<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 6, 1998)
ERP OPERATING LIMITED PARTNERSHIP
$45,000,000
6.15% NOTES DUE SEPTEMBER 15, 2000
INTEREST PAYABLE MARCH 15 AND SEPTEMBER 15
Interest on the Notes is payable semi-annually on March 15 and September 15
of each year, beginning March 15, 1999. The Notes offered hereby constitute
a further issuance of, are fungible with and are consolidated and form a
single series with the 6.15% Notes due September 15, 2000 issued on September
23, 1998 (the "September 23, 1998 Notes"). Upon issuance, the Notes will
rank pari passu with the September 23, 1998 Notes. The Notes will not be
redeemable or repayable prior to maturity and will not be subject to any
sinking fund. The Notes will be represented by a single Global Note
registered in the name of The Depository Trust Company ("DTC") or its
nominee. Interests in the Global Note will be shown on, and transfers
thereof will be effected only through, records maintained by DTC and its
participants. Except as described in the accompanying Prospectus, the Notes
will not be issued in certificated form. See "Description of Debt Securities
- - Book Entry Registration" in the accompanying Prospectus. The Notes will
trade in DTC's Same-Day Funds Settlement System until maturity, and secondary
market trading activity for the Notes will therefore settle in immediately
available funds. See "Description of Debt Securities - Same-Day Settlement"
in the accompanying Prospectus.
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.
The Underwriter proposes to offer the Notes from time to time for sale in one
or more negotiated transactions, or otherwise, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices, in each case plus accrued interest, if any, from September
28, 1998. The Underwriter has agreed to purchase the Notes from the
Operating Partnership at 99.685% of their principal amount ($44,858,250
aggregate proceeds to the Operating Partnership before deducting estimated
expenses of $10,000 payable by the Operating Partnership, plus accrued
interest, if any, from September 28, 1998. The Operating Partnership has
agreed to indemnify the Underwriter against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See "Underwriting."
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriter and subject to approval of certain legal matters by Hogan &
Hartson L.L.P., counsel for the Underwriter. It is expected that the Notes
will be available for delivery in book-entry form through the facilities of
DTC on or about September 28, 1998, against payment therefor in same-day
funds.
J.P. MORGAN & CO.
September 25, 1998
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE OPERATING PARTNERSHIP OR
BY THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY THE NOTES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE OPERATING
PARTNERSHIP SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
______________________
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
The Operating Partnership . . . . . . . . . . . . . . . . . . . . S-3
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . S-4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Description of the Notes. . . . . . . . . . . . . . . . . . . . . S-6
Underwriting. . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
PROSPECTUS
Special Note Regarding Forward-Looking Statements . . . . . . . . 2
Available Information . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . 2
The Operating Partnership . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 6
Ratios of Earnings to Combined Fixed Charges and Preference Unit
Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Description of Debt Securities. . . . . . . . . . . . . . . . . . 7
Plan of Distribution. . . . . . . . . . . . . . . . . . . . . . . 19
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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, UNLESS THE CONTEXT INDICATES OTHERWISE. AS USED HEREIN, THE TERM
"COMPANY" INCLUDES EQUITY RESIDENTIAL PROPERTIES TRUST ("EQR") AND THOSE
ENTITIES OWNED OR CONTROLLED BY IT ON A CONSOLIDATED BASIS (THE
"SUBSIDIARIES"), AS THE SURVIVOR OF THE MERGERS BETWEEN EQR AND EACH OF
WELLSFORD RESIDENTIAL PROPERTY TRUST ("WELLSFORD") AND EVANS WITHYCOMBE
RESIDENTIAL, INC. ("EWR") AND EACH OF EQR, WELLSFORD AND EWR AS PREDECESSORS
TO THE COMPANY, UNLESS THE CONTEXT INDICATES OTHERWISE.
THE OPERATING PARTNERSHIP
The Notes 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 real estate
investment trusts ("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. In December 1997, EQR
completed the acquisition of the multifamily property business of EWR through
the tax-free merger of EQR and EWR. The Company's senior executives average
over 24 years of experience in the multifamily property business.
All of the Company's interests in multifamily properties are held or
controlled 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 August 21, 1998, owned approximately 88% of the
Operating Partnership's outstanding partnership interests.
The Operating Partnership is the largest owner of multifamily properties in
the United States (based on the number of apartment units owned and total
revenues earned). As of August 21, 1998, the Operating Partnership owned or
had interests in a portfolio of 570 multifamily properties (individually a
"Property" and collectively the "Properties") containing 159,193 apartment
units and managed 9,295 additional units owned by affiliated entities. Since
the EQR IPO, at which time the Operating Partnership owned 69 Properties, and
through August 21, 1998, the Operating Partnership has acquired, directly or
indirectly, interests in an additional 526 Properties containing 143,951
units for a total purchase price of approximately $8.2 billion, including the
assumption of approximately $2.4 billion of mortgage indebtedness and
unsecured notes. Since the EQR IPO and through August 21, 1998, the
Operating Partnership has disposed of 25 of its properties and a portion of
one of its Properties containing an aggregate of 6,483 units and a vacant
land parcel for a total sales price of approximately $191.7 million and the
release of mortgage indebtedness in the amount of approximately $27.5
million. The Operating Partnership's interest in six 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 consisted
solely of investments in partnership interests and subordinated mortgages
collateralized by such Properties. As of August 21, 1998, the Properties had
an average occupancy rate of approximately 96%. The Properties are located
throughout the United States in the following 35 states: Alabama, Arizona,
Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico,
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 30 management
offices in the following cities: Chicago, Illinois; Denver, Colorado;
Seattle, Tukwila and Redmond, Washington; Bethesda, Maryland; Atlanta,
Georgia; Las Vegas, Nevada; Scottsdale and Tucson, Arizona; Portland, Oregon;
Dallas, Houston and San Antonio, Texas; Irvine, Pleasant Hill and Stockton,
California; Ypsilanti, Michigan; Charlotte and Raleigh, North Carolina;
Tampa, Jacksonville and Ft. Lauderdale, Florida; Kansas City, Kansas;
Minneapolis, Minnesota; Louisville, Kentucky; Tulsa, Oklahoma; Boston,
Massachusetts; and Nashville and Memphis, Tennessee.
S-3
<PAGE>
RECENT DEVELOPMENTS
MERGER ACTIVITY
On July 8, 1998, EQR entered into an Agreement and Plan of Merger regarding
the planned acquisition of the multifamily property business of Merry Land &
Investment Company, Inc. ("Merry Land"), a Georgia corporation, through the
tax free merger of EQR and Merry Land (the "Merger"). The transaction was
valued at approximately $2.2 billion and includes 118 multifamily properties
containing 34,990 units. In the Merger, each outstanding share of common
stock of Merry Land will be converted to .53 of a common share of EQR. The
Merger is subject to approval of the shareholders of EQR and Merry Land and,
therefore, completion of the Merger is conditioned upon such approval and
certain other closing conditions. Upon completion of the Merger, it is
expected that EQR will contribute the assets of Merry Land to the Operating
Partnership in exchange for additional partnership interests in the Operating
Partnership.
Merry Land 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"), including Merry Land's
Annual Report on Form 10-K for the year ended December 31, 1997. Reports,
proxy statements and other information filed by Merry Land 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 500 West Madison Street, Suite 1400, 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 Merry Land are
currently listed on the New York Stock Exchange ("NYSE") and such reports,
proxy statements and other information concerning Merry Land can be inspected
at the offices of NYSE, 20 Broad Street, New York, New York 10005.
ACQUISITIONS
From January 1, 1998 through August 21, 1998, the Operating Partnership
acquired 93 Properties containing an aggregate of 21,545 units at a total
purchase price of approximately $1.6 billion (including the assumption of
mortgage indebtedness of approximately $423.9 million). The Operating
Partnership funded the cash portion of these acquisitions primarily with
proceeds from previous securities issuances by the Company, its Line of
Credit and working capital. See "Securities Issuances" below.
PROBABLE ACQUISITIONS
As of August 21, 1998, the Operating Partnership had entered into contracts
with sellers to acquire 13 additional properties containing 3,735 units which
are located in seven states (collectively, the "Properties Under Contract").
The total combined purchase price for the Properties Under Contract is
approximately $230 million, including the assumption of approximately $85.2
million of mortgage indebtedness. There can be no assurance that these 13
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 its working capital and/or its Line of
Credit. The Operating Partnership believes that the Properties Under
Contract can be integrated into its system of management offices without any
significant corresponding increase in the costs of operations of such offices.
PENDING ACQUISITIONS
ADDITIONAL PROPERTIES UNDER CONTRACT
As of August 21, 1998, the Operating Partnership had not entered into
contracts with sellers to acquire any other additional properties under
contract (the "Additional Properties Under Contract").
S-4
<PAGE>
PROPERTIES UNDER NEGOTIATION
As of August 21, 1998, the Operating Partnership was also negotiating with
various sellers for the acquisition of three additional properties (the
"Properties Under Negotiation") containing 534 units for a purchase price of
approximately $25.8 million, including the assumption of approximately $9.5
million of mortgage indebtedness. With respect to the Properties Under
Negotiation, the Operating Partnership was 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 with 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
From January 1, 1998 through August 21, 1998, the Operating Partnership
disposed of its interests in seven properties containing 1,448 units for an
aggregate sales price of approximately $61.9 million, including the release
of approximately $7 million of mortgage indebtedness. The net proceeds of
these dispositions were or will be used for the acquisition of additional
properties.
SECURITIES ISSUANCES
Since January 1, 1998, the Operating Partnership has raised approximately
$406 million pursuant to two public offerings of its Debt Securities. Since
January 1, 1998, the Company has raised an aggregate of approximately $358
million pursuant to six separate public offerings of EQR's common shares of
beneficial interest. In addition, from January 1, 1998, through August 21,
1998, the Company has raised approximately $50.4 million pursuant to its
Distribution Reinvestment and Share Purchase Plan.
AGREEMENT OF LIMITED PARTNERSHIP
The Operating Partnership adopted its Fifth Amended and Restated Agreement of
Limited Partnership as of August 1, 1998.
USE OF PROCEEDS
The net proceeds to the Operating Partnership from the Offering are estimated
at $44,848,250 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 to pay down
existing indebtedness on its Line of Credit, which bears interest at a
weighted average rate of 6.05% and matures in November 1999. As of August
21, 1998, $360 million was outstanding under the Line of Credit.
S-5
<PAGE>
DESCRIPTION OF THE NOTES
The Notes constitute a separate series of securities (which are more fully
described in the accompanying Prospectus) 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 Notes offered hereby constitute a further issuance of, are fungible with
and are consolidated and form a single series with the September 23, 1998
Notes. Upon issuance, the Notes will rank pari passu with the September 23,
1998 Notes. The aggregate principal amount of the Notes, together with the
September 23, 1998 Notes, will be $145,000,000. The Notes will be issued in
denominations of $1,000 and integral multiples of $1,000, will bear interest
from September 28, 1998 at the annual rate set forth on the cover page of
this Prospectus Supplement, and will mature on September 15, 2000 (the
"Maturity Date"). Interest will be payable semi-annually in arrears on March
15 and September 15, commencing March 15, 1999 (each, an "Interest Payment
Date"), to the persons in whose names the Notes are registered at the close
of business on the preceding March 1 or September 1, respectively, regardless
of whether such day is a Business Day. 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 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 June 30, 1998, such mortgages aggregated approximately $1.8
billion. As of June 30, 1998, the outstanding indebtedness of the Operating
Partnership with which the Notes will rank PARI PASSU was approximately $1.4
billion (net of a $4.1 million discount and including a $7.4 million
premium). As of June 30, 1998, the Operating Partnership's total debt was
approximately $3.4 billion, and on a pro forma basis giving effect to this
Offering, the offering of the September 23, 1998 Notes and a previous debt
offering consummated on August 21, 1998, the total outstanding indebtedness
of the Operating Partnership and its Subsidiaries was approximately $3.6
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
"Description of Debt Securities - Book Entry Registration" in the
accompanying Prospectus.
The Notes are not redeemable at the option of the Company or repayable at the
option of any holder prior to maturity. The Notes will not be subject to a
sinking fund.
Reference is made 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
S-6
<PAGE>
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 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.
UNDERWRITING
Subject to the terms and conditions set forth in the Terms Agreement dated
the date hereof, incorporating by reference the related Purchase Agreement
dated the date hereof (collectively, the "Purchase Agreement"), the Operating
Partnership has agreed to sell to J.P. Morgan Securities Inc. (the
"Underwriter") and the Underwriter has agreed to purchase from the Operating
Partnership the entire principal amount of the Notes at a price equal to
99.685% of the principal amount thereof. The Underwriter is obligated to
take and pay for all of the Notes if any are taken.
The Underwriter proposes to offer the Notes from time to time for sale in one
or more negotiated transactions, or otherwise, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. In connection with the sale of any Notes, the Underwriter
may be deemed to have received compensation from the Operating Partnership in
the form of underwriting discounts, and the Underwriter may also receive
commissions from the purchasers of the Notes for whom it may act as agent.
In addition, the Underwriter may sell Notes to certain securities dealers,
and such dealers may receive compensation in the form of underwriting
discounts, concessions, or commissions from the Underwriter and/or the
purchasers of the Notes for whom they may act as agent. The Underwriter and
any dealers that participate with the Underwriter in the distribution of the
Notes may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of the Notes by them may be
deemed to be underwriting discounts or commissions.
All secondary trading in the Notes will settle in immediately available
funds. See "Description of Debt Securities -- Same-Day Settlement" in the
accompanying Prospectus.
The Operating Partnership does not intend to apply for listing of the Notes
on a national securities exchange, but has been advised by the Underwriter
that it intends to make a market in the Notes. The Underwriter is not
obligated, however, to make a market in the Notes 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.
The Operating Partnership has agreed to indemnify the Underwriter against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended, or to contribute to payments the Underwriter may be required to
make in respect thereof.
The Underwriter from time to time provides investment banking and financial
advisory services to the Operating Partnership and other entities owned or
controlled by Mr. Zell, and affiliates of the Underwriter may from time to
time provide financing to such entities.
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-7
<PAGE>
PROSPECTUS
$1,275,000,000
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 $1,275,000,000, 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 (each 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 holders of
such Debt Securities, 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.
---------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------
THE DATE OF THIS PROSPECTUS IS APRIL 6, 1998.
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus and the documents incorporated by
reference herein and any accompanying Prospectus Supplement, including those
set forth in "Use of Proceeds" herein and "Risk Factors" incorporated by
reference from the Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997, constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forwarding-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others, the following: general economic and business
conditions which will, among other things, affect demand for multifamily
properties, availability and credit worthiness of prospective tenants, lease
rents and the availability of financing, adverse changes in the real estate
markets including, among other things, competition with other companies,
risks of real estate acquisition, governmental actions and initiatives, and
environmental/safety requirements.
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 (defined below), 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 or from the Commission's Web site.
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, 1997.
b. The Operating Partnership's Current Reports on Form 8-K dated May 20,
1997, May 30, 1997, August 15, 1997, September 10, 1997, September 17,
1997 and October 9, 1997, and the Operating Partnership's Current
Report on Form 8-K/A dated October 9, 1997.
c. The Operating Partnership's Fourth Amended and Restated ERP Operating
Limited Partnership Agreement of Limited Partnership, filed as Exhibit
10.1 to the Operating Partnership's Quarterly Report on Form 10-Q for
period ended September 30, 1995, and the Operating Partnership's
Amendment to Fourth Amended and Restated Agreement of Limited
Partnership, filed as Exhibit 4.2 to the Operating Partnership's
Current Report on Form 8-K dated December 23, 1997.
d. The Operating Partnership's Prospectus/Information Statement dated
November 24, 1997.
2
<PAGE>
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 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>
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, UNLESS THE CONTEXT INDICATES OTHERWISE. AS USED HEREIN,
THE TERM "COMPANY" INCLUDES EQUITY RESIDENTIAL PROPERTIES TRUST ("EQR") AND
THOSE ENTITIES OWNED OR CONTROLLED BY IT AS THE SURVIVOR OF THE MERGERS
BETWEEN EQR AND EACH OF WELLSFORD RESIDENTIAL PROPERTY TRUST ("WELLSFORD")
AND EVANS WITHYCOMBE RESIDENTIAL, INC. ("EWR") AND EACH OF EQR, WELLSFORD AND
EWR AS PREDECESSORS TO THE COMPANY, UNLESS THE CONTEXT INDICATES OTHERWISE.
THE OPERATING PARTNERSHIP
GENERAL
The Debt Securities offered hereby are being issued by the Operating
Partnership which is managed by EQR, its general partner. The Company, one
of the largest publicly traded real estate investment trusts ("REITs") (based
on the aggregate market value of its outstanding equity capitalization), is a
self-administered and self-managed equity REIT. EQR 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"). 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 EQR. 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 the Company and
Wellsford. In December 1997, EQR completed the acquisition of the
multifamily property business of EWR through the tax-free merger of EWR and
the Company. The Company's senior executives average over 24 years of
experience in the multifamily property business.
All of the Company's interests in its multifamily properties (the
"Properties") are held or controlled 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 eight 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, $.01 par value per share ("Common
Shares"), on a one-for-one basis or, at the Company's option, cash; (ii) 9
3/8% Series A Cumulative Redeemable Preference Units ("9 3/8% Series A
Preference Units"); (iii) 9 1/8% Series B Cumulative Redeemable Preference
Units ("9 1/8% Series B Preference Units"); (iv) 9 1/8% Series C Cumulative
Redeemable Preference Units ("9 1/8% Series C Preference Units"); (v) 8.60%
Series D Cumulative Redeemable Preference Units ("8.60% Series D Preference
Units"); (vi) Series E Cumulative Convertible Preference Units ("Series E
Preference Units"), (vii) 9.65% Series F Cumulative Redeemable Preference
Units ("9.65% Series F Preference Units") and (viii) 7 1/4% Series G
Convertible Cumulative Preference Units ("7 1/4% Series G Preference Units").
The 9 3/8% Series A Preference Units, the 9 1/8% Series B Preference Units,
the 9 1/8% Series C Preference Units, the 8.60% Series D Preference Units,
the Series E Preference Units, the 9.65% Series F Preference Units and the 7
1/4% Series G Preference Units (collectively, the "Outstanding 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"), the Company's 9 1/8% Series C Cumulative
Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share
(the "Series C Preferred Shares"), the Company's 8.60% Series D Cumulative
Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share
(the "Series D Preferred Shares"), the Company's Series E Cumulative
Convertible Preferred Shares of Beneficial Interest, $.01 par value per share
(the "Series E Preferred Shares"), the Company's 9.65% Series F Preferred
Shares of Beneficial Interest, $.01 par value per share (the "Series F
Preferred Shares"), and the Company's 7 1/4% Series G Convertible Cumulative
Preferred Shares of Beneficial Interest, $.01 par value per share (the
"Series G Preferred Shares" and, collectively with the Series A Preferred
Shares,
4
<PAGE>
the Series B Preferred Shares, the Series C Preferred Shares, the Series D
Preferred Shares, the Series E Preferred Shares and the Series F Preferred
Shares, the "Outstanding Preferred Shares"), respectively. The Company
controls the Operating Partnership as the sole general partner and, as of
March 31, 1998, owned approximately 91% of all of the Operating Partnership's
outstanding partnership interests, excluding the Outstanding 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 and the Company'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. In
addition, the Operating Partnership has 30 management offices in the
following cities: Chicago, Illinois; Denver, Colorado; Seattle, Federal Way
and Redmond, Washington; Bethesda, Maryland; Atlanta, Georgia; Las Vegas,
Nevada; Scottsdale and Tucson, Arizona; Portland, Oregon; Dallas, Houston and
San Antonio, Texas; Irvine, Pleasant Hill and Stockton, California;
Ypsilanti, Michigan; Charlotte and Raleigh, North Carolina; Tampa,
Jacksonville and Ft. Lauderdale, Florida; Kansas City; Kansas; Minneapolis,
Minnesota; Louisville, Kentucky; Tulsa, Oklahoma; Boston, Massachusetts; and
Nashville and Memphis, Tennessee.
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 Corp., Equity Residential
Properties Management Corp. II, Equity Residential Properties Management
Corp. III, Wellsford Holly Management, Inc. and Evans Withycombe Management,
Inc. (collectively, the "Management Corps") and Equity Residential Properties
Management Limited Partnership and Equity Residential Properties Management
Limited Partnership II (collectively, the "Management Partnerships") 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 to third parties, 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.
5
<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,
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1.64 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.
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.
6
<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;
(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;
7
<PAGE>
(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 (i) 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, (ii) such Debt
Securities may be surrendered for conversion or registration of
transfer or exchange and (iii) 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 United States 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, whether the
Operating Partnership will have the option to redeem such Debt
Securities in lieu of making such payment; and
8
<PAGE>
(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 United States
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 (Section 307).
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
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
9
<PAGE>
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 has 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 (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
10
<PAGE>
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).
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.
11
<PAGE>
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
In addition to the covenants described in the section entitled "Certain
Covenants - Limitations on Incurrence of Debt" above, 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. As of December 31, 1997, the Operating
Partnership's Total Unencumbered Assets were equal to approximately 347% of
the aggregate outstanding amount of the Unsecured Debt of the Operating
Partnership.
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.
12
<PAGE>
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.
13
<PAGE>
"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, 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 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.
14
<PAGE>
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 (Section
501).
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 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
15
<PAGE>
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 affected 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 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
16
<PAGE>
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).
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).
17
<PAGE>
The Indenture provides that, if the provisions of Article Fourteen of
the Indenture 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 defease 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 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.
18
<PAGE>
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
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
19
<PAGE>
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.
SAME-DAY SETTLEMENT
Unless 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.
20
<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.
21
<PAGE>
EXPERTS
The consolidated financial statements of the Operating Partnership
appearing in the Operating Partnership's 1997 Annual Report (Form 10-K) for
the years ended December 31, 1997 and 1996; the consolidated financial
statements of Evans Withycombe Residential, L.P. appearing in the Operating
Partnership's Current Report on Form 8-K, dated September 10,1997; the
consolidated financial statements of Wellsford and its subsidiaries included
in the Operating Partnership's Current Report on Form 8-K, dated May 30,
1997; and the Statements of Revenue and Certain Expenses of certain
properties either acquired or expected to be acquired, appearing in the
Operating Partnership's Current Reports on Forms 8-K or 8-K/A dated 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 included or incorporated by reference therein and are
incorporated herein by reference 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 appearing in the Operating Partnership's 1997 Annual Report
(Form 10-K) at December 31, 1995 and for the year then ended incorporated
herein by reference have been audited by Grant Thornton LLP, independent
public accountants, as indicated in their report with respect thereto, and
are incorporated in this Registration Statement in reliance upon the
authority of said 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, a trustee of the Company, was a principal in the law
firm of Rosenberg & Liebentritt, P.C. until September, 1997. The Company
incurred legal fees to Rosenberg & Liebentritt, P.C. of approximately $1.4
million in 1997. 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
22
