As filed with the Securities and Exchange Commission on April 25, 1997
Registration Statement No. 333- ________
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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
and
William A. Bonn, Esq.
General Counsel
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 Stockholder.
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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
Title of Securities Being Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered Offering Price Per Aggregate Offering Registration Fee
Share (1) Price
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 585,750 $30.875 $18,085,032 $5,481
=============================================================================================================================
</TABLE>
(1) This estimate is based on the average of the high ($31.00) and low
($30.75) sales prices on the New York Stock Exchange of the Common
Stock of Beacon Properties Corporation on April 23, 1997, pursuant to
Rule 457(c) under the Securities Act of 1933, as amended, and is made
solely for purposes of determining the registration fee.
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.
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell 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 April 25, 1997
585,750 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 in major metropolitan areas, including Boston, Atlanta,
Chicago, Los Angeles, San Francisco and Washington, D.C., as well as commercial
real estate development, acquisition, leasing, design and management businesses.
The Company owns or has an interest in 105 income producing commercial
properties encompassing approximately 16.3 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 of the Company, par value $.01 per
share ("Common Stock"), offered hereby are being registered for the account of
Metropolitan Life Insurance Company (the "Registering Stockholder"), who may
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 Operating Partnership issued 1,171,500
Units (585,750 of which may be redeemed on or after June 27, 1997 and the
re-sale of Common Stock received upon redemption of such Units is covered by
this registration statement), to the Registering Stockholder in connection with
a sale of Property pursuant to a Sale and Contribution Agreement by and between
the Registering Stockholder and the Operating Partnership. See "Plan of
Distribution" and "Registering Stockholder." 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 cash; provided, however, that the Company may acquire each Unit
so tendered for one share of Common Stock (subject to certain adjustments in
the event of stock dividends and stock splits). The Company anticipates that it
generally will elect to reserve Common Stock in exchange for Units tendered for
redemption rather than paying cash. The Registering Stockholder, directly or
through agents, dealers or underwriters designated from time to time, may sell
all or a portion of the shares of Common Stock received upon the redemption of
Units 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 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." The Registering Stockholder reserves the sole right
to accept and, together with the 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 aggregate proceeds to the Registering Stockholder 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 Company will not receive any proceeds from the sale by the Registering
Stockholder of such shares.
The Registering Stockholder and any agents, dealers or underwriters that
participate with the Registering Stockholder 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 Stockholder.
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
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" on page 3 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 NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
The date of this Prospectus is __, 1997.
<PAGE>
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 Citicorp Center, 500 West 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. The Commission also maintains a Web site at http://www.sec.gov
containing reports, proxy and other information statements regarding
registrants, including the company, that file electronically with the
Commission. 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 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, 1996, filed with the Commission pursuant to the Exchange Act, including all
amendments thereto.
2. The Company's Current Reports on Form 8-K, dated January 5, 1996,
February 15, 1996, July 23, 1996, October 18, 1996, December 18, 1996, December
20, 1996 and March 27, 1997 filed with the Commission pursuant to the Exchange
Act, including all amendments thereto.
3. The Company's Current Reports of Form 8-K/A dated August 6, 1996
(which Current Report relates to the Form 8-K, dated July 23, 1996) and April 7,
1997 (which Current Reports relates to the Form 8-K dated March 27, 1997) filed
with the Commission pursuant to the Exchange Act, including amendments thereto.
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.
2
<PAGE>
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 Ms. McCarthy at (617) 330-1400.
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.
Risks Associated with the Addition of a Substantial Number of New Properties
The Company is currently experiencing a period of rapid growth. Since
January 1996, the Company has invested approximately $1.3 billion in office
properties, increasing its interests in real estate by over 245%. The Company's
ability to manage its growth effectively will require it to apply successfully
its experience managing its existing portfolio to new markets and to an
increased number of properties. The Company's results of operations and ability
to make expected distributions to Stockholders could be adversely affected if
the Company is unable to manage these operations effectively. There can be no
assurance that the Company will be able to manage these operations effectively.
Risks of Adverse Effect on Company from Debt Servicing and Refinancing,
Increases in Interest Rates, Financial Covenants and Absence of Limitations of
Debt
Debt Financing and Existing Debt Maturities.
The Company intends to finance the acquisition of additional properties
through the use of debt and equity financing. Additionally, in connection with
the acquisition of certain Properties for Units, the Company has agreed to
maintain certain levels of nonrecourse debt on the properties in order to
minimize the tax consequences of these acquisitions to the Unit recipients. The
Company is therefore subject to risks normally associated with debt financing,
including the possibility that the Company will have insufficient cash flow to
meet required principal and interest payments, will be unable to refinance
existing indebtedness (which in most cases will not be fully amortized at
maturity), or will be unable to secure favorable refinancing terms.
Currently, the Company's total consolidated debt is approximately
$485.8 million, and its total consolidated debt plus its proportionate share
of total unconsolidated debt (other than Rowes Wharf) is approximately $578.5
million. The Company (together with an affiliate), and 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 hold one-half of the mortgage debt on the Rowes Wharf Property. See
"Properties--Mortgage Indebtedness and Credit Facility." The Company's current
consolidated mortgage indebtedness of approximately $451.8 million has
maturities ranging from 1998 through 2008 and is secured by Properties. In
addition, the Company currently has $34.0 million outstanding under its Credit
Facility. The Company's proportionate share of its current total unconsolidated
debt (excluding Rowes Wharf) consists of approximately $46.3 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 an affiliate) currently holds one-half of the Rowes Wharf mortgage
indebtedness.
3
<PAGE>
The Company's Debt to Market Capitalization Ratio is currently approximately
23.4%. 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.
The Company anticipates that only a small portion of the principal of
the Company's mortgage indebtedness will be repaid prior to maturity. However,
if the Company does not have funds sufficient to repay such indebtedness at
maturity, the Company may need 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 economic conditions 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 mortgagee could foreclose or otherwise transfer the
Property or Properties, 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.
See "Properties--Mortgage Indebtedness and Credit Facility."
Risk of Adverse Effect of Increase in Market Interest Rates on Variable
Interest Rates.
Outstanding advances under the Credit Facility bear interest at a
variable rate. The Company may incur additional variable rate indebtedness in
the future. 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. An
increase in interest expense could also cause the Company to be in default under
certain Credit Facility covenants.
Limits on Control and Other 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 (iv) approximately 51.6% of the common
stock of a private REIT that holds a direct fee interest in the 75-101 Federal
Street Property. The Company is not in a position to exercise sole decision
making authority regarding 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 of these Properties.
Joint ownership of Properties may, under certain circumstances, involve
risks not otherwise present in wholly-owned properties. Such risks include the
possibility that the Company's partners or co-investors might become bankrupt,
develop business interests or goals inconsistent with the business interests or
goals of the Company, or take action contrary to the instructions or 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. Joint
ownership also involves the potential risk of impasse on decisions, such as a
sale, because neither the Company nor the partners or co-investors 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. The Company's organizational documents do
not limit the amount of available funds that may be invested in partnerships,
joint ventures, or co-investments.
4
<PAGE>
Limits on Ownership May Deter Changes in Management
In order to maintain its REIT qualification, 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 its
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
or 1940, as amended, partnerships, trusts, and corporations) are 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 Common Stock. The Articles of
Incorporation provide that the Board of Directors can waive these ownership
limitations if the Board is satisfied, based upon the advice of tax counsel,
that ownership in excess of these limits will not jeopardize the Company's
status as a REIT, and further, that such waiver would be in the best interest of
the Company. A transfer of shares to a person who, as a result of the transfer,
would violate 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.
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;
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 to
collect all rent from tenants on a timely basis; the expense of periodically
renovating, repairing and reletting spaces; and the increase of operating costs
(including real estate taxes and utilities) that 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.
Risks of Acquisition 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. 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.
5
<PAGE>
Risks of Development Activities.
The Company also intends to continue the development 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 such development 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 additional equity offerings or under lines of credit
or other forms of secured or unsecured construction financing that will result
in the 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.
Potential Adverse Effect on Results of Operations Due to Risks
Associated With 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 could 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 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.
Potential Adverse Effect on Results of Operations Due to Risks
Associated With Ground Leases.
Three 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 on the South Station
Property expires in 2024. The landlord 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 landlord's right to terminate such additional periods upon two years' notice
and payment to the Company of certain termination payments. The Company's
results of operations and ability to make expected distribution to Stockholders
could be adversely affected to the extent the Properties subject to ground
leases revert back to the landlord at the termination of the ground lease or the
Company incurs additional expense by purchasing the ground under these
Properties at the termination of these ground leases. The ground lease at 10880
Wilshire Boulevard expires in 2068. The Company will have an option to purchase
the ground under 10880 Wilshire Boulevard at fair market value in 2001.
Potential Adverse Effect on Results of Operations Due to Risks
Associated With 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, such as changes
6
<PAGE>
in the local or national real estate market. 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.
Potential Adverse Effect on Results of Operations Due to 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 results of operations and its ability
to make distributions to stockholders could be adversely affected.
Risk of Investment in Mortgage Debt
The Company may invest in mortgages that are secured by existing office
and commercial properties in circumstances where the Company anticipates that
such investments may result in the Company's 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 or file for bankruptcy, which 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.
Risk of Adverse Effect on Results of Operations due to Possible Environmental
Liabilities
The Company's operating costs may be affected by the obligation to pay
for the cost of complying with existing environmental laws, ordinances and
regulations, as well as the cost of complying with future legislation. Under
various federal, state and local environmental laws, ordinances and regulations,
a current or previous owner or operator of real property may be liable for the
costs of removal or remediation of hazardous or toxic substances on, under, or
in such property. Such laws often impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances. In addition, the presence of hazardous or toxic substances, or
the failure to remediate such property properly, may adversely affect the
owner's ability to borrow by using such real property as collateral. Persons who
arrange for the transportation, disposal or treatment of hazardous or toxic
substances may also be liable for the costs of removal or remediation of such
substances at the disposal or treatment facility, whether or not such facility
is or ever was owned or operated by such person. Certain environmental laws and
common law principles could be used to impose liability for releases of
hazardous materials, including asbestos-containing materials ("ACMs"), into the
environment, and third parties may seek recovery from owners or operators of
real properties for personal injury associated with exposure to released ACMs or
other hazardous materials. Environmental laws may also impose restrictions on
the manner in which a property may be used or transferred or in which businesses
may be operated, and these restrictions may require expenditures. In connection
with the ownership and operation of the Properties, the Company may be
potentially liable for any such costs. The cost of defending against claims of
liability or remediating contaminated property and the cost of complying with
such environmental laws could materially adversely affect the Company's results
of operations and financial condition.
Phase I environmental site assessments ("ESAs") have been conducted at
all of the Properties by qualified independent environmental engineers. The
purpose of Phase I ESAs is to identify potential sources of contamination for
which the Properties may be responsible and to assess the status of
environmental regulatory compliance. The ESAs have not revealed any
environmental liability or compliance concerns that the Company believes would
have a material adverse affect on the Company's business, assets, results of
operations or liquidity, nor is the Company aware of any such liability or
concerns. Nevertheless, it is possible that these ESAs did not reveal all
environmental liabilities or compliance concerns or that material environmental
liabilities or compliance concerns exist of which the Company is currently
unaware.
7
<PAGE>
The Company has not been notified by any governmental authority, and has
no other knowledge of, any material noncompliance, liability or claim relating
to hazardous or toxic substances or other environmental substances in connection
with any of its Properties except as previously disclosed in documents
incorporated herein by reference.
Possible Additional Risks Associated with 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: voting and nonvoting
common stock. Of the voting common stock, 99% 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% is held by
the Operating Partnership. Of the nonvoting common stock, 100% 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
represents 99% of the economic interests in such corporations, the Company is
not able to elect directors. 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, and that are adverse to the interests of the Company
or that 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.
Adverse Effect of Increase in 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 distributions 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 distributions. Such an increase in the required
distributions yield may adversely affect the market price of the Common Stock.
8
<PAGE>
THE COMPANY
General
The Company is a self-administered and self-managed REIT which owns a
portfolio of Class A office properties and other commercial properties located
in major metropolitan areas, including Boston, Atlanta, Chicago, Los Angeles,
San Francisco and Washington, D.C. as well as commercial real estate
development, 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 16.3 million
rentable square feet in the aggregate and, as of December 31, 1996, were 96%
leased with over 1,100 tenants.
The Company's business is conducted principally through the Operating
Partnership, two subsidiary corporations and two subsidiary limited
partnerships. The Company conducts third-party management operations through
Beacon Property Management Corporation, a Delaware corporation (the "Management
Company") and conducts third-party tenant space design services through Beacon
Design Corporation, a Massachusetts corporation (the "Design Company"). Beacon
conducts management operations for wholly-owned properties through Beacon
Property Management, L.P., a Delaware limited partnership (the "Management
Partnership") and conducts tenant space design services for wholly-owned
properties through Beacon Design, L.P., a Delaware limited partnership (the
"Design Partnership").
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.
9
<PAGE>
The Properties
Set forth below are summary descriptions of the Properties.
<TABLE>
<CAPTION>
Year Rentable Percent Leased
Built/ Ownership Property Area in as of
Property Renovated Interest(1) Location Square Feet 12/31 1996
-------- --------- ----------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Downtown Boston Office Market:
75-101 Federal Street 1985-1988 51.6% Boston, MA 812,000 92%
One Post Office Square 1981 50% Boston, MA 764,129 99%
Center Plaza 1966-1969 (2) Boston, MA 649,359 93%
150 Federal Street 1988 100% Boston, MA 530,279 99%
Rowes Wharf 1987 45% Boston, MA 344,326 100%
Russia Wharf 1978-1982 100% Boston, MA 314,596 98%
2 Oliver Street-147 Milk
Street 1982-1988 100% Boston, MA 271,000 97%
175 Federal Street 1977 100% Boston, MA 203,349 94%
South Station(3) 1988 100% Boston, MA 148,591 100%
---------
4,037,629
Greater Boston Suburban Office
Market:
Wellesley Office Park(4) 1963-1984 100% Wellesley, MA 622,862 100%
Crosby Corporate Center(5) 1995-1996 100% Bedford, MA 336,000 88%
Westwood Business Centre 1985 100% Westwood, MA 160,400 100%
New England Executive
Park Portfolio(6) 1979-1985 100% Burlington, MA 817,013 98%
---------
1,936,275
Cambridge Office Market:
One Canal Park 1987 100% Cambridge, MA 100,300 94%
Ten Canal Park 1987 100% Cambridge, MA 110,000 92%
The Riverview Building(7) 1985-1986 100% Cambridge, MA 263,227 100%
---------
473,527
Central Perimeter Atlanta
Office Market:
Perimeter Center Property(8) 1970-1989 100% Atlanta, GA 3,302,136 98%
---------
Arlington County, Virginia
Office Market:
The Polk and Taylor Buildings 1970 10% Arlington, VA 890,000 100%
1300 North 17th Street 1980 100% Rosslyn, VA 372,865 98%
1616 North Ft. Meyer Drive 1974 100% Rosslyn, VA 292,826 99%
---------
1,555,691
Fairfax County, Virginia
Market:
John Marshall I 1981 100% McLean, VA 261,364 100%
E.J. Randolph 1983 100% McLean, VA 164,677 97%
Northridge I 1988 100% Reston/ 124,319 100%
Herndon, VA ---------
550,360
Washington, D.C. Office
Market:
1333 H Street(9) 1982 100% Washington, D.C. 238,694 90%
10
<PAGE>
Suburban Chicago Office
Market:
AT&T Plaza 1984 100% Oak Brook, IL 225,318 100%
Tri-State International(10) 1986 100% Lincolnshire, IL 548,000 74%
Presidents Plaza(11) 1980-82 100% Chicago, IL 791,000 90%
---------
1,564,318
West Los Angeles Office
Market:
10960 Wilshire Boulevard 1971 100% Westwood, CA 543,804 89%
10880 Wilshire Boulevard 1970 100% Westwood, CA 531,176 85%
---------
1,074,980
Suburban Philadelphia Office
Market:
Westlakes Office Park(12)(13) 1988-1990 100% Berwyn, PA 443,592 98%
---------
Silicon Valley Office/R&D
Market:
Shoreline Technology Park(14) 1985-1991 100% Mountain 726,500 100%
View, CA
Lake Marriott Business Park(15) 1981 100% Santa Clara, CA 400,000 100%
---------
1,126,500
=========
Total Weighted Average 16,303,702 96%
</TABLE>
- -----------------
(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 Wellesley Office Park consists of eight office buildings.
(5) Crosby Corporate Center consists of six office buildings.
(6) The New England Executive Park consists of nine of the thirteen office
buildings located in the New England Executive Park, the remaining four of
which are owner occupied.
(7) The Riverview Building consists of two attached structures connected by a
four-story atrium. Riverview I, a six-story office building, was
constructed in 1909 and renovated in 1986. Riverview II, an eighteen-story
structure with parking on the first nine floors, was constructed in 1985.
(8) The Perimeter Center portfolio consists of 32 buildings and six ground
leases.
(9) Approximately 205,000 square feet of the 1333 H Street Property was built
in 1982. The remaining approximately 34,000 square feet was renovated in
1982.
11
<PAGE>
(10) The Tri-State International Complex consists of five office buildings.
(11) Presidents Plaza consists of four office buildings.
(12) The Westlakes Office Park consists of four office buildings.
(13) The Company has entered into negotiations to sell Westlakes Office Park.
There can be no assurance that these negotiations will be successful.
(14) Shoreline Technology Park consists of twelve office buildings.
(15) Lake Marriott Business Park consists of seven office buildings.
12
<PAGE>
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 April 23, 1997, there were 55,248,490 shares of Common Stock
issued and outstanding and no Preferred Stock issued or outstanding. An
additional 9,877,921 shares of Common Stock have been reserved for issuance upon
the redemption of outstanding Units and for issuance pursuant to the Company's
1994 Stock Option and Incentive Plan, 1996 Stock Option Plan, and 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.
Common Stock must be the subject of an effective registration statement
under the Securities Act, or be exempt from registration, before it can be
transferred.
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.
13
<PAGE>
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.
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.
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
14
<PAGE>
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.
15
<PAGE>
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 federal income
tax considerations of an investment in the Company's Common Stock to the extent
those considerations relate to the taxation of the Company and the tax treatment
of Common Stock in the hands of a U.S. shareholder (as defined below). Goodwin,
Procter & Hoar LLP has acted as counsel to the Company and has reviewed this
summary and is of the opinion that to the extent that it constitutes matters of
law, summaries of legal matters, or legal conclusions, this summary is accurate
in all material respects. 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.
The statements in this discussion and the opinion of Goodwin, Procter
and Hoar LLP are based on current provisions of the Code, Treasury Regulations,
the legislative history of the Code, existing administrative rulings and
practices of the Service, and judicial decisions. No assurance can be given that
future legislative, judicial, or administrative actions or decisions, which may
be retroactive in effect, will not affect the accuracy of any statements in this
Prospectus with respect to the transactions entered into or contemplated prior
to the effective date of such changes.
EACH INVESTOR IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING
THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF AN INVESTMENT IN THE COMMON
STOCK.
Taxation of the Company
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. However, the Company may be subject to
federal income tax under certain circumstances including taxes at regular
corporate rates on any undistributed REIT taxable income, the "alternative
minimum tax" on its items of tax preference, and taxes imposed on income and
gain generated by certain extraordinary transactions. 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.
16
<PAGE>
In addition to meeting a number of technical requirements, including
requirements regarding distributions to shareholders, diversification of
ownership and record keeping, to qualify as a REIT the Company must meet certain
tests regarding the nature of its assets and its gross income. The Company is
largely restricted under these tests to holding "real estate assets" (as defined
in the Code) for investment (and not for resale) and relatively small amounts of
investment securities. Accordingly, the Company's ability to diversify its
holdings outside of investments in real estate is limited. The requirements of
the statutory tests also impose certain requirements on the Company's leases
with its tenants, including restrictions on the Company's ability to provide
noncustomary services to its tenants. Because the Company's proportionate share
of the assets and items of income of the Operating Partnership and its
subsidiary partnerships are treated as assets and gross income of the Company,
the same restrictions apply to the operations and investments of the Operating
Partnership and the subsidiary partnerships. Further, changes in law, or in the
interpretation of the law, may change the nature and effect of these
restrictions or add additional restrictions to the manner in which the Company
conducts its business.
In the opinion of Goodwin, Procter & Hoar LLP, commencing with the
taxable year ending December 31, 1994, the Company has been organized and
operated in conformity with the requirements for qualification and taxation as a
REIT under the Code, and the Company's proposed method of operation will enable
it to continue to meet the requirements for qualification and taxation as a REIT
under the Code. Investors should be aware, however, that opinions of counsel are
not binding upon the Internal Revenue Service (the "Service") or any court.
Moreover, Goodwin, Procter & Hoar LLP's opinion is based on various assumptions
and is conditioned upon certain representations made by the Company as to
factual matters, including representations regarding the nature of the Company's
properties and the future conduct of the Company's business. The Company's
qualification and taxation as a REIT depends upon the Company's ability to meet
on a continuing basis, through actual annual operating results, the distribution
levels, stock ownership, and other various qualification tests imposed under the
Code. Goodwin, Procter & Hoar LLP will not review the Company's compliance with
those tests on a continuing basis. Accordingly, no assurance can be given that
the actual results of the Company's operation for any particular taxable year
will satisfy such requirements.
Taxation of U.S. shareholders
The following is a brief and general summary of the material federal
income tax considerations relating to the tax treatment of Common Stock in the
hands of a U.S. shareholder (as defined below). The following assumes the
Company has and will continue to qualify as a REIT. See "Taxation of the
Company."
Taxation of Taxable U.S. Shareholders
As long as the Company qualifies as a REIT, distributions made to the
Company's taxable U.S. shareholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will be taken into
account by such U.S. shareholders as ordinary
17
<PAGE>
income and will not be eligible for the dividends received deduction generally
available to corporations. As used herein, the term "U.S. shareholder" means a
holder of Common Stock that for U.S. federal income tax purposes is (i) a
citizen or resident of the United States, (ii) a corporation, partnership, or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, (iii) an estate, the income of which is
subject to United States federal income taxation regardless of its source, or
(iv) a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust, and that (v) is not an entity that has special status under the Code
(such as a tax-exempt organization). Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
they do not exceed the Company's actual net capital gain for the taxable year)
without regard to the period for which the shareholder has held his Common
Stock. However, corporate shareholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a
shareholder to the extent that they do not exceed the adjusted basis of the
shareholder's Common Stock, but rather will reduce the adjusted basis of such
stock. To the extent that such distributions in excess of current and
accumulated earnings and profits exceed the adjusted basis of a shareholder's
Common Stock, such distributions will be included in income as long-term capital
gain (or short-term capital gain if the shares of Common Stock have been held
for one year or less) assuming the shares of Common Stock are a capital asset in
the hands of the shareholder. In addition, any distribution declared by the
Company in October, November, or December of any year and payable to a
shareholder of record on a specified date in any such month shall be treated as
both paid by the Company and received by the shareholder on December 31 of such
year, provided that the distribution is actually paid by the Company during
January of the following calendar year.
Shareholders may not include in their individual income tax returns any
net operating losses or capital losses of the Company. Instead, such losses
would be carried over by the Company for potential offset against its future
income (subject to certain limitations). Taxable distributions from the Company
and gain from the disposition of Common Stock will not be treated as passive
activity income and, therefore, shareholders generally will not be able to apply
any "passive activity losses" (such as losses from certain types of limited
partnerships in which the shareholder is a limited partner) against such income.
In addition, taxable distributions from the Company generally will be treated as
investment income for purposes of the investment interest limitations. Capital
gains from the disposition of shares of Common Stock (or distributions treated
as such) will be treated as investment income only if the shareholder so elects,
in which case such capital gains will be taxed at ordinary income rates. The
Company will notify shareholders after the close of the Company's taxable year
as to the portions of the distributions attributable to that year that
constitute ordinary income, return of capital, and capital gain.
Taxation of Shareholders on the Disposition of the Common Stock
In general, any gain or loss realized upon a taxable disposition of the
shares of Common
18
<PAGE>
Stock by a shareholder who is not a dealer in securities will be treated as
long-term capital gain or loss if the shares of Common Stock have been held for
more than one year and otherwise as short-term capital gain or loss. However,
any loss upon a sale or exchange of shares of Common Stock by a shareholder who
has held such stock for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such shareholder as
long-term capital gain. All or a portion of any loss realized upon a taxable
disposition of shares of Common Stock may be disallowed if other shares of
Common Stock are purchased within 30 days before or after the disposition.
Information Reporting Requirements and Backup Withholding
The Company will report to its U.S. shareholders and the Service the
amount of distributions paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a shareholder may be
subject to backup withholding at the rate of 31% with respect to distributions
paid unless such holder (i) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact, or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with the applicable requirements of the
backup withholding rules. A shareholder who does not provide the Company with
his correct taxpayer identification number also may be subject to penalties
imposed by the Service. Any amount paid as backup withholding will be creditable
against the shareholder's income tax liability. In addition, the Company may be
required to withhold a portion of capital gain distributions to any shareholders
who fail to certify their nonforeign status to the Company. The Service issued
proposed regulations in April 1996 regarding the backup withholding rules. These
proposed regulations would alter the current system of backup withholding
compliance.
Taxation of Tax-Exempt Shareholders
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI"). While many
investments in real estate generate UBTI, amounts distributed by the Company to
an Exempt Organization generally should not constitute UBTI. However, if any
Exempt Organization finances its acquisition of Common Stock with debt, a
portion of its income from the Company will constitute UBTI pursuant to the
"debt-financed property" rules. Furthermore, social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans that are exempt from taxation under paragraphs (7),
(9), (17), and (20), respectively, of Code section 501(c) are subject to
different UBTI rules, which generally will require them to characterize
distributions from the Company as UBTI. In addition, in certain circumstances, a
pension trust that owns more than 10% of the value of the Company's stock is
required to treat a percentage of the dividends from the Company as UBTI (the
"UBTI Percentage"). The UBTI Percentage is the gross income derived by the
Company from an unrelated trade or business (determined as if the Company were a
pension trust) divided by the gross income of the Company for the year
19
<PAGE>
in which the dividends are paid. The UBTI rules applies to a pension trust
holding more than 10% of the value of the Company's stock only if (i) the UBTI
Percentage is at least 5%, (ii) the Company qualifies as a REIT by reason of the
modification of the Five or Fewer Requirement that allows the beneficiaries of
the pension trust to be treated as holding stock of the Company in proportion to
their actuarial interests in the pension trust, and (iii) either (A) one pension
trust owns more than 25% of the value of the Company's stock or (B) a group of
pension trusts individually holding more than 10% of the value of the Company's
stock collectively own more than 50% of the value of the Company's stock.
Investors are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the Common Stock offered 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 such investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax consequences
of an investment in the Company, including the possibility of United States
income tax withholding on Company distributions.
20
<PAGE>
REGISTERING STOCKHOLDER
The following table sets forth certain information with respect to the
Registering Stockholder, including the number of shares of Common Stock
beneficially owned by the Registering Stockholder and the number of shares of
Common Stock registered hereby. After completion of the offering, the
Registering Stockholder's holdings will represent approximately 1% of all
outstanding Common Stock. There can be no assurance that all or any of the
shares of Common Stock offered hereby will be sold. If any are sold, the
Registering Stockholder will receive all of the net proceeds from the sale of
its respective shares of Common Stock offered hereby.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Beneficially Owned Number of Shares
Registering Stockholder Prior to the Offering(2) Offered Hereby
- ----------------------- ------------------------ --------------
<S> <C> <C>
Metropolitan Life Insurance Company(1) 1,171,500 585,750
</TABLE>
- -------------
(1) The Common Stock is being registered for the account of the Registering
Stockholder who received or will receive the Common Stock in exchange for
Units in the Operating Partnership.
(2) The Registering Stockholder holds 1,171,500 Units which are redeemable for
cash; provided, however, that the Company may acquire any Unit tendered
for redemption for one share of Common Stock (subject to certain
adjustments in the event of stock dividends and stock splits). For
purposes of this table, the Company has assumed that all Units will be
tendered by the Registering Stockholder and that the Company will acquire
such Units for Common Stock. Of the 1,171,500 Units, the Registering
Stockholder may redeem 585,750 Units on or after June 27,1997 and the
remaining 585,750 Units on or after December 27,1997.
21
<PAGE>
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 Stockholder
may also make private sales directly or through a broker or brokers.
Alternatively, the Registering Stockholder 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 Stockholder and/or the purchasers of the shares of Common Stock
offered hereby for whom such underwriters, dealers or agents may act. The
Registering Stockholder 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 Stockholder from sales of the shares
of Common Stock offered by the Registering Stockholder 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 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 a prospectus supplement to
this registration statement.
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 may be restricted
from engaging in market making activities with respect to the Common Stock. In
addition, and without limiting the foregoing, the Registering Stockholder will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, which may limit the timing of purchases and sales by the
Registering Stockholder.
If the Registering Stockholder offers shares of Common Stock to or
through underwriters, the rules of the Securities and Exchange Commission permit
the underwriters to engage in certain transactions that stabilize the price of
the Common Stock. Such transactions consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the Common Stock.
If the Registering Stockholder offers shares of Common Stock to or
through underwriters and the underwriters create a short position in the Common
Stock in connection with the offering i.e., if they sell more shares of Common
Stock than are set forth on the cover page of this Registration Statement, the
underwriters may reduce that short position by purchasing Common Stock in the
open market. The underwriters may also elect to reduce any short position by
exercising all or part of the over-allotment option described above.
If the Registering Stockholder offers shares of Common Stock to or
through underwriters, the underwriters may impose a penalty bid on certain
underwriters and selling group members. This means that if the underwriters
purchase shares of Common Stock in the open market to reduce the underwriters'
short position or to stabilize the price of the Common Stock, they may reclaim
the amount of the selling concession from the underwriters and selling group
members who sold those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.
If the Registering Stockholder offers shares of Common Stock to or
through underwriters, neither the Registering Stockholder, the Company nor any
of the underwriters makes any representation or prediction as to the direction
or magnitude of any effect that the transactions described above may have on the
price of the Common Stock. In addition, neither the Registering Stockholder, the
Company nor any of the underwriters makes any representation that the
underwriters will engage in such transactions, or that such transactions, once
commenced, will not be discontinued without notice.
Under agreements into which the Company may enter, underwriters, dealers
and agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act. In the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
The Company will pay substantially all the expenses incurred by the
Registering Stockholder and the Company incident to the Offering, but excluding
any underwriting discounts, commissions, and transfers taxes.
The Company has agreed to indemnify the Registering Stockholder against
certain liabilities, including liabilities under the Securities Act.
22
<PAGE>
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 in excess of 1,000 shares
of the Company's Common Stock.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1996
and 1995 and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended December 31, 1996 and 1995 and for the
period from May 26, 1994 to December 31, 1994, the combined statements of
operations, owners' equity (deficit) and cash flows for the period January 1,
1994 to May 25, 1994 of The Beacon Group, predecessor to the Company, and the
related financial statement schedules of the Company as of December 31, 1996,
incorporated by reference herein from the Company's Annual Report on Form 10-K,
as amended, for the year ended December 31, 1996, have been so incorporated in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of said firm as experts in accounting and auditing.
The statements of excess of revenues over specific operating expenses
for each of 10880 Wilshire Boulevard in Westwood, California, Centerpointe in
Fairfax, Virginia, and Westbrook Corporate Center in Westchester, Illinois for
the year ended December 31, 1996, incorporated by reference herein from the
Company's current report on Form 8-K dated March 27, 1997, as amended on the
Form 8-K/A of the Company dated April 7, 1997, as amended, have been so
incorporated in reliance on the reports of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of said firm as experts in accounting and
auditing.
The statements of excess of revenues over specific operating expenses
for each of Shoreline Technology Park in Mountain View, California, Lake
Marriott Business Park in Santa Clara, California and President's Plaza in
Chicago, Illinois for the year ended December 31, 1995, incorporated by
reference herein from the Company's current report on Form 8-K dated December
20, 1996, as amended, have been so incorporated in reliance on the reports of
Coopers & Lybrand, L.L.P., independent accountants, given on the authority of
said firm as experts in accounting and auditing.
The statements of excess of revenues over specific operating expenses
for each of the Rosslyn Acquisitions in Rosslyn, Virginia, New England Executive
Park in Burlington, Massachusetts, and 10960 Wilshire Boulevard in Westwood,
California for the year ended December 31, 1995, incorporated by reference
herein from the Company's current report on Form 8-K dated October 18, 1996, as
amended, 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 statements of excess of revenues over specific operating expenses
for each of the Fairfax County Portfolio in Tysons Corner and Herndon, Virginia,
1333 H Street in Washington, DC, AT&T Plaza in Oak Brook, Illinois, and
Tri-State International in Lincolnshire, Illinois for the year ended December
31, 1995, incorporated by reference herein from the Company's current report on
Form 8-K dated July 23, 1996, as amended on the Form 8-K/A of the Company dated
August 6, 1996, have been so incorporated in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of said firm
as experts in accounting and auditing.
The statement of excess of revenues over specific operating expenses for
Perimeter Center in Atlanta, Georgia for the year ended December 31, 1995,
incorporated by reference herein from the Company's current report on Form 8-K
dated February 15, 1996, as amended, has been so incorporated in reliance on the
report of Coopers & Lybrand, L.L.P., independent accountants, given on the
authority of said firm as experts in accounting and auditing.
23
<PAGE>
================================================================================
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 .................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE .......... 2
RISK FACTORS ............................................. 3
THE COMPANY .............................................. 9
DESCRIPTION OF CAPITAL STOCK ............................. 13
FEDERAL INCOME TAX CONSIDERATIONS ........................ 16
REGISTERING STOCKHOLDER .................................. 21
PLAN OF DISTRIBUTION ..................................... 22
LEGAL MATTERS ............................................ 23
EXPERTS .................................................. 23
585,750 Shares
Beacon Properties
Corporation
Common Stock
-----------
PROSPECTUS
-----------
__, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
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):
Registration fee.............................................. $ 5,481
Printing and duplicating expenses............................. 25,000
Legal fees and expenses....................................... 50,000
Accounting fees and expenses.................................. 25,000
Miscellaneous................................................. 4,519
Total ...................................................... $ 110,000
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>
Item 16. Exhibits
4.1 (1) Articles of Incorporation.
4.2 (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).
- ----------------------
(1) Previously filed as an exhibit to Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1994 and incorporated herein by
reference.
(2) Previously filed as an exhibit to Registrant's Registration Statement on
Form S-3 (File No. 333-17237) 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;
II-2
<PAGE>
(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 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>
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 24th
day of April, 1997.
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.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Alan M. Leventhal
- -------------------------------- President, Chief Executive April 24, 1997
Alan M. Leventhal Officer and Director
(Principal Executive Officer)
/s/ Edwin N. Sidman
- -------------------------------- Chairman of the Board April 24, 1997
Edwin N. Sidman of Directors
/s/ Lionel P. Fortin
- -------------------------------- Executive Vice President, April 24, 1997
Lionel P. Fortin Chief Operating Officer,
and Director
/s/ Robert J. Perriello
- -------------------------------- Senior Vice President and April 24, 1997
Robert J. Perriello Chief Financial Officer
(Principal Financial Officer
and Accounting Officer)
/s/ Norman B. Leventhal
- -------------------------------- Director April 24, 1997
Norman B. Leventhal
II-4
<PAGE>
- -------------------------------- Director
Graham O. Harrison
/s/ William F. McCall, Jr.
- -------------------------------- Director April 24, 1997
William F. McCall, Jr.
- --------------------------------- Director
Steven Shulman
- --------------------------------- Director
Scott M. Sperling
/s/ Dale F. Frey
- --------------------------------- Director April 24, 1997
Dale F. Frey
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ---------- -----------
4.1 (1) Articles of Incorporation.
4.2 (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).
- -----------------
(1) Previously filed as an exhibit to Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1994 and incorporated herein by
reference.
(2) Previously filed as an exhibit to Registrant's Registration Statement on
Form S-3 (File No. 333-17237) and incorporated herein by reference.
Goodwin, Procter & Hoar LLP
Counselors at Law
Exchange Place
Boston, MA 02109-2881
April 25, 1997
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 585,750 shares (the "Redemption Shares") of
common stock, par value $.01 per share ("Common Stock"), of Beacon Properties
Corporation, a Maryland corporation (the "Company") for the account of
Metropolitan Life Insurance Company (the "Registering Stockholder"). The
Redemption Shares may be issued by the Company to the Registering Stockholder in
exchange for units of limited partnership interest ("Units") in Beacon
Properties, L.P. (the "Operating Partnership").
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>
Beacon Properties Corporation
April 25, 1997
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 have
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,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
Goodwin, Procter & Hoar LLP
Counselors at Law
Exchange Place
Boston, MA 02109-2881
April 25, 1997
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
Metropolitan Life Insurance Company. 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 also have relied upon the representations of the Company and the
Operating Partnership 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) or with
similar qualification 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.
<PAGE>
Beacon Properties Corporation
April 25, 1997
Page 2
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
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 the Company's 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>
Beacon Properties Corporation
April 25, 1997
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 Internal Revenue Service (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. 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,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement, relating to the registration of 585,750 shares of common stock of
Beacon Properties Corporation (the "Company") on Form S-3 of our report dated
January 28, 1997, appearing in the Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1996 on our audits of the consolidated
financial position of the Company as of December 31, 1996 and 1995 and the
consolidated result of its operations and its cash flows for the years ended
December 31, 1996 and 1995 and for the period May 26, 1994 to December 31, 1994,
the combined results of operations and cash flows of the Beacon Group,
predecessor to the Company, for the period January 1, 1994 to May 25, 1994, and
the related financial statement schedules of the Company as of December 31,
1996.
We also consent to the incorporation by reference of our report dated
March 11, 1997 on our audit of the statement of excess of revenues over specific
operating expenses of 10880 Wilshire Boulevard in Westwood, California for the
year ended December 31, 1996, of our report dated March 18, 1997 on our audit of
the statement of excess of revenues over specific operating expenses of
Centerpointe in Fairfax, Virginia for the year ended December 31, 1996, and of
our report dated March 21, 1997 on our audit of the statement of excess of
revenues over specific operating expenses of Westbrook Corporate Center in
Westchester, Illinois for the year ended December 31, 1996, which reports were
filed with the Securities and Exchange Commission on the Form 8-K of the Company
dated March 27, 1997, as amended on the Form 8-K/A of the Company dated April 7,
1997, as amended.
We also consent to the incorporation by reference of our report dated
February 6, 1997 on our audit of the statement of excess of revenues over
specific operating expenses of Shoreline Technology Park in Mountain View,
California for the year ended December 31, 1995, of our report dated December
20, 1996 on our audit of the statement of excess of revenues over specific
operating expenses of Lake Marriott Business Park in Santa Clara, California for
the year ended December 31, 1995, and of our report dated December 20, 1996 on
our audit of the statement of excess of revenues over specific operating
expenses of President's Plaza in Chicago, Illinois for the year ended December
31, 1995, which reports were filed with the Securities and Exchange Commission
on the Form 8-K of the Company dated December 20, 1996, as amended.
We also consent to the incorporation by reference of our audit report
dated September 27, 1996 on our audit of the statement of excess of revenues
over specific operating expenses of the Rosslyn Acquisitions in Rosslyn,
Virginia for the year ended December 31, 1995, of our report dated March 15,
1996 on our audit of the statement of excess of revenues over specific operating
expenses of the New England Executive Park in Burlington, Massachusetts for the
year ended December 31, 1995, and of our report dated October 29, 1996 on our
audit of the statement of excess of revenues over specific operating expenses of
10960 Wilshire Boulevard in Westwood, California for the year ended December 31,
1995, which reports were filed with the Securities and Exchange Commission on
the Form 8-K of the Company dated October 18, 1996, as amended.
We also consent to the incorporation by reference of our report dated
April 19, 1996 on our audit of the statement of excess of revenues over specific
operating expenses of Fairfax County Portfolio in Tysons Corner and Herndon,
Virginia for the year ended December 31, 1995, of our report dated July 3, 1996
on our audit of the statement of excess of revenues over specific operating
expenses of 1333 H Street in Washington, DC for the year ended December 31,
1995, and of our report dated July 8, 1996 on our audit of the statement of
excess of revenues over specific operating expenses of AT&T Plaza in Oak Brook,
Illinois for the year ended December 10, 1995, and of our report dated July 8,
1996 on our audit of the statement of excess of revenues over specific operating
expenses of Tri-State International in Lincolnshire, Illinois for the year ended
December 31, 1995, which reports are filed with the Securities and Exchange
Commission on the Form 8-K of the Company dated July 23, 1996, as amended on the
Form 8-K/A of the Company dated August 6, 1996.
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 of Perimeter Center in Atlanta, Georgia for the year ended
December 31, 1995, which reports were filed with the Securities and Exchange
Commission on the Form 8-K of the Company dated October 18, 1996, as amended.
We also consent to the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 24, 1997
