e424b5
Filed
Pursuant to Rule 424(b)(5)
Registration Statement
No. 333-161751
CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Aggregate Offering
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Amount of
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Title of Each Class of Securities to be Registered
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Price
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Registration Fee
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Common Stock, $0.01 par value per share
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$
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120,000,000
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$
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6,696
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(1)
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(1)
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Calculated in accordance with Rule 457(o), based on the
proposed maximum aggregate offering price, and Rule 457(r)
under the Securities Act of 1933, as amended.
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PROSPECTUS SUPPLEMENT
(To Prospectus dated September 4, 2009)
$120,000,000
BioMed Realty Trust,
Inc.
Common Stock
We have entered into separate equity distribution agreements
with each of Raymond James & Associates, Inc.,
UBS Securities LLC and Wells Fargo Securities, LLC, which
we refer to individually as a sales agent and together as the
sales agents, relating to the shares of our common stock offered
by this prospectus supplement and the accompanying prospectus.
In accordance with the terms of the equity distribution
agreements, we may offer and sell shares of our common stock
having an aggregate offering price of up to $120,000,000 from
time to time through the sales agents.
Our common stock is traded 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 September 3,
2009 was $12.31 per share.
Sales of the common stock, if any, under this prospectus
supplement and the accompanying prospectus, will be made in
negotiated transactions or transactions that are deemed to be
at the market offerings as defined in Rule 415
under the Securities Act of 1933, as amended, including sales
made directly on the New York Stock Exchange or sales made to or
through a market maker other than on an exchange. The sales
agents are not required to sell any specific number or dollar
amount of our common stock, but each sales agent will make all
sales on a best efforts basis using its commercially reasonable
efforts consistent with its normal trading and sales practices,
on mutually agreed terms between each applicable sales agent and
us.
Each sales agent will receive from us a commission equal to 2%
of the gross sales price of all shares sold through it as sales
agent under the applicable equity distribution agreement. In
connection with the sale of the common stock on our behalf, the
sales agents each may be deemed to be an underwriter
within the meaning of the Securities Act of 1933, as amended,
and the compensation of the sales agents may be deemed to be
underwriting commissions and discounts.
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 22 of the
accompanying prospectus.
You should consider the risks that we have described in
Risk Factors beginning on
page S-3
of this prospectus supplement and page 1 of the
accompanying prospectus, as well as those described in our most
recent Annual Report on
Form 10-K
and subsequent Quarterly Reports on
Form 10-Q,
before buying shares of our common stock.
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.
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Raymond
James |
UBS Investment Bank |
Wells
Fargo Securities |
The date of this prospectus supplement is September 4,
2009.
TABLE OF
CONTENTS
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Page
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PROSPECTUS SUPPLEMENT
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S-1
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S-3
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S-6
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S-7
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S-7
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PROSPECTUS
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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 sales agents 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.
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 inability 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 subsequent Quarterly Reports on
Form 10-Q,
as updated by our future filings.
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 most recent Annual Report on
Form 10-K
and subsequent Quarterly Reports on
Form 10-Q,
as updated by our future 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.
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. As of June 30, 2009, our portfolio
consisted of 69 properties, representing 114 buildings with an
aggregate of approximately 10.5 million rentable square
feet.
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, 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
The
Offering
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Common stock offered by us |
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Shares having an aggregate gross sales price of up to
$120,000,000. |
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Manner of offering |
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At the market offering that may be made from time to
time through Raymond James & Associates, Inc., UBS
Securities LLC and Wells Fargo Securities, LLC, as sales agents
using commercially reasonable efforts. See Plan of
Distribution. |
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Use of proceeds |
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If we sell shares of our common stock under this prospectus
supplement with an aggregate gross offering price of
$120,000,000, we anticipate that our net proceeds, after
deducting sales agent commissions and estimated expenses payable
by us, will be approximately $117.3 million. We intend to
contribute the net proceeds from any sale of shares of our
common stock pursuant to this prospectus supplement to our
operating partnership. Our operating partnership intends to
subsequently use the net 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. See Use of Proceeds. |
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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, in our most recent Annual Report on
Form 10-K
and subsequent Quarterly Reports on
Form 10-Q,
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. |
S-2
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,
our subsequent Quarterly Reports on
Form 10-Q
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. We may sell shares of our common stock under this
prospectus supplement with an aggregate gross offering price of
up to $120,000,000. As of August 31, 2009, we had
98,132,525 shares of our common stock outstanding, as well
as our operating partnership units and long-term incentive plan,
or LTIP, units which may be exchanged for 2,607,164 and
549,540 shares of our common stock, respectively. In
addition, as of August 31, 2009, we had reserved an
additional 3,294,439 shares of common stock for future
issuance under our incentive award plan and
2,897,665 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 4, 2009, 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 sale of shares of our common stock from time to time under
this prospectus supplement;
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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.
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.
S-3
Our
business operations may not generate the cash needed to make
distributions on our capital stock or to service our
indebtedness.
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.
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.
The
sales agents may have conflicts of interest that arise out of
contractual relationships they or their affiliates have with
us.
If we sell shares of our common stock under this prospectus
supplement, we intend to use the net proceeds to repay a portion
of the outstanding indebtedness under our $600.0 million
unsecured line of credit. This line of credit includes lenders
who are affiliates of certain of our sales agents, including
Raymond James & Associates, Inc. and Wells Fargo
Securities, LLC. As a result, a portion of the net proceeds of
any sale of shares of our common stock under this prospectus
supplement will be received by these affiliates. Because they
will receive a portion of the net proceeds of any of these
sales, Raymond James & Associates, Inc., Wells Fargo
Securities, LLC and their respective affiliates have an interest
in these sales beyond the customary commissions received by our
sales agents. This 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 connection with any sale of shares of
our common stock under this prospectus supplement.
S-4
USE OF
PROCEEDS
If we sell shares of our common stock under this prospectus
supplement with an aggregate gross offering price of
$120,000,000, we anticipate that our net proceeds, after
deducting sales agent commissions and estimated expenses payable
by us, will be approximately $117.3 million. We intend to
contribute the net proceeds from any sale of shares of our
common stock pursuant to this prospectus supplement to our
operating partnership. Our operating partnership intends to
subsequently use the net 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 certain of our
sales agents, including Raymond James & Associates,
Inc. and Wells Fargo Securities, LLC. If we sell shares of our
common stock under this prospectus supplement through or to
Raymond James & Associates, Inc. or Wells Fargo
Securities, LLC, a portion of the net proceeds 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.
At August 31, 2009, we had $341.1 million in
outstanding borrowings on our unsecured line of credit, with a
weighted average interest rate of 1.4% on the unhedged portion
of the outstanding debt of approximately $191.1 million.
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 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, or
(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. Subject to the administrative
agents reasonable discretion, we may increase the amount
of the unsecured line of credit to $1.0 billion upon
satisfying certain conditions. In addition, we may, at our sole
discretion, extend the maturity date of the unsecured line of
credit from August 1, 2011 to August 1, 2012 after
satisfying certain conditions and paying an extension fee based
on the then current facility commitment.
S-5
PLAN OF
DISTRIBUTION
Upon written instructions from us, Raymond James &
Associates, Inc., UBS Securities LLC or Wells Fargo Securities,
LLC, as applicable, will use its commercially reasonable efforts
consistent with its sales and trading practices to solicit
offers to purchase shares of our common stock over time and from
time to time, under the terms and subject to the conditions set
forth in the equity distribution agreements. We will instruct
each of Raymond James & Associates, Inc., UBS
Securities LLC or Wells Fargo Securities, LLC as to the amount
of common stock to be sold by it. We may instruct Raymond
James & Associates, Inc., UBS Securities LLC and Wells
Fargo Securities, LLC not to sell common stock if the sales
cannot be effected at or above the price designated by us in any
instruction. We or any of Raymond James & Associates,
Inc., UBS Securities LLC or Wells Fargo Securities, LLC may
suspend the offering of common stock upon proper notice and
subject to other conditions.
Raymond James & Associates, Inc., UBS Securities LLC
and Wells Fargo Securities, LLC will provide written
confirmation to us no later than the opening of the trading day
on the New York Stock Exchange following the trading day in
which shares of our common stock are sold under the applicable
equity distribution agreement. Each confirmation will include
the number of shares sold on the preceding day, the net proceeds
to us and the compensation payable by us to Raymond
James & Associates, Inc., UBS Securities LLC or Wells
Fargo Securities, LLC in connection with the sales.
We will pay Raymond James & Associates, Inc., UBS
Securities LLC and Wells Fargo Securities, LLC commissions for
their services in acting as agent
and/or
principal in the sale of our common stock. Raymond
James & Associates, Inc., UBS Securities LLC and Wells
Fargo Securities, LLC will be entitled to compensation equal to
2% of the gross sales price of all shares of our common stock
sold through it under the applicable equity distribution
agreement. We have agreed to reimburse Raymond James &
Associates, Inc., UBS Securities LLC and Wells Fargo Securities,
LLC for certain of their legal expenses under the circumstances
described in the equity distribution agreements. We estimate
that the total expenses for the offering, excluding compensation
payable to Raymond James & Associates, Inc., UBS
Securities LLC and Wells Fargo Securities, LLC under the terms
of the equity distribution agreements, will be approximately
$300,000.
Settlement for sales of common stock will occur on the third
business day following the date on which any sales are made, or
on some other date that is agreed upon by us and Raymond
James & Associates, Inc., UBS Securities LLC or Wells
Fargo Securities, LLC, as applicable, in connection with a
particular transaction, in return for payment of the net
proceeds to us. There is no arrangement for funds to be received
in an escrow, trust or similar arrangement.
We will report at least quarterly the number of shares of common
stock sold through Raymond James & Associates, Inc.,
UBS Securities LLC and Wells Fargo Securities, LLC, as agent,
under the equity distribution agreements.
Raymond James & Associates, Inc., UBS Securities LLC
and Wells Fargo Securities, LLC and their affiliates have
provided, and may in the future provide, various investment
banking, commercial banking, fiduciary and advisory services for
us and certain of our officers and directors from time to time
for which they have received, and may in the future receive,
customary fees and expenses. Raymond James &
Associates, Inc., UBS Securities LLC and Wells Fargo Securities,
LLC and their affiliates may, from time to time, engage in other
transactions with and perform services for us in the ordinary
course of their business. 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. and Wells Fargo
Securities, LLC 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.
In connection with the sale of the common stock on our behalf,
Raymond James & Associates, Inc., UBS Securities LLC
and Wells Fargo Securities, LLC may, and will with respect to
sales effected in an at the market offering, be
deemed to be an underwriter within the meaning of
the Securities Act and the compensation of Raymond
James & Associates, Inc., UBS Securities LLC and Wells
Fargo Securities, LLC may be deemed to be underwriting
commissions or discounts. We have agreed to indemnify Raymond
James & Associates, Inc., UBS Securities LLC and Wells
Fargo Securities, LLC against specified liabilities, including
liabilities under the
S-6
Securities Act, or to contribute to payments that Raymond
James & Associates, Inc., UBS Securities LLC and Wells
Fargo Securities, LLC may be required to make because of those
liabilities.
The offering of shares of our common stock pursuant to the
equity distribution agreements will terminate upon the earlier
of (1) the sale of all shares of our common stock subject
to the equity distribution agreements or (2) the
termination of the equity distribution agreements. The equity
distribution agreements may be terminated by Raymond
James & Associates, Inc., UBS Securities LLC or Wells
Fargo Securities, LLC, as applicable, or us at any time upon
10 days notice, and by Raymond James &
Associates, Inc., UBS Securities LLC or Wells Fargo Securities,
LLC, as applicable, at any time in certain circumstances,
including our failure to maintain the listing of our common
stock on the New York Stock Exchange or the occurrence of a
material adverse change in our company.
LEGAL
MATTERS
Certain legal matters will be passed upon for us by
Latham & Watkins LLP, San Diego, California, and
for the sales agents by DLA Piper LLP (US), Raleigh, North
Carolina. Certain matters of Maryland law, including the
validity of the common stock offered by this prospectus
supplement, will be passed upon for us by Venable LLP,
Baltimore, Maryland.
EXPERTS
The consolidated financial statements, the related financial
statement schedule III, as of December 31, 2008 and
2007, and for each of the years in the three-year period ended
December 31, 2008, and managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2008 have been incorporated by reference
herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent registered public accounting
firm incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
The audit report covering the December 31, 2008
consolidated financial statements and financial statement
schedule makes reference to the Company retrospectively applying
certain adjustments upon the adoption of new accounting
standards related to non-controlling interests, exchangeable
senior notes, and earnings per share.
S-7
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:
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debt securities, which may consist of debentures, notes or other
types of debt,
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shares of common stock,
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shares of preferred stock,
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shares of preferred stock represented by depositary shares,
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warrants to purchase debt securities, preferred stock, common
stock or depositary shares,
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rights to purchase shares of common stock, and
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units consisting of two or more of the foregoing.
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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:
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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 fund payments, terms for conversion
into shares of our common stock or preferred stock, covenants
and any initial public offering price,
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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,
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in the case of depositary shares, the fractional share of
preferred stock represented by each such depositary share,
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in the case of warrants or rights, the duration, offering price,
exercise price and detachability, and
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in the case of units, the constituent securities comprising the
units, the offering price and detachability.
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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 United States 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 from time to time, through agents designated 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 3, 2009, the last reported sale price of our
common stock was $12.31 per share.
You should consider the risks that we have described in
Risk Factors on page 1 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 4, 2009
TABLE OF
CONTENTS
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Page
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1
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1
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32
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53
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54
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54
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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.
BIOMED
REALTY TRUST
We are a real estate investment trust, or 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.
At June 30, 2009, our portfolio consisted of 69 properties,
representing 114 buildings with an aggregate of approximately
10.5 million rentable square feet.
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, 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
or any other report or document we file with or furnish to the
Securities and Exchange Commission.
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 or
dealers. The applicable prospectus supplement will describe the
terms of the plan of distribution and set forth the names of any
agents, underwriters or dealers involved in the sale of the
securities. See Plan of Distribution beginning on
page 54 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.,
1
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
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.
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, 2008,
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our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2009,
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our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2009,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
January 2, 2009,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
February 24, 2009,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
May 12, 2009,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
May 18, 2009,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
June 1, 2009,
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our Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
September 4, 2009,
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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,
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the description of our Series A Cumulative Redeemable
Preferred Stock included in our registration statement on
Form 8-A
filed with the Securities and Exchange Commission on
January 17, 2007, 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.
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 request should be addressed to BioMed Realty Trust,
Inc., 17190 Bernardo Center Drive, San Diego, California
92128, Attention: Secretary or by telephone at
(858) 485-9840.
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, including the inability 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 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.
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.
RATIOS OF
EARNINGS TO FIXED CHARGES
The following table sets forth ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred
stock dividends for the periods shown:
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BioMed Realty Trust, Inc.
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Period
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Period
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August 11,
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January 1,
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Six Months
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Year Ended
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2004 Through
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2004 Through
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Ended
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December 31,
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December 31,
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August 17,
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June 30, 2009
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2008
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2007
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2006
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2005
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2004
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2004
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Ratio of Earnings to Fixed Charges
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2.3
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1.3
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1.2
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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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Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
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1.8
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1.1
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1.0
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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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The ratios of earnings to fixed charges were computed by
dividing earnings by fixed charges. Our ratios of earnings to
combined fixed charges and preferred stock dividends are
computed by dividing earnings by the sum of fixed charges and
preferred dividends. For this purpose, earnings consist of
income from continuing operations before minority interests and
income/(loss) from unconsolidated joint ventures, plus
amortization of capitalized interest, distributions from
unconsolidated joint ventures and fixed charges, less
capitalized interest. Fixed charges consist of interest costs,
whether expensed or capitalized. Preferred stock
dividends consist of the amount of pre-tax earnings
required to pay dividends on our Series A Cumulative
Redeemable Preferred Stock, or Series A preferred stock.
4
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 the 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
6
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
7
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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8
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.
9
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
10
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
150,000,000 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, 2009, 98,132,525 shares of
our common stock were issued and outstanding. Under Maryland
law, our stockholders generally are not liable for our 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 board of 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 of our
securities. Subject to the provisions of our charter regarding
the restrictions on transfer of stock, shares of our common
stock will have equal dividend, liquidation and other rights.
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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 all 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
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other
distributions, qualifications and terms and 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 currently
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
stock. See Restrictions on Ownership and Transfer.
Transfer
Agent and Registrar
The transfer agent and registrar for our common stock is Mellon
Investor Services LLC.
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 information contained in the prospectus
supplement differs from this summary description, you should
rely on the information in the prospectus supplement.
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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, 2009, 9,200,000 shares of
Series A preferred stock were issued and outstanding.
Dividends are cumulative on the Series A preferred stock
from the date of original issuance in the amount of $1.84375 per
share each year, which is equivalent to 7.375% of the $25.00
liquidation preference per share. Dividends on the Series A
preferred stock are payable quarterly in arrears on or about the
15th day of January, April, July and October of each year.
Following a change in control, if the Series A preferred
stock is not listed on the NYSE, the American Stock Exchange or
NASDAQ, holders will be entitled to receive (when and as
authorized by the board of directors and declared by us),
cumulative cash dividends from, but excluding, the first date on
which both the change of control and the delisting occurred at
an increased rate of 8.375% per annum of the $25.00 liquidation
preference per share (equivalent to an annual rate of $2.09375
per share) for as long as the Series A preferred stock is
not listed. The Series A preferred stock does not have a
stated maturity date and is not subject to any sinking fund or
mandatory redemption provisions. Upon liquidation, dissolution
or winding up, the Series A preferred stock will rank
senior to the common stock with respect to the payment of
distributions and other amounts. We are not allowed to redeem
the Series A preferred stock before January 18, 2012,
except in limited circumstances to preserve our status as a REIT
or at any time following a change of control that the
Series A preferred stock is not listed on the NYSE, the
American Stock Exchange or NASDAQ. On or after January 18,
2012, we may, at our option, redeem the Series A preferred
stock, in whole or in part, at any time or from time to time,
for cash at a redemption price of $25.00 per share, plus all
accrued and unpaid dividends on such Series A preferred
stock up to, but excluding the redemption date. Holders of the
Series A preferred stock generally have no voting rights
except for limited voting rights if we fail to pay dividends for
six or more quarterly periods (whether or not consecutive) and
in certain other circumstances. The Series A preferred
stock is not convertible into or exchangeable for any of our
other property or securities.
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 preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other
distributions, qualifications and terms and conditions of
redemption for each such class or series.
The issuance of preferred stock could adversely affect the
voting power, dividend rights and other rights of holders of our
common stock. Although the board of directors does not have the
intention at this present time, it could establish a series of
preferred stock, that could, depending on the terms of the
series, delay, defer or prevent a transaction or a change in
control of us that might involve a premium price for our common
stock or otherwise be in the best interest of the holders
thereof. Management believes that the availability of preferred
stock will provide the company with increased flexibility in
structuring possible future financing and acquisitions and in
meeting other needs that might arise.
Under Maryland law, our stockholders generally are not liable
for our debts or obligations.
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 the preferred stock,
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the number of shares of the preferred stock offered, the
liquidation preference per share and the offering price of the
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 the preferred stock,
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whether the dividends on the preferred stock are cumulative or
not and, if cumulative, the date from which dividends on the
preferred stock shall accumulate,
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the provision for a sinking fund, if any, for the preferred
stock,
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the provision for redemption, if applicable, of the preferred
stock,
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any listing of the 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 the
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 the 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 the 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 our affairs,
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any voting rights, if any, of the preferred stock, and
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any other specific terms, preferences, rights, limitations or
restrictions of the 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.
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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 stock. We expect to adopt similar restrictions with respect
to any additional 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.
Transfer
Agent
The transfer agent and registrar for our preferred stock is
Mellon Investor Services LLC.
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 representing depositary shares, or depositary
receipts. Depositary receipts will be delivered to those persons
purchasing depositary shares in the offering. The 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 transferred
to a trust for the benefit of one or more charitable
beneficiaries. See Restrictions on Ownership and
Transfer.
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.
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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.
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 represented 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 represent 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
representing 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 representing depositary shares therefor.
Amendment
and Termination of Deposit Agreement
The form of depositary receipt representing 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 representing 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 represented 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
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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 representing 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 represented 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.
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.
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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 material United States federal income tax
considerations 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.
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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 material United States federal income tax
considerations 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.
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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 that are represented by such warrant certificate
are exercised, 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.
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 United States federal income tax
considerations 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
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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 United States federal income tax
considerations 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 and Incorporation of Certain Documents
by Reference.
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 amount 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,
(1) 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 or (2) Series A preferred stock
in excess of 9.8% (in value or in number of shares, whichever is
more restrictive) of our outstanding Series A preferred
stock.
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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 attempts 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 written 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 or constructive ownership of shares
of our capital stock to result in our being closely
held under Section 856(a)(6) of the Code or 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 Internal Revenue Service, 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(a)(6) 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 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 (net of any
commissions and other expenses of the sale) 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
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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.
If any shares of our stock are represented by certificates, such
certificates 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 or her 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 agreement itself, a
copy of which is filed as an exhibit to the registration
statement of which this prospectus is a part. See Where
You Can Find More Information and Incorporation of
Certain Documents by Reference. 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
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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 96.5% 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, 2009, we owned a 96.9% partnership
interest and other limited partners, including some of our
directors, executive officers and their affiliates, owned the
remaining 3.1% partnership interest (including long-term
incentive plan units).
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 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.
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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,
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modify the manner in which capital accounts are computed, or
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amend or modify any provision of the partnership agreement in
connection with a termination transaction.
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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.
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
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the event of stock splits, stock dividends, issuance of stock
rights, specified extraordinary distributions and similar
events. 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 Treasury regulations. See
Material United States 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 our outstanding 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 entity 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
entity based on the relative fair market value of the net assets
of our operating partnership and the other net assets of the
surviving entity immediately prior to the consummation of the
transaction,
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the rights, preferences and privileges of such unit holders in
the surviving entity 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 entity, and
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the limited partners may redeem their interests in the surviving
entity 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
entity 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 fullest extent permitted by applicable law, the
partnership agreement requires our operating partnership to
indemnify us, as general partner, and our officers, directors
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.
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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 and Incorporation of
Certain Documents by Reference.
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 on
the board of directors may be filled, at any regular meeting or
at any special meeting called for that purpose, by a majority of
the remaining directors, even if the remaining directors do not
constitute a quorum.
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.
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 or issuance 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.
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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.
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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
exclusively by the remaining directors, (2) the number of
directors may be fixed only by the vote of the directors,
(3) a two-thirds vote is required to remove any director
from the board and (4) unless called by our chairman of the
board, chief executive officer, president or the board of
directors, the written request of stockholders entitled to cast
not less than a majority of all the votes entitled to be cast at
such meeting is required to call a special meeting.
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 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 120th day nor earlier
than the 150th day prior to the first anniversary of the
date of the proxy statement 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 actually or
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% in value or number of shares,
whichever is more restrictive, of the outstanding shares of
(i) our common stock or (ii) our Series A
preferred stock. We refer to this restriction as the
ownership limit. For a more detailed description of
this restriction and the constructive ownership rules, see
Restrictions on Ownership and Transfer.
MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material United States
federal income tax considerations regarding our election to be
taxed as a real estate investment trust, or REIT, and the
ownership and disposition of certain of the securities offered
by this prospectus which are anticipated to be material to
purchasers of such securities. The United States federal income
tax considerations relevant to your ownership of the securities
offered by this prospectus may be supplemented in the applicable
prospectus supplement or other offering materials that relates
to those securities. Your tax treatment will vary depending upon
the terms of the specific securities that you acquire, as well
as your particular situation. For purposes of this section under
the heading Material United States Federal Income Tax
Considerations, references to BioMed,
we, our, and us mean only
BioMed Realty Trust Inc., and not its subsidiaries, except
as otherwise indicated. This summary is based on current law, is
for general information only and is not tax advice.
This summary assumes that the securities offered by this
prospectus are held as capital assets (generally,
property held for investment within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as
amended, or the Code). Your tax treatment will vary depending on
your particular situation, and this discussion does not address
all the tax consequences that may be relevant to you in light of
your particular circumstances. This discussion does not address
the tax consequences relevant to persons who receive special
treatment under the United States federal income tax law,
except to the extent discussed specifically herein. Holders
receiving special treatment include, without limitation:
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financial institutions, banks and thrifts;
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insurance companies;
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tax-exempt organizations;
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S corporations;
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traders in securities that elect to mark to market;
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partnerships, pass-through entities and persons holding our
securities through a partnership or other pass-through entity;
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holders subject to the alternative minimum tax;
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regulated investment companies and REITs;
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foreign corporations or partnerships, and persons who are not
residents or citizens of the United States;
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broker-dealers or dealers in securities or currencies;
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United States expatriates;
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persons holding our securities as a hedge against currency risks
or as a position in a straddle;
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except to the extent discussed below,
non-U.S. holders
(as defined below); and
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U.S. holders (as defined below) whose functional currency
is not the United States dollar.
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When we use the term U.S. holder, we mean a
beneficial holder of our securities who, for United States
federal income tax purposes:
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is a citizen or resident of the United States;
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is a corporation, partnership, limited liability company or
other entity treated as a corporation or partnership for United
States federal income tax purposes created or organized in or
under the laws of the United States or of any state thereof or
in the District of Columbia unless, in the case of a partnership
or limited liability company, Treasury Regulations provide
otherwise;
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is an estate the income of which is subject to United States
federal income taxation regardless of its source; or
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is a trust whose administration is subject to the primary
supervision of a United States court and which has one or more
United States persons who have the authority to control all
substantial decisions of the trust, or a trust that has a valid
election in place to be treated as a United States person.
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If you hold our securities and are not a U.S. holder, you
are a
non-U.S. holder.
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
Internal Revenue Service, or 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 which 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 described
in this prospectus. 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 or concerning the treatment of the
securities offered by this prospectus, and the statements in
this summary 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. State, local and foreign
income tax laws may differ substantially from any corresponding
federal income tax laws. This discussion does not address any
aspect of the laws of any state, local or foreign jurisdiction,
or any federal tax other than the income tax.
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You are urged to consult your tax advisors regarding the 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, our 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 the holders of
certain of its securities. This summary is qualified in its
entirety 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 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 have satisfied or 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 summary 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
REIT taxable 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 is a corporation
that is generally required to pay tax at the corporate level.
Double taxation means taxation that occurs 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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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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We may be required to pay the alternative minimum
tax on our items of tax preference under some
circumstances.
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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 and for
which an election is in effect.
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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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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 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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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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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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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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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 certain elections specified in
applicable Treasury regulations are either made or forgone by us
or by the entity from which the assets are acquired, in each
case, depending on the date such acquisition occurred.
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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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Certain of our subsidiaries are C corporations, the earnings of
which will be subject to United States federal corporate income
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 special Code provisions applicable to REITs,
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(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), the term individual generally
includes a supplemental unemployment compensation benefit plan,
a private foundation or a portion of a trust permanently set
aside or used exclusively for charitable purposes, but does not
include a qualified pension plan or profit sharing trust.
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 restrictions, however, may not ensure that we will, in all
cases, be able to satisfy the share ownership requirements
described in conditions (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 and Limited Liability
Companies. In the case of a REIT which is a
partner in a partnership, Treasury regulations provide that the
REIT will be deemed to own its proportionate share of the assets
of the partnership 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 partnership. The
assets and gross income of the partnership retain the same
character in the hands of the REIT, including for purposes of
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 in
which it owns an interest, are treated as our assets and items
of income for purposes of applying the requirements described in
this summary, 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. The treatment described above
also applies with respect to the ownership of interests in
limited liability companies that are treated as partnerships for
tax purposes.
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 applicable entity 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.
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Ownership of Interests in Qualified REIT
Subsidiaries. We may from time to time own
certain 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 the corporations outstanding stock and we do
not elect with the corporation to treat it as a taxable
REIT subsidiary, as described below. A qualified REIT
subsidiary is not treated as a separate corporation for federal
income tax purposes, and all assets, liabilities and items of
income, gain, loss, deduction and credit of a qualified REIT
subsidiary are treated as assets, liabilities and items of
income, gain, loss, 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 summary, 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, gain, loss, deduction and credit of such corporation
are treated as our assets, liabilities and items of income,
gain, loss, 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 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 its 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, certain hedging
transactions entered into after July 30, 2008, and certain
foreign currency gains recognized after July 30, 2008, from
(a) investments relating to real property or mortgages on
real property, including rents from real property
and, in certain circumstances, interest, or (b) some 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, certain designated hedges of
indebtedness, and certain foreign currency gains recognized
after July 30, 2008, from the real property investments
described above, 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
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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 non-customary services will,
however, be nonqualifying 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. The term
hedging transaction generally means any transaction
we enter into in the normal course of our business primarily to
manage risk of (1) interest rate changes or fluctuations
with respect to borrowings made or to be made by us to acquire
or carry real estate assets, or (2) for hedging
transactions entered into after July 30, 2008, currency
fluctuations with respect to an item of qualifying income under
the 75% or 95% gross income test. Our hedging activities may
include entering into interest rate swaps, caps, and floors,
options to purchase these items, and futures and forward
contracts. Income we derive from a hedging transaction,
including gain from the sale or disposition thereof, that is
clearly identified as a hedging transaction as specified in the
Code will not constitute gross income and thus will be exempt
from the 95% gross income test to the extent such a hedging
transaction is entered into on or after January 1, 2005,
and from the 75% gross income test to the extent such hedging
transaction is entered into after July 30, 2008. Income and
gain from a hedging transaction, including gain from the sale or
disposition of such a transaction will be treated as
nonqualifying income for purposes of the 75% gross income test
if entered into on or prior to July 30, 2008 and will be
treated as qualifying income for purposes of the 95% gross
income test if entered into prior to January 1, 2005. To
the extent that we do not properly identify such transactions as
hedges, we hedge
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other risks or we 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.
We believe that the aggregate amount of our nonqualifying
income, from all sources, in any taxable year will not exceed
the limit on nonqualifying income under the gross income tests.
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 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 certain 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
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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 of our assets. First, at least 75% of the
value of our total assets, including our allocable share of the
assets held by our operating partnership, either directly or
through its subsidiary partnerships and limited liability
companies, 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 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 25% (20% for taxable years beginning
before January 1, 2009) of the value of our total
assets may be represented by the securities of one or more
taxable REIT subsidiaries.
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, the 10% value limitation and the 75%
asset test. We believe that the value of our taxable REIT
subsidiary has not exceeded, and believe that in the future it
will not exceed, the limitations set forth above. 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 calendar quarter of our taxable year. 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 unless 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. 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. In addition, we
intend to take such actions within the 30 days after the
close of any calendar quarter as may be required to cure any
noncompliance.
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
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the applicable quarter or (b) $10,000,000, and (2) we
dispose of the nonqualifying assets or otherwise satisfy such
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. 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 and
(2) disclosing certain information to the IRS. In such
case, we will be required to pay 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.
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.
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 generally 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 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
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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 to pay cash dividends or to pay dividends in the form of
taxable stock dividends in order to meet the distribution
requirements, while preserving our cash. In addition, we may
decide to retain our cash, rather than distribute it, in order
to repay debt or for other reasons. Revenue Procedure
2009-15 sets
forth a safe harbor pursuant to which certain part-stock and
part-cash dividends distributed by publicly traded REITs for
calendar years 2008 and 2009 will satisfy the REIT distribution
requirements. Under the terms of this Revenue Procedure, up to
90% of our distributions could be paid in shares of our common
stock.
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, subject to the 4% excise tax described
below. 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 net income for the year and any undistributed
taxable income from prior periods. Any ordinary 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.
Failure
to Qualify
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 of the Code 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 and individuals may be eligible for
the preferential tax rates on the qualified dividend income.
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.
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Tax
Aspects of Our Operating Partnership, the Subsidiary
Partnerships and the Limited Liability Companies
General. All of our investments are held
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 treated as 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 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 would 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 our formation. The partnership
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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.
Federal
Income Tax Considerations for Holders of Our Capital
Stock
The following summary describes certain of the federal income
tax consequences to you of owning and disposing of our capital
stock. If you are considering purchasing our capital stock, you
should consult your tax advisors concerning the application of
United States federal income tax laws to your particular
situation as well as any consequences of the purchase, ownership
and disposition of our capital stock arising under other federal
laws and the laws of any state, local or foreign taxing
jurisdiction.
Taxable
U.S. Holders Generally
Distributions Generally. Distributions out of
our current or accumulated earnings and profits, other than
capital gain dividends and certain amounts subject to corporate
level taxation as discussed below, will constitute dividends
taxable to our taxable U.S. holders as ordinary income when
actually or constructively received. See Tax
Rates below. As long as we qualify as a REIT, these
distributions will not be eligible for the dividends-received
deduction in the case of U.S. holders that are corporations
or, except to the extent provided in Tax
Rates below, the preferential tax rates on qualified
dividend income applicable to non-corporate taxpayers. For
purposes of determining whether distributions to holders of our
capital stock are out of current or accumulated earnings and
profits, our earnings and profits will be allocated first to
distributions on our outstanding preferred stock, and then to
distributions on our outstanding common stock.
To the extent that we make distributions on our capital stock in
excess of our current and accumulated earnings and profits,
these distributions will be treated first as a tax-free return
of capital to a U.S. holder. This treatment will reduce the
U.S. holders adjusted tax basis in its shares
of our capital stock by the amount of the distribution, but not
below zero. Distributions in excess of our current and
accumulated earnings and profits and in excess of a
U.S. holders adjusted tax basis in its shares
will be taxable as capital gains. Such gain will be taxable as
long-term capital gain if the shares have been held for more
than one year. Dividends we declare in October, November, or
December of any year and which are payable to a stockholder of
record on a specified date in any of these months will be
treated as both paid by us and received by the stockholder on
December 31 of that year, provided we actually pay the dividend
on or before January 31 of the following year. U.S. holders
may not include in their income tax returns any of our net
operating losses or capital losses.
Certain stock dividends, including dividends partially paid in
our common stock and partially paid in cash that comply with
Revenue Procedure
2009-15,
will be taxable to recipient U.S. holders to the same
extent as if paid in cash. See Taxation of the
Company Annual Distribution Requirements above.
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Capital Gain Dividends. Dividends that we
properly designate as capital gain dividends will be taxable to
our taxable U.S. holders as a gain from the sale or
disposition of a capital asset, to the extent that such gain
does not exceed our actual net capital gain for the taxable
year. These dividends may be taxable to non-corporate
U.S. holders at a 15% or 25% rate. U.S. holders that
are corporations, however, may be required to treat up to 20% of
some capital gain dividends as ordinary income. If we properly
designate any portion of a dividend as a capital gain dividend
then, except as otherwise required by law, we presently intend
to allocate a portion of the total capital gain dividends paid
or made available to holders of all classes of our stock for the
year to the holders of our capital stock in proportion to the
amount that our total dividends, as determined for United States
federal income tax purposes, paid or made available to the
holders of such class of capital stock for the year bears to the
total dividends, as determined for United States federal income
tax purposes, paid or made available to holders of all classes
of our stock for the year.
Retention of Net Capital Gains. We may elect
to retain, rather than distribute as a capital gain dividend,
all or a portion of our net capital gains. If we make this
election, we would pay tax on our retained net capital gains. In
addition, to the extent we so elect, a U.S. holder
generally would:
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include its pro rata share of our undistributed net capital
gains in computing its long-term capital gains in its return for
its taxable year in which the last day of our taxable year
falls, subject to certain limitations as to the amount that is
includable;
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be deemed to have paid the capital gains tax imposed on us on
the designated amounts included in the U.S. holders
long-term capital gains;
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receive a credit or refund for the amount of tax deemed paid by
it;
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increase the adjusted basis of its stock by the difference
between the amount of includable gains and the tax deemed to
have been paid by it; and
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in the case of a U.S. holder that is a corporation,
appropriately adjust its earnings and profits for the retained
capital gains in accordance with Treasury regulations to be
promulgated by the IRS.
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Passive Activity Losses and Investment Interest
Limitations. Distributions we make and gain
arising from the sale or exchange by a U.S. holder of our
shares will not be treated as passive activity income. As a
result, U.S. holders generally will not be able to apply
any passive losses against this income or gain. A
U.S. holder may elect to treat capital gain dividends,
capital gains from the disposition of stock and qualified
dividend income as investment income for purposes of computing
the investment interest limitation, but in such case, the
stockholder will be taxed at ordinary income rates on such
amount. Other distributions made by us, to the extent they do
not constitute a return of capital, generally will be treated as
investment income for purposes of computing the investment
interest limitation.
Dispositions of Our Capital Stock. If a
U.S. holder sells or disposes of shares of our capital
stock, except as set forth below under Redemption or
Repurchase by Us, it will recognize gain or loss for
federal income tax purposes in an amount equal to the difference
between the amount of cash and the fair market value of any
property received on the sale or other disposition and the
holders adjusted basis in the shares for tax
purposes. This gain or loss, except as provided below, will be
long-term capital gain or loss if the holder has held the
capital stock for more than one year at the time of such sale or
disposition. If, however, a U.S. holder recognizes loss
upon the sale or other disposition of our capital stock that it
has held for six months or less, after applying certain holding
period rules, the loss recognized will be treated as a long-term
capital loss to the extent the U.S. holder received
distributions from us which were required to be treated as
long-term capital gains.
Redemption or Repurchase by Us. A redemption
or repurchase of shares of our stock will be treated under
Section 302 of the Code as a distribution taxable as a
dividend to the extent of our current and accumulated earnings
and profits, generally at ordinary income rates, unless the
redemption or repurchase satisfies one of the tests set forth in
Section 302(b) of the Code and is therefore treated as a
sale or exchange of the redeemed or repurchased shares. The
redemption or repurchase will be treated as a sale or exchange
if it:
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is substantially disproportionate with respect to
the U.S. holder;
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results in a complete termination of the
U.S. holders stock interest in us; or
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is not essentially equivalent to a dividend with
respect to the U.S. holder,
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all within the meaning of Section 302(b) of the Code.
45
In determining whether any of these tests have been met, shares
of capital stock, including common stock and other equity
interests in us, considered to be owned by the U.S. holder
by reason of certain constructive ownership rules set forth in
the Code, as well as shares of our capital stock actually owned
by the U.S. holder, must generally be taken into account.
Because the determination as to whether any of the alternative
tests of Section 302(b) of the Code will be satisfied with
respect to the U.S. holder depends upon the facts and
circumstances at the time that the determination must be made,
U.S. holders are advised to consult their tax advisors to
determine such tax treatment.
If a redemption or repurchase of shares of our stock is treated
as a distribution taxable as a dividend, the amount of the
distribution will be measured by the amount of cash and the fair
market value of any property received. See
Distributions Generally. A
U.S. holders adjusted basis in the redeemed or
repurchased shares of the stock for tax purposes will be
transferred to its remaining shares of our capital stock, if
any. If a U.S. holder owns no other shares of our capital
stock, such basis may, under certain circumstances, be
transferred to a related person or it may be lost entirely.
If a redemption or repurchase of shares of our stock is not
treated as a distribution taxable as a dividend, it will be
treated as a taxable sale or exchange in the manner described
above under Dispositions of Our Capital
Stock.
Backup
Withholding
We report to our U.S. holders and the IRS the amount of
dividends paid during each calendar year, and the amount of any
tax withheld. Under the backup withholding rules, a
U.S. holder may be subject to backup withholding with
respect to dividends paid unless the U.S. holder is a
corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or provides a taxpayer
identification number, certifies as to no loss of exemption from
backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A U.S. holder
that does not provide us with its correct taxpayer
identification number may also be subject to penalties imposed
by the IRS. Backup withholding is not an additional tax. Any
amount paid as backup withholding will be creditable against the
U.S. holders federal income tax liability, provided
the required information is timely filed with the IRS. In
addition, we may be required to withhold a portion of capital
gain distributions to any stockholders who fail to certify their
non-foreign status. See Taxation of
Non-U.S. Holders.
Tax
Rates
The maximum tax rate for non-corporate taxpayers for
(1) capital gains, including certain capital gain
dividends, has generally been reduced to 15% (although
depending on the characteristics of the assets which produced
these gains and on designations which we may make, certain
capital gain dividends may be taxed at a 25% rate) and
(2) qualified dividend income has generally
been reduced to 15%. In general, dividends payable by REITs are
not eligible for the reduced tax rate on corporate dividends,
except to the extent that certain holding requirements have been
met and the REITs dividends are attributable to
dividends received from taxable corporations (such as its
taxable REIT subsidiaries) or to income that was subject to tax
at the corporate/REIT level (for example, if it distributed
taxable income that it retained and paid tax on in the prior
taxable year). The currently applicable provisions of the United
States federal income tax laws relating to the 15% tax rate are
currently scheduled to sunset or revert to the
provisions of prior law effective for taxable years beginning
after December 31, 2010, at which time the capital gains
tax rate will be increased to 20% and the rate applicable to
dividends will be increased to the tax rate then applicable to
ordinary income. In addition, U.S. holders that are
corporations may be required to treat up to 20% of some capital
gain dividends as ordinary income.
Taxation
of Tax-Exempt Stockholders
Dividend income from us and gain arising upon a sale of our
capital stock generally should not be unrelated business taxable
income to a tax-exempt stockholder, except as described below.
This income or gain will be unrelated business taxable income,
however, if a tax-exempt stockholder holds its shares as
debt-financed property within the meaning of the
Code or if the shares are used in a trade or business of the
tax-exempt
46
stockholder. Generally, debt-financed property is
property, the acquisition or holding of which is financed
through a borrowing by the tax-exempt stockholder.
For tax-exempt stockholders which are social clubs, voluntary
employee benefit associations, supplemental unemployment benefit
trusts, or qualified group legal services plans exempt from
federal income taxation under Sections 501(c)(7), (c)(9),
(c)(17) or (c)(20) of the Code, respectively, income from an
investment in our shares will constitute unrelated business
taxable income unless the organization is able to properly claim
a deduction for amounts set aside or placed in reserve for
specific purposes so as to offset the income generated by its
investment in our shares. These prospective investors should
consult their tax advisors concerning these set
aside and reserve requirements.
Notwithstanding the above, a portion of the dividends paid by a
pension-held REIT may be treated as unrelated
business taxable income as to certain trusts that hold more than
10%, by value, of the interests in the REIT. A REIT will not be
a pension-held REIT if it is able to satisfy the
not closely held requirement without relying on the
look-through exception with respect to certain
trusts or if such REIT is not predominantly held by
qualified trusts. As a result of limitations on the
transfer and ownership of stock contained in our charter, we do
not expect to be classified as a pension-held REIT,
and as a result, the tax treatment described in this paragraph
should be inapplicable to our stockholders. However, because our
stock will be publicly traded, we cannot guarantee that this is
or will always be the case.
Taxation
of Non-U.S.
Holders
The following discussion addresses the rules governing United
States federal income taxation of the ownership and disposition
of our capital stock by
non-U.S. holders.
These rules are complex, and no attempt is made herein to
provide more than a brief summary of such rules. Accordingly,
the discussion does not address all aspects of
United States federal income taxation that may be relevant
to a
non-U.S. holder
in light of its particular circumstances and does not address
any state, local or foreign tax consequences. We urge
non-U.S. holders
to consult their tax advisors to determine the impact of
federal, state, local and foreign income tax laws on the
purchase, ownership, and disposition of shares of our capital
stock, including any reporting requirements.
Distributions Generally. Distributions
(including certain stock dividends) that are neither
attributable to gain from our sale or exchange of United States
real property interests nor designated by us as capital gain
dividends will be treated as dividends of ordinary income to the
extent that they are made out of our current or accumulated
earnings and profits. Such distributions ordinarily will be
subject to withholding of United States federal income tax at a
30% rate or such lower rate as may be specified by an applicable
income tax treaty unless the distributions are treated as
effectively connected with the conduct by the
non-U.S. holder
of a United States trade or business. Under certain treaties,
however, lower withholding rates generally applicable to
dividends do not apply to dividends from a REIT. Certain
certification and disclosure requirements must be satisfied to
be exempt from withholding under the effectively connected
income exemption. Dividends that are treated as effectively
connected with such a trade or business will be subject to tax
on a net basis at graduated rates, in the same manner as
dividends paid to U.S. holders are subject to tax, and are
generally not subject to withholding. Any such dividends
received by a
non-U.S. holder
that is a corporation may also be subject to an additional
branch profits tax at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
Distributions in excess of our current and accumulated earnings
and profits will not be taxable to a
non-U.S. holder
to the extent that such distributions do not exceed the
non-U.S. holders
adjusted basis in our capital stock, but rather will reduce the
adjusted basis of such capital stock. To the extent that these
distributions exceed a
non-U.S. holders
adjusted basis in our capital stock, they will give rise to gain
from the sale or exchange of such stock. The tax treatment of
this gain is described below.
For withholding purposes, we expect to treat all distributions
as made out of our current or accumulated earnings and profits.
As a result, except with respect to certain distributions
attributable to the sale of United States
47
real property interests as described below, we expect to
withhold United States income tax at the rate of 30% on any
distributions made to a
non-U.S. holder
unless:
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a lower treaty rate applies and the
non-U.S. holder
files with us an IRS
Form W-8BEN
evidencing eligibility for that reduced treaty rate; or
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the
non-U.S. holder
files an IRS
Form W-8ECI
with us claiming that the distribution is income effectively
connected with the
non-U.S. holders
trade or business.
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However, amounts withheld should generally be refundable if it
is subsequently determined that the distribution was, in fact,
in excess of our current and accumulated earnings and profits.
Capital Gain Dividends and Distributions Attributable to a
Sale or Exchange of United States Real Property
Interests. Distributions to a
non-U.S. holder
that we properly designate as capital gain dividends, other than
those arising from the disposition of a United States real
property interest, generally should not be subject to United
States federal income taxation, unless:
(1) the investment in our capital stock is treated as
effectively connected with the
non-U.S. holders
United States trade or business, in which case the
non-U.S. holder
will be subject to the same treatment as U.S. holders with
respect to such gain, except that a
non-U.S. holder
that is a foreign corporation may also be subject to the 30%
branch profits tax, as discussed above; or
(2) the
non-U.S. holder
is a nonresident alien individual who is present in the United
States for 183 days or more during the taxable year and
certain other conditions are met, in which case the nonresident
alien individual will be subject to a 30% tax on the
individuals capital gains.
Pursuant to the Foreign Investment in Real Property Tax Act, or
FIRPTA, distributions to a
non-U.S. holder
that are attributable to gain from our sale or exchange of
United States real property interests (whether or not designated
as capital gain dividends) will cause the
non-U.S. holder
to be treated as recognizing such gain as income effectively
connected with a United States trade or business.
Non-U.S. holders
would generally be taxed at the same rates applicable to
U.S. holders, subject to a special alternative minimum tax
in the case of nonresident alien individuals. We also will be
required to withhold and to remit to the IRS 35% (or 15% to the
extent provided in Treasury regulations) of any distribution to
non-U.S. holders
that is designated as a capital gain dividend, or, if greater,
35% (or 15% to the extent provided in Treasury regulations) of a
distribution to the
non-U.S. holders
that could have been designated as a capital gain dividend. The
amount withheld is creditable against the
non-U.S. holders
United States federal income tax liability. However, any
distribution with respect to any class of stock which is
regularly traded on an established securities market located in
the United States is not subject to FIRPTA, and therefore, not
subject to the 35% U.S. withholding tax described above, if
the
non-U.S. holder
did not own more than 5% of such class of stock at any time
during the one-year period ending on the date of the
distribution. Instead, such distributions generally will be
treated in the same manner as ordinary dividend distributions.
Retention of Net Capital Gains. Although the
law is not clear on the matter, it appears that amounts
designated by us as retained capital gains in respect of the
capital stock held by U.S. holders generally should be
treated with respect to
non-U.S. holders
in the same manner as actual distributions by us of capital gain
dividends. Under this approach, a
non-U.S. holder
would be able to offset as a credit against its United States
federal income tax liability resulting from its proportionate
share of the tax paid by us on such retained capital gains, and
to receive from the IRS a refund to the extent of the
non-U.S. stockholders
proportionate share of such tax paid by us exceeds its actual
United States federal income tax liability.
Sale of Our Capital Stock. Gain recognized by
a
non-U.S. holder
upon the sale or exchange of our capital stock generally will
not be subject to United States federal income taxation unless
such stock constitutes a United States real property
interest within the meaning of FIRPTA. Our capital stock
will not constitute a United States real property
interest so long as we are a domestically-controlled
qualified investment entity. A domestically-controlled
qualified investment entity includes a REIT if at all times
during a specified testing period, less than 50% in value of
such REITs stock is held directly or indirectly by
non-U.S. holders.
We believe, but cannot guarantee, that we have been a
domestically-controlled qualified investment entity, and because
our capital
48
stock is publicly traded, no assurance can be given that we will
continue to be a domestically-controlled qualified investment
entity.
Notwithstanding the foregoing, gain from the sale or exchange of
our capital stock not otherwise subject to FIRPTA will be
taxable to a
non-U.S. holder
if either (1) the investment in our capital stock is
treated as effectively connected with the
non-U.S. holders
United States trade or business or (2) the
non-U.S. holder
is a nonresident alien individual who is present in the United
States for 183 days or more during the taxable year and
certain other conditions are met. In addition, even if we
qualify as a domestically controlled qualified investment
entity, upon disposition of our capital stock (subject to the 5%
exception applicable to regularly traded stock
described above), a
non-U.S. holder
may be treated as having gain from the sale or exchange of
United States real property interest if the
non-U.S. holder
(1) disposes of our capital stock within a
30-day
period preceding the ex-dividend date of a distribution, any
portion of which, but for the disposition, would have been
treated as gain from the sale or exchange of a United States
real property interest and (2) acquires, or enters into a
contract or option to acquire, other shares of our capital stock
during the
61-day
period beginning with the first day of the
30-day
period described in clause (1).
Non-U.S. holders
should contact their tax advisors regarding the tax consequences
of any sale, exchange, or other taxable disposition of our
capital stock.
Even if we do not qualify as a domestically-controlled qualified
investment entity at the time a
non-U.S. holder
sells or exchanges our capital stock, gain arising from such a
sale or exchange would not be subject to United States taxation
under FIRPTA as a sale of a United States real property interest
if:
(1) our capital stock is regularly traded, as
defined by applicable Treasury regulations, on an established
securities market such as the NYSE; and
(2) such
non-U.S. holder
owned, actually and constructively, 5% or less of our capital
stock throughout the applicable testing period.
If gain on the sale or exchange of our capital stock were
subject to taxation under FIRPTA, the
non-U.S. holder
would be subject to regular United States federal income tax
with respect to such gain in the same manner as a taxable
U.S. holder (subject to any applicable alternative minimum
tax and a special alternative minimum tax in the case of
nonresident alien individuals). In addition, if the sale or
exchange of our capital stock were subject to taxation under
FIRPTA, and if shares of our capital stock were not
regularly traded on an established securities
market, the purchaser of such capital stock would be required to
withhold and remit to the IRS 10% of the purchase price. If
amounts withheld on a sale, redemption, repurchase, or exchange
of our capital stock exceed the
non-U.S. holders
substantive tax liability resulting from such disposition, such
excess may be refunded or credited against such
non-U.S. holders
federal income tax liability, provided that the required
information is provided to the IRS on a timely basis. Amounts
withheld on any such sale, exchange or other taxable disposition
of our capital stock may not satisfy a
non-U.S. holders
entire tax liability under FIRPTA, and such
non-U.S. holder
remains liable for the timely payment of any remaining tax
liability.
Backup Withholding Tax and Information
Reporting. Generally, we must report annually to
the IRS the amount of dividends paid to a
non-U.S. holder,
such holders name and address, and the amount of
tax withheld, if any. A similar report is sent to the
non-U.S. holder.
Pursuant to tax treaties or other agreements, the IRS may make
its reports available to tax authorities in the
non-U.S. holders
country of residence.
Payments of dividends or of proceeds from the disposition of
stock made to a
non-U.S. holder
may be subject to information reporting and backup withholding
unless such holder establishes an exemption, for example, by
properly certifying its
non-United
States status on an IRS
Form W-8BEN
or another appropriate version of IRS
Form W-8.
Notwithstanding the foregoing, backup withholding and
information reporting may apply if either we or our paying agent
has actual knowledge, or reason to know, that a
non-U.S. holder
is a United States person.
Backup withholding is not an additional tax. Rather, the United
States income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund or
credit may be obtained, provided that the required information
is timely furnished to the IRS.
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Taxation
of Holders of Our Debt Securities
The following summary describes the principal United States
federal income tax consequences to you purchasing, owning and
disposing of our debt securities. This discussion assumes the
debt securities will be issued without original issue discount,
or OID. OID with respect to a debt security is the excess, if
any, of the debt securitys stated redemption price
at maturity over its issue price. The
stated redemption price at maturity is the sum of
all payments provided by the debt security, whether designated
as interest or as principal, other than payments of
qualified stated interest. Interest on debt security
generally will constitute qualified stated interest if the
interest is unconditionally payable, or will be constructively
received under Section 451 of the Code, in cash or in
property, other than debt instruments issued by us, at least
annually at a single fixed rate. The issue price of
a debt security is the first price at which a substantial amount
of the debt securities in the issuance that includes such debt
security is sold for money, excluding sales to bond houses,
brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers. The
amount of OID with respect to a debt security will be treated as
zero if the OID is less than an amount equal to 0.0025
multiplied by the product of the stated redemption price at
maturity and the number of complete years to maturity, or, in
the case of a debt security that provides for payment of any
amount other than qualified stated interest prior to maturity,
the weighted average maturity of the debt security. If one or
more series of debt securities are issued with OID, disclosure
concerning the tax considerations arising therefrom will be
included with the applicable prospectus supplement. If you are
considering purchasing our debt securities, you should consult
your tax advisors concerning the application of United States
federal income tax laws to your particular situation as well as
any consequences of the purchase, ownership and disposition of
our debt securities arising under the laws of any state, local
or foreign taxing jurisdiction.
Taxable
U.S. Holders of Our Debt Securities
Stated Interest. U.S. holders generally
must include interest on the debt securities in their federal
taxable income as ordinary income:
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when it accrues, if the U.S. holder uses the accrual method
of accounting for federal income tax purposes; or
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when the U.S. holder actually or constructively receives
it, if the U.S. holder uses the cash method of accounting
for federal income tax purposes.
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If we redeem or otherwise repurchase the debt securities, we may
be obligated to pay additional amounts in excess of stated
principal and interest. Unless otherwise provided in an
applicable prospectus supplement, we intend to take the position
that the debt securities should not be treated as contingent
payment debt instruments because of this additional payment.
Assuming such position is respected, a U.S. holder would be
required to include in income the amount of any such additional
payment at the time such payment is received or accrued in
accordance with such U.S. holders method of
accounting for United States federal income tax purposes. If the
IRS successfully challenged this position, and the debt
securities were treated as contingent payment debt instruments,
U.S. holders could be required to accrue interest income at
a rate higher than the stated interest rate on the debt
securities and to treat as ordinary income, rather than capital
gain, any gain recognized on a sale, exchange or redemption of a
debt security. U.S. holders are urged to consult their tax
advisors regarding the potential application to the debt
securities of the contingent payment debt instrument rules and
the consequences thereof.
Sale, Exchange or Other Taxable Disposition of the Debt
Securities. Unless a nonrecognition provision
applies, U.S. holders must recognize taxable gain or loss
on the sale, exchange, redemption, retirement or other taxable
disposition of a debt security. The amount of gain or loss
equals the difference between (i) the amount the
U.S. holder receives for the debt security in cash or other
property, valued at fair market value, less the amount thereof
that is attributable to accrued but unpaid interest on the debt
security and (ii) the U.S. holders adjusted tax
basis in the debt security. A U.S. holders initial
tax basis in a debt security generally will equal the price the
U.S. holder paid for the debt security.
Gain or loss generally will be long-term capital gain or loss if
at the time the debt security is disposed of it has been held
for more than one year. Otherwise, it will be a short-term
capital gain or loss.
Payments attributable to accrued interest which have not yet
been included in income will be taxed as ordinary interest
income. The maximum federal income tax rate on long-term capital
gain on most capital assets held by an
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individual is currently 15%. The federal income tax laws
relating to this 15% tax rate are scheduled to
sunset or revert to provisions of prior law
effective for taxable years beginning after December 31,
2010, at which time the capital gains tax rate will be increased
to 20%. The deductibility of capital losses is subject to
limitations.
Information Reporting and Backup
Withholding. Backup withholding at the applicable
statutory rate may apply when a U.S. holder receives
interest payments on a debt security or proceeds upon the sale
or other disposition of a debt security. Certain holders
including, among others, corporations, financial institutions
and certain tax-exempt organizations, are generally not subject
to backup withholding. In addition, backup withholding will not
apply to a U.S. holder who provides his or her social
security or other taxpayer identification number in the
prescribed manner unless:
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the IRS notifies us or our paying agent that the taxpayer
identification number provided is incorrect;
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the U.S. holder fails to report interest and dividend
payments received on the U.S. holders tax return and
the IRS notifies us or our paying agent that backup withholding
is required; or
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the U.S. holder fails to certify under penalty of perjury
that backup withholding does not apply.
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A U.S. holder of debt securities who provides us or our
paying agent with an incorrect taxpayer identification number
may be subject to penalties imposed by the IRS. If backup
withholding does apply, the U.S. holder may request a
refund of the amounts withheld or use the amounts withheld as a
credit against the U.S. holders United States
federal income tax liability as long as the U.S. holder
timely provides the required information to the IRS.
U.S. holders should consult their tax advisors as to their
qualification for exemption from backup withholding and the
procedures for obtaining the exemption.
We will be required to furnish annually to the IRS and to
holders of debt securities information relating to the amount of
interest paid on the debt securities, and that information
reporting may also apply to payments of proceeds from the sale
of the debt securities to those holders. Some holders, including
corporations, financial institutions and certain tax-exempt
organizations, generally are not subject to information
reporting.
Non-U.S.
Holders of Our Debt Securities
This section applies to you if you are a
non-U.S. holder
of our debt securities. Special rules may apply to certain
non-U.S. holders
such as controlled foreign corporations and
passive foreign investment companies. Such entities
are encouraged to consult their tax advisors to determine the
United States federal, state, local and other tax consequences
that may be relevant to them.
Payments of Interest. Interest paid to a
non-U.S. holder
will not be subject to United States federal income taxes or
withholding tax if the interest is not effectively connected
with the
non-U.S. holders
conduct of a trade or business within the United States, and the
non-U.S. holder:
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does not actually or constructively own a 10% or greater
interest in the total combined voting power of all classes of
our voting stock;
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is not a controlled foreign corporation with respect to which we
are a related person within the meaning of
Section 864(d)(4) of the Internal Revenue Code;
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is not a bank that received such debt securities on an extension
of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business; and
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provides the appropriate certification as to the
non-U.S. holders
status. A
non-U.S. holder
can generally meet this certification requirement by providing a
properly executed Internal Revenue Service
Form W-8BEN
or appropriate substitute form to us or our paying agent. If the
debt securities are held through a financial institution or
other agent acting on the
non-U.S. holders
behalf, the
non-U.S. holder
may be required to provide appropriate documentation to the
agent. The agent will then generally be required to provide
appropriate certifications to us or our paying agent, either
directly or through other intermediaries. Special certification
rules apply to foreign partnerships, estates and trusts, and in
certain circumstances certifications as to foreign status of
partners, trust owners or beneficiaries may have to be provided
to us or our paying agent.
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If a
non-U.S. holder
does not qualify for an exemption under these rules, interest
income from the debt securities may be subject to withholding
tax at the rate of 30% (or lower applicable treaty rate) at the
time such interest is paid. The payment of interest effectively
connected with a United States trade or business, however, would
not be subject to a 30% withholding tax so long as the
non-U.S. holder
provides us or our paying agent an adequate certification
(currently on IRS
Form W-8ECI),
but such interest would be subject to United States federal
income tax on a net basis at the rates applicable to United
States persons generally. In addition, if the payment of
interest is effectively connected with a foreign
corporations conduct of a United States trade or business,
that foreign corporation may also be subject to a 30% (or lower
applicable treaty rate) branch profits tax. To claim the benefit
of a tax treaty, a
non-U.S. holder
must provide a properly executed IRS
Form W-8BEN
claiming exemption from or reduction in withholding before the
payment of interest, and a
non-U.S. holder
may be required to obtain a United States taxpayer
identification number and provide documentary evidence issued by
foreign governmental authorities to prove residence in the
foreign country.
Sale, Exchange or Other Taxable Disposition of Debt
Securities. Non-U.S. holders
generally will not be subject to United States federal income
tax on any amount which constitutes capital gain upon a sale,
exchange, redemption, retirement or other taxable disposition of
a debt security, unless either of the following is true:
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the
non-U.S. holders
investment in the debt securities is effectively connected with
the conduct of a United States trade or business and, if an
income tax treaty applies, the
non-U.S. holder
maintains a permanent establishment in the United
States to which the gain is attributable; or
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the
non-U.S. holder
is a nonresident alien individual holding the debt security as a
capital asset, is present in the United States for 183 or more
days in the taxable year within which the sale, redemption or
other disposition takes place, and certain other requirements
are met.
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For
non-U.S. holders
described in the first bullet point above, the net gain derived
from the retirement or disposition of the debt securities
generally would be subject to United States federal income tax
at the rates applicable to United States persons generally (or
lower applicable treaty rate). In addition, foreign corporations
may be subject to a 30% (or lower applicable treaty rate) branch
profits tax if the investment in the debt security is
effectively connected with the foreign corporations
conduct of a United States trade or business.
Non-U.S. holders
described in the second bullet point above will be subject to a
flat 30% United States federal income tax on the gain derived
from the retirement or disposition of their debt securities,
which may be offset by United States source capital losses, even
though
non-U.S. holders
are not considered residents of the United States.
Backup Withholding and Information
Reporting. Backup withholding and information
reporting generally will not apply to payments made to a
non-U.S. holder
with respect to the debt securities, provided that we do not
have actual knowledge or reason to know that the
non-U.S. holder
is a U.S. person and the holder has given us the
certification described above under
Non-U.S. Holders
of Our Debt Securities Payments of Interest.
In addition, a
non-U.S. holder
will not be subject to backup withholding or information
reporting with respect to the proceeds of the sale of debt
securities within the United States or conducted through certain
U.S.-related
financial intermediaries, if the payor receives the statement
described above and does not have actual knowledge or reason to
know that the holder is a United States person, as defined in
the Internal Revenue Code, or the
non-U.S. holder
otherwise establishes an exemption. However, we may be required
to report annually to the Internal Revenue Service and to a
non-U.S. holder
the amount of, and the tax withheld with respect to, any
interest (including any OID) paid to the
non-U.S. holder,
regardless of whether any tax was actually withheld. Copies of
these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax
authorities of the country in which the
non-U.S. holder
resides.
A
non-U.S. holder
generally will be entitled to credit any amounts withheld under
the backup withholding rules against the holders United
States federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service in a
timely manner.
Non-U.S. holders
of debt securities should consult their tax advisors regarding
the application of backup withholding and information reporting
in their particular situation, the availability of an exemption
therefrom, and the procedure for obtaining an exemption, if
available.
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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 or any
federal tax other than income tax. You should consult your tax
advisors regarding the effect of state and local tax laws with
respect to our tax treatment as a REIT and on an investment in
our securities.
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.
The distribution of the securities may be effected from time to
time in one or more transactions 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 FINRA member will not exceed 8% of the
gross offering proceeds 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 and Series A preferred stock, which are listed
on the NYSE). If we sell any shares of our common stock or
Series A preferred 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.
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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.
LEGAL
MATTERS
Certain legal matters will be passed upon for us by
Latham & Watkins LLP, San Diego, California.
Venable LLP, Baltimore, Maryland, has issued an opinion to us
regarding certain matters of Maryland law.
EXPERTS
The consolidated financial statements, the related financial
statement schedule III, as of December 31, 2008 and
2007, and for each of the years in the three-year period ended
December, 31, 2008, and managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2008 have been incorporated by reference
herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent registered public accounting
firm incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
The audit report covering the December 31, 2008
consolidated financial statements and financial statement
schedule makes reference to the Company retrospectively applying
certain adjustments upon the adoption of new accounting
standards related to non-controlling interests, exchangeable
senior notes, and earnings per share.
54
$120,000,000
BioMed Realty Trust,
Inc.
Common Stock
Prospectus Supplement
Raymond James
UBS Investment Bank
Wells Fargo
Securities
September 4, 2009