<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
FILE NO: 333-50871
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 14, 1998
$100,000,000
WEEKS REALTY, L.P.
7 3/8% NOTES DUE AUGUST 1, 2007
[LOGO OF WEEKS CORPORATION APPEARS HERE]
---------------
Weeks Realty, L.P., a limited partnership that focuses primarily on the
acquisition, development, ownership and operation of industrial and office
properties in select suburban markets in the southeastern United States and
Texas, will issue 7 3/8% Notes due August 1, 2007 offered hereby in the
aggregate principal amount of $100,000,000. Interest on the Notes is payable
semi-annually on February 1 and August 1 of each year, commencing February 1,
1999. The Notes mature on August 1, 2007. The Notes may be redeemed at any
time at the option of the Operating Partnership, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of the Notes
being redeemed plus accrued interest to the redemption date and (ii) the Make-
Whole Amount, if any. See "Description of Notes--Optional Redemption." The
Notes will not be entitled to the benefits of any sinking fund. The Notes are
unsecured obligations of the Operating Partnership and will rank pari passu
with each other and with all unsecured and unsubordinated indebtedness of the
Operating Partnership and will be effectively subordinated to all secured
indebtedness of the Operating Partnership and its Subsidiaries. As of March
31, 1998, the Operating Partnership and its Subsidiaries had outstanding
$169.9 million of unsecured, unsubordinated indebtedness, $268.8 million of
secured indebtedness, and $727.5 million of unencumbered assets.
The Notes will be represented by a single Global Note registered in the name
of the nominee of The Depository Trust Company. Beneficial interests in the
Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Except as described
in "Description of Notes--Book-Entry System," Notes in definitive form will
not be issued.
Application has been made to list the Notes on the New York Stock Exchange,
although there can be no assurance that the Notes 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>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING OPERATING
OFFERING PRICE(1) DISCOUNT(2) PARTNERSHIP(1)(3)
----------------- ------------ -----------------
<S> <C> <C> <C>
Per Note....................... 99.374% 0.650% 98.724%
Total.......................... $99,374,000 $650,000 $98,724,000
</TABLE>
- -------
(1) Plus accrued interest, if any, from August 4, 1998.
(2) The Operating Partnership has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933. See "Underwriting."
(3) Before deducting estimated expenses of $400,000 payable by the Operating
Partnership.
---------------
The Notes 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 Notes will be ready for
delivery in book-entry form only through the facilities of DTC in New York,
New York on or about August 4, 1998, against payment therefor in immediately
available funds.
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
---------------
The date of this Prospectus Supplement is July 30, 1998.
<PAGE>
[ART--DISTRIBUTION OF PROPERTIES BY TYPE;
GEOGRAPHIC DISTRIBUTION OF PROPERTIES]
<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 (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
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, the general economic climate, competition and the supply of and
demand for industrial and suburban office properties in the Operating
Partnership's markets, interest rate levels, the availability of financing,
potential environmental liability and other risks associated with the
ownership, development and acquisition of properties, including risks that
tenants will not take or remain in occupancy or pay rent, or that construction
or operating costs may be greater than anticipated, and those discussed in
"Business and Properties--Acquisition and Development Risks" appearing
elsewhere in this Prospectus Supplement and "Management's Discussion and
Analysis of Results of Operations and Financial Condition" appearing in the
Operating Partnership's Annual Report on Form 10-K for the year ended December
31, 1997, which is incorporated by reference in the accompanying Prospectus.
All references to the "Operating Partnership" include Weeks Realty, L.P., its
consolidated Subsidiaries, and predecessors of Weeks Realty, L.P., unless the
context indicates otherwise. The offering of the Operating Partnership's 7 3/8%
Notes due August 1, 2007 (the "Notes") pursuant to this Prospectus Supplement
is referred to herein as the "Offering."
THE OPERATING PARTNERSHIP
The Operating Partnership is a limited partnership that focuses primarily on
the acquisition, development, ownership and operation of industrial and office
properties in select suburban markets in the southeastern United States and
Texas. The Operating Partnership, together with its Subsidiaries (as defined in
the accompanying Prospectus under the Section entitled "Description of Debt
Securities--Certain Covenants"), is the entity through which Weeks Corporation
("Weeks" or the "Company"), a self-administered, self-managed, geographically
focused real estate investment trust ("REIT"), conducts all its business.
At June 30, 1998, the Operating Partnership's portfolio was comprised of 347
Properties totaling approximately 29.3 million square feet, including 54
Properties and one Property expansion (totaling approximately 7.0 million
square feet) under development and/or under agreement to acquire. At June 30,
1998, industrial Properties represented approximately 90.0% of the square
footage of all of the Properties, suburban office Properties represented
approximately 8.4% and retail Properties and retail ground leases represented
approximately 1.6%. The average Occupancy Rate of the Operating Partnership's
In-service Properties was 95.7% at June 30, 1998. As used herein, "Properties"
includes properties under development and/or under agreement to acquire as of
the date information is provided herein with respect to the Properties, and
"In-service Properties" excludes those Properties under development which are
not yet stabilized (i.e. not yet substantially leased) and Properties under
agreement to acquire. "Occupancy Rate" means the rate of occupancy calculated
based on leases under which tenants are paying rent.
At June 30, 1998, the Operating Partnership and its Subsidiaries also owned
or controlled (through agreements to acquire, options and marketing and
development agreements) approximately 2,005 net usable acres of undeveloped
land located primarily in existing business parks with zoning and
infrastructure in place. The Operating Partnership believes the development
potential of this land could ultimately total approximately 20.8 million square
feet (based upon the Operating Partnership's estimate of the appropriate
density and anticipated building types that may be developed, net of land
necessary to provide for adequate infrastructure).
S-3
<PAGE>
Through its regional expansion strategy, the Operating Partnership has
acquired properties and established a presence in several rapidly growing
cities in Florida, Tennessee, North Carolina and Texas, reducing its
concentration of Properties in metropolitan Atlanta to 53.5% as of June 30,
1998 (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, over approximately
the same period, the Operating Partnership has significantly increased its
tenant base and reduced its exposure to any single tenant. At June 30, 1998,
the Operating Partnership's In-Service Properties were leased to 958 tenants,
and its largest tenant represented 2.2% of the Operating Partnership's total
Annualized Base Rent. This compares to 351 tenants at December 31, 1995, with
the Operating Partnership's largest tenant representing 6.9% of its total
Annualized Base Rent on that date. As used herein, "Annualized Base Rent" means
annualized current base rent assuming expiration of rental concessions, if any,
for leases under which tenants are paying rent.
The Operating Partnership owns, develops and operates primarily industrial
and suburban office Properties, most of which are located in landscaped
business park settings. The Operating Partnership's business strategy
emphasizes high quality Properties and tenant service. The Operating
Partnership's and its Subsidiaries' approximately 500 employees have experience
in and are engaged in virtually every aspect of the real estate business,
including development, construction, engineering, design, landscape, leasing,
marketing and property management. The Operating Partnership'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 its tenants. The Operating Partnership concentrates its activities in a
limited number of sunbelt cities where it believes it can sustain a significant
market presence.
THE PROPERTIES
The following table sets forth, as of June 30, 1998, the location of the 347
Properties, including the 54 Properties and one Property expansion (totaling
approximately 7.0 million square feet) under development and/or under agreement
to acquire, and the Operating Partnership's and its Subsidiaries' undeveloped
land interests. See "Business and Properties--Acquisitions," "--Recently
Completed Acquisitions," "--Pending Acquisitions" and "--Development."
<TABLE>
<CAPTION>
PERCENT UNDEVELOPED ESTIMATED
TOTAL OF TOTAL LAND DEVELOPMENT POTENTIAL
NUMBER OF SQUARE SQUARE (NET USABLE OF UNDEVELOPED LAND
LOCATION PROPERTIES FEET FEET ACRES) (SQUARE FEET)(1)
- -------- ---------- ---------- -------- ----------- ---------------------
<S> <C> <C> <C> <C> <C>
Atlanta, GA............. 208 15,669,932 53.5% 670.4 7,372,500
Nashville, TN........... 31 3,109,011 10.6 145.3 1,639,000
Research Triangle, NC... 36 2,732,758 9.3 257.9 2,710,000
Miami, FL............... 25 2,566,452 8.8 9.3 85,000
Dallas/Ft. Worth, TX.... 9 1,923,246 6.6 67.9 1,025,000
Orlando, FL............. 17 1,231,891 4.2 155.4 1,774,000
Jacksonville, FL........ 11 804,335 2.7 180.6 1,872,000
Spartanburg, SC......... 4 491,200 1.7 347.3 2,420,000
Ft. Lauderdale, FL...... 3 412,620 1.4 73.8 775,000
Tampa, FL............... 3 366,994 1.2 96.8 1,140,000
--- ---------- ----- ------ ----------
Total................... 347 29,308,439 100.0% 2004.7 20,812,500
=== ========== ===== ====== ==========
</TABLE>
- --------
(1) Based upon the Operating Partnership'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
Operating Partnership's estimate of development potential will be realized.
S-4
<PAGE>
SELECTED FINANCIAL AND OTHER INFORMATION
The following table sets forth the Operating Partnership's consolidated
selected financial and operating information for the three months ended March
31, 1998 and 1997, and the years ended December 31, 1997 and 1996. The
Operating Partnership's selected balance sheet data is presented at March 31,
1998 and December 31, 1997. 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>
THREE MONTHS THREE MONTHS
ENDED ENDED
MAR. 31, MAR. 31, YEAR YEAR
1998 1997 ENDED ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1997 DEC. 31, 1996
------------ ------------ ------------- -------------
(IN THOUSANDS, EXCEPT PER UNIT INFORMATION)
<S> <C> <C> <C> <C>
OPERATING DATA:
Rental and reimbursement
revenues................ $ 32,305 $ 19,557 $ 90,806 $ 52,679
Total revenues........... 32,693 19,899 92,020 53,883
Property operating, main-
tenance, management and
real estate tax ex-
penses.................. 7,467 4,214 19,904 11,474
Depreciation and amorti-
zation.................. 8,361 5,344 24,144 13,474
Interest expense,
including amortization
of deferred financing
costs................... 6,102 5,292 18,833 12,643
General and administra-
tive expenses........... 1,280 877 3,652 2,315
Interest income.......... 279 238 1,509 492
Equity in earnings of
unconsolidated
entities................ 556 648 1,989 1,340
Net income............... 10,318 5,058 29,194 15,809
Net income available to
Common Unitholders...... 7,318 5,058 26,474 15,809
Net income per Common
Unit--basic............. $ 0.29 $ 0.27 $ 1.24 $ 1.11
Net income per Common
Unit--diluted(1)........ 0.29 0.27 1.23 1.10
Weighted average Common
Units--basic............ 24,868 18,605 21,380 14,280
Weighted average Common
Units--diluted(2)....... 25,063 18,840 21,580 14,386
</TABLE>
<TABLE>
<CAPTION>
MAR. 31,
1998
(UNAUDITED) DEC. 31, 1997
----------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Real estate assets before depreciation................ $1,097,257 $ 856,500
Real estate assets, net............................... 1,028,180 794,952
Total assets.......................................... 1,106,702 852,361
Total indebtedness.................................... 436,739 275,515
Partners' capital..................................... 640,341 557,392
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MAR. 31, MAR. 31,
1998 1997 YEAR ENDED YEAR ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1997 DEC. 31, 1996
------------ ------------ ------------- -------------
(IN THOUSANDS, EXCEPT RATIOS AND PROPERTY
INFORMATION)
<S> <C> <C> <C> <C>
OTHER DATA:
Cash provided by (used
in):
Operating activities.... $ 15,938 $ 9,562 $ 49,097 $ 28,031
Investing activities.... (131,424) (21,814) (173,574) (120,323)
Financing activities.... 110,546 12,291 129,638 91,570
Funds from opera-
tions(3)................ 15,694 10,412 50,343 29,323
EBIDA(4)................. 24,781 15,694 71,962 41,926
Ratio of funds from
operations before
preferred distributions
and fixed charges to
fixed
charges(3)(5)(6)(7)..... 2.96x 2.50x 2.95x 2.75x
Ratio of funds from
operations before
preferred distributions
and fixed charges to
preferred distributions
and fixed
charges(3)(5)(7)(8)..... 2.18x 2.50x 2.66x 2.75x
Ratio of earnings to
fixed charges(5)(9)..... 1.97x 1.65x 1.98x 1.88x
Total square feet of In-
service Properties(10).. 19,872 14,122 17,101 12,976
Number of In-service
Properties(10).......... 271 197 243 188
</TABLE>
- --------
(1) Computed by dividing net income available to Common Unitholders by weighted
average Common Units (diluted).
(2) Represents the weighted average Common Units outstanding and the dilutive
effect of outstanding Weeks common stock options. The net proceeds from the
exercise of Weeks common stock options are contributed to the Operating
Partnership in exchange for additional Common Units and, as such, the Weeks
common stock options have a corresponding dilutive effect on the net income
per Common Unit amounts of the Operating Partnership. Common Unit
equivalents related to outstanding Weeks common stock options totaled
195,000 and 235,000 for the three months ended March 31, 1998 and 1997,
respectively, and 200,000 and 106,000 for the years ended December 31, 1997
and 1996, respectively.
(3) The Operating Partnership believes that funds from operations provides an
additional indicator of the financial performance of the Operating
Partnership. "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. The Operating Partnership computes funds from operations under the
current NAREIT definition by subtracting from net income the distributions
to Preferred Unitholders before making an adjustment for the non-cash items
described above. 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 distributions to Unitholders, and should not be
considered as an alternative to net income for purposes of evaluating the
Operating Partnership'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 Operating Partnership's funds from operations is comparable to
the funds from operations of real estate companies that use the current
NAREIT definition.
S-6
<PAGE>
(4) EBIDA means net income before property gains, interest expense and
depreciation and amortization. The Operating Partnership believes that in
addition to cash flows and net income, EBIDA is a useful financial
performance measurement for assessing operating performance because,
together with net income and cash flows, EBIDA provides investors with an
additional basis to evaluate the ability of the Operating Partnership to
incur and service debt and to fund acquisitions and other capital
expenditures. Excluded from EBIDA are financing costs such as interest as
well as depreciation and amortization, each of which can significantly
affect the Operating Partnership's results of operations and liquidity and
should be considered in evaluating the Operating Partnership's operating
performance. Further, EBIDA does not represent net income or cash flow from
operating, financing and investing activities as defined by GAAP and does
not necessarily indicate that cash flows will be sufficient to fund cash
needs. EBIDA presented herein is not necessarily comparable to EBIDA
presented by other companies due to the fact that not all companies use the
same definition. It should not be considered as an alternative to net
income as an indicator of the Operating Partnership's operating performance
or to cash flow as a measure of liquidity.
(5) Fixed charges consist of interest costs including amortization of debt
discount and deferred financing fees, whether expensed or capitalized, and
the interest component of rental expense.
(6) The ratio of funds from operations before distributions to Preferred
Unitholders and fixed charges, to fixed charges, is calculated as funds
from operations plus combined distributions to Preferred Unitholders and
fixed charges (excluding capitalized interest), divided by fixed charges.
(7) The Operating Partnership believes that in addition to the ratio of
earnings to fixed charges, this ratio provides a useful measure of the
Operating Partnership's ability to service its debt because of the
exclusion of non-cash items such as depreciation and amortization from the
definition of funds from operations. This ratio differs from a GAAP-based
ratio of earnings to fixed charges and should not be considered as an
alternative to that ratio.
(8) The ratio of funds from operations before distributions to Preferred
Unitholders and fixed charges, to distributions to Preferred Unitholders
and fixed charges, is calculated as funds from operations plus
distributions to Preferred Unitholders and fixed charges (excluding
capitalized interest), divided by distributions to Preferred Unitholders
and fixed charges.
(9) The ratio of earnings to fixed charges is computed as income from
operations, before extraordinary items, plus fixed charges (excluding
capitalized interest), divided by fixed charges.
(10) At period end.
ACQUISITION AND DEVELOPMENT ACTIVITY
During the 12 months ended June 30, 1998, the Operating Partnership acquired
52 industrial, suburban office and retail Properties, with a total of
approximately 5.0 million square feet, and with a total cost, including
acquisition-related costs and expenses, of approximately $311.8 million. In
addition, the Operating Partnership has agreed to acquire 10 industrial
Properties, totaling approximately 1.5 million square feet and with a total
cost, including acquisition-related costs and expenses, of approximately $70.0
million, and has committed, subject to completing or updating its due diligence
procedures, to acquire development land with a total cost of approximately
$29.5 million. The Property acquisitions discussed above reflect the Operating
Partnership's new market expansion strategy.
During the 12 months ended June 30, 1998, the Operating Partnership
stabilized 24 industrial and suburban office Properties and one Property
expansion, with a total of approximately 2.5 million square feet and with a
total cost of approximately $125.5 million. As of June 30, 1998, these
completed and stabilized Properties and the one Property expansion had an
average Occupancy Rate of approximately 94%. In addition, at June 30, 1998, the
Operating Partnership had 44 industrial and
S-7
<PAGE>
suburban office Properties and one Property expansion under development
totaling approximately 5.4 million square feet, with a total estimated cost of
approximately $292.4 million. Of these Properties, 27%, measured by estimated
total cost, are pre-leased build-to-suits. Including these build-to-suits, at
June 30, 1998, approximately 52% of the Operating Partnership's Properties
under development were leased or pre-leased (based on square footage).
See "Business and Properties--Acquisition and Development Risks."
THE OFFERING
For a more complete description of the terms of the Notes specified in the
following summary, including definitions of capitalized terms not otherwise
provided, see "Description of Notes" in this Prospectus Supplement and
"Description of Debt Securities" in the accompanying Prospectus.
Securities Offered.......... $100,000,000 aggregate principal amount of 7 3/8%
Notes due August 1, 2007.
Maturity.................... The Notes mature on August 1, 2007.
Interest Payment Dates...... Interest on the Notes is payable semi-annually on
February 1 and August 1 of each year, commencing
February 1, 1999.
Optional Redemption......... The Notes may be redeemed at any time at the
option of the Operating Partnership, in whole or
in part, at a redemption price equal to the sum
of (i) the principal amount of the Notes being
redeemed plus accrued interest to the redemption
date and (ii) the Make-Whole Amount, if any. See
"Description of Notes--Optional Redemption."
Ranking..................... The Notes are unsecured obligations of the
Operating Partnership and will rank pari passu
with each other and with all other unsecured and
unsubordinated indebtedness of the Operating
Partnership, except that the Notes will be
effectively subordinated to all secured debt of
the Operating Partnership and its Subsidiaries.
As of March 31, 1998, the Operating Partnership
and its Subsidiaries had outstanding $169.9
million of unsecured, unsubordinated
indebtedness, $268.8 million of secured
indebtedness, and $727.5 million of unencumbered
assets. As of March 31, 1998, on a pro forma
basis, after giving effect to the application of
the net proceeds from the Offering as described
in "Use of Proceeds," the Operating Partnership
and its Subsidiaries would have had outstanding
$202.0 million of unsecured, unsubordinated
indebtedness, $268.8 million of secured
indebtedness, and $757.8 million of unencumbered
assets.
Use of Proceeds............. The net proceeds to the Operating Partnership
from the Offering will be used to repay
outstanding borrowings under the Operating
Partnership's unsecured revolving line of credit
(the "Credit Facility"). See "Use of Proceeds."
S-8
<PAGE>
Limitations on Incurrence The Indenture with respect to the Notes contains
of Debt..................... various covenants, including the following:
(1) The Operating Partnership will not, and will
not permit any Subsidiary to, incur any Debt
if, after giving effect thereto, the
aggregate principal amount of all outstanding
Debt of the Operating Partnership and its
Subsidiaries on a consolidated basis is
greater than 60% of the sum of (i) Total
Assets as of the end of the Operating
Partnership's 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 prior to the incurrence of such Debt
and (ii) the increase in Total Assets from
the end of such quarter, including, without
limitation, increases resulting from the
incurrence of such additional Debt (such
increase, together with the Total Assets, is
referred to as "Adjusted Total Assets").
(2) The Operating Partnership will not, and will
not permit any Subsidiary to, incur any
Secured Debt, if, after giving effect
thereto, the aggregate amount of all
outstanding Secured Debt is greater than 40%
of Adjusted Total Assets.
(3) The Operating Partnership will not, and will
not permit any Subsidiary to, incur any Debt
if, on a pro forma basis, the Consolidated
Income Available for Debt Service for the
four consecutive fiscal quarters most
recently ended prior to the date of the
incurrence of such Debt would be less than
1.5 times the Annual Service Charge on all
Debt outstanding immediately after the
incurrence of such additional Debt. For
purposes of the Notes, the definition of
"Annual Service Charge" set forth in the
accompanying Prospectus has been revised
pursuant to the First Supplemental Indenture
(as defined herein). See "Description of
Notes--Certain Covenants" in this Prospectus
Supplement and "Description of Debt
Securities--Certain Covenants" in the
accompanying Prospectus.
(4) The Operating Partnership will maintain Total
Unencumbered Assets of not less than 150% of
the outstanding aggregate principal amount of
Unsecured Debt.
In addition, the ability of the Operating
Partnership's Subsidiaries to incur additional
unsecured indebtedness is subject to certain
limitations. For a more complete description of
the terms and definitions used in the foregoing
covenants, see "Description of Notes--General"
and "--Certain Covenants" in this Prospectus
Supplement and "Description of Debt Securities--
Certain Covenants" in the accompanying
Prospectus.
Listing..................... Application has been made to list the Notes on
the New York Stock Exchange (the "NYSE"),
although there can be no assurance that the Notes
will be approved for listing.
S-9
<PAGE>
THE OPERATING PARTNERSHIP
The Operating Partnership is a limited partnership that focuses primarily on
the acquisition, development, ownership and operation of industrial and office
properties in select suburban markets in the southeastern United States and
Texas. The Operating Partnership, together with its Subsidiaries, is the
entity through which Weeks, a self-administered, self-managed, geographically
focused REIT, conducts all of its business.
At June 30, 1998, the Operating Partnership's portfolio was comprised of 347
Properties totaling approximately 29.3 million square feet, including 54
Properties and one Property expansion (totaling approximately 7.0 million
square feet) under development and/or under agreement to acquire. At June 30,
1998, industrial Properties represented approximately 90.0% of the square
footage of all of the Properties, suburban office Properties represented
approximately 8.4% and retail properties and retail ground leases represented
approximately 1.6%. The average Occupancy Rate of the Operating Partnership's
In-service Properties was 95.7% at June 30, 1998.
At June 30, 1998, the Operating Partnership and its Subsidiaries also owned
or controlled (through agreements to acquire, options and marketing and
development agreements) approximately 2,005 net usable acres of undeveloped
land located primarily in existing business parks with zoning and
infrastructure in place. The Operating Partnership believes the development
potential of this land could ultimately total approximately 20.8 million
square feet (based upon the Operating Partnership's estimate of the
appropriate density and anticipated building types that may be developed, net
of land necessary to provide for adequate infrastructure).
Through its regional expansion strategy, the Operating Partnership has
acquired properties and established a presence in several rapidly growing
cities in Florida, Tennessee, North Carolina and Texas, reducing its
concentration of Properties in metropolitan Atlanta to 53.5% as of June 30,
1998 (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 Operating
Partnership has significantly increased its tenant base and reduced its
exposure to any single tenant. At June 30, 1998, the Operating Partnership's
In-Service Properties were leased to 958 tenants, and its largest tenant
represented 2.2% of the Operating Partnership's total Annualized Base Rent.
This compares to 351 tenants at December 31, 1995, with the Operating
Partnership's largest tenant representing 6.9% of its total Annualized Base
Rent on that date.
The Operating Partnership owns, develops and operates primarily industrial
and suburban office Properties, most of which are located in landscaped
business park settings. The Operating Partnership's business strategy
emphasizes high quality Properties and tenant service. The Operating
Partnership's and its Subsidiaries' approximately 500 employees have
experience in and are engaged in virtually every aspect of the real estate
business, including development, construction, engineering, design, landscape,
leasing, marketing and property management. The Operating Partnership'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 its tenants. The Operating Partnership concentrates its
activities in a limited number of sunbelt cities where it believes it can
sustain a significant market presence.
The Operating Partnership's general partner, Weeks GP Holdings, Inc. ("Weeks
GP" or the "General Partner"), is a wholly owned subsidiary of Weeks. The
Operating Partnership conducts its third-party service businesses through two
unconsolidated Subsidiaries: Weeks Realty Services, Inc. conducts third-party
landscape, property management and leasing services, and Weeks Construction
Services, Inc. conducts third-party construction services. The Operating
Partnership holds 100% of the nonvoting and 1% of the voting common stock of
these Subsidiaries. The remaining voting common
S-10
<PAGE>
stock is held by three executive officers of Weeks. The ownership of the
common stock of each of Weeks Realty Services, Inc. and Weeks Construction
Services, Inc. entitles the Operating Partnership to substantially all (99%)
of the economic benefits from the results of their respective operations.
USE OF PROCEEDS
The net proceeds to the Operating Partnership from the sale of the Notes
offered hereby, after deducting underwriting discounts and commissions and
expenses of the Offering, are expected to be approximately $98.3 million. The
Operating Partnership intends to use the net proceeds of the Offering to repay
borrowings under its $225 million 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, 1998, was 6.7% per annum, excluding $50 million
which had been swapped to effective fixed rates averaging approximately 7.7%.
As of June 30, 1998, outstanding borrowings under the Credit Facility totaled
approximately $187.8 million. The Credit Facility matures on December 31,
2000, and provides for annual extensions through December 31, 2002.
CAPITALIZATION
The following table sets forth the capitalization of the Operating
Partnership as of March 31, 1998, 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 MARCH 31, 1998
-----------------------
ACTUAL AS ADJUSTED
----------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Debt:
Mortgage notes payable................................ $ 268,794 $ 268,794
Unsecured notes....................................... 100,000 100,000
Credit Facility....................................... 67,945 --
7 3/8% Notes due August 1, 2007....................... -- 100,000
---------- ----------
Total debt.......................................... 436,739 468,794
---------- ----------
Partners' capital....................................... 640,341 640,341
---------- ----------
Total capitalization.................................... $1,077,080 $1,109,135
========== ==========
</TABLE>
S-11
<PAGE>
SELECTED FINANCIAL AND OTHER INFORMATION
The following table sets forth the Operating Partnership's consolidated
selected financial and operating information for the three months ended March
31, 1998 and 1997, and the years ended December 31, 1997 and 1996. The
Operating Partnership's selected balance sheet data is presented at March 31,
1998 and December 31, 1997. 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>
THREE MONTHS THREE MONTHS
ENDED ENDED
MAR. 31, MAR. 31, YEAR YEAR
1998 1997 ENDED ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1997 DEC. 31, 1996
------------ ------------ ------------- -------------
(IN THOUSANDS, EXCEPT PER UNIT INFORMATION)
<S> <C> <C> <C> <C>
OPERATING DATA:
Rental and reimbursement
revenues................ $ 32,305 $ 19,557 $ 90,806 $ 52,679
Total revenues........... 32,693 19,899 92,020 53,883
Property operating, main-
tenance, management and
real estate tax ex-
penses.................. 7,467 4,214 19,904 11,474
Depreciation and amorti-
zation.................. 8,361 5,344 24,144 13,474
Interest expense,
including amortization
of deferred financing
costs................... 6,102 5,292 18,833 12,643
General and administra-
tive expenses........... 1,280 877 3,652 2,315
Interest income.......... 279 238 1,509 492
Equity in earnings of
unconsolidated
entities................ 556 648 1,989 1,340
Net income............... 10,318 5,058 29,194 15,809
Net income available to
Common Unitholders...... 7,318 5,058 26,474 15,809
Net income per Common
Unit--basic............. $ 0.29 $ 0.27 $ 1.24 $ 1.11
Net income per Common
Unit--diluted(1)........ 0.29 0.27 1.23 1.10
Weighted average Common
Units--basic............ 24,868 18,605 21,380 14,280
Weighted average Common
Units--diluted(2)....... 25,063 18,840 21,580 14,386
</TABLE>
<TABLE>
<CAPTION>
MAR. 31,
1998
(UNAUDITED) DEC. 31, 1997
----------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Real estate assets before depreciation................ $1,097,257 $ 856,500
Real estate assets, net............................... 1,028,180 794,952
Total assets.......................................... 1,106,702 852,361
Total indebtedness.................................... 436,739 275,515
Partners' capital..................................... 640,341 557,392
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MAR. 31, MAR. 31,
1998 1997 YEAR ENDED YEAR ENDED
(UNAUDITED) (UNAUDITED) DEC. 31, 1997 DEC. 31, 1996
------------ ------------ ------------- -------------
(IN THOUSANDS, EXCEPT RATIOS AND PROPERTY
INFORMATION)
<S> <C> <C> <C> <C>
OTHER DATA:
Cash provided by (used
in):
Operating activities.... $ 15,938 $ 9,562 $ 49,097 $ 28,031
Investing activities.... (131,424) (21,814) (173,574) (120,323)
Financing activities.... 110,546 12,291 129,638 91,570
Funds from opera-
tions(3)................ 15,694 10,412 50,343 29,323
EBIDA(4)................. 24,781 15,694 71,962 41,926
Ratio of funds from
operations before
preferred distributions
and fixed charges to
fixed
charges(3)(5)(6)(7)..... 2.96x 2.50x 2.95x 2.75x
Ratio of funds from
operations before
preferred distributions
and fixed charges to
preferred distributions
and fixed
charges(3)(5)(7)(8)..... 2.18x 2.50x 2.66x 2.75x
Ratio of earnings to
fixed charges(5)(9)..... 1.97x 1.65x 1.98x 1.88x
Total square feet of In-
service Properties(10).. 19,872 14,122 17,101 12,976
Number of In-service
Properties(10).......... 271 197 243 188
</TABLE>
S-12
<PAGE>
- --------
(1) Computed by dividing net income available to Common Unitholders by
weighted average Common Units (diluted).
(2) Represents the weighted average Common Units outstanding and the dilutive
effect of outstanding Weeks common stock options. The net proceeds from
the exercise of Weeks common stock options are contributed to the
Operating Partnership in exchange for additional Common Units and, as
such, the Weeks common stock options have a corresponding dilutive effect
on the net income per Common Unit amounts of the Operating Partnership.
Common Unit equivalents related to outstanding Weeks common stock options
totaled 195,000 and 235,000 for the three months ended March 31, 1998 and
1997, respectively, and 200,000 and 106,000 for the years ended December
31, 1997 and 1996, respectively.
(3) The Operating Partnership believes that funds from operations provides an
additional indicator of the financial performance of the Operating
Partnership. "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. The Operating Partnership computes funds from operations under the
current NAREIT definition by subtracting from net income the distributions
to Preferred Unitholders before making an adjustment for the non-cash
items described above. 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 distributions to Unitholders, and should not be
considered as an alternative to net income for purposes of evaluating the
Operating Partnership'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 Operating Partnership's funds from operations is comparable
to the funds from operations of real estate companies that use the current
NAREIT definition.
(4) EBIDA means net income before property gains, interest expense and
depreciation and amortization. The Operating Partnership believes that in
addition to cash flows and net income, EBIDA is a useful financial
performance measurement for assessing operating performance because,
together with net income and cash flows, EBIDA provides investors with an
additional basis to evaluate the ability of the Operating Partnership to
incur and service debt and to fund acquisitions and other capital
expenditures. Excluded from EBIDA are financing costs such as interest as
well as depreciation and amortization, each of which can significantly
affect the Operating Partnership's results of operations and liquidity and
should be considered in evaluating the Operating Partnership's operating
performance. Further, EBIDA does not represent net income or cash flow
from operating, financing and investing activities as defined by GAAP and
does not necessarily indicate that cash flows will be sufficient to fund
cash needs. EBIDA presented herein is not necessarily comparable to EBIDA
presented by other companies due to the fact that not all companies use
the same definition. It should not be considered as an alternative to net
income as an indicator of the Operating Partnership's operating
performance or to cash flow as a measure of liquidity.
(5) Fixed charges consist of interest costs including amortization of debt
discount and deferred financing fees, whether expensed or capitalized, and
the interest component of rental expense.
(6) The ratio of funds from operations before distributions to Preferred
Unitholders and fixed charges, to fixed charges, is calculated as funds
from operations plus combined distributions to Preferred Unitholders and
fixed charges (excluding capitalized interest), divided by fixed charges.
(7) The Operating Partnership believes that in addition to the ratio of
earnings to fixed charges, this ratio provides a useful measure of the
Operating Partnership's ability to service its debt because of the
exclusion of non-cash items such as depreciation and amortization from the
definition of funds from operations. This ratio differs from a GAAP-based
ratio of earnings to fixed charges and should not be considered as an
alternative to that ratio.
S-13
<PAGE>
(8) The ratio of funds from operations before distributions to Preferred
Unitholders and fixed charges, to distributions to Preferred Unitholders
and fixed charges, is calculated as funds from operations plus
distributions to Preferred Unitholders and fixed charges (excluding
capitalized interest), divided by distributions to Preferred Unitholders
and fixed charges.
(9) The ratio of earnings to fixed charges is computed as income from
operations, before extraordinary items, plus fixed charges (excluding
capitalized interest), divided by fixed charges.
(10) At period end.
BUSINESS AND PROPERTIES
The following table sets forth, as of June 30, 1998, the location and type
of the 347 Properties by square feet, including the 54 Properties and one
Property expansion (totaling approximately 7.0 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............. 7,400,042 5,492,845 1,573,608 14,466,495 1,154,460 48,977 15,669,932 53.5%
Nashville, TN........... 1,837,053 731,886 453,327 3,022,266 86,745 -- 3,109,011 10.6
Research Triangle, NC... 726,775 -- 1,092,060 1,818,835 913,923 -- 2,732,758 9.3
Miami, FL............... 1,950,996 -- 136,361 2,087,357 63,240 415,855 2,566,452 8.8
Dallas/Ft. Worth, TX.... 241,029 1,682,217 -- 1,923,246 -- -- 1,923,246 6.6
Orlando, FL............. 394,657 486,883 241,330 1,122,870 109,021 -- 1,231,891 4.2
Jacksonville, FL........ -- 732,130 72,205 804,335 -- -- 804,335 2.7
Spartanburg, SC......... 198,000 293,200 -- 491,200 -- -- 491,200 1.7
Ft. Lauderdale, FL...... 412,620 -- -- 412,620 -- -- 412,620 1.4
Tampa, FL............... 68,480 173,514 -- 241,994 125,000 -- 366,994 1.2
---------- --------- --------- ---------- --------- ------- ---------- -----
Total................... 13,229,652 9,592,675 3,568,891 26,391,218 2,452,389 464,832 29,308,439 100.0%
========== ========= ========= ========== ========= ======= ========== =====
Percent of Total........ 45.1% 32.7% 12.2% 90.0% 8.4% 1.6% 100.0%
==== ==== ==== ==== === === =====
</TABLE>
PROPERTY OCCUPANCY
The following tables set forth the average Occupancy Rate (weighted by
square footage) of the Operating Partnership's In-service Properties as of
June 30, 1998. At that date, the Operating Partnership owned 293 In-service
Properties totaling approximately 22.3 million square feet.
OCCUPANCY RATE OF IN-SERVICE PROPERTIES
AS OF JUNE 30, 1998
(BY PROPERTY LOCATION)
<TABLE>
<S> <C>
Atlanta, GA........................................................... 95.5%
Nashville, TN......................................................... 95.5
Research Triangle, NC................................................. 95.1
Miami, FL............................................................. 96.3
Dallas/Ft. Worth, TX.................................................. 100.0
Orlando, FL........................................................... 94.6
Jacksonville, FL...................................................... 84.6
Spartanburg, SC....................................................... 100.0
-----
Total average....................................................... 95.7%
=====
</TABLE>
OCCUPANCY RATE OF IN-SERVICE PROPERTIES
AS OF JUNE 30, 1998
(BY PROPERTY TYPE)
<TABLE>
<S> <C>
Business distribution.................................................. 96.4%
Bulk warehouse......................................................... 95.0
Business service....................................................... 94.9
----
Total industrial average............................................. 95.7
----
Suburban office........................................................ 97.0
Retail................................................................. 90.8
----
Total average........................................................ 95.7%
====
</TABLE>
S-14
<PAGE>
PROPERTY ANNUALIZED BASE RENT
The following tables set forth, as of June 30, 1998, the total Annualized
Base Rent from leases in the Operating Partnership's In-service Properties, on
a percentage basis by the location and type of Property.
PERCENTAGE OF ANNUALIZED BASE RENT
AS OF JUNE 30, 1998
(BY PROPERTY LOCATION)
<TABLE>
<S> <C>
Atlanta, GA........................................................... 53.2%
Nashville, TN......................................................... 9.6
Research Triangle, NC................................................. 15.3
Miami, FL............................................................. 14.1
Dallas/Ft. Worth, TX.................................................. 2.8
Orlando, FL........................................................... 2.8
Jacksonville, FL...................................................... 1.2
Spartanburg, SC....................................................... 1.0
-----
Total............................................................... 100.0%
=====
</TABLE>
PERCENTAGE OF ANNUALIZED BASE RENT
AS OF JUNE 30, 1998
(BY PROPERTY TYPE)
<TABLE>
<S> <C>
Business distribution................................................. 44.9%
Bulk warehouse........................................................ 16.4
Business service...................................................... 17.8
-----
Total industrial.................................................... 79.1%
-----
Suburban office....................................................... 18.8
Retail................................................................ 2.1
-----
Total............................................................... 100.0%
=====
</TABLE>
ACQUISITIONS
During the 12 months ended June 30, 1998, the Operating Partnership acquired
52 industrial, suburban office and retail Properties, with a total of
approximately 5.0 million square feet, and with a total cost, including
acquisition-related costs and expenses, of approximately $311.8 million. In
addition, the Operating Partnership has agreed to acquire 10 industrial
Properties, totaling approximately 1.5 million square feet and with a total
cost, including acquisition-related costs and expenses, of approximately $70.0
million, and has committed, subject to completing or updating its due
diligence procedures, to acquire development land with a total cost of
approximately $29.5 million. The Property acquisitions discussed above reflect
the Operating Partnership's new market expansion strategy.
S-15
<PAGE>
RECENTLY COMPLETED ACQUISITIONS
The following table contains information regarding the Operating
Partnership's recently completed acquisitions.
ACQUISITIONS COMPLETED BETWEEN JULY 1, 1997 AND JUNE 30, 1998
(BY PROPERTY LOCATION)
<TABLE>
<CAPTION>
TOTAL
NUMBER OF SQUARE TOTAL
PROPERTY LOCATION PROPERTIES FEET COST(1)
- ----------------- ---------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nashville, TN..................................... 5 497,706 $ 29,077
Research Triangle, NC............................. 13 843,436 56,707
Miami, FL......................................... 24 2,476,452 175,200
Dallas/Ft. Worth, TX.............................. 5 1,074,315 41,100
Jacksonville, FL.................................. 5 153,205 9,689
--- --------- --------
Total........................................... 52 5,045,114 $311,773
=== ========= ========
</TABLE>
- --------
(1) Includes closing costs and acquisition expenses.
PENDING ACQUISITIONS
The following table contains information regarding the Operating
Partnership's Properties currently under agreement to acquire.
ACQUISITIONS--UNDER AGREEMENT TO ACQUIRE
<TABLE>
<CAPTION>
TOTAL ESTIMATED
NUMBER OF SQUARE ACQUISITION ESTIMATED
MARKET/PROPERTY OR BUSINESS PARK PROPERTIES FEET(1) DATE(2) COSTS(3)
- -------------------------------- ---------- --------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Nashville, TN:
Aspen Grove Business Ctr.
320 Premier Court................ 1 106,358 3Q98 $ 5,366
Building V....................... 1 160,848 4Q98 6,829
Miami, FL:
Beacon Centre Building 13........ 1 90,000 1Q99 5,100
Dallas/Ft. Worth, TX:
MEPC Acquisition................. 4 848,931 3Q98 40,200(4)
Jacksonville, FL:
Jacksonville International
Tradeport....................... 3 327,630 3Q98 12,442
--- --------- -------
Totals........................... 10 1,533,767 $69,937
=== ========= =======
</TABLE>
- --------
(1) Properties are currently under development or in lease-up. Actual leasable
square feet may vary upon completion.
(2) Estimated acquisition date represents the estimated closing date of the
acquisition of such property under the terms of the applicable agreements.
(3) Includes closing costs and acquisition expenses. There can be no assurance
that the total cost of the Property will not exceed the estimate.
(4) Estimated cost assumes that the Properties will be acquired at a
stabilized occupancy level. The actual consideration for these Properties
will be based upon actual occupancy levels achieved prior to September 30,
1998, with a minimum acquisition price of approximately $32,500,000.
DEVELOPMENT
During the 12 months ended June 30, 1998, the Operating Partnership
stabilized 24 industrial and suburban office Properties and one Property
expansion, with a total of approximately 2.4 million
S-16
<PAGE>
square feet and with a total cost of approximately $125.5 million. As of June
30, 1998, these completed and stabilized Properties and the one Property
expansion had an average Occupancy Rate of approximately 94%. In addition, at
June 30, 1998, the Operating Partnership had 44 industrial and suburban office
Properties and one Property expansion under development totaling approximately
5.4 million square feet, with a total estimated cost of approximately $292.4
million. Of these Properties, 27%, measured by estimated total cost, are pre-
leased build-to-suits. Including these build-to-suits, at June 30, 1998,
approximately 52% of the Operating Partnership's Properties under development
were leased or pre-leased (based on square footage).
The Operating Partnership has substantial experience developing projects
throughout its more than 30-year history, and has developed a systematic
approach to development designed to mitigate risk. This includes carefully
analyzing supply and demand by both property type and submarket before
commencing a project, performing substantially all of the development,
construction and landscaping functions using in-house personnel in order to
control cost, quality and building delivery schedules, thoroughly reviewing
development investment decisions by an Investment Committee consisting of the
Operating Partnership's senior management, diversifying development projects
across a number of locations and property types and limiting the Operating
Partnership's investment in any single project. See "--Acquisition and
Development Risks."
The following tables detail the Operating Partnership's development activity
by location and type of Property.
PROPERTIES UNDER DEVELOPMENT
AS OF JUNE 30, 1998
(BY PROPERTY LOCATION)
<TABLE>
<CAPTION>
NUMBER OF
PROPERTIES
OR ESTIMATED ESTIMATED PERCENTAGE OF
PROPERTY SQUARE TOTAL ESTIMATED
PROPERTY LOCATION EXPANSIONS FEET(1) COST(2) TOTAL COST(2)
- ----------------- ---------- --------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Atlanta, GA........................ 21 2,728,486 $138,012 47.2%
Nashville, TN...................... 5 649,491 28,642 9.8
Research Triangle, NC.............. 4 443,224 33,217 11.3
Orlando, FL........................ 6 492,540 31,358 10.7
Spartanburg, SC.................... 1 105,600 3,243 1.1
Jacksonville, FL................... 2 233,500 7,297 2.5
Ft. Lauderdale, FL................. 3 412,620 29,102 10.0
Tampa, FL.......................... 3 366,994 21,498 7.4
--- --------- -------- -----
Total/average.................... 45 5,432,455 $292,369 100.0%
=== ========= ======== =====
</TABLE>
PROPERTIES UNDER DEVELOPMENT
AS OF JUNE 30, 1998
(BY PROPERTY TYPE)
<TABLE>
<CAPTION>
NUMBER OF
PROPERTIES ESTIMATED
OR ESTIMATED ESTIMATED PERCENTAGE OF AVERAGE
PROPERTY SQUARE TOTAL ESTIMATED COST PER
PROPERTY TYPE EXPANSIONS FEET(1) COST(2) TOTAL COST(2) PROPERTY(2)
- ------------- ---------- --------- --------- ------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Business distribution... 17 1,891,529 $ 95,017 32.5% $5,589
Bulk warehouse.......... 12 2,138,969 69,686 23.8 5,807
Business service........ 9 602,726 45,027 15.4 5,003
Suburban office......... 7 799,231 82,639 28.3 11,806
--- --------- -------- ----- ------
Total................. 45 5,432,455 $292,369 100.0% $6,497
=== ========= ======== ===== ======
</TABLE>
S-17
<PAGE>
- --------
(1) Actual leasable square feet may vary upon completion.
(2) The estimated total cost information presented includes the Operating
Partnership's estimate of the fair market value of any development land
used in the development and all estimated capitalized costs to be incurred
through the development stabilization date, and reflects the Operating
Partnership's 85% ownership of one Property being developed with a third
party in a joint venture. With respect to Properties under development or
in lease-up, there can be no assurance that the actual cost will not
exceed the estimate.
The following table details the Operating Partnership's development activity
by estimated stabilization date.
PROPERTIES UNDER DEVELOPMENT
AS OF JUNE 30, 1998
(BY ESTIMATED STABILIZATION DATE(1))
<TABLE>
<CAPTION>
NUMBER OF
PROPERTIES ESTIMATED ESTIMATED
OR PROPERTY SQUARE TOTAL
ESTIMATED STABILIZATION DATE EXPANSIONS FEET(2) COST(3)
- ---------------------------- ----------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
July 1, to Dec. 31, 1998......................... 10 1,397,661 $ 70,224
1999............................................. 33 3,836,294 207,802
2000............................................. 2 198,500 14,343
--- --------- --------
Total.......................................... 45 5,432,455 $292,369
=== ========= ========
</TABLE>
- --------
(1) There can be no assurance that Properties under development will be
completed or stabilized by their respective estimated completion and
stabilization dates.
(2) Actual leasable square feet may vary upon completion.
(3) The estimated total cost information presented includes the Operating
Partnership's estimate of the fair market value of any development land
used in the development and all estimated capitalized costs to be incurred
through the development stabilization date, and reflects the Operating
Partnership's 85% ownership of one Property being developed with a third
party in a joint venture. With respect to Properties under development or
in lease-up, there can be no assurance that the actual cost will not
exceed the estimate.
ACQUISITION AND DEVELOPMENT RISKS
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 Operating Partnership, or (iv) the Operating
Partnership 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. New project development is subject to a number of
risks, including risks that the Operating Partnership may not be able to
obtain financing to complete development on economically feasible terms, 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.
S-18
<PAGE>
CLIENT RELATIONSHIPS
The Operating Partnership's 30 largest tenants (measured by Annualized Base
Rent as of June 30, 1998) occupy a total of approximately 4.6 million square
feet and represented 23.4% of Annualized Base Rent from all leases in place
where tenants were paying rent as of June 30, 1998. As shown in the table
below, no single tenant accounted for more than 2.2% of the Operating
Partnership's total Annualized Base Rent as of June 30, 1998. Information
presented in the table below excludes Properties under development and/or
under agreement to acquire at June 30, 1998.
30 LARGEST TENANTS MEASURED BY ANNUALIZED BASE RENT
AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% OF TOTAL
SQUARE NUMBER ANNUALIZED ANNUALIZED
RANK TENANT FEET OF LEASES BASE RENT BASE RENT STATE
---- ------------------------ --------- --------- ----------- ---------- --------
<C> <S> <C> <C> <C> <C> <C>
1 Northern Telecom, Inc.
(1).................... 401,349 8 $ 3,002,853 2.2% NC,TN
2 Scientific Atlanta,
Inc.................... 573,951 11 2,616,594 2.0 GA
3 Ikon Office Solutions,
Inc.................... 177,000 4 1,468,400 1.1 GA
4 Interpath
Communications, Inc.... 89,630 2 1,416,842 1.1 NC
5 GTE Mobilnet Service
Corporation............ 126,124 3 1,351,146 1.0 GA,NC
6 360(degrees)
Communications......... 114,476 7 1,299,767 1.0 NC
7 Radian International
LLC.................... 90,159 2 1,173,802 0.9 NC
8 Anixter, Inc............ 178,822 4 1,098,144 0.8 GA
9 Tech Data Corporation... 138,996 1 1,009,111 0.8 FL
10 Square D Company........ 102,262 2 992,016 0.7 TN,FL
11 Honeywell, Inc.......... 70,016 3 963,953 0.7 GA
12 PPD Pharmaco, Inc....... 89,130 5 934,271 0.7 NC
13 DeVry Inc............... 64,981 1 928,269 0.7 GA
14 The Athlete's Foot
Group, Inc............. 162,651 1 924,069 0.7 GA
15 Merisel, Inc............ 142,487 2 900,147 0.7 FL
16 Ingram-Micro, Inc....... 193,973 4 887,002 0.7 GA,FL
17 Fisher Scientific
Company................ 223,219 1 875,019 0.7 GA
18 Moore U.S.A., Inc....... 200,515 1 812,086 0.6 TX
19 National Data
Corporation............ 50,283 4 786,777 0.6 GA
20 Data General
Corporation............ 86,000 1 775,720 0.6 GA
21 Saab Cars U.S.A., Inc... 63,625 3 749,509 0.6 GA
22 Vanstar Corporation..... 86,880 5 740,449 0.6 GA
23 Reckitt & Colman, Inc... 313,900 2 733,120 0.5 GA
24 AT&T Corp............... 62,271 4 721,880 0.5 NC,GA,TN
25 Quadram
Corp./Intelligent
Systems................ 137,100 1 719,775 0.5 GA
26 Best Buy Stores, L.P. .. 222,643 1 703,552 0.5 GA
27 United Healthcare
Services, Inc.......... 72,991 2 699,856 0.5 GA,SC
28 Tridom Corporation...... 87,017 3 690,045 0.5 GA
29 Ahlstrom Recovery,
Inc.................... 62,893 2 681,698 0.5 GA
30 Sally Foster, Inc....... 197,200 2 673,237 0.5 SC
--------- --- ----------- ----
4,582,544 92 $31,329,105 23.4%
========= === =========== ====
</TABLE>
- --------
(1) Leases with Northern Telecom totaling 370,824 square feet expire on June
30, 2005, but are subject to an early-termination right that permits
Northern Telecom to terminate any of the leases on June 30, 2000, by
delivering an early-termination notice to the Operating Partnership on or
before June 30, 1999. In the event it exercises its early-termination
option, Northern Telecom will be obligated to make certain termination
payments to the Operating Partnership.
S-19
<PAGE>
LEASING TRENDS
The leases for the Operating Partnership'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, the tenant typically pays for all taxes,
insurance and operating costs. Approximately 67.8% of the Operating
Partnership's leases (based on leased square footage as of June 30, 1998)
contain contractual or CPI-based rent escalations.
The Operating Partnership generally continues to be able to increase average
rents. During the six months ended June 30, 1998, the Operating Partnership
renewed or re-leased approximately 1.3 million square feet of second-
generation space in its Properties. Cash-basis rental rates on this space
increased by an average of 6.6% (weighted by square footage), 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, 1998:
CASH-BASIS RENT INCREASES BY PROPERTY TYPE
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
Bulk warehouse........................................................ 5.0%
Business distribution................................................. 7.3
Business service...................................................... 6.3
Suburban office....................................................... 7.2
Retail................................................................ --(1)
---
Average............................................................. 6.6%
===
</TABLE>
- --------
(1) The Operating Partnership did not have any second-generation leasing
activity in its retail In-service Properties during the first six months
of 1998.
S-20
<PAGE>
LEASE EXPIRATIONS
The following tables show scheduled lease expirations for leases under which
tenants were paying rent to the Operating Partnership as of June 30, 1998,
assuming no exercise of renewal options or termination rights, if any.
LEASE EXPIRATIONS
TOTAL PORTFOLIO
<TABLE>
<CAPTION>
AVERAGE CASH
BASE RENTAL
% OF TOTAL RATE PER
SQUARE % OF TOTAL ANNUALIZED ANNUALIZED SQUARE FOOT
YEAR OF FEET SQUARE FEET BASE RENT(/1/) BASE RENT(/1/) AT
EXPIRATION EXPIRING EXPIRING EXPIRING EXPIRING EXPIRATION
- ---------- ---------- ----------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
1998 2,423,799 11.1% $ 13,454,724 9.6% $ 5.55
1999 2,396,483 10.9 15,148,569 10.8 6.32
2000 3,530,119 16.1 21,525,253 15.4 6.10
2001 2,545,894 11.6 15,595,470 11.2 6.13
2002 2,968,896 13.6 23,985,928 17.2 8.08
2003 2,344,254 10.7 17,808,508 12.7 7.60
2004 1,261,513 5.8 7,870,845 5.6 6.24
2005 1,027,163 4.7 3,666,964 2.6 3.57
2006 769,355 3.5 3,976,791 2.8 5.17
2007 1,318,177 6.0 7,917,199 5.7 6.01
2008 562,516 2.6 3,586,287 2.6 6.38
2009 19,936 0.1 157,281 0.1 7.89
2010 65,340 0.3 90,000 0.1 1.38(2)
2011 349,569 1.6 1,783,541 1.3 5.10
2012 and
later 319,168 1.4 3,233,169 2.3 10.13
---------- ----- ------------ ----- ------
21,902,182 100.0% $139,800,529 100.0% $ 6.38
========== ===== ============ ===== ======
</TABLE>
INDUSTRIAL PROPERTIES
<TABLE>
<CAPTION>
AVERAGE CASH
BASE RENTAL
% OF TOTAL RATE PER
SQUARE % OF TOTAL ANNUALIZED ANNUALIZED SQUARE FOOT
YEAR OF FEET SQUARE FEET BASE RENT(/1/) BASE RENT(/1/) AT
EXPIRATION EXPIRING EXPIRING EXPIRING EXPIRING EXPIRATION
- ---------- ---------- ----------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
1998 2,181,100 11.0% $ 10,043,411 9.2% $4.60
1999 2,208,637 11.2 12,969,919 11.8 5.87
2000 3,287,713 16.6 18,133,742 16.5 5.52
2001 2,433,106 12.3 13,954,179 12.7 5.74
2002 2,549,895 12.9 16,919,723 15.4 6.64
2003 2,051,799 10.4 12,928,487 11.8 6.30
2004 1,149,884 5.8 5,995,489 5.5 5.21
2005 996,025 5.0 3,207,094 2.9 3.22
2006 747,981 3.8 3,607,597 3.3 4.82
2007 1,261,953 6.4 7,326,995 6.7 5.81
2008 476,948 2.4 2,056,182 1.9 4.31
2009 19,936 0.1 157,281 0.1 7.89
2010 -- -- -- -- --
2011 293,819 1.5 1,703,541 1.6 5.80
2012 and
later 104,260 0.6 700,730 0.6 6.72
---------- ----- ------------ ----- -----
19,763,056 100.0% $109,704,370 100.0% $5.55
========== ===== ============ ===== =====
</TABLE>
S-21
<PAGE>
SUBURBAN OFFICE PROPERTIES
<TABLE>
<CAPTION>
AVERAGE CASH
BASE RENTAL
% OF TOTAL RATE PER
SQUARE % OF TOTAL ANNUALIZED ANNUALIZED SQUARE FOOT
YEAR OF FEET SQUARE FEET BASE RENT(/1/) BASE RENT(/1/) AT
EXPIRATION EXPIRING EXPIRING EXPIRING EXPIRING EXPIRATION
---------- --------- ----------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
1998 230,337 13.4% $ 3,216,183 12.0% $13.96
1999 139,695 8.1 1,756,880 6.6 12.58
2000 190,419 11.1 2,833,323 10.6 14.88
2001 109,543 6.4 1,586,446 5.9 14.48
2002 416,023 24.2 7,007,211 26.2 16.84
2003 283,500 16.5 4,686,915 17.5 16.53
2004 104,255 6.1 1,699,715 6.4 16.30
2005 25,723 1.5 382,244 1.4 14.86
2006 17,459 1.0 309,487 1.2 17.73
2007 56,224 3.3 590,204 2.2 10.50
2008 78,699 4.6 1,530,105 5.7 19.44
2009 -- -- -- -- --
2010 -- -- -- -- --
2011 -- -- -- -- --
2012 and later 64,981 3.8 1,164,420 4.3 17.92
--------- ----- ----------- ----- ------
1,716,858 100.0% $26,763,133 100.0% $15.59
========= ===== =========== ===== ======
</TABLE>
- --------
(1) Represents annualized monthly base rent at the time of lease expirations.
(2) Represents the expiration of a retail ground lease.
RE-LEASING COSTS
The following tables summarize by period the Operating Partnership'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. Amounts below are reflected in the period when the
tenant improvement and/or leasing commission is substantially completed or
paid and the tenant occupies the space.
CAPITALIZED TENANT IMPROVEMENTS AND LEASING COMMISSIONS
INDUSTRIAL PROPERTIES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MAR. 31, 1998 DEC. 31, 1997
------------- -------------
(IN THOUSANDS, EXCEPT PER
SQUARE FOOT INFORMATION)
<S> <C> <C>
RE-LEASING
Square feet leased............................... 470 1,073
Capitalized tenant improvements and leasing
commissions..................................... $1,246 $2,276
Capitalized tenant improvements and leasing
commissions per square foot..................... $ 2.65 $ 2.12
RENEWAL
Square feet leased............................... 422 2,358
Capitalized tenant improvements and leasing
commissions..................................... $ 304 $1,392
Capitalized tenant improvements and leasing
commissions per square foot..................... $ 0.72 $ 0.59
TOTAL
Square feet...................................... 892 3,431
Total capitalized tenant improvements and leasing
commissions..................................... $1,550 $3,668
Total capitalized tenant improvements and leasing
commissions per square foot..................... $ 1.74 $ 1.07
</TABLE>
S-22
<PAGE>
SUBURBAN OFFICE PROPERTIES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MAR. 31, 1998 DEC. 31, 1997
------------- -------------
(IN THOUSANDS, EXCEPT PER
SQUARE FOOT INFORMATION)
<S> <C> <C>
RE-LEASING
Square feet leased............................... 29 69
Capitalized tenant improvements and leasing
commissions..................................... $ 64 $ 493
Capitalized tenant improvements and leasing
commissions per square foot..................... $2.19 $7.11
RENEWAL
Square feet leased............................... 51 134
Capitalized tenant improvements and leasing
commissions..................................... $ 4 $ 267
Capitalized tenant improvements and leasing
commissions per square foot..................... $0.09 $1.99
TOTAL
Square feet...................................... 80 203
Total capitalized tenant improvements and leasing
commissions..................................... $ 68 $ 760
Total capitalized tenant improvements and leasing
commissions per square foot..................... $0.86 $3.74
</TABLE>
UNDEVELOPED LAND
An important part of the Operating Partnership's 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 Operating Partnership and its Subsidiaries employ 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.
The following schedule details the Operating Partnership's and its
Subsidiaries' undeveloped land interests as of June 30, 1998. The land
detailed below is located primarily in existing business parks with zoning and
infrastructure in place. The Operating Partnership estimates that the
development potential of the undeveloped land ultimately could total
approximately 20.8 million square feet.
UNDEVELOPED LAND
(IN NET USABLE ACRES)
<TABLE>
<CAPTION>
ESTIMATED
DEVELOPMENT
POTENTIAL
TOTAL (SQUARE FEET)(1)
------- ----------------
<S> <C> <C>
Operating Partnership-owned............................ 516.9 6,869,000
Owned in joint ventures(2)............................. 501.1 4,069,000
Under agreement to acquire(3).......................... 286.9 3,625,000
Optioned............................................... 502.7 4,927,000
Marketing/development agreements(4).................... 197.1 1,322,500
------- ----------
Total.............................................. 2,004.7 20,812,500
======= ==========
</TABLE>
- --------
(1) Based upon the Operating Partnership'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 Operating Partnership's estimate of development
potential will be realized.
S-23
<PAGE>
(2) The Operating Partnership's and its Subsidiaries' interests in undeveloped
land held in joint ventures ranges from 0% to 30%.
(3) The Operating Partnership has agreed to acquire this land over various
periods ranging up to approximately five years.
(4) Under the terms of the development agreements, the Operating Partnership
or its Subsidiaries 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 marketing agreements
generally provide for the Operating Partnership or its Subsidiaries to be
paid marketing or management fees in conjunction with services provided.
Both the development and marketing agreements generally contain certain
non-competition provisions covering a limited geographic area.
S-24
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of each of Weeks and the General Partner currently
consists of eleven persons. Certain information regarding the directors and
officers of each of Weeks and the General Partner is set forth below,
including their ages as of June 30, 1998:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
A. Ray Weeks Jr. 45 Chairman of the Board and Chief Executive Officer
Thomas D. Senkbeil 49 Vice Chairman of the Board and Chief Investment
Officer
Forrest W. Robinson 47 Director; President and Chief Operating Officer
John W. Nelley Jr. 49 Director; Managing Director in charge of the
Operating Partnership's activities in Nashville,
Tennessee
Barrington H. Branch 58 Director; President, The Branch-Shelton Company LLC
George D. Busbee 70 Director; Of counsel of King & Spalding; former
Governor of Georgia
William Cavanaugh III 59 Director; President and Chief Executive Officer,
Carolina Power & Light
Armando Codina 51 Director; Chief Executive Officer, Codina Group,
Inc.
Charles R. Eitel 48 Director; President and Chief Operating Officer,
Interface, Inc.
Harold S. Lichtin 49 Director; President, Lichtin Corporation
William O. McCoy 64 Director; Vice-President, Finance, The University
of North Carolina; former Vice Chairman of the
Board of BellSouth Corporation
Albert W. Buckley Jr. 54 Managing Director, Nashville, Tennessee
Robert G. Cutlip 48 Senior Vice President, North Carolina Operations
Clyde H. Duckett 55 Senior Vice President, Construction
Mark W. Flowers 40 Senior Vice President, Landscape
Charles D. Graham 54 Senior Vice President, North Florida Operations
Eben Hardie III 39 Senior Vice President, Development
David P. Stockert 36 Senior Vice President and Chief Financial Officer
Jeffrey D. Turner 38 Senior Vice President, Dallas/Ft. Worth Operations
David L. Barker 42 Vice President, Property Management
Bobby L. Beavers 52 Vice President, Development, Jacksonville
Elizabeth C. Belden 43 Vice President, Corporate Counsel
Julia S. Rettig 30 Vice President, Marketing, Tampa
Patricia P. Clayton 45 Vice President, Property Management
Philip W. Cobb 49 Vice President, Building Construction
John F. Coleman 39 Vice President, Development, Orlando
Arthur J. Quirk 40 Vice President and Controller
Moses L. Salcido 38 Vice President, Marketing, Orlando
Robert K. Sanders, Jr. 38 Vice President, Estimating
Mark L. Scott 38 Vice President, Interior Construction
Thomas W. Trocheck 43 Vice President, Development-Engineering
Susan C. Walker 45 Vice President, Investor Relations
Robert T. Weeks 38 Vice President, Information Technology
</TABLE>
S-25
<PAGE>
DESCRIPTION OF NOTES
The following description of certain terms of the Notes sets forth certain
terms and provisions of the Notes and the Indenture (as defined below) and is
qualified in its entirety by reference to the terms and provisions of the
Notes and the Indenture, which are incorporated herein by reference.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Notes and in the Indenture. The following description of the
particular terms of the Notes does not purport to be complete and is subject
to, and, to the extent inconsistent therewith, replaces the description of the
general terms and provisions of the Debt Securities set forth in the
accompanying Prospectus.
GENERAL
The Notes will be limited to the aggregate principal amount of $100,000,000
and will mature on August 1, 2007. The Notes are redeemable at any time at the
option of the Operating Partnership, in whole or in part, at a redemption
price equal to the sum of (i) the principal of the Notes being redeemed plus
accrued interest to the redemption date and (ii) the Make-Whole Amount, if
any. The Notes will not be entitled to the benefits of any sinking fund. The
Notes are to be issued pursuant to an Indenture, dated as of March 20, 1998,
as amended and supplemented by the First Supplemental Indenture (the "First
Supplemental Indenture"), dated as of July 30, 1998 (collectively, the
"Indenture"), between the Operating Partnership and State Street Bank and
Trust Company, as Trustee (the "Trustee"). The terms of the Notes include
those provisions contained in the Notes and the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended
(the "TIA"). The Notes are subject to all such terms, and holders of Notes are
referred to the Notes, the Indenture and the TIA for a statement thereof.
Copies of the Indenture and the form of the Notes are available for inspection
at the office of the Trustee located at Two International Place, Fourth Floor,
Boston, Massachusetts 02110 (the "Corporate Trust Office").
The Notes will be direct, unsecured and unsubordinated obligations of the
Operating Partnership and will rank pari passu with each other and with all
other unsecured and unsubordinated indebtedness of the Operating Partnership
from time to time outstanding. However, the Notes will be effectively
subordinated to mortgages and other secured indebtedness of the Operating
Partnership and its Subsidiaries. The Notes also will be effectively
subordinated to any unsecured indebtedness of the Operating Partnership's
Subsidiaries. As of the date of this Prospectus Supplement, the Operating
Partnership's Subsidiaries do not have any outstanding unsecured indebtedness,
except for a $2.0 million unsecured obligation of one of the Operating
Partnership's Subsidiaries incurred in connection with the Operating
Partnership's acquisition of certain development land in Jacksonville,
Florida. Pursuant to the Indenture and in addition to the financial covenants
described under "Description of Debt Securities--Certain Covenants" in the
accompanying Prospectus, the Operating Partnership (i) will not permit the
Subsidiaries that it controls to incur additional unsecured indebtedness and
(ii) will enforce agreements by the Subsidiaries that it does not control
pursuant to which such Subsidiaries have agreed not to incur additional
unsecured indebtedness, other than, in each case, unsecured indebtedness owed
to the Operating Partnership and trade payables incurred in the ordinary
course of such Subsidiaries' business.
As of March 31, 1998, the Operating Partnership and its Subsidiaries had
outstanding $169.9 million of unsecured, unsubordinated indebtedness, $268.8
million of secured indebtedness and $727.5 million of unencumbered assets. As
of March 31, 1998, on a pro forma basis, after giving effect to application of
the net proceeds from the Offering as described in "Use of Proceeds," the
Operating Partnership and its Subsidiaries would have had outstanding $202.0
million of unsecured, unsubordinated indebtedness, $268.8 million of secured
indebtedness and $757.8 million of unencumbered assets. Other than the
limitations set forth in the Notes and in the Indenture that are described
above and in the Prospectus under the caption "Description of Debt
Securities--Certain Covenants," the Indenture will not prohibit the Operating
Partnership and its Subsidiaries from incurring additional secured and
unsecured indebtedness.
S-26
<PAGE>
The Notes will be issued only in fully registered, book-entry form, in
denominations of $1,000 and integral multiples thereof, except under the
limited circumstances described below under "--Book-Entry System."
Except as provided under "Description of Debt Securities--Certain
Covenants--Existence," "Description of Debt Securities--Merger, Consolidation
or Sale," "Description of Debt Securities-- Events of Default" and
"Description of Debt Securities--Modification and Waiver" in the accompanying
Prospectus, the Notes and the Indenture do not contain any other provisions
that would afford Holders (as defined below) of the Notes protection in the
event of (i) a highly leveraged or similar transaction involving the Operating
Partnership, the management of the Operating Partnership or the Company, or
any affiliate of either such party, (ii) a change in control or (iii) a
reorganization, restructuring, merger or similar transaction involving the
Operating Partnership that may adversely affect the Holders of the Notes. The
financial covenants of the Operating Partnership described under "--Certain
Covenants" below and "Description of Debt Securities--Certain Covenants" in
the accompanying Prospectus would continue to apply, unless waived by Holders
of the Notes, in the event of a highly leveraged or similar transaction
involving the Operating Partnership, management of the Operating Partnership
or the Company, or any affiliate of either such party. In addition, subject to
the limitations set forth under "Description of Debt Securities--Merger,
Consolidation or Sale" in the accompanying Prospectus, 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 Notes.
The Operating Partnership has no present intention of engaging in a highly
leveraged or similar transaction. In addition, certain provisions of Georgia
law and the Company's Restated Articles of Incorporation, as amended,
including its Shareholder Rights Plan and restrictions on ownership and
transfers of the Company's capital stock designed to preserve its status as a
REIT, may act to prevent or hinder any such transactions or a change of
control with respect to the Operating Partnership.
The Notes are not guaranteed by the Company.
The Notes are not subject to any defeasance or covenant defeasance
provisions as described under "Description of Debt Securities--Defeasance and
Covenant Defeasance" in the accompanying Prospectus.
CERTAIN COVENANTS
For purposes of the Notes, the definition of Annual Service Charge set forth
in the accompanying Prospectus has been revised pursuant to the First
Supplemental Indenture as follows:
"Annual Service Charge" means, for any period, the interest expense of the
Operating Partnership and its Subsidiaries for such period (including, without
duplication, (i) all amortization of debt discount and premiums, (ii) all
accrued interest, (iii) all capitalized interest, and (iv) the interest
component of capitalized lease obligations), determined on a consolidated
basis in accordance with generally accepted accounting principles.
PAYMENT OF PRINCIPAL AND INTEREST ON THE NOTES
Interest on the Notes will accrue at the rate set forth on the cover page of
this Prospectus Supplement from August 4, 1998, or the most recent Interest
Payment Date (as defined below) to which interest has been paid or provided
for, and will be payable in U.S. Dollars semi-annually in arrears on February
1 and August 1 of each year (each, an "Interest Payment Date"), commencing
February 1, 1999. The interest so payable will be paid to the person (the
"Holder") in whose name the applicable Note is registered at the close of
business on the January 15 or July 15 as the case may be (whether or not a
Business Day, as defined below), next preceding the applicable Interest
Payment
S-27
<PAGE>
Date (each, a "Regular Record Date"). The principal of each Note payable on
the Maturity Date will be paid in U.S. Dollars against presentation and
surrender thereof at the Corporate Trust Office of the Trustee located at Two
International Place, Fourth Floor, Boston, Massachusetts 02110. Interest on
the Notes will be computed on the basis of a 360-day year consisting of twelve
30-day months.
MATURITY
The Notes will mature on August 1, 2007 (the "Maturity Date"). The Notes may
be redeemed at the option of the Operating Partnership at any time. See "--
Optional Redemption." The Notes will not be entitled to the benefit of any
sinking fund.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time at the option of the Operating
Partnership, in whole or in part from time to time, at a redemption price
equal to the sum of (i) the principal amount of the Notes (or portion thereof)
being redeemed plus accrued interest thereon to the redemption date and (ii)
the Make-Whole Amount (as defined below), if any, with respect to such Notes
(or portion thereof) (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes (or any portion thereof) called for redemption shall
have been made available on the redemption date referred to in such notice,
such Notes (or any portion thereof) will cease to bear interest on the date
fixed for such redemption specified in such notice and the only right of the
Holders of such Notes will be to receive payment of the Redemption Price.
Notice of any optional redemption of any Notes (or any portion thereof) will
be given to Holders at their addresses, as shown in the security register for
such Notes, not more than 60 nor less than 30 days prior to the date fixed for
redemption. The notice of redemption will specify, among other items, the
Redemption Price and the principal amount of the Notes held by such Holder to
be redeemed.
The Operating Partnership will notify the Trustee at least 60 days prior to
giving notice of redemption (or such shorter period as is satisfactory to the
Trustee) of the aggregate principal amount of such Notes to be redeemed and
their redemption date. If less than all of the Notes are to be redeemed at the
option of the Operating Partnership, the Trustee shall select, in such manner
as it shall deem fair and appropriate, such Notes to be redeemed in whole or
in part.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption, the
excess, if any, of (i) the aggregate present value as of the date of such
redemption of each dollar of principal being redeemed and the amount of
interest (exclusive of interest accrued to the date of redemption) that would
have been payable in respect of each such dollar if such redemption had not
been made, determined by discounting, on a semi-annual basis, such principal
and interest at the Reinvestment Rate (determined on the third Business Day
preceding the date such notice of redemption is given) from the respective
dates on which such principal and interest would have been payable if such
redemption had not been made, over (ii) the aggregate principal amount of the
Notes being redeemed.
"Reinvestment Rate" means 0.25% plus the arithmetic mean of the yields under
the heading "Week Ending" published in the most recent Statistical Release
under the caption "Treasury Constant Maturities" for the maturity (rounded to
the nearest month) corresponding to the remaining life to maturity, as of the
payment date of the principal being redeemed. If no maturity exactly
corresponds to such maturity, yields for the two published maturities most
closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding each of
such relevant periods to the nearest month. For the purpose of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
S-28
<PAGE>
"Statistical Release" means the statistical release designated "H.15 (519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States
government securities adjusted to constant maturities, or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonably comparable index which shall be designated by the
Operating Partnership.
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture will, under certain circumstances upon the Operating
Partnership's request, cease to be of further effect with respect to the
Notes, and the Trustee will execute proper instruments acknowledging
satisfaction and discharge of its Indenture as to the Notes.
BOOK-ENTRY SYSTEM
The Notes will be issued in the form of one or more fully-registered Notes
in book-entry form (each, a "Global Note") which will be deposited with, or on
behalf of, The Depository Trust Company ("DTC") and registered in the name of
DTC's nominee. Except as set forth below, the Global Notes may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of
DTC to DTC or another nominee of DTC or by DTC or any such nominee to a
successor of DTC or a nominee of such successor.
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered the sole Holder of the
Notes represented by such Global Note for all purposes under the Indenture and
the beneficial owners of such Notes will be entitled only to those rights and
benefits afforded to them in accordance with DTC's regular operating
procedures. Upon specified written instructions of a Participant (as defined
below), DTC will have its nominee assist Participants in the exercise of
certain Holders' rights, such as demand for acceleration or an instruction to
the Trustee. Except as provided below, owners of beneficial interests in a
Global Note will not be entitled to have Notes registered in their names, will
not receive or be entitled to receive physical delivery of Notes in
certificated form and will not be considered the registered owners or Holders
thereof under the Indenture.
If with respect to the Notes (i) DTC is at any time unwilling or unable to
continue as depository or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act, and a successor depository is not appointed
by the Operating Partnership within 90 days, (ii) an Event of Default under
the Indenture has occurred and is continuing or (iii) the Operating
Partnership, in its sole discretion, determines at any time that such Notes
shall no longer be represented by a Global Note, the Operating Partnership
will issue individual Notes of the applicable amount and in certificated form
in exchange for the Global Note representing such Notes. In any such instance,
an owner of a beneficial interest in a Global Note representing such Notes
will be entitled to physical delivery of individual Notes in certificated form
of like tenor, equal in principal amount to such beneficial interest and to
have such Notes in certificated form registered in its name. Notes so issued
in certificated form will be issued in denominations of $1,000 or any integral
multiple thereof, and will be issued in registered form only, without coupons.
The following is based on information furnished by DTC:
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants, including
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the Underwriters, and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others such as securities
brokers and dealers, banks, and trust companies that clear through or maintain
a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each Note ("Beneficial Owner")
is in turn recorded on the Direct and Indirect Participant's records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which such
Beneficial Owner entered into the transaction. Transfers of ownership
interests in Notes are accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in the Notes,
except as provided in the third paragraph under "--Book-Entry System" above.
The laws of some states require that certain persons take physical delivery in
definitive form of securities which they own. Such limits and such laws may
impair the ability of such persons to own, transfer or pledge beneficial
interests in a Global Note.
To facilitate subsequent transfers, each Global Note is registered in the
name of DTC's partnership nominee, Cede & Co. The deposit of each Global Note
with DTC and its registration in the name of Cede & Co. effects no change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Notes; DTC's records reflect only the identity of the Direct Participants
to whose accounts the Notes are credited, which may or may not be the
Beneficial Owners. The Participants remain responsible for keeping account of
their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants and by Direct Participants and
Indirect Participants to Beneficial Owners are governed by arrangements among
them subject to any statutory or regulatory requirements as may be in effect
from time to time.
Redemption notices shall be sent to DTC. If less than all of the Notes are
being redeemed, DTC's practice is to determine by lot the amount of the Notes
of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Notes.
Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy") to the
issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the record date (identified on a list
attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made by the Operating
Partnership to the Trustee and from the Trustee to DTC. DTC's practice is to
credit Direct Participants' accounts on the payable date in accordance with
their respective holdings as shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts
of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trustee or the
Operating Partnership, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to DTC
is the responsibility of the Operating Partnership or the Trustee,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to the Operating
Partnership or the Trustee. Under such
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circumstances, in the event that a successor securities depository is not
appointed, Note certificates are required to be printed and delivered.
The Operating Partnership may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In
that event, Note certificates will be printed and delivered.
None of the Operating Partnership, any of the Underwriters (as defined
below) or the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial interests
in a Global Note, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Operating Partnership believes to be
reliable, but the Operating Partnership takes no responsibility for the
accuracy thereof.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds. All
payments of principal and interest in respect of the Notes will be made by the
Operating Partnership in immediately available funds.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relating to the purchase, ownership and disposition of the
Notes, but does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based on laws, regulations,
rulings and decisions now in effect (or, in the case of certain United States
Treasury Regulations ("Treasury Regulations"), now in proposed form), all of
which are subject to change, possibly on a retroactive basis. This summary
deals only with Notes held as "capital assets" (within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended (the "Code")) and does
not address tax considerations applicable to investors that may be subject to
special tax rules, such as banks, tax-exempt organizations, insurance
companies, dealers in securities or currencies, persons subject to the mark-
to-market rules of the Code, persons that will hold Notes as a position in a
hedging transaction, "straddle" or "conversion transaction" for tax purposes,
or persons that have a "functional currency" other than the United States
dollar.
This Prospectus Supplement does not address the taxation of the Company or
the Operating Partnership, nor does it address the impact on the Company or
the Operating Partnership of the Company's election to be taxed as a REIT.
Such matters are addressed in the accompanying Prospectus under "Federal
Income Tax Considerations--Taxation of the Company."
The Operating Partnership has not sought any ruling from the Internal
Revenue Service ("IRS") with respect to the statements made and the
conclusions reached in the following summary, and there can be no assurance
that the IRS will agree with such statements and conclusions. INVESTORS
CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO
THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE
LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY
APPLICABLE TAX TREATY.
As discussed under "Federal Income Tax Considerations--Taxation of the
Company--Clinton Administration's Proposed Changes to REIT Asset Tests" in the
accompanying Prospectus, on February 2, 1998, the Clinton Administration
announced a proposal to amend the REIT Asset Tests with respect to non-
qualified REIT subsidiaries such as the Operating Partnership's corporate
Subsidiaries. To date, this proposal has not been formally introduced in
Congress as proposed legislation. No assurance can be given, however, that the
proposal or a similar proposal will not be considered by Congress and enacted.
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U.S. HOLDERS OF THE NOTES
As used herein, the term "U.S. Holder" means any beneficial owner of a Note
that is, for United States federal income tax purposes, (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source, or (iv) a
trust if (A) a court within the United States is able to exercise primary
supervision over the administration of the trust and (B) one or more United
States persons have the authority to control all substantial decisions of the
trust. As used herein, the term "Non-U.S. Holder" means a beneficial owner of
a Note that is not a U.S. Holder.
Payment of Interest. The Notes currently are not expected to be issued with
original issue discount ("OID") for federal income tax purposes. Interest on a
Note without OID generally will be included in the income of a U.S. Holder as
ordinary income at the time such interest is received or accrued, in
accordance with the U.S. Holder's regular method of tax accounting.
Market Discount. If a U.S. Holder purchases a Note at original issue for an
amount that is less than its issue price (or, in the case of a subsequent
purchaser, its stated redemption price at maturity), such U.S. Holder will be
treated as having purchased such Note at a "market discount," unless such
market discount is less than a de minimis amount (generally 1/4 of 1 percent
of the stated redemption price of the Note at maturity times the number of
complete years to maturity after the U.S. Holder acquired the Note).
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment on a Note, or any gain realized on the sale,
exchange, retirement or other disposition of a Note, as ordinary income to the
extent of the lesser of (i) the amount of such payment or realized gain or
(ii) the market discount which has not previously been included in income and
is treated as having accrued on such Note at the time of such payment or
disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless
the U.S. Holder elects to accrue market discount on a constant yield basis.
Once made, such an election is irrevocable.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note
or certain earlier dispositions, because a current deduction is only allowed
to the extent that the interest expense exceeds the portion of market discount
allocable to the days during the taxable year in which the Note was held by
the taxpayer. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or constant yield basis), in
which case the rules described above regarding the treatment as ordinary
income of gain upon the disposition of the Note and upon the receipt of
certain cash payments and regarding the deferral of interest deductions will
not apply. Generally, such currently included market discount is treated as
ordinary interest for federal income tax purposes. Such an election will apply
to all debt instruments with market discount acquired by the U.S. Holder on or
after the first day of the taxable year to which such election applies and may
be revoked only with the consent of the IRS.
Amortizable Bond Premium. If a U.S. Holder purchases a debt instrument for
an amount that is greater than the sum of all amounts payable on the debt
instrument after the purchase date, other than payments of qualified stated
interest, such U.S. Holder will be considered to have purchased the debt
instrument with "amortizable bond premium," generally equal in amount to such
excess. However, in the case of a debt instrument that may be optionally
redeemed prior to maturity (such as the Notes), recently issued Treasury
Regulations (the "Bond Premium Regulations") provide that the amount of
amortizable bond premium is determined by substituting the first date on which
the debt instrument
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may be redeemed (the "redemption date") for the maturity date and the
applicable redemption price on the redemption date for the amount payable at
maturity if the result would increase the holder's yield to maturity (i.e.,
result in a smaller amount of amortizable bond premium properly allocable to
the period before the redemption date). If the issuer does not in fact
exercise its right to redeem the debt instrument on the applicable redemption
date, the debt instrument will be treated (for purposes of the amortizable
bond premium rules) as having matured and then as having been reissued for the
holder's "adjusted acquisition price," which is an amount equal to the
holder's basis in the debt instrument (as determined under the Bond Premium
Regulations), less the sum of (i) any amortizable bond premium allocable to
prior accrual periods and (ii) any payments previously made on the debt
instrument (other than payments of qualified stated interest). The debt
instrument deemed to have been reissued will again be subject to the
amortizable bond premium rules with respect to the remaining dates on which
the debt instrument is redeemable.
A U.S. Holder must make an election to amortize bond premium on a debt
instrument. Once made, the election applies to all taxable debt instruments
then owned and thereafter acquired by the U.S. Holder on or after the first
day of the taxable year to which such election applies, and may be revoked
only with the consent of the IRS. In general, a holder amortizes bond premium
by offsetting the qualified stated interest allocable to an accrual period
with the bond premium allocable to the accrual period, which is determined
under a constant yield method pursuant to the Bond Premium Regulations. If the
bond premium allocable to an accrual period exceeds the qualified stated
interest allocable to such period, the excess is treated by the holder as a
bond premium deduction. The bond premium deduction for each accrual period is
limited to the amount by which the holder's total interest inclusions on the
debt instrument in prior accrual periods exceed the total amount treated by
such holder as a bond premium deduction on the debt instrument in prior
accrual periods. Any amounts not deductible in an accrual period may be
carried forward to the next accrual period and treated as bond premium
allocable to that period.
Disposition of the Notes. Upon the sale, exchange, redemption, retirement or
other disposition of a Note, a U.S. Holder generally will recognize capital
gain or loss equal to the difference between (i) the amount of cash proceeds
and the fair market value of any property received on the disposition (except
to the extent such amount is attributable to accrued but unpaid stated
interest, which is taxable as ordinary income) and (ii) such U.S. Holder's
adjusted tax basis in the Note. For purposes of determining gain or loss, a
U.S. Holder's adjusted tax basis in a Note generally will equal the cost of
the Note to such Holder (increased by accrued market discount, if any, if the
U.S. Holder has included such market discount in income) and decreased by the
amount of any payments, other than qualified stated interest payments,
received, and amortizable bond premium taken, with respect to such Note.
Capital gain or loss recognized upon the disposition of a Note will be a long-
term capital gain or loss if the Note was held for more than one year. As a
result of changes to the taxation of capital gains made by the Internal
Revenue Service Restructuring and Reform Act of 1998, the maximum tax rate
applicable to long-term capital gain recognized by a non-corporate taxpayer
generally will be 20%. A capital gain or loss recognized on a Note held for
one year or less will be a short-term capital gain or loss. Short-term capital
gains generally are subject to tax at the same rate as ordinary income.
NON-U.S. HOLDERS OF THE NOTES
The rules governing the United States federal income taxation of a Non-U.S.
Holder are complex and no attempt will be made herein to provide more than a
summary of such rules. NON-U.S. HOLDERS SHOULD CONSULT WITH THEIR OWN TAX
ADVISORS TO DETERMINE THE EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX
LAWS, AS WELL AS TAX TREATIES, WITH REGARD TO AN INVESTMENT IN THE NOTES.
Payment of Interest. Generally, payment of principal and interest on a Note
to a Non-U.S. Holder will qualify for the "portfolio interest exemption" and
therefore will not be subject to United States
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federal income tax or withholding, unless the Non-U.S. Holder is (i) a direct
or indirect 10% or greater partner (as defined in Section 871(h)(3) of the
Code) in the Operating Partnership, (ii) a controlled foreign corporation
related to the Operating Partnership, or (iii) a bank receiving interest
described in section 881(c)(3)(A) of the Code. To qualify for the portfolio
interest exemption, the last United States payor in the chain of payment prior
to payment to a Non-U.S. Holder (the "Withholding Agent") must have received
in the year in which a payment of interest or principal occurs, or in either
of the two preceding calendar years, a statement that (i) is signed by the
beneficial owner of the Note under penalties of perjury, (ii) certifies that
such owner is not a U.S. Holder, and (iii) provides the name and address of
the beneficial owner. The statement may be made on an IRS Form W-8 or a
substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. In such
case, the signed statement must be accompanied by a copy of the IRS Form W-8
or the substitute form provided by the beneficial owner to the organization or
institution.
Recently issued Treasury Regulations provide alternative methods for
satisfying the identification and certification requirements described in the
preceding paragraph. Based on IRS Notice 98-16, these Treasury Regulations
generally are effective for payments made after December 31, 1999, subject to
certain transition rules. A Non-U.S. Holder should consult its tax advisor
regarding the effect of the new Treasury Regulations. See "--Information
Reporting and Backup Withholding" for a further description of these new
Treasury Regulations.
Except to the extent that an applicable treaty otherwise provides, a Non-
U.S. Holder generally will be taxed in the same manner as a U.S. Holder with
respect to interest if the interest income is effectively connected with a
United States trade or business of the Non-U.S. Holder. Under certain
circumstances, effectively connected interest received by a corporate Non-U.S.
Holder may be subject to an additional "branch profits tax" at a 30% rate (or,
if applicable, a lower tax rate specified by a treaty). Even though such
effectively connected interest is subject to income tax, and may be subject to
the branch profits tax, it is not subject to withholding if the Holder
delivers a properly executed IRS Form 4224 to the Withholding Agent.
Interest income of a Non-U.S. Holder that is not effectively connected with
a United States trade or business and that does not qualify for the portfolio
interest exemption described above generally will be subject to a withholding
tax at a 30% rate (or, if applicable, a lower tax rate specified by a treaty).
Disposition of the Notes. A Non-U.S. Holder of a Note generally will not be
subject to United States federal income tax or withholding on any gain
realized on the sale, exchange, redemption, retirement or other disposition of
a Note unless (i) the gain is effectively connected with a United States trade
or business of the Non-U.S. Holder, (ii) in the case of a Non-U.S. Holder who
is an individual, such Non-U.S. Holder is present in the United States for a
period or periods aggregating 183 days or more during the taxable year of the
disposition, and either such Holder has a "tax home" in the United States or
the disposition is attributable to an office or other fixed place of business
maintained by such Holder in the United States, or (3) the Holder is subject
to tax pursuant to the provisions of the Code applicable to certain United
States expatriates.
Certain United States Federal Estate Tax Considerations Applicable to a Non-
U.S. Holder. A Note beneficially owned by an individual who is not a citizen
or resident of the United States at the time of death will not be included in
the decedent's gross estate for United States federal estate tax purposes,
unless the individual is a direct or indirect 10% or greater partner of the
Operating Partnership, or, at the time of death, payments with respect to such
Note would have been effectively connected with the conduct by such Non-U.S.
Holder of a trade or business within the United States.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
On October 6, 1997, the Treasury Department issued final regulations
relating to withholding, information reporting and backup withholding that
unify current certification procedures and forms and clarify reliance
standards applicable to Withholding Agents (the "Final Regulations"). Based on
IRS Notice 98-16, the Final Regulations generally will be effective with
respect to payments made after December 31, 1999, subject to certain
transition rules. Except as provided below, this section describes rules
applicable to payments made on or before December 31, 1999.
In general, information reporting requirements will apply to payments on a
Note (including stated interest payments and payments of the proceeds from the
sale, exchange, redemption, retirement or other disposition of a Note), unless
the holder of the Note is a corporation or comes within certain exempt
categories and, when required, demonstrates that fact. In addition, backup
withholding at a rate of 31% may apply to such payments, unless the holder of
the Note (i) is a corporation or comes within certain other exempt categories
and, when required, demonstrates that fact or (ii) provides a correct taxpayer
identification number, certifies as to its exemption from backup withholding
and otherwise complies with applicable requirements of the backup withholding
rules. Certain penalties may be imposed by the IRS on a holder that is
required to supply information but does not do so in the proper manner.
Information reporting requirements and backup withholding will not apply to
payments on a Note to a Non-U.S. Holder if the statement described in "Non-
U.S. Holders--Payment of Interest" is duly provided by such Holder, provided
that the Withholding Agent does not have actual knowledge that the Holder is a
United States person. Information reporting requirements and backup
withholding will not apply to any payment of the proceeds of the sale of a
Note effected outside the United States by a foreign office of a "broker" (as
defined in applicable Treasury Regulations), unless such broker (i) is a
United States person, (ii) derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States or (iii)
is a controlled foreign corporation as to the United States. Payment of the
proceeds of any such sale effected outside the United States by a foreign
office of any broker that is described in (i), (ii) or (iii) of the preceding
sentence will not be subject to backup withholding, but will be subject to
information reporting requirements unless such broker has documentary evidence
in its records that the beneficial owner is a Non-U.S. Holder and certain
other conditions are met, or the beneficial owner otherwise establishes an
exemption. Payment of the proceeds of any such sale to or through the United
States office of a broker is subject to information reporting and backup
withholding requirements, unless the beneficial owner of the Note provides the
statement described in "Non-U.S. Holders--Payment of Interest" or otherwise
establishes an exemption.
Any amount withheld from a payment to a holder of a Note under the backup
withholding rules is allowable as a credit against such holder's United States
federal income tax liability (which might entitle such holder to a refund),
provided that such holder furnishes the required information to the IRS.
The Final Regulations impose certain certification and documentation
requirements on Non-U.S. Holders claiming an exemption from withholding,
information reporting and backup withholding on interest paid on the Notes and
proceeds from the sale, exchange, redemption, retirement or other disposition
of the Notes. PROSPECTIVE PURCHASERS OF THE NOTES ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE EFFECT, IF ANY, OF THE FINAL REGULATIONS ON THEIR
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES.
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement and the
Pricing Agreement, the Operating Partnership has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters
has severally agreed to purchase, the principal amount of the Notes set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
----------- ------------
<S> <C>
Goldman, Sachs & Co............................................ $ 60,000,000
Morgan Stanley & Co. Incorporated.............................. 20,000,000
NationsBanc Montgomery Securities LLC.......................... 20,000,000
------------
Total........................................................ $100,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the Pricing
Agreement, the Underwriters are committed to take and pay for all of the
Notes, if any are taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial 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 0.40% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of 0.25% of the principal amount of the Notes to certain brokers and
dealers. After the Notes are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
In connection with the Offering, the Underwriters may purchase and sell the
Notes in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover short positions created by the
Underwriters 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 Notes, and short positions created by the
Underwriters involve the sale by the Underwriters of a greater number of Notes
than they are required to purchase from the Operating Partnership in the
Offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to broker-dealers in respect to the securities sold in the
Offering may be reclaimed by the Underwriters if such Notes are repurchased by
the Underwriters in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Notes, 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 NYSE or otherwise.
Application has been made to list the Notes on the NYSE, although there can
be no assurance that the Notes will be approved for listing.
In the ordinary course of their business, the Underwriters provide
investment banking, commercial lending, advisory and other financial services
to the Operating Partnership, the Company and their affiliates for which they
receive customary fees.
NationsBank, N.A., an affiliate of NationsBanc Montgomery Securities LLC
("NationsBanc"), one of the Underwriters, is one of the participant banks
under the Credit Facility. The total commitment of NationsBank, N.A. under the
Credit Facility is $25 million, which amounts to approximately 11.11% of the
total commitment by all of the participant banks under the Credit Facility,
pursuant to which the Company owed approximately $20.8 million to NationsBank,
N.A. as of June 30, 1998.
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All of the net proceeds from the Offering are expected to be used to repay
borrowings under the Credit Facility. See "Use of Proceeds." NationsBank, N.A.
will receive more than 10% of the net proceeds of the Offering ($11.0 million)
in connection with such repayment. Accordingly, this offering is being made in
accordance with Rule 2710(c)(8) of the National Association of Securities
Dealers, Inc. NationsBanc is participating in the Offering on the same terms
as the other Underwriters and will not receive any benefit in connection with
the Offering other than customary managing, underwriting and selling fees.
The Operating Partnership has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act.
VALIDITY OF NOTES
The validity of the Notes offered hereby will be passed upon for the
Operating Partnership 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 financial statements and related financial statement
schedule of the Operating Partnership included in the Operating Partnership's
Annual Report on Form 10-K dated December 31, 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 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 statements of revenue and certain expenses of the Lichtin 1997
Acquisition Properties and the NWI 1997 Acquisition Properties included in the
Operating Partnership's Current Report on Form 8-K dated February 17, 1998 and
filed with the Commission on February 18, 1998, 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.
The combined statement of revenue and certain expenses of the Dallas
Acquisition Properties included in the Operating Partnership's Current Report
on Form 8-K dated and filed with the Commission on June 16, 1998, 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 report with respect thereto, and has been incorporated
herein in reliance upon the authority of such firm as experts in giving such
report.
The statement of revenues and certain expenses of the Beacon Centre
Acquisition Property for the year ended December 31, 1996 included in the
Operating Partnership's Current Report on Form 8-K dated January 9, 1998 and
filed with the Commission on January 23, 1998, as amended by its Form 8-K/A
dated January 9, 1998 and filed with the Commission on February 18, 1998, all
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus has been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and has
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
S-37
<PAGE>
PROSPECTUS
$400,000,000
WEEKS CORPORATION
[LOGO OF WEEKS CORPORATION APPEARS HERE]
PREFERRED STOCK, COMMON STOCK AND
COMMON STOCK WARRANTS
$350,000,000
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 $400,000,000, 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
$350,000,000, 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 May 14, 1998
<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, 1997 filed with the Commission on March 31, 1998;
(ii) The Company's Current Report on Form 8-K dated March 24, 1998 filed
with the Commission on March 27, 1998;
(iii) The Company's Current Report on Form 8-K dated March 17, 1998 filed
with the Commission on March 20, 1998;
(iv) The Company's Current Report on Form 8-K dated February 18, 1998
filed with the Commission on February 20, 1998;
(v) The Company's Current Report on Form 8-K dated February 18, 1998
filed with the Commission on February 18, 1998;
(vi) The Company's Current Report on Form 8-K dated January 9, 1998 filed
with the Commission on January 23, 1998 (as amended by the Company's
Current Report on Form 8-K/A dated January 9, 1998 filed with the
Commission on February 18, 1998);
(vii) The Company's Current Report on Form 8-K dated February 17, 1998
filed with the Commission on February 18, 1998;
(viii) The Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997 filed with the Commission on March 31, 1998;
(ix) The Operating Partnership's Current Report on Form 8-K dated March
24, 1998 filed with the Commission on March 27, 1998;
2
<PAGE>
(x) The Operating Partnership's Current Report on Form 8-K dated March
17, 1998 filed with the Commission on March 20, 1998;
(xi) The Operating Partnership's Current Report on Form 8-K dated March
11, 1998 filed with the Commission on March 12, 1998;
(xii) The Operating Partnership's Current Report on Form 8-K dated
February 18, 1998 filed with the Commission on February 18, 1998;
(xiii) The Operating Partnership's Current Report on Form 8-K dated
January 9, 1998 filed with the Commission on January 23, 1998 (as amended
by the Operating Partnership's Current Report on Form 8-K/A dated January
9, 1998 filed with the Commission on February 18, 1998);
(xiv) The Operating Partnership's Current Report on Form 8-K dated
February 17, 1998 filed with the Commission on February 18, 1998;
(xv) 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
(xvi) The Company's Registration Statement on Form 8-A dated October 9,
1997, registering the Company's 8.00% Series A Cumulative Redeemable
Preferred Stock under Section 12(b) 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.
At December 31, 1997, the Company's portfolio was comprised of 298
properties totaling approximately 23.3 million square feet (the "Properties"),
including 55 Properties and one Property expansion (totaling approximately 6.2
million square feet) under development and/or under agreement to acquire. At
December 31, 1997, the Company also owned or controlled approximately 2,017.1
net usable acres of undeveloped land that the Company believes may ultimately
support the development of up to 20.3 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. At December 31,
1997, industrial Properties, suburban office Properties, and retail Properties
and ground leases represented approximately 89%, 9% and 2%, respectively, of
the square footage of all of the Properties. 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 December 31, 1997, the Company owned approximately
76% of the outstanding interests in the Operating Partnership, and the
remaining approximately 24% 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 76% interest in the Operating Partnership held by the Company as
of December 31, 1997, the Company owned 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
75% 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 100% by Weeks Realty Services and 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>
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 the Series A Preferred Shares (described below)
and 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 RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's and the Operating Partnership's
consolidated ratios of (i) earnings to fixed charges and (ii) earnings to
fixed charges and Preferred Stock dividends for each of the last five fiscal
years. With respect to periods prior to August 24, 1994, the Company's
consolidated ratios reflect the operating results from the businesses
previously conducted by Weeks Corporation and its affiliates and predecessors.
<TABLE>
<CAPTION>
JAN. 1, 1994 AUG. 24, 1994
YEAR ENDED TO TO YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1993 AUG. 24, 1994 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1996 DEC. 31, 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges:(1)...... 1.09x 1.06x 2.69x 1.96x 1.88x 1.98x
Ratio of earnings to
fixed charges and
Preferred Stock
dividends:(1).......... 1.09x 1.06x 2.69x 1.96x 1.88x 1.78x
</TABLE>
- --------
(1) For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income 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. Fixed charges
and Preferred Stock dividends consist of fixed charges and dividends on
the Company's Preferred Stock.
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 past or 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 described below
or 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
General. 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
6
<PAGE>
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.
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.
7
<PAGE>
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.
Series A Preferred Shares. The following summary sets forth the material
terms and provisions of the Company's 8.00% Series A Cumulative Redeemable
Preferred Stock, par value $.01 per share (the "Series A Preferred Shares"),
and is qualified in its entirety by reference to the applicable provisions of
the Articles and the Bylaws. The Company issued 6,000,000 Series A Preferred
Shares in October 1997.
General. The holders of the Series A Preferred Shares 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 are not 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 is Wachovia Bank, N.A.
Ranking. With respect to payment of dividends and amounts upon liquidation,
--------
dissolution or winding up, the Series A Preferred Shares rank senior to the
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 Party 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 are 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 are cumulative from the date of original
issue and are 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"). Any dividends payable on
the Series A Preferred Shares for any partial dividend period will be computed
on a basis of the actual number of days in such period. Dividends are 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 is 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 is credited against the earliest accrued but unpaid
dividend due with respect to the Series A Preferred Shares that remains
payable.
8
<PAGE>
No dividends may 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 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 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, is payable in
respect of any dividend payment or payments on the Series A Preferred Shares
that is in arrears. Holders of Series A Preferred Shares are not 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 may 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 may 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 distributions 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 shareholders 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.
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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 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.
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.
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The holders of Series A Preferred Shares at the close of business on a
Record Date are 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. 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, except as otherwise provided in the preceding
sentence or to the extent that such unpaid dividends are included in the
redemption price.
The Series A Preferred Shares have no stated maturity and are no 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
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 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 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 Senior 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, 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.
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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."
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
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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 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.
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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 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
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<PAGE>
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.
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
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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 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.
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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 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 mortgages and
other secured indebtedness of the Operating Partnership and its Subsidiaries.
The Debt Securities also will be effectively subordinated to any unsecured
indebtedness of the Operating Partnership's 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 December 31, 1997, the Operating
Partnership and its Subsidiaries had $192.6 million of secured indebtedness
and $101.5 million of unsecured indebtedness outstanding, and the Subsidiaries
had outstanding $16.6 million of unsecured indebtedness under the Company's
revolving credit facility. Effective March 17, 1998, these Subsidiaries
refinanced this indebtedness with intercompany loans from the Operating
Partnership (the "Subsidiary Refinancing"). Accordingly, at March 31, 1998,
the Operating Partnership's Subsidiaries did not have any outstanding
unsecured indebtedness, except for a $2 million unsecured obligation incurred
in connection with an acquisition. The Operating Partnership (i) will not
permit the Subsidiaries that it controls to incur additional unsecured
indebtedness and (ii) will enforce agreements by the Subsidiaries that it does
not control pursuant to which such Subsidiaries have agreed not to incur
additional indebtedness, other than, in each case, unsecured indebtedness owed
to the Operating Partnership and trade payables incurred in the ordinary
course of such Subsidiaries' business.
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
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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;
(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;
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(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 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
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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 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
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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 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
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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 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).
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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 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).
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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 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
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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).
"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.
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"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 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
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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 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
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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 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
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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 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
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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 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. It does not 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 and the term "Pass-Through Affiliate" refers to any partnership or
limited liability company in which the Operating Partnership owns an interest.
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
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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, 1996 and 1997, 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 Pass-Through Affiliates.
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 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).
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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 an entity that is classified for federal
income tax purposes as a partnership, Treasury Regulations provide that the
REIT will be deemed to own its 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 any Pass-Through Affiliate will be treated as
assets, liabilities, and items of income of the Company for purposes of
applying the requirements described herein.
Income Tests. To maintain qualification as a REIT, two 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. In addition, 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 have represented less than 30% of the REIT's gross
income (including gross income from prohibited transactions) for such taxable
year. The Taxpayer Relief Act of 1997, signed by the President on August 5,
1997 (the "1997 Act'), repealed the 30% gross income test effective for the
Company's taxable year that began on January 1, 1998.
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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 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 constitute 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 net income derived from a prohibited transaction is subject to a 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 any
Pass-Through Affiliate is held for sale to customers and that the sale of any
Property or Development Land by such entities is not in the 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 entities will attempt
to comply with the terms of safe-harbor provisions in the Code prescribing
when asset sales will not be characterized as prohibited transactions.
Complete assurance cannot be given, however, that the Company or such entities
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
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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 Pass-Through Affiliates 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 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 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.
Clinton Administration's Proposed Changes to REIT Asset Tests. The Clinton
Administration's budget proposal announced on February 2, 1998 includes a
proposal to amend the REIT asset tests with respect to non-qualified REIT
subsidiaries such as the Subsidiaries. The proposal would prohibit a REIT from
owning more than 10% of the vote or value of the outstanding stock of any non-
qualified REIT subsidiary. Existing non-qualified REIT subsidiaries would be
grandfathered, and therefore subject only to the 5% asset test and 10% voting
securities test of current law, except that such grandfathering would
terminate if the subsidiary engaged in a new trade or business or acquired
substantial new assets. As a result, if the proposal were to be enacted, the
Subsidiaries would become subject to the new 10%-vote-and-value limitation if
either corporation commenced new trade or business activities or acquired
substantial new assets after the specified effective date. The Company could
not satisfy the new test because it would be considered to own more than 10%
of the value of the stock of the Subsidiaries. Accordingly, the proposal, if
enacted, would materially impede the ability of the Company to engage in other
activities without jeopardizing its REIT status.
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
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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; 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.
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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. The tax rate applicable to capital gain dividends is
described in "Taxation of Shareholders--Capital Gains Rates" below.
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, 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" below.
The Company may elect to treat all or part of its undistributed net capital
gain as if it had been distributed to the Company's shareholders. 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 described in "Taxation of Shareholders--
Capital Gains Rates" 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.
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" 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. For non-corporate taxpayers, the tax rate differential
between capital gain and ordinary income may be significant. The highest
marginal income tax rate applicable to a non-corporate taxpayer's ordinary
income is 39.6%. Any capital gain generally will be taxed to a non-corporate
taxpayer at a maximum rate of 20% with respect to capital assets held for more
than 18 months, and generally will be taxed at a maximum rate of 28% with
respect to capital assets
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held for more than one year but not more than 18 months. The tax rates
applicable to ordinary income apply to gain attributable to the sale or
exchange of capital assets held for one year or less. In the case of capital
gain attributable to the sale or exchange of certain real property held for
more than 18 months, an amount of such gain equal to the amount of all prior
depreciation deductions not otherwise required to be taxed as ordinary
depreciation recapture income will be taxed at a maximum rate of 25%. With
respect to distributions designated by a REIT as capital gain dividends
(including deemed distributions of retained capital gains), the REIT may
designate (subject to certain limits) whether the dividend is taxable to non-
corporate shareholders at a 20%, 25% or 28% rate.
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 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.
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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 Treasury
Department issued final regulations in October 1997 that will modify the
manner in which the Company complies with its obligations to withhold against
distributions to Non-U.S. Shareholders. The new regulations currently provide
that they will be effective for payments made after December 31, 1998, subject
to certain transition rules. In IRS Notice 98-16, however, the IRS announced
that the Treasury Department and the IRS intend to amend the new regulations
by delaying the effective date so that the new regulations will apply to
payments made after December 31, 1999, subject to certain transition rules.
Prospective investors should consult their own tax advisors as to the effect,
if any, of the new regulations on their purchase, ownership and disposition of
the Common Stock.
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 Company is required 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. 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.
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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. Shareholder's 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 and Other Pass-Through Entities; Effect
on REIT Qualification. All of the Company's investments are made through the
Operating Partnership, which in turn holds interests in the Pass-Through
Affiliates. The Company has received a legal opinion from King & Spalding to
the effect that the Operating Partnership and each Pass-Through Affiliate that
is not 100% beneficially owned by the Operating Partnership will be treated
for U.S. federal income tax purposes as partnerships (and not as associations
taxable as corporations). Each Pass-Through Affiliate that is 100%
beneficially owned by the Operating Partnership is disregarded for federal
income tax purposes. 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 Pass-Through Affiliates were treated as taxable
corporations, 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 Pass-Through Affiliates
(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 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 Operating 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
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acquisition by the Operating Partnership, except to the extent that gain is
recognized by the transferor in connection with the transfer. The Operating
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 Operating Partnership's tax depreciation
deductions will be allocated among the Partners in accordance with their
respective percentage interests in the Operating Partnership, except as
otherwise required pursuant to Section 704(c) of the Code.
State and Local Taxes. The Company, the Operating Partnership, the Pass-
Through Affiliates, the Subsidiaries and the Company's 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.
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.
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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 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, 1997 filed with the Commission on March 31,
1998 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 consolidated financial statements and related financial statement
schedule of the Operating Partnership included in the Operating Partnership's
Annual Report on Form 10-K for the year ended December 31, 1997 filed with the
Commission on March 31, 1998 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 statements of revenue and certain expenses of the Lichtin 1997
Acquisition Properties and the NWI 1997 Acquisition Properties included in the
Company's Current Report on
41
<PAGE>
Form 8-K dated February 17, 1998 and filed with the Commission on February 18,
1998, 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 statements of revenue and certain expenses of the Lichtin 1997
Acquisition Properties and the NWI 1997 Acquisition Properties included in the
Operating Partnership's Current Report on Form 8-K dated February 17, 1998 and
filed with the Commission on February 18, 1998, 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 statement of revenues and certain expenses of Beacon Centre Acquisition
Property for the year ended December 31, 1996 included in the Company's
Current Report on Form 8-K dated January 9, 1998 and filed with the Commission
on January 23, 1998, as amended by Form 8-K/A dated January 9, 1998 and filed
with the Commission on February 18, 1998, all incorporated by reference in
this Prospectus and the Registration Statement has been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report with respect
thereto and has been so included and incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
The statement of revenues and certain expenses of Beacon Centre Acquisition
Property for the year ended December 31, 1996 included in the Operating
Partnership's Current Report on Form 8-K dated January 9, 1998 and filed with
the Commission on January 23, 1998, as amended by Form 8-K/A dated January 9,
1998 and filed with the Commission on February 18, 1998, all incorporated by
reference in this Prospectus and the Registration Statement has been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report with
respect thereto and has been so included and incorporated in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
42
<PAGE>
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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 OPERATING PARTNERSHIP 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 Operating Partnership................................................ S-10
Use of Proceeds.......................................................... S-11
Capitalization........................................................... S-11
Selected Financial and Other Information................................. S-12
Business and Properties.................................................. S-14
Management............................................................... S-25
Description of Notes..................................................... S-26
Certain Federal Income Tax Considerations................................ S-31
Underwriting............................................................. S-36
Validity of Notes........................................................ S-37
Experts.................................................................. S-37
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..................................... 16
Description of Debt Securities........................................... 17
Federal Income Tax Considerations........................................ 30
Plan of Distribution..................................................... 40
Legal Matters............................................................ 41
Experts.................................................................. 41
</TABLE>
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$100,000,000
WEEKS REALTY, L.P.
7 3/8% NOTES DUE AUGUST 1, 2007
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[LOGO OF WEEKS CORP. APPEARS HERE]
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GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY
SECURITIES LLC
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