e424b5
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PROSPECTUS
SUPPLEMENT |
This
filing is made pursuant to Rule 424(b)(5) |
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(To
Prospectus dated September 15, 2006) |
under
the Securities Act of 1933 in connection with
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Registration No. 333-137376.
A filing fee of $10,678, calculated in accordance with
Rules 456(b)
and 457(r), has been transmitted to the SEC in connection
with
the offering of an aggregate offering price of $191,360,000
of common stock by means of this prospectus supplement.
16,000,000 Shares
BioMed Realty Trust,
Inc.
Common Stock
We are offering 16,000,000 shares of our common stock to
be sold in this offering. All of the shares of our common stock
offered pursuant to this prospectus supplement and the
accompanying prospectus are being sold by us. We will receive
all of the net proceeds from the sale of our common stock.
Our common stock is listed on the New York Stock Exchange
under the symbol BMR. The last reported sale price
of our common stock on the New York Stock Exchange on
May 12, 2009 was $11.33 per share.
To assist us in complying with certain federal income tax
requirements applicable to real estate investment trusts, or
REITs, our charter contains certain restrictions relating to the
ownership and transfer of our stock, including an ownership
limit of 9.8% on our common stock. See Restrictions on
Ownership and Transfer beginning on page 24 of the
accompanying prospectus.
You should consider the risks that we have described in
Risk Factors beginning on
page S-4
of this prospectus supplement and page 2 of the
accompanying prospectus, as well as those described in our
Annual Report on
Form 10-K
for the year ended December 31, 2008, before buying shares
of our common stock.
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Per
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Total
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Share
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($ in 000s)
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Public offering price
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$
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10
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.400
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$
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166,400
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Underwriting discount
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$
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0
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.416
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$
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6,656
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Proceeds, before expenses, to us
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$
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9
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.984
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$
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159,744
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The underwriters may purchase up to an additional
2,400,000 shares from us at the public offering price, less
the underwriting discount, within 30 days from the date of
this prospectus supplement, to cover over-allotments. The
underwriters are offering the shares of our common stock as set
forth under Underwriting.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus are truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares to purchasers
on or before May 18, 2009.
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FBR CAPITAL MARKETS & CO.
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The date of this prospectus supplement is May 13,
2009.
TABLE OF
CONTENTS
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PROSPECTUS SUPPLEMENT
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S-ii
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S-1
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S-4
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S-6
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S-7
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S-8
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S-9
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S-13
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S-13
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PROSPECTUS
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BioMed Realty Trust
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1
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Risk Factors
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2
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About This Prospectus
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2
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Where You Can Find More Information
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2
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Incorporation of Certain Documents by Reference
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3
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Forward-Looking Statements
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4
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Use of Proceeds
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5
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Ratios of Earnings to Fixed Charges
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6
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Description of Debt Securities
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7
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Description of Common Stock
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14
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Description of Preferred Stock
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15
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Description of Depositary Shares
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17
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Description of Warrants
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20
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Description of Rights
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22
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Description of Units
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23
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Restrictions on Ownership and Transfer
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24
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Description of the Partnership Agreement of BioMed Realty,
L.P.
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25
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Certain Provisions of Maryland Law and of Our Charter and Bylaws
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30
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Material Federal Income Tax Considerations
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34
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Plan of Distribution
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44
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Legal Matters
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46
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Experts
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46
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You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not, and the underwriters have
not, authorized anyone to provide you with information that is
different from that contained in this prospectus supplement and
the accompanying prospectus. If anyone provides you with
different or inconsistent information, you should not rely on
it. We are offering to sell shares of common stock and seeking
offers to buy shares of common stock only in jurisdictions where
offers and sales are permitted. You should assume that the
information appearing in this prospectus supplement and the
accompanying prospectus, as well as information we previously
filed with the Securities and Exchange Commission and
incorporated herein by reference, is accurate only as of their
respective dates or on other dates which are specified in those
documents, regardless of the time of delivery of this prospectus
supplement or of any sale of the common stock. Our business,
financial condition, results of operations and prospects may
have changed since those dates.
S-i
FORWARD-LOOKING
STATEMENTS
This prospectus supplement, the accompanying prospectus and the
documents that we incorporate by reference in each contain
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 (set forth in
Section 27A of the Securities Act of 1933, as amended, or
the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act). Also,
documents we subsequently file with the Securities and Exchange
Commission and incorporate by reference will contain
forward-looking statements. In particular, statements pertaining
to our capital resources, portfolio performance and results of
operations contain forward-looking statements. Forward-looking
statements depend on assumptions, data or methods which may be
incorrect or imprecise, and we may not be able to realize them.
We do not guarantee that the transactions and events described
will happen as described (or that they will happen at all). You
can identify forward-looking statements by the use of
forward-looking terminology such as believes,
expects, may, will,
should, seeks,
approximately, intends,
plans, estimates or
anticipates or the negative of these words and
phrases or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or
intentions. The following factors, among others, could cause
actual results and future events to differ materially from those
set forth or contemplated in the forward-looking statements:
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adverse economic or real estate developments in the life science
industry or in our target markets, including the ability of our
tenants to obtain funding to run their businesses;
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our failure to obtain necessary outside financing on favorable
terms or at all, including the continued availability of our
unsecured line of credit;
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general economic conditions, including downturns in the national
and local economies;
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volatility in financial and securities markets;
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defaults on or non-renewal of leases by tenants;
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our inability to compete effectively;
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increased interest rates and operating costs;
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our inability to successfully complete real estate acquisitions,
developments and dispositions;
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risks and uncertainties affecting property development and
construction;
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our failure to successfully operate acquired properties and
operations;
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our failure to maintain our status as a real estate investment
trust, or REIT;
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government approvals, actions and initiatives, including the
need for compliance with environmental requirements; and
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changes in real estate, zoning and other laws and increases in
real property tax rates.
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While forward-looking statements reflect our good faith beliefs,
they are not guarantees of future performance. We disclaim any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise. For a further discussion of these and other factors
that could impact our future results, performance or
transactions, see the section below entitled Risk
Factors, including the risks incorporated therein from our
most recent Annual Report on
Form 10-K
and our subsequent Quarterly Reports on
Form 10-Q,
as updated by our future filings.
S-ii
PROSPECTUS
SUPPLEMENT SUMMARY
This document is in two parts. The first part is this
prospectus supplement, which describes the specific terms of
this common stock offering. The second part, which is the
accompanying prospectus, gives more general information, some of
which may not apply to this offering.
If the description of this offering varies between the
prospectus supplement and the accompanying prospectus, you
should rely on the information contained in or incorporated by
reference into this prospectus supplement.
This summary may not contain all the information that may be
important to you. Before making an investment decision, you
should read this entire prospectus supplement and the
accompanying prospectus and the documents incorporated by
reference herein and therein, including the financial statements
and related notes as well as the Risk Factors
section in our Annual Report on
Form 10-K
for the year ended December 31, 2008 and in our subsequent
filings with the Securities and Exchange Commission. References
in this prospectus supplement and the accompanying prospectus to
we, our, us and our
company refer to BioMed Realty Trust, Inc., a Maryland
corporation, BioMed Realty, L.P., and any of our other
subsidiaries. BioMed Realty, L.P. is a Maryland limited
partnership of which we are the sole general partner and to
which we refer in this prospectus supplement and the
accompanying prospectus as our operating partnership. Unless
otherwise indicated, the information contained in this
prospectus supplement assumes that the underwriters
over-allotment option is not exercised.
BioMed
Realty Trust, Inc.
We are a REIT focused on acquiring, developing, owning, leasing
and managing laboratory and office space for the life science
industry. Our tenants primarily include biotechnology and
pharmaceutical companies, scientific research institutions,
government agencies and other entities involved in the life
science industry. Our properties are generally located in
markets with well-established reputations as centers for
scientific research, including Boston, San Diego,
San Francisco, Seattle, Maryland, Pennsylvania and New
York/New Jersey.
We were incorporated in Maryland on April 30, 2004 and
commenced operations on August 11, 2004, after completing
our initial public offering. As of March 31, 2009, we owned
or had interests in 69 properties, representing 112 buildings
with approximately 10.5 million rentable square feet of
laboratory and office space. As of March 31, 2009, our
operating portfolio, comprising approximately 8.2 million
rentable square feet, was 85.9% leased to 121 tenants, not
including approximately 1.5 million square feet that was
available for redevelopment. In addition, as of March 31,
2009, we had properties constituting approximately 735,000
rentable square feet under construction and undeveloped land
that we estimate can support up to an additional
1.4 million rentable square feet of laboratory and office
space.
Our senior management team has significant experience in the
real estate industry, principally focusing on properties
designed for life science tenants. We operate as a fully
integrated, self-administered and
self-managed
REIT, providing property management, leasing, development and
administrative services to our properties. As of March 31,
2009, we had 127 employees.
Our principal offices are located at 17190 Bernardo Center
Drive, San Diego, California 92128. Our telephone number at
that location is
(858) 485-9840.
Our website is located at www.biomedrealty.com. The information
found on, or otherwise accessible through, our website is not
incorporated into, and does not form a part of, this prospectus
supplement, the accompanying prospectus or any other report or
document we file with or furnish to the Securities and Exchange
Commission.
S-1
Recent
Developments
Capital
Position Update
Consistent with our focus on managing our balance sheet and
liquidity position, our debt to total asset book value ratio as
of March 31, 2009 was approximately 43.0%. Also during the
first quarter of 2009, we completed a $203.3 million
refinancing of the secured acquisition and interim loan facility
held by our joint venture with Prudential Real Estate Investors.
In addition, we are currently in negotiations with a group of
lenders to refinance the secured construction loan for our
Center for Life Science
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Boston property. We expect the approximately $350.0 million
loan to have a five-year term, with an anticipated closing in
mid-2009. We also signed a commitment letter with a lender for
an $18.0 million financing of our Towne Centre Drive
property in San Diego, which is fully leased to Illumina,
Inc. as its corporate headquarters. We expect the loan to have a
four-year term and an interest rate of approximately 7.95% per
annum, with an anticipated closing in mid-2009. The Center for
Life Science
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Boston and Towne Centre Drive loan transactions are subject to
the negotiation and execution of definitive agreements, and the
satisfaction of closing conditions set forth therein, and we can
offer no assurances that either transaction will close on the
terms or in the time frame described above, or at all.
In an effort to maintain financial flexibility in light of the
current capital markets environment, we announced in our first
quarter 2009 earnings release that we expect to reset our annual
dividend rate on shares of our common stock to $0.44 per share,
starting in the second quarter of 2009. While this change in our
dividend level represents our current expectation, the actual
dividend payable will be determined by our board of directors
based upon the circumstances at the time of declaration and, as
a result, the actual dividend payable may vary from such
expected amount.
Charter
Amendment
On May 12, 2009, we amended our charter to increase the
authorized number of shares of our common stock from 100,000,000
shares to 150,000,000 shares.
S-2
The
Offering
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Common stock offered by us |
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16,000,000 shares(1). |
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Common stock to be outstanding after this offering |
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97,181,196 shares(2). |
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Use of proceeds |
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We expect that the net proceeds of this offering will be
approximately $159.4 million after deducting underwriting
discounts and commissions and our expenses (and approximately
$183.4 million if the underwriters exercise their
over-allotment option in full). We will contribute the net
proceeds of this offering to our operating partnership. Our
operating partnership intends to subsequently use the net
proceeds of the offering to repay a portion of the outstanding
indebtedness under our $600.0 million unsecured line of
credit and for other general corporate and working capital
purposes. |
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New York Stock Exchange symbol |
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BMR |
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Risk factors |
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See Risk Factors included in this prospectus
supplement, and in our Annual Report on
Form 10-K
for the year ended December 31, 2008, as well as other
information included in this prospectus supplement and the
accompanying prospectus for a discussion of factors you should
carefully consider before deciding to invest in shares of our
common stock. |
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(1) |
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18,400,000 shares of common stock if the underwriters
exercise their over-allotment option in full. |
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(2) |
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99,581,196 shares of common stock if the underwriters
exercise their over-allotment option in full. Based on
81,181,196 shares of common stock outstanding as of
March 31, 2009 and excludes (a) 2,795,364 shares
issuable upon exchange of outstanding units of our operating
partnership, (b) 566,540 shares issuable upon exchange
of outstanding long-term incentive plan, or LTIP, units,
(c) 445,714 shares available for future issuance under
our incentive award plan (not including an additional
2,840,000 shares that may be approved for issuance under
our incentive award plan at our 2009 annual meeting of
stockholders) and (d) 3,691,647 shares potentially
issuable upon exchange of our 4.50% exchangeable senior notes
using the maximum exchange rate. On May 12, 2009, we
amended our charter to increase the authorized number of shares
of our common stock from 100,000,000 shares to 150,000,000
shares. |
S-3
RISK
FACTORS
Investment in the shares offered pursuant to this prospectus
supplement and the accompanying prospectus involves risks. In
addition to the information presented in this prospectus
supplement and the accompanying prospectus and the risk factors
in our most recent Annual Report on
Form 10-K
and other filings under the Exchange Act that are incorporated
by reference in this prospectus supplement and the accompanying
prospectus, you should consider carefully the following risk
factors before deciding to purchase these shares.
Risks
Related to this Offering
The
number of shares of our common stock available for future sale
could adversely affect the market price of our common
stock.
We cannot predict whether future issuances of shares of our
common stock or the availability of shares for resale in the
open market will decrease the market price per share of our
common stock. Upon completion of this offering, we will have
outstanding 97,181,196 shares of our common stock
(99,581,196 shares if the underwriters exercise their
over-allotment option in full), as well as our operating
partnership units and LTIP units which may be exchanged for
2,795,364 and 566,540 shares of our common stock,
respectively, based on the number of shares of common stock,
operating partnership units and LTIP units outstanding as of
March 31, 2009. In addition, as of March 31, 2009, we
had reserved an additional 445,714 shares of common stock
for future issuance under our incentive award plan (not
including an additional 2,840,000 shares that may be
approved for issuance under our incentive award plan at our 2009
annual meeting of stockholders) and 3,691,647 shares
potentially issuable upon exchange of our 4.50% exchangeable
senior notes. Sales of substantial amounts of shares of our
common stock in the public market, or upon exchange of operating
partnership units, LTIP units or our 4.50% exchangeable senior
notes, or the perception that such sales might occur, could
adversely affect the market price of our common stock.
Furthermore, under the rules adopted by the Securities and
Exchange Commission in December 2005 regarding registration and
offering procedures, if we meet the definition of a
well-known seasoned issuer under Rule 405 of
the Securities Act, we are permitted to file an automatic shelf
registration statement that will be immediately effective upon
filing. On September 15, 2006, we filed such an automatic
shelf registration statement, which may permit us, from time to
time, to offer and sell debt securities, common stock, preferred
stock, warrants and other securities to the extent necessary or
advisable to meet our liquidity needs.
Any of the following could have an adverse effect on the market
price of our common stock:
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the exercise of the underwriters over-allotment option,
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the exchange of operating partnership units, LTIP units or our
4.50% exchangeable senior notes for common stock,
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additional grants of LTIP units, restricted stock or other
securities to our directors, executive officers and other
employees under our incentive award plan,
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additional issuances of preferred stock with liquidation or
distribution preferences, and
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other issuances of our common stock.
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Additionally, the existence of operating partnership units, LTIP
units or our 4.50% exchangeable senior notes and shares of our
common stock reserved for issuance upon exchange of operating
partnership units, LTIP units or our 4.50% exchangeable senior
notes and under our incentive award plan may adversely affect
the terms upon which we may be able to obtain additional capital
through the sale of equity securities. In addition, the sale of
shares in this offering and future sales of shares of our common
stock may be dilutive to existing stockholders.
In connection with this offering, each of our executive officers
and certain other officers entered into a
lock-up
agreement restricting the sale of his or her shares for no less
than 30 days following the date of this prospectus
supplement. However, Raymond James & Associates, Inc.,
KeyBanc Capital Markets Inc., Morgan Stanley & Co.
Incorporated, UBS Securities LLC, Wachovia Capital Markets, LLC
and Credit Suisse Securities (USA) LLC, at any time, may release
all or a portion of the common stock subject to the foregoing
lock-up
provisions. When determining whether or not to release shares
subject to a
lock-up
agreement, Raymond James & Associates, Inc., KeyBanc
Capital Markets Inc., Morgan Stanley & Co.
Incorporated, UBS
S-4
Securities LLC, Wachovia Capital Markets, LLC and Credit Suisse
Securities (USA) LLC will consider, among other factors, the
persons reasons for requesting the release, the number of
shares for which the release is being requested and the possible
impact of the release of the shares on the market price of our
common stock. If the restrictions under such agreements are
waived, the affected common stock may be available for sale into
the market, which could reduce the market price of our common
stock.
From time to time we also may issue shares of our common stock
or operating partnership units in connection with property,
portfolio or business acquisitions. We may grant additional
demand or piggyback registration rights in connection with these
issuances. Sales of substantial amounts of our common stock, or
the perception that these sales could occur, may adversely
affect the prevailing market price of our common stock or may
adversely affect the terms upon which we may be able to obtain
additional capital through the sale of equity securities.
Our
business operations may not generate the cash needed to make
distributions on our capital stock or to service our
indebtedness, and we may adjust our common stock dividend
policy.
Our ability to make distributions on our common stock and
payments on our indebtedness and to fund planned capital
expenditures will depend on our ability to generate cash in the
future. We cannot assure you that our business will generate
sufficient cash flow from operations or that future borrowings
will be available to us in an amount sufficient to enable us to
make distributions on our common stock, to pay our indebtedness
or to fund our other liquidity needs.
In an effort to maintain financial flexibility in light of the
current capital markets environment, we announced in our first
quarter 2009 earnings release that we expect to reset our annual
dividend rate on shares of our common stock to $0.44 per share,
starting in the second quarter of 2009. While this change in our
dividend level represents our current expectation, the actual
dividend payable will be determined by our board of directors
based upon the circumstances at the time of declaration and, as
a result, the actual dividend payable may vary from such
expected amount. The decision to declare and pay dividends on
shares of our common stock in the future, as well as the timing,
amount and composition of any such future dividends, will be at
the sole discretion of our board of directors in light of
conditions then existing, including our earnings, financial
condition, capital requirements, debt maturities, the
availability of debt and equity capital, applicable REIT and
legal restrictions and the general overall economic conditions
and other factors. Any change in our dividend policy could have
a material adverse effect on the market price of our common
stock.
Holders
of our outstanding shares of preferred stock have, and holders
of any future outstanding shares of preferred stock will have,
liquidation, dividend and other rights that are senior to the
rights of the holders of our common stock.
Our board of directors has the authority to designate and issue
preferred stock with liquidation, dividend and other rights that
are senior to those of our common stock. Our preferred stock,
including our issued and outstanding shares of 7.375%
Series A cumulative redeemable preferred stock, as well as
any other shares of preferred stock that may be issued in the
future, would receive, upon our voluntary or involuntary
liquidation, dissolution or winding up, before any payment is
made to holders of our common stock, their liquidation
preferences as well as any accrued and unpaid distributions.
These payments would reduce the remaining amount of our assets,
if any, available for distribution to holders of our common
stock.
Several
of the underwriters may have conflicts of interest that arise
out of contractual relationships they or their affiliates have
with us.
We intend to use the net proceeds of this offering to repay a
portion of the outstanding indebtedness under our
$600.0 million unsecured line of credit, which line of
credit includes lenders who are affiliates of several
underwriters participating in this offering, including Raymond
James & Associates, Inc., Wachovia Capital Markets,
LLC, Credit Suisse Securities (USA) LLC, and KeyBanc
Capital Markets Inc. As a result, a portion of the net
proceeds of this offering will be received by these affiliates.
Because they will receive a portion of the net proceeds of this
offering, these underwriters and their affiliates have an
interest in the successful completion of this offering beyond
the customary underwriting discounts and commissions received by
the underwriters in this offering, which could result in a
conflict of interest and cause them to act in a manner that is
not in the best interests of us or our investors in this
offering.
S-5
USE OF
PROCEEDS
We estimate that the net proceeds of this offering will be
approximately $159.4 million, after deducting underwriting
discounts and commissions and estimated offering expenses we
will pay. If the underwriters exercise their over-allotment
option in full, our net proceeds will be approximately
$183.4 million.
We will contribute the net proceeds of this offering to our
operating partnership. Our operating partnership intends to
subsequently use the proceeds to repay a portion of the
outstanding indebtedness under our $600.0 million unsecured
line of credit and for other general corporate and working
capital purposes. The lenders under our $600.0 million
unsecured line of credit include affiliates of several
underwriters participating in this offering, including Raymond
James & Associates, Inc., Wachovia Capital Markets,
LLC, Credit Suisse Securities (USA) LLC and KeyBanc Capital
Markets Inc. A portion of the net proceeds of this offering will
be received by these affiliates because we intend to use the net
proceeds to repay borrowings under our $600.0 million
unsecured line of credit.
As of March 31, 2009, we had $204.3 million
outstanding under our $600.0 million unsecured line of
credit. These borrowings were used to fund property acquisitions
and development activities and for other general corporate and
working capital purposes. The unsecured line of credit matures
on August 1, 2011 and bears interest at a floating rate
equal to, at our option, either (1) reserve adjusted LIBOR
plus a spread which ranges from 100 to 155 basis points,
depending on our leverage, or (2) the higher of
(a) the prime rate then in effect plus a spread which
ranges from 0 to 25 basis points and (b) the federal
funds rate then in effect plus a spread which ranges from 50 to
75 basis points, in each case, depending on our leverage.
In September 2007, we entered into an interest rate swap
agreement, which had the effect of fixing the interest rate on
$35.0 million of the unsecured line of credit at a
weighted-average rate of 5.8% per annum through August 2011
based on our leverage as of March 31, 2009. As of
March 31, 2009, the weighted-average interest rate on our
unsecured line of credit was 1.6% per annum on the unhedged
portion of the outstanding debt of approximately
$169.3 million. We may, in our sole discretion, extend the
maturity of this unsecured line of credit to August 1, 2012
after satisfying certain conditions and paying an extension fee.
S-6
CAPITALIZATION
The following table sets forth the historical consolidated
capitalization of our company as of March 31, 2009 and our
pro forma consolidated capitalization as of March 31, 2009,
as adjusted to give effect to (1) the application of the
estimated net proceeds of this offering and (2) borrowings
of $115.1 million under our $600.0 million unsecured
line of credit after March 31, 2009, in connection with the
settlement of our forward starting swaps, development activities
and other general corporate and working capital purposes.
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Pro Forma
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Historical
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Consolidated
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as Adjusted
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($ in 000s)
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|
|
($ in 000s)
|
|
|
Mortgages and other secured loans
|
|
$
|
1,108,597
|
|
|
$
|
1,108,597
|
|
Unsecured loans and lines of credit
|
|
|
315,402
|
|
|
|
271,008
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 15,000,000 shares
authorized, including the 7.375% Series A cumulative
redeemable preferred stock, $230,000,000 liquidation preference
($25.00 per share), 9,200,000 shares issued and outstanding
as of March 31, 2009 and on a pro forma as adjusted basis
|
|
|
222,413
|
|
|
|
222,413
|
|
Common stock, $0.01 par value, 100,000,000 shares
authorized, 81,181,196 shares issued and outstanding as of
March 31, 2009; 97,181,196 shares issued and
outstanding on a pro forma as adjusted basis(1)
|
|
|
812
|
|
|
|
972
|
|
Additional paid-in capital
|
|
|
1,661,656
|
|
|
|
1,820,940
|
|
Accumulated other comprehensive loss(2)
|
|
|
(100,314
|
)
|
|
|
(100,314
|
)
|
Dividends in excess of earnings
|
|
|
(154,708
|
)
|
|
|
(154,708
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
1,629,859
|
|
|
|
1,789,303
|
|
Noncontrolling interest in our operating partnership
|
|
|
13,139
|
|
|
|
13,139
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
1,642,998
|
|
|
|
1,802,442
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
3,066,997
|
|
|
$
|
3,182,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The common stock outstanding as shown assumes no exercise of the
underwriters over-allotment option and excludes
(a) 2,795,364 shares issuable upon exchange of
outstanding units of our operating partnership,
(b) 566,540 shares issuable upon exchange of
outstanding LTIP units, (c) 445,714 shares available
for future issuance under our incentive award plan (not
including an additional 2,840,000 shares that may be
approved for issuance under our incentive award plan at our 2009
annual meeting of stockholders) and
(d) 3,691,647 shares potentially issuable upon
exchange of our 4.50% exchangeable senior notes using the
maximum exchange rate. On May 12, 2009, we amended our
charter to increase the authorized number of shares of our
common stock from 100,000,000 shares to 150,000,000 shares. |
|
(2) |
|
Represents the fair value of our interest rate swaps, deferred
settlement payments on interest rate swaps, and our equity in
other comprehensive income of unconsolidated partnerships net of
amounts allocated to noncontrolling interests as of
March 31, 2009. |
S-7
SUPPLEMENTAL
MATERIAL UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS
The general summary of the material United States federal income
tax considerations regarding our election to be taxed as a REIT
and the ownership and disposition of shares of our common stock
is set forth in our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
September 30, 2008 (the
Form 8-K
Tax Disclosure), which is incorporated by reference into
this prospectus supplement and the accompanying prospectus. The
summary set forth in the
Form 8-K
Tax Disclosure is for general information only, is not tax
advice and supersedes, in its entirety, the disclosure included
under Material Federal Income Tax Considerations in
the accompanying prospectus. The following summary supplements,
and should be read in connection with, the
Form 8-K
Tax Disclosure, is for general information only, and is not tax
advice.
Tax
Counsel Opinion
Latham & Watkins LLP has acted as our tax counsel in
connection with the registration of our securities pursuant to
this prospectus supplement and our election to be taxed as a
REIT. In connection with this offering, Latham &
Watkins LLP has rendered an opinion to us to the effect that,
commencing with our taxable year ending December 31, 2004,
we have been organized and have operated in conformity with the
requirements for qualification as a REIT under the Internal
Revenue Code of 1986, as amended, or the Code, and our proposed
method of operation will enable us to continue to meet the
requirements for qualification and taxation as a REIT under the
Code. It must be emphasized that this opinion is based on
various assumptions and representations as to factual matters,
including representations made by us in a factual certificate
provided by one of our officers. In addition, this opinion is
based upon our factual representations set forth in the
prospectus supplement and in the prospectus. Moreover, our
qualification and taxation as a REIT depend upon our ability to
meet the various qualification tests imposed under the Code,
including through actual annual operating results, asset
composition, distribution levels and diversity of stock
ownership, the results of which have not been and will not be
reviewed by Latham & Watkins LLP. Accordingly, no
assurance can be given that our actual results of operation for
any particular taxable year will satisfy those requirements.
Latham & Watkins LLP has no obligation to update its
opinion subsequent to its date.
Certain
Dividends Paid in Stock
Recent guidance issued by the Internal Revenue Service sets
forth a safe harbor pursuant to which certain part-stock and
part-cash dividends distributed by REITs for calendar years 2008
and 2009 will satisfy the REIT distribution requirements. Under
the terms of this guidance, up to 90% of our distributions could
be paid in shares of our common stock. If we make such a
distribution, taxable stockholders would be required to include
the full amount of the dividend (i.e., the cash and the stock
portion) as ordinary income (subject to limited exceptions), to
the extent of our current and accumulated earnings and profits
for United States federal income tax purposes, as described in
the
Form 8-K
Tax Disclosure under the headings Taxation of Holders of
Our Common Stock Taxable U.S. Stockholders
Generally Distributions Generally and
Taxation of Holders of Our Common Stock
Taxation of
Non-U.S. Stockholders
Distributions Generally. As a result, our stockholders
generally would recognize taxable income in excess of the cash
received and may be required to pay tax with respect to such
dividends in excess of the cash received. Furthermore, with
respect to
non-U.S. stockholders
(as defined in the
Form 8-K
Tax Disclosure), we may be required to withhold U.S. tax
with respect to such dividends, including in respect of all or a
portion of such dividend that is payable in stock.
S-8
UNDERWRITING
Subject to the terms and conditions in an underwriting agreement
dated May 13, 2009, the underwriters named below, for whom
Raymond James & Associates, Inc., KeyBanc Capital
Markets Inc., Morgan Stanley & Co. Incorporated, UBS
Securities LLC, Wachovia Capital Markets, LLC and Credit Suisse
Securities (USA) LLC are acting as representatives, have
severally agreed to purchase from us the respective number of
shares of common stock set forth opposite their names:
|
|
|
|
|
Underwriter
|
|
Number of Shares
|
|
Raymond James & Associates, Inc.
|
|
|
3,920,000
|
|
KeyBanc Capital Markets Inc.
|
|
|
2,000,000
|
|
Morgan Stanley & Co. Incorporated
|
|
|
2,000,000
|
|
UBS Securities LLC
|
|
|
2,000,000
|
|
Wachovia Capital Markets, LLC
|
|
|
2,000,000
|
|
Credit Suisse Securities (USA) LLC
|
|
|
1,120,000
|
|
Deutsche Bank Securities Inc.
|
|
|
1,120,000
|
|
Robert W. Baird & Co. Incorporated
|
|
|
800,000
|
|
Oppenheimer & Co. Inc.
|
|
|
400,000
|
|
Stifel, Nicolaus & Company, Incorporated
|
|
|
400,000
|
|
FBR Capital Markets & Co.
|
|
|
240,000
|
|
|
|
|
|
|
Total
|
|
|
16,000,000
|
|
The underwriting agreement provides that the obligations of the
underwriters to purchase and accept delivery of the shares of
common stock offered by this prospectus supplement are subject
to approval by their counsel of legal matters and to other
conditions set forth in the underwriting agreement. The
underwriters are obligated to purchase and accept delivery of
all shares of our common stock offered by this prospectus
supplement, if any of the shares are purchased, other than those
covered by the over-allotment option described below.
The underwriters propose to offer our common stock directly to
the public at the public offering price indicated on the cover
page of this prospectus supplement and to various dealers at
that price less a concession not in excess of $0.24 per share.
The underwriters may allow, and the dealers may re-allow, a
concession not in excess of $0.10 per share to other dealers. If
all the shares of common stock are not sold at the public
offering price, the underwriters may change the public offering
price and other selling terms. The shares of our common stock
are offered by the underwriters as stated in this prospectus
supplement, subject to receipt and acceptance by them. The
underwriters reserve the right to reject an order for the
purchase of our common stock in whole or in part.
We have granted the underwriters an option, exercisable for
30 days after the date of this prospectus supplement, to
purchase from time to time up to an aggregate of 2,400,000
additional shares of our common stock to cover over-allotments,
if any, at the public offering price less the underwriting
discounts set forth on the cover page of this prospectus
supplement. If the underwriters exercise this option, each
underwriter, subject to certain conditions, will become
obligated to purchase its pro rata portion of these additional
shares based on the underwriters percentage purchase
commitment in this offering as indicated in the table above. The
underwriters may exercise the over-allotment option only to
cover over-allotments made in connection with the sale of the
common stock offered in this offering.
S-9
The following table shows the amount per share and total
underwriting discounts we will pay to the underwriters (dollars
in thousands, except per share amounts). The amounts are shown
assuming both no exercise and full exercise of the
underwriters over-allotment option.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
($ in 000s)
|
|
|
|
Per Share
|
|
|
No Exercise
|
|
|
Full Exercise
|
|
|
Public offering price
|
|
$
|
10.400
|
|
|
$
|
166,400
|
|
|
$
|
191,360
|
|
Underwriting discounts to be paid by us
|
|
$
|
0.416
|
|
|
$
|
6,656
|
|
|
$
|
7,654
|
|
Proceeds, before expenses, to us
|
|
$
|
9.984
|
|
|
$
|
159,744
|
|
|
$
|
183,706
|
|
In connection with the offering, we expect to incur expenses,
excluding underwriting discounts and commissions, of
approximately $300,000.
We have agreed in the underwriting agreement to indemnify the
underwriters against various liabilities that may arise in
connection with this offering, including liabilities under the
Securities Act. If we cannot indemnify the underwriters, we have
agreed to contribute to payments the underwriters may be
required to make in respect of those liabilities.
Subject to specified exceptions, each of our executive officers
and certain other officers has agreed with the underwriters, for
a period of no less than 30 days after the date of this
prospectus supplement, not to offer, sell, contract to sell, or
otherwise dispose of or transfer any shares of our common stock
or any securities convertible into or exchangeable for shares of
our common stock, including any interests in the operating
partnership, without the prior written consent of Raymond
James & Associates, Inc., KeyBanc Capital Markets
Inc., Morgan Stanley & Co. Incorporated, UBS
Securities LLC, Wachovia Capital Markets, LLC and Credit Suisse
Securities (USA) LLC. This agreement also precludes any hedging
collar or other transaction designed or reasonably expected to
result in a disposition of shares of our common stock or
securities convertible into or exercisable or exchangeable for
shares of our common stock.
In addition, we have agreed with the underwriters, for a period
of 30 days after the date of this prospectus supplement,
not to issue, sell, offer or contract to sell, or otherwise
dispose of or transfer, any shares of our common stock or any
securities convertible into or exchangeable for shares of our
common stock, or file any registration statement with the
Securities and Exchange Commission (except a registration
statement on
Form S-8
relating to our stock plan or on
Form S-4
relating to an acquisition of another entity), without the prior
written consent of Raymond James & Associates, Inc.,
KeyBanc Capital Markets Inc., Morgan Stanley & Co.
Incorporated, UBS Securities LLC, Wachovia Capital Markets, LLC
and Credit Suisse Securities (USA) LLC, except that we may make
grants of equity awards under our existing stock plan (including
the amendment to increase the number of shares authorized for
issuance under the plan if approved at our 2009 annual meeting
of stockholders), issue shares upon exercise of options
outstanding on the date of the underwriting agreement, issue
shares pursuant to our existing dividend reinvestment and stock
purchase plan, issue partnership units in connection with
acquisitions of real property or real property companies, or
issue shares upon exchange of currently outstanding partnership
units or our operating partnerships currently outstanding
exchangeable notes. However, Raymond James &
Associates, Inc., KeyBanc Capital Markets Inc., Morgan
Stanley & Co. Incorporated, UBS Securities LLC,
Wachovia Capital Markets, LLC and Credit Suisse Securities (USA)
LLC may, in their discretion and at any time without notice,
release all or any portion of the securities subject to these
agreements.
Our common stock is listed on the NYSE under the symbol
BMR.
Until the offering is completed, rules of the Securities and
Exchange Commission may limit the ability of the underwriters
and various selling group members to bid for and purchase our
common shares. As an exception to these rules, the underwriters
may engage in activities that stabilize, maintain or otherwise
affect the price of our common stock, including:
|
|
|
|
|
short sales,
|
|
|
|
syndicate covering transactions,
|
S-10
|
|
|
|
|
imposition of penalty bids, and
|
|
|
|
purchases to cover positions created by short sales.
|
Stabilizing transactions consist of bids or purchases made for
the purpose of preventing or retarding a decline in the market
price of our common stock while the offering is in progress.
Stabilizing transactions may include making short sales of our
common stock, which involve the sale by the underwriter of a
greater number of shares of common stock than it is required to
purchase in the offering, and purchasing common stock from us or
in the open market to cover positions created by short sales.
Short sales may be covered shorts, which are short
positions in an amount not greater than the underwriters
over-allotment option referred to above, or may be
naked shorts, which are short positions in excess of
that amount.
The underwriters may close out any covered short position either
by exercising their over-allotment option, in whole or in part,
or by purchasing shares in the open market. In making this
determination, the underwriters will consider, among other
things, the price of shares available for purchase in the open
market compared to the price at which the underwriters may
purchase shares pursuant to the over-allotment option.
A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure
on the price of the common stock in the open market that could
adversely affect investors who purchased in the offering. To the
extent that the underwriters create a naked short position, they
will purchase shares in the open market to cover the position.
The underwriters also may impose a penalty bid on selling group
members. This means that if the underwriters purchase shares in
the open market in stabilizing transactions or to cover short
sales, the underwriters can require the selling group members
that sold those shares as part of the offering to repay the
selling concession received by them.
As a result of these activities, the price of our common stock
may be higher than the price that otherwise might exist in the
open market. If the underwriters commence these activities, they
may discontinue them without notice at any time. The
underwriters may carry out these transactions on the NYSE, in
the
over-the-counter
market or otherwise.
Raymond James & Associates, Inc., Wachovia Capital
Markets, LLC, Credit Suisse Securities (USA) LLC and KeyBanc
Capital Markets Inc. and their respective affiliates and one or
more other underwriters have from time to time provided, and may
in the future provide, various investment banking, commercial
banking, financial advisory and other services for us for which
they have received or will receive customary fees and expenses.
As described under Use of Proceeds, we intend to use
the net proceeds from this offering to repay borrowings
outstanding under our $600.0 million unsecured line of
credit. Because affiliates of Raymond James &
Associates, Inc., Wachovia Capital Markets, LLC, Credit Suisse
Securities (USA) LLC and KeyBanc Capital Markets Inc. are
lenders under our $600.0 million unsecured line of credit,
those affiliates will receive a portion of the net proceeds from
this offering through the repayment of those borrowings.
A prospectus supplement and an accompanying prospectus in
electronic format may be available on the Internet sites or
through other online services maintained by one or more of the
underwriters and selling group members participating in the
offering, or by their affiliates. In those cases, prospective
investors may view offering terms online and, depending upon the
underwriter or the selling group member, prospective investors
may be allowed to place orders online. The underwriters may
agree with us to allocate a specific number of shares for sale
to online brokerage account holders. Any such allocation for
online distributions will be made by the underwriters on the
same basis as other allocations.
Sales
Outside the United States
No action has been taken in any jurisdiction (except in the
United States) that would permit a public offering of our common
stock, or the possession, circulation or distribution of this
prospectus supplement, the accompanying prospectus or any other
material relating to us or our common stock in any jurisdiction
where action for that purpose is required. Accordingly, our
common stock may not be offered or sold, directly or indirectly,
and none of this prospectus supplement, the accompanying
prospectus or any other offering material or advertisements in
connection with our common stock may be distributed or
published, in or from any
S-11
country or jurisdiction except in compliance with any applicable
rules and regulations of any such country or jurisdiction.
Each of the underwriters may arrange to sell common stock
offered hereby in certain jurisdictions outside the United
States, either directly or through affiliates, where they are
permitted to do so. In that regard, Wachovia Capital Markets,
LLC may arrange to sell shares in certain jurisdictions through
an affiliate, Wachovia Securities International Limited, or
WSIL. WSIL is a wholly-owned indirect subsidiary of Wells
Fargo & Company and an affiliate of Wachovia Capital
Markets, LLC. WSIL is a U.K. incorporated investment firm
regulated by the Financial Services Authority. Wachovia
Securities is the trade name for certain corporate and
investment banking services of Wells Fargo & Company
and its affiliates, including Wachovia Capital Markets, LLC and
WSIL.
European
Economic Area
This document is being distributed only to and directed only at
persons in member states of the European Economic Area who are
qualified investors within the meaning of article 2(1)(e)
of the Prospectus Directive (Qualified Investors).
In addition, in the United Kingdom, this document is being
distributed only to and directed only at Qualified Investors
(i) who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005
(Order) (investment professionals) or (ii) who
fall within Article 49(2)(a) to (d) of the Order (high
net worth companies, unincorporated associations, etc.) (all
such persons referred to above being Relevant
Persons). The term Prospectus Directive means
Directive 2003/71/EC and includes any relevant implementing
measures in each member state of the European Economic Area. Any
investment or investment activity to which this document relates
is available only to Relevant Persons and will be engaged in
only with Relevant Persons. By accepting receipt of this
document, each recipient is deemed to confirm, represent and
warrant to the company that they are a Relevant Person.
United
Kingdom
This document is exempt from the general restriction under
English law on the communication of invitations or inducements
to enter into investment activity and has therefore not been
approved by an authorized person, as would otherwise be required
by section 21 of the Financial Services and Markets Act
2000. Any investment to which this document relates is available
only to (and any investment activity to which it relates will be
engaged in only with) those persons described above. Persons who
do not fall within the above category of investor should not
take any action based upon this document and should not rely
on it.
France
The prospectus supplement and the accompanying prospectus
(including any amendment, supplement or replacement thereto)
have not been prepared in connection with the offering of our
securities that has been approved by the Autorité des
marchés financiers or by the competent authority of another
State that is a contracting party to the Agreement on the
European Economic Area and notified to the Autorité des
marchés financiers; no security has been offered or sold
and will be offered or sold, directly or indirectly, to the
public in France except to permitted investors, or Permitted
Investors, consisting of persons licensed to provide the
investment service of portfolio management for the account of
third parties, qualified investors (investisseurs
qualifiés) acting for their own account
and/or
corporate investors meeting one of the four criteria provided in
article D.
341-1 of the
French Code Monétaire et Financier and belonging to a
limited circle of investors (cercle restreint
dinvestisseurs) acting for their own account, with
qualified investors and limited circle of
investors having the meaning ascribed to them in
Article L.
411-2, D.
411-1, D.
411-2, D.
734-1, D.
744-1, D.
754-1 and D.
764-1 of the
French Code Monétaire et Financier; none of this prospectus
supplement and the accompanying prospectus or any other
materials related to the offer or information contained therein
relating to our securities has been released, issued or
distributed to the public in France except to Permitted
Investors; and the direct or indirect resale to the public in
France of any securities acquired by any Permitted Investors may
be made only as provided by articles L.
411-1, L.
411-2, L.
412-1 and L.
621-8 to L.
621-8-3 of
the French Code Monétaire et Financier and applicable
regulations thereunder.
S-12
Switzerland
Our securities may not and will not be publicly offered,
distributed or re-distributed on a professional basis in or from
Switzerland, and neither this prospectus supplement and the
accompanying prospectus nor any other solicitation for
investments in our securities may be communicated or distributed
in Switzerland in any way that could constitute a public
offering within the meaning of articles 652a or 1156 of the
Swiss Federal Code of Obligations or of Article 2 of the
Federal Act on Investment Funds of March 18, 1994. This
prospectus supplement and the accompanying prospectus may not be
copied, reproduced, distributed or passed on to others without
the underwriters and agents prior written consent.
This prospectus supplement and the accompanying prospectus are
not a prospectus within the meaning of Articles 1156 and
652a of the Swiss Code of Obligations or a listing prospectus
according to article 32 of the Listing Rules of the Swiss
exchange and may not comply with the information standards
required thereunder. We will not apply for a listing of our
securities on any Swiss stock exchange or other Swiss regulated
market and this prospectus supplement and the accompanying
prospectus may not comply with the information required under
the relevant listing rules. The securities have not been and
will not be approved by any Swiss regulatory authority. The
securities have not been and will not be registered with or
supervised by the Swiss Federal Banking Commission, and have not
been and will not be authorized under the Federal Act on
Investment Funds of March 18, 1994. The investor protection
afforded to acquirers of investment fund certificates by the
Federal Act on Investment Funds of March 18, 1994 does not
extend to acquirers of our securities.
LEGAL
MATTERS
Certain legal matters will be passed upon for us by
Latham & Watkins LLP, San Diego, California, and
for the underwriters by DLA Piper LLP (US), Raleigh, North
Carolina. Certain matters of Maryland law, including the
validity of the common stock to be issued in connection with
this offering, will be passed upon for us by Venable LLP,
Baltimore, Maryland.
EXPERTS
The consolidated balance sheets of BioMed Realty Trust, Inc. and
subsidiaries as of December 31, 2008 and 2007, the related
consolidated statements of income, stockholders equity,
comprehensive income and cash flows for each of the years in the
three-year period ended December 31, 2008, the related
financial statement schedule III and managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2008 have been
incorporated by reference in this prospectus supplement in
reliance upon the reports of KPMG LLP, independent registered
public accounting firm, and upon the authority of said firm as
experts in accounting and auditing.
S-13
PROSPECTUS
BioMed Realty Trust,
Inc.
Debt Securities
Common Stock
Preferred Stock
Depositary Shares
Warrants
Rights
Units
We may from time to time offer, in one or more classes or
series, separately or together, and in amounts, at prices and on
terms to be set forth in one or more supplements to this
prospectus, the following securities:
|
|
|
|
|
debt securities, which may consist of debentures, notes or other
types of debt,
|
|
|
|
shares of common stock,
|
|
|
|
shares of preferred stock,
|
|
|
|
shares of preferred stock represented by depositary shares,
|
|
|
|
warrants to purchase debt securities, preferred stock, common
stock or depositary shares,
|
|
|
|
rights to purchase shares of common stock, and
|
|
|
|
units consisting of two or more of the foregoing.
|
We refer to the debt securities, common stock, preferred stock,
depositary shares, warrants, rights and units registered
hereunder collectively as the securities in this
prospectus.
The specific terms of each series or class of the securities
will be set forth in the applicable prospectus supplement and
will include, where applicable:
|
|
|
|
|
in the case of debt securities, the specific title, aggregate
principal amount, currency, form (which may be certificated or
global), authorized denominations, maturity, rate (or manner of
calculating the rate) and time of payment of interest, terms for
redemption at our option or repayment at the holders
option, terms for sinking payments, terms for conversion into
shares of our common stock or preferred stock, covenants and any
initial public offering price,
|
|
|
|
in the case of preferred stock, the specific designation,
preferences, conversion and other rights, voting powers,
restrictions, limitations as to transferability, dividends and
other distributions and terms and conditions of redemption and
any initial public offering price,
|
|
|
|
in the case of depositary shares, the fractional share of
preferred stock represented by each such depositary share,
|
|
|
|
in the case of warrants or rights, the duration, offering price,
exercise price and detachability, and
|
|
|
|
in the case of units, the constituent securities comprising the
units, the offering price and detachability.
|
In addition, the specific terms may include limitations on
actual or constructive ownership and restrictions on transfer of
the securities, in each case as may be appropriate to preserve
the status of our company as a real estate investment trust, or
REIT, for federal income tax purposes.
The applicable prospectus supplement will also contain
information, where applicable, about certain United States
federal income tax consequences relating to, and any listing on
a securities exchange of, the securities covered by such
prospectus supplement.
The securities may be offered directly by us or by any selling
security holder, through agents designated from time to time by
us or to or through underwriters or dealers. If any agents,
dealers or underwriters are involved in the sale of any of the
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 the sections
entitled Plan of Distribution and About This
Prospectus for more information. No securities may be sold
without delivery of this prospectus and the applicable
prospectus supplement describing the method and terms of the
offering of such series of securities.
Our common stock currently trades on the New York Stock
Exchange, or NYSE, under the symbol BMR. On
September 14, 2006, the last reported sale price of our
common stock was $31.19 per share.
You should consider the risks that we have described in
Risk Factors on page 2 before investing in our
securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is September 15, 2006
TABLE OF
CONTENTS
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Page
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BioMed Realty Trust
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1
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Risk Factors
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2
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About This Prospectus
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2
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Where You Can Find More Information
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2
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Incorporation of Certain Documents by Reference
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3
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Forward-Looking Statements
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4
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Use of Proceeds
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5
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Ratios of Earnings to Fixed Charges
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6
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Description of Debt Securities
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7
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Description of Common Stock
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14
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Description of Preferred Stock
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15
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Description of Depositary Shares
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17
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Description of Warrants
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20
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Description of Rights
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22
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Description of Units
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23
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Restrictions on Ownership and Transfer
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24
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Description of the Partnership Agreement of BioMed Realty, L.P.
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25
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Certain Provisions of Maryland Law and of Our Charter and Bylaws
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30
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Material Federal Income Tax Considerations
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34
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Plan of Distribution
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44
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Legal Matters
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46
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Experts
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46
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References in this prospectus to we,
our, us and our company
refer to BioMed Realty Trust, Inc., a Maryland corporation,
BioMed Realty, L.P., and any of our other subsidiaries. BioMed
Realty, L.P. is a Maryland limited partnership of which we are
the sole general partner and to which we refer in this
prospectus as our operating partnership.
You should rely only on the information contained in this
prospectus, in an accompanying prospectus supplement or
incorporated by reference herein or therein. We have not
authorized anyone to provide you with information or make any
representation that is different. If anyone provides you with
different or inconsistent information, you should not rely on
it. This prospectus and any accompanying prospectus supplement
do not constitute an offer to sell or a solicitation of an offer
to buy any securities other than the registered securities to
which they relate, and this prospectus and any accompanying
prospectus supplement do not constitute an offer to sell or the
solicitation of an offer to buy securities in any jurisdiction
where, or to any person to whom, it is unlawful to make such an
offer or solicitation. You should not assume that the
information contained in this prospectus and any accompanying
prospectus supplement is correct on any date after the
respective dates of the prospectus and such prospectus
supplement or supplements, as applicable, even though this
prospectus and such prospectus supplement or supplements are
delivered or shares are sold pursuant to the prospectus and such
prospectus supplement or supplements at a later date. Since the
respective dates of the prospectus contained in this
registration statement and any accompanying prospectus
supplement, our business, financial condition, results of
operations and prospects may have changed. We may only use this
prospectus to sell the securities if it is accompanied by a
prospectus supplement.
i
BIOMED
REALTY TRUST
We are a REIT focused on acquiring, developing, owning, leasing
and managing laboratory and office space for the life science
industry. We were formed on April 30, 2004 and commenced
operations after completing the initial public offering, or IPO,
of our common stock in August 2004. Our tenants primarily
include biotechnology and pharmaceutical companies, scientific
research institutions, government agencies and other entities
involved in the life science industry. Our current properties
and primary acquisition targets are generally located in markets
with well-established reputations as centers for scientific
research, including Boston, San Diego, San Francisco,
Seattle, Maryland, Pennsylvania and New York/New Jersey, as well
as in research parks near or adjacent to universities.
As of June 30, 2006, we owned 47 properties consisting of
71 buildings with approximately 5.9 million rentable square
feet of laboratory and office space, which was approximately
91.4% leased to 94 tenants. We also owned undeveloped land
that we estimate can support up to approximately
1,299,000 rentable square feet of laboratory and office
space.
Our senior management team has significant experience in the
real estate industry, principally focusing on properties
designed for life science tenants. We operate as a fully
integrated, self-administered and self-managed REIT, providing
management, leasing, development and administrative services to
our properties. As of June 30, 2006, we had
71 employees.
Our principal offices are located at 17140 Bernardo Center
Drive, Suite 222, San Diego, California 92128. Our
telephone number at that location is
(858) 485-9840.
Our website is located at www.biomedrealty.com. The information
found on, or otherwise accessible through, our website is not
incorporated into, and does not form a part of, this prospectus
or any other report or document we file with or furnish to the
Securities and Exchange Commission.
1
RISK
FACTORS
Investment in any securities offered pursuant to this
prospectus involves risks. You should carefully consider the
risk factors incorporated by reference to our most recent Annual
Report on
Form 10-K
and our subsequent Quarterly Reports on
Form 10-Q
and the other information contained in this prospectus, as
updated by our subsequent filings under the Securities Exchange
Act of 1934, as amended, or the Exchange Act, and the risk
factors and other information contained in the applicable
prospectus supplement before acquiring any of such securities.
The occurrence of any of these risks might cause you to lose all
or part of your investment in the offered securities. Please
also refer to the section below entitled Forward-Looking
Statements.
ABOUT
THIS PROSPECTUS
This prospectus is part of an automatic shelf registration
statement that we filed with the Securities and Exchange
Commission as a well-known seasoned issuer as
defined in Rule 405 under the Securities Act of 1933, as
amended, or the Securities Act, using a shelf
registration process. Under this process, we may sell debt
securities, common stock, preferred stock, depositary shares,
warrants, rights and units in one or more offerings. In
addition, selling security holders to be named in a prospectus
supplement may sell certain of our securities from time to time.
This prospectus provides you with a general description of the
securities we or any selling security holder may offer. Each
time we or any selling security holder sells securities, we or
the selling security holder will provide a prospectus supplement
containing specific information about the terms of the
applicable offering. Such prospectus supplement may add, update
or change information contained in this prospectus. You should
read this prospectus and the applicable prospectus supplement
together with additional information described below under the
heading Where You Can Find More Information.
We or any selling security holder may offer the securities
directly, through agents, or to or through underwriters. The
applicable prospectus supplement will describe the terms of the
plan of distribution and set forth the names of any underwriters
involved in the sale of the securities. See Plan of
Distribution beginning on page 44 for more
information on this topic. No securities may be sold without
delivery of a prospectus supplement describing the method and
terms of the offering of those securities.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange
Commission. You may read and copy any document we file with the
Securities and Exchange Commission at the public reference room
of the Securities and Exchange Commission,
100 F Street, N.E., Washington, D.C. 20549.
Information about the operation of the public reference room may
be obtained by calling the Securities and Exchange Commission at
1-800-SEC-0330.
Copies of all or a portion of the registration statement can be
obtained from the public reference room of the Securities and
Exchange Commission upon payment of prescribed fees. Our
Securities and Exchange Commission filings, including our
registration statement, are also available to you on the
Securities and Exchange Commissions website at
http://www.sec.gov.
We have filed with the Securities and Exchange Commission a
registration statement on
Form S-3,
of which this prospectus is a part, including exhibits,
schedules and amendments filed with, or incorporated by
reference in, this registration statement, under the Securities
Act with respect to the securities registered hereby. This
prospectus and any accompanying prospectus supplement do not
contain all of the information set forth in the registration
statement and exhibits and schedules to the registration
statement. For further information with respect to our company
and the securities registered hereby, reference is made to the
registration statement, including the exhibits to the
registration statement. Statements contained in this prospectus
and any accompanying prospectus supplement as to the contents of
any contract or other document referred to in, or incorporated
by reference in, this prospectus and any accompanying prospectus
supplement are not necessarily complete and, where that contract
is an exhibit to the registration statement, each statement is
qualified in all respects by the exhibit to which the reference
relates. Copies of the registration statement, including the
exhibits and schedules to the registration statement, may be
examined without charge at the public reference room of the
Securities and Exchange Commission, 100 F Street,
N.E., Washington, D.C. 20549. Information about the
operation of the public reference room may be obtained by
2
calling the Securities and Exchange Commission at
1-800-SEC-0330.
Copies of all or a portion of the registration statement can be
obtained from the public reference room of the Securities and
Exchange Commission upon payment of prescribed fees. Our
Securities and Exchange Commission filings, including our
registration statement, are also available to you on the
Securities and Exchange Commissions website at
http://www.sec.gov.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to
incorporate by reference the information we file
with the Securities and Exchange Commission, which means that we
can disclose important information to you by referring to those
documents. The information incorporated by reference is an
important part of this prospectus. The incorporated documents
contain significant information about us, our business and our
finances. Any information contained in this prospectus or in any
document incorporated or deemed to be incorporated by reference
in this prospectus will be deemed to have been modified or
superseded to the extent that a statement contained in this
prospectus, in any other document we subsequently file with the
Securities and Exchange Commission that also is incorporated or
deemed to be incorporated by reference in this prospectus or in
the applicable prospectus supplement modifies or supersedes the
original statement. Any statement so modified or superseded will
not be deemed, except as so modified or superseded, to be a part
of this prospectus. We incorporate by reference the following
documents we filed with the Securities and Exchange Commission:
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our Annual Report on
Form 10-K
for the year ended December 31, 2005,
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Amendment No. 1 to our Annual Report on
Form 10-K
for the year ended December 31, 2005,
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our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2006,
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our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
February 9, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
March 15, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on May 5,
2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
May 16, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
May 26, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
June 8, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
July 3, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
July 17, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
August 16, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
August 21, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
August 28, 2006,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
September 15, 2006,
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the description of our common stock included in our registration
statement on
Form 8-A
filed with the Securities and Exchange Commission on
July 30, 2004, and
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all documents filed by us with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus and prior
to the termination of the offering of the underlying securities.
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To the extent that any information contained in any current
report on
Form 8-K,
or any exhibit thereto, was furnished to, rather than filed
with, the Securities and Exchange Commission, such information
or exhibit is specifically not incorporated by reference in this
prospectus.
3
We will provide without charge to each person, including any
beneficial owner, to whom a prospectus is delivered, on written
or oral request of that person, a copy of any or all of the
documents we are incorporating by reference into this
prospectus, other than exhibits to those documents unless those
exhibits are specifically incorporated by reference into those
documents. A written request should be addressed to BioMed
Realty Trust, Inc., 17140 Bernardo Center Drive,
Suite 222, San Diego, California 92128, Attention:
Secretary.
FORWARD-LOOKING
STATEMENTS
This prospectus, any accompanying prospectus supplement and the
documents that we incorporate by reference in each contain
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 (set forth in
Section 27A of the Securities Act and Section 21E of
the Exchange Act). Also, documents we subsequently file with the
Securities and Exchange Commission and incorporate by reference
will contain forward-looking statements. In particular,
statements pertaining to our capital resources, portfolio
performance and results of operations contain forward-looking
statements. Likewise, our pro forma financial statements and
other pro forma information incorporated by reference and all
our statements regarding anticipated growth in our funds from
operations and anticipated market conditions, demographics and
results of operations are forward-looking statements.
Forward-looking statements involve numerous risks and
uncertainties, and you should not rely on them as predictions of
future events. Forward-looking statements depend on assumptions,
data or methods which may be incorrect or imprecise, and we may
not be able to realize them. We do not guarantee that the
transactions and events described will happen as described (or
that they will happen at all). You can identify forward-looking
statements by the use of forward-looking terminology such as
believes, expects, may,
will, should, seeks,
approximately, intends,
plans, pro forma, estimates
or anticipates or the negative of these words and
phrases or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or
intentions. The following factors, among others, could cause
actual results and future events to differ materially from those
set forth or contemplated in the forward-looking statements:
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adverse economic or real estate developments in the life science
industry or in our target markets,
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general economic conditions,
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our ability to compete effectively,
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defaults on or non-renewal of leases by tenants,
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increased interest rates and operating costs,
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our failure to obtain necessary outside financing,
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our ability to successfully complete real estate acquisitions,
developments and dispositions,
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our failure to successfully operate acquired properties and
operations,
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our failure to maintain our status as a REIT,
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government approvals, actions and initiatives, including the
need for compliance with environmental requirements,
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financial market fluctuations, and
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changes in real estate and zoning laws and increases in real
property tax rates.
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While forward-looking statements reflect our good faith beliefs,
they are not guarantees of future performance. We disclaim any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise. For a further discussion of these and other factors
that could impact our future results, performance or
transactions, see the section above entitled Risk
Factors, including the risks incorporated therein from our
most recent Annual Report on
Form 10-K
and subsequent Quarterly Reports on
Form 10-Q,
as updated by our future filings.
4
USE OF
PROCEEDS
Unless we indicate otherwise in the applicable prospectus
supplement, we intend to contribute the net proceeds from any
sale of the securities pursuant to this prospectus to our
operating partnership. Our operating partnership will
subsequently use the net proceeds received from us to
potentially acquire or develop additional properties and for
general corporate purposes, which may include the repayment of
existing indebtedness and improvements to the properties in our
portfolio. Pending application of cash proceeds, we will invest
the net proceeds in interest-bearing accounts and short-term,
interest-bearing securities which are consistent with our
intention to continue to qualify as a REIT for federal income
tax purposes. Further details regarding the use of the net
proceeds from the sale of a specific series or class of the
securities will be set forth in the applicable prospectus
supplement.
If a prospectus supplement includes an offering by selling
security holders, we will not receive any proceeds from such
sales.
5
RATIOS OF
EARNINGS TO FIXED CHARGES
The following table sets forth ratios of earnings to fixed
charges for the periods shown:
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BioMed Realty Trust, Inc. Predecessor
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BioMed Realty Trust, Inc.
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Historical
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Historical Consolidated Period
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Combined Period
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Historical Combined
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April 1 -
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January 1 -
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Year Ended
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August 11 -
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January 1 -
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Year Ended
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June 30,
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March 31,
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December 31,
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December 31,
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August 17,
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December 31,
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2006
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2006
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2005
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2004
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2004
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2003
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2002
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2001
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Ratio of Earnings to Fixed Charges
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1.8
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1.6
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1.7
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5.3
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1.6
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1.8
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1.5
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1.3
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The ratios of earnings to fixed charges were computed by
dividing earnings by fixed charges. For this purpose, earnings
consist of income before extraordinary items and fixed charges
included in expense. Fixed charges consist of interest costs,
whether expensed or capitalized, and the amortization of debt
issuance costs.
For the periods shown, we had no outstanding shares of preferred
stock. Therefore, the ratios of earnings to fixed charges and
preferred stock dividends are identical to the ratios presented
in the table above.
6
DESCRIPTION
OF DEBT SECURITIES
This prospectus describes the general terms and provisions of
our debt securities. When we offer to sell a particular series
of debt securities, we will describe the specific terms of the
series in a supplement to this prospectus. We will also indicate
in the prospectus supplement whether the general terms and
provisions described in this prospectus apply to a particular
series of debt securities. To the extent the information
contained in the prospectus supplement differs from this summary
description, you should rely on the information in the
prospectus supplement.
The debt securities will be issued under an indenture between us
and a trustee. We have summarized select portions of the
indenture below. The summary is not complete. The form of the
indenture has been filed as an exhibit to the registration
statement, and you should read the indenture and our debt
securities carefully for provisions that may be important to
you. Capitalized terms used in the summary and not defined in
this prospectus have the meaning specified in the indenture.
General
The terms of each series of debt securities will be established
by or pursuant to a resolution of our board of directors and set
forth or determined in the manner provided in an officers
certificate or by a supplemental indenture. The particular terms
of each series of debt securities will be described in a
prospectus supplement relating to such series, including any
pricing supplement.
Each indenture will provide that we may, but need not, designate
more than one trustee for the indenture, each with respect to
one or more series of our debt securities. Any trustee under an
indenture may resign or be removed with respect to one or more
series of our debt securities, and a successor trustee may be
appointed to act with respect to that series. If two or more
persons are acting as trustee to different series of our debt
securities, each trustee shall be a trustee of a trust under the
applicable indenture separate and apart from the trust
administered by any other trustee and, except as otherwise
indicated in this prospectus, any action taken by a trustee may
be taken by that trustee with respect to, and only with respect
to, the one or more series of debt securities for which it is
trustee under the applicable indenture.
Unless otherwise specified in a supplement to this prospectus,
the debt securities will be our direct, unsecured obligations
and will rank equally with all of our other unsecured and
unsubordinated indebtedness. We can issue an unlimited amount of
debt securities under the indenture that may be in one or more
series with the same or various maturities, at par, at a
premium, or at a discount. We will set forth in a prospectus
supplement, including any pricing supplement, relating to any
series of debt securities being offered, the aggregate principal
amount and the following terms of the debt securities, to the
extent applicable:
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the title of the debt securities,
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the price or prices (expressed as a percentage of the principal
amount) at which we will sell the debt securities,
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any limit on the aggregate principal amount of the debt
securities,
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the date or dates on which we will pay the principal on the debt
securities,
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the rate or rates (which may be fixed or variable) per annum or
the method used to determine the rate or rates (including any
commodity, commodity index, stock exchange index or financial
index) at which the debt securities will bear interest, the date
or dates from which interest will accrue, the date or dates on
which interest will commence and be payable and any regular
record date for the interest payable on any interest payment
date,
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the place or places where principal of, premium and interest on
the debt securities will be payable, where debt securities may
be surrendered for registration of transfer or exchange and
where notices or demands to or upon us relating to debt
securities and the indenture may be served,
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the terms and conditions upon which we may redeem the debt
securities,
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any obligation we have to redeem or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the
option of a holder of debt securities,
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the dates on which and the price or prices at which we will
repurchase debt securities at the option of the holders of debt
securities and other detailed terms and provisions of these
repurchase obligations,
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the denominations in which the debt securities will be issued,
if other than denominations of $1,000 and any integral multiple
thereof,
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whether the debt securities will be issued in the form of
certificated debt securities or global debt securities,
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the portion of principal amount of the debt securities payable
upon declaration of acceleration of the maturity date, if other
than the principal amount,
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the currency of denomination of the debt securities,
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the designation of the currency, currencies or currency units in
which payment of principal of, premium and interest on the debt
securities will be made,
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if payments of principal of, premium or interest on the debt
securities will be made in one or more currencies or currency
units other than that or those in which the debt securities are
denominated, the manner in which the exchange rate with respect
to these payments will be determined,
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the manner in which the amounts of payment of principal of,
premium or interest on the debt securities will be determined,
if these amounts may be determined by reference to an index
based on a currency or currencies other than that in which the
debt securities are denominated or designated to be payable or
by reference to a commodity, commodity index, stock exchange
index or financial index,
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any provisions relating to any security provided for the debt
securities,
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any addition to or change in the events of default described in
this prospectus or in the indenture with respect to the debt
securities and any change in the acceleration provisions
described in this prospectus or in the indenture with respect to
the debt securities,
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any addition to or change in the covenants described in this
prospectus or in the indenture with respect to the debt
securities,
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any other terms of the debt securities, which may modify or
delete any provision of the indenture as it applies to that
series,
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a discussion of any material United States federal income tax
consequences applicable to an investment in such debt
securities, and
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any depositaries, interest rate calculation agents, exchange
rate calculation agents or other agents with respect to the debt
securities.
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In addition, the indenture does not limit our ability to issue
convertible or subordinated debt securities. Any conversion or
subordination provisions of a particular series of debt
securities will be set forth in the officers certificate
or supplemental indenture related to that series of debt
securities and will be described in the relevant prospectus
supplement. Such terms may include provisions for conversion,
either mandatory, at the option of the holder or at our option,
in which case the number of shares of common stock, cash or
other securities to be received by the holders of debt
securities would be calculated as of a time and in the manner
stated in the prospectus supplement.
We may issue debt securities that provide for an amount less
than their stated principal amount to be due and payable upon
declaration of acceleration of their maturity pursuant to the
terms of the indenture. We will provide you with information on
the other special considerations applicable to any of these debt
securities in the applicable prospectus supplement.
If we denominate the purchase price of any of the debt
securities in a foreign currency or currencies or a foreign
currency unit or units, or if the principal of and any premium
and interest on any series of debt securities is payable
8
in a foreign currency or currencies or a foreign currency unit
or units, we will provide you with information on the
restrictions, elections, specific terms and other information
with respect to that issue of debt securities and such foreign
currency or currencies or foreign currency unit or units in the
applicable prospectus supplement.
Transfer
and Exchange
Each debt security will be represented by either one or more
global securities registered in the name of The Depository Trust
Company, as depositary, or a nominee (we will refer to any debt
security represented by a global debt security as a
book-entry debt security), or a certificate issued
in definitive registered form (we will refer to any debt
security represented by a certificated security as a
certificated debt security) as set forth in the
applicable prospectus supplement. Except as set forth under the
heading Global Debt Securities and Book-Entry System
below, book-entry debt securities will not be issuable in
certificated form.
Certificated Debt Securities. You may transfer
or exchange certificated debt securities at any office we
maintain for this purpose in accordance with the terms of the
indenture. No service charge will be made for any transfer or
exchange of certificated debt securities, but we may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with a transfer or
exchange.
You may effect the transfer of certificated debt securities and
the right to receive the principal of, and premium and interest
on, certificated debt securities only by surrendering the
certificate representing those certificated debt securities and
either reissuance by us or the trustee of the certificate to the
new holder or the issuance by us or the trustee of a new
certificate to the new holder.
Global Debt Securities and Book-Entry
System. Each global debt security representing
book-entry debt securities will be deposited with, or on behalf
of, the depositary, and registered in the name of the depositary
or a nominee of the depositary.
We will require the depositary to agree to follow the following
procedures with respect to book-entry debt securities.
Ownership of beneficial interests in book-entry debt securities
will be limited to persons who have accounts with the depositary
for the related global debt security, which we refer to as
participants, or persons who may hold interests through
participants. Upon the issuance of a global debt security, the
depositary will credit, on its book-entry registration and
transfer system, the participants accounts with the
respective principal amounts of the book-entry debt securities
represented by such global debt security beneficially owned by
such participants. The accounts to be credited will be
designated by any dealers, underwriters or agents participating
in the distribution of the book-entry debt securities. Ownership
of book-entry debt securities will be shown on, and the transfer
of such ownership interests will be effected only through,
records maintained by the depositary for the related global debt
security (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. These laws may
impair the ability to own, transfer or pledge beneficial
interests in book-entry debt securities.
So long as the depositary for a global debt security, or its
nominee, is the registered owner of that global debt security,
the depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the book-entry debt
securities represented by such global debt security for all
purposes under the indenture. Except as described below,
beneficial owners of book-entry debt securities will not be
entitled to have securities registered in their names, will not
receive or be entitled to receive physical delivery of a
certificate in definitive form representing securities and will
not be considered the owners or holders of those securities
under the indenture. Accordingly, each person beneficially
owning book-entry debt securities must rely on the procedures of
the depositary for the related global debt security 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.
We understand, however, that under existing industry practice,
the depositary will authorize the persons on whose behalf it
holds a global debt security to exercise certain rights of
holders of debt securities, and the indenture provides that we,
the trustee and our respective agents will treat as the holder
of a debt security the persons specified
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in a written statement of the depositary with respect to that
global debt security for purposes of obtaining any consents or
directions required to be given by holders of the debt
securities pursuant to the indenture.
We will make payments of principal of, and premium and interest
on, book-entry debt securities to the depositary or its nominee,
as the case may be, as the registered holder of the related
global debt security. We, the trustee and any other agent of
ours or agent of the trustee will not have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in a global
debt security or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests.
We expect that the depositary, upon receipt of any payment of
principal of, and premium or interest on, a global debt
security, will immediately credit participants accounts
with payments in amounts proportionate to the respective amounts
of book-entry debt securities held by each participant as shown
on the records of such depositary. We also expect that payments
by participants to owners of beneficial interests in book-entry
debt securities held through those participants will be governed
by standing customer instructions and customary practices, as is
now the case with the securities held for the accounts of
customers in bearer form or registered in street
name, and will be the responsibility of those participants.
We will issue certificated debt securities in exchange for each
global debt security if the depositary is at any time unwilling
or unable to continue as depositary or ceases to be a clearing
agency registered under the Exchange Act and a successor
depositary registered as a clearing agency under the Exchange
Act is not appointed by us within 90 days. In addition, we
may at any time and in our sole discretion determine not to have
the book-entry debt securities of any series represented by one
or more global debt securities and, in that event, will issue
certificated debt securities in exchange for the global debt
securities of that series. Global debt securities will also be
exchangeable by the holders for certificated debt securities if
an event of default with respect to the book-entry debt
securities represented by those global debt securities has
occurred and is continuing. Any certificated debt securities
issued in exchange for a global debt security will be registered
in such name or names as the depositary shall instruct the
trustee. We expect that such instructions will be based upon
directions received by the depositary from participants with
respect to ownership of book-entry debt securities relating to
such global debt security.
We have obtained the foregoing information concerning the
depositary and the depositarys book-entry system from
sources we believe to be reliable, but we take no responsibility
for the accuracy of this information.
No
Protection in the Event of a Change of Control
Unless we state otherwise in the applicable prospectus
supplement, the debt securities will not contain any provisions
that may afford holders of the debt securities protection in the
event we have a change in control or in the event of a highly
leveraged transaction (whether or not such transaction results
in a change in control) that could adversely affect holders of
debt securities.
Covenants
We will set forth in the applicable prospectus supplement any
restrictive covenants applicable to any issue of debt securities.
Consolidation,
Merger and Sale of Assets
We may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of our properties and
assets to, any person, which we refer to as a successor person,
unless:
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we are the surviving corporation or the successor person (if
other than us) is a corporation organized and validly existing
under the laws of any U.S. domestic jurisdiction and
expressly assumes our obligations on the debt securities and
under the indenture,
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immediately after giving effect to the transaction, no event of
default, and no event which, after notice or lapse of time, or
both, would become an event of default, shall have occurred and
be continuing under the indenture, and
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certain other conditions are met.
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Events of
Default
Event of default means, with respect to any series of debt
securities, any of the following:
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default in the payment of any interest upon any debt security of
that series when it becomes due and payable, and continuance of
that default for a period of 30 days (unless the entire
amount of the payment is deposited by us with the trustee or
with a paying agent prior to the expiration of the
30-day
period),
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default in the payment of principal of or premium on any debt
security of that series when due and payable,
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default in the deposit of any sinking fund payment, when and as
due in respect of any debt security of that series,
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default in the performance or breach of any other covenant or
warranty by us in the indenture (other than a covenant or
warranty that has been included in the indenture solely for the
benefit of a series of debt securities other than that series),
which default continues uncured for a period of 60 days
after we receive written notice from the trustee or we and the
trustee receive written notice from the holders of not less than
a majority in principal amount of the outstanding debt
securities of that series as provided in the indenture,
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certain events of bankruptcy, insolvency or reorganization of
our company, and
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any other event of default provided with respect to debt
securities of that series that is described in the applicable
prospectus supplement accompanying this prospectus.
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No event of default with respect to a particular series of debt
securities (except as to certain events of bankruptcy,
insolvency or reorganization) necessarily constitutes an event
of default with respect to any other series of debt securities.
The occurrence of an event of default may constitute an event of
default under our bank credit agreements in existence from time
to time. In addition, the occurrence of certain events of
default or an acceleration under the indenture may constitute an
event of default under certain of our other indebtedness
outstanding from time to time.
If an event of default with respect to debt securities of any
series at the time outstanding occurs and is continuing, then
the trustee or the holders of not less than a majority in
principal amount of the outstanding debt securities of that
series may, by a notice in writing to us (and to the trustee if
given by the holders), declare to be due and payable immediately
the principal (or, if the debt securities of that series are
discount securities, that portion of the principal amount as may
be specified in the terms of that series) of, and accrued and
unpaid interest, if any, on all debt securities of that series.
In the case of an event of default resulting from certain events
of bankruptcy, insolvency or reorganization, the principal (or
such specified amount) of and accrued and unpaid interest, if
any, on all outstanding debt securities will become and be
immediately due and payable without any declaration or other act
on the part of the trustee or any holder of outstanding debt
securities. At any time after a declaration of acceleration with
respect to debt securities of any series has been made, but
before a judgment or decree for payment of the money due has
been obtained by the trustee, the holders of a majority in
principal amount of the outstanding debt securities of that
series may rescind and annul the acceleration if all events of
default, other than the non-payment of accelerated principal and
interest, if any, with respect to debt securities of that
series, have been cured or waived as provided in the indenture.
We refer you to the prospectus supplement relating to any series
of debt securities that are discount securities for the
particular provisions relating to acceleration of a portion of
the principal amount of such discount securities upon the
occurrence of an event of default.
The indenture provides that the trustee will be under no
obligation to exercise any of its rights or powers under the
indenture at the request of any holder of outstanding debt
securities, unless the trustee receives indemnity satisfactory
to it against any loss, liability or expense. Subject to certain
rights of the trustee, the holders of a majority in principal
amount of the outstanding debt securities of any series will
have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the
trustee with respect to the debt securities of that series.
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No holder of any debt security of any series will have any right
to institute any proceeding, judicial or otherwise, with respect
to the indenture or for the appointment of a receiver or
trustee, or for any remedy under the indenture, unless:
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that holder has previously given to the trustee written notice
of a continuing event of default with respect to debt securities
of that series, and
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the holders of at least a majority in principal amount of the
outstanding debt securities of that series have made written
request, and offered reasonable indemnity, to the trustee to
institute the proceeding as trustee, and the trustee has not
received from the holders of a majority in principal amount of
the outstanding debt securities of that series a direction
inconsistent with that request and has failed to institute the
proceeding within 60 days.
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Notwithstanding the foregoing, the holder of any debt security
will have an absolute and unconditional right to receive payment
of the principal of, premium and any interest on that debt
security on or after the due dates expressed in that debt
security and to institute suit for the enforcement of payment.
The indenture requires us, within 120 days after the end of
our fiscal year, to furnish to the trustee a statement as to
compliance with the indenture. The indenture provides that the
trustee may withhold notice to the holders of debt securities of
any series of any default or event of default (except in payment
on any debt securities of that series) with respect to debt
securities of that series if it in good faith determines that
withholding notice is in the interest of the holders of those
debt securities.
Modification
and Waiver
We may modify and amend the indenture with the consent of the
holders of at least a majority in principal amount of the
outstanding debt securities of each series affected by the
modifications or amendments. We may not make any modification or
amendment without the consent of the holders of each affected
debt security then outstanding if that amendment will:
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reduce the amount of debt securities whose holders must consent
to an amendment or waiver,
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reduce the rate of or extend the time for payment of interest
(including default interest) on any debt security,
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reduce the principal of or premium on or change the fixed
maturity of any debt security or reduce the amount of, or
postpone the date fixed for, the payment of any sinking fund or
analogous obligation with respect to any series of debt
securities,
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reduce the principal amount of discount securities payable upon
acceleration of maturity,
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waive a default in the payment of the principal of, premium or
interest on any debt security (except a rescission of
acceleration of the debt securities of any series by the holders
of at least a majority in aggregate principal amount of the then
outstanding debt securities of that series and a waiver of the
payment default that resulted from such acceleration),
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make the principal of or premium or interest on any debt
security payable in currency other than that stated in the debt
security,
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make any change to certain provisions of the indenture relating
to, among other things, the right of holders of debt securities
to receive payment of the principal of, premium and interest on
those debt securities and to institute suit for the enforcement
of any such payment and to waivers or amendments, or
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waive a redemption payment with respect to any debt security.
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Except for certain specified provisions, the holders of at least
a majority in principal amount of the outstanding debt
securities of any series may on behalf of the holders of all
debt securities of that series waive our compliance with
provisions of the indenture. The holders of a majority in
principal amount of the outstanding debt securities of any
series may on behalf of the holders of all the debt securities
of such series waive any past default under the indenture with
respect to that series and its consequences, except a default in
the payment of the principal of, or premium or any interest on,
any debt security of that series or in respect of a covenant or
provision, which cannot be
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modified or amended without the consent of the holder of each
outstanding debt security of the series affected; provided,
however, that the holders of a majority in principal amount
of the outstanding debt securities of any series may rescind an
acceleration and its consequences, including any related payment
default that resulted from the acceleration.
Defeasance
of Debt Securities and Certain Covenants in Certain
Circumstances
Legal Defeasance. The indenture provides that,
unless otherwise provided by the terms of the applicable series
of debt securities, we may be discharged from any and all
obligations in respect of the debt securities of any series
(except for certain obligations to register the transfer or
exchange of debt securities of such series, to replace stolen,
lost or mutilated debt securities of such series, and to
maintain paying agencies and certain provisions relating to the
treatment of funds held by paying agents). We will be so
discharged upon the deposit with the trustee, in trust, of money
and/or
U.S. government obligations or, in the case of debt
securities denominated in a single currency other than
U.S. dollars, foreign government obligations, that, through
the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion
of a nationally recognized firm of independent public
accountants to pay and discharge each installment of principal,
premium and interest on and any mandatory sinking fund payments
in respect of the debt securities of that series on the stated
maturity of those payments in accordance with the terms of the
indenture and those debt securities.
This discharge may occur only if, among other things, we have
delivered to the trustee an opinion of counsel stating that we
have received from, or there has been published by, the United
States Internal Revenue Service, or IRS, a ruling or, since the
date of execution of the indenture, there has been a change in
the applicable United States federal income tax law, in either
case to the effect that, and based thereon such opinion shall
confirm that, the holders of the debt securities of that series
will not recognize income, gain or loss for United States
federal income tax purposes as a result of the deposit,
defeasance and discharge and will be subject to United States
federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if the
deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants. The indenture
provides that, unless otherwise provided by the terms of the
applicable series of debt securities, upon compliance with
certain conditions:
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we may omit to comply with the covenant described under the
heading Consolidation, Merger and Sale of Assets and
certain other covenants set forth in the indenture, as well as
any additional covenants that may be set forth in the applicable
prospectus supplement, and
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any omission to comply with those covenants will not constitute
a default or an event of default with respect to the debt
securities of that series, or covenant defeasance.
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The conditions include:
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depositing with the trustee money
and/or
U.S. government obligations or, in the case of debt
securities denominated in a single currency other than
U.S. dollars, foreign government obligations, that, through
the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion
of a nationally recognized firm of independent public
accountants to pay and discharge each installment of principal
of, premium and interest on and any mandatory sinking fund
payments in respect of the debt securities of that series on the
stated maturity of those payments in accordance with the terms
of the indenture and those debt securities, and
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delivering to the trustee an opinion of counsel to the effect
that the holders of the debt securities of that series will not
recognize income, gain or loss for United States federal income
tax purposes as a result of the deposit and related covenant
defeasance and will be subject to United States federal income
tax on the same amounts and in the same manner and at the same
times as would have been the case if the deposit and related
covenant defeasance had not occurred.
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Covenant Defeasance and Events of Default. In
the event we exercise our option to effect covenant defeasance
with respect to any series of debt securities and the debt
securities of that series are declared due and payable because
of the occurrence of any event of default, the amount of money
and/or
U.S. government
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obligations or foreign government obligations on deposit with
the trustee will be sufficient to pay amounts due on the debt
securities of that series at the time of their stated maturity
but may not be sufficient to pay amounts due on the debt
securities of that series at the time of the acceleration
resulting from the event of default. In such a case, we would
remain liable for those payments.
Foreign Government Obligations means, with
respect to debt securities of any series that are denominated in
a currency other than U.S. dollars:
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direct obligations of the government that issued or caused to be
issued such currency for the payment of which obligations its
full faith and credit is pledged which are not callable or
redeemable at the option of the issuer thereof, or
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obligations of a person controlled or supervised by or acting as
an agency or instrumentality of that government the timely
payment of which is unconditionally guaranteed as a full faith
and credit obligation by that government which are not callable
or redeemable at the option of the issuer thereof.
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Governing
Law
The indenture and the debt securities will be governed by, and
construed in accordance with, the internal laws of the State of
New York.
DESCRIPTION
OF COMMON STOCK
General
This prospectus describes the general terms of our common stock.
For a more detailed description of these securities, you should
read the applicable provisions of the Maryland General
Corporation Law, or MGCL, and our charter and bylaws. When we
offer to sell a particular class or series of stock, we will
describe the specific terms of the series in a prospectus
supplement. Accordingly, for a description of the terms of any
class or series of stock, you must refer to both the prospectus
supplement relating to that class or series and the description
of stock in this prospectus. To the extent the information
contained in the prospectus supplement differs from this summary
description, you should rely on the information in the
prospectus supplement.
Our charter provides that we may issue up to
100,000,000 shares of our common stock, $0.01 par
value per share. Our charter authorizes our board of directors
to amend our charter to increase or decrease the number of
authorized shares of any class or series without stockholder
approval. As of August 31, 2006, 65,221,232 shares of
our common stock were issued and outstanding. Under Maryland
law, stockholders generally are not liable for the
corporations debts or obligations.
All shares of our common stock offered hereby will be duly
authorized, fully paid and nonassessable. Subject to the
preferential rights of any other class or series of stock and to
the provisions of our charter regarding the restrictions on
transfer of stock, holders of shares of our common stock are
entitled to receive dividends on such stock if, as and when
authorized by our board of directors out of assets legally
available therefor and declared by us and to share ratably in
the assets of our company legally available for distribution to
our stockholders in the event of our liquidation, dissolution or
winding up after payment of or adequate provision for all known
debts and liabilities of our company.
Subject to the provisions of our charter regarding the
restrictions on transfer of stock, each outstanding share of our
common stock entitles the holder to one vote on all matters
submitted to a vote of stockholders, including the election of
directors and, except as provided with respect to any other
class or series of stock, the holders of such shares will
possess the exclusive voting power. There is no cumulative
voting in the election of our directors, which means that the
holders of a majority of the outstanding shares of our common
stock can elect all of the directors then standing for election
and the holders of the remaining shares will not be able to
elect any directors.
Holders of shares of our common stock have no preference,
conversion, exchange, sinking fund, redemption or appraisal
rights and have no preemptive rights to subscribe for any
securities of our company. Subject to the
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provisions of our charter regarding the restrictions on transfer
of stock, shares of our common stock will have equal dividend,
liquidation and other rights.
Under the MGCL, a Maryland corporation generally cannot
dissolve, amend its charter, merge, sell all or substantially
all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business
unless such action is advised by the board of directors and
approved by the affirmative vote of stockholders entitled to
cast at least two-thirds of the votes entitled to be cast on the
matter unless a lesser percentage (but not less than a majority
of all of the votes entitled to be cast on the matter) is set
forth in the corporations charter. Our charter provides,
except with respect to an amendment to the section relating to
the removal of directors and the corresponding reference in the
general amendment provision, that the foregoing items may be
approved by a majority of the votes entitled to be cast on the
matter. However, Maryland law permits a corporation to transfer
all or substantially all of its assets without the approval of
the stockholders of the corporation to one or more persons if
all of the equity interests of the person or persons are owned,
directly or indirectly, by the corporation. Because operating
assets may be held by a corporations subsidiaries, as in
our situation, this may mean that our subsidiary can merge or
transfer all of its assets without a vote of our stockholders.
Our charter authorizes our board of directors to classify and
reclassify any unissued shares of our common stock into other
classes or series of stock. Prior to issuance of shares of each
class or series, our board of directors is required by the MGCL
and our charter to set, subject to the provisions of our charter
regarding the restrictions on transfer of stock, the terms,
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of
redemption for each such class or series.
Power to
Increase Authorized Stock and Issue Additional Shares of Our
Common Stock
We believe that the power of our board of directors to amend our
charter to increase the number of authorized shares of stock, to
cause us to issue additional authorized but unissued shares of
our common stock and to classify or reclassify unissued shares
of our common stock and thereafter to cause us to issue such
classified or reclassified shares of stock will provide us with
increased flexibility in structuring possible future financings
and acquisitions and in meeting other needs which might arise.
The additional classes or series, as well as the common stock,
will be available for issuance without further action by our
stockholders, unless stockholder consent is required by
applicable law or the rules of any stock exchange or automated
quotation system on which our securities may be listed or
traded. Although our board of directors does not intend to do
so, it could authorize us to issue a class or series that could,
depending upon the terms of the particular class or series,
delay, defer or prevent a transaction or a change of control of
our company that might involve a premium price for our
stockholders or otherwise be in their best interest.
Restrictions
on Ownership and Transfer
To assist us in complying with certain federal income tax
requirements applicable to REITs, we have adopted certain
restrictions relating to the ownership and transfer of our
common stock. See Restrictions on Ownership and
Transfer.
Transfer
Agent and Registrar
The transfer agent and registrar for our common stock is The
Bank of New York.
DESCRIPTION
OF PREFERRED STOCK
General
This prospectus describes the general terms of our preferred
stock. For a more detailed description of these securities, you
should read the applicable provisions of the MGCL and our
charter and bylaws. When we offer to sell a particular class or
series of stock, we will describe the specific terms of the
series in a prospectus supplement. Accordingly, for a
description of the terms of any class or series of stock, you
must refer to both the prospectus supplement relating to that
class or series and the description of stock in this prospectus.
To the extent the
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information contained in the prospectus supplement differs from
this summary description, you should rely on the information in
the prospectus supplement.
Our charter provides that we may issue up to
15,000,000 shares of preferred stock, $0.01 par value
per share. Our charter authorizes our board of directors to
amend our charter to increase or decrease the number of
authorized shares of any class or series without stockholder
approval. As of August 31, 2006, no shares of preferred
stock were issued and outstanding.
Our charter authorizes our board of directors to classify any
unissued shares of preferred stock and to reclassify any
previously classified but unissued shares of any class or
series. Prior to issuance of shares of each class or series, our
board of directors is required by the MGCL and our charter to
set the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of
redemption for each such class or series. Thus, our board of
directors could authorize the issuance of shares of preferred
stock with terms and conditions which could have the effect of
delaying, deferring or preventing a transaction or a change of
control of our company that might involve a premium price for
holders of our common stock or otherwise be in their best
interest.
The specific terms of a particular class or series of preferred
stock will be described in the prospectus supplement relating to
that class or series, including a prospectus supplement
providing that preferred stock may be issuable upon the exercise
of warrants we issue. The description of preferred stock set
forth below and the description of the terms of a particular
class or series of preferred stock set forth in the applicable
prospectus supplement do not purport to be complete and are
qualified in their entirety by reference to the articles
supplementary relating to that class or series.
The preferences and other terms of the preferred stock of each
class or series will be fixed by the articles supplementary
relating to such class or series. A prospectus supplement,
relating to each class or series, will specify the terms of the
preferred stock as follows:
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the designation and stated value of such preferred stock,
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the number of shares of such preferred stock offered, the
liquidation preference per share and the offering price of such
preferred stock,
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the dividend rate(s), period(s),
and/or
payment date(s) or method(s) of calculation thereof applicable
to such preferred stock,
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whether such preferred stock is cumulative or not and, if
cumulative, the date from which dividends on such preferred
stock shall accumulate,
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the provision for a sinking fund, if any, for such preferred
stock,
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the provision for redemption, if applicable, of such preferred
stock,
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any listing of such preferred stock on any securities exchange,
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preemptive rights, if any,
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the terms and conditions, if applicable, upon which such
preferred stock will be converted into our common stock,
including the conversion price (or manner of calculation
thereof),
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a discussion of any material United States federal income tax
consequences applicable to an investment in such preferred stock,
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any limitations on actual and constructive ownership and
restrictions on transfer, in each case as may be appropriate to
preserve our status as a REIT,
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the relative ranking and preferences of such preferred stock as
to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of our company,
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any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with such class or series
of preferred stock as to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of our
company,
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any voting rights, if any, of such preferred stock, and
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any other specific terms, preferences, rights, limitations or
restrictions of such preferred stock.
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Rank
Unless otherwise specified in the applicable prospectus
supplement, the preferred stock will, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of
our company, rank: (1) senior to all classes or series of
our common stock, and to any other class or series of our stock
expressly designated as ranking junior to the preferred stock;
(2) on parity with any class or series of our stock
expressly designated as ranking on parity with the preferred
stock; and (3) junior to any other class or series of our
stock expressly designated as ranking senior to the preferred
stock.
Conversion
Rights
The terms and conditions, if any, upon which any shares of any
class or series of preferred stock are convertible into our
common stock will be set forth in the applicable prospectus
supplement relating thereto. Such terms will include the number
of shares of our common stock into which the shares of preferred
stock are convertible, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to
whether conversion will be at the option of the holders of such
class or series of preferred stock, the events requiring an
adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such class or
series of preferred stock.
Power to
Increase Authorized Stock and Issue Additional Shares of Our
Preferred Stock
Our board of directors has the power to amend our charter to
increase the number of authorized shares of stock, to cause us
to issue additional authorized but unissued shares of our
preferred stock and to classify or reclassify unissued shares of
our preferred stock and thereafter to cause us to issue such
classified or reclassified shares of stock. The additional
classes or series will be available for issuance without further
action by our stockholders, unless stockholder consent is
required by applicable law or the rules of any stock exchange or
automated quotation system on which our securities may be listed
or traded. Although our board of directors does not intend to do
so, it could authorize us to issue a class or series that could,
depending upon the terms of the particular class or series,
delay, defer or prevent a transaction or a change of control of
our company that might involve a premium price for our
stockholders or otherwise be in their best interest.
Restrictions
on Ownership and Transfer
To assist us in complying with certain United States federal
income tax requirements applicable to REITs, we have adopted
certain restrictions relating to the ownership and transfer of
our common stock. We expect to adopt similar restrictions with
respect to any class or series of preferred stock offered
pursuant to this prospectus under the articles supplementary for
each such class or series. The applicable prospectus supplement
will specify any additional ownership limitation relating to
such class or series. See Restrictions on Ownership and
Transfer.
DESCRIPTION
OF DEPOSITARY SHARES
We may, at our option, elect to offer depositary shares rather
than full shares of preferred stock. Each depositary share will
represent ownership of and entitlement to all rights and
preferences of a fraction of a share of preferred stock of a
specified series (including dividend, voting, redemption and
liquidation rights). The applicable fraction will be specified
in a prospectus supplement. The shares of preferred stock
represented by the depositary shares will be deposited with a
depositary named in the applicable prospectus supplement, under
a deposit agreement, among us, the depositary and the holders of
the certificates evidencing depositary shares, or depositary
receipts. Depositary receipts will be delivered to those persons
purchasing depositary shares in the offering. The
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depositary will be the transfer agent, registrar and dividend
disbursing agent for the depositary shares. Holders of
depositary receipts agree to be bound by the deposit agreement,
which requires holders to take certain actions such as filing
proof of residence and paying certain charges.
The summary of the terms of the depositary shares contained in
this prospectus does not purport to be complete and is subject
to, and qualified in its entirety by, the provisions of the
deposit agreement, our charter and the form of articles
supplementary for the applicable class or series of preferred
stock.
Dividends
The depositary will distribute all cash dividends or other cash
distributions received in respect of the series of preferred
stock represented by the depositary shares to the record holders
of depositary receipts in proportion to the number of depositary
shares owned by such holders on the relevant record date, which
will be the same date as the record date fixed by us for the
applicable series of preferred stock. The depositary, however,
will distribute only such amount as can be distributed without
attributing to any depositary share a fraction of one cent, and
any balance not so distributed will be added to and treated as
part of the next sum received by the depositary for distribution
to record holders of depositary receipts then outstanding.
In the event of a distribution other than in cash, the
depositary will distribute property received by it to the record
holders of depositary receipts entitled thereto, in proportion,
as nearly as may be practicable, to the number of depositary
shares owned by such holders on the relevant record date, unless
the depositary determines (after consultation with us) that it
is not feasible to make such distribution, in which case the
depositary may (with our approval) adopt any other method for
such distribution as it deems equitable and appropriate,
including the sale of such property (at such place or places and
upon such terms as it may deem equitable and appropriate) and
distribution of the net proceeds from such sale to such holders.
No distribution will be made in respect of any depositary share
to the extent that it represents any preferred stock converted
into excess stock.
Liquidation
Preference
In the event of the liquidation, dissolution or winding up of
the affairs of our company, whether voluntary or involuntary,
the holders of each depositary share will be entitled to the
fraction of the liquidation preference accorded each share of
the applicable series of preferred stock as set forth in the
applicable prospectus supplement.
Redemption
If the series of preferred stock represented by the applicable
series of depositary shares is redeemable, such depositary
shares will be redeemed from the proceeds received by the
depositary resulting from the redemption, in whole or in part,
of preferred stock held by the depositary. Whenever we redeem
any preferred stock held by the depositary, the depositary will
redeem as of the same redemption date the number of depositary
shares representing the preferred stock so redeemed. The
depositary will mail the notice of redemption promptly upon
receipt of such notice from us and not less than 30 nor
more than 60 days prior to the date fixed for redemption of
the preferred stock and the depositary shares to the record
holders of the depositary receipts.
Voting
Promptly upon receipt of notice of any meeting at which the
holders of the series of preferred stock represented by the
applicable series of depositary shares are entitled to vote, the
depositary will mail the information contained in such notice of
meeting to the record holders of the depositary receipts as of
the record date for such meeting. Each such record holder of
depositary receipts will be entitled to instruct the depositary
as to the exercise of the voting rights pertaining to the number
of shares of preferred stock represented by such record
holders depositary shares. The depositary will endeavor,
insofar as practicable, to vote such preferred stock represented
by such depositary shares in accordance with such instructions,
and we will agree to take all action which may be deemed
necessary by the depositary in order to enable the depositary to
do so. The depositary will abstain from voting any of the
preferred stock to the extent that it does not receive specific
instructions from the holders of depositary receipts.
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Withdrawal
of Preferred Stock
Upon surrender of depositary receipts at the principal office of
the depositary and payment of any unpaid amount due the
depositary, and subject to the terms of the deposit agreement,
the owner of the depositary shares evidenced thereby is entitled
to delivery of the number of whole shares of preferred stock and
all money and other property, if any, represented by such
depositary shares. Partial shares of preferred stock will not be
issued. If the depositary receipts delivered by the holder
evidence a number of depositary shares in excess of the number
of depositary shares representing the number of whole shares of
preferred stock to be withdrawn, the depositary will deliver to
such holder at the same time a new depositary receipt evidencing
such excess number of depositary shares. Holders of preferred
stock thus withdrawn will not thereafter be entitled to deposit
such shares under the deposit agreement or to receive depositary
receipts evidencing depositary shares therefor.
Amendment
and Termination of Deposit Agreement
The form of depositary receipt evidencing the depositary shares
and any provision of the deposit agreement may at any time and
from time to time be amended by agreement between us and the
depositary. However, any amendment which materially and
adversely alters the rights of the holders (other than any
change in fees) of depositary shares will not be effective
unless such amendment has been approved by at least a majority
of the depositary shares then outstanding. No such amendment may
impair the right, subject to the terms of the deposit agreement,
of any owner of any depositary shares to surrender the
depositary receipt evidencing such depositary shares with
instructions to the depositary to deliver to the holder of the
preferred stock and all money and other property, if any,
represented thereby, except in order to comply with mandatory
provisions of applicable law.
The deposit agreement will be permitted to be terminated by us
upon not less than 30 days prior written notice to
the applicable depositary if (1) such termination is
necessary to preserve our status as a REIT or (2) a
majority of each series of preferred stock affected by such
termination consents to such termination, whereupon such
depositary will be required to deliver or make available to each
holder of depositary receipts, upon surrender of the depositary
receipts held by such holder, such number of whole or fractional
shares of preferred stock as are represented by the depositary
shares evidenced by such depositary receipts together with any
other property held by such depositary with respect to such
depositary receipts. We will agree that if the deposit agreement
is terminated to preserve our status as a REIT, then we will use
our best efforts to list the preferred stock issued upon
surrender of the related depositary shares on a national
securities exchange. In addition, the deposit agreement will
automatically terminate if (a) all outstanding depositary
shares thereunder shall have been redeemed, (b) there shall
have been a final distribution in respect of the related
preferred stock in connection with any liquidation, dissolution
or
winding-up
of our company and such distribution shall have been distributed
to the holders of depositary receipts evidencing the depositary
shares representing such preferred stock or (c) each share
of the related preferred stock shall have been converted into
stock of our company not so represented by depositary shares.
Charges
of Depositary
We will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary
arrangements. We will pay charges of the depositary in
connection with the initial deposit of the preferred stock and
initial issuance of the depositary shares, and redemption of the
preferred stock and all withdrawals of preferred stock by owners
of depositary shares. Holders of depositary receipts will pay
transfer, income and other taxes and governmental charges and
certain other charges as are provided in the deposit agreement
to be for their accounts. In certain circumstances, the
depositary may refuse to transfer depositary shares, may
withhold dividends and distributions and sell the depositary
shares evidenced by such depositary receipt if such charges are
not paid. The applicable prospectus supplement will include
information with respect to fees and charges, if any, in
connection with the deposit or substitution of the underlying
securities, the receipt and distribution of dividends, the sale
or exercise of rights, the withdrawal of the underlying
security, and the transferring, splitting or grouping of
receipts. The applicable prospectus supplement will also include
information with respect to the right to collect the fees and
charges, if any, against dividends received and deposited
securities.
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Miscellaneous
The depositary will forward to the holders of depositary
receipts all notices, reports and proxy soliciting material from
us which are delivered to the depositary and which we are
required to furnish to the holders of the preferred stock. In
addition, the depositary will make available for inspection by
holders of depositary receipts at the principal office of the
depositary, and at such other places as it may from time to time
deem advisable, any notices, reports and proxy soliciting
material received from us which are received by the depositary
as the holder of preferred stock. The applicable prospectus
supplement will include information about the rights, if any, of
holders of receipts to inspect the transfer books of the
depositary and the list of holders of receipts.
Neither the depositary nor our company assumes any obligation or
will be subject to any liability under the deposit agreement to
holders of depositary receipts other than for its negligence or
willful misconduct. Neither the depositary nor our company will
be liable if it is prevented or delayed by law or any
circumstance beyond its control in performing its obligations
under the deposit agreement. The obligations of our company and
the depositary under the deposit agreement will be limited to
performance in good faith of their duties thereunder, and they
will not be obligated to prosecute or defend any legal
proceeding in respect of any depositary shares or preferred
stock unless satisfactory indemnity is furnished. Our company
and the depositary may rely on written advice of counsel or
accountants, on information provided by holders of the
depositary receipts or other persons believed in good faith to
be competent to give such information and on documents believed
to be genuine and to have been signed or presented by the proper
party or parties.
In the event the depositary shall receive conflicting claims,
requests or instructions from any holders of depositary
receipts, on the one hand, and us, on the other hand, the
depositary shall be entitled to act on such claims, requests or
instructions received from us.
Resignation
and Removal of Depositary
The depositary may resign at any time by delivering to us notice
of its election to do so, and we may at any time remove the
depositary, any such resignation or removal to take effect upon
the appointment of a successor depositary and its acceptance of
such appointment. Such successor depositary must be appointed
within 60 days after delivery of the notice for resignation
or removal and must be a bank or trust company having its
principal office in the United States and having a combined
capital and surplus of at least $150,000,000.
DESCRIPTION
OF WARRANTS
We may issue warrants for the purchase of debt securities,
common stock, preferred stock or depositary shares and may issue
warrants independently or together with debt securities, common
stock, preferred stock or depositary shares or attached to or
separate from such securities. We will issue each series of
warrants under a separate warrant agreement between us and a
bank or trust company as warrant agent, as specified in the
applicable prospectus supplement.
The warrant agent will act solely as our agent in connection
with the warrants and will not act for or on behalf of warrant
holders. The following sets forth certain general terms and
provisions of the warrants that may be offered under this
registration statement. Further terms of the warrants and the
applicable warrant agreement will be set forth in the applicable
prospectus supplement.
Debt
Warrants
The applicable prospectus supplement will describe the terms of
the debt warrants in respect of which this prospectus is being
delivered, including, where applicable, the following:
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the title of the debt warrants,
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the aggregate number of the debt warrants outstanding,
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the price or prices at which the debt warrants will be issued,
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the designation, aggregate principal amount and terms of the
debt securities purchasable upon exercise of the debt warrants,
and the procedures and conditions relating to the exercise of
the debt warrants,
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the designation and terms of any related debt securities with
which the debt warrants are issued, and the number of the debt
warrants issued with each security,
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the date, if any, on and after which the debt warrants and the
related securities will be separately transferable,
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the principal amount of debt securities purchasable upon
exercise of each debt warrant, and the price at which the debt
securities may be purchased upon exercise,
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the provisions, if any, for changes to or adjustments in the
exercise price,
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the date on which the right to exercise the debt warrants shall
commence and the date on which such right shall expire,
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the minimum or maximum amount of debt warrants that may be
exercised at any one time,
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information with respect to book-entry procedures, if any,
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a discussion of certain United States federal income tax
consequences applicable to an investment in the debt
warrants, and
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any other terms of the debt warrants, including terms,
procedures and limitations relating to the transferability,
exercise and exchange of such warrants.
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Debt warrant certificates will be exchangeable for new debt
warrant certificates of different denominations and debt
warrants may be exercised at the corporate trust office of the
warrant agent or any other office indicated in the applicable
prospectus supplement. Prior to the exercise of their debt
warrants, holders of debt warrants will not have any of the
rights of holders, and will not be entitled to payments of
principal, premium or interest on, the securities purchasable
upon the exercise of debt warrants.
Equity
Warrants
The applicable prospectus supplement will describe the terms of
the warrants to purchase depositary shares, common stock or
preferred stock, or equity warrants, in respect of which this
prospectus is being delivered, including, where applicable, the
following:
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the title of the equity warrants,
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the aggregate number of the equity warrants outstanding,
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the price or prices at which the equity warrants will be issued,
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the type and number of securities purchasable upon exercise of
the equity warrants,
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the date, if any, on and after which the equity warrants and the
related securities will be separately transferable,
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the price at which each security purchasable upon exercise of
the equity warrants may be purchased,
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the provisions, if any, for changes to or adjustments in the
exercise price,
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the date on which the right to exercise the equity warrants
shall commence and the date on which such right shall expire,
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the minimum or maximum amount of equity warrants that may be
exercised at any one time,
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information with respect to book-entry procedures, if any,
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any anti-dilution protection,
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a discussion of certain United States federal income tax
consequences applicable to an investment in the equity
warrants, and
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any other terms of the equity warrants, including terms,
procedures and limitations relating to the transferability,
exercise and exchange of such warrants.
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Equity warrant certificates will be exchangeable for new equity
warrant certificates of different denominations and warrants may
be exercised at the corporate trust office of the warrant agent
or any other office indicated in the applicable prospectus
supplement. Prior to the exercise of their equity warrants,
holders of equity warrants will not have any of the rights of
holders of the securities purchasable upon such exercise or to
any dividend payments or voting rights as to which holders of
the depositary shares, common stock or preferred stock
purchasable upon such exercise may be entitled.
Except as provided in the applicable prospectus supplement, the
exercise price and the number of depositary shares, shares of
common stock or shares of preferred stock purchasable upon the
exercise of each equity warrant will be subject to adjustment in
certain events, including the issuance of a stock dividend to
the holders of the underlying common stock or preferred stock or
a stock split, reverse stock split, combination, subdivision or
reclassification of the underlying common stock or preferred
stock, as the case may be. In lieu of adjusting the number of
shares purchasable upon exercise of each equity warrant, we may
elect to adjust the number of equity warrants. Unless otherwise
provided in the applicable prospectus supplement, no adjustments
in the number of shares purchasable upon exercise of the equity
warrants will be required until all cumulative adjustments
require an adjustment of at least 1% thereof. We may, at our
option, reduce the exercise price at any time. No fractional
shares will be issued upon exercise of equity warrants, but we
will pay the cash value of any fractional shares otherwise
issuable. Notwithstanding the foregoing, except as otherwise
provided in the applicable prospectus supplement, in case of any
consolidation, merger or sale or conveyance of our property as
an entirety or substantially as an entirety, the holder of each
outstanding equity warrant will have the right to the kind and
amount of shares of stock and other securities and property,
including cash, receivable by a holder of the number of
depositary shares, shares of common stock or shares of preferred
stock into which each equity warrant was exercisable immediately
prior to the particular triggering event.
Exercise
of Warrants
Each warrant will entitle the holder to purchase for cash such
number of debt securities, depositary shares, shares of common
stock or shares of preferred stock, at such exercise price as
shall, in each case, be set forth in, or be determinable as set
forth in, the applicable prospectus supplement relating to the
warrants offered thereby. Unless otherwise specified in the
applicable prospectus supplement, warrants may be exercised at
any time up to 5:00 p.m. New York City time on the
expiration date set forth in applicable prospectus supplement.
After 5:00 p.m. New York City time on the expiration date,
unexercised warrants will be void.
Warrants may be exercised as set forth in the applicable
prospectus supplement relating to the warrants. Upon receipt of
payment and the warrant certificate properly completed and duly
executed at the corporate trust office of the warrant agent or
any other office indicated in the applicable prospectus
supplement, we will, as soon as practicable, forward the
securities purchasable upon such exercise. If less than all of
the warrants are presented by such warrant certificate of
exercise, a new warrant certificate will be issued for the
remaining amount of warrants.
DESCRIPTION
OF RIGHTS
We may issue rights to our stockholders to purchase shares of
our common stock. Each series of rights will be issued under a
separate rights agreement to be entered into between us and a
bank or trust company, as rights agent. The rights agent will
act solely as our agent in connection with the certificates
relating to the rights of the series of certificates and will
not assume any obligation or relationship of agency or trust for
or with any holders of rights certificates or beneficial owners
of rights. The statements made in this section relating to the
rights are summaries only. These summaries are not complete.
When we issue rights, we will provide the specific terms of the
rights and the applicable rights agreement in a prospectus
supplement. To the extent the information contained in the
prospectus supplement differs from this summary description, you
should rely on the information in the prospectus supplement. For
more detail, we refer you to the applicable rights agreement
itself, which we will file as an exhibit to, or incorporate by
reference in, the registration statement.
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We will provide in a prospectus supplement the following terms
of the rights being issued:
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the date of determining the stockholders entitled to the rights
distribution,
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the aggregate number of shares of common stock purchasable upon
exercise of the rights,
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the exercise price,
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the aggregate number of rights issued,
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the date, if any, on and after which the rights will be
separately transferable,
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the date on which the right to exercise the rights will
commence, and the date on which the right will expire,
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a discussion of any material or special United States federal
income tax consequences applicable to an investment in the
rights, and
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any other terms of the rights, including terms, procedures and
limitations relating to the distribution, exchange and exercise
of the rights.
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Exercise
of Rights
Each right will entitle the holder of rights to purchase for
cash the principal amount of shares of common stock at the
exercise price provided in the applicable prospectus supplement.
Rights may be exercised at any time up to the close of business
on the expiration date for the rights provided in the applicable
prospectus supplement. After the close of business on the
expiration date, all unexercised rights will be void.
Holders may exercise rights as described in the applicable
prospectus supplement. Upon receipt of payment and the rights
certificate properly completed and duly executed at the
corporate trust office of the rights agent or any other office
indicated in the prospectus supplement, we will, as soon as
practicable, forward the shares of common stock purchasable upon
exercise of the rights. If less than all of the rights issued in
any rights offering are exercised, we may offer any unsubscribed
securities directly to persons other than stockholders, to or
through agents, underwriters or dealers or through a combination
of such methods, including pursuant to standby underwriting
arrangements, as described in the applicable prospectus
supplement.
DESCRIPTION
OF UNITS
We may issue units consisting of two or more other constituent
securities. These units may be issuable as, and for a specified
period of time may be transferable only as a single security,
rather than as the separate constituent securities comprising
such units. The statements made in this section relating to the
units are summaries only. These summaries are not complete. When
we issue units, we will provide the specific terms of the units
in a prospectus supplement. To the extent the information
contained in the prospectus supplement differs from this summary
description, you should rely on the information in the
prospectus supplement.
When we issue units, we will provide in a prospectus supplement
the following terms of the units being issued:
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the title of any series of units,
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identification and description of the separate constituent
securities comprising the units,
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the price or prices at which the units will be issued,
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the date, if any, on and after which the constituent securities
comprising the units will be separately transferable,
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information with respect to any book-entry procedures,
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a discussion of any material or special United States federal
income tax consequences applicable to an investment in the
units, and
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any other terms of the units and their constituent securities.
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RESTRICTIONS
ON OWNERSHIP AND TRANSFER
The following summary with respect to restrictions on
ownership and transfer of our stock sets forth certain general
terms and provisions of our charter documents to which any
prospectus supplement may relate. This summary does not purport
to be complete and is subject to and qualified in its entirety
by reference to our charter documents, as amended and
supplemented from time to time, including any articles
supplementary relating to any issuance of preferred stock
pursuant to this prospectus. Copies of our existing charter
documents are filed with the Securities and Exchange Commission
and are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part. Any
amendment or supplement to our charter documents relating to an
issuance of securities pursuant to this prospectus shall be
filed with the Securities and Exchange Commission and shall be
incorporated by reference as an exhibit to the applicable
prospectus supplement. See Where You Can Find More
Information.
In order for us to qualify as a REIT under the Internal Revenue
Code of 1986, as amended, or the Code, our stock must be
beneficially owned by 100 or more persons during at least
335 days of a taxable year of twelve months (other than the
first year for which an election to be a REIT has been made) or
during a proportionate part of a shorter taxable year. Also, not
more than 50% of the value of our outstanding shares of stock
may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities)
during the last half of a taxable year (other than the first
year for which an election to be a REIT has been made).
Our charter contains restrictions on the number of shares of our
stock that a person may own. No person may acquire or hold,
directly or indirectly, in excess of 9.8% in value of the
aggregate of our outstanding shares of capital stock. In
addition, no person may acquire or hold, directly or indirectly,
common stock in excess of 9.8% (in value or in number of shares,
whichever is more restrictive) of our outstanding shares of
common stock.
Our charter further prohibits (1) any person from owning
shares of our stock that would result in our being closely
held under Section 856(h) of the Code or otherwise
cause us to fail to qualify as a REIT and (2) any person
from transferring shares of our stock if the transfer would
result in our stock being owned by fewer than 100 persons. Any
person who acquires or intends to acquire shares of our stock
that may violate any of these restrictions, or who is the
intended transferee of shares of our stock which are transferred
to a trust, as described below, is required to give us immediate
notice and provide us with such information as we may request in
order to determine the effect of the transfer on our status as a
REIT. The above restrictions will not apply if our board of
directors determines that it is no longer in our best interests
to continue to qualify as a REIT.
Our board of directors may, in its sole discretion, waive the
ownership limit with respect to a particular stockholder if it:
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determines that such ownership will not cause any
individuals beneficial ownership of shares of our common
stock to violate the ownership limit and that any exemption from
the ownership limit will not jeopardize our status as a
REIT, and
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determines that such stockholder does not and will not own,
actually or constructively, an interest in a tenant of ours (or
a tenant of any entity owned in whole or in part by us) that
would cause us to own, actually or constructively, more than a
9.9% interest (as set forth in Section 856(d)(2)(B) of the
Code) in such tenant or that any such ownership would not cause
us to fail to qualify as a REIT under the Code.
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As a condition of our waiver, our board of directors may require
an opinion of counsel or IRS ruling satisfactory to our board of
directors,
and/or
representations or undertakings from the applicant with respect
to preserving our REIT status.
Any attempted transfer of our stock which, if effective, would
result in our stock being owned by fewer than 100 persons will
be null and void. Any attempted transfer of our stock which, if
effective, would result in violation of the ownership limits
discussed above or in our being closely held under
Section 856(h) of the Code or otherwise failing to qualify
as a REIT, will cause the number of shares causing the violation
(rounded up to the nearest whole share) to be automatically
transferred to a trust for the exclusive benefit of one or more
charitable beneficiaries, and the proposed transferee will not
acquire any rights in the shares. The automatic transfer will be
deemed to be effective as of the close of business on the
business day prior to the date of the transfer. Shares of our
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stock held in the trust will be issued and outstanding shares.
The proposed transferee will not benefit economically from
ownership of any shares of stock held in the trust, will have no
rights to dividends, to vote the shares, or to any other rights
attributable to the shares of stock held in the trust. The
trustee of the trust will have all voting rights and rights to
dividends or other distributions with respect to shares held in
the trust. These rights will be exercised for the exclusive
benefit of a charitable beneficiary. Any dividend or other
distribution paid prior to our discovery that shares of stock
have been transferred to the trust must be paid by the recipient
to the trustee upon demand. Any dividend or other distribution
authorized but unpaid will be paid when due to the trustee. Any
dividend or distribution paid to the trustee will be held in
trust for the charitable beneficiary. Subject to Maryland law,
the trustee will have the authority (1) to rescind as void
any vote cast by the proposed transferee prior to our discovery
that the shares have been transferred to the trust and
(2) to recast the vote in accordance with the desires of
the trustee acting for the benefit of the charitable
beneficiary. However, if we have already taken irreversible
corporate action, then the trustee will not have the authority
to rescind and recast the vote.
Within 20 days of receiving notice from us that shares of
our stock have been transferred to the trust, the trustee will
sell the shares to a person designated by the trustee, whose
ownership of the shares will not violate the above ownership
limitations. Upon the sale, the interest of the charitable
beneficiary in the shares sold will terminate and the trustee
will distribute the net proceeds of the sale to the proposed
transferee and to the charitable beneficiary as follows. The
proposed transferee will receive the lesser of (1) the
price paid by the proposed transferee for the shares or, if the
proposed transferee did not give value for the shares in
connection with the event causing the shares to be held in the
trust (e.g., a gift, devise or other similar
transaction), the market price of the shares on the day of the
event causing the shares to be held in the trust and
(2) the price received by the trustee from the sale or
other disposition of the shares. Any net sale proceeds in excess
of the amount payable to the proposed transferee will be paid
immediately to the charitable beneficiary. If, prior to our
discovery that shares of our stock have been transferred to the
trust, the shares are sold by the proposed transferee, then
(1) the shares will be deemed to have been sold on behalf
of the trust and (2) to the extent that the proposed
transferee received an amount for the shares that exceeds the
amount he was entitled to receive, the excess must be paid to
the trustee upon demand.
In addition, shares of our stock held in the trust will be
deemed to have been offered for sale to us, or our designee, at
a price per share equal to the lesser of (1) the price per
share in the transaction that resulted in the transfer to the
trust (or, in the case of a devise or gift, the market price at
the time of the devise or gift) and (2) the market price on
the date we, or our designee, accept the offer. We will have the
right to accept the offer until the trustee has sold the shares.
Upon a sale to us, the interest of the charitable beneficiary in
the shares sold will terminate and the trustee will distribute
the net proceeds of the sale to the proposed transferee.
All certificates representing shares of our stock will bear a
legend referring to the restrictions described above.
Every owner of 5% or more (or such lower percentage as required
by the Code or the regulations promulgated thereunder) of our
stock, within 30 days after the end of each taxable year,
is required to give us written notice, stating his name and
address, the number of shares of each class and series of our
stock which he beneficially owns and a description of the manner
in which the shares are held. Each such owner will provide us
with such additional information as we may request in order to
determine the effect, if any, of his beneficial ownership on our
status as a REIT and to ensure compliance with the ownership
limits. In addition, each stockholder will upon demand be
required to provide us with such information as we may request
in good faith in order to determine our status as a REIT and to
comply with the requirements of any taxing authority or
governmental authority or to determine such compliance.
These ownership limits could delay, defer or prevent a
transaction or a change in control that might involve a premium
price for our common stock or otherwise be in the best interest
of our stockholders.
DESCRIPTION
OF THE
PARTNERSHIP AGREEMENT OF BIOMED REALTY, L.P.
The material terms and provisions of the Agreement of Limited
Partnership of BioMed Realty, L.P. which we refer to as the
partnership agreement are summarized below. For more
detail, you should refer to the partnership
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agreement itself, a copy of which is filed as an exhibit to
the registration statement of which this prospectus is a part.
For purposes of this section, references to we,
our, us and our company
refer to BioMed Realty Trust, Inc.
Management
of Our Operating Partnership
Our operating partnership, BioMed Realty, L.P., is a Maryland
limited partnership that was formed on April 30, 2004. Our
company is the sole general partner of our operating
partnership, and we conduct substantially all of our business in
or through it. As sole general partner of our operating
partnership, we exercise exclusive and complete responsibility
and discretion in its
day-to-day
management and control. We can cause our operating partnership
to enter into certain major transactions including acquisitions,
dispositions and refinancings, subject to limited exceptions.
The limited partners of our operating partnership may not
transact business for, or participate in the management
activities or decisions of, our operating partnership, except as
provided in the partnership agreement and as required by
applicable law. Some restrictions in the partnership agreement
restrict our ability to engage in a business combination as more
fully described in Termination
Transactions below.
The limited partners of our operating partnership expressly
acknowledged that we, as general partner of our operating
partnership, are acting for the benefit of our operating
partnership, the limited partners and our stockholders
collectively. Our company is under no obligation to give
priority to the separate interests of the limited partners or
our stockholders in deciding whether to cause our operating
partnership to take or decline to take any actions. If there is
a conflict between the interests of our stockholders on one hand
and the limited partners on the other, we will endeavor in good
faith to resolve the conflict in a manner not adverse to either
our stockholders or the limited partners; provided, however,
that for so long as we own a controlling interest in our
operating partnership, any conflict that cannot be resolved in a
manner not adverse to either our stockholders or the limited
partners will be resolved in favor of our stockholders. We are
not liable under the partnership agreement to our operating
partnership or to any partner for monetary damages for losses
sustained, liabilities incurred or benefits not derived by
limited partners in connection with such decisions, so long as
we have acted in good faith.
The partnership agreement provides that substantially all of our
business activities, including all activities pertaining to the
acquisition and operation of properties, must be conducted
through our operating partnership, and that our operating
partnership must be operated in a manner that will enable our
company to satisfy the requirements for being classified as a
REIT.
Transferability
of Interests
Except in connection with a transaction described in
Termination Transactions below, we, as
general partner, may not voluntarily withdraw from our operating
partnership, or transfer or assign all or any portion of our
interest in our operating partnership, without the consent of
the holders of a majority of the limited partnership interests
(including our 95.3% limited partnership interest therein)
except for permitted transfers to our affiliates. Currently, any
transfer of units by the limited partners, except to us, as
general partner, to an affiliate of the transferring limited
partner, to other original limited partners, to immediate family
members of the transferring limited partner, to a trust for the
benefit of a charitable beneficiary, or to a lending institution
as collateral for a bona fide loan, subject to specified
limitations, will be subject to a right of first refusal by us
and must be made only to accredited investors as
defined under Rule 501 of the Securities Act.
Capital
Contributions
We contributed to our operating partnership all of the net
proceeds of our IPO as our initial capital contribution in
exchange for a 91.5% partnership interest. Some of our
directors, executive officers and their affiliates contributed
properties and assets to our operating partnership and became
limited partners and, together with other limited partners,
initially owned the remaining 8.5% limited partnership interest.
As of August 31, 2006, we owned a 95.8% partnership
interest and other limited partners, including some of our
directors, executive officers and their affiliates, owned the
remaining 4.2% partnership interest.
The partnership agreement provides that we, as general partner,
may determine that our operating partnership requires additional
funds for the acquisition of additional properties or for other
purposes. Under the partnership agreement, we are obligated to
contribute the proceeds of any offering of stock as additional
capital to our operating
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partnership. Our operating partnership is authorized to cause
partnership interests to be issued for less than fair market
value if we conclude in good faith that such issuance is in the
interests of our operating partnership.
The partnership agreement provides that we may make additional
capital contributions, including properties, to our operating
partnership in exchange for additional partnership units. If we
contribute additional capital and receive additional partnership
interests for the capital contribution, our percentage interests
will be increased on a proportionate basis based on the amount
of the additional capital contributions and the value of our
operating partnership at the time of the contributions.
Conversely, the percentage interests of the other limited
partners will be decreased on a proportionate basis. In
addition, if we contribute additional capital and receive
additional partnership interests for the capital contribution,
the capital accounts of the partners may be adjusted upward or
downward to reflect any unrealized gain or loss attributable to
the properties as if there were an actual sale of the properties
at the fair market value thereof. Limited partners have no
preemptive right or obligation to make additional capital
contributions.
Our operating partnership could issue preferred partnership
interests in connection with acquisitions of property or
otherwise. Any such preferred partnership interests would have
priority over common partnership interests with respect to
distributions from our operating partnership, including the
partnership interests that our wholly owned subsidiaries own.
Amendments
of the Partnership Agreement
Amendments to the partnership agreement may be proposed by us,
as general partner, or by limited partners owning at least 25%
of the units held by limited partners.
Generally, the partnership agreement may be amended, modified or
terminated only with the approval of partners holding 50% of all
outstanding units (including the units held by us as general
partner and as a limited partner). However, as general partner,
we will have the power to unilaterally amend the partnership
agreement without obtaining the consent of the limited partners
as may be required to:
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add to our obligations as general partner or surrender any right
or power granted to us as general partner for the benefit of the
limited partners,
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reflect the issuance of additional units or the admission,
substitution, termination or withdrawal of partners in
accordance with the terms of the partnership agreement,
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set forth or amend the designations, rights, powers, duties and
preferences of the holders of any additional partnership
interests issued by our operating partnership,
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reflect a change of an inconsequential nature that does not
adversely affect the limited partners in any material respect,
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cure any ambiguity, correct or supplement any provisions of the
partnership agreement not inconsistent with law or with other
provisions of the partnership agreement, or make other changes
concerning matters under the partnership agreement that will not
otherwise be inconsistent with the partnership agreement or law,
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satisfy any requirements, conditions or guidelines of federal or
state law,
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reflect changes that are reasonably necessary for us, as general
partner, to maintain our status as a REIT, or
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modify the manner in which capital accounts are computed.
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Amendments that would convert a limited partners interest
into a general partners interest, adversely affect the
limited liability of a limited partner, alter a partners
right to receive any distributions or allocations of profits or
losses or materially alter or modify the redemption rights
described below (other than a change to reflect the seniority of
any distribution or liquidation rights of any preferred units
issued in accordance with the partnership agreement) must be
approved by each limited partner that would be adversely
affected by such amendment; provided that any such amendment
does not require the unanimous consent of all the partners who
are adversely affected unless the amendment is to be effective
against all adversely affected partners.
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In addition, without the written consent of limited partners
holding a majority of the units, we, as general partner, may not
do any of the following:
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take any action in contravention of an express prohibition or
limitation contained in the partnership agreement,
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enter into or conduct any business other than in connection with
our role as general partner of our operating partnership and our
operation as a public reporting company and as a REIT,
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acquire an interest in real or personal property other than
through our operating partnership or our subsidiary partnerships,
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withdraw from our operating partnership or transfer any portion
of our general partnership interest, except to an
affiliate, or
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be relieved of our obligations under the partnership agreement
following any permitted transfer of our general partnership
interest.
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Redemption/Exchange
Rights
Limited partners who acquired units in our formation
transactions have the right to require our operating partnership
to redeem part or all of their units for cash based upon the
fair market value of an equivalent number of shares of our
common stock at the time of the redemption. Alternatively, we
may elect to acquire those units in exchange for shares of our
common stock. Our acquisition will be on a
one-for-one
basis, subject to adjustment in the event of stock splits, stock
dividends, issuance of stock rights, specified extraordinary
distributions and similar events. We presently anticipate that
we will elect to issue shares of our common stock in exchange
for units in connection with each redemption request, rather
than having our operating partnership redeem the units for cash.
With each redemption or exchange, we increase our companys
percentage ownership interest in our operating partnership.
Limited partners who hold units may exercise this redemption
right from time to time, in whole or in part, except when, as a
consequence of shares of our common stock being issued, any
persons actual or constructive stock ownership would
exceed our companys ownership limits, or violate any other
restriction as provided in our charter as described under the
section entitled Restrictions on Ownership and
Transfer. In all cases, unless we agree otherwise, no
limited partner may exercise its redemption right for fewer than
1,000 units or, if a limited partner holds fewer than
1,000 units, all of the units held by such limited partner.
Issuance
of Additional Units, Common Stock or Convertible
Securities
As sole general partner, we have the ability to cause our
operating partnership to issue additional units representing
general and limited partnership interests. These additional
units may include preferred limited partnership units. In
addition, we may issue additional shares of our common stock or
convertible securities, but only if we cause our operating
partnership to issue to us partnership interests or rights,
options, warrants or convertible or exchangeable securities of
our operating partnership having parallel designations,
preferences and other rights, so that the economic interests of
our operating partnerships interests issued are
substantially similar to the securities that we have issued.
Tax
Matters
We are the tax matters partner of our operating partnership. We
have authority to make tax elections under the Code on behalf of
our operating partnership.
Allocations
of Net Income and Net Losses to Partners
The net income or net loss of our operating partnership
generally will be allocated to us, as the general partner, and
to the limited partners in accordance with our respective
percentage interests in our operating partnership. However, in
some cases losses may be disproportionately allocated to
partners who have guaranteed debt of our operating partnership.
The allocations described above are subject to special
allocations relating to depreciation deductions and to
compliance with the provisions of Sections 704(b)
and 704(c) of the Code and the associated
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Treasury regulations. See Material Federal Income Tax
Considerations Tax Aspects of Our Operating
Partnership, the Subsidiary Partnerships and the Limited
Liability Companies.
Operations
and Distributions
The partnership agreement provides that we, as general partner,
will determine and distribute the net operating cash revenues of
our operating partnership, as well as the net sales and
refinancing proceeds, in such amount as determined by us in our
sole discretion, quarterly, pro rata in accordance with the
partners percentage interests.
The partnership agreement provides that our operating
partnership will assume and pay when due, or reimburse us for
payment of all costs and expenses relating to the operations of,
or for the benefit of, our operating partnership.
Termination
Transactions
The partnership agreement provides that our company may not
engage in any merger, consolidation or other combination with or
into another person, sale of all or substantially all of our
assets or any reclassification or any recapitalization or change
in outstanding shares of our equity interests, each a
termination transaction, unless in connection with a termination
transaction either:
(1) all limited partners will receive, or have the right to
elect to receive, for each unit an amount of cash, securities,
or other property equal to the product of:
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the number of shares of our common stock into which each unit is
then exchangeable, and
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the greatest amount of cash, securities or other property paid
to the holder of one share of our common stock in consideration
of one share of our common stock in the termination transaction,
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provided that, if, in connection with a termination transaction,
a purchase, tender or exchange offer is made to and accepted by
the holders of more than 50% of the outstanding shares of our
common stock, each holder of units will receive, or will have
the right to elect to receive, the greatest amount of cash,
securities, or other property which such holder would have
received had it exercised its redemption right and received
shares of our common stock in exchange for its units immediately
prior to the expiration of such purchase, tender or exchange
offer and accepted such purchase, tender or exchange
offer, or
(2) the following conditions are met:
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substantially all of the assets of the surviving entity are held
directly or indirectly by our operating partnership or another
limited partnership or limited liability company that is the
surviving partnership of a merger, consolidation or combination
of assets with our operating partnership,
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the holders of units own a percentage interest of the surviving
partnership based on the relative fair market value of the net
assets of our operating partnership and the other net assets of
the surviving partnership immediately prior to the consummation
of the transaction,
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the rights, preferences and privileges of such unit holders in
the surviving partnership are at least as favorable as those in
effect immediately prior to the consummation of the transaction
and as those applicable to any other limited partners or
non-managing members of the surviving partnership, and
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the limited partners may redeem their interests in the surviving
partnership for either the consideration available to the common
limited partners pursuant to the first paragraph in this
section, or if the ultimate controlling person of the surviving
partnership has publicly traded common equity securities, shares
of those common equity securities, at an exchange ratio based on
the relative fair market value of those securities and our
common stock.
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Term
Our operating partnership will continue in full force and effect
until December 31, 2104, or until sooner dissolved in
accordance with its terms or as otherwise provided by law.
Indemnification
and Limitation of Liability
To the extent permitted by applicable law, the partnership
agreement requires our operating partnership to indemnify us, as
general partner, and our officers, directors, employees, agents
and any other persons we may designate from and against any and
all claims arising from operations of our operating partnership
in which any indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established that:
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the act or omission of the indemnitee was material to the matter
giving rise to the proceeding and either was committed in bad
faith, fraud or was the result of active and deliberate
dishonesty,
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the indemnitee actually received an improper personal benefit in
money, property or services, or
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in the case of any criminal proceeding, the indemnitee had
reasonable cause to believe that the act or omission was
unlawful.
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Similarly, we, as general partner of our operating partnership,
and our officers, directors, agents or employees, are not liable
or accountable to our operating partnership for losses
sustained, liabilities incurred or benefits not derived as a
result of errors in judgment or mistakes of fact or law or any
act or omission so long as we acted in good faith.
CERTAIN
PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND
BYLAWS
The following summary of certain provisions of Maryland law
and of our charter and bylaws is subject to and qualified in its
entirety by reference to Maryland law and our charter and
bylaws, copies of which are exhibits to the registration
statement of which this prospectus is a part. See Where
You Can Find More Information.
Our Board
of Directors
Our charter and bylaws provide that our board of directors may
establish the number of directors of our company as long as the
number is not fewer than the minimum required under the MGCL
nor, unless our bylaws are amended, more than 15. Any vacancy
may be filled, at any regular meeting or at any special meeting
called for that purpose, by a majority of the remaining
directors.
Pursuant to our charter, each of our directors is elected by our
stockholders to serve until the next annual meeting and until
his or her successor is duly elected and qualifies. Holders of
shares of our common stock will have no right to cumulative
voting in the election of directors. Consequently, at each
annual meeting of stockholders, the holders of a majority of the
shares of our common stock will be able to elect all of our
directors.
Removal
of Directors
Our charter provides that a director may be removed only by the
affirmative vote of at least two-thirds of the votes entitled to
be cast generally in the election of directors. This provision,
when coupled with the provision in our bylaws authorizing our
board of directors to fill vacant directorships, precludes
stockholders from removing incumbent directors and filling the
vacancies created by such removal with their own nominees.
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Business
Combinations
Maryland law prohibits business combinations between
us and an interested stockholder or an affiliate of an
interested stockholder for five years after the most recent date
on which the interested stockholder becomes an interested
stockholder. These business combinations include a merger,
consolidation, share exchange or, in certain circumstances
specified in the statute, an asset transfer, issuance or
transfer by us of equity securities, liquidation plan or
reclassification of equity securities. Maryland law defines an
interested stockholder as:
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any person who beneficially owns 10% or more of the voting power
of our stock, or
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an affiliate or associate of ours who, at any time within the
two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of our
then-outstanding voting stock.
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A person is not an interested stockholder if our board of
directors approved in advance the transaction by which the
person otherwise would have become an interested stockholder.
However, in approving a transaction, our board of directors may
provide that its approval is subject to compliance, at or after
the time of approval, with any terms and conditions determined
by our board of directors.
After the five-year prohibition, any business combination
between us and an interested stockholder or an affiliate of an
interested stockholder generally must be recommended by our
board of directors and approved by the affirmative vote of at
least:
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80% of the votes entitled to be cast by holders of our
then-outstanding shares of voting stock, and
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two-thirds of the votes entitled to be cast by holders of our
voting stock other than stock held by the interested stockholder
with whom or with whose affiliate the business combination is to
be effected or stock held by an affiliate or associate of the
interested stockholder.
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These super-majority vote requirements do not apply if our
common stockholders receive a minimum price, as defined under
Maryland law, for their stock in the form of cash or other
consideration in the same form as previously paid by the
interested stockholder for its stock.
The statute permits various exemptions from its provisions,
including business combinations that are approved or exempted by
the board of directors before the time that the interested
stockholder becomes an interested stockholder. Our board of
directors has adopted a resolution exempting any business
combination between us and any person from the business
combination provisions of the MGCL, provided such business
combination is first approved by our board of directors
(including a majority of the directors who are not affiliates or
associates of such person). However, this resolution may be
altered or repealed in whole or in part at any time.
We can provide no assurance that our board of directors will not
amend or rescind this resolution in the future. If this
resolution is repealed, or our board of directors does not
otherwise approve a business combination, the business
combination statute may discourage others from trying to acquire
control of us and increase the difficulty of consummating any
offer.
Control
Share Acquisitions
The MGCL provides that control shares of a Maryland
corporation acquired in a control share acquisition
have no voting rights except to the extent approved at a special
meeting of stockholders by the affirmative vote of two-thirds of
the votes entitled to be cast on the matter. Shares owned by the
acquiring person, or by officers or by directors who are our
employees, are excluded from shares entitled to vote on the
matter. Control shares are voting shares of stock
which, if aggregated with all other such shares of stock
previously acquired by the acquiror or in respect of which the
acquiror is able to exercise or direct the exercise of voting
power (except solely by virtue of a revocable proxy), would
entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power:
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one-tenth or more but less than one-third,
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one-third or more but less than a majority, or
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a majority or more of all voting power.
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Control shares do not include shares the acquiring person is
then entitled to vote as a result of having previously obtained
stockholder approval. A control share acquisition
means the acquisition of control shares, subject to certain
exceptions.
A person who has made or proposes to make a control share
acquisition, upon satisfaction of certain conditions (including
an undertaking to pay expenses), may compel our board of
directors to call a special meeting of stockholders to be held
within 50 days of demand to consider the voting rights of
the shares. If no request for a meeting is made, the corporation
may itself present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the
acquiring person does not deliver an acquiring person statement
as required by the statute, then, subject to certain conditions
and limitations, the corporation may redeem any or all of the
control shares (except those for which voting rights have
previously been approved) for fair value determined, without
regard to the absence of voting rights for the control shares,
as of the date of the last control share acquisition by the
acquiror or of any meeting of stockholders at which the voting
rights of such shares are considered and not approved. If voting
rights for control shares are approved at a stockholders meeting
and the acquiror becomes entitled to vote a majority of the
shares entitled to vote, all other stockholders may exercise
appraisal rights. The fair value of the shares as determined for
purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control
share acquisition.
The control share acquisition statute does not apply (1) to
shares acquired in a merger, consolidation or share exchange if
the corporation is a party to the transaction or (2) to
acquisitions approved or exempted by the charter or bylaws of
the corporation.
Our bylaws contain a provision exempting from the control share
acquisition statute any and all acquisitions by any person of
our common stock. We can provide no assurance that our board of
directors will not amend or eliminate such provision in the
future. Should this happen, the control share acquisition
statute may discourage others from trying to acquire control of
us and increase the difficulty of consummating any offer.
Other
Anti-Takeover Provisions of Maryland Law
Subtitle 8 of Title 3 of the MGCL permits a Maryland
corporation with a class of equity securities registered under
the Exchange Act and with at least three independent directors
to elect to be subject to any or all of five provisions:
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a classified board,
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a two-thirds vote requirement to remove a director,
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a requirement that the number of directors be fixed only by the
vote of the directors,
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a requirement that a vacancy on the board be filled only by the
remaining directors and for the remainder of the full term of
the directorship in which the vacancy occurred, and
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a majority requirement for the calling of a special meeting of
stockholders.
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A corporation can elect into this statute by provision in its
charter or bylaws or by a resolution of its board of directors.
Furthermore, a corporation can elect to be subject to the above
provisions regardless of any contrary provisions in the charter
or bylaws.
Through provisions in our charter and bylaws unrelated to
Subtitle 8, (1) vacancies on the board may be filled
by the remaining directors, (2) the number of directors may
be fixed only by the vote of the directors and (3) a
two-thirds vote is required to remove any director from the
board.
Amendment
to Our Charter and Bylaws
Our charter may generally be amended only if declared advisable
by our board of directors and approved by the affirmative vote
of the stockholders entitled to cast at least a majority of all
the votes entitled to be cast on the matter under consideration.
However, the provision regarding director removal and the
corresponding amendment
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provision may be amended only if advised by the board of
directors and approved by the affirmative vote of the
stockholders entitled to cast not less than two-thirds of all of
the votes entitled to be cast on the matter. Our bylaws provide
that only our board of directors may amend or repeal our bylaws
or adopt new laws.
Advance
Notice of Director Nominations and New Business
Our bylaws provide that with respect to an annual meeting of
stockholders, nominations of persons for election to our board
of directors and the proposal of business to be considered by
stockholders may be made only:
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pursuant to our notice of the meeting,
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by or at the direction of our board of directors, or
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by a stockholder who is a stockholder of record both at the time
of giving the stockholders notice required by our bylaws
and at the time of the meeting, who is entitled to vote at the
meeting and who has complied with the advance notice procedures
set forth in our bylaws.
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With respect to special meetings of stockholders, only the
business specified in our companys notice of meeting may
be brought before the meeting of stockholders and nominations of
persons for election to our board of directors may be made only:
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pursuant to our notice of the meeting,
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by or at the direction of our board of directors, or
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provided that our board of directors has determined that
directors will be elected at such meeting, by a stockholder who
is a stockholder of record both at the time of giving the
stockholders notice required by our bylaws and at the time
of the meeting, who is entitled to vote at the meeting and has
complied with the advance notice provisions set forth in our
bylaws.
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Generally, under our bylaws, a stockholder seeking to nominate a
director or bring other business before our annual meeting of
stockholders must deliver a notice to our secretary not later
than the close of business on the 90th day nor earlier than
the 120th day prior to the first anniversary of the date of
mailing of the notice to stockholders for the prior years
annual meeting. For a stockholder seeking to nominate a
candidate for our board of directors, the notice must describe
various matters regarding the nominee, including name, address,
occupation and number of shares held, and other specified
matters. For a stockholder seeking to propose other business,
the notice must include a description of the proposed business,
the reasons for the proposal and other specified matters.
Anti-Takeover
Effect of Certain Provisions of Maryland Law and of Our Charter
and Bylaws
The provisions of our charter on removal of directors and the
advance notice provisions of the bylaws could delay, defer or
prevent a transaction or a change of control of our company that
might involve a premium price for our common stockholders or
otherwise be in their best interest. Likewise, if our
companys board of directors were to rescind the resolution
exempting business combinations from the business combination
provisions of the MGCL (or does not otherwise approve a business
combination) or if the provision in the bylaws opting out of the
control share acquisition provisions of the MGCL were rescinded,
these provisions of the MGCL could have similar anti-takeover
effects.
Ownership
Limit
Our charter provides that no person or entity may beneficially
own, or be deemed to own by virtue of the applicable
constructive ownership provisions of the Code, more than 9.8% in
value of the aggregate of our outstanding shares of capital
stock or more than 9.8% of the outstanding shares of our common
stock, whichever is more restrictive. We refer to this
restriction as the ownership limit. For a fuller
description of this restriction and the constructive ownership
rules, see Restrictions on Ownership and Transfer.
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MATERIAL
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the United States federal
income tax considerations related to our REIT election which are
anticipated to be material to purchasers of the securities
offered by this prospectus. Your tax treatment will vary
depending upon the terms of the specific securities you acquire,
as well as your particular situation. This discussion does not
attempt to address any aspects of federal income taxation
relevant to your ownership of the securities offered by this
prospectus. Instead, the material federal income tax
considerations relevant to your ownership of the securities
offered by this prospectus will be provided in the applicable
prospectus supplement that relates to those securities. This
summary is for general information only and is not tax advice.
The information in this summary is based on current law,
including:
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the Code,
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current, temporary and proposed Treasury regulations promulgated
under the Code,
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the legislative history of the Code,
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current administrative interpretations and practices of the
IRS, and
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court decisions,
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in each case, as of the date of this prospectus. In addition,
the administrative interpretations and practices of the IRS
include its practices and policies as expressed in private
letter rulings that are not binding on the IRS except with
respect to the particular taxpayers who requested and received
those rulings. Future legislation, Treasury regulations,
administrative interpretations and practices
and/or court
decisions may adversely affect the tax considerations contained
in this discussion. Any such change could apply retroactively to
transactions preceding the date of the change.
We have not requested and do not intend to request a ruling from
the IRS that we qualify as a REIT, and the statements in this
discussion are not binding on the IRS or any court. Thus, we can
provide no assurance that the tax considerations contained in
this summary will not be challenged by the IRS or will be
sustained by a court if so challenged. This summary does not
discuss any state, local or foreign tax consequences associated
with our election to be taxed as a REIT.
You are urged to consult the applicable prospectus
supplement, as well as your tax advisors, regarding the specific
tax consequences to you of:
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the acquisition, ownership,
and/or sale
or other disposition of the securities offered under this
prospectus, including the federal, state, local, foreign and
other tax consequences;
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our election to be taxed as a REIT for federal income tax
purposes; and
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potential changes in the applicable tax laws.
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Taxation
of Our Company
General. We elected to be taxed as a REIT
under Sections 856 through 860 of the Code, commencing with
our taxable year ended December 31, 2004. We believe that
we have been organized and have operated in a manner that has
allowed us to qualify for taxation as a REIT under the Code
commencing with our taxable year ended December 31, 2004,
and we intend to continue to be organized and operate in this
manner. However, qualification and taxation as a REIT depend
upon our ability to meet the various qualification tests imposed
under the Code, including through our actual annual operating
results, asset composition, distribution levels and diversity of
stock ownership. Accordingly, no assurance can be given that we
have been organized and have operated, or will continue to be
organized and operated, in a manner so as to qualify or remain
qualified as a REIT. See Failure to
Qualify.
The sections of the Code and the corresponding Treasury
regulations that relate to qualification and operation as a REIT
are highly technical and complex. The following sets forth the
material aspects of the sections of the Code that govern the
federal income tax treatment of a REIT and its stockholders.
This summary is qualified in its entirety
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by the applicable Code provisions, relevant rules and
regulations promulgated under the Code, and administrative and
judicial interpretations of the Code and these rules and
regulations.
Latham & Watkins LLP has acted as our tax counsel in
connection with the registration of our securities pursuant to
this prospectus and our election to be taxed as a REIT. In
connection with the registration statement of which this
prospectus is a part, Latham & Watkins LLP has rendered
an opinion to us to the effect that, commencing with our taxable
year ending December 31, 2004, we have been organized and
have operated in conformity with the requirements for
qualification as a REIT under the Code, and our proposed method
of operation will enable us to continue to meet the requirements
for qualification and taxation as a REIT under the Code. It must
be emphasized that this opinion was based on various assumptions
and representations as to factual matters, including
representations made by us in a factual certificate provided by
one of our officers. In addition, this opinion was based upon
our factual representations set forth in this prospectus.
Moreover, our qualification and taxation as a REIT depend upon
our ability to meet the various qualification tests imposed
under the Code which are discussed below, including through
actual annual operating results, asset composition, distribution
levels and diversity of stock ownership, the results of which
have not been and will not be reviewed by Latham &
Watkins LLP. Accordingly, no assurance can be given that our
actual results of operation for any particular taxable year will
satisfy those requirements. Latham & Watkins LLP has no
obligation to update its opinion subsequent to its date.
Further, the anticipated income tax treatment described in this
prospectus may be changed, perhaps retroactively, by
legislative, administrative or judicial action at any time. See
Failure to Qualify.
Provided we qualify for taxation as a REIT, we generally will
not be required to pay federal corporate income taxes on our net
income that is currently distributed to our stockholders. This
treatment substantially eliminates the double
taxation that ordinarily results from investment in a C
corporation. A C corporation generally is required to pay tax at
the corporate level. Double taxation means taxation once at the
corporate level when income is earned and once again at the
stockholder level when that income is distributed. We will,
however, be required to pay federal income tax as follows:
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First, we will be required to pay tax at regular corporate rates
on any undistributed REIT taxable income, including
undistributed net capital gains.
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Second, we may be required to pay the alternative minimum
tax on our items of tax preference under some
circumstances.
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Third, if we have (1) net income from the sale or other
disposition of foreclosure property held primarily
for sale to customers in the ordinary course of business or
(2) other nonqualifying income from foreclosure property,
we will be required to pay tax at the highest corporate rate on
this income. Foreclosure property generally is defined as
property we acquired through foreclosure or after a default on a
loan secured by the property or a lease of the property.
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Fourth, we will be required to pay a 100% tax on any net income
from prohibited transactions. Prohibited transactions are, in
general, sales or other taxable dispositions of property, other
than foreclosure property, held primarily for sale to customers
in the ordinary course of business.
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Fifth, if we fail to satisfy the 75% gross income test or the
95% gross income test, as described below, but have otherwise
maintained our qualification as a REIT because certain other
requirements are met, we will be required to a pay a tax equal
to (1) the greater of (a) the amount by which 75% of
our gross income exceeds the amount qualifying under the 75%
gross income test, and (b) the amount by which 95% of our
gross income (90% for our taxable year ended December 31,
2004) exceeds the amount qualifying under the 95% gross
income test, multiplied by (2) a fraction intended to
reflect our profitability.
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Sixth, if we fail to satisfy any of the REIT asset tests (other
than a de minimis failure of the 5% or 10% asset tests), as
described below, due to reasonable cause and not due to willful
neglect, and we nonetheless maintain our REIT qualification
because of specified cure provisions, we will be required to pay
a tax equal to the greater of $50,000 or the highest corporate
tax rate multiplied by the net income generated by the
nonqualifying assets that caused us to fail such test.
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Seventh, if we fail to satisfy any provision of the Code that
would result in our failure to qualify as a REIT (other than a
violation of the REIT gross income tests or certain violations
of the asset tests described below) and the violation is due to
reasonable cause and not due to willful neglect, we may retain
our REIT qualification but we will be required to pay a penalty
of $50,000 for each such failure.
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Eighth, we will be required to pay a 4% excise tax to the extent
we fail to distribute during each calendar year at least the sum
of (1) 85% of our REIT ordinary income for the year,
(2) 95% of our REIT capital gain net income for the year,
and (3) any undistributed taxable income from prior periods.
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Ninth, if we acquire any asset from a corporation which is or
has been a C corporation in a transaction in which the basis of
the asset in our hands is determined by reference to the basis
of the asset in the hands of the C corporation, and we
subsequently recognize gain on the disposition of the asset
during the ten-year period beginning on the date on which we
acquired the asset, then we will be required to pay tax at the
highest regular corporate tax rate on this gain to the extent of
the excess of (1) the fair market value of the asset over
(2) our adjusted basis in the asset, in each case
determined as of the date on which we acquired the asset. The
results described in this paragraph with respect to the
recognition of gain assume that the C corporation will refrain
from making an election to receive different treatment under
existing Treasury regulations on its tax return for the year in
which we acquire an asset from the C corporation.
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Tenth, we will be required to pay a 100% tax on any
redetermined rents, redetermined
deductions or excess interest. In general,
redetermined rents are rents from real property that are
overstated as a result of services furnished to our tenants by a
taxable REIT subsidiary of ours. Redetermined
deductions and excess interest represent amounts that are
deducted by our taxable REIT subsidiary for amounts paid to us
that are in excess of the amounts that would have been deducted
based on arms-length negotiations. See
Penalty Tax.
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Requirements for Qualification as a Real Estate Investment
Trust. The Code defines a REIT as a
corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable
certificates to evidence its beneficial ownership;
(3) that would be taxable as a domestic corporation, but
for Sections 856 through 860 of the Code;
(4) that is not a financial institution or an insurance
company within the meaning of certain provisions of the Code;
(5) that is beneficially owned by 100 or more persons;
(6) not more than 50% in value of the outstanding stock of
which is owned, actually or constructively, by five or fewer
individuals, including specified entities, during the last half
of each taxable year; and
(7) that meets other tests, described below, regarding the
nature of its income and assets and the amount of its
distributions.
The Code provides that conditions (1) to (4), inclusive,
must be met during the entire taxable year and that condition
(5) must be met during at least 335 days of a taxable
year of twelve months, or during a proportionate part of a
taxable year of less than twelve months. Conditions (5) and
(6) do not apply until after the first taxable year for
which an election is made to be taxed as a REIT. For purposes of
condition (6), pension funds and other specified tax-exempt
entities generally are treated as individuals except that a
look-through exception applies with respect to
pension funds.
We believe that we have been organized, have operated and have
issued sufficient shares of capital stock with sufficient
diversity of ownership to allow us to satisfy conditions
(1) through (7) inclusive during the relevant time
periods. In addition, our charter provides for restrictions
regarding the ownership and transfer of our shares that are
intended to assist us in continuing to satisfy the share
ownership requirements described in (5) and (6) above.
These stock ownership and transfer restrictions are described in
Restrictions on Ownership and Transfer in this
prospectus. These restrictions, however, may not ensure that we
will, in all cases, be able to satisfy the share
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ownership requirements described in (5) and (6) above.
If we fail to satisfy these share ownership requirements, except
as provided in the next sentence, our status as a REIT will
terminate. If, however, we comply with the rules contained in
applicable Treasury regulations that require us to ascertain the
actual ownership of our shares and we do not know, or would not
have known through the exercise of reasonable diligence, that we
failed to meet the requirement described in condition
(6) above, we will be treated as having met this
requirement. See the section below entitled
Failure to Qualify.
In addition, we may not maintain our status as a REIT unless our
taxable year is the calendar year. We have and will continue to
have a calendar taxable year.
Ownership of Interests in Partnerships, Limited Liability
Companies and Qualified REIT Subsidiaries. In the
case of a REIT which is a partner in a partnership or a member
in a limited liability company treated as a partnership for
federal income tax purposes, Treasury regulations provide that
the REIT will be deemed to own its proportionate share of the
assets of the partnership or limited liability company, as the
case may be, based on its interest in partnership capital,
subject to special rules relating to the 10% asset test
described below. Also, the REIT will be deemed to be entitled to
its proportionate share of the income of the entity. The assets
and gross income of the partnership or limited liability company
retain the same character in the hands of the REIT for purposes
of Section 856 of the Code, including satisfying the gross
income tests and the asset tests. Thus, our pro rata share of
the assets and items of income of our operating partnership,
including our operating partnerships share of these items
of any partnership or limited liability company in which it owns
an interest, are treated as our assets and items of income for
purposes of applying the requirements described in this
prospectus, including the REIT income and asset tests described
below. A brief summary of the rules governing the federal income
taxation of partnerships and limited liability companies is set
forth below in Tax Aspects of Our Operating
Partnership, the Subsidiary Partnerships and the Limited
Liability Companies.
We have control of our operating partnership and the subsidiary
partnerships and limited liability companies and intend to
continue to operate them in a manner consistent with the
requirements for our qualification as a REIT. In the future, we
may be a limited partner or non-managing member in a partnership
or limited liability company. If such a partnership or limited
liability company were to take actions which could jeopardize
our status as a REIT or require us to pay tax, we could be
forced to dispose of our interest in such entity. In addition,
it is possible that a partnership or limited liability company
could take an action which could cause us to fail a REIT income
or asset test, and that we would not become aware of such action
in time to dispose of our interest in the partnership or limited
liability company or take other corrective action on a timely
basis. In that case, we could fail to qualify as a REIT unless
we were entitled to relief, as described below. See
Failure to Qualify.
We may from time to time own and operate certain properties
through wholly-owned subsidiaries that we intend to be treated
as qualified REIT subsidiaries under the Code. A
corporation will qualify as our qualified REIT subsidiary if we
own 100% of its outstanding stock and we do not elect with the
subsidiary to treat it as a taxable REIT subsidiary,
as described below. For federal income tax purposes, a qualified
REIT subsidiary is not treated as a separate corporation, and
all assets, liabilities and items of income, deduction and
credit of a qualified REIT subsidiary are treated as assets,
liabilities and items of income, deduction and credit (as the
case may be) of the parent REIT for all purposes under the Code,
including the REIT qualification tests. Thus, in applying the
federal income tax requirements described in this prospectus,
any corporation in which we own a 100% interest (other than a
taxable REIT subsidiary) is ignored, and all assets,
liabilities, and items of income, deduction and credit of such
corporation are treated as our assets, liabilities and items of
income, deduction, and credit. A qualified REIT subsidiary is
not required to pay federal income tax, and our ownership of the
stock of a qualified REIT subsidiary will not violate the
restrictions on ownership of securities described below under
Asset Tests.
Ownership of Interests in Taxable REIT
Subsidiaries. A taxable REIT subsidiary is a
corporation other than a REIT in which a REIT directly or
indirectly holds stock, and that has made a joint election with
the REIT to be treated as a taxable REIT subsidiary. A taxable
REIT subsidiary also includes any corporation, other than a
REIT, with respect to which a taxable REIT subsidiary owns
securities possessing more than 35% of the total voting power or
value. Other than some activities relating to lodging and health
care facilities, a taxable REIT subsidiary may generally engage
in any business, including the provision of customary or
non-customary services to tenants of its parent REIT. A taxable
REIT subsidiary is subject to federal income tax as a regular C
corporation. In addition, a
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taxable REIT subsidiary may be prevented from deducting interest
on debt funded directly or indirectly by its parent REIT if
certain tests regarding the taxable REIT subsidiarys debt
to equity ratio and interest expense are not satisfied. A
REITs ownership of securities of taxable REIT subsidiaries
will not be subject to the 10% or 5% asset tests described
below. See Asset Tests.
We currently hold an interest in one taxable REIT subsidiary and
may acquire securities in additional taxable REIT subsidiaries
in the future.
Income Tests. We must satisfy two gross income
requirements annually to maintain our qualification as a REIT.
First, in each taxable year, we must derive directly or
indirectly at least 75% of our gross income, excluding gross
income from prohibited transactions, from investments relating
to real property or mortgages on real property, including
rents from real property and, in certain
circumstances, interest, or from certain types of temporary
investments. Second, in each taxable year, we must derive at
least 95% of our gross income, excluding gross income from
prohibited transactions and certain hedges of indebtedness, from
the real property investments described above, or from
dividends, interest and gain from the sale or disposition of
stock or securities, or from any combination of the foregoing.
For these purposes, the term interest generally does
not include any amount received or accrued, directly or
indirectly, if the determination of all or some of the amount
depends in any way on the income or profits of any person.
However, an amount received or accrued generally will not be
excluded from the term interest solely by reason of
being based on a fixed percentage or percentages of receipts or
sales.
Rents we receive from a tenant will qualify as rents from
real property for the purpose of satisfying the gross
income requirements for a REIT described above only if all of
the following conditions are met:
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The amount of rent must not be based in any way on the income or
profits of any person. However, an amount we receive or accrue
generally will not be excluded from the term rents from
real property solely because it is based on a fixed
percentage or percentages of receipts or sales;
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We, or an actual or constructive owner of 10% or more of our
capital stock, must not actually or constructively own 10% or
more of the interests in the tenant, or, if the tenant is a
corporation, 10% or more of the voting power or value of all
classes of stock of the tenant. Rents we receive from such a
tenant that is also our taxable REIT subsidiary, however, will
not be excluded from the definition of rents from real
property as a result of this condition if at least 90% of
the space at the property to which the rents relate is leased to
third parties, and the rents paid by the taxable REIT subsidiary
are substantially comparable to rents paid by our other tenants
for comparable space. Whether rents paid by a taxable REIT
subsidiary are substantially comparable to rents paid by other
tenants is determined at the time the lease with the taxable
REIT subsidiary is entered into, extended, and modified, if such
modification increases the rents due under such lease.
Notwithstanding the foregoing, however, if a lease with a
controlled taxable REIT subsidiary is modified and
such modification results in an increase in the rents payable by
such taxable REIT subsidiary, any such increase will not qualify
as rents from real property. For purposes of this
rule, a controlled taxable REIT subsidiary is a
taxable REIT subsidiary in which we own stock possessing more
than 50% of the voting power or more than 50% of the total value;
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Rent attributable to personal property, leased in connection
with a lease of real property, is not greater than 15% of the
total rent received under the lease. If this requirement is not
met, then the portion of the rent attributable to personal
property will not qualify as rents from real
property; and
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We generally must not operate or manage the property or furnish
or render services to our tenants, subject to a 1% de minimis
exception and except as provided below. We may, however, perform
services that are usually or customarily rendered in
connection with the rental of space for occupancy only and are
not otherwise considered rendered to the occupant of
the property. Examples of these services include the provision
of light, heat, or other utilities, trash removal and general
maintenance of common areas. In addition, we may employ an
independent contractor from whom we derive no revenue to provide
customary services, or a taxable REIT subsidiary, which may be
wholly or partially owned by us, to provide both customary and
non-customary services to our tenants without causing the rent
we receive from those tenants to fail to qualify as rents
from real property. Any amounts we receive from a taxable
REIT subsidiary with respect to the taxable REIT
subsidiarys provision of noncustomary services will,
however, be nonqualifying
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income under the 75% gross income test and, except to the extent
received through the payment of dividends, the 95% gross income
test.
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We generally do not intend, and as a general partner of our
operating partnership, do not intend to permit our operating
partnership, to take actions we believe will cause us to fail to
satisfy the rental conditions described above. However, we may
intentionally fail to satisfy some of these conditions to the
extent we conclude, based on the advice of our tax counsel, the
failure will not jeopardize our tax status as a REIT. In
addition, with respect to the limitation on the rental of
personal property, we have not obtained appraisals of the real
property and personal property leased to tenants. Accordingly,
there can be no assurance that the IRS will agree with our
determinations of value.
Income we receive that is attributable to the rental of parking
spaces at the properties will constitute rents from real
property for purposes of the REIT gross income tests if certain
services provided with respect to the parking facilities are
performed by independent contractors from whom we derive no
income, either directly or indirectly, or by a taxable REIT
subsidiary, and certain other conditions are met. We believe
that the income we receive that is attributable to parking
facilities meets these tests and, accordingly, will constitute
rents from real property for purposes of the REIT gross income
tests.
From time to time, we enter into hedging transactions with
respect to one or more of our assets or liabilities. Our hedging
activities may include entering into interest rate swaps, caps,
and floors, options to purchase these items, and futures and
forward contracts. Any income we derive from a hedging
transaction will be nonqualifying for purposes of the 75% gross
income test. Except to the extent provided by Treasury
regulations, however, income from a hedging transaction entered
into prior to January 1, 2005, including gain from the sale
or disposition of such a transaction, will be qualifying income
for purposes of the 95% gross income test, but only to the
extent that the transaction hedges indebtedness incurred or to
be incurred by us to acquire or carry real estate assets. Income
from such a hedging transaction entered into on or after
January 1, 2005 that is clearly identified as such as
specified in the Code will not constitute gross income for
purposes of the 95% gross income test, and therefore will be
exempt from this test. The term hedging transaction,
as used above, generally means any transaction we enter into in
the normal course of our business primarily to manage risk of
interest rate changes or fluctuations with respect to borrowings
made or to be made by us. To the extent that we do not properly
identify such transactions as hedges or hedge with other types
of financial instruments, the income from those transactions is
not likely to be treated as qualifying income for purposes of
the gross income tests. We intend to structure our hedging
transactions in a manner that does not jeopardize our status as
a REIT.
To the extent our taxable REIT subsidiary pays dividends, we
generally will derive our allocable share of such dividend
income through our interest in our operating partnership. Such
dividend income will qualify under the 95%, but not the 75%,
REIT gross income test. We will monitor the amount of the
dividend and other income from our taxable REIT subsidiary and
we will take actions intended to keep this income, and any other
nonqualifying income, within the limitations of the REIT income
tests. While we expect these actions will prevent a violation of
the REIT income tests, we cannot guarantee that such actions
will in all cases prevent such a violation.
If we fail to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, we may nevertheless qualify as a
REIT for the year if we are entitled to relief under certain
provisions of the Code. Commencing with our taxable year
beginning January 1, 2005, we generally may make use of the
relief provisions if:
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following our identification of the failure to meet the 75% or
95% gross income tests for any taxable year, we file a schedule
with the IRS setting forth each item of our gross income for
purposes of the 75% or 95% gross income tests for such taxable
year in accordance with Treasury regulations to be
issued; and
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our failure to meet these tests was due to reasonable cause and
not due to willful neglect.
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It is not possible, however, to state whether in all
circumstances we would be entitled to the benefit of these
relief provisions. For example, if we fail to satisfy the gross
income tests because nonqualifying income that we intentionally
accrue or receive exceeds the limits on nonqualifying income,
the IRS could conclude that our failure to satisfy the tests was
not due to reasonable cause. If these relief provisions do not
apply to a particular set of circumstances, we will not qualify
as a REIT. As discussed above in Taxation of
Our Company General, even if these relief
provisions apply, and we retain our status as a REIT, a tax
would be imposed with respect to our
39
nonqualifying income. We may not always be able to comply with
the gross income tests for REIT qualification despite our
periodic monitoring of our income.
Prohibited Transaction Income. Any gain that
we realize on the sale of property held as inventory or
otherwise held primarily for sale to customers in the ordinary
course of business, including our share of any such gain
realized by our operating partnership, either directly or
through its subsidiary partnerships and limited liability
companies, will be treated as income from a prohibited
transaction that is subject to a 100% penalty tax. This
prohibited transaction income may also adversely affect our
ability to satisfy the income tests for qualification as a REIT.
Under existing law, whether property is held as inventory or
primarily for sale to customers in the ordinary course of a
trade or business is a question of fact that depends on all the
facts and circumstances surrounding the particular transaction.
Our operating partnership intends to hold its properties for
investment with a view to long-term appreciation, to engage in
the business of acquiring, developing and owning its properties
and to make occasional sales of the properties as are consistent
with our operating partnerships investment objectives. We
do not intend to enter into any sales that are prohibited
transactions. However, the IRS may successfully contend that
some or all of the sales made by our operating partnership or
its subsidiary partnerships or limited liability companies are
prohibited transactions. We would be required to pay the 100%
penalty tax on our allocable share of the gains resulting from
any such sales.
Penalty Tax. Any redetermined rents,
redetermined deductions or excess interest we generate will be
subject to a 100% penalty tax. In general, redetermined rents
are rents from real property that are overstated as a result of
services furnished by our taxable REIT subsidiary to any of our
tenants, and redetermined deductions and excess interest
represent amounts that are deducted by a taxable REIT subsidiary
for amounts paid to us that are in excess of the amounts that
would have been deducted based on arms-length
negotiations. Rents we receive will not constitute redetermined
rents if they qualify for the safe harbor provisions contained
in the Code.
From time to time, our taxable REIT subsidiary may provide
services to our tenants. We intend to set the fees paid to our
taxable REIT subsidiary for such services at arms length
rates, although the fees paid may not satisfy the safe harbor
provisions described above. These determinations are inherently
factual, and the IRS has broad discretion to assert that amounts
paid between related parties should be reallocated to clearly
reflect their respective incomes. If the IRS successfully made
such an assertion, we would be required to pay a 100% penalty
tax on the excess of an arms length fee for tenant
services over the amount actually paid.
Asset Tests. At the close of each calendar
quarter of our taxable year, we must also satisfy four tests
relating to the nature and diversification of our assets. First,
at least 75% of the value of our total assets must be
represented by real estate assets, cash, cash items and
government securities. For purposes of this test, the term
real estate assets generally means real property
(including interests in real property and interests in mortgages
on real property) and shares (or transferable certificates of
beneficial interest) in other REITs, as well as any stock or
debt instrument attributable to the investment of the proceeds
of a stock offering or a public offering of debt with a term of
at least five years, but only for the one-year period beginning
on the date we receive such proceeds.
Second, not more than 25% of the value of our total assets may
be represented by securities, other than those securities
includable in the 75% asset test.
Third, of the investments included in the 25% asset class, and
except for investments in other REITs, our qualified REIT
subsidiaries and our taxable REIT subsidiaries, the value of any
one issuers securities may not exceed 5% of the value of
our total assets, and we may not own more than 10% of the total
vote or value of the outstanding securities of any one issuer.
Solely for purposes of the 10% value test, however, certain
securities including, but not limited to straight
debt securities having specified characteristics, loans to
an individual or an estate, obligations to pay rents from real
property and any securities issued by a REIT, are disregarded as
securities. In addition, commencing with our taxable year
beginning January 1, 2005, solely for purposes of the 10%
value test, the determination of our interest in the assets of a
partnership or limited liability company in which we own an
interest will be based on our proportionate interest in any
securities issued by the partnership or limited liability
company, excluding for this purpose certain securities described
in the Code.
Fourth, not more than 20% of the value of our total assets may
be represented by the securities of one or more taxable REIT
subsidiaries.
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To the extent that we own an interest in an issuer that does not
qualify as a REIT, a qualified REIT subsidiary, or a taxable
REIT subsidiary, we believe that the value of the securities of
any such issuer has not exceeded 5% of the total value of our
assets. Moreover, with respect to each issuer in which we own an
interest that does not qualify as a qualified REIT subsidiary or
a taxable REIT subsidiary, we believe that our ownership of the
securities of any such issuer has complied with the 10% voting
securities limitation and the 10% value limitation. We believe
that the value of our taxable REIT subsidiary does not exceed,
and believe that in the future it will not exceed, 20% of the
aggregate value of our gross assets. No independent appraisals
have been obtained to support these conclusions. In addition,
there can be no assurance that the IRS will agree with our
determinations of value.
The asset tests described above must be satisfied at the close
of each quarter of our taxable year in which we (directly or
through our operating partnership) acquire securities in the
applicable issuer, increase our ownership of securities of such
issuer (including as a result of increasing our interest in our
operating partnership or other partnerships and limited
liability companies which own such securities), or acquire other
assets. For example, our indirect ownership of securities of
each issuer will increase as a result of our capital
contributions to our operating partnership or as limited
partners exercise their redemption/exchange rights. After
initially meeting the asset tests at the close of any quarter,
we will not lose our status as a REIT for failure to satisfy the
asset tests at the end of a later quarter solely by reason of
changes in asset values. If we fail to satisfy an asset test
because we acquire securities or other property during a
quarter, including as a result of an increase in our interest in
our operating partnership, we may cure this failure by disposing
of sufficient nonqualifying assets within 30 days after the
close of that quarter. We believe that we have maintained and
intend to maintain adequate records of the value of our assets
to ensure compliance with the asset tests. If we fail to cure
any noncompliance with the asset tests within the 30 day
cure period, we would cease to qualify as a REIT unless we are
eligible for certain relief provisions discussed below.
Certain relief provisions may be available to us if we discover
a failure to satisfy the asset tests described above after the
30 day cure period. Under these provisions, we will be
deemed to have met the 5% and 10% asset tests if the value of
our nonqualifying assets (1) does not exceed the lesser of
(a) 1% of the total value of our assets at the end of the
applicable quarter or (b) $10,000,000, and (2) we
dispose of the nonqualifying assets or otherwise satisfy such
tests within (a) six months after the last day of the
quarter in which the failure to satisfy the asset tests is
discovered or (b) the period of time prescribed by Treasury
regulations to be issued. For violations of any of the asset
tests due to reasonable cause and not due to willful neglect and
that are, in the case of the 5% and 10% asset tests, in excess
of the de minimis exception described above, we may avoid
disqualification as a REIT after the 30 day cure period by
taking steps including (1) the disposition of sufficient
nonqualifying assets, or the taking of other actions, which
allow us to meet the asset tests within (a) six months
after the last day of the quarter in which the failure to
satisfy the asset tests is discovered or (b) the period of
time prescribed by Treasury regulations to be issued,
(2) paying a tax equal to the greater of (a) $50,000
or (b) the highest corporate tax rate multiplied by the net
income generated by the nonqualifying assets, and
(3) disclosing certain information to the IRS.
Although we believe that we have satisfied the asset tests
described above and plan to take steps to ensure that we satisfy
such tests for any calendar quarter with respect to which
retesting is to occur, there can be no assurance that we will
always be successful, or a reduction in our operating
partnerships overall interest in an issuer will not be
required. If we fail to timely cure any noncompliance with the
asset tests in a timely manner, and the relief provisions
described above are not available, we would cease to qualify as
a REIT. See Failure to Qualify below.
Annual Distribution Requirements. To maintain
our qualification as a REIT, we are required to distribute
dividends, other than capital gain dividends, to our
stockholders in an amount at least equal to the sum of:
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90% of our REIT taxable income; and
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90% of our after-tax net income, if any, from foreclosure
property; minus
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the excess of the sum of certain items of non-cash income over
5% of our REIT taxable income.
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For these purposes, our REIT taxable income is
computed without regard to the dividends paid deduction and our
net capital gain. In addition, for purposes of this test,
non-cash income means income attributable to leveled stepped
rents, original issue discount on purchase money debt,
cancellation of indebtedness or a like-kind exchange that is
later determined to be taxable.
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In addition, if we dispose of any asset we acquired from a
corporation which is or has been a C corporation in a
transaction in which our basis in the asset is determined by
reference to the basis of the asset in the hands of that C
corporation, within the ten-year period following our
acquisition of such asset, we would be required to distribute at
least 90% of the after-tax gain, if any, we recognize on the
disposition of the asset, to the extent that gain does not
exceed the excess of (a) the fair market value of the
asset, over (b) our adjusted basis in the asset, in each
case, on the date we acquired the asset.
We generally must pay, or be treated as paying, the
distributions described above in the taxable year to which they
relate. At our election, a distribution will be treated as paid
in a taxable year if it is declared before we timely file our
tax return for such year and paid on or before the first regular
dividend payment after such declaration, provided such payment
is made during the twelve-month period following the close of
such year. These distributions are taxable to our stockholders,
other than tax-exempt entities, in the year in which paid. This
is so even though these distributions relate to the prior year
for purposes of the 90% distribution requirement. The amount
distributed must not be preferential i.e., every
stockholder of the class of stock to which a distribution is
made must be treated the same as every other stockholder of that
class, and no class of stock may be treated other than according
to its dividend rights as a class. To the extent that we do not
distribute all of our net capital gain, or distribute at least
90%, but less than 100%, of our REIT taxable income,
as adjusted, we will be required to pay tax on the undistributed
amount at regular corporate tax rates. We believe we have made,
and intend to continue to make timely distributions sufficient
to satisfy these annual distribution requirements and to
minimize our corporate tax obligations. In this regard, the
partnership agreement of our operating partnership authorizes
us, as general partner, to take such steps as may be necessary
to cause our operating partnership to distribute to its partners
an amount sufficient to permit us to meet these distribution
requirements.
We expect that our REIT taxable income will be less than our
cash flow because of depreciation and other non-cash charges
included in computing REIT taxable income. Accordingly, we
anticipate that we will generally have sufficient cash or liquid
assets to enable us to satisfy the distribution requirements
described above. However, from time to time, we may not have
sufficient cash or other liquid assets to meet these
distribution requirements due to timing differences between the
actual receipt of income and actual payment of deductible
expenses, and the inclusion of income and deduction of expenses
in determining our taxable income. If these timing differences
occur, we may be required to borrow funds or pay dividends in
the form of taxable stock dividends in order to meet the
distribution requirements.
Under some circumstances, we may be able to rectify an
inadvertent failure to meet the 90% distribution requirements
for a year by paying deficiency dividends to our
stockholders in a later year, which may be included in our
deduction for dividends paid for the earlier year. Thus, we may
be able to avoid being taxed on amounts distributed as
deficiency dividends. However, we will be required to pay
interest to the IRS based upon the amount of any deduction
claimed for deficiency dividends.
Furthermore, we will be required to pay a 4% excise tax to the
extent we fail to distribute during each calendar year, or in
the case of distributions with declaration and record dates
falling in the last three months of the calendar year, by the
end of January immediately following such year, at least the sum
of 85% of our REIT ordinary income for such year, 95% of our
REIT capital gain income for the year and any undistributed
taxable income from prior periods. Any REIT taxable income and
net capital gain on which this excise tax is imposed for any
year is treated as an amount distributed during that year for
purposes of calculating such tax.
For purposes of the distribution requirements and excise tax
described above, distributions declared during the last three
months of the taxable year, payable to stockholders of record on
a specified date during such period and paid during January of
the following year, will be treated as paid by us and received
by our stockholders on December 31 of the year in which
they are declared.
Like-Kind Exchanges. We may dispose of
properties in transactions intended to qualify as like-kind
exchanges under the Code. Such like-kind exchanges are intended
to result in the deferral of gain for federal income tax
purposes. The failure of any such transaction to qualify as a
like-kind exchange could subject us to federal income tax,
possibly including the 100% prohibited transaction tax,
depending on the facts and circumstances surrounding the
particular transaction.
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Failure
to Qualify
Commencing with our taxable year beginning January 1, 2005,
specified cure provisions are available to us in the event that
we discover a violation of a provision of the Code that would
result in our failure to qualify as a REIT. Except with respect
to violations of the REIT income tests and asset tests (for
which the cure provisions are described above), and provided the
violation is due to reasonable cause and not due to willful
neglect, these cure provisions generally impose a $50,000
penalty for each violation in lieu of a loss of REIT status.
If we fail to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, we will be
required to pay tax, including any applicable alternative
minimum tax, on our taxable income at regular corporate rates.
Distributions to stockholders in any year in which we fail to
qualify as a REIT will not be deductible by us, and we will not
be required to distribute any amounts to our stockholders. As a
result, we anticipate that our failure to qualify as a REIT
would reduce the cash available for distribution by us to our
stockholders. In addition, if we fail to qualify as a REIT, all
distributions to stockholders will be taxable as regular
corporate dividends to the extent of our current and accumulated
earnings and profits. In this event, corporate distributees may
be eligible for the dividends-received deduction. Unless
entitled to relief under specific statutory provisions, we will
also be disqualified from taxation as a REIT for the four
taxable years following the year during which we lost our
qualification. It is not possible to state whether in all
circumstances we would be entitled to this statutory relief.
Tax
Aspects of Our Operating Partnership, the Subsidiary
Partnerships and the Limited Liability Companies
General. All of our investments are held
indirectly through our operating partnership. In addition, our
operating partnership holds certain of its investments
indirectly through subsidiary partnerships and limited liability
companies which we expect will be treated as partnerships (or
disregarded entities) for federal income tax purposes. In
general, entities that are classified as partnerships (or
disregarded entities) for federal income tax purposes are
pass-through entities which are not required to pay
federal income tax. Rather, partners or members of such entities
are allocated their shares of the items of income, gain, loss,
deduction and credit of the entity, and are potentially required
to pay tax thereon, without regard to whether the partners or
members receive a distribution of cash from the entity. We
include in our income our pro rata share of the foregoing items
for purposes of the various REIT income tests and in the
computation of our REIT taxable income. Moreover, for purposes
of the REIT asset tests and subject to special rules relating to
the 10% asset test described above, we will include our pro rata
share of the assets held by our operating partnership, including
its share of its subsidiary partnerships and limited liability
companies, based on our capital interest. See
Taxation of Our Company.
Entity Classification. Our interests in our
operating partnership and the subsidiary partnerships and
limited liability companies involve special tax considerations,
including the possibility that the IRS might challenge the
status of one or more of these entities as a partnership (or
disregarded entity), as opposed to an association taxable as a
corporation for federal income tax purposes. If our operating
partnership, or a subsidiary partnership or limited liability
company, were treated as an association, it would be taxable as
a corporation and would be required to pay an entity-level tax
on its income. In this situation, the character of our assets
and items of gross income would change and could prevent us from
satisfying the REIT asset tests and possibly the REIT income
tests. See Taxation of Our Company
Asset Tests and Income Tests.
This, in turn, could prevent us from qualifying as a REIT. See
Failure to Qualify for a discussion of
the effect of our failure to meet these tests for a taxable
year. In addition, a change in the tax status of our operating
partnerships or a subsidiary partnerships or limited
liability companys status might be treated as a taxable
event. In that case, we might incur a tax liability without any
related cash distributions. We believe our operating partnership
and each of our other partnerships and limited liability
companies will be classified as a partnership or a disregarded
entity for federal income tax purposes.
Allocations of Income, Gain, Loss and
Deduction. The operating partnership agreement
generally provides that items of operating income and loss will
be allocated to the holders of units in proportion to the number
of units held by each such unit holder. Certain limited partners
have agreed to guarantee debt of our operating partnership,
either directly or indirectly through an agreement to make
capital contributions to our operating partnership under limited
circumstances. As a result of these guarantees or contribution
agreements, and notwithstanding the
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foregoing discussion of allocations of income and loss of our
operating partnership to holders of units, such limited partners
could under limited circumstances be allocated a
disproportionate amount of net loss upon a liquidation of our
operating partnership, which net loss would have otherwise been
allocable to us.
If an allocation of partnership income or loss does not comply
with the requirements of Section 704(b) of the Code and the
Treasury regulations thereunder, the item subject to the
allocation will be reallocated in accordance with the
partners interests in the partnership. This reallocation
will be determined by taking into account all of the facts and
circumstances relating to the economic arrangement of the
partners with respect to such item. Our operating
partnerships allocations of taxable income and loss are
intended to comply with the requirements of Section 704(b)
of the Code and the Treasury regulations promulgated thereunder.
Tax Allocations With Respect to the
Properties. Under Section 704(c) of the
Code, income, gain, loss and deduction attributable to
appreciated or depreciated property that is contributed to a
partnership in exchange for an interest in the partnership, must
be allocated in a manner so that the contributing partner is
charged with the unrealized gain or benefits from the unrealized
loss associated with the property at the time of the
contribution. The amount of the unrealized gain or unrealized
loss generally is equal to the difference between the fair
market value or book value and the adjusted tax basis of the
contributed property at the time of contribution, as adjusted
from time to time. These allocations are solely for federal
income tax purposes and do not affect the book capital accounts
or other economic or legal arrangements among the partners.
Appreciated property was contributed to our operating
partnership in exchange for interests in our operating
partnership in connection with the formation transactions. The
partnership agreement requires that these allocations be made in
a manner consistent with Section 704(c) of the Code.
Treasury regulations issued under Section 704(c) of the
Code provide partnerships with a choice of several methods of
accounting for book-tax differences. We and our operating
partnership have agreed to use the traditional
method for accounting for book-tax differences for the
properties initially contributed to our operating partnership.
Under the traditional method, which is the least favorable
method from our perspective, the carryover basis of contributed
interests in the properties in the hands of our operating
partnership (1) will or could cause us to be allocated
lower amounts of depreciation deductions for tax purposes than
would be allocated to us if all contributed properties were to
have a tax basis equal to their fair market value at the time of
the contribution and (2) could cause us to be allocated
taxable gain in the event of a sale of such contributed
interests or properties in excess of the economic or book income
allocated to us as a result of such sale, with a corresponding
benefit to the other partners in our operating partnership. An
allocation described in (2) above might cause us or
the other partners to recognize taxable income in excess of cash
proceeds in the event of a sale or other disposition of
property, which might adversely affect our ability to comply
with the REIT distribution requirements. See
Taxation of Our Company
Requirements for Qualification as a Real Estate Investment
Trust and Annual Distribution
Requirements. To the extent our depreciation is reduced,
or our gain on sale is increased, stockholders may recognize
additional dividend income without an increase in distributions.
Any property acquired by our operating partnership in a taxable
transaction will initially have a tax basis equal to its fair
market value, and Section 704(c) of the Code will not apply.
Other Tax
Consequences
State, local and foreign income tax laws may differ
substantially from the corresponding federal income tax laws,
and this discussion does not purport to describe any aspect of
the tax laws of any state, local or foreign jurisdiction. You
should consult your tax advisor regarding the effect of state
and local tax laws with respect to our tax treatment as a REIT
and on an investment in our common stock.
PLAN OF
DISTRIBUTION
We may sell the securities domestically or abroad to one or more
underwriters for public offering and sale by them or may sell
the securities to investors directly or through dealers or
agents, or through a combination of methods. Any underwriter,
dealer or agent involved in the offer and sale of the securities
will be named in the applicable prospectus supplement.
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Underwriters may offer and sell the securities at: (1) a
fixed price or prices, which may be changed, (2) market
prices prevailing at the time of sale, (3) prices related
to the prevailing market prices at the time of sale or
(4) negotiated prices. We also may, from time to time,
authorize underwriters acting as their agents to offer and sell
the securities upon the terms and conditions as are set forth in
the applicable prospectus supplement. In connection with the
sale of securities, underwriters may be deemed to have received
compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of
securities for whom they may act as agent. Underwriters may sell
securities to or through dealers, and the 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 us to underwriters,
dealers or agents in connection with the offering of securities,
and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the
applicable prospectus supplement. Dealers and agents
participating in the distribution of the 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 securities may be deemed to be underwriting discounts and
commissions under the Securities Act. The maximum compensation
to be received by any NASD member will not exceed 10% of the
gross offering proceeds plus an additional 0.5% for bona fide
due diligence expenses in connection with the sale of the
securities registered hereunder. Underwriters, dealers and
agents may be entitled, under agreements entered into with us
and our operating partnership, to indemnification against and
contribution toward civil liabilities, including liabilities
under the Securities Act. We will describe any indemnification
agreement in the applicable prospectus supplement.
Unless we specify otherwise in the applicable prospectus
supplement, any series of securities issued hereunder will be a
new issue with no established trading market (other than our
common stock, which is listed on the NYSE). If we sell any
shares of our common stock pursuant to a prospectus supplement,
such shares will be listed on the NYSE, subject to official
notice of issuance. We may elect to list any other securities
issued hereunder on any exchange, but we are not obligated to do
so. Any underwriters or agents to or through whom such
securities are sold by us or our operating partnership for
public offering and sale may make a market in such securities,
but such underwriters or agents will not be obligated to do so
and may discontinue any market making at any time without
notice. We cannot assure you as to the liquidity of the trading
market for any such securities.
If indicated in the applicable prospectus supplement, we may
authorize underwriters or other persons acting as our agents to
solicit offers by institutions or other suitable purchasers to
purchase the securities from us at the public offering price set
forth in the prospectus supplement, pursuant to delayed delivery
contracts providing for payment and delivery on the date or
dates stated in the prospectus supplement. These purchasers may
include, among others, commercial and savings banks, insurance
companies, pension funds, investment companies and educational
and charitable institutions. Delayed delivery contracts will be
subject to the condition that the purchase of the securities
covered by the delayed delivery contracts will not at the time
of delivery be prohibited under the laws of any jurisdiction in
the United States to which the purchaser is subject. The
underwriters and agents will not have any responsibility with
respect to the validity or performance of these contracts.
To facilitate the offering of the securities, certain persons
participating in the offering may engage in transactions that
stabilize, maintain, or otherwise affect the price of the
securities. This may include over-allotments or short sales of
the securities, which involves the sale by persons participating
in the offering of more securities than we sold to them. In
these circumstances, these persons would cover the
over-allotments or short positions by making purchases in the
open market or by exercising their over-allotment option. In
addition, these persons may stabilize or maintain the price of
the securities by bidding for or purchasing securities in the
open market or by imposing penalty bids, whereby selling
concessions allowed to dealers participating in the offering may
be reclaimed if securities sold by them are repurchased in
connection with stabilization transactions. The effect of these
transactions may be to stabilize or maintain the market price of
the securities at a level above that which might otherwise
prevail in the open market. These transactions may be
discontinued at any time.
The underwriters, dealers and agents and their affiliates may be
customers of, engage in transactions with and perform services
for us and our operating partnership in the ordinary course of
business.
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LEGAL
MATTERS
Certain legal matters will be passed upon for us by
Latham & Watkins LLP, San Diego, California and
Los Angeles, California. Venable LLP, Baltimore, Maryland, has
issued an opinion to us regarding certain matters of Maryland
law.
EXPERTS
The consolidated balance sheets of BioMed Realty Trust, Inc. and
subsidiaries as of December 31, 2005 and 2004, the related
consolidated statements of income, stockholders equity and
comprehensive income of BioMed Realty Trust, Inc. and
subsidiaries for the year ended December 31, 2005 and the
period from August 11, 2004 (commencement of operations)
through December 31, 2004, the related statements of income
and owners equity of Inhale 201 Industrial Road, L.P. for
the period from January 1, 2004 through August 17,
2004 and the year ended December 31, 2003, the related
consolidated statement of cash flows of BioMed Realty Trust,
Inc. and subsidiaries for the year ended December 31, 2005,
the related consolidated and combined statement of cash flows of
BioMed Realty Trust, Inc. and subsidiaries and Inhale 201
Industrial Road, L.P. for the year ended December 31, 2004,
the related statements of cash flows of Inhale 201 Industrial
Road, L.P. for the year ended December 31, 2003, the
related financial statement schedule III, managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2005 and the
effectiveness of internal control over financial reporting as of
December 31, 2005, of BioMed Realty Trust, Inc. and
subsidiaries, all incorporated in this prospectus by reference,
have been so incorporated in reliance upon the reports of KPMG
LLP, independent registered public accountants, and upon the
authority of said firm as experts in accounting and auditing.
The combined statements of revenues and certain expenses of the
Lyme Portfolio and Uniqema Properties, and the statements of
revenues and certain expenses of Bridgeview II, Nancy
Ridge, Graphics Drive and Phoenixville for the year ended
December 31, 2004, all incorporated in this prospectus by
reference, have been so incorporated in reliance upon the
reports of KPMG LLP, an independent auditor, and upon the
authority of said firm as an expert in accounting and auditing.
KPMG LLPs reports refer to the fact that the statements of
revenues and expenses were prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange
Commission and are not intended to be a complete presentation of
revenues and expenses.
46
16,000,000 Shares
BioMed Realty Trust,
Inc.
Common Stock
PROSPECTUS SUPPLEMENT
RAYMOND JAMES
KEYBANC CAPITAL
MARKETS
MORGAN STANLEY
UBS INVESTMENT BANK
WACHOVIA SECURITIES
CREDIT SUISSE
DEUTSCHE BANK
SECURITIES
ROBERT W. BAIRD &
CO.
OPPENHEIMER &
CO.
STIFEL NICOLAUS
FBR CAPITAL MARKETS &
CO.
May 13, 2009