 2065, does not contain an
extension option but includes an option to purchase. The ground lease pursuant
to which the Company leases the South Station Property expires in 2024. The
landowner becomes the owner of the South Station Property at the expiration of
the term of the ground lease or at the earlier termination by reason of a breach
of the lease by the tenant. The Company will have the right to extend the lease
for two additional 15-year terms, subject to the landowner's right to terminate
such additional periods upon two years' notice and payment to the Company of
certain termination payments.
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, provisions of the Code limit 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.
Operating Risks. The Properties are subject to operating risks common to
commercial real estate in general, any and all of which may adversely affect
occupancy or rental rates. The Properties are subject to increases in operating
expenses such as cleaning, electricity, heating, ventilation and air
conditioning; elevator repair and maintenance; insurance and administrative
costs; and other general costs associated with security, landscaping, repairs
and maintenance. While the Company's tenants are currently obligated to pay
these escalating costs, there can be no assurance that tenants will agree to pay
such costs upon renewal or that new tenants will agree to pay such costs. If
operating expenses increase, the local rental market may limit the extent to
which rents may be increased to meet such increased expenses without decreasing
occupancy rates. While the Company implements cost-saving incentive measures at
each of its Properties, if any of the foregoing occurs, the Company's ability to
make distributions to stockholders could be adversely affected.
Competition. There are numerous commercial properties that compete with the
Properties in attracting tenants in the Company's identified markets.
RISKS ASSOCIATED WITH THE ADDITION OF A SUBSTANTIAL NUMBER OF NEW PROPERTIES
The Company is currently experiencing a period of rapid growth. Since the
Company's initial public offering in May 1994, the Company has invested
approximately $650 million in office properties, increasing its interests in
real estate by over 200%. The Company's ability to manage its growth effectively
will require it and its submanager, Taylor & Mathis, Inc., to, among other
things, successfully apply their experience in the Atlanta market to the
management of the Perimeter Center Property. There can be no assurance that the
Company will be able to manage these operations effectively.
RISK OF INVESTMENT IN MORTGAGE DEBT
The Company may invest in mortgages which are secured by existing office
and commercial properties in circumstances where the Company anticipates that
its ownership of the mortgage may result in the acquisition of the related
properties through foreclosure proceedings or negotiated settlements. In
addition to the risks associated with investments in commercial office
properties, investments in mortgage indebtedness present the additional risks
that the fee owners of such properties may default in payments of interest on a
current basis and that the filing of bankruptcy proceedings may stay the
Company's foreclosure of such mortgages and receipt of payments thereunder.
Under such circumstances, the Company may not realize its anticipated investment
return, and may sustain losses relating to such investments.
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various Federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real estate may be
required to investigate and clean up hazardous or toxic substances or petroleum
product releases at such property and may be held liable to a governmental
entity or
8
<PAGE> 10
to third parties for damage to property or natural resources and for
investigation and remediation costs incurred by such parties in connection with
the contamination. Such laws typically impose remediation responsibility and
liability without regard to whether the owner knew of or caused the presence of
the contaminants, and the liability under such laws has been interpreted to be
joint and several. The cost of investigation, remediation or removal of such
substances may be substantial and the owner's liability therefor under such laws
is generally not limited and may exceed the value of the property or the
aggregate assets of the owner. In addition, the presence of such substances, or
the failure properly to remediate the contamination on such property, may
adversely affect the owner's ability to sell or rent such property or to borrow
using such property as collateral. Persons who arrange for the disposal or
treatment of hazardous or toxic substances or petroleum products at a disposal
or treatment facility also may be liable for the costs of removal or remediation
of a release of hazardous or toxic substances or petroleum products at such
disposal or treatment facility, whether or not such facility is owned or
operated by such person. In addition, some environmental laws create a lien on
the contaminated site in favor of the government for damages and costs it incurs
in connection with the contamination. In addition to statutory liability, the
owner of a site may be subject to common law claims by third parties based on
damages and costs resulting from environmental contamination emanating from a
site. In connection with its ownership and operation of the Properties, the
Company may be liable for costs and damages of the types described above.
Statutes of limitations applicable to liabilities arising from releases of
hazardous or toxic substances or petroleum products generally are not based on
the time of disposal.
Certain Federal, state, and local laws and regulations impose requirements
on the construction and operation of commercial buildings, including
requirements for pre-construction review of environmental impacts, permit
requirements for the discharge of wastewater and the operation of fossil fuel
burning equipment above a certain size, restrictions on the construction and
operation of certain commercial parking facilities, and approval requirements
for the construction and use of structures in certain tidelands. Failure to
comply with such requirements could have a material adverse effect on the
Company's operations of the Properties or result in penalties that could have a
material adverse effect on the Company's financial condition.
Certain Federal, state and local laws, regulations and ordinances govern
the removal, encapsulation, disturbance, or release to the environment of
asbestos-containing materials ("ACMs") in the event of construction, remodeling,
renovation or demolition of a building. Such laws generally allow for the
imposition of fines for failure to comply with such requirements and may impose
liability for the 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. The potential for release of, or exposure to, asbestos
from ACMs is greater if ACMs are damaged and "friable." "Friable" ACMs are
generally any ACMs that can be crumbled, pulverized, or reduced to powder by
hand pressure. In connection with its ownership and operation of the Properties,
the Company may be subject to such requirements or potentially liable for such
costs.
Certain Federal and state regulations also apply to the generation,
storage, transportation, and disposal of hazardous wastes. Other Federal, state,
and local regulations and ordinances set forth requirements applicable to the
construction, operation, licensing, and removal of certain storage tanks and the
storage of flammable liquids. As a result of its ownership and operation of the
Properties, the Company may be subject to such requirements. Failure to comply
with such requirements could have a material adverse effect on the Company's
operations of the Properties or result in penalties that would have a material
adverse effect on the Company's financial condition.
At various times, Phase I environmental site assessments (which are
preliminary in nature and generally do not include sampling and testing) and, on
some Properties, subsurface sampling and/or asbestos inspections, have been
carried out on the Properties to determine the likelihood that oil or hazardous
substances are present in the soil or groundwater on the Properties. The
assessments of the Properties conducted to date 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, nor is the
Company aware of any such material environmental liability.
In addition, the assessments have revealed the existence or possible
existence of nonfriable, and in some cases friable, ACMs at several Properties.
A release of asbestos could occur if ACMs at the Properties are not properly
maintained or are disturbed. However, the Company has programs in place to
monitor and maintain ACMs remaining in place and the Company believes that even
if a release of asbestos did occur it would not have a material adverse effect
on the Company or its financial condition, results of operations or liquidity.
9
<PAGE> 11
Nevertheless, it is possible that the Company's assessments do not reveal
all environmental liabilities or that there are material environmental
liabilities of which the Company is unaware. Moreover, no assurances can be
given that (i) future laws, ordinances or regulations will not impose any
material environmental liability, (ii) the current environmental condition of
the Properties will not be affected by tenants, by the condition of land or
operations in the vicinity of the Properties (such as the presence of
underground storage tanks), or by third parties unrelated to the Company, or
(iii) that conditions at the Properties have not changed since the site
assessments were completed.
The Company believes that it is in compliance in all material respects with
all Federal, state and local laws, ordinances and regulations regarding
hazardous or toxic substances or petroleum products. The Company does not
believe that the cost of continued compliance with applicable environmental laws
or regulations will have a material adverse effect on the Company or its
financial condition or results of operations. Except as noted in this
Prospectus, the Company has not been notified by any governmental authority, and
is not otherwise aware, of any material noncompliance, liability or claim
relating to hazardous or toxic substances or petroleum products which could be
asserted against it in connection with any of the Properties.
Some of the Properties are located in urban areas where fill or current or
historic industrial uses of the areas may have caused site contamination at the
Properties. Nonetheless, at this time, the Company does not anticipate that
regulatory authorities will require remediation of the Properties, except as
specified below or incorporated herein by reference.
Perimeter Center Property. Site assessments have identified the presence of
petroleum contamination in the groundwater on a small portion of the Property,
near the North and South Terrace Buildings, which the site assessments indicate
is the result of a release from an underground storage tank located on an
adjacent property. The current owner of the adjacent property has taken
responsibility for the remediation of the release pursuant to an Agreement dated
May 20, 1993 (the "Agreement"), and, according to a Corrective Action Plan which
has been approved by the Georgia Department of Natural Resources and which the
adjacent property owner has implemented, the target date for completion of the
remediation program is July 1996. Pursuant to the Agreement, the current
adjacent property owner has indemnified the Company for any costs and
liabilities arising from the release. As the owner of the Property, however, the
Company could be held liable for the costs of such activities if the current
adjacent property owner fails to undertake such actions, although the Company
does not believe that such costs would have a material adverse effect on the
Company.
RISKS OF INVESTMENTS IN SUBSIDIARIES
The capital stock of each of Beacon Property Management Corporation, Beacon
Construction Company, Inc. and Beacon Design Corporation (collectively, the
"Subsidiary Corporations") is divided into two classes: (i) voting common stock,
99% of which is held by officers and/or directors of such Subsidiary
Corporations (each of whom, as of the date of this Prospectus, is also an
officer and/or director of the Company) and 1% of which is held by the Operating
Partnership, and (ii) nonvoting common stock, 100% of which is held by the
Operating Partnership. Management's 99% voting common stock represents 1% of the
economic interests in each of the Subsidiary Corporations. Members of each
Subsidiary Corporation's management, as the holders of 99% of the voting common
stock, retain the ability to elect the board of directors of each of the
Subsidiary Corporations. Although the nonvoting common stock and the voting
common stock of each of the Subsidiary Corporations held by the Company
represent 99% of the economic interests in such corporations, the Company is not
able to elect directors and its ability to influence the day-to-day decisions
affecting these corporations may therefore be limited. As a result, the board of
directors and management of each of the Subsidiary Corporations may implement
business policies or decisions that would not have been implemented by persons
controlled by the Company that are adverse to the interests of the Company or
that lead to adverse financial results, which could adversely impact the
Company's results of operations. The bylaws of each of the Subsidiary
Corporations require that the voting common stock in such Subsidiary Corporation
be held by officers of such Subsidiary Corporation at all times and require
holders of voting common stock to enter into an agreement to that effect.
RISKS OF THIRD-PARTY MANAGEMENT
The Company manages Properties in which it does not own a controlling
interest and intends to actively pursue the management of properties which are
owned by third parties. Risks associated with the management of properties which
are not controlled by the Company and properties owned by third parties include
the risk that management contracts (which are typically cancelable without
notice) will be terminated by the entity
10
<PAGE> 12
controlling the property or in connection with the sale of such property, the
risk that contracts may not be renewed upon expiration or may not be renewed on
terms consistent with current terms and the risk that the rental revenues upon
which management fees are based will decline as a result of general real estate
market conditions or specific market factors affecting properties managed by the
Company, resulting in decreased management fee income. Although the Company has
several third-party management contracts, there can be no assurance that these
management contracts will not be terminated by the property owners in the
future.
EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK
One of the factors that will influence the market price of the Common Stock
in public markets is the annual yield on the price paid for shares of Common
Stock from dividends by the Company. An increase in market interest rates may
lead prospective purchasers of the Common Stock to demand a higher annual yield
from future dividends. Such an increase in the required dividend yield may
adversely affect the market price of the Common Stock.
THE COMPANY
GENERAL
The Company owns a portfolio of Class A office properties and other
commercial properties located primarily in the greater Boston and Atlanta
metropolitan areas, as well as commercial real estate development, construction,
acquisition, leasing and management businesses. Class A office properties
generally are considered to be those that have excellent locations and access,
attract high quality tenants, are well maintained and professionally managed,
and achieve among the highest rent, occupancy and tenant retention rates within
their markets. The Properties comprise approximately 10.0 million rentable
square feet in the aggregate.
The Company was formed in May 1994 to succeed to the office and commercial
real estate business of The Beacon Companies and its affiliates. Beacon was
founded in 1946 by Norman Leventhal and Robert Leventhal and has over 30 years
of experience in the development and management of office and commercial
properties. Starting in the 1940s, Beacon developed commercial building
construction expertise by providing general contracting services to projects in
20 states. Beacon began developing for its own account in the 1960s. Twelve of
the Properties were developed and constructed by Beacon, either alone or as a
co-general contractor. Also in the 1960s, Beacon began to develop its property
management business. Through Beacon Property Management Corporation, the Company
manages approximately 3.0 million square feet of commercial and office space
owned by third parties in various locations including Baltimore, Maryland;
Chicago, Illinois; Springfield, Massachusetts; and Washington, D.C.
The Company is a self-administered and self-managed REIT. The executive
officers of the Company have an average of 23 years of experience in the real
estate industry and each executive officer worked with Beacon, the predecessor
to the Company, for at least 16 years.
The Company's executive offices are located at 50 Rowes Wharf in Boston,
Massachusetts 02110 and its telephone number at that location is (617) 330-1400.
The Company was organized under the laws of the State of Maryland in March 1994.
11
<PAGE> 13
<TABLE>
THE PROPERTIES
Set forth below are summary descriptions of the Properties.
<CAPTION>
YEAR RENTABLE PERCENT LEASED
BUILT/ OWNERSHIP PROPERTY AREA IN AT MARCH 31,
PROPERTY RENOVATED INTEREST (LOCATION SQUARE FEET 1996
-------- --------- -------- --------- ----------- ----
<C> <C> <C> <C> <C> <C>
DOWNTOWN BOSTON OFFICE MARKET:
75-101 Federal Street ...... 1985-1988 51.6 % Boston, MA 812,000 96%
One Post Office Square ..... 1981 50 % Boston, MA 764,129 100%
Center Plaza ............... 1966-1969 (2) Boston, MA 649,359 93%
150 Federal Street ......... 1988 100 % Boston, MA 530,279 100%
Rowes Wharf ................ 1987 45 % Boston, MA 344,326 100%
Russia Wharf ............... 1978-1982 100 % Boston, MA 314,596 100%
2 Oliver Street-147 Milk
Street ................... 1982-1988 100 Boston, MA 271,000 95%
175 Federal Street ......... 1977 100 % Boston, MA 203,349 88%
South Station(3) ........... 1988 100 % Boston, MA 148,591 100%
---------
4,037,629
---------
NORTH CENTRAL ATLANTA OFFICE
MARKET:
Perimeter Center
Property(4)............... 1970-1989 100 % Atlanta, GA 3,302,136 95%
---------
GREATER BOSTON SUBURBAN OFFICE
MARKET:
Wellesley Office Park(5) ... 1963-1984 100 % Wellesley, MA 599,334 97%
Crosby Corporate Center ... 1995-1996 100 % Bedford, MA 336,000 88%
Westwood Business Centre ... 1985 100 % Westwood, MA 160,400 100%
---------
1,095,734
---------
CAMBRIDGE OFFICE MARKET:
One Canal Park............. 1987 100 % Cambridge, MA 100,300 94%
Ten Canal Park............. 1987 100 % Cambridge, MA 110,000 88%
---------
210,300
---------
SUBURBAN PHILADELPHIA OFFICE
MARKET:
Westlakes Office Park(6) .. 1988-1990 100 % Berwyn, PA 443,592 97%
--------- ---
ARLINGTON COUNTY, VIRGINIA
OFFICE MARKET:
The Polk and Taylor Buildings 1970 10 % Arlington, VA 890,000 100%
--------- ---
Total/Weighted
Average........ 9,979,391 96%
========= ===
</TABLE>
12
<PAGE> 14
(1) The Company holds a general partner interest in One Post Office Square, a
general partner and limited partner interest in Center Plaza and the Polk
and Taylor Buildings and an indirect limited partner interest in Rowes
Wharf Associates. The Company holds approximately 51.6% of the common stock
of BeaMetFed, Inc., the entity that holds the fee title to the 75-101
Federal Street Property. The Company owns a 100% fee interest in the
remaining Properties, with the exception of South Station, in which the
Company holds a ground leasehold interest.
(2) The Company holds a 1% general partner interest, a 75% limited partner
interest and an option to purchase the remaining 24% limited partner
interest in the partnership that owns the Center Plaza Property.
(3) The Company owns a ground leasehold interest in the South Station Property
which expires in 2024 but may be extended, at the Company's option, for two
additional 15-year terms. Fee title to this Property is owned by an
unaffiliated third party. This Property was originally built in the early
1900s and was fully rehabilitated in 1988. This Property includes a
significant retail component.
(4) The Perimeter Center Property consists of 32 buildings and six ground
leases.
(5) The Wellesley Office Park consists of eight office buildings.
(6) The Westlakes Office Park consists of four office buildings.
13
<PAGE> 15
DESCRIPTION OF CAPITAL STOCK
The description of the Company's capital stock set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Company's Articles of Incorporation (the "Articles of Incorporation") and Bylaws
(the "Bylaws"), each as amended, as in effect.
GENERAL
Under the Articles of Incorporation, the Company has authority to issue up
to 175 million shares of stock, consisting of 100 million shares of Common
Stock, par value $.01 per share, 50 million shares of excess stock, par value
$.01 per share ("Excess Stock") (as described below), and 25 million shares of
preferred stock, par value $0.01 per share ("Preferred Stock"). Under Maryland
law, stockholders generally are not responsible for the corporation's debts or
obligations. As of June 11, 1996, there were 27,292,395 shares of Common Stock
issued and outstanding and no Preferred Stock issued or outstanding. An
additional 7,473,796 shares of Common Stock have been reserved for issuance upon
the redemption of outstanding Units, for issuance under the Company's 1994
Stock Option and Incentive Plan and for issuance under the Company's dividend
reinvestment plan.
The Articles of Incorporation authorize the Directors to classify or
reclassify any unissued shares of capital stock by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions, qualifications or terms or conditions of
redemption of such stock.
COMMON STOCK
Subject to the preferential rights of any other shares or series of shares
and to the provisions of the Company's Articles of Incorporation regarding
Excess Stock, each outstanding share of Common Stock entitles the holder to one
vote on all matters submitted to a vote of stockholders, including the election
of Directors and, except as otherwise required by law or except as provided with
respect to any other class or series of stock, the holders of Common Stock will
possess the exclusive voting power. There is no cumulative voting in the
election of Directors, which means that the holders of a majority of the
outstanding shares of Common Stock can elect all of the Directors then standing
for election, and the holders of the remaining shares of Common Stock will not
be able to elect any Directors.
Holders of Common Stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm and quarterly reports for the
first three quarters of each fiscal year containing unaudited financial
information.
Subject to the provisions of the Company's Articles of Incorporation
regarding Excess Stock, all shares of Common Stock will have equal dividend,
distribution, liquidation and other rights, and will have no preference,
appraisal or exchange rights.
Pursuant to the Maryland General Corporation Law (the "MGCL"), a
corporation generally cannot dissolve, amend its Articles of Incorporation,
merge, sell all or substantially all of its assets, engage in a share exchange
or engage in similar transactions outside the ordinary course of business unless
approved by the affirmative vote of stockholders holding at least two-thirds of
the shares entitled to vote on the matter unless a lesser percentage (but not
less than a majority of all of the votes to be cast on the matter) is set forth
in the corporation's Articles of Incorporation. The Company's Articles of
Incorporation do not provide for a lesser percentage in such situations.
14
<PAGE> 16
PREFERRED STOCK
Preferred Stock may be issued from time to time, in one or more series, as
authorized by the Board of Directors. Prior to the issuance of shares of each
series, the Board of Directors is required by the MGCL and the Company's
Articles of Incorporation to fix for each series, subject to the provisions of
the Company's Articles of Incorporation regarding Excess Stock, such terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption, as are permitted by Maryland law. Such rights, powers,
restrictions and limitations could include the right to receive specified
dividend payments and payments on liquidation prior to any such payments being
made to the holders of some, or a majority, of the Common Stock. The Board of
Directors could authorize the issuance of Preferred Stock with terms and
conditions that could have the effect of discouraging a takeover or any other
transaction that holders of Common Stock might believe to be in their best
interests or in which holders of some, or a majority, of the Common Stock might
receive a premium for their shares over the then-current market price of such
shares. As of the date hereof, no shares of Preferred Stock are outstanding, and
the Company has no present plans to issue any Preferred Stock.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is Boston EquiServe.
RESTRICTIONS ON TRANSFERS
In order for the Company to qualify as a REIT under the Code, among other
things, not more than 50% in value of its outstanding capital stock may be
owned, directly or indirectly, by five or fewer individuals (defined in the Code
to include certain entities) during the last half of a taxable year (other than
the first year), and such shares of capital stock must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months
(other than the first year) or during a proportionate part of a shorter taxable
year. See "Federal Income Tax Considerations." In order to protect the Company
against the risk of losing its status as a REIT on account of a concentration of
ownership among its stockholders, the Articles of Incorporation, subject to
certain exceptions, provide that no single holder may own, or be deemed to own
by virtue of the attribution provisions of the Code, more than 6.0% (the
"Ownership Limit") of the aggregate value of the Company's shares of Common
Stock. Pursuant to the Code, Common Stock held by certain types of entities,
such as pension trusts qualifying under Section 401(a) of the Code, United
States investment companies registered under the Investment Company Act,
partnerships, trusts and corporations, will be attributed to the beneficial
owners of such entities for purposes of the Five or Fewer Requirement (i.e., the
beneficial owners of such entities will be counted as holders). The Company's
Articles of Incorporation limit such entities to holding no more than 9.9% of
the aggregate value of the Company's shares of capital stock (the "Look-Through
Ownership Limit"). Any transfer of shares of capital stock or of any security
convertible into shares of capital stock that would create a direct or indirect
ownership of shares of capital stock in excess of the Ownership Limit or the
Look-Through Ownership Limit or that would result in the disqualification of the
Company as a REIT, including any transfer that results in the shares of capital
stock being owned by fewer than 100 persons or results 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 of
capital stock. The foregoing restrictions on transferability and ownership will
not apply if the Board of Directors determines 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 Board of Directors may, in its sole discretion, waive the Ownership
Limit and the Look-Through Ownership Limit if evidence satisfactory to the Board
of Directors and the Company's tax counsel is presented that the changes in
ownership will not then or in the future jeopardize the Company's REIT status
and the Board of Directors otherwise decides that such action is in the best
interest of the Company.
15
<PAGE> 17
Shares of capital stock owned, or deemed to be owned, or transferred to a
stockholder in excess of the Ownership Limit or the Look-Through Ownership Limit
will automatically be converted into shares of Excess Stock that will be
transferred, by operation of law, to the Company as trustee of a trust for the
exclusive benefit of the transferees to whom such shares of capital stock may be
ultimately transferred without violating the Ownership Limit or the Look-Through
Ownership Limit. While the Excess Stock is held in trust, it will not be
entitled to vote, it will not be considered for purposes of any stockholder vote
or the determination of a quorum for such vote, and, except upon liquidation, it
will not be entitled to participate in dividends or other distributions. Any
distribution paid to a proposed transferee of Excess Stock prior to the
discovery by the Company that capital stock has been transferred in violation of
the provisions of the Company's Articles of Incorporation shall be repaid to the
Company upon demand. The Excess Stock is not treasury stock, but rather
constitutes a separate class of issued and outstanding stock of the Company. The
original transferee stockholder may, at any time the Excess Stock is held by the
Company in trust, transfer the interest in the trust representing the Excess
Stock to any person whose ownership of the shares of capital stock exchanged for
such Excess Stock would be permitted under the Ownership Limit or the
Look-Through Ownership Limit, at a price not in excess of (i) the price paid by
the original transferee-stockholder for the shares of capital stock that were
exchanged into Excess Stock, or (ii) if the original transferee-stockholder did
not give value for such shares (e.g., the stock was received through a gift,
devise or other transaction), the average closing price for the class of shares
from which such shares of Excess Stock were converted for the ten days
immediately preceding such sale or gift. Immediately upon the transfer to the
permitted transferee, the Excess Stock will automatically be converted back into
shares of capital stock of the class from which it was converted. If the
foregoing transfer restrictions are determined to be void or invalid by virtue
of any legal decision, statute, rule or regulation, then the intended transferee
of any shares of Excess Stock may be deemed, at the option of the Company, to
have acted as an agent on behalf of the Company in acquiring the Excess Stock
and to hold the Excess Stock on behalf of the Company.
In addition, the Company will have the right, for a period of 90 days
during the time any shares of Excess Stock are held by the Company in trust, to
purchase all or any portion of the Excess Stock from the original
transferee-stockholder at the lesser of (i) the price initially paid for such
shares by the original transferee stockholder, or if the original
transferee-stockholder did not give value for such shares (e.g., the shares were
received through a gift, devise or other transaction), the average closing price
for the class of stock from which such shares of Excess Stock were converted for
the ten days immediately preceding such sale or gift, and (ii) the average
closing price for the class of shares from which such shares of Excess Stock
were converted for the ten trading days immediately preceding the date the
Company elects to purchase such shares. The 90-day period begins on the date
notice is received of the violative transfer if the original
transferee-stockholder gives notice to the Company of the transfer or, if no
such notice is given, the date the Board of Directors determines that a
violative transfer has been made.
These restrictions will not preclude settlement of transactions through the
NYSE.
Each stockholder shall upon demand be required to disclose to the Company
in writing any information with respect to the direct, indirect and constructive
ownership of capital stock as the Board of Directors deems necessary to comply
with the provisions of the Code applicable to REITs, to comply with the
requirements of any taxing authority or governmental agency or to determine any
such compliance.
The Ownership Limit may have the effect of precluding acquisition of
control of the Company unless the Board of Directors determines that maintenance
of REIT status is no longer in the best interests of the Company.
16
<PAGE> 18
DESCRIPTION OF UNITS AND REDEMPTION OF UNITS
GENERAL
Unitholders may, subject to certain limitations, require the Operating
Partnership to redeem all or a portion of their Units (the "Redemption Right").
This Redemption Right shall be exercised pursuant to a notice of redemption
delivered to the Operating Partnership, with a copy delivered to the Company.
Upon redemption, a Unitholder will receive for each Unit redeemed cash in an
amount equal to the market value (as defined below) of a share of Common Stock
(subject to certain adjustments in the event of stock dividends and stock
splits); provided, however, that the Company may, in its sole discretion, by
notice to the Unitholder within five business days after receipt of the notice
of redemption, elect to acquire any Unit presented to the Operating Partnership
for redemption for cash or for one share of Common Stock (subject to the same
adjustments). The market value of the Common Stock for purposes of redeeming
Units will be equal to the average of the closing trading price of the Common
Stock for the ten trading days prior to the day on which the redemption notice
was received by the Operating Partnership.
The Company anticipates that it generally will elect to acquire any Units
presented to the Operating Partnership for redemption by the issuance of the
Redemption Shares. Such an acquisition by the Company will be treated as a sale
of the Units to the Company for Federal income tax purposes. See "--Tax
Consequences of Redemption." Upon a redemption for cash, a Unitholder's right to
receive distributions with respect to the Units redeemed will cease. Upon the
receipt of Redemption Shares, a Unitholder will have rights as a stockholder of
the Company, including the right to receive dividends from the time of its
acquisition of the Redemption Shares.
A Unitholder must notify the Company of its desire to require the Operating
Partnership to redeem Units. A Unitholder must request the redemption of at
least 1,000 Units. No redemption can occur if the delivery of Redemption Shares
would be prohibited under the provisions of the Company's Articles of
Incorporation to protect the Company's qualification as a REIT.
TAX CONSEQUENCES OF REDEMPTION
The following discussion summarizes certain Federal income tax
considerations that may be relevant to a Unitholder should it exercise its right
to redeem its Units.
Tax Treatment of Exchange or Redemption of Units. If the Company elects to
purchase Units tendered for redemption, the Partnership Agreement provides that
each of the Unitholder, the Operating Partnership and the Company shall treat
the transaction between the Unitholder and the Company as a sale of Units by the
Unitholder at the time of such redemption. Such sale will be fully taxable to
the Unitholder and the Unitholder will be treated as realizing for tax purposes
an amount equal to the sum of the cash value or the value of the Common Stock
received in the exchange plus the amount of any Operating Partnership
liabilities allocable to the redeemed Units at the time of the redemption. The
determination of the amount of gain or loss is discussed more fully below. If
the Company does not elect to purchase a Unitholder's Units tendered for
redemption and the Operating Partnership redeems such Units for cash that the
Company contributes to the Operating Partnership to effect such redemption, the
redemption likely would be treated for tax purposes as a sale of such Units to
the Company in a fully taxable transaction, although the matter is not free from
doubt. In that event, the Unitholder would be treated as realizing an amount
equal to the sum of the cash received in the exchange plus the amount of any
Operating Partnership liabilities allocable to the redeemed Units at the time of
the redemption. The determination of the amount and character of gain or loss in
the event of such a sale is discussed more fully below. See "--Tax Treatment of
Disposition of Units by a Limited Partner Generally."
17
<PAGE> 19
If the Company does not elect to purchase Units tendered for redemption and
the Operating Partnership redeems a Unitholder's Units for cash that is not
contributed by the Company to effect the redemption, the tax consequences would
be the same as described in the previous paragraph, except that, if the
Operating Partnership redeems less than all of a Unitholder's Units, the
Unitholder would not be permitted to recognize any loss occurring on the
transaction and would recognize taxable gain only to the extent that the cash,
plus the amount of any Operating Partnership liabilities allocable to the
redeemed Units, exceeded the Unitholder's adjusted basis in all of its Units
immediately before the redemption.
If the Company contributes cash to the Operating Partnership to effect a
redemption, and in the unlikely event that the redemption transaction is treated
as the redemption of a Unitholder's Units by the Operating Partnership rather
than a sale of Units to the Company, the income tax consequences to the
Unitholder would be as described in the preceding paragraph.
Tax Treatment of Disposition of Units by a Limited Partner Generally. If a
Unit is disposed of in a manner that is treated as a sale of the Unit, or a
limited partner otherwise disposes of a Unit, the determination of gain or loss
from the sale or other disposition will be based on the difference between the
amount considered realized for tax purposes and the tax basis in such Unit. See
"--Basis of Units." Upon the sale of a Unit, the "amount realized" will be
measured by the sum of the cash and fair market value of other property (e.g.,
Redemption Shares) received plus the amount of any Operating Partnership
liabilities allocable to the Units sold. To the extent that the amount of cash
or property received plus the allocable share of any Operating Partnership
liabilities exceeds the limited partner's basis for the Units disposed of, such
limited partner will recognize gain. It is possible that the amount of gain
recognized or even the tax liability resulting from such gain could exceed the
amount of cash and/or the value of any other property (e.g., Redemption Shares)
received upon such disposition.
Except as described below, any gain recognized upon a sale or other
disposition of Units will be treated as gain attributable to the sale or
disposition of a capital asset. To the extent, however, that the amount realized
upon the sale of a Unit attributable to a limited partner's share of "unrealized
receivables" of the Operating Partnership (as defined in Section 751 of the
Code) exceeds the basis attributed to those assets, such excess will be treated
as ordinary income. Unrealized receivables include, to the extent not previously
included in Operating Partnership income, any rights to payment for services
rendered or to be rendered. Unrealized receivables also include amounts that
would be subject to recapture as ordinary income if the Operating Partnership
had sold its assets at their fair market value at the time of the transfer of a
Unit.
Basis of Units. Generally, a limited partner's initial tax basis ("Initial
Basis") in his Units is increased by (i) such limited partner's share of
Operating Partnership taxable and tax-exempt income and (ii) increases in such
limited partner's allocable share of liabilities of the Operating Partnership.
Conversely, a limited partner's basis in his Units is decreased (but not below
zero) by (A) such limited partner's share of Operating Partnership
distributions, (B) decreases in such limited partner's allocable share of
liabilities of the Operating Partnership, (C) such limited partner's share of
losses of the Operating Partnership and (D) such limited partner's share of
nondeductible expenditures of the Operating Partnership that are not chargeable
to his capital account.
COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK
The information below highlights a number of significant differences
between the Operating Partnership and the Company relating to, among other
things, form of organization, permitted investments, policies and restrictions,
management structure, compensation and fees, investor rights and Federal income
taxation and compares certain legal rights associated with the ownership of
Units and Common Stock, respectively. This discussion is summary in nature and
does not constitute a complete discussion of these matters, and investors
18
<PAGE> 20
should carefully review the balance of this Prospectus and the registration
statement of which this Prospectus is a part for additional important
information about the Company.
Form of Organization and Assets Owned. The Operating Partnership is
organized as a Delaware limited partnership. A substantial amount of the
Company's operations are conducted through the Operating Partnership.
The Company was organized under the laws of the State of Maryland in March
1994. The Company maintains both a limited partner interest and a general
partner interest in the Operating Partnership, which gives the Company an
indirect investment in the Properties and other assets owned by the Operating
Partnership. The Company currently has an approximate 86.3% economic interest in
the Operating Partnership, and such interest will increase as Units are redeemed
for cash or acquired by the Company.
Length of Investment. The Operating Partnership has a stated termination
date of December 31, 2093, although it may be terminated earlier under certain
circumstances. The Company has a perpetual term and intends to continue its
operations for an indefinite time period.
Purchase and Permitted Investments. The purpose of the Operating
Partnership includes the conduct of any business that may be lawfully conducted
by a limited partnership formed under Delaware law, except that the Partnership
Agreement requires the business of the Operating Partnership to be conducted in
such a manner that will permit the Company to be classified as a REIT for
Federal income tax purposes. The Operating Partnership may, subject to the
foregoing limitation, invest or enter into partnerships, joint ventures or
similar arrangements and may own interests in any other entity.
Under its Articles of Incorporation, the Company may engage in any lawful
activity permitted under the Maryland General Corporation Law. However, under
the Partnership Agreement, the Company, as the general partner of the Operating
Partnership, may not, directly or indirectly, enter into or conduct any business
other than in connection with the ownership, acquisition and disposition of
interests in the Operating Partnership or the management of the business
thereof.
Additional Equity. The Operating Partnership is authorized to issue Units
and other partnership interests to its partners or to other persons for such
consideration and on such terms and conditions as the Company, as general
partner, in its sole discretion, may deem appropriate.
The Board of Directors of the Company may authorize the issuance of shares
of capital stock of any class, whether now or hereafter authorized, or
securities or rights, convertible into shares of capital stock, for such
consideration as the Board of Directors may deem advisable, subject to such
restrictions or limitations as may be set forth in the Company's Bylaws. As long
as the Operating Partnership is in existence, the proceeds of all equity capital
raised by the Company will be contributed to the Operating Partnership in
exchange for Units or other interests in the Operating Partnership.
Borrowing Policies. The Operating Partnership has no restrictions on
borrowings, and the Company as general partner, has full power and authority to
borrow money on behalf of the Operating Partnership.
The Company is not restricted under its governing instruments from
incurring borrowings. The Company has, however, adopted a policy that currently
limits total borrowings to 50% of the total market capitalization of the
Company. See "Risk Factors--Real Estate Financing Risks." The foregoing reflects
the Company's general policy over time and is not intended to operate in a
manner that inappropriately restricts the Company's ability to raise additional
capital, including additional debt, to implement its planned growth, to pursue
attractive acquisition opportunities that may arise or to otherwise act in a
manner that the Board of Directors believes to be in the best interests of the
Company and its stockholders. The Board of Directors, with
19
<PAGE> 21
the assistance of management of the Company, may reevaluate from time to time
its debt and other capitalization policies in light of then current economic
conditions, including the relative costs of debt and equity capital, the market
value of its Properties, growth and acquisition opportunities, the market value
of its equity securities in relation to the Company's view of the market value
of its Properties, and other factors, and may modify its debt policy. Such
modification may include increasing or decreasing its general ratio of debt to
total market capitalization or substituting another measuring standard.
Other Investment Restrictions. Other than restrictions precluding
investments by the Operating Partnership that would adversely affect the
qualification of the Company as a REIT, there are no restrictions upon the
Operating Partnership's authority to enter into certain transactions, including,
among others, making investments, lending Operating Partnership funds, or
reinvesting the Operating Partnership's cash flow and net sale or refinancing
proceeds.
Neither the Company's Articles of Incorporation nor its Bylaws impose any
restrictions upon the types of investments that may be made by the Company.
Management Control. All management powers over the business and affairs of
the Operating Partnership are vested in the Company, as general partner, and no
limited partner of the Operating Partnership has any right to participate in or
exercise control or management power over the business and affairs of the
Operating Partnership. The Company may not be removed as general partner by the
limited partners with or without cause.
The Board of Directors has exclusive control over the Company's business
and affairs subject only to the restrictions in the Articles of Incorporation
and the Bylaws. The Board of Directors is classified into three classes. At each
annual meeting of the stockholders, the successors of the class of directors
whose terms expire at that meeting will be elected. The policies adopted by the
Board of Directors may be altered or eliminated without advice of the
stockholders. Accordingly, except for their vote in the elections of trustees,
stockholders have no control over the ordinary business policies of the Company.
Management Liability and Indemnification. The Partnership Agreement
generally provides that the Company, as general partner, will incur no liability
to the Operating Partnership or any limited partner for losses sustained or
liabilities incurred as a result of errors in judgment or of any act or omission
if the Company acted in good faith. In addition, the Company is not responsible
for any misconduct or negligence on the part of its agents provided the Company
appointed such agents in good faith. The Company may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisors, and any action it takes or omits to take in reliance
upon the opinion of such persons, as to matters which the Company reasonably
believes to be within their professional or expert competence, shall be
conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion. The Partnership Agreement also provides for
indemnification of the Company the Directors and officers of the Company, and
such other persons as the Company may from time to time designate, against any
and all losses, claims, damages, liabilities, expenses, judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings that relate to the operations of the Operating Partnership
in which such person may be involved.
The Company's Articles of Incorporation and Bylaws provide certain
limitations on the liability of the Company's Directors and officers for
monetary damages to the Company. The Articles of Incorporation, and the Bylaws
obligate the Company to indemnify its Directors and officers, and permit the
Company to indemnify its employees and other agents, against certain liabilities
incurred in connection with their service in such capacities. These provisions
could reduce the legal remedies available to the Company and the stockholders
against these individuals.
20
<PAGE> 22
The Company's Bylaws require it to indemnify its officers, Directors and
certain other parties to the fullest extent permitted from time to time by
Maryland law. The Maryland General Corporation Law permits a corporation to
indemnify (a) any present or former Director or officer who has been successful,
on the merits or otherwise, in the defense of a proceeding to which he was made
a party by reason of his service in that capacity, against reasonable expenses
incurred by him in connection with the proceeding and (b) any present or former
Director or officer against any claim or liability unless it is established that
(i) his act or omission was committed in bad faith or was the result of active
or deliberate dishonesty, (ii) he actually received an improper personal benefit
in money, property or services or (iii) in the case of a criminal proceeding, he
had reasonable cause to believe that his act or omission was unlawful. The
Maryland General Corporation Law also permits the Company to provide
indemnification and advance expenses to a present or former Director or officer
who served a predecessor of the Company in such capacity, and to any employer or
agent of the Company or a predecessor of the Company.
The Company has entered into indemnification agreements with each of its
executive officers and Directors. The indemnification agreements require, among
other things, that the Company indemnify its officers and Directors to the
fullest extent permitted by law and advance to the officers and Directors all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Under these agreements, the Company must also
indemnify and advance all expenses incurred by officers and Directors seeking to
enforce their rights under the indemnification agreements and may cover officers
and Directors under the Company's Directors' and officers' liability insurance.
Although the form of indemnification agreement offers substantially the same
scope of coverage afforded by law, it provides additional assurance to Directors
and officers that indemnification will be available because, as a contract, it
cannot be modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights it provides. It is the position of the SEC
that indemnification of directors and officers for liabilities under the
Securities Act is against public policy and unenforceable pursuant to Section 14
of the Securities Act.
Anti-takeover Provisions. Except in limited circumstances, the Company, as
general partner, has exclusive management power over the business and affairs of
the Operating Partnership. The Company may not be removed as general partner by
the limited partners with or without cause.
The Articles of Incorporation and Bylaws of the Company and Maryland law
contain a number of provisions that may have the effect of delaying or
discouraging an unsolicited proposal for the acquisition of the Company or the
removal of incumbent management.
Voting Rights. Under the Partnership Agreement, the limited partners do not
have voting rights relating to the operation and management of the Operating
Partnership except in connection with matters, as described more fully below,
involving certain amendments to the Partnership Agreement, dissolution of the
Operating Partnership and the sale or exchange of all or substantially all of
the Operating Partnership's assets, including mergers or other combinations.
Stockholders of the Company have the right to vote, among other things, on
a merger or sale of substantially all of the assets of the Company, certain
amendments to the Articles of Incorporation and dissolution of the Company. The
Company is managed and controlled by a Board of Directors consisting of three
classes having staggered terms of office. Each class is to be elected by the
stockholders at annual meetings of the Company. Each share of Common Stock has
one vote, and the Articles of Incorporation permit the Board of Directors to
classify and issue Preferred Stock in one or more series having voting power
which may differ from that of the Common Stock.
Amendment of the Partnership Agreement or the Company's Articles of
Incorporation. Amendments to the Partnership Agreement may be proposed by the
Company, as general partner, or by limited partners holding 20% or more of the
partnership interests and generally require approval of limited partners
(including the
21
<PAGE> 23
Company) holding a majority of the outstanding limited partner interests.
Certain amendments that would, among other things, convert a limited partner's
interest into a general partner's interest, modify the limited liability of any
limited partner, alter the interest of any limited partner in profits, losses or
distributions, alter or modify the redemption right described herein, or cause
the termination of the Operating Partnership at a time inconsistent with the
terms of the Partnership Agreement must be approved by the Company, as general
partner, and each limited partner that would be adversely affected by any such
amendment.
Amendments to the Company's Articles of Incorporation must be approved by
affirmative vote of the holders of not less than two-thirds of all votes
entitled to be cast on the matter.
Vote Required to Dissolve the Operating Partnership or the Company. Under
Delaware law, the Operating Partnership may be dissolved, other than in
accordance with the terms of the Partnership Agreement, only upon the unanimous
vote of the limited partners. Under Maryland law, the Board of Directors must
obtain the approval of holders of not less than two-thirds of all outstanding
shares of capital stock of the Company in order to dissolve the Company.
Vote Required to Sell Assets or Merge. Under the Partnership Agreement,
except in certain circumstances, the Operating Partnership may not sell,
exchange, transfer or otherwise dispose of all or substantially all of its
assets, including by way of merger or consolidation or other combination of the
Operating Partnership, without the consent of the limited partners (including
the Company) holding 85% or more of the limited partner interests of the
Operating Partnership.
Under Maryland law and the Company's Articles of Incorporation, the sale of
all or substantially all of the assets of the Company or any merger or
consolidation of the Company requires the approval of the Board of Directors and
the affirmative vote of two-thirds of all the votes entitled to be cast on the
matter. No approval of the stockholders is required for the sale of less than
all or substantially all of the Company's assets.
Compensation, Fees and Distributions. The Company does not receive any
compensation for its services as general partner of the Operating Partnership.
As a partner in the Operating Partnership, however, the Company has the same
right to allocations and distributions as other partners of the Operating
Partnership. In addition, the Operating Partnership will reimburse the Company,
as general partner, for all expenses incurred relating to the ownership and
operation of, or for the benefit of, the Operating Partnership.
The Directors and officers of the Company receive compensation for their
services.
Liability of Investors. Under the Partnership Agreement and applicable
Delaware law, the liability of the limited partners for the Operating
Partnership's debts and obligations is generally limited to the amount of their
investment in the Operating Partnership.
Under Maryland law, stockholders generally are not personally liable for
the debts or obligations of the Company. See "Description of Common
Stock--General."
Nature of Investment. The Units constitute equity interests entitling
holders thereof to their pro rata share of cash distributions made to the
limited partners of the Operating Partnership. The Company is entitled to
receive its pro rata shares of distributions made by the Operating Partnership
with respect to its interest in the Operating Partnership.
Shares of Common Stock constitute equity interests in the Company. Each
stockholder will be entitled to his pro rata share of any dividends or
distributions paid with respect to Common Stock. The dividends payable to the
stockholders are not fixed in amount and are paid only if, when and as declared
by the Board of Directors. In order to qualify as a REIT, the Company must
distribute at least 95% of its taxable income
22
<PAGE> 24
(excluding capital gains), and any taxable income (including capital gains) not
distributed will be subject to corporate income tax.
Potential Dilution of Rights. The Company, as general partner, is
authorized, in its sole discretion and without limited partner approval, to
cause the Operating Partnership to issue additional limited partnership
interests and other equity securities for any partnership purpose at any time to
the limited partners or to other persons on terms established by the Company.
The Board of Directors of the Company may issue, in its discretion,
additional shares of Common Stock and has the authority to issue from the
authorized capital stock a variety of other equity securities of the Company
with such powers, preferences and rights as the Board of Directors may designate
at the time. The issuance of additional shares of Common Stock or other similar
equity securities may result in the dilution of interests of the stockholders.
Liquidity. Subject to certain exceptions, the Registering Stockholders may
transfer all or any portion of then Units with or without the consent of the
Company. However, the Company, as general partner, in its sole and absolute
discretion, may or may not consent to the admission as a substituted limited
partner of any transferee of such Units. If the Company does not consent to the
admission of a transferee as a substituted limited partner, the transferee shall
be considered an assignee of an economic interest in the Operating Partnership
but will not be a holder of Units for any other purpose; accordingly, the
assignee will not be permitted to vote on any affairs or issues on which a
limited partner may vote.
The Common Stock is listed on the NYSE. The breadth and strength of this
market will depend, among other things, upon the number of shares outstanding,
the Company's financial results and prospects, the general interest in the
Company's real estate investments and the Company's dividend yield compared to
that of other debt and equity securities.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to continue
to operate, in such a manner as to qualify as a REIT under the Code, but no
assurance can be given that it will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions that
currently govern the Federal income tax treatment of the Company and its
stockholders. For the particular provisions that govern the Federal income tax
treatment of the Company and its stockholders, reference is made to Sections 856
through 860 of the Code and the regulations thereunder. The following summary is
qualified in its entirety by such reference.
Under the Code, if certain requirements are met in a taxable year, a REIT
generally will not be subject to federal income tax with respect to income that
it distributes to its stockholders. If the Company fails to qualify during any
taxable year as a REIT, unless certain relief provisions are available, it will
be subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates, which could have a material adverse
effect upon its stockholders.
In any year in which the Company qualifies to be taxed as a REIT,
distributions made to its stockholders out of current or accumulated earnings
and profits will be taxed to stockholders as ordinary income except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term capital gain income to the stockholders. To
the extent that distributions exceed current or accumulated earnings and
profits, they will constitute a return of capital, rather than dividend or
capital gain income, and will reduce
23
<PAGE> 25
the basis for the stockholder's Common Stock with respect to which the
distribution is paid or, to the extent that they exceed such basis, will be
taxed in the same manner as gain from the sale of that Common Stock.
Unitholders are urged to consult with their own tax advisors with respect
to the appropriateness of an investment in the Redemption Shares registered
hereby and with respect to the tax consequences arising under Federal law and
the laws of any state, municipality or other taxing jurisdiction, including tax
consequences resulting from a Unitholder's own tax characteristics.
REGISTERING STOCKHOLDERS
<TABLE>
The following table sets forth certain information with respect to the
Registering Stockholders, including the number of shares of Common Stock
beneficially owned by each Registering Stockholder, the number of shares of
Common Stock registered hereby and the percentage of shares of Common Stock held
by each. There can be no assurance that all or any of the shares of Common Stock
offered hereby will be sold. If any are sold, each Registering Stockholder will
receive all of the net proceeds from the sale of his, her or its respective
shares of Common Stock offered hereby.
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY OWNED
REGISTERING STOCKHOLDER AND OFFERED HEREBY(1)
----------------------- ---------------------
<S> <C>
Norman W. Barron 10,246
John A. Beach 5,393
Charles T. Beeching, Jr. 5,393
William P. Burrows 5,393
N. Earle Evans, Jr. 5,393
John Freyer 2,696
Robert W. Kopp 2,941
Henry R. McCarthy 2,696
Francis D. Price 2,157
James E. Wilber 4,314
Richard L. Friedman 77,508
John L. Hall, II 14,550
Harvey I. Steinberg 44,706
Norman B. Leventhal, as Trustee
of the Norman B. Leventhal
Revocable Trust dated
November 2, 1982(2) 30,575
Alan M. Leventhal(3) 306,055
Edwin N. Sidman(4) 123,062
Paula L. Sidman 197,848
Mark S. Leventhal(5) 273,231
Paula Sidman, Mark Leventhal
and Alan Leventhal, as General Partners
of The Leventhal Family Investment
Limited Partnership(6) 616,139
Paula Sidman, Alan Leventhal
and Robert Casey, as Trustees of
The Bonnybrook Trust
dated January 1, 1992(7) 283,295
</TABLE>
24
<PAGE> 26
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY OWNED
REGISTERING STOCKHOLDER AND OFFERED HEREBY(1)
----------------------- ---------------------
<S> <C>
Norman Leventhal, Mark Leventhal
and Alan Leventhal, as Trustees of
The Dartmouth Trust
dated January 1, 1992 206,155
Alan Leventhal, Mark Leventhal and
Andrew Newman, as Trustees of
The Pickwick Trust
dated January 1, 1992 124,032
Paul D. Fortin, as Trustee of
POSC Trust
dated December 31, 1991 7,193
Mark Leventhal, Edwin Sidman and
Robert Casey, as Trustees of
The Wykeham Trust
dated January 1, 1992(8) 305,380
Paula Sidman and Mark Leventhal,
as General Partners of
Jeral Limited Partnership
dated January 2, 1986 35,282
Paula Sidman and Alan Leventhal,
as General Partners of
Tridon Limited Partnership
dated January 15, 1986 35,282
Alan Leventhal and Mark Leventhal,
as General Partners of
Homatt Limited Partnership
dated January 23, 1984 35,282
Lionel P. Fortin(9) 158,434
Robert J. Perriello(10) 134,620
Douglas S. Mitchell(11) 119,116
James M. Becker(12) 109,815
Lawrence Selkovits 13,700
---------
TOTAL 3,297,882
=========
- -------------
<FN>
(1) The Common Stock is being registered for the account of the Registering
Stockholders who received or will receive the Common Stock in exchange for
Units in the Operating Partnership. Unless otherwise noted, each
Registering Stockholder's holdings represent less than 1% of all
outstanding shares of Common Stock of the Company.
(2) Mr. N. Leventhal has served as a director of the Company since 1994.
(3) Mr. A. Leventhal has served as President and Chief Executive Officer and
a director of the Company since 1994. Mr. A. Leventhal's 306,055 Units
represent approximately 1.1% of the outstanding Common Stock.
(4) Mr. Sidman has served as Chairman of the Board of the Company since 1994.
(5) Mr. M. Leventhal's 273,231 Units represent approximately 1.0% of the
outstanding Common Stock.
(6) The 616,139 Units held by the Leventhal Family Investment Limited
Partnership represent approximately 2.3% of the outstanding Common Stock.
</TABLE>
25
<PAGE> 27
(7) The 283,295 Units held by The Bonnybrook Trust represent approximately
1.0% of the outstanding Common Stock.
(8) The 305,380 Units held by The Wykeham Trust represent approximately 1.1%
of the outstanding Common Stock.
(9) Mr. Fortin has served as Senior Vice President and Chief Operating Officer
of the Company since 1994. From May 1994 through February 1995,
Mr. Fortin also served as Chief Financial Officer of the Company.
(10) Mr. Perriello served as Senior Vice President-Finance and Asset
Management of the Company from May 1994 until February 1995. Since
February 1995, Mr. Perriello has served the Company as Senior Vice
President and Chief Financial Officer.
(11) Mr. Mitchell has served as Senior Vice President-Leasing and Management
of the Company since 1994.
(12) Mr. Becker has served as Senior Vice President-Construction and
Development of the Company since 1994.
26
<PAGE> 28
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds from this Offering. The
shares of Common Stock offered hereby may be sold from time to time on the NYSE
on terms to be determined at the time of such sales. The Registering
Stockholders may also make private sales directly or through a broker or
brokers. Alternatively, the Registering Stockholders may from time to time offer
shares of Common Stock to or through underwriters, dealers or agents, who may
receive consideration in the form of discounts and commissions; such
compensation, which may be in excess of ordinary brokerage commissions, may be
paid by the Registering Stockholders and/or the purchasers of the shares of
Common Stock offered hereby for whom such underwriters, dealers or agents may
act. The Registering Stockholders and any dealers or agents that participate in
the distribution of the shares of Common stock offered hereby may be deemed to
"underwriters" as defined in the Securities Act, and any profit on the sale of
such shares of Common Stock offered hereby by them and any discounts,
commissions or concessions received by any such dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
The aggregate proceeds to the Registering Stockholders from sales of the shares
of Common Stock offered by the Registering Stockholders hereby will be the
purchase price of such Common Stock less any broker's commissions.
To the extent required, the specific shares of Common Stock to be sold,
the names of the Registering Stockholders, the respective purchase prices and
public offering prices, the names of any such agent, dealer or underwriter, and
any applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying prospectus supplement.
The shares of Common Stock offered hereby may be sold from time to time in
one or more transactions at a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the shares of Common Stock offered hereby will be sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states shares of Common Stock may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock offered hereby may not
simultaneously engage in market making activities with respect to the Common
Stock for a period of two business days prior to the commencement of such
distribution. In addition, and without limiting the foregoing, the Registering
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-2, 10b-6 and 10b-7, which may limit the timing of purchases and sales by the
Registering Stockholders.
The Company will pay substantially all the expenses incurred by the
Registering Stockholders and the Company incident to the Offering, but excluding
any underwriting discounts, commissions, and transfers taxes.
The Company has agreed to indemnify the Registering Stockholders against
certain liabilities, including liabilities under the Securities Act.
27
<PAGE> 29
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Goodwin,
Procter & Hoar LLP, Boston, Massachusetts, a partnership including professional
corporations, as corporate, securities and tax counsel to the Company. Gilbert
G. Menna, whose professional corporation is a partner of Goodwin, Procter & Hoar
LLP, is an assistant secretary of the Company and owns 1,000 shares of the
Company's Common Stock.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995 and
1994 and the related consolidated statements of operations, stockholders' equity
and cash flows for the year ended December 31, 1995 and for the period from May
26, 1994 to December 31, 1994, the related combined statements of operations,
owners' equity (deficit) and cash flows of The Beacon Group, predecessor to the
Company, for the period January 1, 1994 to May 25, 1994 and the year ended
December 31, 1993, and the related financial statement schedules of the Company
as of December 31, 1995, incorporated in this registration statement by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 have been so incorporated in reliance on the reports of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing. The statement of excess of
revenues over specific operating expenses for Perimeter Center, Atlanta,
Georgia, for the year ended December 31, 1995, incorporated in this registration
statement by reference from the Company's current report on Form 8-K dated
February 20, 1996, has been so incorporated in reliance on the report of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
28
<PAGE> 30
===============================================================================
No person has been authorized in connection with the 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 any other person. This
Prospectus does 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 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.
------------------
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION...................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE............................................................ 3
RISK FACTORS............................................................... 4
THE COMPANY................................................................ 11
DESCRIPTION OF CAPITAL STOCK............................................... 14
DESCRIPTION OF UNITS AND REDEMPTION OF UNITS............................... 17
FEDERAL INCOME TAX CONSIDERATIONS.......................................... 23
REGISTERING STOCKHOLDERS................................................... 24
PLAN OF DISTRIBUTION....................................................... 27
LEGAL MATTERS.............................................................. 28
EXPERTS.................................................................... 28
===============================================================================
===============================================================================
3,297,882 SHARES
BEACON PROPRETIES
CORPORATIONS
COMMON STOCK
---------------
PROSPECTUS
---------------
JUNE___, 1996
===============================================================================
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses payable by
the Company in connection with the issuance and distribution of the Common Stock
registered hereby (all amounts except the registration fee are estimated):
<S> <C>
Registration fee........................................... $29,220
Printing and duplicating expenses.......................... 2,000
Legal fees and expenses.................................... 2,500
Blue sky fees and expenses................................. 2,000
Miscellaneous.............................................. 1,000
Total...................................................... $36,720
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation and Bylaws provide certain
limitations on the liability of the Company's Directors and officers for
monetary damages to the Company. The Articles of Incorporation, and the Bylaws
obligate the Company to indemnify its Directors and officers, and permit the
Company to indemnify its employees and other agents, against certain liabilities
incurred in connection with their service in such capacities. These provisions
could reduce the legal remedies available to the Company and the stockholders
against these individuals.
The Company's Bylaws require it to indemnify its officers, Directors and
certain other parties to the fullest extent permitted from time to time by
Maryland law. The Maryland General Corporation Law permits a corporation to
indemnify (a) any present or former Director or officer who has been successful,
on the merits or otherwise, in the defense of a proceeding to which he was made
a party by reason of his service in that capacity, against reasonable expenses
incurred by him in connection with the proceeding and (b) any present or former
Director or officer against any claim or liability unless it is established that
(i) his act or omission was committed in bad faith or was the result of active
or deliberate dishonesty, (ii) he actually received an improper personal benefit
in money, property or services or (iii) in the case of a criminal proceeding, he
had reasonable cause to believe that his act or omission was unlawful. The
Maryland General Corporation Law also permits the Company to provide
indemnification and advance expenses to a present or former Director or officer
who served a predecessor of the Company in such capacity, and to any employer or
agent of the Company or a predecessor of the Company.
The Company has entered into indemnification agreements with each of its
executive officers and Directors. The indemnification agreements require, among
other things, that the Company indemnify its officers and Directors to the
fullest extent permitted by law and advance to the officers and Directors all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Under these agreements, the Company must also
indemnify and advance all expenses incurred by officers and Directors seeking to
enforce their rights under the indemnification agreements and may cover officers
and Directors under the Company's Directors' and officers' liability insurance.
Although the form of indemnification agreement offers substantially the same
scope of coverage afforded by law, it provides additional assurance to Directors
and officers that indemnification will be available because, as a contract, it
cannot be modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights it provides. It is the position of the SEC
that indemnification of directors and officers for liabilities under the
Securities Act is against public policy and unenforceable pursuant to Section 14
of the Securities Act.
II-1
<PAGE> 32
ITEM 16. EXHIBITS
4.1* Articles of Incorporation.
4.2** Bylaws.
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
Common Stock being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
24.1 Power of Attorney (included on the signature page hereto).
- --------------
* Previously filed as an exhibit to Registrant's June 30, 1994 Form 10-Q.
** Previously filed as an exhibit to Registrant's Registration Statement on
Form S-11 (File No. 33-76316) filed with the SEC on May 10, 1994 and
incorporated herein by reference.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) 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;
(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 change 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; and
(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)(1)(i) and (a)(1)(ii) herein do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
undersigned registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
II-2
<PAGE> 33
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act
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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to Directors, officers and controlling
persons of the Registrant pursuant to the provisions described under
Item 15 above, or otherwise, the Registrant has been advised that in
the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act 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 director, officer, or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, 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 and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts on this 11th
day of June, 1996.
BEACON PROPERTIES CORPORATION
By: /s/ Alan M. Leventhal
---- ---------------------------------
Alan M. Leventhal
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
Directors of Beacon Properties Corporation, hereby severally constitute Alan M.
Leventhal and Lionel P. Fortin, and each of them singly, as our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement filed
herewith and any and all amendments to said Registration Statement (or any
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933), and generally to do
all such things in our names and in our capacities as officers and Directors to
enable Beacon Properties Corporation to comply with the provisions of the
Securities Act of 1933, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorneys, or any of them, to said Registration Statement and any
and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Capacity Date
--------- -------- ----
/s/ Alan M. Leventhal President, Chief Executive June 11, 1996
- ------------------------------ Officer and Director
Alan M. Leventhal (Principal Executive
Officer)
/s/ Edwin N. Sidman Chairman of the Board June 11, 1996
- ------------------------------ of Directors
Edwin N. Sidman
/s/ Lionel P. Fortin Senior Vice President June 11, 1996
- ------------------------------ and Chief Operating Officer
Lionel P. Fortin
/s/ Robert J. Perriello Senior Vice President and June 11, 1996
- ------------------------------ Chief Financial Officer
Robert J. Perriello (Principal Financial Officer
and Accounting Officer)
/s Norman B. Leventhal Director June 11, 1996
- ------------------------------
Norman B. Leventhal
II-4
<PAGE> 35
Director
- ------------------------------
Graham O. Harrison
/s/ William F. McCall, Jr. Director June 11, 1996
- ------------------------------
William F. McCall, Jr.
Director
- ------------------------------
Steven Shulman
/s/ Scott M. Sperling Director June 11, 1996
- ------------------------------
Scott M. Sperling
II-5
<PAGE> 36
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
4.1* Articles of Incorporation.
4.2** Bylaws.
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
Securities being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to
certain tax matters.
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in
Exhibit 5.1 hereto).
24.1 Power of Attorney (included on the signature page hereto).
- ----------
* Previously filed as an exhibit to Registrant's June 30, 1994 Form 10-Q.
** Previously filed as an exhibit to Registrant's Registration Statement on
Form S-11 (File No. 33-76316) filed with the SEC on May 10, 1994 and
incorporated herein by reference.
<PAGE> 1
EXHIBIT 5.1
<PAGE> 2
Goodwin, Procter & Hoar LLP
Counselors at Law
Exchange Place
Boston, MA 02109-2881
June 11, 1996
Beacon Properties Corporation
50 Rowes Wharf
Boston, Massachusetts 02110
Re: Legality of Securities to be Registered
Pursuant to the Registration Statement on Form S-3
--------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished in connection with the registration on Form S-3
(the "Registration Statement") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), of 3,298,315 shares of common stock, par value
$.01 per share ("Common Stock"), of Beacon Properties Corporation, a Maryland
corporation (the "Company") for the respective accounts of certain stockholders
of the Company (the "Registering Stockholders"). The Common Stock registered
pursuant to the Registration Statement (the "Redemption Shares") may be issued
by the Company if, and to the extent that, holders of units of limited
partnership interest ("Units") in Beacon Properties, L.P. (the "Operating
Partnership") tender such Units to the Operating Partnership for redemption and
the Company exercises its contractual right to acquire such tendered Units for
Common Stock.
In connection with rendering this opinion, we have examined the Articles of
Incorporation of the Company, as amended and restated to the date hereof and on
file with the Maryland State Department of Assessments and Taxation; the Bylaws
of the Company; the Agreement of Limited Partnership of the Operating
Partnership, as amended to the date hereof (the "Partnership Agreement"); such
records of the corporate proceedings of the Company as we deemed material; the
Registration Statement and the exhibits thereto; and such other certificates,
receipts, records and documents as we considered necessary for the purposes of
this opinion. In our examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as certified, photostatic or facsimile copies, the
authenticity of the originals of such copies and the authenticity of telephonic
confirmations of public officials and others. As to facts material to our
opinion, we have relied upon certificates or telephonic confirmations of public
officials and certificates, documents, statements and other information of the
Company or representatives or officers thereof.
<PAGE> 3
Beacon Properties Corporation
June 11, 1996
Page 2
We are attorneys admitted to practice in The Commonwealth of Massachusetts.
We express no opinion concerning the laws of any jurisdictions other than the
laws of the United States of America, the laws of The Commonwealth of
Massachusetts and the Maryland General Corporation Law, and also express no
opinion with respect to the blue sky or securities laws of any state, including
Massachusetts and Maryland.
Based upon the foregoing, we are of the opinion that under the Maryland
General Corporation Law, pursuant to which the Company was incorporated:
(1) When the Registration Statement relating to the Redemption Shares has
become effective under the Securities Act and the Redemption Shares has been
duly issued and exchanged for Units tendered to the Operating Partnership for
redemption in accordance with the provisions of the Partnership Agreement as
described in the Registration Statement, such Redemption Shares will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us with respect to this opinion
under the heading "Legal Matters" in the Prospectus which is a part of such the
Registration Statement.
Very truly yours,
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 8.1
<PAGE> 2
Goodwin, Procter & Hoar LLP
Counselors at Law
Exchange Place
Boston, MA 02109-2881
June 11, 1996
Beacon Properties Corporation
50 Rowes Wharf
Boston, MA 02110
Re: Certain Federal Income Tax Matters
----------------------------------
Ladies and Gentlemen:
This opinion is delivered to you in our capacity as counsel to Beacon
Properties Corporation (the "Company") in connection with the Company's
registration statement on Form S-3 (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission under the Securities Act of
1933, as amended, relating to Common Stock of the Company (as defined in the
Registration Statement), that is being registered for the account of certain
persons named in the Registration Statement. This opinion relates to the
Company's qualification for federal income tax purposes as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code").
In rendering the following opinion, we have examined the Articles of
Incorporation and Bylaws of the Company, and such other records, certificates
and documents as we have deemed necessary or appropriate for purposes of
rendering the opinions set forth herein.
We have reviewed the Registration Statement and the descriptions set forth
therein of the Company and its investments and activities. We have relied upon
the representations of the Company and its affiliates and certain officers
thereof (including, without limitation, representations contained in a
representation letter dated as of this date) regarding the manner in which the
Company has been and will continue to be owned and operated. We have neither
independently investigated nor verified such representations, and we assume that
such representations are true, correct and complete and that all representations
made "to the best of the knowledge and belief" of any person(s) or party(ies)
are and will be true, correct and complete as if made without such
qualification. We assume that the Company has been and will be operated in
accordance with applicable laws and the terms and conditions of applicable
documents, and that the descriptions of the Company and its investments, and the
proposed investments, activities, operations and governance of the Company set
forth in the Registration
<PAGE> 3
Beacon Properties Corporation
June 11, 1996
Page 2
Statement continue to be true. In addition, we have relied on certain additional
facts and assumptions described below.
In rendering the opinions set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us, and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. We have
also assumed, without investigation, that all documents, certificates,
warranties and covenants on which we have relied in rendering the opinion set
forth below and that were given or dated earlier than the date of this letter
continue to remain accurate, insofar as relevant to the opinion set forth
herein, from such earlier date through and including the date of this letter.
The discussion and conclusions set forth below are based upon the Code, the
Income Tax Regulations and Procedure and Administration Regulations promulgated
thereunder and existing administrative and judicial interpretations thereof, all
of which are subject to change. No assurance can therefore be given that the
federal income tax consequences described below will not be altered in the
future.
Based upon and subject to the foregoing, and provided that the Company
makes a valid and timely election to be taxed as a REIT and continues to meet
the applicable asset composition, source of income, shareholder diversification,
distribution, recordkeeping and other requirements of the Code necessary for a
corporation to qualify as a REIT, we are of the opinion that:
1. Commencing with the Company's first taxable year ended December 31,
1994, the Company has been organized in conformity with the
requirements for qualification as a "real estate investment trust"
under the Code, and its method of operation, as described in the
representations referred to above, will enable it to continue to meet
the requirements for qualification and taxation as a "real estate
investment trust" under the Code.
2. The Statements in the Registration Statement set forth under the
caption "Federal Income Tax Considerations" to the extent such
information constitutes matters of law, summaries of legal matters, or
legal conclusions, have been reviewed by us and are accurate in all
material respects.
<PAGE> 4
Beacon Properties Corporation
June 11, 1996
Page 3
We express no opinion with respect to the transactions described in the
Registration Statement other than those expressly set forth herein. You should
recognize that our opinion is not binding on the IRS and that the IRS may
disagree with the opinion contained herein. Although we believe that our opinion
will be sustained if challenged, there can be no assurance that this will be the
case. Except as specifically discussed above, the opinion expressed herein is
based upon the law as it currently exists. Consequently, future changes in the
law may cause the federal income tax treatment of the transactions described
herein to be materially and adversely different from that described above.
We consent to being named as Counsel to the Company in the Registration
Statement, to the references in the Registration Statement to our firm and to
the inclusion of a copy of this opinion letter as an exhibit to the Registration
Statement.
Very truly yours,
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement,
relating to the registration of 3,297,882 shares of common stock of Beacon
Properties Corporation (the "Company") on Form S-3, of our reports dated
January 17, 1996 (except for Note 19 for which the date is February 15, 1996),
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 on our audits of the consolidated balance sheets of the
Company as of December 31, 1995 and 1994 and the consolidated statements of
operations, stockholders' equity and cash flows for the year ended
December 31, 1995 and for the period May 26, 1994 to December 31, 1994, the
combined statements of operations, owners' equity (deficit) and cash flows of
The Beacon Group, predecessor to the Company, for the period January 1, 1994 to
May 25, 1994 and for the year ended December 31, 1993, and the related
financial statement schedules of the Company as of December 31, 1995. We also
consent to the incorporation by reference of our report dated February 14,
1996, on our audit of the statement of excess of revenues over specific
operating expenses for Perimeter Center, Atlanta, Georgia for the year ended
December 31, 1995, which report was filed with the Securities and Exchange
Commission on February 20, 1996 on Form 8-K of the Company.
We also consent to the reference to our Firm under the caption "Experts" in
such Registration Statement.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 11, 1996
