<PAGE>
Filed Pursuant to Rule No. 424(b)(5)
Registration No. 333-12213
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 25, 1996)
LOGO
ERP OPERATING LIMITED PARTNERSHIP
$150,000,000 6.55% NOTES DUE NOVEMBER 15, 2001
$50,000,000 6.65% NOTES DUE NOVEMBER 15, 2003
----------------
ERP Operating Limited Partnership, an Illinois limited partnership (the
"Operating Partnership"), will issue its 6.55% Notes due November 15, 2001
(the "2001 Notes") and its 6.65% Notes due November 15, 2003 (the "2003 Notes"
and, together with the 2001 Notes, the "Notes") offered hereby in aggregate
principal amounts of $150,000,000 and $50,000,000, respectively (the
"Offering"). The Notes are not subject to any mandatory sinking fund. See
"Description of the Notes."
Interest on the Notes is payable semiannually in arrears on May 15 and
November 15, commencing on May 15, 1998.
Each series of Notes will be represented by a single fully registered Note
in book-entry form (each a "Global Security") registered in the name of the
nominee of The Depository Trust Company ("DTC"). Beneficial interests in the
Global Securities will be shown on, and transfers thereof will be effected
only through, records maintained by DTC and, with respect to the beneficial
owners' interests, by DTC's participants. Except as described in this
Prospectus Supplement, Notes in definitive form will not be issued. See
"Description of Notes--Book Entry System." Settlement for the Notes will be in
same-day funds. See "Description of Notes--Same-Day Settlement and Payment."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROCEEDS TO THE
PRICE TO UNDERWRITING OPERATING
PUBLIC(1) DISCOUNT(2) PARTNERSHIP(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2001 Note....................... 99.789% .55% 99.239%
- --------------------------------------------------------------------------------
Total .............................. $149,683,500 $825,000 $148,858,500
- --------------------------------------------------------------------------------
Per 2003 Note....................... 99.833% .6125% 99.2205%
- --------------------------------------------------------------------------------
Total .............................. $ 49,916,500 $306,250 $ 49,610,250
- --------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from November 25, 1997.
(2) The Operating Partnership has agreed to indemnify the several Underwriters
against certain liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting expenses payable by the Operating Partnership estimated
at $225,000.
----------------
The Notes are being offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by the Underwriters, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and reject orders in whole or in part. It is expected that
delivery of the Global Securities will be made in New York, New York on or
about November 25, 1997.
----------------
MERRILL LYNCH & CO.
BANCAMERICA ROBERTSON STEPHENS
J.P. MORGAN & CO.
----------------
The date of this Prospectus Supplement is November 20, 1997.
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NATIONAL PORTFOLIO
[MAP]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING BIDS AND THE PURCHASE OF NOTES TO COVER
SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
S-2
<PAGE>
The following information contained in this Prospectus Supplement is
qualified in its entirety by the detailed information appearing in the
accompanying Prospectus or incorporated therein by reference. As used herein,
the "Operating Partnership" shall be deemed to mean the Operating Partnership
and those entities owned or controlled by it on a consolidated basis (the
"Subsidiaries"), unless the context indicates otherwise. As used herein, the
term "Company" includes Equity Residential Properties Trust and those entities
owned or controlled by it, as the survivor of the merger between Wellsford
Residential Property Trust ("Wellsford") and Equity Residential Properties Trust
("EQR") and both EQR and Wellsford as predecessors to the Company, unless the
context indicates otherwise.
THE OPERATING PARTNERSHIP
The Notes offered hereby (the "Offering") 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. EQR was
organized in March 1993 and commenced operations as a publicly traded company on
August 18, 1993 upon completion of its initial public offering (the "EQR IPO").
EQR 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. In May 1997, EQR completed the acquisition of the multifamily
property business of Wellsford through the tax free merger of EQR and Wellsford.
The Company's senior executives average over 23 years of experience in the
multifamily property business.
All of the Company's interests in multifamily properties are held directly
or indirectly by, and substantially all of its operations relating to
multifamily properties are conducted through, the Operating Partnership. The
Company controls the Operating Partnership as the sole general partner and, as
of November 17, 1997, owned approximately 91% of the Operating Partnership's
outstanding partnership interests.
The Company is the largest publicly traded REIT owner of multifamily
properties (based on the number of apartment units owned and total revenues
earned). As of November 17, 1997, the Company owned or had interests in a
portfolio of 402 multifamily properties (individually a "Property" and
collectively the "Properties") containing 115,751 apartment units and managed
9,067 additional units owned by affiliated entities. Since the EQR IPO, at which
time EQR owned 69 Properties, and through November 17, 1997, the Company has
acquired, directly or indirectly, interests in an additional 345 Properties
containing 97,925 units for a total purchase price of approximately $5 billion,
including the assumption of approximately $1.2 billion of mortgage indebtedness.
Since the EQR IPO and through November 17, 1997, the Company has disposed of 12
of its properties containing 3,899 units for a total sales price of
approximately $98.1 million and the release of mortgage indebtedness in the
amount of approximately $20.5 million. The Company's interest in 11 of the
Properties at the time of acquisition thereof consisted solely of ownership of
the debt collateralized by such Properties and in 21 of the Properties consists
solely of investments in partnership interests and subordinated mortgages
collateralized by such Properties. As of November 17, 1997, the Properties had
an average occupancy rate of approximately 95%. The Properties are located
throughout the United States in the following 33 states: Arizona, Arkansas,
California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana,
Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, New
Hampshire, New Jersey, New Mexico, Nevada, North Carolina, Ohio, Oklahoma,
Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and
Wisconsin.
The Operating Partnership's executive offices are located at Two North
Riverside Plaza, Suite 400, Chicago, Illinois 60606, and its telephone number is
(312) 474-1300. In addition, the Operating Partnership has Regional Operations
Centers in Chicago, Illinois; Dallas, Texas; Denver, Colorado; Seattle,
Washington; Tampa, Florida and Bethesda, Maryland, and area offices in Atlanta,
Georgia; Las Vegas, Nevada; Phoenix, Arizona; Portland, Oregon; Houston and San
Antonio, Texas; Irvine and Stockton, California; Ypsilanti, Michigan; Raleigh,
North Carolina; Ft. Lauderdale, Florida; Kansas City, Kansas; Tulsa, Oklahoma;
and Nashville, Tennessee.
S-3
<PAGE>
RECENT DEVELOPMENTS
Merger Activity
On August 27, 1997, the Company entered into an Agreement and Plan of
Merger regarding the planned acquisition of the multifamily property business of
Evans Withycombe Residential, Inc. ("EWR"), a Maryland corporation, through the
tax free merger of the Company and EWR (the "Merger"). The transaction is valued
at approximately $1 billion and includes 51 multifamily properties containing
14,747 units and four properties under development or expansion expected to
contain 953 units. In the Merger, each outstanding share of common stock of EWR
will be converted into .50 of a common share of the Company. The Merger is
subject to approval of the shareholders of the Company and EWR and, therefore,
completion of the Merger is conditioned upon such approval and certain other
closing conditions.
EWR is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by EWR can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and at its Regional Offices located at Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661; and Seven World Trade Center, Suite 1300, New York, New
York 10048. 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 that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
web site is: http://www.sec.gov. The shares of common stock of EWR are currently
listed on the NYSE and such reports, proxy statements and other information
concerning EWR can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
On May 30, 1997, the Company completed the acquisition of the multifamily
property business of Wellsford Residential Property Trust ("Wellsford") through
the tax-free merger of the Company and Wellsford (the "Wellsford Merger"). The
transaction was valued at approximately $1 billion and included 72 multifamily
properties of Wellsford containing 19,004 units. In the Wellsford Merger, each
outstanding common share of beneficial interest of Wellsford was converted into
.625 of a common share of beneficial interest, $.01 par value per share, of the
Company (the "Common Shares").
Acquisitions
In addition to the Wellsford Merger, since January 1, 1997 and through
November 17, 1997, the Operating Partnership had acquired 87 Properties
containing an aggregate of 23,974 units at a total purchase price of
approximately $1.4 billion (including the assumption of mortgage indebtedness of
approximately $330 million). The Operating Partnership purchased 12 of such
Properties for an aggregate purchase price of approximately $162.2 million
(including the assumption of mortgage indebtedness of approximately $107.1
million) from affiliates of the Operating Partnership, Zell/Merrill Lynch Real
Estate Opportunity Partners Limited Partnership ("Zell/Merrill I") and
subsidiaries of Zell/Merrill Lynch Real Estate Opportunity Partners Limited
Partnership II ("Zell/Merrill II"). The Operating Partnership funded the cash
portion of these acquisitions primarily from its working capital.
In April 1997, the Operating Partnership made an $88 million investment in
six mortgage loans collateralized by five Properties. This investment was funded
from the Operating Partnership's $500 million unsecured line of credit (the
"Line of Credit") which it pays down from time to time with the proceeds of
equity or debt offerings by the Company or the Operating Partnership,
respectively. See "Securities Issuances" below.
Probable Acquisitions
As of November 17, 1997, the Operating Partnership had entered into
contracts with unaffiliated sellers to acquire 34 additional properties
containing 8,185 units which are located in 15 states (collectively, the
"Properties Under Contract"). The total combined purchase price for the
Properties Under Contract is approximately $456.8 million, including the
assumption of approximately $262.2 million of mortgage indebtedness. There can
be no assurance that these 34 Properties Under Contract will be acquired or, if
acquired, that the terms of such acquisitions will not change from the terms
presently contemplated. The Operating Partnership anticipates that the
acquisition of the Properties Under Contract will be funded with the proceeds of
the Offering, its working capital and/or its Line of Credit.
S-4
<PAGE>
Pending Acquisitions
Additional Properties Under Contract
As of November 17, 1997, the Operating Partnership had entered into
contracts with various unaffiliated sellers to acquire eight additional
properties under contract (the "Additional Properties Under Contract") for a
total combined purchase price of approximately $177.8 million, which includes
the assumption of approximately $40.2 million of mortgage indebtedness. These
Additional Properties Under Contract contain 2,280 units and are located in six
states. The contracts for the Additional Properties Under Contract contain due
diligence contingency provisions that allow the Operating Partnership to conduct
extensive investigative procedures of such properties and give the Operating
Partnership the option to terminate such contracts with a full refund of earnest
money if the Operating Partnership becomes dissatisfied with the Additional
Properties Under Contract in any way, in its sole discretion, during such review
period. The purchase price for the Additional Properties Under Contract is
expected to be funded primarily with the net proceeds of the Offering and/or
from the Operating Partnership's Line of Credit. There can be no assurance that
the Additional Properties Under Contract will be acquired or, if acquired, that
the terms of such acquisitions will not change from the terms presently
contemplated.
Properties Under Negotiation
The Operating Partnership is also negotiating with various sellers for the
acquisition of 12 additional properties (the "Properties Under Negotiation")
containing 3,225 units for a purchase price of approximately $232.4 million,
which includes the assumption of approximately $57.7 million of mortgage
indebtedness. With respect to the Properties Under Negotiation, the Operating
Partnership is negotiating the significant terms of the purchase contracts for
such properties. The Operating Partnership anticipates that, if and when entered
into, the purchase contracts for the Properties Under Negotiation will contain
due diligence contingency provisions that will allow the Operating Partnership
to conduct extensive investigations of such properties and will give the
Operating Partnership flexibility to terminate such contracts with a full refund
of earnest money if the Operating Partnership becomes dissatisfied with the
Properties Under Negotiation in any way, in its sole discretion, during such
review period. If the Operating Partnership acquires the Properties Under
Negotiation, it is expected that the terms and conditions of such acquisitions
will be similar to other acquisitions of Properties made by the Operating
Partnership. The purchase price for the Properties Under Negotiation is expected
to be funded primarily from the Operating Partnership's Line of Credit. In
addition, the Company or the Operating Partnership may consider issuing
additional equity or debt securities to finance some or all of such potential
acquisitions. There can be no assurance, however, that the Properties Under
Negotiation will be acquired or, if acquired, that the terms of such
acquisitions will not change from the terms presently contemplated.
Dispositions
Since January 1, 1997, the Operating Partnership has disposed of its
interests in one property containing 200 units for an aggregate sales price of
approximately $4.8 million. The proceeds of this transaction were used for the
acquisition of an additional property.
Securities Issuances
On October 8, 1997, the Operating Partnership raised approximately $147.4
million pursuant to a public offering of its 7 1/8% Notes due October 15, 2017.
Since January 1, 1997, the Company has raised an aggregate of approximately
$637.3 million in proceeds pursuant to nine separate public offerings of its
Common Shares and an aggregate of approximately $473.1 million pursuant to the
public offering of depositary shares representing its Series D Preferred Shares
and Series G Preferred Shares.
Financings
On September 9, 1997, the Operating Partnership entered into its Second
Amended and Restated Revolving Credit Agreement, with Morgan Guaranty Trust
Operating Partnership of New York as Lead Agent, which increased available
borrowings under the Line of Credit to $500 million.
S-5
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Operating Partnership from the sale
of the Notes are estimated at $198,243,750 after the deduction of the
underwriting discount and the estimated expenses payable by the Operating
Partnership. The Operating Partnership intends to use the net proceeds of this
offering for the acquisition of additional multifamily properties and for
working capital purposes.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE UNIT DISTRIBUTIONS
The following table sets forth the Operating Partnership's ratio of
earnings to combined fixed charges and preference unit distributions for the
periods shown.
<TABLE>
<CAPTION>
For the Years Ended December 31,
For the Nine Months For the Nine Months -----------------------------------
Ended Sept. 30, 1997 Ended Sept. 30, 1996 1996 1995 1994 1993 1992
- -------------------- -------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.69 1.58 1.59 1.54 2.18 1.25 .91
</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.
BUSINESS AND PROPERTIES
The Operating Partnership is managed by the Company. The Company is a self-
administered and self-managed equity REIT. EQR was established in 1993 to
continue the multifamily property business objectives and acquisition strategies
of certain affiliated entities controlled by Mr. Zell, Chairman of the Board of
Trustees of the Company. These entities had been engaged in the multifamily
property business since 1969. The Company is a fully integrated real estate
concern that acquires, improves, operates and manages its Properties. The
Company has benefited, and expects to benefit, from the following elements:
Diversified Portfolio
As of November 17, 1997, the Operating Partnership owned or had interests
in a portfolio of 402 Properties containing 115,751 apartment units located in
33 states. As of such date, the Operating Partnership's portfolio was the
largest multifamily property portfolio controlled by a publicly traded REIT
(based on the number of apartment units owned and total revenues earned). The
Operating Partnership's interest in 11 of the Properties at the time of
acquisition thereof consisted solely of ownership of the debt collateralized by
such Properties and in 21 Properties consists solely of investments in
partnership interests and subordinated mortgages collateralized by such
Properties. No single Property represents more than 1.23% of total apartment
units. The distribution of the Properties throughout the United States reflects
the Operating Partnership's belief that geographic diversification helps
insulate the portfolio from regional and local economic influences. At the same
time, the Operating Partnership has sought to create clusters of Properties
within each of its primary markets to achieve economies of scale in management
and operation. The Operating Partnership has established Regional Operations
Centers in Chicago, Illinois; Tampa, Florida; Dallas, Texas; Denver, Colorado;
Seattle, Washington; and Bethesda, Maryland; and area offices in Atlanta,
Georgia; Las Vegas, Nevada; Phoenix, Arizona; Portland, Oregon; Houston and San
Antonio, Texas; Irvine and Stockton, California; Ypsilanti, Michigan; Raleigh,
North Carolina; Ft. Lauderdale, Florida; Kansas City, Kansas; Tulsa, Oklahoma;
and Nashville, Tennessee.
Experienced Management
The Operating Partnership's senior executives average over 23 years of
experience in the multifamily property business. The Operating Partnership has a
fully integrated management team: an Acquisitions Department that is dedicated
exclusively to the property acquisition function and is in constant contact with
principals and brokers nationwide; an Asset Management Department that
establishes strategic plans with respect to the portfolio including the
development and implementation of long-term business plans, asset financings,
property repositionings, expansions, and property disposition decisions; a
Property Management Department that aggressively manages the portfolio through
significant interaction with on-site property managers at each Property; an
Accounting and Finance Department that maintains the books and records of the
Properties and generates timely financial reports; a Capital Markets Department
that manages investor relations and capital raising; and a Legal Department that
oversees all of the Operating Partnership's legal affairs.
S-6
<PAGE>
Sophisticated Management Information Systems
The Operating Partnership makes extensive use of management information
systems. On-site computers at every Property are capable of compiling and
forwarding to the Operating Partnership's Regional Operations Centers on a daily
basis numerous standardized reports including daily occupancy, lease expiration
and renewals, prospective tenants and rental rate information. Quality controls
are maintained through the Operating Partnership's practice of (i) conducting
resident satisfaction surveys, (ii) surveying residents that move out of the
Properties, and (iii) surveying prospective tenants who select alternative
housing.
The Properties
As of November 17, 1997, the Operating Partnership owned or had interests
in a portfolio of 402 Properties located in 33 states containing 115,751
apartment units with the largest having 1,420 units and the smallest having 36
units. The average number of units per Property was approximately 288. The units
are typically contained in a series of two-story buildings. As of November 17,
1997, the Properties had an average occupancy rate of approximately 95%. Tenant
leases are generally year-to-year and require security deposits. The Properties
typically provide residents with attractive amenities, including a clubhouse,
swimming pool, laundry facilities and cable television access. Certain
Properties offer additional amenities such as saunas, whirlpools, spas, sports
courts and exercise rooms.
S-7
<PAGE>
The following chart sets forth certain information regarding the Properties
on a state-by-state basis.
Properties By State
(As of November 17, 1997)
<TABLE>
<CAPTION>
State Number of Properties Number of Units % of Units in Portfolio
- ----- -------------------- --------------- -----------------------
<S> <C> <C> <C>
Arizona 26 7,889 6.8%
Arkansas 4 1,039 .9%
California 44 11,845 10.2%
Colorado 22 5,912 5.1%
Connecticut 1 144 0.1%
Florida 38 9,867 8.5%
Georgia 19 5,499 4.8%
Idaho 1 120 0.1%
Illinois 6 2,986 2.6%
Indiana 2 592 0.5%
Iowa 1 186 0.2%
Kansas 6 2,392 2.1%
Kentucky 5 1,327 1.2%
Maine 2 340 0.3%
Maryland 12 3,753 3.3%
Michigan 7 2,966 2.6%
Minnesota 2 935 0.8%
Missouri 4 970 0.8%
Nevada 11 3,279 2.8%
New Hampshire 1 390 0.3%
New Jersey 1 704 0.6%
New Mexico 4 1,073 0.9%
North Carolina 19 4,856 4.2%
Ohio 6 2,771 2.4%
Oklahoma 16 4,549 3.9%
Oregon 11 3,448 3.0%
South Carolina 6 1,045 0.9%
Tennessee 14 4,009 3.5%
Texas 49 16,190 14.0%
Utah 4 1,426 1.2%
Virginia 9 2,821 2.4%
Washington 46 9,742 8.4%
Wisconsin 3 686 0.6%
--- ------- -----
TOTAL 402 (1) 115,751 100.0%
=== ======= =====
</TABLE>
- -------------------
(1) The Operating Partnership's interest in 11 of the Properties at the time of
acquisition thereof consisted solely of ownership of the debt
collateralized by such Properties and in 21 Properties consists solely of
investments in partnership interests and subordinated mortgages
collateralized by such Properties.
For additional information with respect to the Properties, see the
Operating Partnership's Annual Report on Form 10-K, as amended by Form 10-K/A,
for the year ended December 31, 1996 and the Operating Partnership's Quarterly
Report on Form 10-Q for the period ended September 30, 1997, each of which is
incorporated by reference into the accompanying Prospectus.
S-8
<PAGE>
SELECTED FINANCIAL AND OPERATING INFORMATION
The following table sets forth selected financial and operating information
on a historical basis for the Operating Partnership. The following information
should be read in conjunction with all of the financial statements and notes
thereto included in the Quarterly Report on Form 10-Q for the period ended
September 30, 1997 and the Annual Report on Form 10-K for the year ended
December 31, 1996, which documents are incorporated by reference into the
accompanying Prospectus. In the opinion of management, the operating data for
the periods presented include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the information set forth
therein.
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
(Amounts in thousands except per partnership interest data)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
-------------------- -------------------------------
1997 1996 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
REVENUES
Rental income $482,980 $327,749 $454,412 $373,919 $220,727
Fee and asset management 4,364 4,982 6,749 7,030 4,739
Interest income-investment
in mortgage notes 14,821 9,084 12,819 4,862 --
Interest and other income 7,513 2,232 4,405 4,573 5,568
-------- -------- -------- -------- --------
Total revenues 509,678 344,047 478,385 390,384 231,034
-------- -------- -------- -------- --------
EXPENSES
Property and maintenance 117,681 93,128 127,172 112,186 66,534
Real estate taxes and insurance 48,560 32,301 44,128 37,002 23,028
Property management 18,765 13,136 17,512 15,213 10,249
Property management-non-recurring -- -- -- -- 879
Fee and asset management 2,523 3,037 3,837 3,887 2,056
Depreciation 106,114 66,759 93,253 72,410 37,273
Interest:
Expense incurred 82,775 58,632 81,351 78,375 37,044
Amortization of deferred
financing costs 1,810 2,860 4,242 3,444 1,930
General and administrative 10,037 6,690 9,857 8,129 6,053
-------- -------- -------- -------- --------
Total expenses 388,265 276,543 381,352 330,646 185,046
-------- -------- -------- -------- --------
Income before gain on dispo-
sition of properties and
extraordinary items 121,413 67,504 97,033 59,738 45,988
Gain on disposition of properties 3,923 2,346 22,402 21,617 --
-------- -------- -------- -------- --------
Income before extraordinary
items 125,336 69,850 119,435 81,355 45,988
Extraordinary items:
Write-off of unamortized costs on
refinanced debt -- (3,134) (3,512) -- --
Gain on early extinguishment
of debt -- -- 2,000 --
-------- -------- -------- -------- --------
Net income $125,336 $ 66,716 $115,923 $ 83,355 $ 45,988
======== ======== ======== ======== ========
Net income per weighted average
partnership interest outstanding $ 1.28 $ .94 1.70 $ 1.68 $ 1.34
Weighted average partnership
interests outstanding 68,970 49,620 51,108 42,749 34,150
</TABLE>
S-9
<PAGE>
<TABLE>
<CAPTION>
At September 30, At December 31,
----------------------- ------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation $4,822,779 $2,747,081 $2,983,510 $2,188,939 $1,963,476
Real estate, after accumulated
depreciation $4,422,229 $2,473,686 $2,681,998 $1,970,600 $1,770,735
Total assets $5,034,014 $2,784,866 $2,986,127 $2,141,260 $1,847,685
Total debt $1,718,111 $1,237,623 $1,254,274 $1,002,219 $ 994,746
Redeemable Preference Interests $ -- $ -- $ -- $ 24,578 $ 26,001
9 3/8% Series A Cumulative
Redeemable Preference Units $ 153,000 $ 153,000 $ 153,000 $ 153,000 $ --
9 1/8% Series B Cumulative
Redeemable Preference Units $ 125,000 $ 125,000 $ 125,000 $ 125,000 $ --
9 1/8% Series C Cumulative
Redeemable Preference Units $ 115,000 $ 115,000 $ 115,000 $ -- $ --
8.60% Series D Cumulative
Redeemable Preference Units $ 175,000 $ -- $ -- $ -- $ --
Series E Cumulative
Convertible Preference Units $ 99,995 $ -- $ -- $ -- $ --
9.65% Series F Cumulative
Redeemable Preference Units $ 57,500 $ -- $ -- $ -- $ --
7 1/4% Series G Convertible
Cumulative Preference Units $ 275,000 $ -- $ -- $ -- $ --
Partners' capital $2,120,437 $1,033,729 $1,216,467 $ 750,902 $ 761,373
</TABLE>
S-10
<PAGE>
DESCRIPTION OF THE NOTES
The 2001 Notes and the 2003 Notes constitute separate series of securities
(which are more fully described in the accompanying Prospectus) each to be
issued pursuant to an indenture, dated as of October 1, 1994 (the "Indenture")
between the Operating Partnership and The First National Bank of Chicago, as
trustee (the "Trustee"). The terms of the Notes include those provisions
contained in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
following description of the particular terms of the Notes offered hereby
(referred to herein as the "Notes" and in the Prospectus as the "Debt
Securities") supplements, and to the extent inconsistent therewith, replaces,
the description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made. The
following summary of the Notes is qualified in its entirety by reference to the
Indenture referred to in the Prospectus. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Prospectus or the
Indenture, as the case may be.
General
The 2001 Notes and the 2003 Notes will be limited to aggregate principal
amounts of $150,000,000 and $50,000,000, respectively. The Notes will be issued
in denominations of $1,000 and integral multiples of $1,000. The 2001 Notes will
mature on November 15, 2001 and the 2003 Notes will mature on November 15, 2003
(each a "Maturity Date"). The Notes will not be subject to a sinking fund.
Interest will be payable semi-annually in arrears on May 15 and November 15,
commencing May 15, 1998 (each, an "Interest Payment Date"), to the persons in
whose names the Notes are registered at the close of business on the preceding
May 1 or November 1, respectively, regardless of whether such day is a Business
Day. The 2001 Notes will bear interest at 6.55% per annum and the 2003 Notes
will bear interest at 6.65% per annum, each from November 25, 1997 or from the
immediately preceding Interest Payment Date to which interest has been paid to
the next succeeding Interest Payment Date. If any Interest Payment Date or the
Maturity Date falls on a day that is not a Business Day, the required payment
shall be made on the next Business Day as if it were made on the date such
payment was due and no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date or the Maturity Date, as the
case may be. "Business Day" means any day, other than a Saturday or Sunday, on
which banking institutions in The City of New York are open for business.
The Notes will be direct, unsecured obligations of the Operating
Partnership and will rank equally with each other and with all other unsecured
and unsubordinated indebtedness of the Operating Partnership from time to time
outstanding. The Notes will be effectively subordinated to the prior claims of
each secured mortgage lender to any specific Property which secures such
lender's mortgage. As of September 30, 1997, such mortgages aggregated
approximately $964 million. As of September 30, 1997, the outstanding
indebtedness of the Operating Partnership with which the Notes will rank equally
was approximately $754 million (net of a $.9 million discount and including a
$5.2 million premium). As of September 30, 1997, the Operating Partnership's
total debt was approximately $1.72 billion, and on a pro forma basis giving
effect to this Offering, the total outstanding indebtedness of the Operating
Partnership and its Subsidiaries was approximately $1.92 billion. Subject to
certain limitations set forth in the Indenture, and as described under "Certain
Covenants--Limitations on Incurrence of Indebtedness" in the accompanying
Prospectus, the Indenture will permit the Operating Partnership to incur
additional secured and unsecured indebtedness.
The Notes will be issued only in fully registered, book-entry form. See
"--Book Entry System" below.
Reference is made to the "Additional Covenant" described below and to the
section entitled "Certain Covenants" in the accompanying Prospectus for a
description of the covenants applicable to the Notes. Compliance with such
covenants with respect to the Notes generally may not be waived by the Board of
Trustees of the Company, as general partner of the Operating Partnership, or the
Trustee unless the Holders of at least a majority in principal amount of all
outstanding Notes of such series consent to such waiver; provided, however, that
the defeasance and covenant defeasance provisions of the Indenture described
under "Description of Debt Securities--Discharge, Defeasance and Covenant
Defeasance" in the accompanying Prospectus will apply to the Notes.
Except as described herein or under "Certain Covenants--Limitations on
Incurrence of Indebtedness" and under "Merger, Consolidation or Sale" in the
accompanying Prospectus, 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 the Notes protection in the event of (i) a
highly leveraged or similar transaction involving the Operating Partnership, the
general partner of the Operating Partnership, or any Affiliate of either such
party, (ii) a change of control, or (iii) a reorganization, restructuring,
merger or similar transaction involving the Operating Partnership that may
adversely affect the Holders of the Notes. In addition, subject to the
limitations set
S-11
<PAGE>
forth under "Merger, Consolidation or Sale" in the accompanying Prospectus, the
Operating Partnership may, in the future, enter into certain transactions such
as the sale of all or substantially all of its assets or the merger or
consolidation of the Operating Partnership that would increase the amount of the
Operating Partnership's indebtedness or substantially reduce or eliminate the
Operating Partnership's assets, which may have an adverse effect on the
Operating Partnership's ability to service its indebtedness, including the
Notes.
The Operating Partnership and its management have no present intention of
engaging in a highly leveraged or similar transaction involving the Operating
Partnership.
Additional Covenant
In addition to the covenants applicable to the Notes described in the
section entitled "Certain Covenants" in the accompanying Prospectus, the
Operating Partnership is required to maintain Total Unencumbered Assets of not
less than 150% of the aggregate outstanding principal amount of the Unsecured
Debt of the Operating Partnership. On a pro forma basis giving effect to the
Offering, as of September 30, 1997 the Operating Partnership's Total
Unemcumbered Assets would have been equal to approximately 394% of the aggregate
outstanding amount of the Unsecured Debt of the Operating Partnership.
As used herein,
"Subsidiary" means a corporation, a limited liability company or a
partnership a majority of the outstanding voting stock, limited liability
company or partnership interests, as the case may be, of which is owned,
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, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"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 GAAP (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 on such date, before depreciation and
amortization determined on a consolidated basis in accordance with GAAP.
"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.
Defeasance
The Notes will be subject to defeasance and discharge and to defeasance of
certain obligations as described under "Description of Debt Securities--
Discharge, Defeasance, and Covenant Defeasance" in the Prospectus.
Book Entry System
The following are summaries of certain rules and operating procedures of
DTC that affect the payment of principal and interest and transfers of interests
in a Global Security. Upon issuance, each series of Notes will only be issued in
the form of a Global Security which will be deposited with, or on behalf of, DTC
and registered in the name of Cede & Co., as nominee of DTC. Unless and until it
is exchanged in whole or in part for Notes in definitive form under the limited
circumstances described below, a Global Security may not be transferred except
as a whole (i) by DTC 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.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with DTC for such Global Security ("Participants") or
persons that may hold interests through Participants. Upon the issuance of a
Global Security, DTC will credit, on its book-entry registration and transfer
system, the Participants' accounts with the respective principal amounts of the
Notes represented by such Global Security beneficially owned by such
Participants. Ownership of beneficial interests in the Global Securities 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
S-12
<PAGE>
of persons holding through Participants). The laws of some states may 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 Securities.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by such Global Security for all purposes under
the Indenture. Except as set forth below, owners of beneficial interests in a
Global Security will not be entitled to have the interests represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of the Notes in definitive form, and will not be
considered the owners or holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Security 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 a Global
Security 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 interests represented by a Global
Security will be made to DTC or its nominee, as the case may be, as the
registered owner of such Global Security. 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
Securities 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 a Global Security, will immediately credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in such Global Security as shown on the records
of DTC. The Operating Partnership also expects that payments by Participants to
owners of beneficial interests in the Global Securities held through such
Participants will be governed by standing customer instructions and customary
practices, as is now 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
Notes 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 Notes in definitive form in exchange for
the Global Securities. Any Notes issued in definitive form in exchange for the
Global Securities 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 Securities.
DTC has advised the Operating Partnership of the following information
regarding DTC. DTC is a limited-purpose trust company organized under the
Banking Law 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.
S-13
<PAGE>
Same-Day Settlement and Payment
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of the Notes
will be made by the Operating Partnership in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes 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 Notes.
S-14
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Terms Agreement
incorporating by reference the related Purchase Agreement (collectively, the
"Purchase Agreement"), the Operating Partnership has agreed to sell to each of
the Underwriters named below, and each of the Underwriters named below has
severally agreed to purchase from the Operating Partnership, the respective
principal amount of Notes set forth opposite its name below. The Purchase
Agreement provides that the obligations of the Underwriters are subject to
certain conditions precedent and that the Underwriters will be obligated to
purchase all of the Notes if any are purchased.
<TABLE>
<CAPTION>
Principal Amount Principal Amount
Underwriter of 2001 Notes of 2003 Notes
----------- ---------------- ----------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................ $ 50,000,000 $16,670,000
BancAmerica Robertson Stephens...................... 50,000,000 16,665,000
J.P. Morgan Securities Inc.......................... 50,000,000 16,665,000
------------ -----------
Total...................................... $150,000,000 $50,000,000
============ ===========
</TABLE>
The Operating Partnership has been advised by the Underwriters that the
Underwriters propose to offer each series of Notes to the public at the offering
price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of .35 % of the principal
amount thereof, and that the Underwriters may allow, and such dealers may
reallow, a discount not in excess of .25% of the principal amount to other
dealers. The public offering price and the concession and discount to dealers
may be changed after the initial public offering.
The Operating Partnership has agreed to indemnify the Underwriters against
certain liabilities, including civil liabilities under the Securities Act of
1933, as amended, or to contribute to payments the Underwriters may be required
to make in respect thereof.
The Notes are a new issue of securities with no established trading market.
The Operating Partnership does not intend to apply for listing of the Notes on a
national securities exchange. The Operating Partnership has been advised by the
Underwriters that the Underwriters intend to make a market in the Notes as
permitted by applicable laws and regulations, but the Underwriters are not
obligated to do so and may discontinue market-making at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Notes.
Until the distribution of the Notes is completed, rules of the Securities
and Exchange Commission limit the ability of the Underwriters to bid for and
purchase the Notes. As an exception to these rules, the Underwriters are
permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes.
If the Underwriters create a short position in the Notes in connection with
this Offering, i.e., they sell more Notes than are set forth on the cover page
of this Prospectus Supplement, the Underwriters may reduce that short position
by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the Operating Partnership nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Notes. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The Underwriters from time to time provide investment banking and financial
advisory services to the Operating Partnership and other entities owned or
controlled by Mr. Zell, and affiliates of the Underwriters from time to time
provide financing to such entities.
The Operating Partnership has purchased, and may purchase in the future,
multifamily properties from affiliates of certain of the Underwriters.
S-15
<PAGE>
EXPERTS
The consolidated financial statements of Evans Withycombe Residential, L.P.
appearing in the Current Report of the Operating Partnership on Form 8-K, dated
September 10, 1997; the consolidated financial statements of Wellsford
Residential Property Trust and its subsidiaries included in the Operating
Partnership's Current Report on Form 8-K, dated May 30, 1997; the consolidated
financial statements of the Operating Partnership appearing in the Operating
Partnership's 1996 Annual Report (Form 10-K) for the year ended December 31,
1996; and the Statements of Revenue and Certain Expenses of certain properties
either acquired or expected to be acquired in 1996 or 1997, appearing in the
Current Reports of the Operating Partnership on Forms 8-K or 8-K/A dated May 23,
1996, November 15, 1996, May 20, 1997, August 15, 1997, September 17, 1997 and
October 9, 1997; have all been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon and incorporated by reference in
the attached Prospectus, and are incorporated in the attached Prospectus in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of the Operating Partnership and its
subsidiaries at December 31, 1995 and for the years ended December 31, 1995 and
1994 appearing in the Operating Partnership's 1996 Annual Report (Form 10-K)
incorporated by reference in the attached Prospectus have been audited by Grant
Thornton LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated in the attached Prospectus in reliance
upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Notes offered hereby will be passed upon for the
Operating Partnership by Rosenberg & Liebentritt, P.C., Chicago, Illinois and
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 Operating Partnership and other entities controlled by
Mr. Zell.
S-16
<PAGE>
PROSPECTUS
- ----------
$625,000,000
ERP OPERATING LIMITED PARTNERSHIP
DEBT SECURITIES
-------------
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.
------------------
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.
<PAGE>
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
2
<PAGE>
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).
3
<PAGE>
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
4
<PAGE>
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 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.
5
<PAGE>
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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<PAGE>
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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<PAGE>
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 Years Ended December 31,
----------------------------------------
For the Six For the Six
Months Months
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.
8
<PAGE>
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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<PAGE>
(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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<PAGE>
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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<PAGE>
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
12
<PAGE>
(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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<PAGE>
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.
"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.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"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.
"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.
22
<PAGE>
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.
23
<PAGE>
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.
24
<PAGE>
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.
25
<PAGE>
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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 SUPPLEMENT AND THE PROSPECTUS IN CONNECTION WITH
THE OFFERING COVERED BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE OPERATING PARTNERSHIP. THIS PROSPECTUS SUPPLE-
MENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, THE NOTES, IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE DE-
LIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY OFFER OR SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUP-
PLEMENT OR THE PROSPECTUS OR IN THE AFFAIRS OF THE OPERATING PARTNERSHIP SINCE
THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Operating Partnership................................................. S-3
Recent Developments....................................................... S-4
Use of Proceeds........................................................... S-6
Ratio of Earnings to Combined Fixed Charges and Preference Unit
Distributions............................................................ S-6
Business and Properties................................................... S-6
Selected Financial and Operating Information.............................. S-9
Description of the Notes.................................................. S-11
Underwriting.............................................................. S-15
Experts................................................................... S-16
Legal Matters............................................................. S-16
PROSPECTUS
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>
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LOGO
ERP OPERATING
LIMITED PARTNERSHIP
$150,000,000
6.55% NOTES DUE NOVEMBER 15, 2001
$50,000,000
6.65% NOTES DUE NOVEMBER 15, 2003
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PROSPECTUS SUPPLEMENT
-----------------
MERRILL LYNCH & CO.
BANCAMERICA ROBERTSON STEPHENS
J.P. MORGAN & CO.
NOVEMBER 20, 1997
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