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Filed pursuant to Rule 424(b)(5)
SEC File No. 333-12213
PROSPECTUS $625,000,000
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ERP OPERATING LIMITED PARTNERSHIP
DEBT SECURITIES
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ERP Operating Limited Partnership, an Illinois limited partnership
(the "Operating Partnership"), may from time to time offer in one or more
series its unsecured senior debt securities (the "Debt Securities"), in an
aggregate principal amount of up to $625,000,000, on terms to be determined
at the time of offering. The Debt Securities may be offered by the Operating
Partnership in separate series, in amounts, at prices and on terms to be set
forth in a supplement to this Prospectus (a "Prospectus Supplement").
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include the specific title, aggregate principal amount,
currency, form (which may be registered or bearer, or certificated or global),
authorized denominations, maturity, rate (or manner of calculation thereof) 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.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Debt Securities
covered by such Prospectus Supplement.
The Debt Securities may be offered directly, through agents designated
from time to time by the Operating Partnership, or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Debt Securities, their names, and any applicable purchase price, fee, commission
or discount arrangement between or among them, will be set forth or will be
calculable from the information set forth in the applicable Prospectus
Supplement. See "Plan of Distribution." No Debt Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and terms
of the offering of such Debt Securities.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
RELATING TO AN INVESTMENT IN THE DEBT SECURITIES.
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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 SEPTEMBER 25, 1996.
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AVAILABLE INFORMATION
The Operating Partnership 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"). The Registration
Statement, the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by the Operating Partnership with
the Commission in accordance with the Exchange Act can be inspected and copied
at the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements, and other information regarding registrants,
including the Operating Partnership, that file electronically with the
Commission.
The Operating Partnership has filed with the Commission a registration
statement on Form S-3 (the "Registration Statement"), of which this
Prospectus is a part, under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Debt Securities offered hereby. For
further information with respect to the Operating Partnership and the Debt
Securities offered hereby, reference is made to the Registration Statement
and exhibits thereto. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Operating Partnership and the Debt Securities, reference is hereby
made to the Registration Statement and such exhibits and schedules which may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Operating Partnership
under the Exchange Act with the Commission and are incorporated herein by
reference:
a. The Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 1995, as amended by Form 10-K/A filed on
August 26, 1996.
b. The Operating Partnership's Quarterly Reports on Form 10-Q for
the three- and six-month periods ended March 31, 1996 and June 30,
1996, respectively.
c. The Operating Partnership's Current Reports on Form 8-K dated
September 21, 1995, March 1, 1996, May 23, 1996 (each as amended
by a Form 8-K/A), and August 8, 1996.
d. The Operating Partnership's Fourth Amended and Restated ERP
Operating Limited Partnership Operating Limited Partnership
Agreement of Limited Partnership, filed as Exhibit 10.1 to the
Operating Partnership's Quarterly Report on Form 10-Q for the
three- and nine-month periods ended September 30, 1995.
All documents filed by the Operating Partnership pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
shall be deemed to be incorporated by reference in this Prospectus and to be
part hereof from the date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other 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
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or any accompanying Prospectus Supplement subject to the foregoing, all
information appearing in this Prospectus and each accompanying Prospectus
Supplement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
Copies of all documents which are incorporated herein by reference
(not including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be
provided without charge to each person, including any beneficial owner, to
whom this Prospectus is delivered upon written or oral request. Requests
should be directed to ERP Operating Limited Partnership, c/o Equity
Residential Properties Trust, Two North Riverside Plaza, Suite 400,
Chicago, Illinois 60606, Attention: Cynthia McHugh (telephone number:
(312) 474-1300).
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THE OPERATING PARTNERSHIP
GENERAL
The Debt Securities offered hereby are being issued by the Operating
Partnership which is managed by its general partner, Equity Residential
Properties Trust (the "Company"). The Company, one of the largest publicly
traded REITs (based on the aggregate market value of its outstanding equity
capitalization), is a self-administered and self-managed equity REIT. The
Company was organized as a Maryland real estate investment trust in March
1993 and commenced operations as a publicly traded company on August 18,
1993 upon completion of its initial public offering (the "IPO"). The
Company was formed to continue the multifamily property business objectives
and acquisition strategies of certain affiliated entities controlled by Mr.
Samuel Zell, Chairman of the Board of Trustees of the Company. These
entities had been engaged in the acquisition, ownership and operation of
multifamily properties since 1969. The Company's senior executives average
over 23 years of experience in the multifamily property business.
All of the Company's interests in its multifamily properties (the
"Properties") are held directly or indirectly by, and substantially all of
its operations relating to the Properties are conducted through, the
Operating Partnership.
The Operating Partnership currently has four classes of limited
partnership interests outstanding: (i) partnership interests ("OP Units"),
which may be exchanged by the holders thereof for either common shares of
beneficial interest of the Company, $0.01 par value per share ("Common
Shares"), on a one-for-one basis or, at the Company's option, cash; (ii)
9 3/8% Cumulative Redeemable Preference Units ("9 3/8% Preference Units");
(iii) 9 1/8% Cumulative Redeemable Preference Units ("9 1/8% Series B
Preference Units"); and (iv) 9 1/8% Series C Cumulative Redeemable
Preference Units ("9 1/8% Series C Preference Units"). The 9 3/8%
Preference Units, the 9 1/8% Series B Preference Units, and the 9 1/8%
Series C Preference Units are owned by the Company and mirror the payments
of distributions, including accrued and unpaid distributions upon
redemption, and of the liquidating preference amount of the Company's
9 3/8% Series A Cumulative Redeemable Preferred Shares of Beneficial
Interest, $.01 par value per share (the "Series A Preferred Shares"), the
Company's 9 1/8% Series B Cumulative Redeemable Preferred Shares of
Beneficial Interest, $.01 par value per share (the "Series B Preferred
Shares"), and the Company's 9 1/8% Series C Cumulative Redeemable Preferred
Shares of Beneficial Interest, $.01 per value per share (the "Series C
Preferred Shares"), respectively. The Company controls the Operating
Partnership as the sole general partner and, as of September 25, 1996,
owned approximately 84% of all of the Operating Partnership's outstanding
partnership interests, excluding the 9 3/8% Preference Units, the 9 1/8%
Series B Preference Units, and the 9 1/8% Series C Preference Units. It is
the Company's policy that Equity Residential Properties Trust shall not
incur indebtedness other than short-term trade, employee compensation,
dividends payable or similar indebtedness that will be paid in the ordinary
course of business, and that indebtedness shall instead be incurred by the
Operating Partnership to the extent necessary to fund the business
activities conducted by the Operating Partnership and its subsidiaries.
The Operating Partnership's corporate headquarters and executive
offices are located at Two North Riverside Plaza, Suite 400, Chicago,
Illinois 60606, and its telephone number is (312) 474-1300.
THE OPERATING SUBSIDIARIES
Essentially all operations of the Company are conducted directly or
indirectly by the Operating Partnership and those entities owned or
controlled by the Operating Partnership (collectively, the "Subsidiaries"),
so that, among other things, the Company is able to comply with certain
technical and complex requirements under the Federal tax law relating to
the assets and income that a REIT may hold or earn. In this regard, the
Company has established: (i) the Operating Partnership which benefited
those entities that contributed certain of the 69 Properties acquired by
the Operating Partnership in connection with the IPO in exchange for OP
Units by allowing them to partially defer certain tax consequences and
which will allow the Operating Partnership to acquire additional
multifamily properties in transactions that may defer some or all of the
sellers' tax consequences, (ii) Equity Residential Properties Management
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Corp., Equity Residential Properties Management Corp. II, and Equity
Residential Properties Management Corp. III (collectively, the "Management
Corps") and Equity Residential Properties Management Limited Partnership
and Equity Residential Properties Management Limited Partnership II
(collectively, the "Management Partnerships") which provide management
services because the income from such operations might jeopardize the
Company's REIT status if such services were provided directly by the
Company or the Operating Partnership, and (iii) a series of limited
partnerships and limited liability companies which own the beneficial
interest of certain of the Properties which are encumbered by mortgage
financing. The Operating Partnership and its Subsidiaries perform
substantially all ownership and management functions with respect to the
Properties.
RISK FACTORS
Prospective investors should carefully consider, among other factors,
the matters described below prior to making an investment decision
regarding the Debt Securities offered hereby.
ADVERSE CONSEQUENCES OF DEBT FINANCING AND PREFERRED SHARES
General Risks. As of June 30, 1996, the Properties were subject to
approximately $667.8 million of mortgage indebtedness and the Operating
Partnership's total debt equaled approximately $1.04 billion, $151.5
million of which was floating rate debt. Subsequent to June 30, 1996, the
Operating Partnership issued $150 million aggregate principal amount of
7.57% Notes due August 15, 2026 pursuant to a public debt offering in
August 1996 (the "Debt Offering"). In addition, in June 1995, the Company
issued 6,120,000 Series A Preferred Shares pursuant to a preferred share
offering; in November 1995, the Company issued 5,000,000 depositary shares
each representing a 1/10 fractional interest in a Series B Preferred Share
pursuant to a depositary share offering; and in September 1996, the Company
issued 4,600,000 depositary shares each representing a 1/10 fractional
interest in a Series C Preferred Share pursuant to a depositary share
offering (collectively, the "Preferred Share Offerings"). The Operating
Partnership used the proceeds from the Debt Offering and the Preferred
Share Offerings to repay indebtedness and to acquire additional Properties.
The Operating Partnership is subject to the risks normally associated with
debt or preferred equity financing, including the risk that the Operating
Partnership's cash flow will be insufficient to meet required payments of
principal and interest, the risk that existing indebtedness may not be
refinanced or that the terms of such refinancing will not be as favorable
as the terms of current indebtedness and the risk that necessary capital
expenditures for such purposes as renovations and other improvements may
not be financed on favorable terms or at all. If the Operating Partnership
were unable to refinance its indebtedness on acceptable terms, or at all,
the Operating Partnership might be forced to dispose of one or more of the
Properties on disadvantageous terms, which might result in losses to the
Operating Partnership and and might adversely affect the cash available for
distributions to shareholders. If interest rates or other factors at the
time of the refinancing result in higher interest rates upon refinancing,
the Operating Partnership's interest expense would increase, which would
affect the Operating Partnership's ability to make distributions to its
shareholders. Furthermore, if a Property is mortgaged to secure payment of
indebtedness and the Operating Partnership is unable to meet mortgage
payments, the mortgagee could foreclose upon the Property, appoint a
receiver and receive an assignment of rents and leases or pursue other
remedies, all with a consequent loss of income and asset value to the
Operating Partnership. Foreclosures could also create taxable income
without accompanying cash proceeds, thereby hindering the Company's ability
to meet the REIT distribution requirements of the Internal Revenue Code of
1986, as amended (the "Code").
Restrictions on the Company's Activities. A substantial portion of the
Operating Partnership's debt has been issued pursuant to two different
indentures (the "Indentures") which restrict the amount of indebtedness
(including acquisition financing) the Operating Partnership may incur.
Accordingly, if the Company or the Operating Partnership is unable to raise
additional equity or borrow money, respectively, because of the debt
restrictions in the indentures, the Operating Partnership's ability to
acquire additional properties may be limited.
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Bond Compliance Requirements. The Operating Partnership owns several
Properties that are subject to restrictive covenants or deed restrictions
relating to current or previous tax-exempt bond financing and owns the
bonds collateralized by several additional Properties. The Operating
Partnership has retained an independent outside consultant to monitor
compliance with the restrictive covenants and deed restrictions that affect
these Properties. The bond compliance requirements may have the effect of
limiting the Operating Partnership's income from these Properties if the
Operating Partnership is required to lower its rental rates to attract low
or moderate income tenants, or eligible/qualified tenants.
POTENTIAL ENVIRONMENTAL LIABILITY AFFECTING THE COMPANY
Under various Federal, state and local environmental laws, ordinances
and regulations, an owner of real estate may be liable for the costs of
removal or remediation of certain hazardous or toxic substances on such
property. These laws often impose environmental liability without regard to
whether the owner knew of, or was responsible for, the presence of such
hazardous or toxic substances. The presence of such substances, or the
failure properly to remediate such substances, may adversely affect the
owner's ability to sell or rent the property or to borrow using the
property as collateral. Persons who arrange for the disposal or treatment
of hazardous or toxic substances may also be liable for the costs of
removal or remediation of such substances at a disposal or treatment
facility, whether or not such facility is owned or operated by such person.
Certain laws impose liability for release of asbestos-containing materials
("ACMs") into the air and third parties may seek recovery from owners or
operators of real properties for personal injury associated with ACMs. In
connection with the ownership (direct or indirect), operation, management
and development of real properties, the Operating Partnership or the
Subsidiaries, as the case may be, may be considered an owner or operator of
such properties or as having arranged for the disposal or treatment of
hazardous or toxic substances and, therefore, potentially liable for
removal or remediation costs, as well as certain other related costs,
including governmental fines and injuries to persons and property.
All of the Properties have been the subject of a Phase I or similar
environmental assessment (which involves general inspections without soil
sampling or ground water analysis and generally without radon testing)
completed by qualified independent environmental consultant companies. All
of the environmental assessments were conducted within the last five years
and were obtained prior to the acquisition by the Operating Partnership of
each of the Properties. These environmental assessments have not revealed,
nor is the Operating Partnership aware of, any environmental liability that
the Operating Partnerships's management believes would have a material
adverse effect on the Operating Partnership's business, results of
operations, financial condition or liquidity.
No assurance can be given that existing environmental assessments with
respect to any of the Properties reveal all environmental liabilities, that
any prior owner of a Property did not create any material environmental
condition not known to the Operating Partnership, or that a material
environmental condition does not otherwise exist as to any one or more
Properties.
REAL ESTATE INVESTMENT CONSIDERATIONS
General. Income from real property investments and the Operating
Partnership's resulting ability to make expected interest payments on Debt
Securities may be adversely affected by the general economic climate, local
conditions such as oversupply of apartment units or a reduction in demand
for apartment units in the area, the attractiveness of the Properties to
tenants, zoning or other regulatory restrictions, the ability of the
Operating Partnership to provide adequate maintenance and insurance, and
increased operating costs (including insurance premiums and real estate
taxes). The Operating Partnership's income would also be adversely affected
if tenants were unable to pay rent or the Company were unable to rent
apartment units on favorable terms. If the Operating Partnership were
unable to promptly relet or renew the leases for a significant number of
apartment units, or if the rental rates upon such renewal or reletting were
significantly lower than expected rates, then the Operating Partnership's
income and ability to make expected distributions to shareholders may be
adversely affected. In addition, certain expenditures
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associated with each equity investment (such as real estate taxes and
maintenance costs) generally are not reduced when circumstances cause a
reduction in income from the investment. Furthermore, real estate
investments are relatively illiquid and, therefore, will tend to limit the
ability of the Operating Partnership to vary its portfolio promptly in
response to changes in economic or other conditions.
Changes in Laws. Increases in real estate taxes and income, service or
other taxes generally are not passed through to tenants under existing
leases and may adversely affect the Operating Partnership's income and its
ability to make interest payments on Debt Securities. Similarly, changes in
laws increasing the potential liability for environmental conditions
existing on properties or increasing the restrictions on discharges or
other conditions may result in significant unanticipated expenditures,
which would adversely affect the Operating Partnership's income and its
ability to make interest payments on Debt Securities.
DEPENDENCE ON KEY PERSONNEL
The Operating Partnership is dependent on the efforts of the
Company's executive officers. While the Operating Partnership believes that
it could find replacements for these key personnel, the loss of their
services could have a temporary adverse effect on the operations of the
Operating Partnership. None of these officers has entered into employment
agreements with the Company.
DISTRIBUTION REQUIREMENTS POTENTIALLY INCREASING INDEBTEDNESS OF THE
COMPANY
The Company may be required from time to time, under certain
circumstances, to accrue as income for tax purposes interest and rent
earned but not yet received. In such event, or upon the repayment by the
Operating Partnership or its Subsidiaries of principal on debt, the Company
could have taxable income without sufficient cash to enable the Company to
meet the distribution requirements of a REIT. Accordingly, the Operating
Partnership could be required to borrow funds or liquidate investments on
adverse terms in order to allow the Company to meet such distribution
requirements.
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USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
Operating Partnership intends to use the proceeds from the sale of the Debt
Securities for general purposes including, without limitation, the acquisition
of multifamily properties and the repayment of debt.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE UNIT DISTRIBUTIONS
The following table sets forth the Operating Partnership's ratios of
earnings to combined fixed charges and preference unit distributions for the
periods shown.
<TABLE>
<CAPTION>
For the Six For the Six
Months Months For the Years Ended December 31,
Ended June 30, Ended June 30, ----------------------------------------
1996 1995 1995 1994 1993 1992 1991
- - --------------- -------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.57 1.61 1.54 2.18 1.25 .91 .82
</TABLE>
Ratio of earnings to combined fixed charges and preference unit
distributions represents the ratio of income before gain on disposition of
properties, extraordinary items and allocation to Minority Interests plus fixed
charges (principally interest expense incurred) to fixed charges and preference
unit distributions.
The reorganization and recapitalization of the Company and the Operating
Partnership effected in connection with the IPO in 1993 permitted the Company
and the Operating Partnership to significantly deleverage the Properties
resulting in an improved ratio of earnings to combined fixed charges and
preference unit distributions for periods subsequent to the IPO.
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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 October
1, 1994, as amended or supplemented from time to time (the "Indenture"), between
the Operating Partnership and The First National Bank of Chicago, as trustee
(the "Trustee"). The Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and is available for inspection at
the corporate trust office of the Trustee at 14 Wall Street, Eighth Floor, New
York, New York or as described above under "Available Information." The
Indenture is subject to, and governed by, the Trust Indenture Act of 1939, as
amended (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. All section references appearing herein are to sections of the
Indenture, and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Operating Partnership and will rank equally with all other unsecured and
unsubordinated indebtedness of the Operating Partnership. Unless otherwise
specified in the applicable Prospectus Supplement, the Company has no
obligation for payment of principal of or interest on the Debt Securities.
The Debt Securities may be issued 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 Trustees of the Company, as general partner of
the Operating Partnership, or as established in the Indenture or in one or
more indentures supplemental to the Indenture. All Debt Securities of one
series need not be issued at the same time and, unless otherwise provided,
a series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of
such series (Section 301).
The Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under the Indenture may resign or be removed with respect to one or
more series of Debt Securities, and a successor Trustee may be appointed to
act with respect to such series (Section 608). 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 the 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 Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including
without limitation:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of the maturity thereof;
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(4) the date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable;
(5) the rate or rates (which may be fixed or variable), or the method by which
such rate or rates shall be determined, at which such Debt Securities will
bear interest, if any;
(6) the date or dates, or the method for determining such date or dates, from
which any such interest will accrue, the Interest Payment Dates on which
any such interest will be payable, the Regular Record Dates for such
Interest Payment Dates, or the method by which such dates shall be
determined, the Person to whom such interest shall be payable, and the
basis upon which interest shall be calculated if other than that of a 360-
day year of twelve 30-day months;
(7) the place or places where the principal of (and premium and Make-Whole
Amounts (as defined below), if any) and interest, if any, on such Debt
Securities will be payable, such Debt Securities may be surrendered for
conversion or registration of transfer or exchange and notices or demands
to or upon the Operating Partnership in respect of such Debt Securities
and the Indenture may be served;
(8) the period or periods within which, the price or prices at which and the
terms and conditions upon which such Debt Securities may be redeemed, in
whole or in part, at the option of the Operating Partnership, if the
Operating Partnership is to have such an option;
(9) the obligation, if any, of the Operating Partnership to redeem, repay or
purchase such Debt Securities at the option of a Holder thereof, and the
period or periods within which, the price or prices as to which and the
terms and conditions upon which such Debt Securities will be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(10) if other than U.S. dollars, the currency or currencies in which such Debt
Securities are denominated and payable, which may be a foreign currency or
units of two or more foreign currencies or a composite currency or
currencies, and the terms and conditions relating thereto;
(11) whether the amount of payments of principal (and premium, if any) or
interest, if any, on such Debt Securities may be determined with reference
to an index, formula or other method (which index, formula or other method
may, but need not be, based on a currency, currencies, currency unit or
units or composite currency or currencies) and the manner in which such
amounts shall be determined;
(12) any additions to, modifications of or deletions from the terms of such
Debt Securities with respect to the Events of Default or covenants, set
forth in the Indenture;
(13) whether such Debt Securities will be issued in certificated or book-entry
form;
(14) whether such Debt Securities will be in registered or bearer form and, if
in registered form, the denominations thereof if other than $1,000 and any
integral multiple thereof and, if in bearer form, the denominations
thereof and the terms and conditions relating thereto;
(15) the applicability, if any, of the defeasance and covenant defeasance
provisions of Article Fourteen of the Indenture;
(16) whether and under what circumstances the Operating Partnership will pay
Additional Amounts as contemplated in the Indenture in respect of any tax,
assessment or governmental charge and, if so,
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whether the Operating Partnership will have the option to redeem
such Debt Securities in lieu of making such payment;
(17) any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture (Section 301).
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the
maturity thereof ("Original Issue Discount Securities"). Special U.S.
federal income tax, accounting and other considerations applicable to
Original Issue Discount Securities will be described in the applicable
Prospectus Supplement.
Except as set forth below under "Certain Covenants - Limitations on
Incurrence of Debt," the Indenture does not contain any other provisions
that would limit the ability of the Operating Partnership to incur
indebtedness or that would afford Holders of Debt Securities protection in
the event of a highly leveraged or similar transaction involving the
Operating Partnership or in the event of a change of control. However,
restrictions on ownership and transfers of the Company's Common Shares and
preferred shares of beneficial interest are designed to preserve its status
as a REIT and, therefore, 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 of the Operating Partnership that are
described below, including any addition of a covenant or other provision
providing event risk or similar protection.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement,
the Registered Securities of any series will be issuable in denominations
of $1,000 and integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement,
the principal of (and premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee,
initially located at 14 Wall Street, Eighth Floor, New York, New York;
provided that, at the option of the Operating Partnership, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as it appears in the Security Register or by wire transfer of funds
to such Person at an account maintained within the United States (Sections
301, 305, 306, 307 and 1002).
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 Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of
such Debt Securities at the corporate trust office of the Trustee referred
to above. In addition, subject to certain limitations imposed upon Debt
Securities issued in book-entry form, the Debt Securities of any series may
be surrendered for conversion or registration of transfer or exchange
thereof at the corporate trust office of the Trustee. Every Debt Security
surrendered for conversion, registration of transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer. No
service charge will be made for any registration of transfer or exchange of
any 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 (Section 305). If the applicable Prospectus Supplement
refers to any transfer agent (in addition to the Trustee) initially
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designated by the Operating Partnership with respect to any series of Debt
Securities, the Operating Partnership may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Operating Partnership will be required
to maintain a transfer agent in each Place of Payment for such series. The
Operating Partnership may at any time designate additional transfer agents with
respect to any series of Debt Securities (Section 1002).
Neither the Operating Partnership nor the Trustee shall be required to (i)
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security being
redeemed in part; or (iii) issue, register the transfer of or exchange any Debt
Security which as been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
305).
MERGER, CONSOLIDATION OR SALE
The Operating Partnership may consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into any other
entity, provided that (i) the Operating Partnership shall be the continuing
entity, or the successor entity shall be an entity organized and existing under
the laws of the United States or a state thereof and such successor entity shall
expressly assume payment of the principal of and premium (if any) and any
interest (including all Additional Amounts, if any, payable pursuant to Section
1012) on all of the Debt Securities and the due and punctual performance and
observance of all of the covenants and conditions contained in the Indenture,
(ii) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Operating Partnership or any
Subsidiary as a result thereof as having been incurred by the Operating
Partnership, or such Subsidiary at the time of such transaction, no Event of
Default under the Indenture, and no event which after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and be
continuing; and (iii) an officer's certificate of the Company as general partner
of the Operating Partnership and legal opinion covering such conditions shall be
delivered to the Trustee (Sections 801 and 803).
CERTAIN COVENANTS
Limitations on Incurrence of Debt. The Operating Partnership will not, and
will not permit any Subsidiary to incur any Debt (as defined below), other than
intercompany Debt (representing Debt to which the only parties are the Company,
the Operating Partnership and any of its Subsidiaries, (but only so long as such
Debt is held solely by any of the Company, the Operating Partnership and any
Subsidiary) that is subordinate in right of payment of the Debt Securities, if,
immediately after giving effect to the incurrence of such additional Debt, the
aggregate principal amount of all outstanding Debt of the Operating Partnership
and its Subsidiaries on a consolidated basis determined in accordance with
generally accepted accounting principles is greater than 60% of the sum of (i)
the Operating Partnership's 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 Commission (or, if such filing is not permitted under the Exchange Act,
with the Trustee) prior to the incurrence of such additional Debt and (ii) the
increase in Total Assets from the end of such quarter including, without
limitation, any increase in Total Assets caused by the incurrence of such
additional Debt (such increase together with the Company's Total Assets shall be
referred to as the "Adjusted Total Assets") (Section 1004).
In addition to the foregoing limitation on the incurrence of Debt, the
Operating Partnership will not and will not permit any Subsidiary to incur any
Debt if the ratio of Consolidated Income Available for Debt Service to the
Maximum Annual Service Charge for the four consecutive fiscal quarters most
recently ended prior to the date on which such additional Debt 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 Debt and to the application of the proceeds therefrom,
and calculated on the assumption that
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(i) such Debt and any other Debt 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 Debt, had occurred at
the beginning of such period, (ii) the repayment or retirement of any other Debt
by the Operating Partnership or its Subsidiaries since the first day of such
four-quarter period had been incurred, repaid or retired at the beginning of
such period (except that, in making such computation, the amount of Debt under
any revolving credit facility shall be computed based upon the average daily
balance of such Debt 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
Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation (Section 1004).
In addition to the foregoing limitations on the incurrence of Debt, the
Operating Partnership will not, and will not permit any Subsidiary to incur any
Debt secured by any mortgage, lien, charge, pledge, encumbrance or security
interest of any kind upon any of the property of the Operating Partnership or
any Subsidiary ("Secured Debt"), whether owned at the date of the Indenture or
thereafter acquired, if, immediately after giving effect to the incurrence of
such additional Secured Debt, the aggregate principal amount of all outstanding
Secured Debt of the Operating Partnership and its Subsidiaries on a consolidated
basis is greater than 40% of the Adjusted Total Assets (Section 1004).
Notwithstanding the limitation set forth in the preceding paragraph, the
Indenture provides that the Operating Partnership and its Subsidiaries may incur
Secured Debt, provided that such Secured Debt is incurred under the Acquisition
Lines of Credit, and provided further that after the increase of such Secured
Debt under the Acquisition Lines of Credit, the aggregate principal amount of
all outstanding Secured Debt, including debt under the Acquisition Lines of
Credit of the Operating Partnership or any Subsidiary does not exceed 45% of the
Adjusted Total Assets; provided, however, that the aggregate principal amount of
all outstanding Secured Debt of the Operating Partnership and its Subsidiaries
on a consolidated basis may exceed 40% of the Adjusted Total Assets for not more
than 270 days of any consecutive 360 day period.
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Debt, Debt shall be deemed to be "incurred" by the Operating
Partnership and its Subsidiaries on a consolidated basis whenever the Operating
Partnership and its Subsidiaries on a consolidated basis shall create, assume,
guarantee or otherwise become liable in respect thereof.
Restrictions on Distributions. The Operating Partnership will not make any
distribution, by reduction of capital or otherwise (other than distributions
payable in securities evidencing interests in the Operating Partnership's
capital for the purpose of acquiring interests in real property or otherwise)
if, immediately after such distribution the aggregate of all such distributions
made since March 31, 1993 shall exceed Funds from Operations of the Operating
Partnership and its Subsidiaries from March 31, 1993 until 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 Commission (or, if such filing is not permitted under the Exchange Act,
with the Trustee) prior to such distribution; provided, however, that the
foregoing limitation shall not apply to any distribution which is necessary to
maintain the Company's status as a REIT under the Internal Revenue Code of 1986,
as amended (the "Code"), if the aggregate principal amount of all outstanding
Debt of the Operating Partnership and its Subsidiaries on a consolidated basis
at such time is less than 60% of Adjusted Total Assets (Section 1005).
Notwithstanding the foregoing, the Operating Partnership will not be
prohibited from making the payment of any distribution within 30 days of the
declaration thereof if at such date of declaration such payment would have
complied with the provisions of the immediately preceding paragraph (Section
1005).
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Existence. Except as permitted under "Merger, Consolidation or Sale," the
Operating Partnership will 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 the business of the Operating
Partnership, and that the loss thereof is not disadvantageous in any material
respect to the Holders of the Debt Securities.
Maintenance of Properties. The Operating Partnership will cause all of its
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 will 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 selling or otherwise disposing for value its properties in
the ordinary course of business (Section 1007).
Insurance. The Operating Partnership will and will cause each of its
Subsidiaries to, keep all of its insurable properties insured against loss or
damage at least equal to their then fully insurable value with financially sound
and reputable insurance companies (Section 1008).
Payment of Taxes and Other Claims. The Operating Partnership will 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 it 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 1009).
Provision of Financial Information. The Holders of the Debt Securities will
be provided with copies of the annual reports and quarterly reports of the
Operating Partnership. Whether or not the Operating Partnership is subject to
Section 13 or 15(d) of the Exchange Act, 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 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, as their names and addresses appear in the Security
Register, 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 15(d) of the Exchange Act if
the Operating Partnership were subject to such Sections and (ii) file with the
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 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).
ADDITIONAL COVENANTS AND/OR MODIFICATIONS TO THE COVENANTS DESCRIBED ABOVE
Any additional covenants and/or modifications to the covenants described
above with respect to any series of Debt Securities will be set forth in the
Prospectus Supplement relating thereto.
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As used herein,
"Acquisition Lines of Credit" means, collectively, any secured lines of
credit of the Operating Partnership and its Subsidiaries, the proceeds of which
shall be used to, among other things, acquire interests, directly or indirectly,
in real estate.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) of the Operating Partnership and its
Subsidiaries plus amounts which have been deducted for (a) interest on Debt of
the Operating Partnership and its Subsidiaries, (b) provision for taxes of the
Operating Partnership and its Subsidiaries based on income, (c) amortization of
debt discount, (d) provisions for gains and losses on properties, (e)
depreciation and amortization (f) the effect of any non-cash charge resulting
from a change in accounting principles in determining Consolidated Net Income
for such period and (g) amortization of deferred charges.
"Consolidated Net Income" for any period means the amount of consolidated
net income (or loss) of the Operating Partnership and its Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Debt" of the Operating Partnership or any Subsidiary means any
indebtedness of the Operating Partnership and its Subsidiaries, whether or not
contingent, in respect of (i) borrowed money evidenced by bonds, notes,
debentures or similar instruments, (ii) indebtedness secured by any mortgage,
pledge, lien, charge, encumbrance or any security interest existing on property
owned by the Operating Partnership and its Subsidiaries, (iii) the reimbursement
obligations, contingent or otherwise, in connection with any letters of credit
actually issued or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) any lease of property by the Operating
Partnership and its Subsidiaries as lessee which is reflected on 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 incurred 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 of the Operating Partnership or any 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) (it
being understood that Debt shall be deemed to be incurred by the Operating
Partnership and its Subsidiaries on a consolidated basis whenever the Operating
Partnership and its Subsidiaries on a consolidated basis shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Funds from Operations" for any period means the Consolidated Net Income of
the Operating Partnership and its Subsidiaries for such period without giving
effect to depreciation and amortization, gains or losses from extraordinary
items, gains or losses on sales of real estate, gains or losses on investments
in marketable securities and any provision/benefit for income taxes for such
period, plus funds from operations of unconsolidated joint ventures, all
determined on a consistent basis in accordance with generally accepted
accounting principles.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed or paid.
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"Maximum Annual Service Charge" as of any date means the maximum amount
which is payable in any 12 month period for interest on Debt.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Reinvestment Rate" means .25% (one-fourth of one percent) plus the
arithmetic means of the yields under the respective 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 or paid. 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 in each of such relevant periods to the
nearest month. For the purposes 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.
"Significant Subsidiary" means any Subsidiary which is a "Significant
Subsidiary" (within the meaning of Regulation S-X, promulgated under the
Securities Act) of the Operating Partnership.
"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.
"Subsidiary" means a corporation, a limited liability company or a
partnership a majority of the outstanding voting stock or partnership 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 of the Operating
Partnership. For the purposes of this definition, "voting stock" means stock
having voting power for the election of directors, managing members or trustees,
as the case may be, 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) the Operating
Partnership's and its Subsidiaries' 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 accounts receivable).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated Real
Estate Assets not subject to an encumbrance and (ii) all other assets of the
Operating Partnership and its Subsidiaries not subject to an encumbrance
determined in accordance with generally accepted accounting principles (but
excluding accounts receivable and intangibles).
"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 not subject to an encumbrance determined in
accordance with generally accepted accounting principles (but excluding accounts
receivable and intangibles).
"Unsecured Debt" means Debt of the Operating Partnership or any Subsidiary
which is not secured by any mortgage, lien, charge, pledge or security interest
of any kind upon any of the Properties.
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EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to the Debt Securities issued thereunder: (i) default for 30 days
in the payment of any interest on any Debt Security of such series; (ii) default
in the payment of the principal of (or premium, if any,) on any Debt Security of
such series at its maturity; (iii) default in the performance, or breach, of any
other covenant or warranty of the Operating Partnership contained in the
Indenture (other than a covenant added to the Indenture solely for the benefit
of a series of Debt Securities issued thereunder other than such series),
continued for 60 days after written notice as provided in the applicable
Indenture; (iv) an event of default under any Debt, as defined in any indenture
or instrument evidencing such Debt, whether such indebtedness now exists or
shall hereinafter be created, the repayment of which the Operating Partnership
is directly responsible or liable as obligor or guarantor on a full recourse
basis, for outstanding indebtedness for borrowed money in, or a guarantee for, a
principal amount in excess of $10,000,000, shall happen and be continuing and
such indebtedness shall have been accelerated so that the same shall be or
become due and payable prior to the date on which the same would otherwise have
become due and payable or the Operating Partnership shall default in the payment
at final maturity of outstanding indebtedness for borrowed money in a principal
amount in excess of $10,000,000, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled; and (v)
certain events of bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of the Operating Partnership, any
Significant Subsidiary or any of their property and any other Event of Default.
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% of the principal
amount of the Outstanding Debt Securities of that series will have the right to
declare the principal of (or, if the Debt Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
amount as may be specified in the terms thereof) and premium (if any) on all of
the Debt Securities of that series to be due and payable immediately by written
notice thereof to the Operating Partnership (and to the Trustee if given by the
Holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of not less than a majority in principal amount of
Outstanding Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may rescind and annul such
declaration and its consequences if (i) the Operating Partnership shall have
paid or deposited with the Trustee all required payments of the principal of and
premium (if any) and interest on the Outstanding Debt Securities of such series
(or of all Debt Securities then Outstanding under the Indenture, as the case may
be), plus certain fees, expenses, disbursements and advances of the Trustee and
(ii) all Events of Default, other than the non-payment of accelerated principal
or interest, with respect to the Debt Securities of such series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) have been
cured or waived as provided in the Indenture (Section 502). The Indenture also
provides that the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may waive any past default
with respect to such series and its consequences, except a default (x) in the
payment of the principal of and premium (if any) or interest on any Debt
Security of such series or (y) in respect of a covenant or provision contained
in the Indenture that cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security affected thereby (Section 513).
The Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture, unless such default
shall have been cured or waived; provided, however, that the Trustee may
withhold notice to the Holders of any series of Debt Securities of any default
with respect to such series (except a default in the payment of the principal of
and premium (if any) or interest on any Debt Security) if and so long as the
Responsible Officers of the Trustee consider such withholding to be in the
interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
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60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of such series, as well as
an offer of indemnity reasonably satisfactory to it (Section 507). This
provision will not prevent, however, any Holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of and premium
(if any) and interest on such Debt Securities at the respective due dates
thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon the
Trustee. However, the Trustee may refuse to follow any direction which is in
conflict with any law or the Indenture, which may involve the Trustee in
personal liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, the Operating
Partnership must deliver to the Trustee a certificate, signed by one of several
specified officers of the Company as to such officer's knowledge of the
Operating Partnership's compliance with all conditions and covenants under the
Indenture, and, in the event of any noncompliance, specifying each such
noncompliance and the nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities of each series issued under the Indenture which are
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each such
Debt Security affected thereby, (i) change the Stated Maturity of the principal
of, or any installment of principal of and premium (if any) or interest on, any
such Debt Security; (ii) reduce the principal amount of, or the rate or amount
of interest on, or premium payable upon the redemption of any such Debt
Security; (iii) change the Place of Payment, or the currency, for payment of
principal of any Debt Security or any premium or interest on any such Debt
Security; (iv) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (v) reduce the above-
stated percentage of Outstanding Debt Securities of any series necessary to
modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in the Indenture; or (vi) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security or
(vii) adversely modify or affect (in any manner adverse to the Holders) the
terms and conditions of the obligations of the Operating Partnership in respect
of the due and punctual payment of the principal of and premium (if any), or
interest on the Debt Securities (Section 902).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities of each series effected thereby have the right to waive
compliance by the Operating Partnership with certain covenants in the Indenture
(Section 1013).
Modifications and amendments of the Indenture may be permitted to 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 as obligor under the
Indenture; (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 Indenture; (iii)
to add Events of Default for
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the benefit of the Holders of all or any series of Debt Securities; (iv) to
change or eliminate any of the provisions of the Indenture, provided that any
such change or elimination shall become effective only when there is no Debt
Security Outstanding of any series created prior to the modification or
amendment which is entitled to the benefit of such provision; (v) to secure the
Debt Securities; (vi) to provide for the acceptance of appointment by a
successor Trustee or facilitate the administration of the trusts under the
Indenture by more than one Trustee; (vii) to cure any ambiguity, defect or
inconsistency in the Indenture, provided that such action shall not adversely
affect the interests of Holders of Debt Securities of any series issued under
the Indenture in any material respect; or (viii) to supplement any of the
provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities, provided that
such action shall not adversely affect the interests of the Holders of the Debt
Securities of any series in any material respect (Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, Debt Securities owned by the Operating Partnership, or any other
obligor upon the Debt Securities or any affiliate of the Operating Partnership,
Company or of such other obligor shall be disregarded.
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting may be called at any time
by the Trustee, and also, upon request, by the Operating Partnership or by the
Holders of at least 10% in principal amount of the Outstanding Debt Securities
of such series, or in any such case, upon notice given as provided in the
Indenture (Section 1502). Except for any consent that must be given by the
Holder of each Debt Security affected by certain modifications and amendments of
the Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in principal
amount of the Outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of Holders of Debt Securities of any series duly
held in accordance with the Indenture will be binding on all Holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be Persons holding or presenting
a majority in principal amount of the Outstanding Debt Securities of a series;
provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver which may be given by the Holders of not less
than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing such specified
percentage in principal amount of the Outstanding Debt Securities will
constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting; and
(ii) the principal amount of the Outstanding Debt Securities of such series that
vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under the Indenture (Section
1504).
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership may discharge certain obligations to Holders of
any series of Debt Securities that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one
year) by irrevocably depositing with the Trustee, in trust, funds in an amount
sufficient to pay and discharge the entire indebtedness on such Debt Securities
in respect of principal and premium (if any) and interest to the date of such
deposit (if such Debt Securities have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be (Section 1401).
The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Operating Partnership may elect either (i) to decease
and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligations to register the transfer or exchange of
such Debt Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of such Debt
Securities and to hold moneys for payment in trust) ("defeasance") (Section
1402) or (ii) to be released from its obligations with respect to such Debt
Securities under Sections 1004 to 1010, inclusive, of the Indenture (being the
restrictions described under "Certain Covenants") and any omission to comply
with such obligations shall not constitute a default or an Event of Default with
respect to such Debt Securities ("covenant defeasance") (Section 1403), in
either case upon the irrevocable deposit by the Operating Partnership with the
Trustee, in trust, of an amount, in cash or Government Obligations (as defined
below), or both, which through the scheduled payment of principal and interest
in accordance with their terms will provide money in an amount sufficient
without reinvestment to pay the principal of and premium (if any) and interest
on such Debt Securities on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the Operating
Partnership has delivered to the applicable Trustee an Opinion of Counsel (as
specified in the Indenture) to the effect that the Holders of such Debt
Securities will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States federal income tax law occurring
after the date of the Indenture (Section 1404).
"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 an agency or instrumentality of the United States of America, the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which are not callable or redeemable
at the option or the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or specific payment of interest on or principal of any
such Government Obligation held by such custodian for 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 Government Obligation or the specific payment of interest on or
principal of the Government Obligation evidenced by such depository receipt.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities, and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (iii) under "Events of Default, Notice and
Waiver" with respect to Sections 1004 to 1010, inclusive, of the Indenture
(which Sections would no longer be applicable to such Debt Securities), the
amount of Government Obligations on deposit with the Trustee will be sufficient
to pay amounts due on such Debt Securities at the time of their Stated Maturity
but may not be sufficient to pay amounts due on such Debt Securities at the time
of the
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acceleration resulting from such Event of Default. However, the Operating
Partnership would remain liable to make payment of such amounts due at the time
of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
REDEMPTION OF SECURITIES
The Indenture provides that the Debt Securities may be redeemed at any time
at the option of the Operating Partnership, in whole or in part, at the
Redemption Price, except as may otherwise be provided in connection with any
Debt Securities or series thereof.
From and after notice has been given as provided in the Indenture, if funds
for the redemption of any Debt Securities called for redemption shall have been
made available on such redemption date, such Debt Securities will cease to bear
interest on the date fixed for such redemption specified in such notice and the
only right of the Holders of the Debt Securities will be to receive payment of
the Redemption Price.
Notice of any optional redemption of any Debt Securities will be given to
Holders at their addresses, as shown in the Security Register, 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 Debt Securities held by such Holder to be redeemed.
If the Operating Partnership elects to redeem Debt Securities, it will
notify the Trustee at lease 45 days prior to the redemption date (or such
shorter period as satisfactory to the Trustee) of the aggregate principal amount
of Debt Securities to be redeemed and the redemption date. If less than all the
Debt Securities are to be redeemed, the Trustee shall select the Debt Securities
to be redeemed pro rata, by lot or in such manner as it shall deem fair and
appropriate.
BOOK ENTRY REGISTRATION
If the applicable Prospectus Supplement so indicates, the Debt Securities
will be represented by one or more certificates (the "Global Notes"). The Global
Notes representing Debt Securities will be deposited with, or on behalf of, The
Depository Trust Company ("DTC") or other successor depository appointed by the
Operating Partnership (DTC or such other depository is herein referred to as the
"Depository") and registered in the name of the Depository or its nominee.
Unless and until it is exchanged in whole or in part for Debt Securities in
definitive form under the limited circumstances described below, the Global Note
may not be transferred except as a whole (i) by DTC for the Global Note to a
nominee of DTC, (ii) by a nominee of DTC to DTC or another nominee of DTC, or
(iii) by DTC or any such nominee to a successor of DTC or a nominee of such
successor.
DTC currently limits the maximum denomination of any single Global Note to
$150,000,000. Therefore, for purposes hereof, "Global Note" refers to the Global
Note or Global Notes representing the entire issue of Debt Securities of a
particular series.
Ownership of beneficial interests in the Global Note will be limited to
persons that have accounts with DTC for the Global Note ("participants") or
persons that may hold interests through participants. Upon the issuance of the
Global Note, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with the respective principal amounts of the
Debt Securities represented by the Global Note beneficially owned by such
participants. Ownership of beneficial interests in the Global Note will be shown
on, and the transfer of such ownership interests will be effected only through,
records maintained by DTC (with respect to interests of participants) and on the
records of participants (with respect to interests of persons holding through
participants). The laws of some states may
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require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer, or pledge beneficial interests in the Global Note.
So long as DTC or its nominee is the registered owner of the Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Debt Securities represented by the Global Note for all purposes
under the Indenture. Except as set forth below, owners of beneficial interests
in the Global Note will not be entitled to have the Debt Securities represented
by the Global Note registered in their names, will not receive or be entitled to
receive physical delivery of the Debt Securities in definitive form, and will
not be considered the owners or holders thereof under the Indenture.
Accordingly, each person owning a beneficial interest in the Global Note must
rely on the procedures of DTC and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Operating Partnership
understands that under existing industry practices, if the Operating Partnership
requests any action of holders or if an owner of a beneficial interest in the
Global Note desires to give or take any action that a holder is entitled to give
or take under the Indenture, DTC would authorize the participants holding the
relevant beneficial interests to give or take such action, and such participants
would authorize beneficial owners owning through such participants to give or
take such action or would otherwise act upon the instructions of beneficial
owners holding through them.
Principal and interest payments on Debt Securities represented by the
Global Note will be made to DTC or its nominee, as the case may be, as the
registered owner of the Global Note. None of the Operating Partnership, the
Trustee, or any other agent of the Operating Partnership or agent of the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Note or for maintaining, supervising, or reviewing any records relating to such
beneficial ownership interests.
The Operating Partnership expects that DTC, upon receipt of any payment of
principal or interest in respect of the Global Note, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the Global Note as shown on the records of
DTC. The Operating Partnership also expects that payments by participants to
owners of beneficial interests in the Global Note held through such participants
will be governed by standing customer instructions and customary practices, as
is not the case with the securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
participants.
If DTC is at any time unwilling or unable to continue as depository for the
Debt Securities and the Operating Partnership fails to appoint a successor
Depository registered as a clearing agency under the Exchange Act within 90
days, the Operating Partnership will issue the Debt Securities in definitive
form in exchange for the Global Note. Any Debt Securities issued in definitive
form in exchange for the Global Note will be registered in such name or names,
and will be issued in denominations of $1,000 and such integral multiples
thereof, as DTC shall instruct the Trustee. It is expected that such
instructions will be based upon directions received by DTC from participants
with respect to ownership of beneficial interests in the Global Note.
DTC has advised the Operating Partnership of the following information
regarding DTC. DTC is a limited-purpose trust company organized under the
Banking Laws of the State of New York, 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 was created to hold securities of its participants
and to facilitate the clearance and settlement of transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations, some of which (and/or their representatives) own DTC. Access to
DTC book-entry system is also available to others, such as banks, brokers,
dealers, and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
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SAME-DAY SETTLEMENT
If the applicable Prospectus Supplement so indicates, settlement for the
Debt Securities will be made by the underwriters, dealers or agents in
immediately available funds and all payments of principal and interest on the
Debt Securities will be made by the Operating Partnership in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Debt
Securities subject to settlement in immediately available funds will trade in
DTC's Same-Day Funds Settlement System until maturity or until the Debt
Securities are issued in certificated form, and secondary market trading
activity in such Debt Securities will therefore be required by DTC to settle in
immediately available funds. No assurance can be given as to the effect, if any,
of settlement in immediately available funds on trading activity in the Debt
Securities.
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PLAN OF DISTRIBUTION
The Operating Partnership may sell the Debt Securities to one or more
underwriters for public offering and sale by them or may sell the Debt
Securities to investors directly or through agents. Any such underwriter or
agent involved in the offer and sale of the Debt Securities will be named in the
applicable Prospectus Supplement.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices
at the time of sale or at negotiated prices. The Operating Partnership may, from
time to time, authorize underwriters acting as the Operating Partnership's
agents to offer and sell the Debt Securities upon the terms and conditions as
are set forth in the applicable Prospectus Supplement. In connection with the
sale of the Debt Securities, underwriters may be deemed to have received
compensation from the Operating Partnership in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of the
Debt Securities for whom they may act as agent. Underwriters may sell Debt
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Operating Partnership to
underwriters or agents in connection with the offering of the Debt Securities,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in the applicable Prospectus
Supplement. Underwriters, dealers and agents participating in the distribution
of the Debt Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Debt Securities may be deemed to be underwriting discounts and commissions,
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Operating Partnership, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Operating
Partnership will authorize underwriters or other persons acting as the Operating
Partnership's agents to solicit offers by certain institutions to purchase Debt
Securities from the Operating Partnership at the public offering price set forth
in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount not less than,
and the aggregate principal amount of Debt Securities sold pursuant to Contracts
shall be not less nor more than, the respective amounts stated in the applicable
Prospectus Supplement. Institutions with whom Contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but will in all cases be subject to the approval of the Operating
Partnership. Contracts will not be subject to any conditions except (i) the
purchase by an institution of the Debt Securities covered by its Contracts shall
not at the time of delivery be prohibited under the laws of any jurisdiction in
the United States to which such institution is subject, and (ii) if the Debt
Securities are being sold to underwriters, the Operating Partnership shall have
sold to such underwriters, the total principal amount of the Debt Securities
less the principal amount thereof covered by Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with, and perform services for the Operating Partnership
and its Subsidiaries in the ordinary course of business.
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EXPERTS
The Consolidated and Combined Financial Statements incorporated in this
Prospectus by reference to the Operating Partnership's Annual Report on Form
10-K, as amended by Form 10-K/A, for the year ended December 31, 1995 have been
so incorporated in reliance on the reports of Grant Thornton LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting. The Combined Statement of Revenue and Certain Expenses of the 1996
Acquired Properties and Probable Properties for the year ended December 31,
1995, as set forth in the Operating Partnership's Current Report on Form 8-K, as
amended by Form 8-K/A, dated May 23, 1996, has been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated in this Prospectus by reference. Such combined financial
statement is incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Debt Securities offered hereby will be passed upon for
the Operating Partnership by Rosenberg & Liebentritt, P.C., Chicago, Illinois,
and, with respect to any underwritten offering of Debt Securities, certain legal
matters will be passed upon for the underwriters by Hogan & Hartson L.L.P.,
Washington, D.C. Hogan & Hartson L.L.P. from time to time provides services to
the Company and other entities controlled by Mr. Zell.
Sheli Z. Rosenberg, the Chairman of the Board of Rosenberg & Liebentritt,
P.C., is a trustee of the Company. The Company incurred legal fees to Rosenberg
& Liebentritt, P.C. of approximately $1.031 million in 1995 and, through
September 1, 1996, approximately $540,000 in 1996. Attorneys of Rosenberg &
Liebentritt, P.C. beneficially own less than 1% of the outstanding Common Shares
of the Company, either directly or upon the exercise of options.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE OPERATING PARTNERSHIP. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE DEBT SECURITIES, IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. THE DELIVERY OF
THIS PROSPECTUS OR ANY OFFER OR SALE MADE HEREUNDER SHALL NOT, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE OPERATING
PARTNERSHIP SINCE THE DATE HEREOF.
-------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PROSPECTUS
<S> <C>
Available Information................................................. 2
Incorporation of Certain Documents by Reference....................... 2
The Operating Partnership............................................. 4
Risk Factors.......................................................... 5
Use of Proceeds....................................................... 8
Ratios of Earnings to Combined Fixed Charges and Preference Unit
Distributions...................................................... 8
Description of Debt Securities........................................ 9
Plan of Distribution.................................................. 24
Experts............................................................... 25
Legal Matters......................................................... 25
</TABLE>
ERP OPERATING
LIMITED PARTNERSHIP
$625,000,000
DEBT SECURITIES
PROSPECTUS
September 25, 1996
================================================================================
