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As filed with the Securities and Exchange Commission on June 18, 1998
Registration No. 333-53835
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST INDUSTRIAL REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
Maryland 36-3935116
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
311 S. Wacker Drive, Suite 4000
Chicago, Illinois 60606
(312) 344-4300
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Michael T. Tomasz
President and Chief Executive Officer
First Industrial Realty Trust, Inc.
311 S. Wacker Drive, Suite 4000
Chicago, Illinois 60606
(312) 344-4300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Gerald S. Tanenbaum, Esq.
Roger Andrus, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement. / /
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Subject to Completion, Dated June 18, 1998
Prospectus
1,112,644 Shares
First Industrial Realty Trust, Inc.
Common Stock
This Prospectus relates to the offer and sale from time to time of
1,112,644 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of First Industrial Realty Trust, Inc. (the "Company"). The
Shares will be offered for sale or otherwise transferred from time to time by
the stockholder named herein (the "Selling Stockholder"). See "Selling
Stockholder." The Shares were originally sold by the Company to Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Initial Purchaser") and were then
deposited by the Initial Purchaser with the Trustee of the Equity Investor Fund
Cohen & Steers Realty MajorsSM Portfolio (the "Trust"), a registered unit
investment trust under the Investment Company Act of 1940, to which the Initial
Purchaser acts as sponsor, in exchange for units of the Trust. The shares were
acquired by the Selling Stockholder pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 4(2) thereof. The Shares are being
registered pursuant to the terms of a Registration Rights Agreement dated April
29, 1998, by and among the Company, First Industrial, L.P. and the Initial
Purchaser (the "Registration Rights Agreement"). The registration of the Common
Stock to which this Prospectus relates does not necessarily mean that any of the
Shares will be sold by the Selling Stockholder.
The Common Stock is listed on the New York Stock Exchange (the "NYSE")
under the symbol "FR." In order to maintain the Company's qualification as a
real estate investment trust ("REIT"), ownership by any person of the Company's
capital stock is limited, with certain exceptions, to an aggregate of 9.9% in
value of the outstanding capital stock of the Company.
The Selling Stockholder may offer and sell Shares from time to time in
transactions on the NYSE, in privately negotiated transactions or a combination
of such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholder may effect such
transactions by selling the Shares to or through agents or broker-dealers on
terms to be determined at the time of sale. To the extent required, the names of
any agent or broker-dealer and applicable commissions or discounts and any other
required information with respect to any particular offer will be set forth in
an accompanying Prospectus Supplement. See "Plan of Distribution." The Selling
Stockholder reserves the right to accept or reject, in whole or in part, any
proposed purchase of Shares to be made directly or through agents. The Selling
Stockholder and any agents or broker-dealers that participate with the Selling
Stockholder in the distribution of Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by them
and any profit on the sale of Shares may be deemed to be underwriting
commissions or discounts under the Securities Act.
For information concerning risk factors relevant to an investment in the
Common Stock see "Risk Factors" on pages 1-6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholder. The Company will bear the expenses incurred in
connection with the registration of the Shares under the Securities Act and
other expenses incurred in connection with this Prospectus pursuant to the
Registration Rights Agreement.
The date of this Prospectus is , 1998
No dealer, salesperson or other person has been authorized to give any
information or make any representations other than those contained in or
incorporated by reference in this Prospectus and any accompanying Prospectus
Supplement and if given or made, such other information or representations must
not be relied upon as having been authorized by the Company or by the Selling
Stockholder. This Prospectus and any accompanying Prospectus Supplement do not
constitute an offer to sell, or a solicitation of an offer to buy, to any person
in any jurisdiction where such an offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that the information contained herein
is correct as of any time subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be examined without
charge at, and copies obtained upon payment of prescribed fees from, the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 and are also available for inspection and copying at the regional offices
of the Commission located at 7 World Trade Center, New York, New York 10048 and
at Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511. In addition, the Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission at http://www.sec.gov.
The Common Stock is listed on the NYSE and such material can also be inspected
and copied at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act, and the rules and regulations promulgated
thereunder, with respect to the shares of Common Stock offered pursuant to this
Prospectus. This Prospectus, which is part of the Registration Statement, does
not contain all of the information set forth in, or incorporated by reference
into, the Registration Statement and the exhibits thereto. For further
information concerning the Company and the Common Stock offered hereby,
reference is made to the Registration Statement. Any statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company (File No. 1-13102)
with the Commission are incorporated herein by reference:
1) Annual Report on Form 10-K for year ended December 31, 1997, filed
March 24, 1998;
2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
filed May 15, 1998;
3) Current Report on Form 8-K filed February 6, 1998;
4) Current Report on Form 8-K/A No. 2 filed February 26, 1998;
5) Current Report on Form 8-K filed March 27, 1998;
6) Current Report on Form 8-K filed April 20, 1998, as amended by Form
8-K/A No. 1 filed June 16, 1998;
7) Current Report on Form 8-K filed April 27, 1998;
8) Current Report on Form 8-K filed May 5, 1998; and
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9) the description of the Common Stock included in the Company's
Registration Statement on Form 8-A dated June 23, 1994 and Form 8-A
dated September 24, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock offered hereby shall be
deemed to be incorporated by reference in this Prospectus and made a part hereof
from the date of the filing of such documents. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein (in the case of a previously filed
document incorporated or deemed to be incorporated by reference herein) or in
any other document subsequently filed with the Commission which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the information incorporated by
reference herein (not including the exhibits to the information that is
incorporated by reference herein, unless such exhibits are specifically
incorporated by reference into the information that is incorporated by reference
herein). Requests for such copies should be directed to: First Industrial Realty
Trust, Inc., Attention: Investor Relations, 311 S. Wacker Drive, Suite 4000,
Chicago, Illinois 60606, telephone (312) 344-4300.
Certain information, including, but not limited to, information relating
the Company's principal security holders, management, executive compensation,
certain relationships and related transactions and legal proceedings that would
be required to be disclosed in a prospectus included in a registration statement
on Form S-11 has been omitted from this Prospectus, because such information is
not materially different from the information contained in the Company's
periodic reports, proxy statements and other information filed by the Company
with the Commission.
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FORWARD-LOOKING INFORMATION
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. The Company intends such forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and is including this statement for
purposes of complying with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company are generally identifiable by use of
the words "believe," "expect," "intend," "anticipate," "estimate," "project" or
similar expressions. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on the operations and future prospects of
the Company include, but are not limited to, changes in: economic conditions
generally and the real estate market specifically, legislative/regulatory
framework (including changes to laws governing the taxation of REITs),
availability of capital, interest rates, competition, supply and demand for
industrial properties in the Company's current and proposed market areas and
general accounting principles, policies and guidelines applicable to REITs.
These risks and uncertainties, together with those stated herein under the
caption "Risk Factors," should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.
TABLE OF CONTENTS
Page
Available Information................................................. ii
Incorporation of Certain Documents by Reference....................... ii
Forward-Looking Information........................................... iv
The Company........................................................... 1
Risk Factors.......................................................... 1
Use of Proceeds....................................................... 6
Description of Common Stock........................................... 6
Certain Provisions of Maryland Law and the Company's
Articles of Incorporation and Bylaws............................. 8
Restrictions on Transfers of Capital Stock............................ 10
Federal Income Tax Considerations..................................... 11
Selling Stockholder................................................... 12
Plan of Distribution.................................................. 13
Experts............................................................... 14
Legal Matters......................................................... 14
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THE COMPANY
As used herein, the term "Company" refers to First Industrial Realty Trust,
Inc. and its subsidiaries, including First Industrial, L.P. (the "Operating
Partnership"), and all references in this Prospectus to the "Other Real Estate
Partnerships" refer to all partnership subsidiaries of First Industrial Realty
Trust, Inc. other than the Operating Partnership. Unless otherwise indicated,
all information regarding properties owned by the Company (the "Properties") is
as of March 31, 1998.
The Company is a REIT which owns, manages, acquires and develops bulk
warehouse and light industrial properties. Markets in which the Company
currently operates include the following metropolitan areas: Atlanta, Georgia;
Chicago, Illinois; Cincinnati, Ohio; Cleveland, Ohio; Columbus, Ohio; Dallas,
Texas; Dayton, Ohio; Denver, Colorado; Des Moines, Iowa; Detroit, Michigan;
Grand Rapids, Michigan; Hartford, Connecticut; Houston, Texas; Indianapolis,
Indiana; Milwaukee, Wisconsin; Minneapolis/St. Paul, Minnesota; Nashville,
Tennessee; Philadelphia, Pennsylvania; Phoenix, Arizona; Tampa, Florida; St.
Louis, Missouri; and Salt Lake City, Utah, as well as the regional areas of
Central Pennsylvania; Long Island, New York; Louisiana; and New Jersey. As of
March 31, 1998, the Company owned 834 in-service Properties, containing an
aggregate of approximately 61.0 million square feet of gross leasable area
("GLA") which was approximately 95.3% leased to over 2,600 tenants. The
Company's principal executive offices are located at 311 S. Wacker Drive, Suite
4000, Chicago, Illinois 60606, and its telephone number is (312) 344-4300.
The Company conducts its operations primarily through the Operating
Partnership, of which the Company is the sole general partner and, as of March
31, 1998 held approximately 86% of the outstanding units of partnership
interest.
The transfer agent and registrar for the Common Stock is First Chicago
Trust Company of New York of Chicago, Illinois.
RISK FACTORS
Prospective investors should carefully consider the following factors, in
addition to other matters set forth or incorporated in this Prospectus, prior to
making an investment decision regarding the shares of Common Stock offered
hereby.
Real Estate Investment Considerations
General
Income from real property investments, and the Company's resulting ability
to make expected distributions to stockholders, may be adversely affected by the
general economic climate, local conditions such as oversupply or a reduction in
demand in the area, the attractiveness of the properties to tenants, tenant
defaults, zoning or other regulatory restrictions, competition from other
available real estate, the ability of the Company to provide adequate
maintenance and insurance and increased operating costs (including insurance
premiums and real estate taxes). The Company's income would also be adversely
affected if tenants were unable to pay rent or the Company were unable to rent
properties on favorable terms. In addition, certain expenditures associated with
real estate investment (such as real estate taxes and maintenance costs)
generally are not reduced when circumstances cause a reduction in income from
the investment. Furthermore, real estate investments are relatively illiquid
and, therefore, will tend to limit the ability of the Company to vary its
portfolio promptly in response to changes in economic or other conditions.
Renewal of Leases and Reletting of Space
The Company will be subject to the risks that, upon expiration of leases,
the leases may not be renewed, the space subject to such leases may not be relet
or the terms of renewal or reletting (including the cost of required
renovations) may be less favorable than expiring lease terms. If the Company
were unable
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promptly to renew a significant number of expiring leases or promptly to relet
the space covered by such leases, or if the rental rates upon such renewal or
reletting were significantly lower than the then current rates, the Company's
cash funds from operations and ability to make expected distributions to
stockholders might be adversely affected. Leases with respect to approximately
9.2 million, 10.6 million and 9.3 million square feet of GLA expire in the
remainder of 1998, in 1999 and in 2000, respectively.
Potential Environmental Liability
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate may be liable for the costs of clean-up of
certain conditions relating to the presence of hazardous or toxic materials on,
in or emanating from the property, and any related damages to natural resources.
Such laws often impose liability without regard to whether the owner or operator
knew of, or was responsible for, the presence of hazardous or toxic materials.
The presence of such materials, or the failure to address such conditions
properly, may adversely affect the ability to rent or sell the property or to
borrow using the property as collateral. Persons who dispose of or arrange for
the disposal or treatment of hazardous or toxic materials may also be liable for
the costs of clean-up of such materials, or for related natural resource
damages, at or from an off-site disposal or treatment facility, whether or not
such facility is owned or operated by such persons. No assurance can be given
that existing environmental assessments with respect to any of the Company's
properties reveal all environmental liabilities, that any prior owner or
operator of any of the properties did not create any material environmental
condition not known to the Company or that a material environmental condition
does not otherwise exist as to any one or more properties.
Limited Geographic Concentration
Approximately 54.5% of the GLA of Properties owned by the Company as of
March 31,1998 are located in the midwest region of the United States. A
fundamental element of the Company's growth strategy is to acquire additional
properties in its current markets. Consequently, the Company may be dependent
upon the demand for industrial space in those markets. The Company's revenues
and the value of its properties may be affected by a number of factors in its
current markets, including the local economic climate (which may be adversely
impacted by business layoffs or downsizing, industry slowdowns, changing
demographics and other factors) and local real estate conditions (such as
oversupply of, or reduced demand for, properties). Therefore, the Company's
performance and its ability to make distributions to stockholders will likely be
dependent, to a significant extent, on the economic conditions in its current
markets.
Tax Risks
Consequences of Failure to Qualify as a REIT
The Company intends to operate so as to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"). Although the Company
believes that it is organized and will operate in a manner so as to qualify as a
REIT, qualification as a REIT involves the satisfaction of numerous requirements
(some of which must be met on a recurring basis) established under highly
technical and complex Code provisions of which there are only limited judicial
or administrative interpretations, and involves the determination of various
factual matters and circumstances not entirely within the Company's control. If
the Company were to fail to qualify as a REIT in any taxable year, the Company
would be subject to federal income tax (including any applicable alternative
minimum tax) on its taxable income at corporate rates and, unless entitled to
relief under certain statutory provisions, the Company also would be
disqualified from treatment as a REIT for the four taxable years that follow.
See "Federal Income Tax Considerations."
Effect of Distribution Requirements
The Company could, in certain instances, have taxable income without
sufficient cash to enable the Company to meet the distribution requirements of
the REIT provisions of the Code. Accordingly, the Company could be required to
borrow funds or sell properties on adverse terms in order to meet such
distribution
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requirements. In addition, because the Company must distribute to its
stockholders at least 95% of its REIT taxable income each year, the Company's
ability to accumulate capital may be limited. Thus, it may be more dependent on
outside sources of financing, such as debt financing or issuances of additional
capital stock, in connection with future acquisitions. See "Federal Income Tax
Considerations."
Restrictions on Transfer of Shares
As noted below under "Restrictions on Transfer of Capital Stock," in order
to maintain its qualification as a REIT under the Code, no more than 50% in
value of the outstanding capital stock of the Company 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. Accordingly, the
Company's Articles of Incorporation contain provisions restricting the ownership
and transfer of the Company's capital stock.
Risks Associated with Debt Financing and Leverage; Collateralization and
Cross-Collateralization
General
Where possible, the Company intends to continue to use leverage to increase
the rate of return on its investments and to allow the Company to make more
investments than it otherwise could. Such use of leverage presents an additional
element of risk in the event that the cash flow from the Company's properties is
insufficient to meet both debt payment obligations and the distribution
requirements of the REIT provisions of the Code. To the extent the Operating
Partnership determines to obtain additional debt financing in the future, it may
do so through mortgages on some or all of its properties. These mortgages may be
on recourse, non-recourse or cross-collateralized bases. Holders of indebtedness
which is so secured will have a claim against these properties and to the extent
indebtedness is cross-collaterized, lenders may seek to foreclose upon
properties which are not the primary collateral for their loan, which may, in
turn, result in acceleration of other indebtedness secured by properties.
Foreclosure of properties would result in a loss of income and asset value to
the Operating Partnership and the Company.
Balloon Payments
The Company is required to make lump-sum or "balloon" payments pursuant to
the terms of certain of its indebtedness, including the Operating Partnership's:
$100 million aggregate principal amount of 7.15% Notes due 2027 (the "2027
Notes"), $100 million aggregate principal amount of 7.50% Notes due 2017 (the
"2017 Notes"), $100 million aggregate principal amount of 7 3/8% Notes due 2011
(the "Trust Notes"), $150 million aggregate principal amount of 7.60% Notes due
2007 (the "2007 Notes"), $150 million aggregate principal amount of 7.0% Notes
due 2006 (the "2006 Notes"), $50 million aggregate principal amount of 6.90%
Notes due 2005 (the "2005 Notes"), $100 million aggregate principal amount of 6
1/2% dealer remarketable securities due April 5, 2011 (the "Drs.") and a $300
million unsecured revolving credit facility (the "Acquisition Facility") under
which the Company, through the Operating Partnership may borrow to finance the
acquisition of additional properties and for other corporate purposes, including
working capital. The holders of the 2027 Notes have the right to require the
Company to redeem through the Operating Partnership the 2027 Notes, in whole or
in part, on May 15, 2002. The trust to which the Trust Notes were issued must
exercise its right to require the Company, through the Operating Partnership, to
redeem the Trust Notes on May 15, 2004 if the holder of a call option with
respect to the Trust Notes fails to give written notice on or before May 1, 2004
that it intends to exercise such option. The Drs. are subject to mandatory
redemption by the Operating Partnership under certain circumstances on April 5,
2001. The Acquisition Facility provides for the repayment of principal in a
lump-sum or "balloon" payment at maturity in 2001 (subject to successive
one-year extensions at the Operating Partnership's option, subject to certain
conditions). The Company's ability to make required payments of principal on
outstanding indebtedness, whether at maturity or otherwise, may depend on its
ability either to refinance the applicable indebtedness or to sell properties.
The Company has no commitments to refinance the 2005 Notes, the 2006 Notes, the
2007 Notes, the Trust Notes, the 2017 Notes, the 2027 Notes, the Drs. or the
Acquisition Facility. Certain existing debt obligations of the Company,
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through the Operating Partnership, are secured by its properties, and therefore
such obligations will permit the lender to foreclose on those properties in the
event of a default.
No Limitation on Debt in Organizational Documents
The Company currently has a policy of maintaining a ratio of debt to total
market capitalization (i.e., total consolidated debt of the Company as a
percentage of the aggregate market value of all outstanding shares of Common
Stock, assuming the exchange of all units of limited partnership interests in
the Operating Partnership (the "Units") for Common Stock, plus the aggregate
stated value of all outstanding shares of preferred stock, plus total
consolidated debt) which generally will not exceed 50% and a coverage ratio
(computed as total revenues (excluding interest income on U.S. Government
securities which collateralized the Company's $300 million Mortgage Loan (the
"1994 Defeased Mortgage Loan") which was defeased in April 1997 and subsequently
repaid in full in January 1998) minus property expenses and general and
administrative expenses divided by interest expense (excluding interest on the
1994 Defeased Mortgage Loan accruing after the date of defeasance) plus
dividends on preferred stock) of at least 2.0:1. As of March 31, 1998, the
Company's ratio of debt to total market capitalization was 31.1% and for the
twelve months ended March 31, 1998 the Company's coverage ratio was 2.65.
However, the organizational documents of the Company do not contain any
limitation on the amount or percentage of indebtedness the Company may incur and
the Company's Board of Directors has the power to alter the current policy.
Accordingly, the Company could become more highly leveraged, resulting in an
increase in debt service that could adversely affect the Company's ability to
make expected distributions to stockholders and in an increased risk of default
on its obligations.
Rising Interest Rates
The Acquisition Facility bears interest at a floating rate. Increases in
the interest rate payable on balances outstanding under the Acquisition Facility
would have an adverse effect on the Company's cash available for distribution.
Limits on Changes in Control
Certain provisions of the Articles of Incorporation may have the effect of
delaying, deferring or preventing a third party from making an acquisition
proposal for the Company and thus inhibit a change in control of the Company and
limit the opportunity for stockholders to receive a premium for their Common
Stock over then-prevailing market prices. See "Certain Provisions of Maryland
Law and the Company's Articles of Incorporation and Bylaws." These provisions
include the following:
Risks Associated with Preferred Stock
Under its Articles of Incorporation, the Company has authority to issue up
to 10,000,000 shares of Preferred Stock, par value $.01 per share (of which
1,650,000 shares of the Company's Series A Preferred Stock, 40,000 shares of the
Company's Series B Preferred Stock, 20,000 shares of the Company's Series C
Preferred Stock, 50,000 shares of the Company's Series D Preferred Stock and
30,000 shares of the Company's Series E Preferred Stock were outstanding on June
18, 1998), on such terms as may be authorized by the Board of Directors of the
Company. The Board of Directors has also reserved 1,000,000 shares of Junior
Participating Preferred Stock, par value $.01 per share (the "Junior
Participating Preferred Stock"), of the Company for issuance pursuant to a
shareholder rights plan adopted by the Board of Directors. The shareholder
rights plan may discourage a third party from making an acquisition proposal and
thus inhibit a change in control of the Company.
Maryland Business Combination Law
Under the Maryland General Corporation Law, as amended ("MGCL"), certain
"business combinations" (including certain issuances of equity securities)
between a Maryland corporation, such as the Company, and any person who
beneficially owns 10% or more of the voting power of the corporation's shares
(an
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"Interested Stockholder") or, in certain circumstances, an associate or an
affiliate thereof (as defined in the MGCL) are prohibited for five years after
the most recent date on which the Interested Stockholder becomes an Interested
Stockholder. Thereafter, any such business combination must be recommended by
the board of directors and approved by two super-majority stockholder votes
unless, among other conditions, the corporation's common stockholders receive a
minimum price (as defined in the MGCL) for their shares, in cash or in the same
form as previously paid by the Interested Stockholder for its shares. The
provisions of the MGCL do not apply to business combinations that are approved
or exempted by the Board of Directors prior to the time that the Interested
Stockholder becomes an Interested Stockholder. In addition, the Company's
Articles of Incorporation exempt from these provisions of the MGCL any business
combination in which there is no Interested Stockholder other than Jay H.
Shidler, the Chairman of the Board of Directors of the Company, or any entity
controlled by Mr. Shidler, unless Mr. Shidler is an Interested Stockholder
without taking into account Mr. Shidler's ownership of shares of Common Stock of
the Company and the right to acquire shares in an aggregate amount which does
not exceed the number of shares which Mr. Shidler owned and had the right to
acquire (including through the exchange of Units) at the time of the
consummation of the Company's initial public offering.
Maryland Control Share Acquisition Statute
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 by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares owned by the acquiror, by officers of the corporation and by
directors who are also employees of the corporation. If voting rights with
respect to control shares have not been approved at a meeting of stockholders,
then, subject to certain conditions and limitations, the issuer may redeem any
or all of such control shares for fair value. 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 Company's Bylaws contain a provision exempting
any and all acquisitions of the Company's shares of capital stock from the
control shares provisions of the MGCL. There can be no assurance that this
provision will not be amended or eliminated in the future.
Classified Board of Directors
The Company's directors are divided into three classes by its Articles of
Incorporation, with terms expiring over a three-year period. The classified
board provision could make it more difficult and time consuming to remove the
incumbent directors, thus discouraging a third party from attempting to take
control of the Company.
Risks Associated with Dilution
To the extent the Company issues Common Stock, the ownership interest of
existing stockholders would be diluted.
Risks Associated with Possible Conflicts of Interest
Competition from Other Business Interests of Certain Officers and Directors
Entities affiliated with or controlled by certain officers and directors of
the Company hold equity interests in industrial properties not owned by the
Company. Some of these properties may compete with properties owned by the
Company. There can be no assurance that decisions by officers and directors of
the Company will fully represent the interests of stockholders of the Company
rather than such individuals and their affiliates.
-5-
Tax Consequences to Certain Officers and Directors
Certain officers and directors of the Company own Units which may be
exchanged for shares of Common Stock. Prior to the exchange of Units for Common
Stock, officers and directors of the Company who own Units may suffer different
and more adverse tax consequences than holders of Common Stock upon the sale of
certain of the Company's properties, the refinancing of debt associated with
those properties or in connection with a proposed tender offer or merger
involving the Company and, therefore, such individuals and the Company, as
partners in the Operating Partnership, may have different objectives regarding
the appropriate terms of any such transaction.
Year 2000 Concerns
The Company believes, based on discussions with its current systems'
vendor, that its software applications and operational programs will properly
recognize calendar dates beginning in the year 2000. In addition, the Company is
discussing with its major vendors and customers the possibility of any interface
difficulties relating to the year 2000 which may affect the Company. To date, no
significant concerns have been identified; however, there can be no assurance
that there will not be any year 2000-related operating problems or expenses that
will arise with the Company's computer systems and software or in connection
with the Company's interface with the computer systems and software of the
Company's vendors and customers.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholder.
DESCRIPTION OF COMMON STOCK
The description of the Company's Common Stock set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Articles of Incorporation and the Bylaws. All material terms of the Company's
Common Stock are included in this Prospectus.
General
Under the Articles of Incorporation, the Company has authority to issue 100
million shares of Common Stock, par value $.01 per share. Under Maryland law,
stockholders generally are not responsible for the corporation's debts or
obligations. At June 17, 1998 the Company had outstanding 37,846,520 shares of
Common Stock.
Terms
Subject to the preferential rights of any other shares or series of stock
(including Preferred Stock outstanding from time to time) and to the provisions
of the Articles of Incorporation regarding Excess Stock, holders of shares of
Common Stock will be entitled to receive dividends on shares of Common Stock if,
as and when authorized and declared by the Board of Directors of the Company out
of assets legally available therefor and to share ratably in the assets of the
Company legally available for distribution to its stockholders in the event of
its liquidation, dissolution or winding up after payment of, or adequate
provision for, all known debts and liabilities of the Company.
Subject to the provisions of the Articles of Incorporation regarding Excess
Stock, each outstanding share of Common Stock entitled the holder to one vote on
all matters submitted to a vote of stockholders, including the election of
Directors, and, except as otherwise required by law or except as provided with
respect to any other class or series of stock, the holders of Common Stock will
possess the exclusive voting power. There is no cumulative voting in the
election of Directors, which means that the holders of a majority of the
outstanding shares of Common Stock can elect all of the Directors then standing
for election, and the holders of the remaining shares of Common Stock will not
be able to elect any Directors.
-6-
Holders of Common Stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
Subject to the provisions of the Articles of Incorporation regarding Excess
Stock, all shares of Common Stock will have equal dividend, distribution,
liquidation and other rights, and will have no preference, appraisal or exchange
rights.
Pursuant to the MGCL, a corporation generally cannot dissolve, amend its
Articles of Incorporation, 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 approved by the affirmative vote of
stockholders holding at least two-thirds of the shares entitled to vote on the
matter unless a lesser percentage (but not less than a majority of all of the
votes to be cast on the matter) is set forth in the corporation's Articles of
Incorporation. The Articles of Incorporation do not provide for a lesser
percentage in such situations.
Restrictions on Ownership
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital 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. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by individuals of the Company's outstanding
equity securities. See "Restrictions on Transfer of Capital Stock."
Transfer Agent
The transfer agent and registrar for the Common Stock if First Chicago
Trust Company of New York.
Shareholder Rights Plan
On September 4, 1997, the Board of Directors adopted a shareholder rights
plan (the "Shareholder Rights Plan"). Under such plan, one right was attached to
each outstanding share of Common Stock at the close of business on October 19,
1997, and one right will be attached to each share of Common Stock thereafter
issued. Each right entitles the holder to purchase, under certain conditions,
one one-hundredth of a share of Junior Participating Preferred Stock of the
Company for $125.00. The rights may also, under certain conditions, entitle the
holders to receive Common Stock, or common stock of an entity acquiring the
Company, or other consideration, each having a value equal to twice the exercise
price of each right ($250.00). The Company has designated 1,000,000 shares as
Junior Participating Preferred Stock and has reserved such shares for issuance
under the Shareholder Rights Plan. The rights are redeemable by the Company at a
price of $.001 per right. If not exercised or redeemed, all rights expire on
October 20, 2007. The description and terms of the rights are set forth in a
Shareholder Rights Agreement between the Company and First Chicago Trust Company
of New York.
-7-
CERTAIN PROVISIONS OF MARYLAND LAW AND
THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The following summary of certain provisions of Maryland law and the
Company's Articles of Incorporation and Bylaws does not purport to be complete
and is qualified by reference to Maryland law and the Company's Articles of
Incorporation and Bylaws.
Business Combinations
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and an interested stockholder or, in certain circumstances, an
associate or an affiliate thereof are prohibited for five years after the most
recent date on which the Interested Stockholder became an Interested
Stockholder. Thereafter, any such business combination must be recommended by
the board of directors of the corporation and approved by the affirmative vote
of at least (a) 80% of the votes entitled to be cast by holders of outstanding
voting shares of the corporation and (b) two-thirds of the votes entitled to be
cast by holders of outstanding shares of the corporation other than shares held
by the Interested Stockholder with whom the business combination is to be
effected, unless, among other things, the corporation's stockholders receive a
minimum price (as defined in the MGCL) for their shares and the consideration is
received in cash or in the same form as previously paid by the Interested
Stockholder for its shares. These provisions of Maryland law do not apply,
however, to business combinations that are approved or exempted by the board of
directors of the corporation prior to the time that the Interested Stockholder
becomes an Interested Stockholder. The Articles of Incorporation exempt from
these provisions of the MGCL any business combination in which there is no
Interested Stockholder other than Mr. Shidler or any entity controlled by Mr.
Shidler unless Mr. Shidler is an Interested Stockholder without taking into
account his ownership of shares of the Company's Common Stock and the right to
acquire shares of the Company's Common Stock in an aggregate amount which does
not exceed the number of shares of the Company's Common Stock which he owned and
had the right to acquire (including through the exchange of Units) at the time
of the consummation of the Company's initial public offering.
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 by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror or by officers or directors who
are employees of the corporation. "Control shares" are voting shares of stock
that, if aggregated with all other shares of stock previously acquired by that
person, would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power; (i) one-fifth or
more but less than one-third, (ii) one-third or more but less than a majority,
or (iii) a majority of all voting power. 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 may
compel the board of directors, upon satisfaction of certain conditions
(including an undertaking to pay expense), 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 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 voting rights, as of
the date of the last control share acquisition 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.
-8-
The fair value of the shares as determined for purposes of the appraisal rights
may not be less than the highest price per share paid in the control share
acquisition. Certain limitations and restrictions otherwise applicable to the
exercise of dissenters' rights do not apply in the context of a control share
acquisition.
The control share acquisition statute does not apply to (i) shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction, or (ii) acquisitions approved or exempted by the Company's
Articles of Incorporation or Bylaws.
The Company's Bylaws contain a provision exempting any and all acquisitions
of the Company's shares of capital stock from the control shares provisions of
the MGCL. There can be no assurance that this provision will not be amended or
eliminated in the future.
Amendment of Articles of Incorporation
The Company's Articles of Incorporation, including its provisions on
classification of the Board of Directors (discussed below), may be amended only
by the affirmative vote of the holders of not less than two-thirds of all of the
votes entitled to be cast on the matter.
Meetings of Stockholders
The Company's Bylaws provide for annual meetings of stockholders to be held
on the third Wednesday in April or on any other day as may be established from
time to time by the Board of Directors. Special meetings of stockholders may be
called by (i) the Company's Chairman of the Board of the Company's President,
(ii) a majority of the Board of Directors or (iii) stockholders holding at least
25% of the outstanding capital stock of the Company entitled to vote at the
meeting.
The Company's Bylaws provide that any stockholder of record wishing to
nominate a director or have a stockholder proposal considered at an annual
meeting must provide written notice and certain supporting documentation to the
Company relating to the nomination or proposal not less than 75 days nor more
than 180 days prior to the anniversary date of the prior year's annual meeting
or special meeting in lieu thereof (the "Anniversary Date"). In the event that
the annual meeting is called for a date more than seven calendar days before the
Anniversary Date, stockholders generally must provide written notice within 20
calendar days after the date on which notice of the meeting is mailed to
stockholders or the date of the meeting is publicly disclosed.
The purpose of requiring stockholders to give the Company advance notice of
nominations and other business is to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees or the
advisability of the other proposed business and, to the extent deemed necessary
or desirable by the Board of Directors, to inform stockholders and make
recommendations about the qualifications or business, as well as to provide a
more orderly procedure for conducting meetings of stockholders. Although the
Company's Bylaws do not give the Board of Directors any power to disapprove
stockholder nominations for the election of directors or proposals for action,
they may have the effect of precluding a contest for the election of directors
or the consideration of stockholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of the nominees or
proposal might be harmful or beneficial to the Company and its stockholders.
Classification of the Board of Directors
The Company's Bylaws provide that the number of directors of the Company
may be established by the Board of Directors but may not be fewer than the
minimum number required by Maryland law nor more than twelve. Any vacancy will
be filled, at any regular meeting or at any special meeting called for that
purpose, by a majority of the remaining directors, except that a vacancy
resulting from an increase in the number of directors will be filled by a
majority of the entire Board of Directors. Pursuant to the terms of the Articles
-9-
of Incorporation, the directors are divided into three classes. One class holds
office for a term expiring at the annual meeting of stockholders to be held in
1999, and the other two classes hold office for terms expiring at the annual
meetings of stockholders to be held in 2000 and 2001, respectively. As the term
of each class expires, directors in that class will be elected for a term of
three years and until their successors are duly elected and qualified. The
Company believes that classification of the Board of Directors will help to
assure the continuity and stability of the Company's business strategies and
policies as determined by the Board of Directors.
The classified board provision could have the effect of making the removal
of incumbent directors more time consuming and difficult, which could discourage
a third party from making a tender offer or otherwise attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its stockholders. At least two annual meetings of stockholders,
instead of one, will generally be required to effect a change in a majority of
the Board of Directors. Thus, the classified board provision could increase the
likelihood that incumbent directors will retain their positions. Holders of
shares of Common Stock will have no right to cumulative voting for the election
of directors. Consequently, at each annual meeting of stockholders, the holders
of a majority of the shares of Common Stock will be able to elect all of the
successors of the class of directors whose term expires at that meeting.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding capital 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, and such
capital stock must be beneficially owned by 100 or more persons during at least
335 days of a taxable year of 12 months or during a proportionate part of a
shorter tax year. See "Certain Federal Income Tax Considerations." To ensure
that the Company remains a qualified REIT, the Company's Articles of
Incorporation, subject to certain exceptions, provide that no holder may own, or
be deemed to own by virtue of the attribution provisions of the Code, more than
an aggregate of 9.9% in value of the Company's capital stock. Any transfer of
capital stock or any security convertible into capital stock that would create a
direct or indirect ownership of capital stock in excess of the ownership limit
or that would result in the disqualification of the Company as a REIT, including
any transfer that results in the capital stock being owned by fewer than 100
persons or results in the Company being "closely held" within the meaning of
Section 856(h) of the Code, shall be null and void, and the intended transferee
will acquire no rights to the capital stock. Capital stock owned, or deemed to
be owned, or transferred to a stockholder in excess of the ownership limit will
automatically be exchanged for shares of Excess Stock (as defined in the
Company's Articles of Incorporation) that will be transferred, by operation of
law, to the Company as trustee of a trust for the exclusive benefit of the
transferees to whom such capital stock may be ultimately transferred without
violating the ownership limit. While the Excess Stock is held in trust, it will
not be entitled to vote, it will not be considered for purposes of any
stockholder vote or the determination of a quorum for such vote, and it will not
be entitled to participate in the accumulation or payment of dividends or other
distributions. A transferee of Excess Stock may, at any time such Excess Stock
is held by the Company in trust, designate as beneficiary of the transferee
stockholder's interest in the trust representing the Excess Stock any individual
whose ownership of the capital stock exchanged into such Excess Stock would be
permitted under the ownership limit, and may transfer such interest to such
beneficiary at a price not in excess of the price paid by the original
transferee-stockholder for the capital stock that was exchanged into Excess
Stock. Immediately upon the transfer to the permitted beneficiary, the Excess
Stock will automatically be exchanged for capital stock of the class from which
it was converted. In addition, the Company will have the right, for a period of
90 days during the time any Excess Stock is held by the Company in trust, and,
with respect to Excess Stock resulting from the attempted transfer of preferred
stock of the Company, at any time when any outstanding shares of preferred stock
of such series are being redeemed, to purchase all or any portion of the Excess
Stock from the original transferee-stockholder at the lesser of the price paid
for the capital stock by the original transferee-stockholder and the market
price (as determined in the manner set forth in the Articles of Incorporation)
of the capital stock on the date the Company exercises its option to purchase
or, in the case of a purchase of Excess Stock attributed to preferred stock
which has been called for redemption, at its stated value, plus all accumulated
and unpaid dividends to the date of redemption. The 90-day period begins on the
date of the violative transfer if the original transferee-stockholder gives
notice to the Company of the transfer
-10-
or, if no such notice is given, the date the Board of Directors determines that
a violative transfer has been made.
FEDERAL INCOME TAX CONSIDERATIONS
This section is a summary of the material federal income tax matters of
general application pertaining to REITs under the Code. The discussion is based
on current law and does not purport to deal with all aspects of federal income
taxation that may be relevant to investors subject to special treatment under
the federal income tax laws, such as tax-exempt investors, dealers in securities
or foreign persons. The provisions of the Code pertaining to REITs are highly
technical and complex and sometimes involve mixed questions of fact and law. In
addition, this section does not discuss foreign, state or local taxation. The
Company has received an opinion from Cahill Gordon & Reindel as to the
conclusions of law expressed in this summary. Prospective investors should
consult their own tax advisors regarding the federal, state, local, foreign and
other tax consequences specific to them of holding and disposing of the Common
Stock.
Taxation of the Company
In the opinion of Cahill Gordon & Reindel, commencing with its taxable year
ended December 31, 1994, the Company has been organized in conformity with the
requirements for qualification as a REIT under the Code, the Company's method of
operation has enabled it to meet the requirements for qualification as a REIT
under the Code, and, provided that the Company continues to satisfy the various
requirements applicable under the Code to REITs, as described herein, it will
continue to so qualify. Cahill Gordon & Reindel's opinion is based on various
assumptions and is conditioned upon certain representations as to factual
matters made by the Company and certain partnerships through which the Company
holds substantially all of its assets (the "Partnerships"). Moreover, such
qualification and taxation as a REIT depend upon the Company's ability to meet,
as a matter of fact, through actual annual operating results, distribution
levels, diversity of stock ownership and various other qualification tests
imposed under the Code discussed below, the results of which will not be
reviewed by Cahill Gordon & Reindel. Accordingly, no assurance can be given that
the actual results of the Company's operations for any one taxable year will
satisfy such requirements.
To qualify as a REIT under the Code for a taxable year, the Company must
meet certain organizational and operational requirements, which generally
require it to be a passive investor in operating real estate and to avoid
excessive concentration of ownership of its capital stock. Initially, its
principal activities must be related to real estate. Generally, at least 75% of
the value of the total assets of the Company at the end of each calendar quarter
must consist of real estate assets, cash or governmental securities. The Company
may not own more than 10% of the outstanding voting securities of any
corporation and the value of any one issuer's securities may not exceed 5% of
the Company's gross assets; shares of qualified REITs, qualified temporary
investments and shares of certain wholly owned subsidiary corporations are
exempt from these prohibitions. The Company holds assets through certain wholly
owned subsidiary corporations and holds Preferred Stock interests in certain
corporations; in the opinion of Cahill Gordon & Reindel, based on certain
factual representations, these holdings do not violate the prohibition on
ownership of voting securities. For each taxable year, at least 75% of a REIT's
gross income must be derived from specified real estate sources and 95% must be
derived from such real estate sources plus certain other permitted sources. Real
estate income for purposes of these requirements includes gain from the sale of
real property not held primarily for sale to customers in the ordinary course of
business, dividends on REIT shares, interest on loans secured by mortgages on
real property, certain rents from real property and income from foreclosure
property. For rents to qualify, they may not be based on the income or profits
of any person, except that they may be based on a percentage or percentages of
gross income or receipts. Also, subject to certain limited exceptions, the REIT
may not manage the property or furnish services to tenants except through an
independent contractor which is paid an arm's-length fee and from which the REIT
derives no income. However, a REIT may render a de minimis amount of otherwise
impermissible services to tenants, or in connection with the management of
property, and treat amounts received with respect to such property as rents from
real property. Substantially all of the Company's assets are held through the
Operating Partnership and the Other Real Estate Partnerships. In general, in the
case of a REIT that is a partner in a partnership, applicable regulations treat
the REIT as holding di-
-11-
rectly its proportionate share of the assets of the partnership and as being
entitled to the income of the partnership attributable to such share.
The Company must satisfy certain ownership restrictions that limit (i)
concentration of ownership of the Company's capital stock by a few individuals
and (ii) ownership by the Company of its tenants. The outstanding capital stock
of the Company must be held by at least 100 stockholders. No more than 50% in
value of the outstanding capital stock, including in some circumstances capital
stock into which outstanding securities might be converted, may be owned
actually or constructively by five or fewer individuals or certain other
entities at any time during the last half of the Company's taxable year.
Accordingly, the Company's Articles of Incorporation contain certain
restrictions regarding the transfer of Common Stock, Preferred Stock and any
other outstanding securities convertible into Common Stock when necessary to
maintain the Company's qualification as a REIT under the Code. However, because
the Code imposes broad attribution rules in determining constructive ownership,
no assurance can be given that the restrictions contained in the Company's
Articles of Incorporation will be effective in maintaining the Company's REIT
status. See "Restrictions on Transfers of Capital Stock."
So long as the Company qualifies for taxation as a REIT and distributes at
least 95% of its REIT taxable income (computed without regard to net capital
gain or the dividends paid deduction) for its taxable year to its stockholders
annually, the Company itself will not be subject to federal income tax on that
portion of such income distributed to stockholders. The Company will be taxed at
regular corporate rates on all income not distributed to stockholders. The
Company's policy is to distribute at least 95% of its taxable income. The
Company may elect to pass through to its shareholders on a pro rata basis any
taxes paid by the Company on its undistributed net capital gain income for the
relevant tax year. REITs also may incur taxes for certain other activities or to
the extent distributions do not satisfy certain other requirements.
Failure of the Company to qualify during any taxable year as a REIT could,
unless certain relief provisions were available, have a material adverse effect
upon its stockholders. If disqualified for taxation as a REIT for a taxable
year, the Company also would be disqualified for taxation as a REIT for the next
four taxable years, unless the failure were considered to be due to reasonable
cause and not willful neglect. The Company would be subject to federal income
tax at corporate rates on all of its taxable income and would not be able to
deduct any dividends paid, which could result in a discontinuation of or
substantial reduction in dividends to stockholders. Dividends also would be
subject to the regular tax rules applicable to dividends received by
stockholders of corporations. Should the failure to qualify as a REIT be
determined to have occurred retroactively in an earlier tax year of the Company,
the imposition of a substantial federal income tax liability on the Company
attributable to any nonqualifying tax years may adversely affect the Company's
ability to pay dividends. In the event that the Company fails to meet certain
income tests applicable to REITs, it may, generally, nonetheless retain its
qualification as a REIT if it pays a 100% tax on the amount by which it failed
to meet the relevant income test so long as such failure was considered to be
due to reasonable cause and not willful neglect. Any such taxes would adversely
affect the Company's ability to pay dividends and distributions.
SELLING STOCKHOLDER
The following table sets forth the name of the Selling Stockholder, the
number of shares of Common Stock currently beneficially owned by the Selling
Stockholder and the numbers of Shares to be offered hereby, assuming the sale of
all Shares beneficially owned. As the Selling Stockholder may sell all, some or
none of its Shares, no estimate can be made as to the number of Shares that are
to be offered hereby, or the aggregate number of Shares that will be owned by
the Selling Stockholder upon completion of the offering to which this Prospectus
relates. All of the Shares being offered by the Selling Stockholder were
acquired from the Initial Purchaser in a private placement pursuant to an
exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof. The Shares are being registered by the Company pursuant to
the Registration Rights Agreement. The Company has agreed, among other things,
to bear the expenses incurred in connection with the registration and sale under
the Securities Act of the Shares being offered by the Selling Stockholder. The
Company has filed with the Commission, under the Securities Act, a Registration
Statement
-12-
on Form S-3, of which this Prospectus forms a part, with respect to the resale
of the Shares from time to time on the NYSE or in privately-negotiated
transactions and has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep the Registration
Statement effective until the Shares are no longer required to be registered for
the public sale thereof by the Selling Stockholder. The Shares offered by this
Prospectus may be offered from time to time by the Selling Stockholder named
below.
Beneficial Shares
Ownership to Be
Selling Stockholder Prior to Offering Offered
------------------- ----------------- -------
Equity Investor Fund 1,112,644 1,112,644
Cohen & SteersSM Realty Majors Portfolio
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time of the
Shares. Pursuant to the Registration Rights Agreement, the Company has filed
with the Commission, under the Securities Act, a Registration Statement on Form
S-3, of which this Prospectus forms a part, with respect to the resale of the
Shares from time to time on the NYSE or in privately-negotiated transactions and
has agreed to prepare and file such amendments and supplements to the
Registration Statement as may be necessary to keep the Registration Statement
effective until the Shares are no longer required to be registered for the
public sale thereof by the Selling Stockholder or any of its transferees under
the terms of the Registration Rights Agreement. The registration of such shares
does not necessarily mean that any of such shares will be sold by the Selling
Stockholder.
The Selling Stockholder may from time to time offer the Shares in one or
more transactions (which may involve block transactions) on the NYSE or
otherwise, in secondary distributions pursuant to and in accordance with the
rules of the NYSE, in the over-the-counter market, in negotiated transactions,
through the writing of options on the Shares (whether such options are listed on
an options exchange or otherwise), or a combination of such methods of sale, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In addition, any Shares that
qualify for sale under Rule 144 under the Securities Act may be sold under that
Rule rather than pursuant to this Prospectus.
The Selling Stockholder may effect such transactions by selling Shares to
or through broker-dealers or through other agents, and such broker-dealers or
agents may receive compensation in the form of commissions from the Selling
Stockholder, which will not exceed those customary in the types of transactions
involved, and/or the purchasers of Shares for whom they may act as agent. The
Selling Stockholder and any dealers or agents that participate in the
distribution of Shares may be deemed to be "underwriters" within the meaning of
the Securities Act and any profit on the sale of Shares by them and any
commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act.
In the event of a "distribution" of the shares, the Selling Stockholder,
any selling broker-dealer or agent and any "affiliated purchasers" may be
subject to Regulation M under the Exchange Act, which would prohibit, with
certain exceptions, each such person from bidding for or purchasing any security
which is the subject of such distribution until his participation in that
distribution is completed. In addition, Regulation M under the Exchange Act
prohibits certain "stabilizing bids" or "stabilizing purchases" for the purpose
of pegging, fixing or stabilizing the price of Common Stock in connection with
this offering.
At the time a particular offer of Shares is made, a Prospectus Supplement,
if required, will be distributed that will set forth the name or names of any
dealers, agents or underwriters and any commissions and
-13-
other terms constituting compensation from the Selling Stockholder and any other
required information. The Shares may be sold from time to time at varying prices
determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold only through registered or licensed brokers
or dealers or, if required, an exemption from issuer-dealer registration will be
perfected.
Pursuant to the Registration Rights Agreement, the Company has agreed to
indemnify each holder of Shares and any person who controls any holder against
certain losses, claims, damages, liabilities and expenses arising under the
securities laws. The Registration Rights Agreement also provides certain future
holders of the Shares with the right to have the Shares registered under the
Securities Act, to the extent required.
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1997 and the
consolidated financial statement schedule as of December 31, 1997, of the
Company, and the combined statement of revenues and certain expenses of the 1997
Acquisition VIII Properties (as defined in the Company's Current Report on Form
8-K/A No. 2 filed February 26, 1998) for the year ended December 31, 1996 and
the combined statement of revenues and certain expenses of the 1998 Acquisition
I Properties (as defined in the Company's Current Report on Form 8-K/A No. 1
filed June 16, 1998) for the year ended December 31, 1997 incorporated by
reference in this Prospectus or elsewhere in the Registration Statement, have
been incorporated herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Cahill Gordon
& Reindel (a partnership including a professional corporation), New York, New
York. Cahill Gordon & Reindel will rely as to all matters of Maryland law on the
opinion of McGuire, Woods, Battle & Boothe LLP, Baltimore, Maryland.
-14-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities registered hereby, which will be
borne by the Company:
Securities and Exchange Commission registration fee......... $ 9,962
NYSE fee.................................................... 4,200
Legal fees and expenses..................................... 35,000
Accounting fees and expenses................................ 25,000
Miscellaneous............................................... 25,000
---------
Total....................................................... $99,162
=======
Item 15. Indemnification of Directors and Officers.
The Company's Articles of Incorporation and Bylaws provide certain
limitations on the liability of the Company's Directors and officers for
monetary damages to the Company. The Articles of Incorporation and Bylaws
obligate the Company to indemnify its Directors and officers, and permit the
Company to indemnify its employees and other agents, against certain liabilities
incurred in connection with their service in such capacities. These provisions
could reduce the legal remedies available to the Company and its stockholders
against these individuals. The provisions of Maryland law provide for the
indemnification of officers and directors of a company under certain
circumstances.
Item 16. Exhibits.
Exhibit
Number Description
4.1 Registration Rights Agreement, dated April 29, 1998, relating to the
Shares, between the Company, the Operating Partnership and the Initial
Purchaser (incorporated by reference to Exhibit 4.1 of the Company's Form
8-K dated May 1, 1998 as filed on May 5, 1998, File No. 1-13102).
4.2 Amended and Restated Articles of Incorporation of the Company (incorporated
by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal
quarter ended June 30, 1996, File No. 1-13102).
4.3 Amended and Restated Bylaws of the Company, dated September 4, 1997
(incorporated by reference to Exhibit 1 of the Company's Form 8-K dated
September 4, 1997 as filed on September 29, 1997, File No. 1-13102).
4.4 Rights Agreement, dated as of September 16, 1997, between the Company and
First Chicago Trust Company of New York, as Rights Agent (incorporated by
reference to Exhibit 99.1 of Form 8-A12B as filed on September 24, 1997,
Registration No. 333-29879, File No. 1-13102).
5** Opinion of Cahill Gordon & Reindel, counsel to the Registrant, as to the
legality of the securities being registered, together with the opinion of
McGuire, Woods, Battle &
II-1
Boothe LLP.
8** Opinion of Cahill Gordon & Reindel, counsel to the Registrant, as to
certain tax matters.
23.1* Consent of Coopers & Lybrand L.L.P.
23.2** Consent of Cahill Gordon & Reindel (included in Exhibit 5 and Exhibit 8).
23.3** Consent of McGuire, Woods, Battle & Boothe LLP (included in Exhibit 5).
24** Powers of Attorney.
- -----------------------
* Filed herewith.
** Previously filed.
II-2
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act of 1933, if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the undersigned registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 17 above, or otherwise, the registrant has been
advised that in the
II-3
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer, or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the manner
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, State of Illinois, on June 18, 1998.
FIRST INDUSTRIAL REALTY TRUST, INC.
By: /s/ Michael J. Havala
--------------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
* Principal Executive June 18, 1998
- -------------------------------- Officer and Director
Michael T. Tomasz
/s/ Michael J. Havala Principal Financial and June 18, 1998
- -------------------------------- Accounting Officer
Michael J. Havala
* Chief Operating Officer and June 18, 1998
- -------------------------------- Director
Michael W. Brennan
* Director June 18, 1998
- --------------------------------
Michael G. Damone
* Director June 18, 1998
- --------------------------------
John L. Lesher
* Director June 18, 1998
- --------------------------------
Kevin W. Lynch
* Director June 18, 1998
- --------------------------------
John E. Rau
* Chairman of the Board of June 18, 1998
- -------------------------------- Directors
Jay H. Shidler
* Director June 18, 1998
- --------------------------------
Robert J. Slater
* Director June 18, 1998
- --------------------------------
J. Steven Wilson
*By: /s/ Michael J. Havala
-------------------------
Michael J. Havala
Attorney-in-fact
II-5
EXHIBIT INDEX
Exhibit
Number Description
4.1 Registration Rights Agreement, dated April 29, 1998, relating to the
Shares, between the Company, the Operating Partnership and the Initial
Purchaser (incorporated by reference to Exhibit 4.1 of the Company's Form
8-K dated May 1, 1998 as filed on May 5, 1998, File No. 1-13102).
4.2 Amended and Restated Articles of Incorporation of the Company (incorporated
by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal
quarter ended June 30, 1996, File No. 1-13102).
4.3 Amended and Restated Bylaws of the Company, dated September 4, 1997
(incorporated by reference to Exhibit 1 of the Company's Form 8-K dated
September 4, 1997 as filed on September 29, 1997, File No. 1-13102).
4.4 Rights Agreement, dated as of September 16, 1997, between the Company and
First Chicago Trust Company of New York, as Rights Agent (incorporated by
reference to Exhibit 99.1 of Form 8-A12B as filed on September 24, 1997,
Registration No. 333-29879, File No. 1-13102).
5** Opinion of Cahill Gordon & Reindel, counsel to the Registrant, as to the
legality of the securities being registered, together with the opinion of
McGuire, Woods, Battle & Boothe LLP.
8** Opinion of Cahill Gordon & Reindel, counsel to the Registrant, as to
certain tax matters.
23.1* Consent of Coopers & Lybrand L.L.P.
23.2** Consent of Cahill Gordon & Reindel (included in Exhibit 5 and Exhibit 8).
23.3** Consent of McGuire, Woods, Battle & Boothe LLP (included in Exhibit 5).
24** Powers of Attorney.
- ------------------------
* Filed herewith.
** Previously Filed.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of First Industrial Realty Trust, Inc. to Amendment No. 1 on Form S-3 (File No.
333-53835) of our report dated February 17, 1998 on our audits of the
consolidated financial statements of First Industrial Realty Trust, Inc. (the
"Company") as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997, and the consolidated financial statement
schedule as of December 31, 1997, which is included in the Company's 1997 Annual
Report on Form 10-K, our reports dated December 30, 1997, January 9, 1998,
January 9, 1998 and February 17, 1998 on our audit of the combined historical
statement of revenues and certain expenses of the 1997 Acquisition V Properties,
the 1997 Acquisition VI Properties, the 1997 Acquisition VII Properties and the
1997 Acquisition VIII Properties, respectively, for the year ended December 31,
1996 which are included in the Company's Current Report on Form 8-K filed
December 23, 1997, as amended by Form 8-K/A No. 1 filed January 22, 1998 and as
amended by Form-8 K/A No. 2 filed on February 26, 1998 and our report dated
April 23, 1998 on our audit of the combined historical statement of revenues and
certain expenses of the 1998 Acquisition I Properties for the year ended
December 31, 1997 which is included in the Company's Current Report on Form
8-K/A No. 1 filed June 16, 1998. We also consent to the reference to our firm
under the caption "Experts."
Coopers & Lybrand L.L.P.
Chicago, Illinois
June 18, 1998