<PAGE>
Filed Pursuant to
Rule 424(b)(2)
Registration No. 333-32755
[LOGO OF WEEKS CORPORATION APPEARS HERE]
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 1, 1997
6,000,000 SHARES
WEEKS CORPORATION
LOGO 8.00% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
[LOGO OF WEEKS
CORPORATION
APPEARS HERE]
(PAR VALUE $.01 PER SHARE)
(LIQUIDATION PREFERENCE $25.00 PER SHARE)
----------
The Company is a publicly traded real estate investment trust that focuses
primarily on the acquisition, development, ownership and operation of
industrial and office properties in select suburban markets in the southeastern
United States.
Dividends on the Company's 8.00% Series A Cumulative Redeemable Preferred
Stock, par value $.01 per share, offered by this Prospectus Supplement will be
cumulative from the date of original issue and will be payable quarterly in
arrears on the last day of January, April, July and October of each year (or,
if such day is not a business day, the next business day), commencing on
October 31, 1997, at the rate of 8.00% of the liquidation preference per annum.
See "Description of Series A Preferred Shares--Dividends."
The Series A Preferred Shares are not redeemable prior to October 10, 2002.
On and after such date, the Series A Preferred Shares may be redeemed, in whole
or in part, at the option of the Company, at a redemption price of $25.00 per
share, plus all accrued and unpaid dividends. The Series A Preferred Shares
will not be subject to any sinking fund or mandatory redemption and will not be
convertible into any other securities of the Company. See "Description of
Series A Preferred Shares--Redemption." Subject to certain limited exceptions,
ownership of more than 7.5% of the Series A Preferred Shares is restricted in
order to preserve the Company's status as a REIT for federal income tax
purposes. See "Description of Capital Stock--Restrictions on Transfer" in the
accompanying Prospectus.
The Company has filed an application to list the Series A Preferred Shares on
the New York Stock Exchange, although there can be no assurance that such
shares will be approved for listing.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Share.......................... $25.00 $0.7875 $24.2125
Total.............................. $150,000,000 $4,725,000 $145,275,000
</TABLE>
- -----
(1) Plus accrued dividends, if any, from the date of original issue.
(2) The Company and the Operating Partnership have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933. See "Underwriting."
(3) Before deducting estimated expenses of $650,000 payable by the Company.
----------
The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
shares will be ready for delivery in book-entry form only through the
facilities of DTC in New York, New York on or about October 10, 1997, against
payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
MORGAN STANLEY DEAN WITTER
THE ROBINSON-HUMPHREY COMPANY
----------
The date of this Prospectus Supplement is October 7, 1997
<PAGE>
[MAP OF SOUTHEASTERN UNITED STATES, HIGHLIGHTING WEEKS
CORPORATION'S CURRENT MARKETS; CENTER OF PAGE]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES A PREFERRED
SHARES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF SERIES A
PREFERRED SHARES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following is qualified in its entirety by the more detailed information
and financial information and statements, and the notes thereto, appearing
elsewhere in this Prospectus Supplement and the accompanying Prospectus and
incorporated herein or therein by reference. This Prospectus Supplement and the
accompanying Prospectus, including documents incorporated herein and therein by
reference, contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are inherently
subject to risks and uncertainties, many of which cannot be predicted with
accuracy and some of which might not even be anticipated. Future events and
actual results, financial and otherwise, may differ materially from the events
and results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
"Business and Properties--Acquisition and Development Risks" appearing
elsewhere in this Prospectus Supplement. Unless otherwise indicated, the
information contained in this Prospectus Supplement assumes the Underwriters'
over-allotment option is not exercised. As used herein, the term "Company"
includes Weeks Corporation and its predecessors and subsidiaries, including
Weeks Realty, L.P. (the "Operating Partnership") and its subsidiaries, unless
the context indicates otherwise. The offering of 6,000,000 shares of the
Company's 8.00% Series A Cumulative Redeemable Preferred Stock, par value $.01
per share (the "Series A Preferred Shares"), pursuant to this Prospectus
Supplement is referred to herein as the "Offering."
THE COMPANY
The Company is a publicly traded real estate investment trust ("REIT") that
focuses primarily on the acquisition, development, ownership and operation of
industrial and office properties in select suburban markets in the southeastern
United States.
The Company's portfolio is comprised of 264 properties totaling approximately
19.8 million square feet (the "Properties"), including 32 Properties and one
Property expansion (totaling approximately 3.7 million square feet) under
development and/or under agreement to acquire. The Company currently manages,
or expects to manage upon completion or acquisition, all of the Properties.
Industrial Properties represent approximately 90% of the square footage of all
of the Properties, and suburban office Properties represent approximately 10%.
The average Occupancy Rate of the Company's In-service Properties was 96.5% at
June 30, 1997. As used in this Prospectus Supplement, "In-service Properties"
excludes those Properties under development which are not yet stabilized and
Properties under agreement to acquire. "Occupancy Rate" means the rate of
occupancy calculated based on leases under which tenants are paying rent.
The Company also owns or controls (through agreements to acquire, options and
marketing and development agreements) approximately 1,768 net usable acres of
undeveloped land located primarily in existing business parks with zoning and
infrastructure in place. The Company believes the development potential of this
land may ultimately total approximately 19.0 million square feet.
With its recent acquisitions in Nashville and in the Raleigh-Durham-Chapel
Hill area of North Carolina (the "Research Triangle") and with the continued
expansion of its activities in Orlando, the Company has reduced its
concentration of Properties in metropolitan Atlanta to 68.7% as of June 30,
1997 (based on square footage and pro forma to include the Properties under
development and/or under agreement to acquire) from 92.9% at December 31, 1995
(calculated on the same basis on that date). In addition, the Company has
significantly increased its tenant base and reduced its exposure to any single
tenant. At June 30, 1997, the Company's In-service Properties were leased to
S-3
<PAGE>
695 tenants, and the Company's largest tenant represented 3.1% of the Company's
total Annualized Base Rent. This compares to 351 tenants at December 31, 1995,
with the Company's largest tenant representing 6.9% of the Company's total
Annualized Base Rent on that date. As used in this Prospectus Supplement,
"Annualized Base Rent" means annualized current base rent assuming expiration
of rental concessions, if any, for leases under which tenants are paying rent.
The Company owns, develops and operates industrial and suburban office
Properties located primarily in landscaped business park settings. The
Company's business strategy emphasizes high quality Properties and tenant
service. The Company's approximately 420 employees have experience and are
engaged in virtually every aspect of the real estate business, including
development, construction, engineering, design, landscape, leasing, marketing
and property management. The Company's strategy for growth includes intensive
management of its Properties, developing and acquiring additional Properties
that are consistent with its existing portfolio, and owning and controlling
undeveloped land sufficient to develop new and existing business parks and to
meet the expansion and relocation needs of tenants. The Company concentrates
its activities in a limited number of cities in the Southeast where it believes
it can sustain a significant market presence.
THE PROPERTIES
The following table sets forth, as of the date of this Prospectus Supplement,
the location of the 264 Properties, including the 32 Properties and one
Property expansion (totaling approximately 3.7 million square feet) under
development and/or under agreement to acquire, and the Company's undeveloped
land interests. See "Business and Properties--Acquisitions" and "--
Development."
<TABLE>
<CAPTION>
ESTIMATED
DEVELOPMENT
PERCENT UNDEVELOPED POTENTIAL OF
NUMBER TOTAL OF TOTAL LAND UNDEVELOPED
OF SQUARE SQUARE (NET USABLE LAND
LOCATION PROPERTIES FEET FEET ACRES) (SQUARE FEET)(1)
- -------- ---------- ---------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Atlanta, GA............. 191 13,585,608 68.7% 918.2 10,612,500
Nashville, TN........... 25 2,522,916 12.8 166.7 2,064,000
Research Triangle, NC... 32 2,428,156 12.3 254.2 2,790,000
Orlando, FL............. 13 850,830 4.3 56.6 874,000
Spartanburg, SC......... 3 385,600 1.9 372.7 2,617,500
--- ---------- ----- ------- ----------
Total................. 264 19,773,110 100.0% 1,768.4 18,958,000
=== ========== ===== ======= ==========
</TABLE>
- --------
(1) Based upon the Company's estimate of the appropriate density and
anticipated building types that may be developed, net of land necessary to
provide for adequate infrastructure. There can be no assurance that the
Company's estimate of development potential will be realized.
S-4
<PAGE>
THE OFFERING
For a more complete description of the terms of the Series A Preferred
Shares, including definitions of capitalized terms used but not defined in this
summary, see "Description of Series A Preferred Shares" in this Prospectus
Supplement.
Securities Offered.......... 6,000,000 Series A Preferred Shares.
Use of Proceeds............. The net proceeds to the Company from the Offering
of approximately $144.6 million will be used to
repay borrowings under the Company's unsecured
revolving line of credit (the "Credit Facility").
See "Use of Proceeds."
Ranking..................... With respect to the payment of dividends and
amounts upon liquidation, the Series A Preferred
Shares will rank senior to the Company's common
stock, par value $.01 per share ("Common Stock").
See "Description of Series A Preferred Shares--
Ranking."
Dividends................... Dividends on the Series A Preferred Shares will
be cumulative from the date of original issue and
will be payable quarterly in arrears on the last
day of January, April, July and October of each
year (or, if such day is not a business day, the
next business day), commencing on October 31,
1997, at the rate of 8.00% of the liquidation
preference per annum (equivalent to $2.00 per
share per annum). Dividends on the Series A
Preferred Shares will accrue whether or not the
Company has earnings, whether or not there are
funds legally available for the payment of such
dividends and whether or not such dividends are
declared. See "Description of Series A Preferred
Shares--Dividends."
Liquidation Rights.......... The liquidation preference for each Series A
Preferred Share is $25.00. Upon liquidation,
holders will be entitled to be paid the
liquidation preference plus an amount equal to
accrued and unpaid dividends thereon out of the
assets available for such payment. See
"Description of Series A Preferred Shares--
Liquidation Rights."
Redemption.................. Except in certain circumstances relating to
preservation of the Company's status as a REIT,
the Series A Preferred Shares are not redeemable
prior to October 10, 2002. On and after October
10, 2002, the Series A Preferred Shares will be
redeemable at the option of the Company, in whole
or in part, at a redemption price of $25.00 per
share, plus accrued and unpaid dividends thereon.
The redemption price (other than the portion
thereof consisting of accrued and unpaid
dividends) is payable solely out of proceeds from
the sale of other capital stock of the Company.
See "Description of Series A Preferred Shares--
Redemption."
S-5
<PAGE>
Voting Rights............... Holders of Series A Preferred Shares generally
will have no voting rights except as required by
law. However, if dividends on the Series A
Preferred Shares are in arrears for six or more
consecutive quarterly periods, holders of Series
A Preferred Shares (voting separately as a class
with all other series of Parity Shares upon which
like voting rights have been conferred and are
exercisable) will be entitled to vote for the
election of two additional directors to serve on
the Board of Directors of the Company until all
such dividend arrearages are eliminated. See
"Description of Series A Preferred Shares--Voting
Rights."
Conversion.................. The Series A Preferred Shares are not convertible
into or exchangeable for any other property or
security of the Company.
Ownership Limits............ Subject to certain limited exceptions, ownership
of more than 7.5% of the Series A Preferred
Shares is restricted in order to maintain the
Company's ability to qualify as a REIT for
federal income tax purposes. See "Description of
Capital Stock--Restrictions on Transfer" in the
accompanying Prospectus.
Trading..................... The Company has filed an application to list the
Series A Preferred Shares on the New York Stock
Exchange, although there can be no assurance that
such shares will be approved for listing.
S-6
<PAGE>
SELECTED FINANCIAL AND OTHER INFORMATION
The following table sets forth the Company's consolidated selected financial
and operating information for the six months ended June 30, 1997 and 1996, and
the years ended December 31, 1996 and 1995. The Company's selected balance
sheet data is presented as of June 30, 1997 and December 31, 1996. This
information should be read in conjunction with all of the financial statements
and notes thereto incorporated by reference in this Prospectus Supplement and
the accompanying Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR YEAR
JUNE 30, 1997 JUNE 30, 1996 ENDED ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- -------------
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C>
OPERATING DATA:
Rental revenues......... $ 36,279 $ 21,943 $ 48,162 $ 31,217
Total revenues.......... 41,338 24,508 53,883 35,271
Property operating,
maintenance and real
estate tax expenses.... 8,089 4,840 10,750 6,896
Depreciation and
amortization........... 11,044 6,000 13,474 8,177
Interest expense........ 9,554 4,955 11,779 8,106
Amortization of deferred
financing costs........ 452 421 864 691
General and
administrative
expenses............... 2,419 1,414 3,039 1,848
Interest income......... 543 198 492 334
Equity in earnings of
unconsolidated
subsidiaries........... 1,224 543 1,340 1,220
Income before minority
interests.............. 11,756 7,619 15,809 11,107
Net income.............. 8,906 6,193 12,745 8,426
Net income per common
share.................. $ 0.59 $ 0.56 $ 1.11 $ 1.03
Weighted average shares
outstanding............ 14,994 11,156 11,512 8,171
<CAPTION>
JUNE 30, 1997
(UNAUDITED) DEC. 31, 1996
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Investment in real
estate before
accumulated
depreciation........... $687,909 $592,841
Net investment in real
estate................. 636,878 551,372
Total assets............ 688,195 591,849
Total indebtedness...... 270,846 296,975
Shareholders' equity.... 310,703 213,711
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR YEAR
JUNE 30, 1997 JUNE 30, 1996 ENDED ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT NUMBER OF PROPERTIES AND RATIOS)
<S> <C> <C> <C> <C>
OTHER DATA:
Cash provided by (used
in):
Operating activities.. $ 23,416 $ 13,132 $ 28,031 $ 18,678
Investing activities.. (84,383) (34,016) (120,323) (117,127)
Financing activities.. 60,831 20,009 91,570 93,097
Funds from
operations(1)(2)....... 22,525 13,639 29,323 19,307
Funds from operations
attributable to the
Company's
shareholders(1)(2)(3).. 17,065 11,088 23,640 14,662
EBITDA(4)(5)............ $ 32,806 $ 18,995 $ 41,926 $ 28,081
Ratio of EBITDA to
interest
expense(4)(5)(6)....... 3.28x 3.53x 3.32x 3.19x
Ratio of earnings to
fixed charges(7)....... 1.78x 2.06x 1.90x 1.99x
Total square feet of
stabilized and In-
service Properties(8).. 14,786 9,355 12,976 8,862
Number of stabilized and
In-service
Properties(8).......... 216 140 188 134
</TABLE>
S-7
<PAGE>
- --------
(1) The Company believes that funds from operations provides an additional
indicator of the financial performance of the Company. "Funds from
operations" is defined by the National Association of Real Estate
Investment Trusts ("NAREIT") to mean net income (loss) determined in
accordance with generally accepted accounting principles ("GAAP"),
excluding gains (or losses) from debt restructuring and sales of property,
plus depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect funds from
operations on the same basis. Funds from operations does not represent cash
flow from operating, investing and financing activities as defined by GAAP.
Additionally, funds from operations does not measure whether cash flow is
sufficient to fund all cash flow needs, including principal amortization,
capital expenditures and dividends to shareholders, and should not be
considered as an alternative to net income for purposes of evaluating the
Company's operating performance or as an alternative to cash flow, as
defined by GAAP, as a measure of liquidity. Funds from operations presented
herein under the NAREIT guidelines is not necessarily comparable to funds
from operations presented by other real estate companies due to the fact
that not all real estate companies use the same definition. However, the
Company's funds from operations is comparable to the funds from operations
of real estate companies that use the current NAREIT definition.
(2) Effective for the year ended December 31, 1996, the Company implemented the
new guidelines issued by NAREIT in 1995 for calculating funds from
operations. The primary difference between the Company's funds from
operations under the new guidelines and prior years is that the Company now
reduces reported funds from operations for the amortization of deferred
financing costs and recognizes rental income for purposes of computing
funds from operations on a "straight-line" basis. Previously reported funds
from operations were $20,017,000 and funds from operations attributable to
the Company's shareholders were $15,201,000 for the year ended December 31,
1995.
(3) Represents the Company's share of funds from operations, net of amounts
attributable to minority interests.
(4) EBITDA is calculated as income before minority interests, plus interest
expense, depreciation and amortization and income taxes, if any. The
Company does not incur corporate income tax. See "Federal Income Tax
Considerations" in the accompanying Prospectus.
(5) EBITDA (i) does not represent cash flow from operations as defined by GAAP;
(ii) should not be considered as an alternative to net income (determined
in accordance with GAAP) as a measure of operating performance; and (iii)
is not an alternative to cash flows as a measure of liquidity. The
Company's management believes that in addition to cash flows and net
income, EBITDA is a useful financial performance measurement for assessing
the operating performance of an equity REIT because, together with net
income and cash flows, EBITDA provides investors with an additional basis
to evaluate the ability of a REIT to incur and service debt and to fund
acquisition and other capital expenditures. To evaluate EBITDA and the
trends it depicts, the components of EBITDA, such as revenues and operating
expenses, should be considered. The Company's method of calculating EBITDA
may be different from the methods used by other REITs.
(6) For the purpose of computing the ratio of EBITDA to interest expense,
interest expense includes interest expense plus the amortization of
deferred financing costs.
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
have been calculated by adding fixed charges, excluding capitalized
interest, to income before minority interests. Fixed charges consist of
interest costs, whether expensed or capitalized, and the amortization of
deferred financing costs.
(8) At period end.
S-8
<PAGE>
THE COMPANY
The Company is a publicly traded REIT that focuses primarily on the
acquisition, development, ownership and operation of industrial and office
properties in select suburban markets in the southeastern United States.
The Company's portfolio is comprised of 264 Properties totaling
approximately 19.8 million square feet, including 32 Properties and one
Property expansion (totaling approximately 3.7 million square feet) under
development and/or under agreement to acquire. The Company currently manages,
or expects to manage upon completion or acquisition, all of the Properties.
Industrial Properties represent approximately 90% of the square footage of all
of the Properties, and suburban office Properties represent approximately 10%.
The average Occupancy Rate of the Company's In-service Properties was 96.5% at
June 30, 1997.
The Company also owns or controls (through agreements to acquire, options
and marketing and development agreements) approximately 1,768 net usable acres
of undeveloped land located primarily in existing business parks with zoning
and infrastructure in place. The Company believes the development potential of
this land may ultimately total approximately 19.0 million square feet.
With its recent acquisitions in Nashville and the Research Triangle and with
the continued expansion of its activities in Orlando, the Company has reduced
its concentration of Properties in metropolitan Atlanta to 68.7% as of June
30, 1997 (based on square footage and pro forma to include the Properties
under development and/or under agreement to acquire) from 92.9% at December
31, 1995 (calculated on the same basis on that date). In addition, the Company
has significantly increased its tenant base and reduced its exposure to any
single tenant. At June 30, 1997, the Company's In-service Properties were
leased to 695 tenants, and the Company's largest tenant represented 3.1% of
the Company's total Annualized Base Rent. This compares to 351 tenants at
December 31, 1995, with the Company's largest tenant representing 6.9% of the
Company's total Annualized Base Rent on that date.
The Company owns, develops and operates industrial and suburban office
Properties located primarily in landscaped business park settings. The
Company's business strategy emphasizes high quality Properties and tenant
service. The Company's approximately 420 employees have experience and are
engaged in virtually every aspect of the real estate business, including
development, construction, engineering, design, landscape, leasing, marketing
and property management. The Company's strategy for growth includes intensive
management of its Properties, developing and acquiring additional Properties
that are consistent with its existing portfolio, and owning and controlling
undeveloped land sufficient to develop new and existing business parks and to
meet the expansion and relocation needs of tenants. The Company concentrates
its activities in a limited number of cities in the Southeast where it
believes it can sustain a significant market presence.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Series A Preferred
Shares offered hereby, after deducting underwriting discounts and commissions
and expenses of the Offering, are expected to be approximately $144.6 million.
The Company intends to contribute or otherwise transfer the net proceeds of
the sale of the Series A Preferred Shares to the Operating Partnership in
exchange for 8.00% Series A Cumulative Preferred limited partnership interests
in the Operating Partnership ("Series A Preferred Units"), the economic terms
of which will be substantially identical to the Series A Preferred Shares. The
Operating Partnership will be required to make all required distributions on
the Series A Preferred Units (which will mirror the payments of distributions,
including accrued and unpaid distributions upon redemption, and of the
liquidation preference amount on the Series A Preferred Shares) prior to any
distribution of assets to the holders of common limited partnership interests
in the
S-9
<PAGE>
Operating Partnership ("Common Units") or to the holders of any other interest
in the Operating Partnership, except for any other class or series of
preferred limited partnership interests ranking senior to or on a parity with
the Series A Preferred Units as to distributions and/or liquidation rights and
except for distributions required to enable the Company to maintain its
qualifications as a REIT.
The Company intends to use the net proceeds of the Offering to repay
borrowings under its Credit Facility, which amounts have been incurred to fund
development and acquisition activities. The borrowings under the Credit
Facility bear interest at floating rates based on LIBOR or the prime rate, and
the weighted average rate on such borrowings as of June 30, 1997, was 7.15%
per annum, excluding $50 million which had been swapped to fixed rates
averaging approximately 8.0%. As of June 30, 1997, outstanding borrowings
under the Credit Facility, including borrowings by unconsolidated subsidiaries
of the Company, totaled approximately $105.7 million. Such outstanding
borrowings under the Credit Facility, including borrowings by unconsolidated
subsidiaries of the Company, totaled $165.6 million as of September 26, 1997.
Effective September 1, 1997, the Company increased its borrowing capacity
under the Credit Facility from $175 million to $225 million. The Credit
Facility has an initial term through December 31, 1999, and provides for
annual extensions through December 31, 2002.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997 and as adjusted to give effect to the Offering and the application of
the net proceeds therefrom as described in "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt and Minority Interest:
Mortgage notes payable................................. $169,056 $169,056
Bank credit facility................................... 101,790 --
Minority interest in Operating Partnership............. 88,863 87,668
-------- --------
Total debt and minority interest..................... 359,709 256,724
-------- --------
Shareholders' Equity:
Preferred stock at $25.00 per share liquidation
preference, $.01 par value per share, 20,000,000
shares authorized, none issued and outstanding
(6,000,000 Series A Preferred Shares issued and
outstanding--as adjusted)............................. -- 150,000
Common Stock, $.01 par value per share, 100,000,000
shares authorized, 17,682,788 shares issued and
outstanding(1)........................................ 177 177
Additional paid-in capital............................. 375,638 370,263
Deferred compensation.................................. (1,005) (1,005)
Accumulated deficit.................................... (64,107) (62,912)
-------- --------
Total shareholders' equity........................... 310,703 456,523
-------- --------
Total capitalization................................. $670,412 $713,247
======== ========
</TABLE>
- --------
(1) Excludes an aggregate of 5,057,836 shares of Common Stock issuable upon
the exchange of Common Units and an aggregate of approximately 748,600
shares of Common Stock issuable upon the exercise of options granted to
directors, executive officers, management and staff, and an aggregate of
approximately 162,000 shares of Common Stock available for future grants
pursuant to the Company's Incentive Stock Plan as of June 30, 1997.
S-10
<PAGE>
BUSINESS AND PROPERTIES
The following table sets forth, as of the date of this Prospectus
Supplement, the location and type of the 264 Properties by square feet,
including the 32 Properties and one Property expansion (totaling approximately
3.7 million square feet) under development and/or under agreement to acquire.
LOCATION AND TYPE OF PROPERTIES
(BY SQUARE FEET)
<TABLE>
<CAPTION>
BUSINESS BULK BUSINESS TOTAL SUBURBAN PERCENT
LOCATION DISTRIBUTION WAREHOUSE SERVICE INDUSTRIAL OFFICE RETAIL TOTAL OF TOTAL
- -------- ------------ --------- --------- ---------- --------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta, GA............. 6,730,995 4,409,490 1,346,830 12,487,315 1,049,316 48,977 13,585,608 68.7%
Nashville, TN........... 1,532,962 636,179 353,775 2,522,916 -- -- 2,522,916 12.8
Research Triangle, NC... 629,597 -- 987,509 1,617,106 811,050 -- 2,428,156 12.3
Orlando, FL............. 310,007 368,633 172,190 850,830 -- -- 850,830 4.3
Spartanburg, SC......... 92,400 293,200 -- 385,600 -- -- 385,600 1.9
--------- --------- --------- ---------- --------- ------ ---------- -----
Total.................. 9,295,961 5,707,502 2,860,304 17,863,767 1,860,366 48,977 19,773,110 100.0%
========= ========= ========= ========== ========= ====== ========== =====
Percent of Total........ 47.0% 28.9% 14.5% 90.4% 9.4% 0.2% 100.0%
==== ==== ==== ==== === === =====
</TABLE>
PROPERTY OCCUPANCY
The following tables set forth the average Occupancy Rate of the Company's
In-service Properties as of June 30,1997. At that date, the Company owned 216
In-service Properties totaling approximately 14.8 million square feet.
OCCUPANCY RATE OF IN-SERVICE PROPERTIES
AS OF JUNE 30, 1997
(BY PROPERTY LOCATION)
<TABLE>
<S> <C>
Atlanta, GA....................................................... 96.3%
Nashville, TN..................................................... 96.0
Research Triangle, NC............................................. 99.8
Orlando, FL....................................................... 93.7
Spartanburg, SC................................................... 100.0
-----
Total average................................................... 96.5%
=====
</TABLE>
OCCUPANCY RATE OF IN-SERVICE PROPERTIES
AS OF JUNE 30, 1997
(BY PROPERTY TYPE)
<TABLE>
<S> <C>
Business distribution............................................. 95.4%
Bulk warehouse.................................................... 99.6
Business service.................................................. 95.3
-----
Total industrial average........................................ 96.7
-----
Suburban office................................................... 94.7
Retail............................................................ 100.0
-----
Total average................................................... 96.5%
=====
</TABLE>
S-11
<PAGE>
PROPERTY ANNUALIZED BASE RENT
The following tables set forth, as of June 30, 1997, the total Annualized
Base Rent from leases in the Company's In-service Properties, on a percentage
basis by the location and type of Property.
PERCENTAGE OF ANNUALIZED BASE RENT
AS OF JUNE 30, 1997
(BY PROPERTY LOCATION)
<TABLE>
<S> <C>
Atlanta, GA....................................................... 72.5%
Nashville, TN..................................................... 9.4
Research Triangle, NC............................................. 13.4
Orlando, FL....................................................... 3.2
Spartanburg, SC................................................... 1.5
-----
Total........................................................... 100.0%
=====
PERCENTAGE OF ANNUALIZED BASE RENT
AS OF JUNE 30, 1997
(BY PROPERTY TYPE)
Business distribution............................................. 46.7%
Bulk warehouse.................................................... 16.7
Business service.................................................. 16.9
-----
Total industrial................................................ 80.3
-----
Suburban office................................................... 19.2
Retail............................................................ 0.5
-----
Total........................................................... 100.0%
=====
</TABLE>
S-12
<PAGE>
ACQUISITIONS
Since January 1, 1996, the Company has acquired 77 industrial and suburban
office Properties with a total of approximately 4.8 million square feet, and
with a total cost, including acquisition related costs and expenses, of
approximately $284.0 million. In addition, the Company has agreed to acquire 8
industrial and suburban office Properties totaling approximately 900,000
square feet and with a total cost, including acquisition related costs and
expenses, of approximately $55.6 million.
ACQUISITIONS COMPLETED SINCE JANUARY 1, 1996
The following table contains information regarding the Company's Properties
acquired since January 1, 1996.
ACQUISITIONS--COMPLETED SINCE JANUARY 1, 1996
<TABLE>
<CAPTION>
MARKET/ NUMBER TOTAL
PROPERTY OR PROPERTY OF SQUARE ACQUISITION OCCUPANCY COST
BUSINESS PARK TYPE(1) BUILDINGS FEET DATE RATE(2) (000S)(3) MAJOR LESSEES
- ------------- -------- --------- --------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ATLANTA
Northwoods O 1 30,768 Apr-96 100% $ 2,602 ISI Systems, Nurse on Call
Park Creek S 2 103,477 Jun-96 100 6,655 Whirlpool, Contel
Northwoods D,S 9 394,657 Aug-96 100 Kraft General Foods
Schlumberger Industries,
30,845 Rugby Group
Northwest Business S 2 139,129 Aug-96 100 Blockbuster Music, Aaron Rents
Center
6525 Jimmy Carter D 1 92,735 Aug-96 100 Computer Communications
Blvd.
Specialists
Northwest Business Center S,D 8 239,672 May-97 96 Dover Electric, LABCOR
Franklin Forest S,D 9 306,321 May-97 91 29,600 Tridom, Riverwood
International Corporation
ORLANDO
100 Technology Park S 1 60,711 Apr-97 61 3,352 Strombert Carlson
NASHVILLE--NWI
ACQUISTION
Airpark Business S,D,B 11 897,192 Nov-96 95 Airborne Freight,
Center
71,097 Nippon Express
Brentwood South D 6 504,264 Nov-96 100 Service Merchandise,
Business Center
UPS, Matrix Exhibits
Aspen Grove Business D 1 127,285 Mar-97 94 AT&T Resource Management
Center 12,498
Four-Forty Business B 1 165,902 Mar-97 90 UPS, Ingersoll Rand
Center
RESEARCH TRIANGLE--
LICHTIN ACQUISITION
Perimeter Park S 1 50,231 Dec-96 94 Radian, Medaphis
Perimeter Park West O 4 276,645 Dec-96 100 Intersolv, Rhone-Poulenc, AT&T
Interchange Plaza O 2 107,121 Dec-96 100 Communications, DSA Atlantic
Enterprise Center S 2 210,741 Dec-96 100 90,461 Tekelec, Zevatech
Metro Center D 3 272,427 Dec-96 100 Northern Telecom, Baxter,
Burnham
Woodlake Center D 1 108,000 Dec-96 100 R.R. Donnelley & Sons Co.
6501 Weston Parkway O 1 93,351 Dec-96 100 GTE Mobilnet, Burnham
Research Triangle D 3 154,341 Jan-97 100 5,200 Emco-Wheaton, Burnham
Industrial Center
1000 Perimeter Park S 1 56,436 Jul-97 92 3,072 Healthsource
Northern Telecom S 6 370,734 Jul-97 100 23,196 Northern Telecom
Properties
1100 Perimeter Park S 1 84,950 Aug-97 100 5,389 Coram Healthcare
West --- --------- --- --------
77 4,847,090 97% $283,967
=== ========= === ========
</TABLE>
- --------
(1) B=bulk warehouse; D=business distribution; S=business service; and
O=suburban office.
(2) Occupancy Rate is as of June 30, 1997.
(3) Includes reserve for refurbishment costs, if any, and allocated closing
and other transaction costs.
S-13
<PAGE>
PENDING ACQUISITIONS
The following table contains information regarding the Company's Properties
currently under agreement to acquire.
ACQUISITIONS--UNDER AGREEMENT TO ACQUIRE
<TABLE>
<CAPTION>
NUMBER TOTAL ESTIMATED ESTIMATED
MARKET/PROPERTY OR PROPERTY OF SQUARE ACQUISITION OCCUPANCY COST
BUSINESS PARK TYPE(1) BUILDINGS FEET DATE(2) RATE(3) (000S)(4) MAJOR LESSEES
- ------------------ -------- --------- ------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NASHVILLE--NWI
ACQUISITION
Airpark Business Center
Bldg. XII(5) B 1 156,830 4Q97 76% $ 7,610 Molecular Systems Labs,
Harman Int'l Industries, DHL
Bldg. X(5) D 1 106,122 4Q97 100 8,660 Square D, United Telephone
Aspen Grove Business
Center
Bldg. II(5) D 1 106,358 1Q98 33 5,366 BellSouth Mobility, The Tennessean
Bldg. V(5) D 1 160,848 1Q98 34 6,829 Corrigan Moving & Storage, Comdata
RESEARCH TRIANGLE--
LICHTIN ACQUISITION
Perimeter Park West(5) O 1 55,636 4Q97 84 5,250 BE&K Engineering of
North Carolina
Enterprise Center(5) S 1 70,848 4Q97 100 6,500 Apria Healthcare
Woodlake Center(5) D 1 97,200 4Q97 100 4,100 Time Warner Entertainment
Regency Forest(5)(6) O 1 100,000 4Q97 73 11,300 Sprint
--- ------- --- -------
8 853,842 71% $55,615
=== ======= === =======
</TABLE>
- --------
(1) B=bulk warehouse; D=business distribution; S=business service; and
O=suburban office.
(2) Estimated acquisition date represents the estimated closing date of the
acquisition of such Property under the terms of the applicable agreements.
(3) Occupancy Rate is as of September 26, 1997.
(4) Estimated cost is based upon a number of factors, including the
outstanding balance of assumed indebtedness and projected net operating
income (as defined in the applicable acquisition agreements) of each
Property. Cost includes estimated allocated closing and other transaction
costs. There can be no assurance that the total cost of any of these
Properties will not exceed the relevant estimate.
(5) Property under development or in lease-up.
(6) Property will be acquired prior to its estimated stabilization date, and
will be treated as in development and lease-up until stabilized occupancy
is achieved. The Company currently estimates that stabilization of the
Property will be achieved during the second quarter of 1998.
Pending NWI Acquisition. As part of the Company's acquisition of an
approximately 1.4 million square foot portfolio of industrial properties and
related business operations from NWI Warehouse Group, L.P. and its affiliates
("NWI"), the Company has agreed to acquire four industrial Properties totaling
approximately 530,000 square feet currently under development. The acquisition
of each of these four Properties is expected to be completed upon the earlier
of (i) the substantial lease-up of the Property or (ii) March 31, 1998, for a
combination of Common Units and the assumption of construction indebtedness.
In addition, the Company has agreed to acquire, in staged acquisitions through
the year 2003, approximately 105 net usable acres of undeveloped land for
Common Units, the assumption of indebtedness or cash, or a combination
thereof.
Based upon currently available information, the Company estimates the
aggregate acquisition consideration for the four Properties under development
will total approximately $28.5 million and for the undeveloped land will total
approximately $8.6 million. The actual amount of the acquisition
S-14
<PAGE>
consideration for the four Properties under development and the undeveloped
land will be based upon a number of factors, including the outstanding balance
of assumed indebtedness and the projected property operating income (as
defined in the applicable acquisition agreements) of the applicable Property
under development or, in certain instances, the buildings that are developed
in the future on certain portions of the undeveloped land. One or more of
these factors may vary from the Company's current expectations prior to
consummation of these acquisitions. The Company has assumed development
management responsibilities for tenant finish improvements for each of the
four Properties under development. Closing of the acquisitions of the four
Properties under development and the undeveloped land is subject to certain
closing conditions, including updating the Company's due diligence procedures,
and there is no assurance that these acquisitions will be consummated.
Pending Lichtin Acquisition. As part of the Company's acquisition of an
approximately 1.1 million square foot portfolio of industrial and suburban
office properties and related business operations from Lichtin Properties,
Inc. and its affiliates ("Lichtin"), the Company has agreed to acquire from
Lichtin four Properties totaling approximately 324,000 square feet currently
under development. The Company expects to complete the acquisition of each of
these four Properties upon the earlier of (i) the substantial lease-up of the
Property or (ii) June 30, 1998, for a combination of cash, Common Units and
the assumption of construction indebtedness. The Company has also agreed to
acquire from Lichtin approximately 59 net usable acres of undeveloped land in
a staged acquisition over a period of approximately four years. Consideration
for this undeveloped land is expected to consist of Common Units.
Based upon currently available information, the Company estimates that the
aggregate acquisition consideration for the four Properties under development
to be acquired in future phases of the Lichtin acquisition is expected to be
approximately $27.1 million. Consideration for the 59 net usable acres of
undeveloped land will be approximately $7.4 million. The actual amount of the
acquisition consideration relating to the four Properties under development
will be based upon a number of factors, including the outstanding balance of
assumed indebtedness at the time of acquisition and the projected net
operating income (as defined in the applicable acquisition agreements) of each
such Property. The Company has assumed development management responsibilities
for each of the four Properties under development. Closing of the acquisitions
of the four Properties under development and the undeveloped land is subject
to certain closing conditions, including updating the Company's due diligence
procedures, and there is no assurance that these acquisitions will be
consummated.
DEVELOPMENT
Since January 1, 1996, the Company has stabilized 22 industrial Properties
and two Property expansions with a total of approximately 2.5 million square
feet and with a total cost of approximately $103.3 million. As of September
26, 1997, these completed and stabilized Properties and the two Property
expansions were leased an average of approximately 98%. In addition, the
Company currently has 24 industrial and suburban office Properties and one
industrial Property expansion under development totaling approximately 2.8
million square feet, with a total estimated cost of approximately $146.6
million. As of September 26, 1997, these Properties under development are
leased or pre-leased an average of approximately 37%. See "--Acquisition and
Development Risks."
S-15
<PAGE>
The following tables contain information regarding the Company's Properties
stabilized since January 1, 1996 and currently under development or in lease-
up.
DEVELOPMENT PROPERTIES STABILIZED SINCE JANUARY 1, 1996
<TABLE>
<CAPTION>
MARKET/ PROPERTY SQUARE COMPLETION STABILIZATION PERCENT TOTAL COST
PROPERTY AND BUSINESS PARK TYPE(1) FEET DATE(2) DATE(3) LEASED(4) (000S)(5) MAJOR LESSEES
- -------------------------- -------- --------- ---------- ------------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
MULTI-TENANT
ATLANTA
3905 Steve Reynolds D 64,800 Jun-95 Mar-96 100% $ 2,561 Back Street, Arch Aluminum &
Blvd. Gwinnett Pavilion Glass Co., PrimeSource
2775 Horizon Ridge Ct. B 223,219 Jan-96 May-96 100 7,227 Fisher Scientific
Horizon
2660 Pinemeadow Ct. B 104,000 Jul-96 Oct-96 100 3,076 Rockwell International,
Pinebrook Atlanta Precision Molding
3130 No. Berkeley Lake B 240,000 Jan-96 Jan-97 100 5,640 Siemens Energy & Automation
Rd. Berkeley Lake
2780 Horizon Ridge Ct. B 222,643 Oct-96 Jan-97 100 6,104 Best Buy
Horizon
5025 Derrick Jones D 89,600 Apr-96 Aug-97 100 4,458 Professional Sales Group,
Rd.(6) Southridge Dedicated Transportation,
AIT Freight Systems
3805 Crestwood Pkwy. O 105,295 Mar-97 Aug-97 89 10,646 Det Norske Veritas, Optrex,
Crestwood Pointe Summit Group, Paccar
Financial, Astronet, Ganek
3240 Town Point Dr. D 140,400 Sep-96 Sep-97 77 5,585 Barco, Inc., Heidelberg
Town Point USA, Inc., Commodore
Separation Tech, Inc.
3280 Summit Ridge Pkwy. B 173,360 Feb-97 Sep-97 100 4,999 Professional Book Dist.,
Berkeley Lake Public Storage, Wilmar Supply
ORLANDO
8249 Parkline Blvd.(6) D 33,600 Dec-95 Aug-96 100 1,974 Hellman International,
Airport Commerce Ctr. Invetech Co.
2500 Principal Row B 140,015 Sep-96 Sep-96 100 4,790 General Medical Corp.
Orlando Central Park
SPARTANBURG
170 Parkway West B 96,000 Dec-95 Aug-96 100 2,810 European Textile,
Hillside United HealthCare, Cryovac
190 Parkway West D 92,400 Jan-97 Mar-97 100 2,799 BMG Music
Hillside
--------- --- --------
SUBTOTAL MULTI-TENANT 1,725,332 97 62,669
--------- --- --------
BUILD-TO-SUIT
ATLANTA
7250 McGinnis Ferry Rd. D 70,600 Jan-96 Feb-96 100% $ 4,429 GE-Hitachi HVB
Johns Creek
3290 Summit Ridge Pkwy. B 100,800 Jan-97 Jan-97 100 2,804 Central Garden & Pet
Berkeley Lake
4020 Steve Reynolds D 44,260 Jan-97 Jan-97 100 2,174 Pike Nurseries
Blvd. Gwinnett Pavilion
240 Northpoint Pkwy. B 95,100 Feb-97 Feb-97 100 2,796 Auto-Lok (expansion)
Northpoint
2555 Northwinds Pkwy. O 64,981 Jun-97 Jun-97 100 8,561 DeVry
Northwinds
5755 Peachtree Ind. O 50,000 Sep-97 Sep-97 100 4,615 IKON Office Solutions
Blvd.
IKON Campus
5765 Peachtree Ind. D 60,000 Sep-97 Sep-97 100 3,913 IKON Office Solutions
Blvd.
IKON Campus
5775 Peachtree Ind. D 60,000 Sep-97 Sep-97 100 3,194 IKON Office Solutions
Blvd.
IKON Campus
ORLANDO
1630 Prime Ct.(6) D 43,200 Aug-96 Sep-96 100 1,870 SIG Logistics and
Airport Commerce Ctr. Bakery Express
9600 Parksouth Ct. B 126,818 Sep-97 Sep-97 100 4,464 U.S. Office Products
SPARTANBURG
285 Parkway East B 57,600 Jul-96 Jul-96 100 1,807 Sally Foster (expansion)
Hillside
--------- --- --------
SUBTOTAL BUILD-TO-SUIT 773,359 100 40,627
--------- --- --------
2,498,691 98% $103,296
========= === ========
</TABLE>
S-16
<PAGE>
PROPERTIES UNDER DEVELOPMENT OR IN LEASE-UP(7)
<TABLE>
<CAPTION>
PERCENT
ESTIMATED ESTIMATED ESTIMATED LEASED OR ESTIMATED
MARKET/ PROPERTY SQUARE COMPLETION STABILIZATION PRE- TOTAL
PROPERTY AND BUSINESS PARK TYPE(1) FEET(8) DATE(2) DATE(3) LEASED(4) COST(000S)(5) MAJOR LESSEES
- -------------------------- -------- --------- ---------- ------------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
MULTI-TENANT
ATLANTA
5195 Southridge D 60,000 Sep-95 Nov-97 0% $2,758 N/A
Pkwy.(9)(10)
Southridge
5149 Southridge D 46,800 Feb-96 Nov-97 64 2,497 Burlington Air Express
Pkwy.(9)(10) (expansion)
Southridge
1335 Northmeadow S 88,783 Nov-96 Oct-97 100 6,950 Evans Technology, UPS,
Pkwy.(10)(11) Visiting Nurse Health
Northmeadow Systems, Pioneer,
Checkmate Electronics
250 Hembree Park Dr.(10)(11) D 94,500 Nov-96 Nov-97 72 4,942 Paul Davis Systems,
Northmeadow Roadtrac LP,
SprintCom, Inc.
120 Declaration B 301,200 Mar-97 Oct-97 70 7,841 Appleton Papers
Dr.(10)
Liberty
Distribution
Center
1750 Beaver Ruin S 67,600 Apr-97 Nov-97 100 4,860 Liberty Mutual Insurance, SAAB
Rd.(10)
Gwinnett Park Cars USA, Inc., Business
Telephone Systems, Inc.
11390 Old Roswell S 47,600 Jun-97 Jun-98 31 3,527 SprintCom, Inc.
Rd.(10)(11)
Northmeadow
250 Horizon B 267,619 Aug-97 Aug-98 23 7,661 Euromarket Design, Inc.
Drive(10)
Horizon
2775 Premiere Pkwy. D 79,588 Oct-97 Oct-98 46 3,500 Innovative Product Achievements,
The Business Park Inc., The Walman Optical Co.
at Sugarloaf
2885 Breckinridge S 82,349 Oct-97 Oct.98 86 5,866 Equifax, General
Blvd.
Park Creek Instrument
3270 Summit Ridge B 152,000 Oct-97 Oct-98 0 4,198 N/A
Pkwy.
Berkeley Lake
130 Declaration Dr. B 210,000 Dec-97 Dec-98 0 5,373 N/A
Liberty
660 Hembree Park D 94,500 Jan-98 Jan-99 53 4,226 BellSouth
Dr.(11) Northmeadow Entertainment, Inc.
2550 Northwinds O 149,797 Feb-98 Feb-99 0 16,169 N/A
Parkway
Northwinds
3885 Crestwood Pkwy. O 105,295 Mar-98 Mar-99 0 11,109 N/A
Crestwood Pointe
ORLANDO
1629 Prime Ct.(10) D 43,200 Jan-97 Nov-97 100 2,416 JD Group, Rocap
Airport Commerce
Center
2490 Principal B 101,800 Apr-97 Nov-97 100 3,491 Greenmount Moving
Row(10) and Storage, Inc.,
Orlando Central Universal Studios Florida,
Park The Standard Register Co.
Celebration Blvd. S 58,702 Mar-98 Mar-99 0 4,879 N/A
Celebration
255 Technology Pkwy. S 52,777 Mar-98 Mar-99 0 3,257 N/A
Technology Park
NASHVILLE
736 Melrose Avenue D 103,400 Dec-97 Dec-98 0 5,454 N/A
Four-Forty Business
Center
</TABLE>
S-17
<PAGE>
PROPERTIES UNDER DEVELOPMENT OR IN LEASE-UP (CONTINUED)(7)
<TABLE>
<CAPTION>
PERCENT
ESTIMATED ESTIMATED ESTIMATED LEASED OR ESTIMATED
MARKET/ PROPERTY SQUARE COMPLETION STABILIZATION PRE- TOTAL
PROPERTY AND BUSINESS PARK TYPE(1) FEET(8) DATE(2) DATE(3) LEASED(4) COST(000S)(5) MAJOR LESSEES
- -------------------------- -------- --------- ---------- ------------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
MULTI-TENANT (CONTINUED)
NASHVILLE (CONTINUED)
3300 Briley Park Blvd. B 194,750 Dec-97 Dec-98 0% $ 6,374 N/A
South
Nashville Business
Center
RESEARCH TRIANGLE
5400 McCrimmon Pkwy. S 146,250 Jan-98 Jan-99 0 9,166 N/A
Enterprise Center
1700 Perimeter Park O 81,000 Jan-98 Jan-99 0 7,947 N/A
Drive
Perimeter Park West
--------- --- --------
SUBTOTAL MULTI-TENANT 2,629,510 32 134,461
--------- --- --------
BUILD-TO-SUIT
ATLANTA
2850 Premiere D 86,000 Dec-97 Dec-97 100 2,938 Data General
Parkway(12)
The Business Park at
Sugarloaf
RESEARCH TRIANGLE
Paramount Pkwy. O 99,684 Apr-98 Jan-99 100 9,164 PPD Pharmaco
Perimeter Park West
--------- --- --------
SUBTOTAL BUILD-TO-SUIT 185,684 100 12,102
--------- --- --------
2,815,194 37% $146,563
========= === ========
</TABLE>
- --------
Footnotes to Development Tables:
(1) B=bulk warehouse; D=business distribution; S=business service; and
O=suburban office.
(2) Represents actual or estimated shell completion of the Property. With
respect to Properties under development or in lease-up, there can be no
assurance that the building will be completed by the estimated completion
date.
(3) Represents the actual or estimated stabilization date of the Property.
Properties are considered stabilized for financial reporting purposes
upon the earlier of substantial lease-up or one year after shell
completion. There can be no assurance that the Property will reach
stabilization by the estimated stabilization date.
(4) As of September 26, 1997.
(5) The total actual or estimated cost information presented includes the
Company's estimate of the fair market value of any development land used
in the development and capitalized costs through the development
stabilization date. With respect to Properties under development or in
lease-up, there can be no assurance that the actual cost of a building
will not exceed the estimate.
(6) The Company developed this project in a joint venture and acquired the
Property upon its reaching substantial lease-up.
(7) Does not include development Properties under agreement to acquire from
NWI or Lichtin. See "--Acquisitions--Pending Acquisitions."
(8) Actual leasable square feet may vary upon completion.
(9) The Company is the developer for the joint ventures that own these
Properties and in which the Company currently has interests ranging from
2.5% to 5.0%. The Company has options to purchase these Properties upon
stabilization, as defined in the joint venture agreements.
(10) Shell completed; interior finish to be completed.
(11) The Company is the developer of this Property, has an option to purchase
the Property upon stabilization and can be required by the owner to
purchase the Property after completion.
(12) Sugarloaf Properties Inc., an unrelated third party, has exercised its
option to participate in 50% of the development and operations of this
Property. Estimated total cost figures are based on 50% of the estimated
cost.
S-18
<PAGE>
ACQUISITION AND DEVELOPMENT RISKS
Subsequent to the Company's August 1994 initial public offering (the "IPO"),
the Company has acquired or has agreed to acquire 134 Properties totaling
approximately 8.3 million square feet, an increase of approximately 146% in
the size of the portfolio from the size at the time of the IPO. Acquisitions
entail risks that (i) existing agreements to acquire Properties may fail to
close, (ii) acquired Properties may not perform in accordance with
management's expectations, including projected occupancy and rental rates,
(iii) the senior executives and employees of an acquired business will not be
successfully integrated into the Company, or (iv) the Company may have
underestimated the cost of improvements required to bring an acquired Property
up to standards established for the market position intended for that
Property.
Subsequent to the IPO, the Company has commenced, and in many cases also
completed, the development of 60 Properties and four Property expansions
totaling approximately 7.1 million square feet, an increase of approximately
126% in the size of the portfolio from the size at the time of the IPO. New
project development is subject to a number of risks, including risks of
construction delays or cost overruns that may increase project costs, risks
that the project will not achieve anticipated occupancy levels or sustain
anticipated rent levels, new project commencement risks such as the failure to
obtain zoning, occupancy and other required governmental permits and
authorizations, and the risk that development costs will be incurred in
connection with projects that are not pursued to completion.
CLIENT RELATIONSHIPS
The Company seeks to retain its tenants by providing a high level of tenant
services. Of the leases that expired in the Company's In-service Properties in
1996, tenants occupying approximately 67% of such space renewed their leases
with the Company. In addition, over the same period, the Company completed 40
tenant expansions for existing tenants, totaling approximately 490,000 square
feet.
The Company's 30 largest tenants (measured by Annualized Base Rent as of
June 30, 1997) occupy a total of approximately 4.4 million square feet and
represented 28.1% of Annualized Base Rent from all leases in place where
tenants were paying rent as of June 30, 1997. As shown in the table below, no
single tenant accounted for more than 3.1% of the Company's total Annualized
Base Rent as of June 30, 1997. Information presented in the table below
excludes Properties under development and/or under agreement to acquire at
June 30, 1997.
S-19
<PAGE>
30 LARGEST TENANTS MEASURED BY ANNUALIZED BASE RENT
AS OF JUNE 30, 1997(1)
<TABLE>
<CAPTION>
PERCENTAGE LOCATION OF
NUMBER ANNUALIZED OF TOTAL LEASED
SQUARE OF BASE RENT ANNUALIZED PROPERTY
RANK TENANT FOOTAGE LEASES JUNE 30, 1997 BASE RENT (STATE)
---- ------ --------- ------ ------------- ---------- -----------
<C> <S> <C> <C> <C> <C> <C>
Scientific Atlanta,
1 Inc. ................... 600,413 11 $ 2,668,779 3.1% GA
2 GTE Mobilnet Service
Corporation............ 126,124 3 1,320,976 1.6 GA,NC
Radian International
3 LLC..................... 90,159 2 1,170,275 1.4 NC
4 DeVry Inc. ............. 64,981 1 959,120 1.1 GA
5 Honeywell, Inc.......... 70,016 3 947,995 1.1 GA
The Athlete's Foot
6 Group................... 162,651 1 897,155 1.1 GA
Fisher Scientific
7 Company................. 223,219 1 875,019 1.0 GA
8 Tridom Corporation...... 120,989 5 820,952 1.0 GA
National Data
9 Corporation............. 50,283 4 786,777 0.9 GA
10 AT&T.................... 67,551 5 752,082 0.9 GA,NC,TN
11 PPD Pharmaco, Inc....... 72,416 4 747,368 0.9 NC
12 Best Buy Stores, L.P. .. 222,643 1 703,552 0.8 GA
13 United Healthcare....... 72,991 2 699,856 0.8 GA,SC
Intelligent Systems
14 Corporation............. 137,100 1 685,500 0.8 GA
15 Sally Foster, Inc. ..... 197,200 2 673,237 0.8 SC
16 Vanstar Corporation..... 86,880 4 666,746 0.8 GA
Yokohama Tire
17 Corporation............. 252,092 1 665,383 0.8 GA
18 Auto-Lok, Inc. ......... 222,900 2 658,879 0.8 GA
360 Degree
19 Communications.......... 42,557 6 652,556 0.8 NC
Ahlstrom Recovery,
20 Inc..................... 62,893 2 649,493 0.8 GA
21 Astronet Corporation.... 34,138 1 648,622 0.8 GA
22 Siemens Energy &
Automation, Inc. ...... 240,000 3 637,200 0.7 GA
The Bombay Company,
23 Inc..................... 253,890 2 631,344 0.7 GA
United Parcel Service,
24 Inc. ................... 128,275 3 594,201 0.7 GA,TN,FL
25 Appleton Papers, Inc.... 210,600 1 593,892 0.7 GA
26 Southern Multimedia
Communications, Inc.... 117,647 3 581,172 0.7 GA
27 Tekelec, Inc. .......... 68,236 2 579,322 0.7 NC
28 Intersolv, Inc.......... 39,280 1 571,701 0.6 NC
29 Deutz Corporation....... 137,061 1 561,950 0.6 GA
Reckitt & Colman,
30 Inc. ................... 256,000 1 547,840 0.6 GA
--------- --- ----------- ----
Total................... 4,431,185 79 $23,948,944 28.1%
========= === =========== ====
</TABLE>
- --------
(1) Effective July 1, 1997, the Company acquired six buildings fully or
partially leased to Northern Telecom, Inc. Annualized Base Rent from the
Northern Telecom, Inc. lease is $2,782,633, or 3.3% of the Company's
Annualized Base Rent as of June 30, 1997.
LEASING TRENDS
The leases for the Company's Properties have terms ranging from one to
fifteen years, with terms for multi-tenant Properties typically between three
and five years and for build-to-suit Properties typically between seven and
ten years. Typically, the tenant in a multi-tenant Property pays for increases
in taxes, operating costs and insurance above a base year level. For build-to-
suit Properties,
S-20
<PAGE>
the tenant typically pays for all taxes, insurance and operating costs.
Approximately 65% of the Company's leases (based on leased square footage as
of June 30, 1997) contain contractual rent escalations.
The Company continues to be able to increase average rents and generally to
avoid offering tenant concessions. During the first six months of 1997, the
Company renewed or re-leased approximately 1.2 million square feet of second-
generation space in its Properties. Cash-basis rental rates on this space
increased by an average of 7.0%, calculated by comparing the initial cash-
basis rent to be paid by the tenant under the new or renewed lease with the
ending cash-basis rent paid by the tenant under the previous lease on the same
space. Rental rate increases by Property type, calculated on the same basis,
were as follows for the six months ended June 30, 1997:
CASH-BASIS RENT INCREASES BY PROPERTY TYPE
SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<S> <C>
Bulk warehouse...................................................... 8.5%
Business distribution............................................... 6.0
Business service.................................................... 7.3
Suburban office..................................................... 9.7
Retail.............................................................. 4.0
---
Average........................................................... 7.0%
===
</TABLE>
LEASE EXPIRATIONS
The following tables show scheduled lease expirations for leases under which
tenants were paying rent to the Company as of June 30, 1997, assuming no
exercise of renewal options or termination rights, if any.
LEASE EXPIRATIONS
TOTAL PORTFOLIO
<TABLE>
<CAPTION>
AVERAGE CASH
PERCENTAGE OF PERCENTAGE OF BASE RENTAL
SQUARE TOTAL ANNUALIZED TOTAL ANNUALIZED RATE PER
FEET SQUARE FEET BASE RENT BASE RENT SQUARE FOOT
YEAR OF EXPIRATION EXPIRING EXPIRING EXPIRING(1) EXPIRING(2) AT EXPIRATION
- ------------------ ---------- ------------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
1997.................... 1,434,000 9.5% $ 8,049,000 9.0% $ 5.61
1998.................... 2,494,000 16.5 13,233,000 14.8 5.31
1999.................... 1,896,000 12.5 12,049,000 13.4 6.35
2000.................... 2,590,000 17.1 15,729,000 17.5 6.07
2001.................... 1,278,000 8.5 7,052,000 7.9 5.52
2002.................... 1,282,000 8.5 10,071,000 11.2 7.85
2003.................... 592,000 3.9 5,242,000 5.8 8.86
2004.................... 1,283,000 8.5 6,170,000 6.9 4.81
2005.................... 523,000 3.5 2,606,000 2.9 4.98
2006.................... 603,000 4.0 3,011,000 3.4 4.99
2007.................... 514,000 3.4 2,442,000 2.7 4.75
2008.................... 223,000 1.5 783,000 0.9 3.51
Thereafter.............. 403,000 2.6 3,201,000 3.6 7.94
---------- ----- ----------- ----- ------
Total................. 15,115,000 100.0% $89,638,000 100.0% $ 5.93
========== ===== =========== ===== ======
</TABLE>
S-21
<PAGE>
INDUSTRIAL PROPERTIES
<TABLE>
<CAPTION>
AVERAGE CASH
PERCENTAGE OF PERCENTAGE OF BASE RENTAL
SQUARE TOTAL ANNUALIZED TOTAL ANNUALIZED RATE PER
FEET SQUARE FEET BASE RENT BASE RENT SQUARE FOOT
YEAR OF EXPIRATION EXPIRING EXPIRING EXPIRING(1) EXPIRING(2) AT EXPIRATION
- ------------------ ---------- ------------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
1997.................... 1,395,000 10.0% $ 7,525,000 10.4% $5.39
1998.................... 2,387,000 17.2 11,666,000 16.2 4.89
1999.................... 1,816,000 13.1 10,922,000 15.2 6.02
2000.................... 2,340,000 16.8 12,420,000 17.2 5.31
2001.................... 1,197,000 8.6 6,017,000 8.4 5.03
2002.................... 1,037,000 7.4 6,156,000 8.6 5.94
2003.................... 420,000 3.0 2,688,000 3.7 6.40
2004.................... 1,179,000 8.5 4,523,000 6.3 3.84
2005.................... 493,000 3.5 2,167,000 3.0 4.39
2006.................... 582,000 4.2 2,642,000 3.7 4.54
2007.................... 514,000 3.7 2,442,000 3.4 4.75
2008.................... 223,000 1.6 783,000 1.1 3.51
Thereafter.............. 338,000 2.4 1,999,000 2.8 5.91
---------- ----- ----------- ----- -----
Total................. 13,921,000 100.0% $71,950,000 100.0% $5.17
========== ===== =========== ===== =====
</TABLE>
SUBURBAN OFFICE PROPERTIES
<TABLE>
<CAPTION>
AVERAGE CASH
PERCENTAGE OF PERCENTAGE OF BASE RENTAL
SQUARE TOTAL ANNUALIZED TOTAL ANNUALIZED RATE PER
FEET SQUARE FEET BASE RENT BASE RENT SQUARE FOOT
YEAR OF EXPIRATION EXPIRING EXPIRING EXPIRING(1) EXPIRING(2) AT EXPIRATION
- ------------------ --------- ------------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
1997.................... 37,000 3.2% $ 506,000 2.9% $13.71
1998.................... 106,000 9.2 1,556,000 9.0 14.74
1999.................... 79,000 6.9 1,105,000 6.4 14.01
2000.................... 213,000 18.6 3,000,000 17.4 14.12
2001.................... 81,000 7.1 1,036,000 6.0 12.76
2002.................... 245,000 21.4 3,915,000 22.8 15.97
2003.................... 172,000 15.0 2,554,000 14.9 14.86
2004.................... 104,000 9.1 1,646,000 9.6 15.79
2005.................... 26,000 2.2 382,000 2.2 14.86
2006.................... 17,000 1.5 309,000 1.8 17.73
Thereafter.............. 65,000 5.8 1,204,000 7.0 18.51
--------- ----- ----------- ----- ------
Total................. 1,145,000 100.0% $17,213,000 100.0% $15.04
========= ===== =========== ===== ======
</TABLE>
- --------
(1) Represents annualized monthly base rent at the time of lease expirations.
Includes contractual increases that will take place prior to lease
expirations.
(2) Calculated by dividing Annualized Base Rent under expiring leases by the
total Annualized Base Rent (inclusive of contractual increases) for each
period indicated.
RE-LEASING COSTS
The following tables summarize by period the Company's capitalized tenant
improvement and leasing commission expenditures incurred in the renewal or re-
leasing of previously occupied space in its industrial and suburban office
Properties.
S-22
<PAGE>
CAPITALIZED TENANT IMPROVEMENTS AND LEASING COMMISSIONS
INDUSTRIAL PROPERTIES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED SIX MONTHS
DEC. 31, DEC. 31, ENDED
1995 1996 JUNE 30, 1997
---------- ---------- -------------
<S> <C> <C> <C>
RE-LEASING
Square feet leased................... 317 678 678
Capitalized tenant improvements and
leasing commissions................. $ 462 $1,395 $1,031
Capitalized tenant improvements and
leasing commissions per square
foot................................ $ 1.46 $ 2.06 $ 1.52
RENEWAL
Square feet leased................... 814 1,027 1,212
Capitalized tenant improvements and
leasing commissions................. $ 469 $1,055 $ 776
Capitalized tenant improvements and
leasing commissions per square
foot................................ $ 0.58 $ 1.03 $ 0.64
TOTAL
Square feet.......................... 1,131 1,705 1,890
Total capitalized tenant improvements
and leasing commissions............. $ 931 $2,450 $1,807
Total capitalized tenant improvements
and leasing commissions per square
foot................................ $ 0.82 $ 1.44 $ 0.96
SUBURBAN OFFICE PROPERTIES
<CAPTION>
YEAR ENDED YEAR ENDED SIX MONTHS
DEC. 31, DEC. 31, ENDED
1995 1996 JUNE 30, 1997
---------- ---------- -------------
<S> <C> <C> <C>
RE-LEASING
Square feet leased................... 111(1) 16 58
Capitalized tenant improvements and
leasing commissions................. $1,578(1) $ 45 $ 243
Capitalized tenant improvements and
leasing commissions per square
foot................................ $14.25(1) $ 2.80 $ 4.18
RENEWAL
Square feet leased................... 47 106 86
Capitalized tenant improvements and
leasing commissions................. $ 50 $ 290 $ 87
Capitalized tenant improvements and
leasing commissions per square
foot................................ $ 1.06 $ 2.74 $ 1.01
TOTAL
Square feet.......................... 158(1) 122 144
Total capitalized tenant improvements
and leasing commissions............. $1,628(1) $ 335 $ 330
Total capitalized tenant improvements
and leasing commissions per square
foot................................ $10.27(1)(2) $ 2.75 $ 2.28
</TABLE>
- --------
(1) Includes approximately $1,377,000 or $15.68 per square foot to re-tenant
87,845 square feet of space in the Company's 94,677 square foot office
Property which was vacated by a single tenant and which was subsequently
converted from a single tenant to a multi-tenant office Property.
(2) Excluding amounts incurred to re-lease the office Property described in
footnote (1) above, capitalized tenant improvements and leasing
commissions would have averaged $3.55 per square foot for re-leased and
renewed space during 1995.
S-23
<PAGE>
UNDEVELOPED LAND
An important part of the Company's development strategy is to own or control
land sufficient to allow it to develop exclusive business park environments
and to accommodate the expansion and relocation needs of its tenants. The
Company employs a number of ownership and control arrangements in its land
strategy, including outright purchases, joint ventures, staged acquisitions,
options and exclusive marketing and development agreements. By doing so, the
Company believes that it can control sufficient land acreage, while mitigating
the negative impact of land carrying costs.
The following schedule details the Company's undeveloped land interests as
of June 30, 1997. The land detailed below is located primarily in existing
business parks with zoning and infrastructure in place. The Company estimates
that the development potential of the undeveloped land ultimately could total
approximately 19.0 million square feet.
UNDEVELOPED LAND
(IN NET USABLE ACRES)
<TABLE>
<CAPTION>
ESTIMATED
DEVELOPMENT
RESEARCH POTENTIAL
ATLANTA NASHVILLE TRIANGLE ORLANDO SPARTANBURG TOTAL (SQUARE FEET)(1)
---------- --------- --------- ------- ----------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Company-owned........... 138.3 40.8 34.3 22.3 -- 235.7 3,284,000
Owned in joint
ventures(2)............ 213.2 -- -- -- 372.7(3) 585.9 5,396,500(3)
Under agreement to
acquire................ 14.2(4) 125.9(5) 53.0(6) 34.3(7) -- 227.4 3,140,000
Optioned................ -- -- 166.9 -- -- 166.9 1,550,000
Marketing/development
agreements(8).......... 552.5 -- -- -- -- 552.5 5,587,500
---------- --------- --------- ------- --------- ------- ----------
Total.................. 918.2 166.7 254.2 56.6 372.7 1,768.4
========== ========= ========= ======= ========= =======
Estimated development
potential (square
feet)(1)............... 10,612,500 2,064,000 2,790,000 874,000 2,617,500(3) 18,958,000
========== ========= ========= ======= ========= ==========
</TABLE>
- --------
(1) Based upon the Company's estimate of the appropriate density and
anticipated building types that may be developed, net of land necessary to
provide for adequate infrastructure. There can be no assurance that the
Company's estimate of development potential will be realized.
(2) The Company's interests in its undeveloped land held in joint ventures
ranges from 0% to 30%.
(3) The Company expects that it will eventually develop approximately one-half
the acreage it owns in a joint venture in Spartanburg and that the
remainder will be sold to third parties. Estimated development potential
reflects only that land which is not currently expected to be sold.
(4) The Company has agreed to acquire this land prior to April 1998.
(5) The Company has agreed to purchase 104.5 net usable acres of undeveloped
land from NWI in a staged acquisition over a period of up to six years.
See "--Acquisitions--Pending Acquisitions."
(6) The Company has agreed to purchase this land from Lichtin in a staged
acquisition over a period of up to four years. See "--Acquisitions--
Pending Acquisitions."
(7) The Company has agreed to acquire 24.6 acres at Orlando Central Park in
two stages to occur by December 1998.
(8) Under the terms of the Company's development agreements, the Company will
generally either develop properties for a fee, or have certain rights to
acquire land for development or to acquire developed properties upon their
completion. The Company's marketing agreements generally provide for the
Company to be paid marketing or management fees in conjunction with
services it provides. Both the development and marketing agreements
generally contain certain non-competition provisions covering a limited
geographic area.
S-24
<PAGE>
SELECTED FINANCIAL AND OTHER INFORMATION
The following table sets forth the Company's consolidated selected financial
and operating information for the six months ended June 30, 1997 and 1996, and
the years ended December 31, 1996 and 1995. The Company's selected balance
sheet data is presented as of June 30, 1997 and December 31, 1996. This
information should be read in conjunction with all of the financial statements
and notes thereto incorporated by reference in this Prospectus Supplement and
the accompanying Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR YEAR
JUNE 30, 1997 JUNE 30, 1996 ENDED ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C>
OPERATING DATA:
Rental revenues......... $ 36,279 $ 21,943 $ 48,162 $ 31,217
Total revenues.......... 41,338 24,508 53,883 35,271
Property operating,
maintenance and real
estate tax expenses.... 8,089 4,840 10,750 6,896
Depreciation and
amortization........... 11,044 6,000 13,474 8,177
Interest expense........ 9,554 4,955 11,779 8,106
Amortization of deferred
financing costs........ 452 421 864 691
General and
administrative
expenses............... 2,419 1,414 3,039 1,848
Interest income......... 543 198 492 334
Equity in earnings of
unconsolidated
subsidiaries .......... 1,224 543 1,340 1,220
Income before minority
interests.............. 11,756 7,619 15,809 11,107
Net income.............. 8,906 6,193 12,745 8,426
Net income per common
share.................. $ 0.59 $ 0.56 $ 1.11 $ 1.03
Weighted average shares
outstanding............ 14,994 11,156 11,512 8,171
<CAPTION>
JUNE 30, 1997
(UNAUDITED) DEC. 31, 1996
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Investment in real
estate before
accumulated
depreciation........... $687,909 $ 592,841
Net investment in real
estate................. 636,878 551,372
Total assets............ 688,195 591,849
Total indebtedness...... 270,846 296,975
Shareholders' equity.... 310,703 213,711
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR YEAR
JUNE 30, 1997 JUNE 30, 1996 ENDED ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT NUMBER OF PROPERTIES AND RATIOS)
<S> <C> <C> <C> <C>
OTHER DATA:
Cash provided by (used
in):
Operating activities.. $ 23,416 $ 13,132 $ 28,031 $ 18,678
Investing activities.. (84,383) (34,016) (120,323) (117,127)
Financing activities.. 60,831 20,009 91,570 93,097
Funds from
operations(1)(2)....... 22,525 13,639 29,323 19,307
Funds from operations
attributable to the
Company's
shareholders(1)(2)(3).. 17,065 11,088 23,640 14,662
EBITDA(4)(5)............ $ 32,806 $ 18,995 $ 41,926 $ 28,081
Ratio of EBITDA to
interest
expense(4)(5)(6)....... 3.28x 3.53x 3.32x 3.19x
Ratio of earnings to
fixed charges(7)....... 1.78x 2.06x 1.90x 1.99x
Total square feet of
stabilized and In-
service Properties(8).. 14,786 9,355 12,976 8,862
Number of stabilized and
In-service
Properties(8).......... 216 140 188 134
</TABLE>
S-25
<PAGE>
- --------
(1) The Company believes that funds from operations provides an additional
indicator of the financial performance of the Company. "Funds from
operations" is defined by NAREIT to mean net income (loss) determined in
accordance with GAAP excluding gains (or losses) from debt restructuring
and sales of property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis. Funds from
operations is influenced not only by the operations of the Properties, but
also by the capital structure of the Company. Funds from operations does
not represent cash flow from operating, investing and financing activities
as defined by GAAP. Additionally, funds from operations does not measure
whether cash flow is sufficient to fund all cash flow needs, including
principal amortization, capital expenditures and dividends to
shareholders, and should not be considered as an alternative to net income
for purposes of evaluating the Company's operating performance or as an
alternative to cash flow, as defined by GAAP, as a measure of liquidity.
Funds from operations presented herein under the NAREIT guidelines is not
necessarily comparable to funds from operations presented by other real
estate companies due to the fact that not all real estate companies use
the same definition. However, the Company's funds from operations is
comparable to the funds from operations of real estate companies that use
the current NAREIT definition.
(2) Effective for the year ended December 31, 1996, the Company implemented
the new guidelines issued by NAREIT in 1995 for calculating funds from
operations. The primary difference between the Company's funds from
operations under the new guidelines and prior years is that the Company
now reduces reported funds from operations for the amortization of
deferred financing costs and recognizes rental income for purposes of
computing funds from operations on a "straight-line" basis. Previously
reported funds from operations were $20,017,000 and funds from operations
attributable to the Company's shareholders were $15,201,000 for the year
ended December 31, 1995.
(3) Represents the Company's share of funds from operations, net of amounts
attributable to minority interests.
(4) EBITDA is calculated as income before minority interests, plus interest
expense, depreciation and amortization and income taxes, if any. The
Company does not incur corporate income tax. See "Federal Income Tax
Considerations" in the accompanying Prospectus.
(5) EBITDA (i) does not represent cash flow from operations as defined by
GAAP; (ii) should not be considered as an alternative to net income
(determined in accordance with GAAP) as a measure of operating
performance; and (iii) is not an alternative to cash flows as a measure of
liquidity. The Company's management believes that in addition to cash
flows and net income, EBITDA is a useful financial performance measurement
for assessing the operating performance of an equity REIT because,
together with net income and cash flows, EBITDA provides investors with an
additional basis to evaluate the ability of a REIT to incur and service
debt and to fund acquisition and other capital expenditures. To evaluate
EBITDA and the trends it depicts, the components of EBITDA, such as
revenues and operating expenses, should be considered. The Company's
method of calculating EBITDA may be different from the methods used by
other REITs.
(6) For the purpose of computing the ratio of EBITDA to interest expense,
interest expense includes interest expense plus the amortization of
deferred financing costs.
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
have been calculated by adding fixed charges, excluding capitalized
interest, to income before minority interests. Fixed charges consist of
interest costs, whether expensed or capitalized, and the amortization of
deferred financing costs.
(8) At period end.
S-26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Selected Financial and Other Information appearing elsewhere herein and the
Consolidated Financial Statements of the Company and the Notes thereto
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus.
RESULTS OF OPERATIONS
The results of operations as discussed herein include the historical results
of the Company for the six months ended June 30, 1997 and 1996.
On November 1, 1996 and December 31, 1996, the Company completed the initial
closings of the NWI and Lichtin acquisitions, respectively. See "Business and
Properties--Acquisitions." While these transactions did not have a material
impact on 1996 reported results of operations, they were significant
transactions as they provided for the Company's continued expansion in the
Southeast. The impact of these acquisitions on reported operating results for
the six months ended June 30, 1997 is discussed herein. As discussed below,
the operations of the NWI and Lichtin acquisition properties are included with
all of the Company's acquisition properties in the following comparisons of
operating results.
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1997 TO THE
SIX MONTHS ENDED JUNE 30, 1996
Operating information relating to the Company's properties for the six
months ended June 30, 1997 and 1996, respectively, is summarized below (in
thousands):
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED %
JUNE 30, 1997 JUNE 30, 1996 CHANGE
-------------- ------------- ------
<S> <C> <C> <C>
Rental revenues............................ $36,279 $21,943 65.3%
Tenant reimbursements...................... 4,416 2,007 120.0
------- ------- -----
Property operating revenues................ 40,695 23,950 69.9
------- ------- -----
Operating and maintenance expenses......... 4,622 2,687 72.0
Real estate taxes.......................... 3,467 2,153 61.0
Depreciation and amortization.............. 11,044 6,000 84.1
------- ------- -----
Property operating expenses................ 19,133 10,840 76.5
======= ======= =====
Property operating revenues less
property operating expenses............... $21,562 $13,110 64.5%
======= ======= =====
</TABLE>
Period to period comparisons of property operating revenues and expenses for
the six months ended June 30, 1997 and 1996 are discussed herein using the
categories "core properties," "development properties" and "acquisition
properties." Core properties are defined as properties which were stabilized
and operating as of January 1, 1996. The Company defines a property as
stabilized upon the earlier of substantial lease-up or one year from building
shell completion. Development properties reflect properties completed and
stabilized, and acquisition properties are properties acquired subsequent to
January 1, 1996.
Property operating revenues (rental revenues plus tenant reimbursements)
increased $16,745,000 or 69.9% between periods. Of this increase, $13,424,000,
$2,734,000 and $587,000 were attributable to acquisition, development and core
properties, respectively. The increases relating to acquisition and
S-27
<PAGE>
development properties were due to the acquisition of 69 properties (46 in
1996 and 23 in 1997) totaling approximately 4,328,000 square feet and the
stabilization of 14 development properties (8 in 1996 and 6 in 1997) and two
property expansions (one each year) totaling approximately 1,693,000 square
feet. Property operating expenses increased $8,293,000 or 76.5% between
periods due primarily to the growth in the property portfolio resulting from
the acquisition and development properties discussed above.
For the comparable six month periods ended June 30, 1997 and 1996, operating
results of the core properties, representing 134 properties totaling
approximately 8,861,000 square feet, are summarized below (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED %
JUNE 30, 1997 JUNE 30, 1996 CHANGE
------------- ------------- ------
<S> <C> <C> <C>
Rental revenues.......................... $21,496 $21,153 1.6%
Tenant reimbursements.................... 2,226 1,982 12.3
------- ------- ----
Property operating revenues.............. 23,722 23,135 2.5
------- ------- ----
Operating and maintenance expenses....... 2,776 2,654 4.6
Real estate taxes........................ 2,211 2,090 5.8
Depreciation and amortization............ 6,122 5,842 4.8
------- ------- ----
Property operating expenses.............. 11,109 10,586 4.9
------- ------- ----
Property operating revenues less
property operating expenses............. $12,613 $12,549 0.5%
======= ======= ====
Average occupancy........................ 95.4% 96.1%
</TABLE>
Property operating revenues from core properties increased 2.5% despite the
impact of lost property operating revenues of approximately $166,000 resulting
from the sale of a 96,000 square foot building in April 1997 and a slight
decrease in overall average occupancy. Adjusted for these factors between
periods, property operating revenues from core properties increased
approximately 3.6%. This increase was due primarily to rental rate increases
between periods. Property operating expenses increased 4.9% due primarily to
increased utilities, repairs and maintenance and real estate tax expenses in
1997. Property operating revenues less property operating expenses from core
properties increased 2.3%, exclusive of depreciation and amortization expense,
and increased approximately 3.2% after adjusting for the building sale
discussed herein and the decrease in weighted average occupancy between
periods.
Interest expense increased by $4,599,000 or 92.8% from $4,955,000 for the
six months ended June 30, 1996, to $9,554,000 for the six months ended June
30, 1997, as a result of increased mortgage interest of $3,522,000 due to
mortgage debt assumed in conjunction with certain of the Company's 1996 and
1997 property acquisitions, and increased Credit Facility interest of
$1,077,000 in the first half of 1997. Interest expense of $9,554,000 in the
first half of 1997 consisted of mortgage interest of $7,707,000 and Credit
Facility interest of $1,847,000.
Amortization of deferred financing costs increased $31,000 or 7.4% from
$421,000 for the six months ended June 30, 1996, to $452,000 for the six
months ended June 30, 1997, due primarily to the amortization of deferred
financing costs associated with increasing the availability under and
restructuring the Credit Facility in 1996.
Company general and administrative expenses increased by $1,005,000 or 71.1%
from $1,414,000 for the six months ended June 30, 1996, to $2,419,000 for the
six months ended June 30, 1997, due primarily to increased personnel and
related costs associated with the Company's Southeast expansion. The majority
of the increase related to the additional general and administrative
S-28
<PAGE>
expenses associated with the Company's Nashville and Research Triangle
operations, both of which were acquired in the fourth quarter of 1996, and to
a lesser extent expenses related to the establishment of an office in Orlando,
which also occurred in the fourth quarter of 1996. As a percentage of total
revenue, general and administrative expenses increased from 5.8% in the first
half of 1996 to 5.9% in the first half of 1997. General and administrative
expenses of the Company when combined with the general and administrative
expenses of its unconsolidated subsidiaries (the "Subsidiaries") increased
$1,283,000 or 59.0% from $2,175,000 in 1996 to $3,458,000 in 1997 for the same
reasons discussed above having to do with the Company's southeast expansion.
As a percentage of the combined revenues of the Company and the Subsidiaries,
the combined general and administrative expenses of the Company and the
Subsidiaries decreased from 7.8% in the first half of 1996 to 7.5% in the
first half of 1997.
Interest income increased $345,000 or 174.2% from $198,000 for the six
months ended June 30, 1996 to $543,000 for the six months ended June 30, 1997,
due primarily to increased real estate loan balances between periods. Real
estate loans consist primarily of loans to affiliated entities and other
parties for the development of industrial buildings. The Company generally has
options to acquire the developed buildings upon their completion.
Equity in earnings of the Subsidiaries represents the Company's 99% economic
interest in the earnings of the Subsidiaries after the elimination of interest
expense and gains on property sales to the Company. Equity in earnings of the
Subsidiaries increased by $681,000 or 125.4% from $543,000 for the six months
ended June 30, 1996 to $1,224,000 for the six months ended June 30, 1997, due
primarily to the increased activity and profitability of the Subsidiaries'
third-party construction and landscape businesses and due to increased
earnings from land sales and land brokerage transactions in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities increased from
$13,132,000 for the six months ended June 30, 1996 to $23,416,000 for the six
months ended June 30, 1997, due primarily to the growth in the Company's
operating income resulting from 14 development properties (8 in 1996 and 6 in
1997) and two property expansions (one each year) stabilized and from 69
buildings (46 in 1996 and 23 in 1997) acquired.
Net cash used in investing activities increased from $34,016,000 for the six
months ended June 30, 1996, to $84,383,000 for the six months ended June 30,
1997, due primarily to higher property development and land and building
acquisition volumes in the first six months of 1997 compared to 1996.
Net cash provided by financing activities increased from $20,009,000 for the
six months ended June 30, 1996, to $60,831,000 for the six months ended June
30, 1997. This net increase between periods reflects primarily the net
proceeds of approximately $107 million from an equity offering in 1997, net of
debt retirements, used to finance the Company's property portfolio growth.
The Company's net cash flow from operations is currently sufficient to meet
the Company's current operational needs and to satisfy the Company's current
quarterly dividends. Company management believes that operating cash flows
will continue to be adequate to fund these requirements in the short and long-
term. The Company operates as and intends to maintain its qualification as a
REIT under the Code. As a REIT, the Company will generally not be subject to
corporate federal income taxes as long as it satisfies certain technical
requirements of the Code, including the requirement to distribute 95% of its
taxable income to its shareholders.
In 1996, the Company increased its available borrowing capacity under its
line of credit arrangements from $100 million to $175 million (which
subsequently was increased to $225 million in
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<PAGE>
September 1997) and lowered its borrowing costs from LIBOR plus 1.50% to LIBOR
plus 1.35% (LIBOR plus 1.05% effective October 1, 1997), and replaced its
single-bank revolving line of credit with the new syndicated, unsecured Credit
Facility. The Credit Facility may be used to, among other things, meet the
Company's operational obligations and annual REIT dividend requirements. The
Company may finance certain of its development, construction and acquisition
activities primarily through borrowings under the Credit Facility. As of
September 26, 1997, the Company had available capacity under the Credit
Facility of approximately $59.4 million. The Credit Facility has an initial
term through December 31, 1999, and provides for annual extensions through
December 31, 2002.
In May and June 1997, the Company completed a public offering of 3,584,200
shares of Common Stock, including shares issued to cover over-allotments, and
received net proceeds of approximately $107 million. These proceeds were used
to reduce outstanding Credit Facility borrowings, increasing the Company's
available capacity under the Credit Facility. In June 1997, the Company used
the additional Credit Facility borrowing capacity to prepay, without penalty,
three mortgage notes, totaling $31.2 million which were scheduled to mature in
1998 and used approximately $32.1 million to acquire additional properties
during the second quarter of 1997.
As part of the NWI and Lichtin acquisition transactions (see "Business and
Properties--Acquisitions--Pending Acquisitions"), the Company has agreed,
subject to updating its due diligence procedures, to the future acquisition of
land and properties under development not acquired as of the date of this
Prospectus Supplement. It is expected that these future acquisitions will be
consummated primarily through a combination of Common Units and the assumption
of indebtedness, some of which will be repaid through borrowings under the
Credit Facility.
The Company believes it currently has adequate liquidity and sources of
capital, including available borrowing capacity under its existing Credit
Facility and capacity of $600 million under a recently filed combined equity
and debt shelf registration of which the accompanying Prospectus is a part, to
meet its current operational requirements, to fund annual principal
requirements under existing mortgage notes payable and to fund its current
development and acquisition activity. It is management's expectation that the
Company will continue to have access to the additional capital resources
necessary to further expand and develop its business and to refinance mortgage
notes payable as they begin to mature in 1998. These resources include long-
term mortgage debt and other forms of debt and equity financing, in both
public and private markets. Future development and acquisition activities will
be undertaken by the Company only as suitable opportunities arise. Such
activities are not expected to be undertaken unless adequate sources of
financing are available and a satisfactory budget with targeted returns on
investment has been internally approved. The Company maintains staffing levels
sufficient to meet its existing construction and leasing activities. If the
market conditions warrant, the Company may adjust staffing levels to avoid a
negative impact on the Company's results of operations.
Total consolidated debt amounted to $270.9 million at June 30, 1997,
including Credit Facility borrowings of $101.8 million and mortgage notes
payable of $169.1 million. Of the $169.1 million of mortgage indebtedness,
$163.3 million is fixed rate and $5.8 million is variable rate. The weighted
average interest rate on the Company's fixed rate mortgage debt was 8.05%, and
on its variable rate mortgage debt was 4.49%, at June 30, 1997. The weighted
average interest rate under the Credit Facility at June 30, 1997, exclusive of
the impact of the interest rate swaps discussed below, was 7.15%. Based on the
outstanding balance of mortgage notes payable at June 30, 1997, the weighted
average interest rates on the mortgage notes with a final maturity in each of
the next five years were 8.8% in 1998, 7.4% in 1999, 8.5% in 2000 and 7.0% in
2001. None of the mortgage notes mature in 1997.
In July 1996, the Company entered into interest rate swap agreements to
effectively fix the Company's interest cost on $50.0 million of the Company's
Credit Facility borrowings. The weighted
S-30
<PAGE>
average interest rate under the fixed swap arrangements is approximately 8.0%.
If interest rates on amounts outstanding under the Credit Facility, in excess
of the $50.0 million discussed above, and under the Company's variable rate
mortgage debt fluctuated by 1.0%, interest costs to the Company, based on
outstanding borrowings at June 30, 1997, would increase or decrease by
approximately $600,000 on an annualized basis.
At June 30, 1997, the Company's mortgage debt on its consolidated Properties
was $169.1 million. All mortgage debt of the Subsidiaries was retired or
assumed by third parties during the second quarter of 1997. Including Credit
Facility borrowings of $101.8 million for the Company and $3.9 million for the
Subsidiaries, the total indebtedness of the Company and the Subsidiaries was
$274.8 million, or 28% of total market capitalization at June 30, 1997
(assuming the exchange of all Common Units for shares of the Company's Common
Stock). Based on the closing price of the Common Stock of $31.25 on June 30,
1997, and assuming the exchange of all Common Units for shares of Common
Stock, there would be 22,740,624 shares of the Company's Common Stock
outstanding with a total market value of $710.6 million. Following the
Offering, the Company expects to have a ratio of total indebtedness, including
its pro rata share of the indebtedness of the Subsidiaries, to total market
capitalization of approximately 17%.
SUPPLEMENTAL DISCLOSURE OF FUNDS FROM OPERATIONS
The Company believes that funds from operations provides an additional
indicator of the financial performance of the Company, and management expects
that funds from operations will be one of the factors considered by the Board
of Directors in determining the amount of cash dividends the Company will pay
to its shareholders. Funds from operations does not represent cash flow from
operating, investing and financing activities as defined by GAAP, which are
discussed under "Liquidity and Capital Resources" above. Additionally, funds
from operations does not measure whether cash flow is sufficient to fund all
cash flow needs, including principal amortization, capital expenditures and
dividends to shareholders, and should not be considered as an alternative to
net income for purposes of evaluating the Company's operating performance or
as an alternative to cash flow, as defined by GAAP, as a measure of liquidity.
The Company's calculation of funds from operations follows the guidelines
issued by NAREIT, including the recognition of rental income on the "straight-
line" basis consistent with its treatment in the Company's statement of
operations under GAAP. The "straight-line" rental adjustment increased rental
revenues by $324,000 and $191,000 for the six months ended June 30, 1997 and
1996, respectively.
Funds from operations presented herein under the NAREIT guidelines is not
necessarily comparable to funds from operations presented by other real estate
companies due to the fact that not all real estate companies calculate funds
from operations in the same manner. However, the Company's funds from
operations is comparable to the funds from operations of real estate companies
that use the current NAREIT definition.
S-31
<PAGE>
For the six months ended June 30, 1997, funds from operations increased by
$5,977,000 or 53.9% to $17,065,000 compared to funds from operations of
$11,088,000 for the six months ended June 30, 1996. Funds from operations
calculated under the current NAREIT guidelines for the six months ended June
30, 1997 and 1996 are detailed below (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
<S> <C> <C>
Income before minority interests.................. $11,756 $ 7,619
Depreciation and amortization..................... 11,044 6,000
Depreciation and amortization--Subsidiaries....... 10 20
Gain on sale of operating real estate asset....... (209) --
Gain on sale of operating real estate
asset--Subsidiaries.............................. (76) --
------- -------
Funds from operations--Common Units fully
converted......................................... 22,525 13,639
Ownership percentage(1)........................... 75.8% 81.3%
------- -------
Funds from operations attributable to the
Company's shareholders............................ $17,065 $11,088
======= =======
Weighted average shares outstanding............... 14,994 11,156
======= =======
</TABLE>
- --------
(1) Represents the Company's weighted average ownership of the Operating
Partnership for the year.
SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES AND LEASING COSTS
The following table details the Company's capital expenditures for the six
months ended June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997
-------------
<S> <C>
Building acquisitions(1)....................................... $ 49,758
Development and land acquisition activity(2)(3)................ 47,827
Non-revenue-producing building improvements.................... 362
Tenant improvement and leasing costs
on second-generation leases(4)................................ 2,094
--------
$100,041
========
</TABLE>
- --------
(1) Reflects aggregate acquisition costs including the assumption of
indebtedness of $4,360,000, the issuance of $14,334,000 of Common Units
and other changes in acquisition related payables, net of receivables, of
$382,000.
(2) Includes first-generation leasing costs on development Properties
totaling $1,346,000.
(3) Reflects aggregate development and leasing costs, exclusive of the
increase in construction payables of $1,332,000.
(4) Includes second-generation leasing costs totaling $1,067,000.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of the Company currently consists of ten persons,
with one presently unfilled vacancy. Certain information regarding the
directors and executive officers of the Company is set forth below, including
their ages as of September 26, 1997:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
A. Ray Weeks, Jr. 44 Chairman of the Board and Chief Executive Officer
Vice Chairman of the Board and Chief Investment
Thomas D. Senkbeil 48 Officer
Forrest W. Robinson 46 Director; President and Chief Operating Officer
John W. Nelley, Jr. 48 Director; Managing Director in charge of the
Company's
activites in Nashville, Tennessee
Barrington H. Branch 57 Director; former President and Chief Executive
Officer,
DIHC Management Corporation, currently
independent advisor
and consultant
George D. Busbee 70 Director; Of counsel of King & Spalding; former
Governor of Georgia
William Cavanaugh III 58 Director; President and Chief Executive Officer,
Carolina Power & Light Company
Director; President and Chief Operating Officer,
Charles R. Eitel 47 Interface, Inc.
Harold S. Lichtin 49 Director; Managing Director in charge of the
Company's
activities in North Carolina(1)
William O. McCoy 63 Director; Vice-President, Finance, The University
of North Carolina; former Vice Chairman of the
Board of BellSouth Corporation
Albert W. Buckley,
Jr. 53 Managing Director, Nashville, Tennessee
Robert G. Cutlip 47 Senior Vice President, Development(1)
Clyde H. Duckett 54 Senior Vice President, Construction
Mark W. Flowers 40 Senior Vice President, Landscape
Klay W. Simpson 42 Senior Vice President, Marketing
David P. Stockert 35 Senior Vice President and Chief Financial Officer
David L. Barker 42 Vice President, Property Management
Elizabeth C. Belden 43 Vice President, Corporate Counsel
Patricia P. Clayton 45 Vice President, Property Management
Philip W. Cobb 48 Vice President, Building Construction
Arthur J. Quirk 39 Vice President and Controller
Moses L. Salcido 37 Vice President, Orlando
Robert K. Sanders,
Jr. 38 Vice President, Estimating
Mark L. Scott 37 Vice President, Interior Construction
Thomas W. Trocheck 43 Vice President, Development-Engineering
Robert T. Weeks 37 Vice President, Information Technology
</TABLE>
- --------
(1) Effective October 1, 1997, Robert G. Cutlip, Senior Vice President,
Development, assumed day-to-day operating responsibility for the Company's
activities in North Carolina. Mr. Cutlip will relocate to the Research
Triangle area in 1998. Harold S. Lichtin will assist in the transition and
will continue to focus his efforts on overall corporate strategy as a
member of the Board of Directors.
S-33
<PAGE>
DESCRIPTION OF SERIES A PREFERRED SHARES
The following summary sets forth the material terms and provisions of the
Series A Preferred Shares, and is qualified in its entirety by reference to
the provisions of the Articles of Amendment (the "Articles of Amendment") to
the Company's Restated Articles of Incorporation (the "Articles of
Incorporation") and the Articles of Incorporation, which are incorporated
herein by this reference. The following description of the particular terms of
the Series A Preferred Shares supplements, and to the extent inconsistent
therewith, replaces, the description of the general terms of the Preferred
Stock set forth in the accompanying Prospectus, to which description reference
is hereby made.
GENERAL
Subject to limitations prescribed by Georgia law and the Articles of
Incorporation, the Board of Directors is authorized to issue, from the
authorized but unissued capital stock of the Company, Preferred Stock in such
classes or series as the Board of Directors may determine and to establish
from time to time the number of shares of Preferred Stock to be included in
any such series and to fix the designation and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the shares of each
such series. The Board of Directors has authorized the Company to designate
and issue the Series A Preferred Shares.
When issued, the Series A Preferred Shares will be validly issued, fully
paid and nonassessable. The holders of the Series A Preferred Shares will have
no preemptive rights with respect to any shares of the capital stock of the
Company or any other securities of the Company convertible into or carrying
rights or options to purchase any such shares. The Series A Preferred Shares
will not be subject to any sinking fund or other obligation of the Company to
redeem or retire the Series A Preferred Shares.
The transfer agent, registrar and dividend disbursing agent for the Series A
Preferred Shares will be Wachovia Bank, N.A.
RANKING
With respect to payment of dividends and amounts upon liquidation,
dissolution or winding up, the Series A Preferred Shares will rank senior to
the Company's Common Stock.
While any Series A Preferred Shares are outstanding, the Company may not
authorize, create or increase the authorized amount of any class of security
that ranks senior to the Series A Preferred Shares with respect to the payment
of dividends or amounts payable upon liquidation, dissolution or winding up,
or any class of security convertible into shares of such a class, without the
consent of the holders of two-thirds of the outstanding Series A Preferred
Shares and Parity Shares (as defined below), voting as a single class.
However, the Company may create additional classes of other stock, increase
the authorized number of shares of Preferred Stock or issue series of
Preferred Stock ranking on a parity with the Series A Preferred Shares with
respect, in each case, to the payment of dividends and amounts upon
liquidation, dissolution and winding up (a "Parity Share") without the consent
of any holder of Series A Preferred Shares. See "--Voting Rights" below.
DIVIDENDS
Holders of the Series A Preferred Shares will be entitled to receive, when
and as declared by the Board of Directors, out of funds legally available for
the payment of dividends, cumulative preferential cash dividends at the rate
of 8.00% of the liquidation preference per annum (equivalent to $2.00 per
share per annum). Such dividends will be cumulative from the date of original
issue and payable quarterly in arrears on the last calendar day (or, if such
day is not a business day, the next business day) of each January, April, July
and October (each, a "Quarterly Dividend Date"). The first dividend, which
will be paid on or about October 31, 1997, will be for less than a full
quarter. Such first dividend
S-34
<PAGE>
and any dividends payable on the Series A Preferred Shares for any partial
dividend period will be computed on the basis of the actual number of days in
such period. Dividends will be payable to holders of record as they appear in
the records of the Company at the close of business on the applicable record
date, which will be the 15th day of the calendar month in which the Quarterly
Dividend Date falls or such other date designated as such by the Board of
Directors of the Company that is not more than 50 nor less than 10 days prior
to such Quarterly Dividend Date (each, a "Record Date"). Accrued and unpaid
dividends for any past dividend periods may be declared and paid at any time
and for such interim periods to holders of record on the applicable Record
Date. Any dividend payment made on the Series A Preferred Shares will first be
credited against the earliest accrued but unpaid dividend due with respect to
the Series A Preferred Shares that remains payable.
No dividends will be authorized by the Board of Directors or paid or set
aside for payment if any agreement of the Company prohibits such
authorization, payment or setting apart for payment or provides that such
authorization, payment or setting aside of payment would constitute a breach
thereof or a default thereunder, or if such authorization or payment is
restricted or prohibited by law. Dividends on Series A Preferred Shares will
accrue whether or not the Company has earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared. No interest, or sum of money in lieu of interest, will
be payable in respect of any dividend payment or payments on the Series A
Preferred Shares that may be in arrears. Holders of Series A Preferred Shares
will not be entitled to any dividends, whether payable in cash, property or
shares of stock, in excess of the full cumulative dividends, as described
herein, on the Series A Preferred Shares.
If, for any taxable year, the Company elects to designate as "capital gain
dividends" (as defined in Section 857 of the Code) any portion (the "Capital
Gains Amount") of the dividends (within the meaning of the Code) paid or made
available for the year to holders of all classes of capital stock (the "Total
Dividends"), then the portion of the Capital Gains Amount that will be
allocable to holders of Series A Preferred Shares will be in the same portion
that the Total Dividends paid or made available to the holders of Series A
Preferred Shares for the year bears to the Total Dividends.
Except as provided in the next sentence, no dividends will be declared or
paid on any Parity Shares unless full cumulative dividends have been declared
and paid or are contemporaneously declared and funds sufficient for the
payment thereof set aside for such payment on the Series A Preferred Shares
for all prior dividend periods. If accrued dividends on the Series A Preferred
Shares for all prior dividend periods have not been paid in full, then any
dividend declared on the Series A Preferred Shares and on any Parity Shares
for any dividend period will be declared ratably in proportion to accrued and
unpaid dividends on the Series A Preferred Shares and such Parity Shares.
The Company will not (i) declare, pay or set apart funds for the payment of
any dividend or other distribution with respect to any Junior Shares (as
defined below) or (ii) redeem, purchase or otherwise acquire for consideration
any Junior Shares through a sinking fund or otherwise (other than a redemption
or purchase or other acquisition of Common Stock made for purposes of any
employee incentive or benefit plan of the Company or any subsidiary), unless
(A) all cumulative dividends with respect to the Series A Preferred Shares and
any Parity Shares at the time such dividends are payable have been paid or
declared and funds have been set apart for payment of such dividends and
(B) sufficient funds have been paid or declared and set apart for the payment
of the dividend for the current dividend period with respect to the Series A
Preferred Shares and any Parity Shares.
As used herein, (i) the term "dividend" does not include dividends or other
distributions payable solely in Fully Junior Shares (as defined below), or in
options, warrants or rights to subscribe for or purchase any Fully Junior
Shares, (ii) the term "Junior Shares" means the Common Stock and any other
class or series of shares of capital stock of the Company now or hereafter
issued and outstanding that ranks junior to the Series A Preferred Shares as
to the payment of dividends or in the
S-35
<PAGE>
distribution of assets or amounts upon liquidation, dissolution and winding up
and (iii) the term "Fully Junior Shares" means Junior Shares (including the
Common Stock) that rank junior to the Series A Preferred Shares both as to the
payment of dividends and distribution of assets upon liquidation, dissolution
and winding up.
LIQUIDATION RIGHTS
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, the holders of Series A Preferred Shares will be entitled to
receive out of assets of the Company legally available for distribution to
stockholders a liquidation preference of $25.00 per Series A Preferred Share,
plus an amount per Series A Preferred Share equal to all dividends (whether or
not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders, and no more.
Until the holders of Series A Preferred Shares and Parity Shares have been
paid their liquidation preference in full, no payment will be made to any
holder of Junior Shares upon the liquidation, dissolution or winding up of the
Company. If upon any liquidation, dissolution or winding up of the Company,
the assets of the Company, or proceeds thereof, distributable among the
holders of the Series A Preferred Shares are insufficient to pay in full the
amount payable upon liquidation with respect to the Series A Preferred Shares
and any other Parity Shares, then such assets, or the proceeds thereof, will
be distributed among the holders of Series A Preferred Shares and any such
Parity Shares ratably in accordance with the respective amounts which would be
payable on such Series A Preferred Shares and any such Parity Shares if all
amounts payable thereon were paid in full. Neither a consolidation nor a
merger of the Company with another entity, a statutory share exchange by the
Company or a sale, lease or transfer of all or substantially all of the
Company's assets will be considered a liquidation, dissolution or winding up,
voluntary or involuntary, of the Company.
REDEMPTION
The Series A Preferred Shares are not redeemable by the Company prior to
October 10, 2002. On and after October 10, 2002, the Company, at its option,
upon publication in a newspaper of general circulation in New York, New York
at least once a week for two successive weeks and written notice to the
holders of Series A Preferred Shares, may redeem the Series A Preferred
Shares, in whole or in part, at any time or from time to time, for cash at a
redemption price of $25.00 per share, plus accumulated, accrued and unpaid
dividends thereon to the date fixed for redemption, without interest. The
redemption price of the Series A Preferred Shares (other than the portion
thereof consisting of accrued and unpaid dividends) is payable solely out of
proceeds from the sale of other capital stock of the Company, which may
include Common Stock, Preferred Stock, depositary shares, interests,
participations or other ownership interests in the Company however designated
(other than debt securities convertible into or exchangeable for equity
securities), and any rights, warrants or options to purchase any thereof. If
fewer than all of the outstanding Series A Preferred Shares are to be
redeemed, the number of shares to be redeemed will be determined by the
Company and such shares may be redeemed pro rata from the holders of record of
such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares), by lot or by any
other method determined by the Company in its sole discretion to be equitable.
Unless full cumulative dividends on all Series A Preferred Shares and any
Parity Shares have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for all
past dividend periods and the then-current dividend period, no Series A
Preferred Shares or Parity Shares may be redeemed or purchased by the Company
except pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Series A Preferred Shares or Parity Shares, as the
case may be.
S-36
<PAGE>
Notice of redemption will be mailed at least 30 days but not more than 90
days before the redemption date by the registrar to each holder of record of
Series A Preferred Shares to be redeemed at the address shown on the stock
transfer books of the Company. Each notice shall state: (i) the redemption
date; (ii) the number of Series A Preferred Shares to be redeemed; (iii) the
redemption price per share; (iv) the place or places where certificates for
Series A Preferred Shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the Series A Preferred Shares will cease to
accrue on such redemption date. If fewer than all Series A Preferred Shares
are to be redeemed, the notice mailed to each such holder thereof shall also
specify the number of Series A Preferred Shares to be redeemed from such
holder. If notice of redemption of any Series A Preferred Shares has been
given and if the funds necessary for such redemption have been set aside by
the Company in trust for the benefit of the holders of Series A Preferred
Shares so called for redemption, then from and after the redemption date,
dividends will cease to accrue on the Series A Preferred Shares, such Series A
Preferred Shares shall no longer be deemed outstanding and all rights of the
holders of such shares will terminate, except the right to receive the
redemption price.
The holders of Series A Preferred Shares at the close of business on a
Record Date will be entitled to receive the dividends payable with respect to
such Series A Preferred Shares on the corresponding Quarterly Dividend Date
notwithstanding the redemption thereof between such Record Date and the
corresponding Quarterly Dividend Date or the Company's default in the payment
of the dividend due. Except as provided above, the Company will make no
payment or allowance for unpaid dividends, whether or not in arrears, on
Series A Preferred Shares which have been called for redemption.
The Series A Preferred Shares have no stated maturity and will not be
subject to any sinking fund or mandatory redemption.
VOTING RIGHTS
Except as indicated below, or except as otherwise from time to time required
by applicable law, the holders of Series A Preferred Shares will have no
voting rights.
If six consecutive quarterly dividends payable on the Series A Preferred
Shares or any Parity Shares are in arrears, whether or not earned or declared,
the number of directors then constituting the Board of Directors of the
Company will be increased by two, and the holders of Series A Preferred
Shares, voting together as a class with the holders of any other series of
Parity Shares, will have the right to elect two additional directors to serve
on the Company's Board of Directors at any annual meeting of shareholders or a
properly called special meeting of the holders of the voting Parity Shares
until all such dividends and dividends for the current quarterly period on the
Series A Preferred Shares and such other voting Parity Shares have been
declared and paid or set aside for payment. Such voting rights will terminate
when all such accrued and unpaid dividends have been declared and paid or set
aside for payment. The term of office of all directors so elected will
terminate with the termination of such voting rights.
The approval of two-thirds of the outstanding Series A Preferred Shares and
all other Parity Shares similarly affected, voting as a single class, is
required in order to (i) amend the Articles of Incorporation to affect
materially and adversely the rights, preferences or voting power of the
holders of the Series A Preferred Shares or the Parity Shares (except that if
such amendment would materially and adversely affect any right, preference,
privilege or voting power of the Series A Preferred Shares or another series
of Parity Shares that is not enjoyed by the other, then the approval of two-
thirds of the holders of all series similarly affected shall be required);
(ii) enter into a share exchange that affects the Series A Preferred Shares,
or consolidate the Company with or merge the Company with another entity,
unless in each such case each Series A Preferred Share remains outstanding
without a material adverse change to its terms and rights or is converted into
or exchanged for preferred stock of the
S-37
<PAGE>
surviving entity having preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption thereof identical to that of the Series A
Preferred Shares (except for changes that do not materially and adversely
affect the holders of Series A Preferred Shares); or (iii) authorize,
reclassify, create or increase the authorized or issued amount of any shares
of any class, or any security convertible into shares of any class, having
rights senior to the Series A Preferred Shares with respect to the payment of
dividends or the distribution of assets or amounts upon liquidation,
dissolution or winding up of the Company. However, the Company may create
additional classes of Parity Shares and Junior Shares, increase the authorized
number of Parity Shares and Junior Shares and issue additional series of
Parity Shares and Junior Shares without the consent of any holder of Series A
Preferred Shares.
Except as provided above and as required by applicable law, the holders of
Series A Preferred Shares are not entitled to vote on any merger or
consolidation involving the Company, on any share exchange or on a sale of all
or substantially all of the assets of the Company.
RETIREMENT
Except as otherwise provided in the Articles of Incorporation, all Series A
Preferred Shares issued and reacquired by the Company shall be restored to the
status of authorized but unissued shares of Preferred Stock, without
designation as to class or series.
CONVERSION
The Series A Preferred Shares are not convertible into or exchangeable for
any other property or securities of the Company at the option of the holder.
RECORD HOLDERS
The Company and its transfer agent may deem and treat the record holder of
any Series A Preferred Shares as the true and lawful owner thereof for all
purposes, and neither the Company nor its transfer agent shall be affected by
any notice to the contrary.
RESTRICTIONS ON TRANSFER
For information regarding restrictions on ownership of the Series A
Preferred Shares, see "Description of Capital Stock--Restrictions on Transfer"
in the accompanying Prospectus.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain federal income tax considerations is based
on current law, is for general information only, and is not tax advice. This
discussion does not purport to deal with all aspects of taxation that may be
relevant to particular shareholders in light of their personal investment or
tax circumstances, or to certain types of shareholders (including insurance
companies, tax-exempt organizations, financial institutions or broker dealers,
foreign corporations and persons who are not citizens or residents of the
United States) subject to special treatment under the federal income tax laws.
In addition, this section does not discuss foreign, state, or local taxation.
This Prospectus Supplement does not address the taxation of the Company or
the impact on the Company of its election to be taxed as a REIT. Such matters
are addressed in the accompanying Prospectus under "Federal Income Tax
Considerations--Taxation of the Company." Prospective investors should
consult, and must depend on, their own tax advisors regarding the state,
local, foreign and other tax consequences of holding and disposing of Series A
Preferred Shares.
S-38
<PAGE>
Dividends and Other Distributions; Backup Withholding. For a discussion of
the taxation of dividends and other distributions with respect to shares of
the Company's capital stock, and the backup withholding rules, see the
captions "Federal Income Tax Considerations--Taxation of Shareholders" in the
accompanying Prospectus. In determining the extent to which a distribution on
the Series A Preferred Shares constitutes a dividend for tax purposes, the
earnings and profits of the Company will be allocated, on a pro rata basis,
first to distributions with respect to the Series A Preferred Shares and then
to the Common Stock.
Sale or Exchange of Series A Preferred Shares. Upon the sale or exchange of
Series A Preferred Shares to a party other than the Company, a holder of
Series A Preferred Shares will realize a capital gain or loss measured by the
difference between the amount realized on the sale or other disposition and
the holder's adjusted tax basis in the Series A Preferred Shares (provided the
Series A Preferred Shares are held as a capital asset). If the Series A
Preferred Shares have been held by an individual for more than one year but
not more than 18 months at the time of disposition, the maximum capital gains
rate will be 28 percent. If the Series A Preferred Shares have been held by an
individual for more than 18 months, the maximum capital gains rate will be 20
percent. Any loss on a sale of Series A Preferred Shares which was held by the
holder for six months or less and with respect to which capital gain dividends
have been received will be treated as a long term capital loss, up to the
amount of the capital gain dividends received with respect to such shares.
Redemption of Series A Preferred Shares. The treatment to be accorded to any
redemption by the Company of Series A Preferred Shares can only be determined
on the basis of particular facts as to each holder of Series A Preferred
Shares at the time of redemption. In general, a holder of Series A Preferred
Shares will recognize capital gain or loss (provided the Series A Preferred
Shares are held as a capital asset) measured by the difference between the
amount realized by the holder upon the redemption and such holder's adjusted
tax basis in the Series A Preferred Shares redeemed if such redemption (i)
results in a "complete termination" of the holder's interest in all classes of
shares of the Company under Section 302(b)(3) of the Code, (ii) is
"substantially disproportionate" with respect to the holder's interest in the
Company under Section 302(b)(2) of the Code (which will not be the case if
only Series A Preferred Shares are redeemed, since they generally do not have
voting rights), or (iii) is "not essentially equivalent to a dividend" with
respect to the holder of Series A Preferred Shares under Section 302(b)(1) of
the Code. In determining whether any of these tests have been met, shares
considered to be owned by the holder by reason of certain constructive
ownership rules set forth in the Code, as well as shares actually owned,
generally must be taken into account. If the aforementioned tests are not met,
the redemption will be treated as a distribution with respect to the Series A
Preferred Shares as described under "Federal Income Tax Considerations--
Taxation of Shareholders" in the accompanying Prospectus. Because the
determination as to whether any of the alternative tests of Section 302(b) of
the Code will be satisfied with respect to any particular holder of Series A
Preferred Shares depends upon the facts and circumstances at the time when the
determination must be made, prospective investors are advised to consult their
own tax advisors to determine such tax treatment.
S-39
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement and the
related Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman,
Sachs & Co., A.G. Edwards & Sons, Inc., Morgan Stanley & Co. Incorporated and
The Robinson-Humphrey Company, LLC are acting as representatives, has
severally agreed to purchase from the Company, the respective number of Series
A Preferred Shares set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
UNDERWRITER PREFERRED SHARES
----------- ----------------
<S> <C>
Goldman, Sachs & Co. ....................................... 1,260,000
A.G. Edwards & Sons, Inc. .................................. 1,250,000
Morgan Stanley & Co. Incorporated........................... 1,250,000
The Robinson-Humphrey Company, LLC ......................... 1,250,000
Bear, Stearns & Co. Inc. ................................... 60,000
BT Alex. Brown Incorporated................................. 60,000
Everen Securities, Inc. .................................... 60,000
Legg Mason Wood Walker Incorporated......................... 60,000
Lehman Brothers Inc. ....................................... 60,000
NationsBanc Montgomery Securities, Inc. .................... 60,000
Oppenheimer & Co., Inc. .................................... 60,000
Prudential Securities Incorporated.......................... 60,000
Robertson, Stephens & Company, LLC.......................... 60,000
Wheat First Butcher Singer.................................. 60,000
Advest, Inc. ............................................... 30,000
Fahnestock & Co. Inc. ...................................... 30,000
Interstate/Johnson Lane Corporation......................... 30,000
Janney Montgomery Scott Inc. ............................... 30,000
McDonald & Company Securities, Inc. ........................ 30,000
McGinn, Smith & Co., Inc. .................................. 30,000
Morgan Keegan & Company, Inc. .............................. 30,000
Piper Jaffray Inc. ......................................... 30,000
Principal Financial Securities, Inc. ....................... 30,000
Rauscher Pierce Refsnes, Inc. .............................. 30,000
Raymond James & Associates, Inc. ........................... 30,000
Tucker Anthony Incorporated................................. 30 000
U.S. Clearing Corp. ........................................ 30,000
---------
Total..................................................... 6,000,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the related
Pricing Agreement, the Underwriters are committed to take and pay for all of
the Series A Preferred Shares offered hereby, if any are taken.
The Underwriters propose to offer the Series A Preferred Shares in part
directly to the public at the public offering price set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers
at such price less a concession of $0.50 per share. The Underwriters may
allow, and such dealers may re-allow, a concession not in excess of $0.40 per
share to certain brokers and dealers. After the Series A Preferred Shares are
released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
S-40
<PAGE>
In connection with the Offering, the Underwriters may purchase and sell
Series A Preferred Shares in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions in connection with the Offering. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or
retarding a decline in the market price of the Series A Preferred Shares; and
syndicate short positions involve the sale by the Underwriters of a greater
number of Series A Preferred Shares than they are required to purchase from
the Company in the Offering. The Underwriters also may impose a penalty bid,
whereby selling concessions allowed to syndicate members or other broker-
dealers in respect of the Series A Preferred Shares sold in the Offering for
their respective accounts may be reclaimed by the syndicate if such Series A
Preferred Shares are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Series A Preferred Shares, which may be higher than the
price that might otherwise prevail in the open market; and these activities,
if commenced, may be discontinued at any time. These transactions may be
effected on the New York Stock Exchange, in the over-the-counter market or
otherwise.
The Company has agreed that during the period beginning from the date of
this Prospectus Supplement and continuing to and including the date 90 days
after the date of the Prospectus Supplement, not to offer, sell, contract to
sell or otherwise dispose of any securities of the Company (other than
pursuant to employee stock option plans existing on, restricted stock awards
granted prior to, or upon the conversion of convertible or exchangeable
securities outstanding as of, the date of the Pricing Agreement) that are
substantially similar to the Series A Preferred Shares without the prior
written consent of the representatives, except for the Series A Preferred
Shares offered in connection with the Offering.
The Company and the Operating Partnership, jointly and severally, have
agreed to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
VALIDITY OF SECURITIES
The validity of the Series A Preferred Shares offered hereby will be passed
upon for the Company by King & Spalding, Atlanta, Georgia, and for the
Underwriters by Sullivan & Cromwell, New York, New York. Sullivan & Cromwell
will rely upon the opinion of King & Spalding as to matters of Georgia law.
EXPERTS
The consolidated and combined financial statements and related financial
statement schedule of the Company included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, as amended by Form 10-K/A-2
filed with the Commission on September 26, 1997, incorporated by reference in
this Prospectus Supplement and the accompanying Prospectus, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and have been incorporated herein in reliance
upon the authority of such firm as experts in giving such reports.
S-41
<PAGE>
PROSPECTUS
[LOGO OF WEEKS CORPORATION APPEARS HERE]
$300,000,000
WEEKS CORPORATION
PREFERRED STOCK, COMMON STOCK AND
COMMON STOCK WARRANTS
$300,000,000
WEEKS REALTY, L.P.
DEBT SECURITIES
----------------
Weeks Corporation (the "Company") may offer from time to time, together or
separately, in one or more series (i) shares of the Company's preferred stock,
par value $.01 per share ("Preferred Stock"), (ii) shares of the Company's
common stock, par value $.01 per share ("Common Stock"), and (iii) warrants to
purchase shares of Common Stock ("Common Stock Warrants") at an aggregate
initial offering price not to exceed U.S. $300,000,000, in amounts, at prices
and on terms to be determined at the time of sale. Weeks Realty, L.P. (the
"Operating Partnership") may offer from time to time, together or separately,
in one or more series, unsecured non-convertible investment grade debt
securities (the "Debt Securities", and, together with the Preferred Stock, the
Common Stock and the Common Stock Warrants, collectively referred to herein as
the "Securities"), at an aggregate initial public offering price not to exceed
$300,000,000, in amounts, at prices and on terms to be determined at the time
of sale.
The specific terms of any Securities offered pursuant to this Prospectus
will be set forth in an accompanying supplement to this Prospectus (a
"Prospectus Supplement"), together with the terms of the offering of such
Securities and the initial price and the net proceeds to the Company from the
sale thereof. The Prospectus Supplement will include, with regard to the
particular Securities, where applicable, the following information: (i) in the
case of Preferred Stock, the designation, number of shares, liquidation
preference per share, initial offering price, dividend rate (or method of
calculation thereof), dates on which dividends shall be payable and dates from
which dividends shall accrue, any redemption or sinking fund provision, any
conversion rights, any voting or other rights, and the terms of the offering
and sale thereof; (ii) in the case of Common Stock, the number of shares and
the terms of the offering and sale thereof; (iii) in the case of Common Stock
Warrants, the designation and aggregate number thereof, the number of shares
of Common Stock purchasable upon exercise, the exercise price, the terms of
the offering and sale thereof, and where applicable, the duration and
detachability thereof; (iv) in the case of Debt Securities, the specific
title, aggregate principal amount, form (which may be registered or bearer, or
certificated or global), authorized denominations, maturity, rate and time of
payment of interest, terms for redemption at the option of the Operating
Partnership or repayment at the option of the holder, terms for sinking fund
payments, covenants and any initial public offering price; and (v) in the case
of all Securities, whether such Securities will be offered separately or as a
unit with other Securities. The Company's Common Stock is subject to certain
restrictions on ownership designed to preserve the Company's status as a real
estate investment trust for federal income tax purposes. See "Description of
Capital Stock."
The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "WKS." Any Common Stock offered pursuant to a
Prospectus Supplement will be listed on such exchange, subject to official
notice of issuance.
The Company and the Operating Partnership may sell the Securities in or
outside the United States through underwriters or dealers, directly to one or
more purchasers, or through agents. If any agents, underwriters or dealers are
involved in the sale of the Securities, the names of such agents, underwriters
or dealers and any applicable commissions or discounts will be set forth in
the applicable Prospectus Supplement. See "Plan of Distribution."
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
----------------
The date of this Prospectus is October 1, 1997
<PAGE>
AVAILABLE INFORMATION
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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), pursuant to the
Exchange Act. Such reports, proxy statements and other information filed by
the Company may be examined without charge at, or copies obtained upon payment
of prescribed fees from, the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and are also
available for inspection and copying at the regional offices of the Commission
located at Seven World Trade Center, New York, New York 10048 and at 500 West
Madison Street, Chicago, Illinois 60661. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of the Commission's Web site is: http://www.sec.gov. The Common Stock
of the Company is listed on the NYSE, and such material can also be inspected
and copied at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The Company and the Operating Partnership have filed with the Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Securities offered hereby
(together with all amendments and exhibits and schedules thereto, the
"Registration Statement"). As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information set forth
in the Registration Statement. For further information concerning the Company
and the Operating Partnership and the Securities offered hereby, reference is
made to the Registration Statement, which may be examined without charge at,
or copies obtained upon payment of prescribed fees from, the Commission and
its regional offices at the locations listed above. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and, in each instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 001-13254) or the
Operating Partnership (File No. 000-22933) with the Commission are
incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the year ended December
31, 1996 (as amended by the Company's Annual Report on Form 10-K/A-2 for
the year ended December 31, 1996 filed with the Commission on September 26,
1997);
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(iii) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997;
(iv) The Company's Current Report on Form 8-K dated May 7, 1997 filed
with the Commission on May 12, 1997;
(v) The Company's Current Report on Form 8-K dated May 2, 1997 filed with
the Commission on May 2, 1997;
(vi) The Company's Current Report on Form 8-K dated March 25, 1997 filed
with the Commission on March 26, 1997;
(vii) The Company's Current Report on Form 8-K dated December 31, 1996
filed with the Commission on January 15, 1997 (as amended by the Company's
Current Report on Form 8-K/A dated December 31, 1996 filed with the
Commission on March 14, 1997);
(viii) The Company's Current Report on Form 8-K dated November 5, 1996
filed with the Commission on November 6, 1996;
(ix) The Company's Current Report on Form 8-K dated November 1, 1996
filed with the Commission on November 6, 1996 (as amended by the Company's
Current Report on Form 8-K/A dated November 1, 1996 filed with the
Commission on November 8, 1996);
2
<PAGE>
(x) The Company's Registration Statement on Form 8-A dated August 12,
1994, registering the Company's Common Stock under Section 12(b) of the
Exchange Act; and
(xi) The Operating Partnership's Registration Statement on Form 10 dated
August 1, 1997 filed with the Commission on August 4, 1997 (as amended by
the Operating Partnership's Pre-Effective Amendment No. 3 to Registration
Statement on Form 10 dated and filed with the Commission on October 1,
1997), registering the Operating Partnership's partnership interests under
Section 12(g) of the Exchange Act.
All documents and reports filed by the Company or the Operating Partnership
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the
date of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference herein and shall be
deemed to be a part hereof from the date of the filing of such reports and
documents (provided, however, that the information referred to in Item
402(a)(8) of Regulation S-K of the Commission shall not be deemed specifically
incorporated by reference herein). Any statement contained 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 subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus or any Prospectus
Supplement is delivered, on written or oral request of such person, a copy of
any or all documents which are incorporated herein by reference (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in the document which this Prospectus incorporates).
Requests should be directed to: Vice President-Investor Relations, Weeks
Corporation, 4497 Park Drive, Norcross, Georgia 30093, telephone number (770)
923-4076.
3
<PAGE>
THE COMPANY AND THE OPERATING PARTNERSHIP
The Company is a self-administered, self-managed, geographically focused
real estate investment trust ("REIT") that was organized in 1994 to continue
and expand the fully integrated real estate business previously conducted by
Weeks Corporation and its affiliates. The Company, together with its
affiliates and predecessors, has developed, owned, managed, constructed and
acquired primarily institutional-quality industrial properties in metropolitan
Atlanta, Georgia and certain other southeastern United States markets since
1965.
The Company's portfolio is comprised of 264 properties totaling
approximately 19.8 million square feet (the "Properties"), including 40
Properties and one Property expansion (totaling approximately 4.3 million
square feet) under development and/or under agreement to acquire. The Company
also owns or controls approximately 1,768 net usable acres of undeveloped land
that the Company believes may ultimately support the development of up to 19.0
million square feet of industrial and suburban office properties. The Company
currently manages, or expects to manage upon completion or acquisition, all of
the Properties. Industrial Properties represent approximately 90% of the
square footage of all of the Properties, and suburban office Properties
represent approximately 10%. As used herein, the term "Properties" includes
the completed properties currently in the Company's portfolio, as well as
properties under development and/or under agreement to acquire.
The Company conducts all of its business through the Operating Partnership
and its subsidiaries. As of June 30, 1997, the Company owned approximately 78%
of the outstanding interests in the Operating Partnership, and the remaining
approximately 22% of the partnership interests in the Operating Partnership
were owned by various individuals and entities (including certain officers and
directors of the Company) (i) that previously owned the properties, land and
other assets contributed to the Operating Partnership and its subsidiaries in
connection with the Company's initial public offering in August 1994 (the
"IPO") and (ii) that have contributed, directly or indirectly, certain assets,
properties and businesses to the capital of the Operating Partnership
(collectively, the "Limited Partners"). Of the approximately 78% interest in
the Operating Partnership held by the Company, the Company currently owns the
sole approximately 1% general partnership interest in the Operating
Partnership through Weeks GP Holdings, Inc., a wholly owned Georgia
corporation ("Weeks GP"), and an approximately 77% limited partnership
interest in the Operating Partnership through Weeks LP Holdings, Inc., a
wholly owned Georgia corporation ("Weeks LP"). Both Weeks GP and Weeks LP are
qualified REIT subsidiaries within the meaning of Section 856(i)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), and their existence
will be disregarded for federal income tax purposes.
Weeks Realty Services, Inc. ("Weeks Realty Services") and Weeks Construction
Services, Inc. ("Weeks Construction Services") were organized as subsidiaries
of the Operating Partnership to provide real estate related services to third
parties. Weeks Realty Services generally provides property management, leasing
and landscaping services, and Weeks Construction Services generally provides
general contracting services, to third parties.
The Operating Partnership owns 1% of the voting common stock and 100% of the
nonvoting common stock of each of Weeks Realty Services and Weeks Construction
Services. The voting and nonvoting common stock of Weeks Realty Services and
Weeks Construction Services held by the Operating Partnership represents
approximately 99% of the economic interests in these corporations. Ninety-nine
percent of the voting common stock of Weeks Realty Services and Weeks
Construction Services is held by executive officers of the Company.
Weeks Development Partnership ("Weeks Development") is a Georgia general
partnership owned 25% by Weeks Realty Services and 75% by Weeks Construction
Services. Weeks Development holds certain development land that is or may be
used for build-to-suit for sale projects, and interests in certain joint
ventures that own interests in certain development land. The Operating
Partnership may purchase sites for development from Weeks Development.
4
<PAGE>
The Operating Partnership owns five of its industrial Properties in Atlanta,
Georgia through its 99% ownership of Weeks Financing Limited Partnership (the
"Financing Partnership"). The Financing Partnership Properties are encumbered
by mortgage indebtedness assumed in connection with the IPO. The remaining 1%
ownership interest in the Financing Partnership is held by Weeks Realty
Services.
In order to maintain its qualification as a REIT for Federal income tax
purposes, the Company is required to distribute at least 95% of its taxable
income each year. Dividends on any Preferred Stock offered pursuant to a
Prospectus Supplement would be included as distributions for this purpose.
The Common Stock is listed on the NYSE under the symbol "WKS." The Company
was incorporated in Georgia in 1983, and the Operating Partnership is a
Georgia limited partnership that was formed in June, 1994. The Company's
principal executive offices are located at 4497 Park Drive, Norcross, Georgia
30093, and its telephone number is (770) 923-4076.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company intends to contribute the proceeds from the sale of the Securities to
the Operating Partnership, of which the Company's wholly owned subsidiary,
Weeks GP, is the sole general partner, in exchange for additional units
representing general and/or limited partnership interests in the Operating
Partnership. The Operating Partnership will use the proceeds for general
corporate purposes including, without limitation, the acquisition and
development of industrial and office properties and the repayment of
outstanding indebtedness.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's and the Operating Partnership's
consolidated ratios of earnings to fixed charges for the six months ended June
30, 1997, and for each of the last five fiscal years. With respect to periods
prior to August 24, 1994, the Company's consolidated ratios of earnings to
fixed charges reflect the operating results from the businesses previously
conducted by Weeks Corporation and its affiliates and predecessors. There was
no preferred stock outstanding for any of the periods shown below.
Accordingly, the ratio of earnings to fixed charges and preferred stock
dividends is identical to the ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
YEAR ENDED
DEC. 31, JAN. 1, 1994 AUG. 24, 1994 SIX MONTHS
------------- TO TO YEAR ENDED YEAR ENDED ENDED
1992 1993 AUG. 24, 1994 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1996 JUNE 30, 1997
------- ----- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges:(1)...... .86x(2) 1.09x 1.06x 2.69x 1.99x 1.90x 1.78x
</TABLE>
- --------
(1) For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income (loss)
before minority interest and extraordinary items. Fixed charges consist of
interest costs, whether expensed or capitalized, and amortization of debt
discounts and issue costs, whether expensed or capitalized.
(2) Earnings were inadequate to cover fixed charges by $1,551,000 in 1992.
This deficiency occurred in a year prior to the Company's IPO in August,
1994.
5
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Under the Company's Restated Articles of Incorporation (the "Articles"), the
authorized capital stock of the Company consists of 100,000,000 shares of
Common Stock, par value $.01 per share, and 20,000,000 shares of Preferred
Stock, par value $.01 per share.
COMMON STOCK
The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any Prospectus Supplement
may relate, including a Prospectus Supplement providing that Common Stock will
be issuable upon conversion of Preferred Stock or upon the exercise of Common
Stock Warrants issued by the Company. This description is in all respects
subject to and qualified in its entirety by reference to the applicable
provisions of the Articles and the Company's Bylaws.
The holders of Common Stock are entitled to one vote per share on all
matters voted on by shareholders, including elections of directors. The
Articles do not provide for cumulative voting in the election of directors.
The shares of Common Stock offered hereby will, when issued, be fully paid
and nonassessable and will not be subject to preemptive or similar rights.
Subject to such preferential rights as may be granted by the Board of
Directors in connection with the future issuance of Preferred Stock, the
holders of Common Stock are entitled to such distributions as may be declared
from time to time by the Board of Directors from assets available for
distribution to such holders.
In the event of a liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the assets remaining
after satisfaction of all liabilities and payment of liquidation preferences
and accrued dividends, if any, on Preferred Stock. The rights of holders of
Common Stock are subject to the rights and preferences established by the
Board of Directors for any class or series of Preferred Stock that may
subsequently be issued by the Company.
The Common Stock is listed on the NYSE under the symbol "WKS." Wachovia
Bank, N.A. is the Company's transfer agent and registrar.
PREFERRED STOCK
Subject to limitations prescribed by Georgia law and the Articles, the Board
of Directors is authorized to designate and issue, from the authorized but
unissued capital stock of the Company, one or more classes or series of
Preferred Stock without shareholder approval. The Board of Directors may affix
and determine the preferences, limitations and relative rights of each class
or series of Preferred Stock so issued. Because the Board of Directors has the
power to establish the preferences, limitations and relative rights of each
class or series of Preferred Stock, it may afford the holders in any class or
series of Preferred Stock preferences and relative rights, voting or
otherwise, senior to the rights of holders of Common Stock. The issuance of
Preferred Stock could have the effect of delaying, deferring or preventing a
change in control of the Company.
Preferred Stock offered hereby will, when issued, be fully paid and
nonassessable and will not be subject to preemptive or similar rights. The
specific terms of a particular class or series of Preferred Stock will be
described in the Prospectus Supplement relating to that class or series. In
connection with any offering of any class or series of Preferred Stock, the
Company, through its wholly owned subsidiaries, will receive preferred
partnership interests of the Operating Partnership which will have
preferences, limitations and relative rights that are substantially identical
to those of such class or series of Preferred Stock. The description of
Preferred Stock set forth below and the description of the terms of a
particular class or series of Preferred Stock set forth in a Prospectus
Supplement do not purport to be complete and are qualified in their entirety
by reference to the articles of amendment relating to such class or series.
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The preferences, limitations and relative rights of each class or series of
Preferred Stock will be fixed by the articles of amendment relating to such
class or series. The applicable Prospectus Supplement will describe the terms
of the Preferred Stock in respect of which this Prospectus is being delivered,
including, where applicable, the following:
(1) The designation of such Preferred Stock;
(2) The number of shares of such Preferred Stock offered, the liquidation
preferences per share and the initial offering price of such Preferred
Stock;
(3) The dividend rate(s), period(s), and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Stock;
(4) Whether dividends on such Preferred Stock are cumulative or not and,
if cumulative, the date from which dividends on such Preferred Stock shall
accumulate;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) The provision for a sinking fund, if any, for such Preferred Stock;
(7) The provision for redemption, if applicable, of such Preferred Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock or other securities of the
Company, including the conversion price (or manner of calculation thereof);
(10) A discussion of the material Federal income tax considerations
applicable to such Preferred Stock;
(11) Any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT;
(12) The relative ranking and preferences of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the Company;
(13) Any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with such class or series of
Preferred Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company;
(14) Any voting rights of such Preferred Stock; and
(15) Any other specific terms, preferences, limitations or relative
rights of such Preferred Stock.
Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or winding up of the Company, rank (i) senior to Common Stock and to all other
equity securities ranking junior to such Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company; (ii) on a parity with all equity securities issued by the Company the
terms of which specifically provide that such equity securities rank on a
parity with the Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Company; and (iii) junior to all
equity securities issued by the Company the terms of which specifically
provide that such equity securities rank senior to the Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding
up of the Company.
The terms and conditions, if any, upon which shares of any class or series
of Preferred Stock are convertible into Common Stock or other securities of
the Company will be set forth in the applicable Prospectus Supplement relating
thereto. Such terms will include the number of shares of Common Stock or other
securities of the Company into which the Preferred Stock is convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of
the Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Preferred Stock.
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RESTRICTIONS ON TRANSFER
The Articles contain certain restrictions on the number of shares of capital
stock that individual shareholders may own. For the Company to qualify as a
REIT under the Code, no more than 50% in value of its outstanding shares of
capital stock may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities) during the
last half of a taxable year (other than the first taxable year) or during a
proportionate part of a shorter taxable year. The capital stock must also be
beneficially owned by 100 or more persons during at least 335 days of a
taxable year (other than the first taxable year) or during a proportionate
part of a shorter taxable year. To enable the Company to continue to qualify
as a REIT, the Articles contain restrictions on the acquisition of capital
stock intended to ensure compliance with these requirements (collectively, the
"Ownership Limit").
The Ownership Limit provides that, subject to certain exceptions specified
in the Articles, no person (excluding the Weeks Family and the Weeks Siblings,
as defined below) may own, actually and constructively under the applicable
attribution provisions of the Code, more than 7.5% of the outstanding shares
of any class of capital stock of the Company. The Ownership Limit also
provides that the sisters and brother of A. Ray Weeks, Jr., Chairman and Chief
Executive Officer of the Company (the "Weeks Family"), as well as all
individuals (other than A. Ray Weeks, Jr.) from whom shares of capital stock
would be attributed to such persons under the applicable attribution
provisions of the Code, may not actually and constructively own, in the
aggregate, more than 10% of the outstanding shares of any class of capital
stock of the Company. The Ownership Limit further provides that A. Ray Weeks,
Jr. and the Weeks Family (collectively, the "Weeks Siblings"), as well as all
individuals from whom shares of capital stock would be attributed to such
persons under the applicable attribution provisions of the Code, may not
actually and constructively own, in the aggregate, more than 19% of the
outstanding shares of any class of capital stock of the Company.
The Board of Directors may (but in no event will be required to) waive the
Ownership Limit with respect to a holder if it determines that such holder's
ownership will not then or in the future jeopardize the Company's status as a
REIT. The Board of Directors has granted waivers with respect to the Ownership
Limit after making such a determination. As a condition to the grant of any
such waiver, the Board of Directors may require opinions of counsel
satisfactory to it and/or an undertaking or other information from the
applicant with respect to preserving the REIT status of the Company.
If any purported transfer of capital stock of the Company or any other event
would otherwise result in any person or entity holding shares of capital stock
of the Company in excess of the applicable Ownership Limit, then any such
purported transfer will be null and void as to that number of shares in excess
of such Ownership Limit and the purported transferee (the "Prohibited
Transferee") shall acquire no right or interest (or, in the case of any event
other than a purported transfer, the person or entity holding record title to
any such shares in excess of the Ownership Limit (the "Prohibited Owner")
shall cease to own any right or interest) in such excess shares. In addition,
if any purported transfer of capital stock or any other event would result in
the Company's failing to qualify as a REIT under the Code (other than as a
result of a violation of the requirement that a REIT have at least 100
shareholders), then any such purported transfer will be null and void as to
that number of shares in excess of the number that could have been transferred
without such result, and the Prohibited Transferee shall acquire no right or
interest (or, in the case of any event other than a transfer, the Prohibited
Owner shall cease to own any right or interest) in such excess shares.
Any such excess shares described above will be transferred automatically, by
operation of law, to a trust, the beneficiary of which will be a qualified
charitable organization selected by the Company (the "Beneficiary"). The
trustee of the trust will be empowered to sell such excess shares to a
qualified person or entity and distribute to a Prohibited Transferee an amount
equal to the lesser of the price paid by the Prohibited Transferee for such
excess shares or the sales proceeds received by the trust for such excess
shares. In the case of any excess shares resulting from any event other than a
transfer, or from a transfer for no consideration, the trustee will be
empowered to sell such excess
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shares to a qualified person or entity and distribute to the Prohibited Owner
an amount equal to the lesser of the fair market value of such excess shares
on the date of such event or the sales proceeds received by the trust for such
excess shares. Prior to a sale of any such excess shares by the trust, the
trustee will be entitled to receive, in trust for the benefit of the
Beneficiary, all dividends and other distributions paid by the Company with
respect to such excess shares, and also will be entitled to exercise all
voting rights with respect to such excess shares. Any sales proceeds received
by the trust in excess of the amount that must be distributed to a Prohibited
Transferee or Prohibited Owner, as the case may be, will be distributed to the
Beneficiary.
Any purported transfer of capital stock of the Company that would otherwise
cause the Company to be beneficially owned by fewer than 100 persons will be
null and void in its entirety, and the intended transferee will acquire no
rights in such stock.
All certificates representing shares of capital stock will bear a legend
referring to the restrictions described above.
Every owner of more than 1% (or such lower percentage as may be required by
the Code or regulations promulgated thereunder) of the outstanding shares of
capital stock of the Company must file a written notice with the Company
containing the information specified in the Articles within 30 days after
December 31 and June 30 of each year. In addition, each shareholder shall upon
demand be required to disclose to the Company in writing such information as
the Company may request in order to determine the effect, if any, of such
shareholder's actual and constructive ownership on the Company's status as a
REIT and to ensure compliance with the Ownership Limit.
The Ownership Limit may have the effect of precluding an acquisition of
control of the Company without the approval of the Board of Directors.
LIMITATION OF DIRECTORS' LIABILITY
The Articles eliminate, subject to certain exceptions, the personal
liability of a director to the Company or its shareholders for monetary
damages for breaches of such director's duty of care or other duties as a
director. The Articles do not provide for the elimination of, or any
limitation on, the personal liability of a director for (i) any appropriation,
in violation of the director's duties, of any business opportunity of the
Company, (ii) acts or omissions which involve intentional misconduct or a
knowing violation of law, (iii) approving or assenting to unlawful corporate
distributions or (iv) any transaction from which the director received an
improper personal benefit. The Articles further provide that if the Georgia
Business Corporation Code (the "GBCC") is amended to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director of the Company shall be eliminated or limited
to the fullest extent permitted by the GBCC, as amended. These provisions of
the Articles will limit the remedies available to a shareholder in the event
of breaches of any director's duties to such shareholder or the Company.
Under the Company's Bylaws, the Company is required to indemnify to the
fullest extent permitted by the GBCC any individual made a party to a
proceeding (as defined in the GBCC) because he is or was a director or officer
of the Company, against liability (as defined in the GBCC) incurred in such
proceeding, if he acted in a manner he believed in good faith to be in or not
opposed to the best interests of the Company and, in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful.
The Company is required to pay for or reimburse the reasonable expenses
incurred by a director or officer who is party to a proceeding in advance of
final disposition thereof if (i) such director or officer furnishes the
Company a written affirmation of his good faith belief that he has met the
standard of conduct set forth above, and (ii) such director or officer
furnishes the Company a written undertaking, executed personally or in his
behalf, to repay any advances if it is ultimately determined that he is not
entitled to indemnification. The Company may not indemnify a director (i) in
connection with a proceeding by or in the right of the Company, except for
reasonable
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expenses incurred in connection with the proceeding if it is determined that
the director has met the standard of conduct set forth above, or (ii) in
connection with any other proceeding in which he was adjudged liable on the
basis that personal benefit was improperly received by him, whether or not
involving action in his official capacity.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of the
Company's directors. The indemnification agreements require, among other
things, that the Company indemnify its directors to the fullest extent
permitted by applicable law as enacted or amended, and advance to directors
all reasonable expenses incurred in a proceeding in which the director was
made a party because he is or was a director of the Company, subject to
reimbursement if it is subsequently determined that indemnification is not
permitted. The Company also must indemnify and advance all reasonable expenses
incurred by directors seeking to enforce their rights under the
indemnification agreements, and cover directors under the Company's directors'
and officers' liability insurance. Although the indemnification agreements
offer substantially the same scope of coverage afforded by provisions in the
Company's Bylaws, they provide greater assurance to directors that
indemnification will be available, because, as contracts, they cannot be
modified unilaterally in the future by the Board of Directors or by the
shareholders to eliminate the rights provided thereunder.
GEORGIA ANTI-TAKEOVER STATUTES
The GBCC restricts certain business combinations with "interested
shareholders" (as defined below) (the "Business Combination Statute"), and
contains fair price requirements applicable to certain mergers with certain
interested shareholders (the "Fair Price Statute"). In accordance with the
provisions of these statutes, the Company must elect in its Articles or Bylaws
to be covered by the restrictions imposed by these statutes. The Company has
not elected to be covered by such restrictions; however, the Company, by
action of its Board of Directors without shareholder approval, may in the
future amend its Bylaws to make such an election. If such an election is made,
the applicable Bylaw provision may only be repealed by the affirmative vote of
at least two-thirds of the continuing directors and a majority of the votes
entitled to be cast by the holders of voting shares of the Company.
Furthermore, shareholders may amend or repeal the Company's Bylaws or adopt
new Bylaws (even though the Bylaws may also be amended or repealed by the
Board of Directors) and may also expressly provide that any Bylaw so amended
or repealed by them may not be amended or repealed by the Board of Directors.
The Business Combination Statute regulates business combinations such as
mergers, consolidations, share exchanges and asset purchases where the
acquired business has at least 100 shareholders residing in Georgia and has
its principal office in Georgia, as the Company does, and where the acquiror
became an interested shareholder of the corporation, unless either (i) the
transaction resulting in such acquiror becoming an interested shareholder or
the business combination received the approval of the corporation's board of
directors prior to the date on which the acquiror became an interested
shareholder, or (ii) the acquiror became the owner of at least 90% of the
outstanding voting shares of the corporation (excluding shares held by
directors, officers and affiliates of the corporation and shares held by
certain other persons) in the same transaction in which the acquiror became an
interested shareholder. For purposes of the Business Combination Statute and
the Fair Price Statute, an "interested shareholder" generally is any person
who directly or indirectly, alone or in concert with others, beneficially owns
or controls 10% or more of the voting power of the outstanding voting shares
of the corporation. The Business Combination Statute prohibits business
combinations with an unapproved interested shareholder for a period of five
years after the date on which such person became an interested shareholder.
The Business Combination Statute is broad in its scope and is designed to
inhibit unfriendly acquisitions.
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The Fair Price Statute prohibits certain business combinations between a
Georgia business corporation and an interested shareholder. The Fair Price
Statute would permit the business combination to be effected if (i) certain
"fair price" criteria are satisfied, (ii) the business combination is
unanimously approved by the continuing directors, (iii) the business
combination is recommended by at least two-thirds of the continuing directors
and approved by a majority of the votes entitled to be cast by holders of
voting shares, other than voting shares beneficially owned by the interested
shareholder, or (iv) the interested shareholder has been an interested
shareholder for at least three years and has not increased his ownership
position in such three-year period by more than one percent in any twelve
month period. The Fair Price Statute is designed to inhibit unfriendly
acquisitions that do not satisfy the specified "fair price" requirements.
Pursuant to the GBCC, the Company cannot, subject to certain exceptions,
merge with or sell all or substantially all of the assets of the Company,
except pursuant to a resolution approved by shareholders holding a majority of
the shares entitled to vote on the resolution. In addition, the agreement of
limited partnership of the Operating Partnership (the "Partnership Agreement")
requires that any merger of the Operating Partnership into another entity if
the Operating Partnership is not the surviving entity or any sale of all or
substantially all of the assets of the Operating Partnership to the Company or
an affiliate of the Company be approved by a majority in interest of the
limited partners (excluding any limited partner interests in the Operating
Partnership owned by the Company and its subsidiaries).
CERTAIN OTHER PROVISIONS OF THE COMPANY'S ARTICLES AND BYLAWS
Certain provisions of the Company's Articles and Bylaws might discourage
certain types of transactions that involve an actual or threatened change in
control of the Company. The Ownership Limit may delay or impede a transaction
or a change in control of the Company that might involve a premium price for
the Company's capital stock or otherwise be in the best interest of the
shareholders. See "--Restrictions on Transfer." Pursuant to the Articles, the
Company's Board of Directors is divided into three classes of directors, each
class serving staggered three-year terms. The staggered terms of directors may
reduce the possibility of a tender offer or an attempt to change control of
the Company. Under the GBCC, unless otherwise set forth in the articles of
incorporation or in a bylaw adopted by the shareholders, directors serving on
a classified board may only be removed by the shareholders for cause. In
addition, the Bylaws of the Company provide that, subject to the right of the
holders of any Preferred Stock then outstanding to elect additional directors
under specified circumstances, directors may be removed only for cause upon
the affirmative vote of holders of a majority of the shares present and
voting. These provisions may render more difficult a change in control of the
Company or removal of incumbent management. The issuance of Preferred Stock by
the Board of Directors also may have the effect of delaying, deferring or
preventing a change in control of the Company. See "--Preferred Stock."
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants, which may be issued
independently or together with any other Securities and may be attached to or
separate from any such Securities. Each series of Common Stock Warrants will
be issued under a separate warrant agreement (a "Warrant Agreement") to be
entered into between the Company and a warrant agent specified in the
applicable Prospectus Supplement (the "Warrant Agent"). The Warrant Agent will
act solely as an agent of the Company in connection with the Common Stock
Warrants of such series and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Common Stock
Warrants. The following summary of certain provisions of the Common Stock
Warrants does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the applicable
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Prospectus Supplement and the provisions of the Warrant Agreement that will be
filed with the Commission in connection with the offering of such Common Stock
Warrants.
The applicable Prospectus Supplement will describe the terms of the Common
Stock Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following:
(1) The designation of such Common Stock Warrants;
(2) The aggregate number of such Common Stock Warrants;
(3) The price or prices at which such Common Stock Warrants will be
issued;
(4) The number of shares of Common Stock purchasable upon exercise of a
Common Stock Warrant and the price at which such shares may be purchased
upon exercise (which price may be payable in cash, securities or other
property);
(5) If applicable, the designation and terms of the Securities with which
such Common Stock Warrants are issued and the number of such Common Stock
Warrants issued with each such Security;
(6) The date, if any, from and after which such Common Stock Warrants and
any Securities issued therewith will be separately transferable;
(7) The date on which the right to exercise such Common Stock Warrants
shall commence and the date on which such right shall expire;
(8) The minimum or maximum amount of such Common Stock Warrants which may
be exercised at any one time;
(9) The antidilution provisions of such Common Stock Warrants, if any;
(10) A discussion of the material Federal income tax considerations
applicable to such Common Stock Warrants; and
(11) Any other specific terms of such Common Stock Warrants, including
terms, procedures and limitations relating to the exercise of such Common
Stock Warrants.
Reference is made to the section captioned "Description of Capital Stock"
for a general description of the Common Stock to be acquired upon the exercise
of the Common Stock Warrants, including a description of certain restrictions
on the ownership of Common Stock.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities being offered and the extent to which
such general provisions may apply will be described in a Prospectus Supplement
relating to such Debt Securities.
The Debt Securities will be issued under an indenture, dated as of a date
prior to the issuance of the Debt Securities, as amended or supplemented from
time to time (the "Indenture"), between the Operating Partnership and a
trustee (the "Trustee") chosen by the Operating Partnership and qualified to
act as Trustee under the Trust Indenture Act of 1939, as amended (the "TIA").
The form of Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and is available for inspection
as described above under "Available Information." The Indenture is subject to,
and governed by, the TIA. The statements made hereunder relating to the
Indenture and the Debt Securities to be issued thereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all provisions of the
Indenture and such Debt Securities. Capitalized terms used but not defined
herein
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shall have the respective meanings set forth in the Indenture. All Section
references appearing herein are to sections of the Indenture.
Wherever particular Sections or defined terms of the Indenture are referred
to herein or in a Prospectus Supplement, such Sections or defined terms are
incorporated by reference herein or therein, as the case may be.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Operating
Partnership and will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Operating Partnership. The Debt Securities
are non-convertible and will be effectively subordinated to any secured
indebtedness of the Operating Partnership and its Subsidiaries. The Company
intends that all future borrowings will be made through the Operating
Partnership and its Subsidiaries. At least one nationally-recognized
statistical rating organization will have assigned an investment grade rating
to the Debt Securities at the time of sale. At June 30, 1997, the Operating
Partnership and its Subsidiaries had $169.1 million of secured indebtedness
and $105.7 million of unsecured indebtedness outstanding. The Debt Securities
may be issued without limit as to aggregate principal amount, in one or more
series, in each case as established from time to time in or pursuant to
authority granted by a resolution of the Board of Directors of Weeks GP as
sole general partner of the Operating Partnership or as established in the
Indenture or in one or more indentures supplemental to the Indenture. All Debt
Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the
holders of the Debt Securities of such series, for issuances of additional
Debt Securities of such series (Section 301).
The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect
to such series (Section 610). In the event that two or more persons are acting
as Trustee with respect to different series of Debt Securities, each such
trustee shall be a Trustee of a trust under the applicable Indenture separate
and apart from the trust administered by any other Trustee (Section 609) and,
except as otherwise indicated herein, any action described herein to be taken
by a Trustee may be taken by each such Trustee with respect to, and only with
respect to, the one or more series of Debt Securities for which it is Trustee
under the applicable Indenture.
The applicable Prospectus Supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities:
(1) the title of such Debt Securities;
(2) any limit on the aggregate principal amount of such Debt Securities
or the series of which they are a part;
(3) the Person to whom any interest on a Debt Security shall be payable,
if other than the Person in whose name the Debt Security is registered;
(4) the date or dates on which the principal of any of such Debt
Securities will be payable;
(5) the rate or rates at which any of such Debt Securities will bear
interest, if any, the date or dates from which any such interest will
accrue, the Interest Payment Dates on which any such interest will be
payable and the Regular Record Date for any such interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium and
interest on any of such Debt Securities will be payable;
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(7) the period or periods within which, the price or prices at which and
the terms and conditions on which any of such Debt Securities may be
redeemed, in whole or in part, at the option of the Operating Partnership;
(8) the obligation, if any, of the Operating Partnership to redeem or
purchase any of such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of the Holder thereof, and the period
or periods within which, the price or prices at which, and the terms and
conditions on which, any of such Debt Securities will be redeemed or
purchased, in whole or in part, pursuant to any such obligation;
(9) the denominations in which any of such Debt Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof;
(10) if the amount of principal of or any premium or interest on any of
such Debt Securities may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;
(11) if other than the entire principal amount thereof, the portion of
the principal amount of any of such Debt Securities which will be payable
upon declaration of acceleration of the Maturity thereof;
(12) if the principal amount payable at the Stated Maturity of any of
such Debt Securities will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the
principal amount thereof which will be due and payable upon any Maturity
other than the Stated Maturity or which will be deemed to be Outstanding as
of any such date (or, in any such case, the manner in which such deemed
principal amount is to be determined);
(13) if applicable, that such Debt Securities, in whole or any specified
part, are defeasible pursuant to the provisions of the Indenture described
under "--Defeasance and Covenant Defeasance--Defeasance and Discharge" or
"--Defeasance and Covenant Defeasance--Defeasance of Certain Covenants," or
under both such captions;
(14) whether any of such Debt Securities will be issuable in whole or in
part in the form of one or more Global Debt Securities and, if so, the
respective Depositaries for such Global Debt Securities, the form of any
legend or legends to be borne by any such Global Debt Security in addition
to or in lieu of the legend referred to under "--Global Debt Securities"
and, if different from those described under such caption, any
circumstances under which any such Global Debt Security may be exchanged in
whole or in part for Debt Securities registered, and any transfer of such
Global Debt Security in whole or in part may be registered, in the names of
Persons other than the Depositary for such Global Debt Security or its
nominee;
(15) any addition to or change in the Events of Default applicable to any
of such Debt Securities and any change in the right of the Trustee or the
Holders thereof to declare the principal amount of any of such Debt
Securities due and payable;
(16) any addition to or change in the covenants in the Indenture
described under "--Certain Covenants" applicable to any of such Debt
Securities; and
(17) any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture (Section 301 ).
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt
Securities sold at an original issue discount may be described in the
applicable Prospectus Supplement.
Except as described under "--Merger, Consolidation or Sale" or "--Certain
Covenants" or as may be set forth in any Prospectus Supplement, the Indenture
does not contain any provisions that would
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limit the ability of the Operating Partnership to incur indebtedness or that
would afford Holders of the Debt Securities protection in the event of (i) a
highly leveraged or similar transaction involving the Operating Partnership,
the management of the Operating Partnership or any affiliate of any such
party, (ii) a change of control or (iii) a reorganization, restructuring,
merger or similar transaction involving the Operating Partnership that may
adversely affect the Holders of the Debt Securities. In addition, subject to
the limitations set forth under "--Merger, Consolidation or Sale," the
Operating Partnership may, in the future, enter into certain transactions,
such as the sale of all or substantially all of its assets or the merger or
consolidation of the Operating Partnership, that would increase the amount of
the Operating Partnership's indebtedness or substantially reduce or eliminate
the Operating Partnership's assets, which may have an adverse effect on the
Operating Partnership's ability to service its indebtedness, including the
Debt Securities. However, restrictions on ownership and transfers of the
Company's Common Stock designed to preserve its status as a REIT may act to
prevent or hinder a change of control. Reference is made to the applicable
Prospectus Supplement for information with respect to any deletions from,
modifications of or additions to the events of default or covenants that are
described below, including any addition of a covenant or other provision
providing event risk or similar protection.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof (Section 302).
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Debt Securities, Debt Securities of each
series will be exchangeable for other Debt Securities of the same series of
any authorized denomination and of a like tenor and aggregate principal amount
(Section 305).
Subject to the terms of the Indenture and the limitations applicable to
Global Debt Securities, Debt Securities may be presented for exchange as
provided above or for registration of transfer (duly endorsed or with the form
of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Operating
Partnership for such purpose. No service charge will be made for any
registration of transfer or exchange of Debt Securities, but the Operating
Partnership may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Such transfer or exchange
will be effected upon the Security Registrar or such transfer agent, as the
case may be, being satisfied with the documents of title and identity of the
person making the request. The Operating Partnership has appointed the Trustee
as Security Registrar. Any transfer agent (in addition to the Security
Registrar) initially designated by the Operating Partnership for any Debt
Securities will be named in the applicable Prospectus Supplement (Section
305).
The Operating Partnership may at any time designate additional transfer
agents or rescind the designation of any transfer agent or approve a change in
the office through which any transfer agent acts, except that the Operating
Partnership will be required to maintain a transfer agent in each Place of
Payment for the Debt Securities of each series (Section 1002).
If the Debt Securities of any series (or of any series and specified terms)
are to be redeemed in part, the Operating Partnership will not be required to
(i) issue, register the transfer of or exchange any Debt Security of that
series (or of that series and specified terms, as the case may be) during a
period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of any such Debt Security that may be selected for
redemption and ending at the close of business on the day of such mailing,
(ii) register the transfer of or exchange any Debt Security so selected for
redemption, in whole or in part, except the unredeemed portion of any such
Debt Security
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being redeemed in part or (iii) issue, register the transfer of or exchange
any Debt Security that has been surrendered for payment at the option of the
Holder, except the portion, if any, of such Debt Security not to be so repaid
(Section 305).
GLOBAL DEBT SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Debt Securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby. Each Global Debt Security will be registered in the name of a
Depositary or a nominee thereof identified in the applicable Prospectus
Supplement, will be deposited with such Depositary or nominee or a custodian
therefor and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any such other matters
as may be provided for pursuant to the Indenture (Section 305).
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Debt Security may be exchanged in whole or in part
for Debt Securities registered, and no transfer of a Global Debt Security in
whole or in part may be registered, in the name of any Person other than the
Depositary for such Global Debt Security or any nominee of such Depositary
unless (i) the Depositary has notified the Operating Partnership that it is
unwilling or unable to continue as Depositary for such Global Debt Security or
has ceased to be qualified to act as such as required by the Indenture, (ii)
there shall have occurred and be continuing an Event of Default with respect
to the Debt Securities represented by such Global Debt Security or (iii) there
shall exist such circumstances, if any, in addition to or in lieu of those
described above as may be described in the applicable Prospectus Supplement
(Section 305). All securities issued in exchange for a Global Debt Security or
any portion thereof will be registered in such names as the Depositary may
direct (Sections 204 and 305).
As long as the Depositary, or its nominee, is the registered Holder of a
Global Debt Security, the Depositary or such nominee, as the case may be, will
be considered the sole owner and Holder of such Global Debt Security and the
Debt Securities represented thereby for all purposes under the Debt Securities
and the Indenture (Section 308). Except in the limited circumstances referred
to above, owners of beneficial interests in a Global Debt Security will not be
entitled to have such Global Debt Security or any Debt Securities represented
thereby registered in their names, will not receive or be entitled to receive
physical delivery of certificated Debt Securities in exchange therefor and
will not be considered to be the owners or Holders of such Global Debt
Security or any Debt Securities represented thereby for any purpose under the
Debt Securities or the Indenture. All payments of principal of and any premium
and Interest on a Global Debt Security will be made to the Depositary or its
nominee, as the case may be, as the Holder thereof. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Debt Security.
Ownership of beneficial interests in a Global Debt Security will be limited
to institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Debt Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of Debt Securities represented by the Global
Debt Security to the accounts of its participants. Ownership of beneficial
interests in a Global Debt Security will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depositary (with respect to participants' interests) or any such
participant (with respect to interests of persons held by such participants on
their behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Debt Security may be subject to various
policies and procedures adopted by the Depositary from time to time. None of
the Operating Partnership, the Trustee or any agent of the Operating
Partnership or the Trustee will have any responsibility or liability for any
aspect
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of the Depositary's or any participant's records relating to, or for payments
made on account of, beneficial interests in a Global Debt Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Debt Security, in all cases, will trade in the Depositary's
settlement system, in which secondary market trading activity in those
beneficial interests will be required by the Depositary to settle in
immediately available funds. The Operating Partnership cannot predict the
effect, if any, that settlement in immediately available funds would have on
trading activity in such beneficial interests. Also, settlement for purchases
of beneficial interests in a Global Debt Security upon the original issuance
thereof will be required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to
the Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest (Section 307).
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Operating Partnership may designate for such purpose from time
to time, except that at the option of the Operating Partnership payment of any
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the Security Register. Unless otherwise
indicated in the applicable Prospectus Supplement, the corporate trust office
of the Trustee will be designated as the Operating Partnership's sole Paying
Agent for payments with respect to Debt Securities of each series. Any other
Paying Agents initially designated by the Operating Partnership for the Debt
Securities of a particular series will be named in the applicable Prospectus
Supplement. The Operating Partnership may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent or approve a
change in the office through which any Paying Agent acts, except that the
Operating Partnership will be required to maintain a Paying Agent in each
Place of Payment for the Debt Securities of a particular series (Section
1002).
All moneys paid by the Operating Partnership to a Paying Agent for the
payment of the principal of, or any premium or interest on, any Debt Security
that remain unclaimed at the end of two years after such principal, premium or
interest has become due and payable will be repaid to the Operating
Partnership, and the Holder of such Debt Security thereafter may look only to
the Operating Partnership for payment thereof (Section 103).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely described in the
applicable Prospectus Supplement (Section 307).
MERGER, CONSOLIDATION OR SALE
The Operating Partnership may not consolidate with or merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to,
any Person (a "successor Person"), and may not
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permit any Person to merge into, or convey, transfer or lease its properties
and assets substantially as an entirety to, the Operating Partnership, unless
(i) the successor Person (if any) is a corporation, partnership or trust
organized and validly existing under the laws of any domestic jurisdiction and
assumes, by a supplemental indenture, the Operating Partnership's obligations
on the Debt Securities and under the Indenture, (ii) immediately after giving
effect to the transaction, and treating any indebtedness which becomes an
obligation of the Operating Partnership or any Subsidiary as a result of the
transaction as having been incurred by it at the time of the transaction, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be continuing and
(iii) certain other conditions are met (Section 801).
CERTAIN COVENANTS
Existence. Except as permitted under "--Merger, Consolidation or Sale," the
Operating Partnership will be required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises; provided, however, that the Operating Partnership shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1005).
Maintenance of Properties. The Operating Partnership will be required to
cause all properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and to cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Operating Partnership may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
the Operating Partnership shall not be prevented from discontinuing the
operation or maintenance of any of its properties if such discontinuance is,
in the judgment of the Operating Partnership, desirable in the conduct of its
business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders (Section 1006).
Insurance. The Operating Partnership will be required to, and to cause each
of its Subsidiaries to, keep all of its insurable properties insured against
loss or damage with insurers of recognized responsibility in commercially
reasonable amounts and types (Section 1008).
Payment of Taxes and Other Claims. The Operating Partnership will be
required to pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges levied or imposed upon the Operating Partnership or any Subsidiary or
upon the income, profits or property of the Operating Partnership or any
Subsidiary, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the
Operating Partnership or any Subsidiary; provided, however, that the Operating
Partnership shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings (Section 1007).
Provision of Financial Information. Whether or not the Operating Partnership
is subject to Section 13 or Section 15(d) of the Exchange Act and for so long
as any Debt Securities are outstanding, the Operating Partnership will, to the
extent permitted under the Exchange Act, file with the Commission the annual
reports, quarterly reports and other documents which the Operating Partnership
would have been required to file with the Commission pursuant to such Section
13 or Section 15(d) (the "Financial Statements") if the Operating Partnership
were so subject, such documents to be filed with the Commission on or prior to
the respective dates (the "Required Filing Dates") by which the Operating
Partnership would have been required so to file such documents if the
Operating Partnership were so subject. The Operating Partnership will also in
any event (x) within 15 days of each Required Filing
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Date (i) transmit by mail to all Holders of Debt Securities whose names appear
in the Security Register for such Debt Securities, as their names and
addresses appear in the Security Register for such Debt Securities, without
cost to such Holders, copies of the annual reports and quarterly reports which
the Operating Partnership would have been required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act if the Operating
Partnership were subject to such Sections and (ii) file with any Trustee
copies of the annual reports, quarterly reports and other documents which the
Operating Partnership would have been required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act if the Operating
Partnership were subject to such Sections and (y) if filing such documents by
the Operating Partnership with the Commission is not permitted under the
Exchange Act, promptly upon written request and payment of the reasonable cost
of duplication and delivery, supply copies of such documents to any
prospective Holder (Section 1010).
Limitations on Incurrence of Indebtedness. The Operating Partnership will
not, and will not permit any Subsidiary to, incur any Indebtedness (as defined
below), other than intercompany debt representing Indebtedness to which the
only parties are the Company, the Operating Partnership and any of their
Subsidiaries (but only so long as such Indebtedness is held solely by any of
the Company, the Operating Partnership and any Subsidiary) that is subordinate
in right of payment to Outstanding Debt Securities, if, immediately after
giving effect to the incurrence of such additional Indebtedness, the aggregate
principal amount of all outstanding Indebtedness of the Operating Partnership
and its Subsidiaries on a consolidated basis is greater than 60% of the sum of
(i) Total Assets (as defined below) as of the end of the calendar quarter
covered in the Operating Partnership's Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, as the case may be, most recently filed with the Trustee
(or such reports of the Company if filed by the Operating Partnership with the
Trustee in lieu of filing its own reports) prior to the incurrence of such
additional Indebtedness and (ii) the increase in Total Assets from the end of
such quarter including, without limitation, any increase in Total Assets
resulting from the incurrence of such additional Indebtedness (such increase,
together with the Total Assets, is referred to as "Adjusted Total Assets")
(Section 1009).
In addition to the foregoing limitation on the incurrence of Indebtedness,
the Operating Partnership will not, and will not permit any Subsidiary to,
incur any Indebtedness if the ratio of Consolidated Income Available for Debt
Service to the Annual Service Charge (in each case as defined below) for the
four consecutive fiscal quarters most recently ended prior to the date on
which such additional Indebtedness is to be incurred shall have been less than
1.5 to 1, on a pro forma basis, after giving effect to the incurrence of such
Indebtedness and to the application of the proceeds therefrom and calculated
on the assumption that (i) such Indebtedness and any other Indebtedness
incurred by the Operating Partnership or its Subsidiaries since the first day
of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of
such period, (ii) the repayment or retirement of any other Indebtedness by the
Operating Partnership or its Subsidiaries since the first day of such four-
quarter period had occurred at the beginning of such period (except that, in
making such computation, the amount of Indebtedness under any revolving credit
facility shall be computed based upon the average daily balance of such
Indebtedness during such period), (iii) the income earned on any increase in
Adjusted Total Assets since the end of such four-quarter period had been
earned on an annualized basis, during such period, and (iv) in the case of any
acquisition or disposition by the Operating Partnership or any Subsidiary of
any asset or group of assets since the first day of such four-quarter period,
including, without limitation, by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Indebtedness had occurred as of the first day of such period with appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation (Section 1009). Further, the Operating Partnership
will not, and will not permit any Subsidiary to, incur any Secured
Indebtedness of the Operating Partnership or any Subsidiary if, immediately
after giving effect to the incurrence of such additional Secured Indebtedness,
the aggregate principal amount of all outstanding Secured Indebtedness of the
Operating Partnership and its Subsidiaries on a
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consolidated basis would be greater than 40% of Adjusted Total Assets. As used
herein, "Secured Indebtedness" means Indebtedness secured by any mortgage,
lien, charge, encumbrance, trust, deed, deed of trust, deed to secure debt,
security agreement, pledge, conditional sale or other title retention
agreement, capitalized lease, or other like agreement granting or conveying
security title to or a security interest in real property or other tangible
assets.
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Indebtedness, Indebtedness shall be deemed to be "incurred" by
the Operating Partnership or a Subsidiary whenever the Operating Partnership
and its Subsidiary shall create, assume, guarantee or otherwise become liable
in respect thereof (Section 1009).
Maintenance of Total Unencumbered Assets. For so long as there are
Outstanding any Debt Securities (other than Debt Securities that are not, by
their terms, entitled to the benefit of this covenant), the Operating
Partnership is required to maintain Total Unencumbered Assets (as defined
below) of not less than 150% of the aggregate outstanding principal amount of
all outstanding Unsecured Indebtedness (as defined below) (Section 1009).
As used herein:
"Annual Service Charge" as of any date means the amount which is expensed in
any 12-month period for interest on Indebtedness of the Operating Partnership
and its Subsidiaries.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (i) plus amounts which have been deducted for (a)
interest on Indebtedness of the Operating Partnership and its Subsidiaries,
(b) provision for taxes of the Operating Partnership and its Subsidiaries
based on income, (c) amortization of Indebtedness discount, (d) losses and
provisions for losses on properties, (e) depreciation and amortization, (f)
the effect of any noncash charge resulting from a change in accounting
principles in determining Consolidated Net Income for such period, (g)
amortization of deferred charges and (h) the effect of net losses of joint
ventures in which the Operating Partnership or any Subsidiary owns an interest
to the extent not requiring a use of cash, and (ii) less amounts which have
been included for (a) gains from sales or dispositions of properties and (b)
the effect of net income of joint ventures in which the Operating Partnership
or any Subsidiary owns an interest to the extent not providing a source of
cash.
"Consolidated Net Income" for any period means the amount of consolidated
net income (or loss) of the Partnership and its Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Indebtedness" of the Operating Partnership or any Subsidiary means any
indebtedness of the Operating Partnership or such Subsidiary, as applicable,
whether or not contingent, in respect of (i) borrowed money evidenced by
bonds, notes, debentures or similar instruments, (ii) indebtedness secured by
a mortgage, pledge, lien, charge, encumbrance of any security interest
existing on property owned by the Operating Partnership or such Subsidiary,
(iii) the reimbursement obligations, contingent or otherwise, in connection
with any letters of credit actually issued or amounts representing the balance
that constitutes an accrued expense or trade payable or (iv) any lease of
property by the Operating Partnership or such Subsidiary as lessee which is
reflected in the Operating Partnership's consolidated balance sheet as a
capitalized lease in accordance with generally accepted accounting principles,
in the case of items of indebtedness under (i) through (iii) above to the
extent that any such items (other than letters of credit) would appear as a
liability on the Operating Partnership's consolidated balance sheet in
accordance with generally accepted accounting principles, and also includes,
to the extent not otherwise included, any obligation by the Operating
Partnership or such Subsidiary to be liable for, or to pay, as obligor,
guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), indebtedness of another person (other than the Operating
Partnership or any Subsidiary).
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"Subsidiary" means Weeks Realty Services, Weeks Construction Services and
any other corporation, partnership or limited liability company more than 50%
of the outstanding voting stock, partnership interests or membership
interests, as the case may be, of which is owned or controlled, directly or
indirectly, by the Operating Partnership or by one or more other Subsidiaries,
or by the Operating Partnership and one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Total Assets" as of any date means the sum of (i) Undepreciated Real Estate
Assets and (ii) all other assets of the Operating Partnership and its
Subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles (but excluding intangibles and straight-line
rents receivable).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated Real
Estate Assets which have not been pledged, mortgaged or otherwise encumbered
by the owner thereof to secure Indebtedness, excluding infrastructure
assessment bonds and (ii) all other assets of the Operating Partnership and
its Subsidiaries determined in accordance with generally accepted accounting
principles (but excluding intangibles and straight-line rents receivable)
which have not been pledged, mortgaged or otherwise encumbered by the owner
thereof to secure Indebtedness.
"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Operating
Partnership and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with generally
accepted accounting principles.
"Unsecured Indebtedness" means Indebtedness which is (i) not subordinated to
any other Indebtedness and (ii) not secured by any mortgage, lien, charge,
pledge, encumbrance or security interest of any kind upon any of the
properties of the Operating Partnership or any Subsidiary.
Additional Covenants. Any additional or different covenants of the Operating
Partnership with respect to any series of Debt Securities will be set forth in
the applicable Prospectus Supplement.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (i) failure to pay
any interest on any Debt Securities of that series when due, and continuance
of such failure for a period of 30 days; (ii) failure to pay principal of or
any premium on any Debt Security of that series when due; (iii) failure to
deposit any sinking fund payment, when due, in respect of any Debt Security of
that series; (iv) failure to perform any other covenant of the Operating
Partnership in the Indenture (other than a covenant included in the Indenture
solely for the benefit of a series other than that series), that has continued
for 60 days after written notice has been given by the Trustee, or the Holders
of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series, as provided in the Indenture; (v) failure to pay
when due (subject to any applicable grace period) the principal of, or
acceleration of, any Indebtedness for money borrowed by the Operating
Partnership, if, in the case of any such failure, such Indebtedness has not
been discharged or, in the case of any such acceleration, such Indebtedness
has not been discharged or such acceleration has not been rescinded or
annulled, in each case within 10 days after written notice has been given by
the Trustee, or the Holders of at least 25% in aggregate principal amount of
the Outstanding Debt Securities of that series, as provided in the Indenture,
if the aggregate outstanding principal amount of indebtedness under the
instrument with respect to which such default or acceleration has occurred
exceeds $10 million; (vi) certain events of bankruptcy, insolvency or
reorganization of the Operating Partnership or any Significant Subsidiary or
any of their respective
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property; and (vii) any other event of default provided with respect to a
particular series of Debt Securities (Section 501).
If an Event of Default (other than an Event of Default described in clause
(vi) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders
of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series by notice as provided in the Indenture may declare
the principal amount of the Debt Securities of that series (or, in the case of
any Debt Security that is an Original Issue Discount Security or the principal
amount of which is not then determinable, such portion of the principal amount
of such Debt Security, or such other amount in lieu of such principal amount,
as may be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (vi) above with
respect to the Debt Securities of any series at the time Outstanding shall
occur, the principal amount of all the Debt Securities of that series (or, in
the case of any such Original Issue Discount Security or other Debt Security,
such specified amount) will automatically, and without any action by the
Trustee or any Holder, become immediately due and payable. After any such
acceleration, but before a judgment or decree based on acceleration, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the non-payment of
accelerated principal (or other specified amount), have been cured or waived
as provided in the Indenture (Section 502). For information as to waiver of
defaults, see "--Modification and Waiver."
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity (Section 603).
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of that series (Section 512).
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of that series, (ii) the
Holders of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series have made written request, and such Holder or
Holders have offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee and (iii) the Trustee has failed to institute such
proceeding, and has not received from the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of that series a direction
inconsistent with such request, within 60 days after such notice, request and
offer (Section 507). However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment of
the principal of or any premium or interest on such Debt Security on or after
the applicable due date specified in such Debt Security (Section 508).
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to furnish to the Trustee a statement by certain
of the Company's officers as to whether the Operating Partnership, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the Indenture and, if so, specifying all such
known defaults (Section 1004).
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Operating
Partnership and the Trustee with the consent of the Holders of a majority in
principal amount of the Outstanding Debt
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Securities of each series affected by such modification or amendment;
provided, however, that no such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security affected thereby, (i)
change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debt Security, (ii) reduce the principal
amount of, or any premium or interest on, any Debt Security, (iii) reduce the
amount of principal of an Original Issue Discount Security or any other Debt
Security payable upon acceleration of the Maturity thereof, (iv) change the
place or currency of payment of principal of, or any premium or interest on,
any Debt Security, (v) impair the right to institute suit for the enforcement
of any payment on or with respect to any Debt Security, (vi) reduce the
percentage in principal amount of Outstanding Debt Securities of any series,
the consent of whose Holders is required for modification or amendment of the
Indenture, (vii) reduce the percentage in principal amount of Outstanding Debt
Securities of any series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults or (viii) modify
such provisions with respect to modification and waiver (Section 902).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by the Operating Partnership
with certain restrictive provisions of the Indenture (Section 1011). The
Holders of a majority in principal amount of the Outstanding Debt Securities
of any series may waive any past default under the Indenture, except a default
in the payment of principal, premium or interest and certain covenants and
provisions of the Indenture that cannot be amended without the consent of the
Holder of each Outstanding Debt Security of such series affected (Section
513).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under the
Indenture as of any date (i) the principal amount of an Original Issue
Discount Security that will be deemed to be Outstanding will be the amount of
the principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date and (ii) if, as of such
date, the principal amount payable at the Stated Maturity of a Debt Security
is not determinable (for example, because it is based on an index), the
principal amount of such Debt Security deemed to be Outstanding as of such
date will be an amount determined in the manner prescribed for such Debt
Security. Certain Debt Securities, including those for whose payment or
redemption money has been deposited or set aside in trust for the Holders and
those that have been fully defeased pursuant to Section 1302, will not be
deemed to be Outstanding (Section 101).
Except in certain limited circumstances, the Operating Partnership will be
entitled to set any day as a record date for the purpose of determining the
Holders of Outstanding Debt Securities of any series entitled to give or take
any direction, notice, consent, waiver or other action under the Indenture, in
the manner and subject to the limitations provided in the Indenture. In
certain limited circumstances, the Trustee will be entitled to set a record
date for action by Holders. If a record date is set for any action to be taken
by Holders of a particular series, such action may be taken only by persons
who are Holders of Outstanding Debt Securities of that series on the record
date. To be effective, such action must be taken by Holders of the requisite
principal amount of such Debt Securities within a specified period following
the record date. For any particular record date, this period will be 180 days
or such shorter period as may be specified by the Operating Partnership (or
the Trustee, if it set the record date), and may be shortened or lengthened
(but not beyond 180 days) from time to time (Section 104).
Modifications and amendments of the Indenture may be made by the Operating
Partnership and the Trustee without the consent of any Holders of Debt
Securities for any of the following purposes: (i) to evidence the succession
of another person to the Operating Partnership and the assumption by such
successor of the covenants of the Operating Partnership in the Indenture and
the Debt Securities; (ii) to add to the covenants of the Operating Partnership
for the benefit of the Holders of all or any series of Debt Securities or to
surrender any right or power conferred upon the Operating Partnership
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in the Indenture; (iii) to add events of default for the benefit of the
Holders of all or any series of Debt Securities; (iv) to add to or change any
provisions of the Indenture as necessary to permit or facilitate the issuance
of Debt Securities in uncertificated form; (v) to add to, change or eliminate
any of the provisions of the Indenture with respect to one or more series of
Debt Securities, so long as the changes (A) do not (1) apply to any Debt
Securities of any series created prior to such modification or amendment and
entitled to the benefit of such provision or (2) modify the rights of the
holder of any such Debt Security with respect to such provision, or (B) will
only become effective when there is no such Debt Security Outstanding; (vi) to
secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series as permitted in the Indenture; or (viii) to provide
for the acceptance of appointment by a successor Trustee (Section 901).
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Operating Partnership may elect, at its option at any time, to have the
provisions of Section 1302 of the Indenture, relating to defeasance and
discharge of indebtedness, or Section 1303, relating to defeasance of certain
restrictive covenants in the Indenture, applied to the Debt Securities of any
series, or to any specified part of a series (Section 1301).
DEFEASANCE AND DISCHARGE
The Indenture provides that, upon the Operating Partnership's exercise of
its option (if any) to have Section 1302 applied to any Debt Securities, the
Operating Partnership will be discharged from all its obligations with respect
to such Debt Securities (except for certain obligations to exchange or
register the transfer of Debt Securities, to replace stolen, lost or mutilated
Debt Securities, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the principal
of and any premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the Indenture and such Debt
Securities. Such defeasance or discharge may occur only if, among other
things, the Operating Partnership has delivered to the Trustee an Opinion of
Counsel to the effect that the Operating Partnership has received from, or
there has been published by, the United States Internal Revenue Service a
ruling, or there has been a change in tax law, in either case to the effect
that Holders of such Debt Securities will not recognize gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge were not to occur (Sections 1302 and 1304).
DEFEASANCE OF CERTAIN COVENANTS
The Indenture provides that, upon the Operating Partnership's exercise of
its option (if any) to have Section 1303 applied to any Debt Securities, the
Operating Partnership may omit to comply with certain restrictive covenants,
including those described under "Certain Covenants," in the last sentence
under "--Merger, Consolidation or Sale" and any that may be described in the
applicable Prospectus Supplement, and the occurrence of certain Events of
Default, which are described above in clause (iv) (with respect to such
restrictive covenants) and clauses (v) and (vii) under "--Events of Default"
and any that may be described in the applicable Prospectus Supplement, will be
deemed not to be or result in an Event of Default, in each case with respect
to such Debt Securities. The Operating Partnership, in order to exercise such
option, will be required to deposit, in trust for the benefit of the Holders
of such Debt Securities, money or U.S. Government Obligations, or both, which,
through the payment of principal and interest in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of and any premium and interest on such Debt Securities
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on the respective Stated Maturities in accordance with the terms of the
Indenture and such Debt Securities. The Operating Partnership will also be
required, among other things, to deliver to the Trustee an Opinion of Counsel
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance were not to occur. In the event the
Operating Partnership exercised this option with respect to any Debt
Securities and such Debt Securities were declared due and payable because of
the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations so deposited in trust would be sufficient to pay
amounts due on such Debt Securities at the time of their respective Stated
Maturities but may not be sufficient to pay amounts due on such Debt
Securities upon any acceleration resulting from such Event of Default. In such
case, the Operating Partnership would remain liable for such payments
(Sections 1303 and 1304).
"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as a agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation
held by such custodian of the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of
the U.S. Government Obligation evidenced by such depository receipt (Section
1304).
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register (Sections 101 and
106).
TITLE
The Operating Partnership, the Trustee and any agent of the Operating
Partnership or the Trustee may treat the Person in whose name a Debt Security
is registered as the absolute owner thereof (whether or not such Debt Security
may be overdue) for the purpose of making payment and for all other purposes
(Section 308).
NO CONVERSION RIGHTS
The Debt Securities will not be convertible into or exchangeable for any
capital stock of the Company or equity interest in the Operating Partnership.
FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTORY NOTES
The following discussion summarizes the United States federal income tax
considerations material to a prospective holder of Common Stock. The Company
has received a legal opinion from King & Spalding, which has acted as tax
counsel to the Company, to the effect that the following discussion fairly
summarizes the United States federal income tax considerations that are
material to a holder of
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Common Stock and, to the extent such discussion contains statements of law or
legal conclusions, such statements and conclusions are the opinion of King &
Spalding. If the Company offers Securities other than Common Stock pursuant to
this Prospectus, a discussion of the United States federal income tax
considerations relevant to such Securities will be included in the Prospectus
Supplement relating thereto.
This discussion is based on current law. It is not exhaustive of all
possible tax considerations and does not give a detailed discussion of any
state, local or foreign tax considerations. Nor does it discuss all of the
aspects of federal income taxation that may be relevant to a prospective
shareholder in light of his or her particular circumstances or to certain
types of shareholders (including insurance companies, tax-exempt entities,
financial institutions or broker-dealers, foreign corporations, and persons
who are not citizens or residents of the United States) who are subject to
special treatment under the federal income tax laws. As used in this section,
the term "Subsidiaries" refers to Weeks Realty Services and Weeks Construction
Services.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,
OWNERSHIP, AND SALE OF SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL,
FOREIGN, AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE, AND
ELECTION AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
General. The Company has made an election to be taxed as a REIT under
Sections 856 and 860 of the Code commencing with its taxable year that ended
on December 31, 1994. The Company has received a legal opinion from King &
Spalding to the effect that the Company was organized and has operated in
conformity with the requirements for qualification and taxation as a REIT for
its taxable years ended December 31, 1994, 1995, and 1996, and that its
current organization and method of operation should enable it to continue to
qualify as a REIT. Investors should be aware, however, that opinions of
counsel are not binding upon the Internal Revenue Service ("IRS") or any
court. Further, King & Spalding's opinion is based on various assumptions and
is conditioned upon certain representations made by the Company as to certain
relevant factual matters relating to the organization and the past, current
and expected future manner of operation of the Company, the Operating
Partnership and the Financing Partnership. Moreover, the Company's continued
qualification and taxation as a REIT depends upon the Company's ability to
meet on a continuing basis, through actual annual operating results,
distribution levels and diversity of stock ownership, the various
qualification tests imposed by the Code and discussed below. King & Spalding
will not review compliance with these tests on a continuing basis. No
assurance can be given that the Company will satisfy such tests on a
continuing basis. See "--Failure to Qualify" below.
The following is a general summary of the Code provisions that govern the
U.S. federal income tax treatment of a REIT and its shareholders. These
provisions of the Code are highly technical and complex. This summary is
qualified in its entirety by the applicable Code provisions, the regulations
promulgated thereunder ("Treasury Regulations"), and administrative and
judicial interpretations thereof.
As a REIT, the Company generally is not subject to U.S. federal corporate
income tax on net income that it currently distributes to shareholders. This
treatment substantially eliminates the "double taxation" (at the corporate and
shareholder levels) that generally results from investment in a corporation.
Notwithstanding its REIT election, however, the Company is still subject to
U.S. federal income tax in the following circumstances. First, the Company is
taxed at regular corporate rates on any undistributed taxable income,
including undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the "alternative minimum tax" on
its items of tax
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preference. Third, if the Company has (i) net income from the sale or other
disposition of "foreclosure property" (which is, in general, property acquired
by foreclosure or otherwise on default of a loan or lease secured by the
property) which is held primarily for sale to clients in the ordinary course
of business or (ii) other non-qualifying income from foreclosure property, it
will be subject to tax at the highest corporate rate on such income. Fourth,
if the Company has net income from prohibited transactions (which are, in
general, certain sales or other dispositions of property (other than
foreclosure property) held primarily for sale to clients in the ordinary
course of business), such income will be subject to a 100% tax. Fifth, if the
Company should fail to satisfy the 75% gross income test or the 95% gross
income test (as discussed below), and has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on the net income attributable to the greater of
the amount by which the Company fails the 75% or 95% test. Sixth, if the
Company should fail to distribute during each calendar year at least the sum
of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT
capital gain net income for such year, and (iii) any undistributed taxable
income from prior years, the Company would be subject to a 4% excise tax on
the excess of such required distribution over the amounts actually
distributed. Seventh, if the Company acquires any asset from a C corporation
(i.e., a corporation generally subject to full corporate level tax) in a
transaction in which the basis of the asset in the Company's hands is
determined by reference to the basis of the asset (or any other property) in
the hands of the C corporation, and the Company recognizes gain on the
disposition of such asset during the 10-year period beginning on the date on
which such asset was acquired by the Company, then, to the extent of such
property's "built-in" gain (the excess of the fair market value of such
property at the time of acquisition by the Company over the adjusted basis of
such property at such time), and assuming the Company will make an election
pursuant to Notice 88-19, such gain will be subject to tax at the highest
regular corporate rate applicable (as provided in IRS regulations that have
not yet been promulgated).
Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or
directors; (2) the beneficial ownership of which is evidenced by transferable
shares or by transferable certificates of beneficial interest; (3) which would
be taxable as a domestic corporation but for Sections 856 through 859 of the
Code; (4) which is neither a financial institution nor an insurance company
subject to certain provisions of the Code; (5) the beneficial ownership of
which is held by 100 or more persons; (6) during the last half of each taxable
year not more than 50% in value of the outstanding stock of which is owned,
directly or indirectly, by five or fewer individuals (as defined in the Code
to include certain entities); and (7) which meets certain other tests,
described below, regarding the nature of its income and assets. The Code
provides that conditions (1) through (4), inclusive, must be met during the
entire taxable year and that condition (5) must be met during at least 335
days of a taxable year of twelve months, or during a proportionate part of a
taxable year of less than twelve months. The Company has issued sufficient
shares of Common Stock with sufficient diversity of ownership to allow the
Company to satisfy requirements (5) and (6). In addition, the Company's
Articles provide restrictions regarding the transfer of its shares that are
intended to assist the Company in continuing to satisfy the share ownership
requirements described in (5) and (6) above. See "Capital Stock of the
Company--Restrictions on Transfer". In addition, a corporation may not elect
to become a REIT unless its taxable year is the calendar year. The Company's
taxable year is a calendar year.
In the case of a REIT that owns the stock of a corporation that is a
"qualified REIT subsidiary" within the meaning of Section 856(i)(2) of the
Code, the subsidiary will not be treated as a separate corporation, and the
assets, liabilities, and items of income, deduction, and credit of the
subsidiary will be treated as assets, liabilities, and such items of the REIT.
Weeks GP and Weeks LP are "qualified REIT subsidiaries" of the Company, so the
separate existence of these corporations will be ignored for U.S. federal tax
purposes, and the Company will be treated as directly holding the assets and
liabilities and receiving the tax items of these subsidiaries. Further, in the
case of a REIT that is a partner in a partnership, Treasury Regulations
provide that the REIT will be deemed to own its
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proportionate share of the assets of the partnership and will be deemed to be
entitled to the income of the partnership attributable to such share. In
addition, the character of the assets and gross income of the partnership will
retain the same character in the hands of the REIT for purposes of Section 856
of the Code, including satisfying the gross income tests and asset tests (as
discussed below). Thus, the Company's proportionate share of the assets,
liabilities, and items of income of the Operating Partnership and the
Financing Partnership will be treated as assets, liabilities, and items of
income of the Company for purposes of applying the requirements described
herein.
Income Tests. For its taxable years ending on or before December 31, 1997,
in order to maintain qualification as a REIT, three gross income requirements
must be satisfied annually. First, at least 75% of the REIT's gross income
(excluding gross income from prohibited transactions) for each taxable year
must be derived directly or indirectly from investments relating to real
property or mortgages on real property (including "rents from real property"
and, in certain circumstances, interest) or from certain types of temporary
investments. Second, at least 95% of the REIT's gross income (excluding gross
income from prohibited transactions) for each taxable year must be derived
from such real property investments described above, and from dividends,
interest, and gain from the sale or disposition of stock or securities, or
from any combination of the foregoing. Third, for each taxable year ending on
or before December 31, 1997, short-term gain from the sale or other
disposition of stock or securities, gain from prohibited transactions, and
gain on the sale or other disposition of real property held for less than four
years (apart from involuntary conversions and sales of foreclosure property)
must represent less than 30% of the REIT's gross income (including gross
income from prohibited transactions) for each taxable year. Under the 30%
gross income test, where a REIT holds an interest in a partnership that sells
real property or where the REIT sells its interest in a partnership that holds
real property, the gross income derived from such sale, to the extent
attributable to real property, is deemed to be derived from the sale of real
property held for the shorter of the period the partnership held the property
or the REIT held its partnership interest. Therefore, for purposes of applying
the 30% gross income test, the holding period of Properties held by the
Operating Partnership on the closing date of the IPO will be deemed to have
commenced on such date so that if the Operating Partnership sells one or more
of the Properties prior to the expiration of four years after such closing
date, income from the sale of those Properties will not qualify under the 30%
gross income test even though the Operating Partnership has held such
Properties for more than four years. The Taxpayer Relief Act of 1997 signed by
the President on August 5, 1997 (the "1997 Act') repeals the 30% gross income
test effective for the Company's taxable year beginning January 1, 1998.
Rents received by the Company will qualify as "rents from real property" in
satisfying the above gross income tests only if several conditions are met.
First, the amount of rent must not be based in whole or in part on the income
or profits of any person. However, an amount received or accrued generally
will not be excluded from "rents from real property" solely by reason of being
based on a fixed percentage or percentages of receipts or sales. Second, rents
received from a tenant will not qualify as "rents from real property" if the
Company, or an owner of 10% or more of the Company, directly or constructively
owns 10% or more of such tenant (a "Related Party Tenant"). Third, if rent
attributable to personal property that is leased in connection with a lease of
real property is greater than 15% of the total rent received under the lease,
then the portion of rent attributable to such personal property will not
qualify as "rents from real property". Finally, for rents received to qualify
as "rents from real property," the Company generally must not operate or
manage the property or furnish or render services to tenants, other than
through an "independent contractor" from whom the Company derives no revenue.
The "independent contractor" requirement, however, does not apply to the
extent the services provided by the Company are "usually or customarily
rendered" in the relevant geographic region in connection with the rental of
space for occupancy only and are not otherwise considered "rendered to the
occupant". The Company believes that, except in certain circumstances that are
not believed to be material, it provides only usual and customary services to
the tenants of the Properties and that any noncustomary services are provided
by independent contractors. For the
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Company's taxable years beginning after December 31, 1997, the "independent
contractor" requirement will not apply to noncustomary services provided by
the Company, the annual value of which does not exceed 1% of the gross income
derived from the property with respect to which the services are provided. For
this purpose, such services may not be valued at less than 150% of the
Company's direct cost of providing the services.
The Operating Partnership receives rents from a company controlled by Ray
Weeks' spouse that may under certain circumstances qualify as a Related Party
Tenant. The Company also receives certain other types of non-rent income,
including its allocable share of any dividends and interest paid by the
Subsidiaries to the Operating Partnership (which will qualify under the 95%
gross income test but not under the 75% gross income test). The Company
believes, however, that the aggregate amount of such income and other non-
qualifying income in any taxable year will not cause the Company to exceed the
limits on non-qualifying income under the 75% and 95% gross income tests.
Any gross income derived from a prohibited transaction is taken into account
in applying the 30% income test necessary to qualify as a REIT (and the net
income from the transaction is subject to 100% tax). The term "prohibited
transaction" generally includes a sale or other disposition of property (other
than foreclosure property) that is held primarily for sale to customers in the
ordinary course of a trade or business. The Company believes that no asset
owned by the Operating Partnership or the Financing Partnership is held for
sale to customers and that the sale of any Property or Development Land by
such partnerships is not in its ordinary course of business. Whether property
is held "primarily for sale to customers in the ordinary course of a trade or
business" depends, however, on the facts and circumstances in effect from time
to time, including those related to a particular property. Nevertheless, the
Company and such partnerships will attempt to comply with the terms of safe-
harbor provisions in the Code prescribing when assets sales will not be
characterized as prohibited transactions. Complete assurance cannot be given,
however, that the Company or such partnerships will comply with the safe-
harbor provisions of the Code or avoid owning property that may be
characterized as property held "primarily for sale to customers in the
ordinary course of business".
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such
year if it is entitled to relief under certain provisions of the Code. These
relief provisions generally are available if the Company's failure to meet
such tests was due to reasonable cause and not due to willful neglect, the
Company attaches a schedule of the sources of its income to its return, and
any incorrect information on the schedules was not due to fraud with intent to
evade tax. It is not possible, however, to state whether in all circumstances
the Company would be entitled to the benefit of these relief provisions. As
discussed above in "General," even if these relief provisions were to apply, a
tax would be imposed with respect to the Company's excess net income. The
foregoing relief provisions do not apply in the case of a failure to satisfy
the 30% gross income test (which, as noted above, has been repealed commencing
with the Company's 1998 taxable year).
Asset Tests. At the close of each quarter of its taxable year, the Company
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by
real estate assets (including (i) its allocable share of real estate assets
held by the Operating Partnership and the Financing Partnership and (ii) stock
or debt instruments held for not more than one year purchased with the
proceeds of a stock offering or long-term (at least five years) debt offering
of the Company), cash, cash items, and government securities. Second, not more
than 25% of the Company's total assets may be represented by securities other
than those in the 75% asset class. Third, of the investments included in the
25% asset class, the value of any one issuer's debt and equity securities
owned by the Company may not exceed 5% of the value of the Company's total
assets, and the Company may not own more than 10% of any one issuer's
outstanding voting securities. Debt of an issuer that is secured by real
estate assets does not constitute a "security" for purposes of the 5% asset
test. The 5% asset test must generally be met for any quarter in which a
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REIT acquires securities of an issuer or other property. Thus, this
requirement must be satisfied not only on the date that the Company initially
acquires securities in a Subsidiary, but also each time the Company increases
its ownership of securities of a Subsidiary (including as a result of
increasing its interest in the Operating Partnership as limited partners
exercise their Exchange Rights).
As described above, the Operating Partnership owns 100% of the nonvoting
stock and 1% of the voting stock of Weeks Realty Services, Inc. and Weeks
Construction Services, Inc. (the "Subsidiaries"). The Operating Partnership
does not own more than 10% of the voting securities of the Subsidiaries. In
addition, based upon its analysis of the estimated value of the debt and
equity securities of the Subsidiaries owned by the Operating Partnership
relative to the estimated value of the other assets owned by the Operating
Partnership, the Company believes that its pro rata share of the debt and
equity securities of each Subsidiary held by the Operating Partnership does
not exceed 5% of the total value of the Company's assets, although no
independent appraisals have been obtained to support this conclusion. Although
the Company plans to take steps to ensure that it satisfies the 5% value test
for any quarter in which it acquires securities of the Subsidiaries or other
property, there can be no assurance that such steps will always be successful
or will not require a reduction in the Operating Partnership's overall
interest in the Subsidiaries.
Annual Distribution Requirements. As a REIT, the Company is required to
distribute dividends (other than capital gain dividends) to its shareholders
in an amount at least equal to (A) the sum of (i) 95% of the Company's "REIT
taxable income" (computed without regard to the dividends paid deduction and
the REIT's net capital gain) and (ii) 95% of the net income (after tax), if
any, from "foreclosure property" (as defined above under "--Taxation of the
Company (General)"), minus (B) the sum of certain items of noncash income.
Such distributions must be paid in the taxable year to which they relate, or
in the following taxable year if declared before the Company timely files its
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. To the extent that the Company does not
distribute all of its net capital gain or distributes at least 95%, but less
than 100%, of its "REIT taxable income," as adjusted, it will be subject to
tax on the undistributed amount at regular capital gains and ordinary
corporate tax rates. Furthermore, if the Company should fail to distribute
during each calendar year at least the sum of (i) 85% of its REIT ordinary
income for such year, (ii) 95% of its REIT capital gain income for such year,
and (iii) any undistributed taxable income from prior periods, the Company
will be subject to a 4% excise tax on the excess of such required distribution
over the amounts actually distributed.
The Company intends to make timely distributions sufficient to satisfy the
annual distribution requirements. In this regard, the Partnership Agreement
authorizes the Company, as general partner, to take such steps as may be
necessary to cause the Operating Partnership to distribute to its partners an
amount sufficient to permit the Company to meet these distribution
requirements. It is possible, however, that the Company, from time to time,
may not have sufficient cash or other liquid assets to meet the distribution
requirements due to timing differences between the actual receipt of income
and actual payment of deductible expenses and the inclusion of such income and
deduction of such expenses in arriving at taxable income of the Company, or if
the amount of nondeductible expenses (such as principal amortization or
capital expenditures) exceed the amount of noncash deductions. In the event
that such timing differences occur, in order to meet the distribution
requirements, the Company may cause the Operating Partnership to arrange for
short-term, or possibly long-term, borrowing to permit the payment of required
dividends. If the amount of nondeductible expenses exceeds noncash deductions,
the Operating Partnership may refinance its indebtedness to reduce principal
payments and borrow funds for capital expenditures.
Under certain circumstances, the Company may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends"
to shareholders in a later year that may be included in the Company's
deduction for dividends paid for the earlier year. Thus, the Company may be
able to avoid paying income tax (but not excise tax) on amounts distributed as
deficiency dividends;
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<PAGE>
however, the Company will be required to pay interest to the IRS based upon
the amount of any deduction taken for deficiency dividends.
Information Regarding Stock Ownership. Pursuant to applicable Treasury
Regulations, the Company must maintain certain records and request certain
information from its shareholders designed to disclose the actual ownership of
its stock. The Company intends to comply with such requirements.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable year
and no relief provisions apply, the Company will be subject to tax (including
any applicable alternative minimum tax) on its taxable income at regular
corporate rates. Any distributions made by the Company to shareholders in any
year in which the Company fails to qualify will not be deductible by the
Company. In such event, to the extent of the Company's current and accumulated
earnings and profits, all distributions to shareholders will be taxable as
ordinary income, and, subject to certain limitations in the Code, corporate
distributees may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, the Company also would
be disqualified from taxation as a REIT for the four taxable years following
the year during which qualification was lost. It is not possible to state
whether in all circumstances the Company would be entitled to such statutory
relief.
TAXATION OF SHAREHOLDERS
Taxation of Taxable Domestic Shareholders. As long as the Company continues
to qualify as a REIT, distributions made to the Company's taxable domestic
shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) are taken into account by them as
ordinary income, and corporate shareholders are not eligible for the dividends
received deduction as to such amounts. Distributions that are designated as
capital gain dividends will be taxed as gain from the sale or exchange of a
capital asset held for more than one year (to the extent they do not exceed
the payor's actual net capital gain for the taxable year) without regard to
the period for which the shareholder held his shares. However, corporate
shareholders are required to treat up to 20% of certain capital gain dividends
as ordinary income.
Distributions in excess of current and accumulated earnings and profits are
not taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's Common Stock, but rather reduce the
adjusted basis of such shares. To the extent that such distributions exceed
the adjusted basis of a shareholder's Common Stock, they are included in
income as capital gain (or short-term capital gain if the shares have been
held for one year or less), assuming the shares are a capital asset in the
hands of the shareholder. The tax rate to which such capital gain will be
subject will depend on the shareholder's holding period for his shares. See
"Taxation of Shareholders--Capital Gains Rates Under the 1997 Act" below.
For its taxable years beginning after December 31, 1997, the Company may
make an election with respect to all or part of its undistributed net capital
gain. If the Company should make such an election, its shareholders would be
required to include in their income as long-term capital gain their
proportionate share of the Company's undistributed net capital gain as
designated by the Company. The tax rate applicable to such gain is not clear
under the 1997 Act. See "Taxation of Shareholders--Capital Gains Rates Under
the 1997 Act" below. Each such shareholder would be deemed to have paid his
proportionate share of the income tax imposed on the Company with respect to
such undistributed net capital gain, and this amount would be credited or
refunded to the shareholder. In addition, the tax basis of the shareholder's
stock would be increased by his proportionate share of undistributed net
capital gains included in his income less his proportionate share of the
income tax imposed on the Company with respect to such gains.
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Any dividend declared by the Company in October, November, or December of
any year payable to a shareholder of record on a specific date in any such
month are treated as both paid by the Company and received by the shareholder
on December 31 of such year, provided that the dividend is actually paid by
the Company during January of the following calendar year. Shareholders do not
include in their individual income tax returns any net operating losses or
capital losses of the Company.
In general, any gain or loss realized upon a taxable disposition of shares
of Common Stock by a shareholder who is not a dealer in securities will be
treated as a capital gain or loss. Lower marginal tax rates for individuals
may apply in the case of capital gains depending on the holding period of the
shares of Common Stock that are sold. See "Taxation of Shareholders--Capital
Gains Rates Under the 1997 Act" below. However, any loss upon a sale or
exchange of Common Stock by a shareholder who has held such shares for six
months or less (after applying certain holding period rules) are 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.
Capital Gains Rates Under the 1997 Act. In general, under the 1997 Act, the
maximum tax rate on an individual's net capital gain is reduced from 28-
percent to 20-percent. In addition, any net capital gain which otherwise would
be taxed at a 15-percent rate is taxed at a 10-percent rate. However, the
rates applicable to ordinary income continue to apply to the sale or exchange
of capital assets held for one year or less, and the applicable tax rate under
prior law, rather than the new 20-percent and 10-percent rates, will continue
to apply to the sale or exchange of capital assets held for more than one year
but not more than 18 months. It is unclear how the applicable rate is
determined in the case of capital gain dividends paid by a REIT, which, under
Section 857 of the Code, are required to be treated as "gain from the sale or
exchange of a capital asset held for more than one year." The Treasury
Department is authorized to issue regulations that address the application of
the new capital gains rates to sales and exchanges by REITs and to sales and
exchanges of interests in REITs, but no such regulations have been issued.
Backup Withholding. The Company reports to its domestic shareholders and the
IRS the amount of dividends paid during each calendar year, and the amount of
tax withheld, if any, with respect thereto. Under the backup withholding
rules, a shareholder may be subject to backup withholding at the rate of 31%
with respect to dividends paid unless such holder (a) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, or (b) provides a taxpayer identification number, certifies as to
no loss of exemption from backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. A shareholder who
does not provide the Company with its correct taxpayer identification number
may also be subject to penalties imposed by the IRS. 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 made to any shareholders who fail to certify their non-foreign
status to the Company. See "Taxation of Foreign Shareholders" below.
Taxation of Tax-Exempt Shareholders. The IRS has ruled that amounts
distributed by a REIT to a tax-exempt employees' pension trust do not
constitute "unrelated business taxable income" ("UBTI"). The Revenue
Reconciliation Act of 1993 (the "1993 Act") has partially preempted this
revenue ruling (as discussed below). In those circumstances in which the
ruling still applies, distributions by the Company to a shareholder that is a
tax-exempt entity should not constitute UBTI, provided that the tax-exempt
entity has not financed the acquisition of its shares with "acquisition
indebtedness" within the meaning of the Code and the Common Stock is not
otherwise used in an unrelated trade or business of the tax-exempt entity.
Revenue rulings are interpretative in nature and subject to revocation or
modification by the IRS.
In applying the stock ownership test of Section 856(h) of the Code, the 1993
Act treats beneficiaries of certain pension trusts as holding the shares of a
REIT in proportion to their actuarial
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interests in such trust, thus permitting affected pension trusts to acquire
more concentrated ownership of a REIT. However, a pension trust that owns more
than 10% of a REIT must now treat a percentage of the dividends as UBTI (the
"UBTI Percentage") under certain circumstances. The UBTI Percentage is
determined by dividing (i) the gross income of a REIT, less related direct
expenses, that would be considered to be derived from an unrelated trade or
business if the REIT were a pension trust by (ii) the gross income of the
REIT, less related direct expenses, for the year in which the dividends are
paid. The UBTI rule would apply to a pension trust that owns more than 10% of
the value of the REIT's stock only if (a) the UBTI Percentage is at least 5%,
(b) the REIT qualifies as a REIT by reason of the above modification of the
stock ownership test, and (c) either one pension trust owns more than 25% of
the value of the REIT's stock or a group of pension trusts individually owning
more than 10% of the value of the REIT's stock collectively own more than 50%
of the value of the REIT's stock.
Taxation of Foreign Shareholders. The rules governing U.S. federal income
taxation of nonresident alien individuals, foreign corporations, foreign
partnerships, and other foreign shareholders (collectively, "Non-U.S.
Shareholders") are complex, and no attempt is made herein to provide more than
a limited summary of such rules. Prospective Non-U.S. Shareholders should
consult with their own tax advisors to determine the impact of U.S. federal,
state, and local income tax laws with regard to an investment in Common Stock,
including any reporting requirements.
Distributions that are not attributable to gain from sales or exchanges by
the Company of U.S. real property interests and not designated by the Company
as capital gain dividends are treated as dividends of ordinary income to the
extent that they are made out of current or accumulated earnings and profits
of the Company. Such distributions, ordinarily, are subject to a withholding
tax equal to 30% of the gross amount of the distribution unless an applicable
tax treaty reduces that tax. However, if income from the investment in the
shares of capital stock is treated as effectively connected with the Non-U.S.
Shareholder's conduct of a U.S. trade or business, the Non-U.S. Shareholder
generally is subject to a tax at graduated rates, in the same manner as U.S.
shareholders are taxed with respect to such dividends (and may also be subject
to the 30% branch profits tax if the shareholder is a foreign corporation).
The Company withholds U.S. income tax at the rate of 30% on the gross amount
of any dividends paid to a Non-U.S. Shareholder that are not designated as
capital gain dividends unless (i) a lower treaty rate applies and the required
form evidencing eligibility for that reduced rate is filed with the Company or
(ii) the Non-U.S. Shareholder files an IRS Form 4224 with the Company claiming
that the distribution is "effectively connected" income. The IRS issued
proposed regulations in April 1996 that would modify the manner in which the
Company complies with the withholding requirements.
Distributions in excess of current and accumulated earnings and profits of
the Company are not taxable to a shareholder to the extent that they do not
exceed the adjusted basis of the shareholder's shares of capital stock, but
rather will reduce the adjusted basis of such shares. To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Shareholder's shares,
they give rise to tax liability if the Non-U.S. Shareholder is otherwise
subject to tax on any gain from the sale or disposition of his shares of
capital stock as described below. If it cannot be determined at the time a
distribution is made whether or not such distribution is in excess of current
and accumulated earnings and profits, the distribution is subject to
withholding at the rate applicable to dividends. The Small Business Job
Protection Act of 1996 requires the Company to withhold 10% of any
distribution to a Non-U.S. Shareholder in excess of the Company's current and
accumulated earnings and profits. Accordingly, although the Company intends to
withhold at a rate of 30% on the entire amount of the distribution, to the
extent that the Company does not do so, any portion of the distribution not
subject to withholding at a rate of 30% will be subject to withholding at a
rate of 10%. The Non-U.S. Shareholder may seek a refund of such amounts from
the IRS to the extent that the amount withheld from such distribution was, in
fact, in excess of the U.S. income tax due with respect to such distribution.
For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests will be taxed to a Non-U.S.
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Shareholder under the FIRPTA provisions as if such gain were effectively
connected with a U.S. business. Thus, Non-U.S. Shareholders will be taxed on
such distributions at the normal capital gain rates applicable to U.S.
shareholders (subject to applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals). Also,
distributions that are attributable to gain from sales or exchanges by the
Company of U.S. real property interests may be subject to a 30% branch profits
tax in the hands of a corporate Non-U.S. Shareholder not entitled to treaty
relief or exemption. The Company is required by applicable Treasury
Regulations to withhold 35% of any distribution that could be designated by
the Company as a capital gain dividend. The amount withheld is creditable
against the Non-U.S. Shareholder's U.S. federal income tax liability.
Gain recognized by a Non-U.S. Shareholder upon the sale or exchange of
Common Stock generally will not be subject to U.S. tax unless the capital
stock constitutes a "United States real property interest" within the meaning
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). The
capital stock will not constitute a "United States real property interest" so
long as the Company qualifies as a "domestically controlled REIT." A
"domestically controlled REIT" is a REIT in which at all times during a
specified testing period less than 50% in value of its stock is held, directly
or indirectly, by Non-U.S. Shareholders. Because the Company is publicly
traded, there can be no assurance that the Company will qualify as a
domestically controlled REIT. If the Company does not qualify (or ceases to
qualify) as a "domestically controlled REIT," whether gain arising from the
sale or exchange of capital stock by a Non-U.S. Shareholder would be subject
to U.S. tax under FIRPTA will depend on whether the capital stock is
"regularly traded" (as defined by applicable Treasury Regulations) on an
established securities market (e.g., the New York Stock Exchange) and on the
size of the selling Non-U.S. Shareholders interest in the Company.
If gain on the sale or exchange of capital stock were subject to tax under
FIRPTA, then (i) the Non-U.S. Shareholder would be subject to regular U.S.
income tax with respect to such gain in the same manner as a U.S. shareholder
(subject to any applicable alternative minimum tax and a special alternative
minimum tax in the case of nonresident alien individuals), and (ii) the
purchaser of the capital stock would be required to withhold and remit to the
IRS 10% of the purchase price unless the purchased capital stock was
"regularly traded" on an established securities market.
Notwithstanding the foregoing, gain from the sale or exchange of capital
stock not otherwise taxable under FIRPTA will be subject to U.S. tax if (i)
the investment in capital stock is treated as effectively connected with a
U.S. trade or business of a Non-U.S. Shareholder, in which case the Non-U.S.
Shareholder will be subject to the same treatment as U.S. shareholders with
respect to such gain, or (ii) the Non-U.S. Shareholder is a nonresident alien
individual who is present in the United States for 183 days or more during the
taxable year and has a "tax home" in the United States, in which case the
individual will be subject to a 30% tax on the individual's capital gains.
OTHER TAX CONSIDERATIONS
Tax Status of Operating Partnership; Effect on REIT Qualification. All of
the Company's investments are made through the Operating Partnership, which in
turn owns substantially all of the interests in the Financing Partnership. The
Company has received a legal opinion from King & Spalding to the effect that
the Operating Partnership and the Financing Partnership will be treated for
U.S. federal income tax purposes as partnerships (and not as associations
taxable as a corporation). If the Operating Partnership were treated as an
association taxable as a corporation, the Company would fail the 75% asset
test (in addition to the 5% asset test and, likely, the 10% voting securities
test). Further, if the Financing Partnership were treated as a taxable
corporation, then the Company would likely fail to qualify as a REIT under the
10% voting securities test, and would also fail to qualify under the 5% test
if the value of the Company's interest in the Financing Partnership (through
the Operating Partnership) exceeded 5% of the value of the Company's assets.
Furthermore, in such a situation, distributions from such partnerships would
be treated as dividends, which are not taken into
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account in satisfying the 75% gross income test described above and which
could therefore make it more difficult for the Company to meet such test, and
the Company would not be able to deduct its share of any losses generated by
such partnerships in computing its taxable income. See "--Failure to Qualify"
above for a discussion of the effect of the Company's failure to meet such
tests for a taxable year.
Depreciation. The Partnership's initial income tax basis in the Properties
acquired in exchange for Units generally is the same as the transferor's basis
in such Property on the date of acquisition by the Partnership, except to the
extent that gain is recognized by the transferor in connection with the
transfer. The Partnership generally depreciates such Properties under the
alternative depreciation system of depreciation ("ADS"), using a 40-year
recovery period and the straight-line method with respect to the building and
structural components of such Properties. The Partnership's tax depreciation
deductions will be allocated among the Partners in accordance with their
respective percentage interests in the Partnership, except as otherwise
required pursuant to Section 704(c) of the Code.
State and Local Taxes. The Company and its shareholders may be subject to
state or local taxation in various state or local jurisdictions, including
those in which it or they transact business or reside. The state and local tax
treatment of the Company and its shareholders may not conform to the Federal
income tax consequences discussed above. Consequently, prospective
shareholders should consult their own tax advisors regarding the effect of
state and local tax laws on an investment in the Common Stock.
PLAN OF DISTRIBUTION
The Company and the Operating Partnership may sell the Securities in or
outside the United States through underwriters or dealers, directly to one or
more purchasers, through agents or through a combination of any such methods
of sale. The Prospectus Supplement with respect to the Securities will set
forth the terms of the offering of the Securities, including the name or names
of any underwriters, dealers or agents, the initial public offering price, any
delayed delivery arrangements, any underwriting discounts and other items
constituting underwriters compensation, any discounts or concessions allowed
or reallowed or paid to dealers, and any securities exchanges on which the
Securities may be listed.
If underwriters are used in the sale of the Securities, the Securities may
be acquired by the underwriters for their own accounts and may be resold from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time
of sale. The Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering of Securities
will be named in the Prospectus Supplement relating to such offering, and if
an underwriting syndicate is used, the managing underwriter or underwriters
will be set forth on the cover of such Prospectus Supplement. Unless otherwise
set forth in the Prospectus Supplement relating thereto, the obligations of
the underwriters or agents to purchase the Securities will be subject to
conditions precedent and the underwriters will be obligated to purchase all
the Securities if any are purchased. The initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If dealers are used in the sale of the Securities, the Company or the
Operating Partnership will sell such Securities to the dealers as principals.
The dealers may then resell such Securities to the public at varying prices to
be determined by such dealers at the time of resale. The names of the dealers
and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
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<PAGE>
Securities may be sold directly by the Company or the Operating Partnership
through agents designated by the Company or the Operating Partnership from
time to time at fixed prices, which may be changed, or at varying prices
determined at the time of sale. Any agent involved in the offer or sale of the
Securities will be named, and any commissions payable by the Company or the
Operating Partnership to such agent will be set forth, in the Prospectus
Supplement relating thereto. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment.
In connection with the sale of the Securities, underwriters, dealers or
agents may receive compensation from the Company, from the Operating
Partnership or from purchasers of Securities for whom they may act as agents
in the form of discounts, concessions or commissions. Underwriters, dealers
and agents participating in the distribution of the Securities may be deemed
to be underwriters and any discounts or commissions received by them from the
Company or the Operating Partnership and any profit on the resale of the
Securities by them may be deemed to be underwriting discounts or commissions
under the Securities Act.
If so indicated in the Prospectus Supplement, the Company or the Operating
Partnership, as the case may be, will authorize dealers or agents to solicit
offers from certain types of institutions to purchase Securities from the
Company or the Operating Partnership, as the case may be, at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company and the Operating Partnership to indemnification by the
Company or the Operating Partnership against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with
respect to payments that such agents, dealers or underwriters may be required
to make with respect thereto. Underwriters, agents and dealers may engage in
transactions with, or perform services for, the Company or the Operating
Partnership in the ordinary course of business.
The Preferred Stock, the Common Stock Warrants and the Debt Securities may
or may not be listed on a national securities exchange. The Common Stock
currently trades on the NYSE, and any Common Stock offered hereby will be
listed on the NYSE, subject to an official notice of issuance. No assurances
can be given that there will be a market for the Securities.
LEGAL MATTERS
The validity of the Securities will be passed upon for the Company by King &
Spalding, Atlanta, Georgia. George D. Busbee, a director of the Company, is of
counsel to King & Spalding.
EXPERTS
The consolidated and combined financial statements and related financial
statement schedule of the Company included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, as amended by Form 10-K/A-2
filed with the Commission on September 26, 1997 incorporated by reference in
this Prospectus and the Registration Statement, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and have been incorporated herein in reliance upon the
authority of such firm as experts in giving such reports.
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The consolidated and combined financial statements and related financial
statement schedule of the Operating Partnership included in the Operating
Partnership's Registration Statement on Form 10 dated August 1, 1997 and filed
with the Commission on August 4, 1997, as amended by Pre-Effective Amendment
No. 3 to Form 10 filed with the Commission on October 1, 1997, incorporated by
reference in this Prospectus and the Registration Statement, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and have been incorporated herein in reliance
upon the authority of such firm as experts in giving such reports.
The combined financial statements of Lichtin Properties included in the
Company's Current Report on Form 8-K dated November 5, 1996 and filed November
6, 1996, incorporated by reference in the Company's Current Report on Form 8-K
dated December 31, 1996 and filed on January 15, 1997, as amended by
Form 8-K/A dated December 31, 1996 and filed on March 14, 1997, all
incorporated by reference in this Prospectus and the Registration Statement,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and have been incorporated
herein in reliance upon the authority of such firm as experts in giving such
report.
The combined financial statements of NWI Warehouse Group included in the
Company's Current Report on Form 8-K dated November 1, 1996 and filed on
November 6, 1996, as amended by Form 8-K/A dated November 1, 1996 and filed on
November 8, 1996, incorporated by reference in the Company's Current Report on
Form 8-K dated March 25, 1997 and filed on March 26, 1997, all incorporated by
reference in this Prospectus and the Registration Statement, have been audited
by Ernst & Young LLP, independent auditors, as indicated in their report with
respect thereto, and have been incorporated herein in reliance upon the
authority of such firm as experts in giving such report.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............................................ S-3
The Company.............................................................. S-9
Use of Proceeds.......................................................... S-9
Capitalization........................................................... S-10
Business and Properties.................................................. S-11
Selected Financial and Other Information................................. S-25
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... S-27
Management............................................................... S-33
Description of Series A Preferred Shares................................. S-34
Certain Federal Income Tax Considerations................................ S-38
Underwriting............................................................. S-40
Validity of Securities................................................... S-41
Experts.................................................................. S-41
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain
Documents by Reference.................................................. 2
The Company and the Operating Partnership................................ 4
Use of Proceeds.......................................................... 5
Consolidated Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends............................................................... 5
Description of Capital Stock............................................. 6
Description of Common Stock Warrants..................................... 11
Description of Debt Securities........................................... 12
Federal Income Tax Considerations........................................ 25
Plan of Distribution..................................................... 35
Legal Matters............................................................ 36
Experts.................................................................. 36
</TABLE>
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6,000,000 SHARES
WEEKS CORPORATION
8.00% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
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[LOGO OF WEEKS CORPORATION APPEARS HERE]
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GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
MORGAN STANLEY DEAN WITTER
THE ROBINSON-HUMPHREY COMPANY
REPRESENTATIVES OF THE UNDERWRITERS
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