Filed Pursuant to Rule 424(b)(5)
Registration No. 333-76588
PROSPECTUS SUPPLEMENT
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(To prospectus dated January 30, 2002)
15,000,000 Shares
[LOGO] Senior Housing Properties Trust
Common Shares of Beneficial Interest
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We are offering for sale 15,000,000 common shares of beneficial interest. Our
common shares of beneficial interest are listed on the New York Stock Exchange
under the symbol "SNH." The last reported sale price for the common shares of
beneficial interest on February 15, 2002 prior to the detemination of the
offering price was $13.89 per share.
Investment in our common shares of beneficial interest involves risks. You
should read carefully the entire prospectus and this prospectus supplement,
including the section entitled "Risk factors" that begins on page S-4 of this
prospectus supplement, which describes material risks.
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 is truthful or complete.
Any representation to the contrary is a criminal offense.
Per
Share Total
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Public offering price $13.72 $ 205,800,000
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Underwriting discounts and commissions $0.686 $ 10,290,000
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Proceeds, before expenses, to Senior Housing Properties
Trust $13.034 $ 195,510,000
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The underwriters may also purchase from us up to an additional 2,250,000 of our
common shares of beneficial interest, at the public offering price less the
underwriting discount, to cover over-allotments, if any, within 30 days from the
date of this prospectus supplement.
The underwriters are offering our common shares of beneficial interest as
described in "Underwriting". The shares will be ready for delivery on or about
February 21, 2002.
UBS Warburg Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
Legg Mason Wood Walker Incorporated
Wachovia Securities
Raymond James
RBC Capital Markets
The date of this prospectus supplement is February 15, 2002.
TABLE OF CONTENTS
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Page
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Prospectus supplement
Documents incorporated by
reference.......................... iii
Where you can find more
information........................ iii
Prospectus supplement summary........ S-1
Risk factors......................... S-4
Recent share prices.................. S-9
Use of proceeds...................... S-9
Capitalization....................... S-10
Selected financial data.............. S-11
Our Company.......................... S-12
Our tenants and property
operations......................... S-14
Federal income tax and ERISA
considerations..................... S-17
Underwriting......................... S-18
Legal matters........................ S-19
Page
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Prospectus
Senior Housing Properties Trust...... 1
SNH Capital Trusts................... 1
Risk factors......................... 3
Use of proceeds...................... 3
Ratio of earnings to fixed charges... 3
Description of debt securities....... 4
Description of common shares......... 12
Description of preferred shares...... 13
Description of depositary shares..... 18
Description of warrants.............. 22
Description of trust preferred
securities and trust guarantee..... 23
Description of certain provisions of
Maryland law and our declaration of
trust and bylaws................... 27
Plan of distribution................. 35
Validity of the offered securities... 37
Experts.............................. 37
Where you can find more
information........................ 38
Documents incorporated by
reference.......................... 39
ii
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REFERENCES IN THIS PROSPECTUS SUPPLEMENT TO "WE," "US," "OUR," "SNH" OR THE
"COMPANY" MEAN SENIOR HOUSING PROPERTIES TRUST AND ALL OF ITS SUBSIDIARIES.
REFERENCES IN THIS PROSPECTUS SUPPLEMENT TO "SHARES" MEAN OUR COMMON SHARES OF
BENEFICIAL INTEREST.
IN PRESENTING "AS ADJUSTED" INFORMATION IN THIS PROSPECTUS SUPPLEMENT, WE HAVE
ASSUMED THAT THIS OFFERING HAS BEEN COMPLETED AND THAT WE HAVE APPLIED THE NET
PROCEEDS AS DESCRIBED IN THIS PROSPECTUS SUPPLEMENT. UNLESS OTHERWISE STATED IN
THIS PROSPECTUS SUPPLEMENT, WE HAVE ASSUMED THROUGHOUT THIS PROSPECTUS
SUPPLEMENT THAT THE UNDERWRITER'S OVER-ALLOTMENT OPTION IS NOT EXERCISED.
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You should rely only on the information contained or incorporated in this
prospectus supplement and the accompanying prospectus. We have not, and the
underwriters have not, authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not, and the underwriters are not, making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information appearing in this
prospectus supplement, the accompanying prospectus and the documents
incorporated by reference is accurate only as of their respective dates or on
other dates which are specified in those documents. Our business, financial
condition, results of operations and prospects may have changed since those
dates.
Documents incorporated by reference
In addition to the documents incorporated by reference or deemed incorporated by
reference in the accompanying prospectus, our Current Report on Form 8-K dated
February 13, 2002, which has been filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is hereby incorporated into this prospectus supplement and
specifically made a part hereof.
We also incorporate by reference each of the following documents that we file
with the SEC after the date of this prospectus supplement but before the end of
this offering:
- Reports filed under Sections 13(a) and (c) of the Exchange Act;
- Definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent shareholders' meeting; and
- Any reports filed under Section 15(d) of the Exchange Act.
You may request a copy of any of these filings (excluding exhibits), at no cost,
by writing or telephoning us at the following address:
Investor Relations
Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
(617) 796-8350
Where you can find more information
You may read and copy any material that we file with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. You may also access our SEC filings over the internet at the
SEC's site at http://www.sec.gov.
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iii
Prospectus supplement summary
THIS DOCUMENT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.
YOU SHOULD CAREFULLY READ THIS ENTIRE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS. YOU SHOULD ALSO READ THE DOCUMENTS WE HAVE REFERRED YOU TO IN
"DOCUMENTS INCORPORATED BY REFERENCE".
OUR COMPANY
We are a real estate investment trust (REIT) which invests in senior housing
facilities, including apartment buildings for aged residents, independent living
properties, assisted living facilities and nursing homes. As of January 31,
2002, we own 112 facilities located in 28 states with a book value before
depreciation of $1.2 billion. Our current annual rent from our investments
totals $115.3 million and is divided by operator as shown in the following chart
(dollars in thousands):
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
5 SEPARATE PRIVATE COMPANY TENANTS
(7 facilities leased to 2002/2015)
$3,462 3
Genesis Health Ventures, Inc.
(1 facility leased to 2005)
$1,483 1
Integrated Health Services, Inc.
(1 facility leased to 2010)
$1,200 1
HEALTHSOUTH Corporation
(2 facilities leased to 2011)
$8,700 8
Marriott International, Inc.(1)
(14 facilities leased to 2013)
$30,482 26
Five Star Quality Care, Inc.
(56 facilities leased to 2018)
$7,000 6
Marriott International, Inc.(2)
(31 facilities leased to Five Star to 2017)
$63,000 55
(1) This lease to a Marriott subsidiary is guaranteed by Marriott
International, Inc.
(2) These properties are managed by a subsidiary of Marriott. The Five Star
lease is not guaranteed by Marriott International, Inc.
DISTRIBUTIONS
Our current cash distribution rate per share is $0.30 per quarter, or $1.20 per
year. The next quarterly distribution for the period ended March 31, 2002, is
expected to be declared in early April 2002.
We intend to continue to pay future quarterly distributions in cash, but may
from time to time declare and pay special distributions in cash or in kind. Our
payment of distributions is subject to compliance with restrictions contained in
our senior notes indenture and our revolving bank credit facility. Our
determination of distributions is in part based upon our consideration of cash
available for distribution, which has in the past exceeded earnings. We
generally calculate cash available for distribution as earnings plus non-cash
charges such as depreciation, plus non-recurring expenses and minus a reserve
for capital expenditures at some of our properties. We expect to continue to pay
distributions, in part, based upon our cash available for distribution and we
expect that our distributions will continue to exceed earnings. Accordingly, a
portion of your distributions will be considered a return of capital and may not
be subject to income tax until your shares are sold. There can be no assurance
that we will be able to maintain or increase our distribution rate.
S-1
RECENT DEVELOPMENTS
- SALE OF $245 MILLION OF UNSECURED SENIOR NOTES. On December 20 and 28, 2001,
we sold $245 million of senior notes. The notes carry interest at a fixed
rate of 8 5/8% and are due in 2012. Net proceeds to us from the sale of the
notes were $238 million. Interest on the notes is payable semi-annually in
arrears. No principal payments are due until maturity.
- SPIN-OFF OF FIVE STAR QUALITY CARE, INC. On December 31, 2001, we completed
a spin-off of Five Star Quality Care, Inc., our former subsidiary. Five Star
now leases 56 senior living facilities from us. We capitalized Five Star
with $50 million of equity capital and paid all costs of the spin-off.
- SETTLEMENT WITH HEALTHSOUTH. As previously reported, HEALTHSOUTH, one of our
tenants, had committed a non-monetary default by closing one of our nursing
homes which it leased. On January 2, 2002, this default was settled by a
property exchange. We delivered to HEALTHSOUTH title to five nursing homes
which it leased from us. In exchange, HEALTHSOUTH delivered to us title to
two rehabilitation hospitals and HEALTHSOUTH leased these hospitals from us.
As part of this settlement HEALTHSOUTH's lease was extended to
December 2011 from January 2006, and the annual rent paid to us was reduced
from $10.0 million to $8.7 million.
- ACQUISITION OF 31 MARRIOTT SENIOR LIVING COMMUNITIES. On January 11, 2002,
we acquired 31 senior living communities for $600 million. These communities
are managed by a subsidiary of Marriott International, Inc. and leased to
Five Star under long-term agreements.
ORGANIZATION AND PRINCIPAL PLACE OF BUSINESS
We are organized as a Maryland real estate investment trust. Our principal place
of business is 400 Centre Street, Newton, Massachusetts 02458 and our telephone
number is (617) 796-8350.
S-2
The offering
Shares being offered by us........................... 15,000,000 shares
Shares to be outstanding after the offering.......... 58,422,200 shares
Use of proceeds...................................... We estimate that our net proceeds from the
offering will be $195 million. We intend to
use these proceeds to repay a $25 million
10% unsecured promissory note and the
remainder of $170 million to be used to repay
borrowings outstanding under our revolving
bank credit facility and for general business
purposes.
New York Stock Exchange symbol....................... SNH
The number of shares to be outstanding after the offering is based on 43,422,200
shares outstanding on February 14, 2002. If the underwriters exercise their
over-allotment option, we will issue up to an additional 2,250,000 shares.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
We have made statements in this prospectus supplement and the accompanying
prospectus, including the documents that are incorporated by reference, that are
not historical facts but are forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. These statements concern:
- the possible expansion of our portfolio;
- the performance of our tenants and properties;
- our ability to make distributions on our shares;
- our ability to make interest and principal payments on our debts;
- our policies and plans regarding investments, financings and other matters;
- our tax status as a real estate investment trust;
- our ability to appropriately balance the use of debt and equity; and
- our ability to access capital markets or other sources of funds.
Also, when we use any of the words "believe", "expect", "anticipate", "intend",
"plan", "estimate", or similar expressions, we are making forward-looking
statements. You are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual
results may differ materially from those contained in or implied by the forward-
looking statements as a result of various factors. Such factors include, without
limitation:
- the impact of changes in the economy and the capital markets on us and our
tenants;
- compliance with and changes to regulations and payment policies within the
real estate, senior housing and healthcare industries;
- changes in financing terms;
- competition within the real estate, senior housing and healthcare
industries; and
- changes in law.
The information contained in "Risk factors", our Annual Report on Form 10-K
which is incorporated by reference in the accompanying prospectus, including the
information contained in "Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and our Current Reports on
Form 8-K incorporated by reference in this prospectus supplement and
accompanying prospectus identify other important factors that could cause such
differences.
S-3
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Risk factors
Ownership of the shares will involve various risks. The following is a summary
of the material risks:
Changes at Marriott International, Inc. could adversely affect us.
Marriott International leases 14 properties from us which generate 26% of our
current annual rent. Marriott also manages 31 senior living facilities which we
lease to Five Star and which generate 55% of our rent. We regard Marriott as a
strong credit tenant and competent manager of senior living facilities.
Nonetheless, the Marriott International leases for the 14 facilities we
currently own extend to 2013, the Marriott operating agreements for the 31
senior living facilities we lease to Five Star extend to 2027, and Marriott's
financial condition and the performance of its leased and managed facilities may
change. Because our investment in facilities leased to or operated by Marriott
generates a large percentage of our income, adverse changes in Marriott's
financial condition or its operation of our properties may adversely affect our
cash flow and our ability to pay distributions.
Financial or other difficulties at Five Star could adversely affect us.
Five Star is our largest tenant, responsible for $70 million of our annual rent,
which is 61% of our current annual rent. Five Star's initial equity capital was
$50 million. Although we expect Five Star's initial capitalization is adequate
to support its current business plan, Five Star has limited resources; and, if
Five Star's operations decline, Five Star may default on its lease obligations
to us.
Five Star is a new company with a limited operating history and a staff that has
been assembled for less than two years and does not have extensive experience
working together. Accordingly, Five Star may be unable to effectively operate
our facilities or execute its business plans effectively.
The operations of some of our facilities are dependent upon payments from the
Medicare and Medicaid programs.
At most of our facilities, other than those leased to or operated by Marriott, a
substantial majority of the operating revenues are received from the Medicare
and Medicaid programs. Since 1998 the federal government has been implementing a
Medicare prospective payment system which has lowered Medicare rates paid to
nursing homes. Many state Medicaid programs also have adopted rate setting
formulas to limit Medicaid rates. The prospective payment system and other
federal and state initiatives adversely affected many operators of nursing homes
over the last several years, including some of our tenants. At present, there is
active debate within the federal government and within many state governments
regarding whether current Medicare and Medicaid reimbursement rates should
remain at their current levels. If Medicare and Medicaid rates are reduced from
current levels or if rate increases are less than increases in our tenants'
operating costs, it could have a material adverse effect on the ability of some
of our tenants to pay our rent.
Healthcare operations are subject to litigation risks and increasing insurance
costs.
There are various federal and state laws prohibiting fraud by health care
providers, including criminal provisions that prohibit filing false claims for
Medicare and Medicaid payments and laws that govern patient referrals. The state
and federal governments seem to be devoting increasing resources to anti-fraud
initiatives against health care providers. In some states, advocacy groups have
been created to monitor the quality of care at senior housing facilities, and
these groups have brought litigation against operators. Also, in several
instances private litigation by nursing home patients has succeeded in winning
very large damage awards for alleged abuses. The effect of this litigation and
potential litigation has been to materially increase the costs of monitoring and
reporting quality of care compliance incurred by our tenants. In addition, the
cost of liability and medical malpractice insurance
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S-4
Risk factors
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has increased and may continue to increase so long as the present litigation
environment affecting the operations of nursing homes and other senior housing
facilities continues. Continued cost increases could adversely affect our
tenants' abilities to pay their rents.
Our facilities and their operations are subject to complex regulations.
Physical characteristics of senior housing facilities are mandated by various
governmental authorities. Changes in these regulations may require significant
expenditures. Our triple net leases require our tenants to maintain our
facilities in compliance with applicable laws and we generally try to monitor
their compliance activities. However, when our tenants suffer financial
distress, maintenance of our facilities may be neglected. Our available
financial resources or those of our tenants may be insufficient to fund
additional expenditures required to keep these facilities operating in
accordance with regulations, and if we fund these expenditures, our tenants'
financial resources may be insufficient to meet increased rental obligations to
us.
State licensing and Medicare and Medicaid laws also require our tenants who
operate nursing homes and assisted living facilities to comply with extensive
standards governing operations. Federal and state agencies administering these
laws regularly inspect such facilities and investigate complaints. When
deficiencies are identified, sanctions and remedies such as denials of payment
for new Medicare and Medicaid admissions, civil money penalties, state oversight
and loss of Medicare and Medicaid participation or licensure may be imposed. Our
tenants and their managers receive notices of potential sanctions and remedies
from time to time, and such sanctions have been imposed from time to time on
facilities operated by them. If they are unable to cure deficiencies which have
been identified or which are identified in the future, such sanctions may be
imposed, and if imposed, may adversely affect our tenants' abilities to pay
their rents.
We may be unable to access the capital necessary to grow.
Because we are a REIT, we are required to distribute 90% of our taxable income
to shareholders and we generally cannot use income from operations to fund our
growth. Accordingly, our growth strategy depends, in part, upon our ability to
raise additional capital at reasonable costs to fund new investments. We believe
we will be able to raise additional debt and equity capital at reasonable costs
to refinance the debt we assume or incur at or prior to its maturity and to
invest at yields which exceed our cost of capital. However, our ability to raise
reasonably priced capital is not guaranteed; we may be unable to raise
reasonably priced capital because of reasons related to our business or for
reasons beyond our control, such as market conditions. Similarly, we may be
unable to make accretive new investments because of competition from other REITs
or investors, or for other reasons. Our growth strategy is not assured and it
may fail.
The common shares being sold in this offering are being offered under a shelf
registration statement that we have filed with the SEC. Following this offering,
we will have approximately $1.8 billion of debt, equity and other securities
available for issuance under this shelf registration statement. We believe the
availability of this shelf registration statement will allow us to more quickly
access the capital markets, should the need arise; however, we cannot assure you
that we will be able to access the capital markets. Also, to the extent we issue
additional equity securities, the issuances could be dilutive to you and to the
extent we issue additional debt securities, we could be adversely impacted by
additional debt leverage.
Our $270 million revolving credit facility matures in September 2002. We expect
to enter into a new revolving credit facility at or before that time. We cannot
assure you that a new credit facility will be available to us on terms we view
as favorable, or at all.
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S-5
Risk factors
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Acquisitions that we make may not be successful.
Our recently completed acquisition of 31 senior living communities in January
2002 approximately doubled the book value of assets in our real estate
portfolio. Our business strategy contemplates further acquisitions. We cannot
assure you that acquisitions we make will prove to be successful. We might
encounter unanticipated difficulties and expenditures relating to any acquired
properties, including contingent liabilities. Further, newly acquired properties
might require significant management attention that would otherwise be devoted
to our ongoing business. We might never realize the anticipated benefits of any
acquisition. In order to finance future acquisitions, we might issue equity
securities or incur additional debt, or both, which may reduce our per share
financial results.
One of our tenants is in bankruptcy.
One of our facilities is currently leased to a tenant that is in bankruptcy.
This lease provides us rent of $1.2 million per year. Although this tenant is
paying rent to us, it may cease to do so in the future or may otherwise exercise
rights available pursuant to the United States Bankruptcy Code. Also, because of
the financial difficulties facing the nursing home industry generally, some of
our other nursing home tenants may file for bankruptcy or stop paying their rent
to us.
HRPT Properties Trust is our dominant shareholder.
Until October 1999 we were a 100% owned subsidiary of HRPT Properties Trust.
HRPT Properties continues to own 12.8 million of our shares, which will
represent 22% of our total shares outstanding as adjusted for this offering.
Because of this large percentage ownership, HRPT Properties may be able to
control our shareholder decisions, and this control may result in decisions
which you believe are contrary to our or your best interests. In connection with
this offering, HRPT Properties has agreed not to sell its shares of SNH for
90 days; thereafter, HRPT Properties will be free to sell its owned shares of
SNH. The possibility that HRPT Properties may in the future decide to sell a
large number of our shares or actual sales of our shares by HRPT Properties may
have an adverse effect upon the market price of our shares.
Our business dealings with our managing trustees may create conflicts of
interest.
We have no employees. Personnel and other services which we require are provided
to us under contract by our investment manager, REIT Management & Research LLC,
or RMR. RMR is owned by our managing trustees, Barry Portnoy and Gerard Martin.
We pay RMR a fee based in large part upon the amount of our investments. This
fee arrangement could encourage RMR and Messrs. Portnoy and Martin to advocate
acquisitions and discourage sales by us. RMR also acts as the investment manager
for two other publicly owned REITs: HRPT Properties Trust, which owns and
operates office buildings, and Hospitality Properties Trust, which owns and
leases hotels. RMR also provides services to Five Star under a shared services
agreement. Messrs. Portnoy and Martin also serve as managing trustees of HRPT
Properties and Hospitality Properties and as managing directors of Five Star.
These multiple responsibilities to these public companies could create
competition among these companies for the time and efforts of RMR and
Messrs. Portnoy and Martin.
All of the contractual arrangements between us and RMR have been approved by our
trustees other than Messrs. Portnoy and Martin. We believe that the quality and
depth of management available to us by contracting with RMR could not be
duplicated by our being a self-advised company or by our contracting with
unrelated third parties without considerable cost increases. However, the fact
that we believe these relationships have been beneficial to us in the past does
not guarantee that these related party transactions may not be detrimental to us
in the future.
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S-6
Risk factors
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Competition has adversely affected some of our facilities.
During the 1990s a large number of new assisted living facilities were
developed. In most states these facilities are subject to less stringent
regulations than nursing homes and can operate with comparatively fewer
personnel and at comparatively lower costs. As a result of offering newer
accommodations at equal or lower costs, these assisted living facilities and
other senior living alternatives, including home healthcare, often attract those
who would have previously become nursing home residents. Our nursing home
facilities now generally have lower occupancies than when we acquired them.
Moreover, many of the residents attracted to new assisted living facilities were
the most profitable nursing home patients, being those who paid higher private
pay rates rather than Medicaid or Medicare rates and those who required lesser
amounts of care.
Historically, nursing homes have been somewhat protected from competition by
state requirements of obtaining certificates of need to develop new facilities;
however, these barriers are being eliminated in many states. Also, there are few
regulatory barriers to competition for home healthcare or for independent and
assisted living services. These competitive factors have caused some nursing
homes which we own to decline in value. This decline may continue as assisted
living facilities or other elderly care alternatives such as home healthcare
expand their businesses. Similar risks face each of our tenants. These risks and
competition from competitors which may be larger or have greater financial
resources may have the impact of preventing our tenants and operators from
maintaining or improving occupancy at our facilities, which may increase the
risk of default under our leases.
We may be unable to remain a REIT.
As a REIT we generally do not pay federal and state income taxes. However, our
continued qualification as a REIT is dependent upon our compliance with complex
provisions of the amended Internal Revenue Code of 1986, or the Tax Code, for
which there are available only limited judicial or administrative
interpretations. For example, during 2000 one of our bankrupt former tenants
delivered to us several nursing homes, which it owned free of debt, in partial
satisfaction of its default obligations to us, and we took possession of these
facilities through taxable REIT subsidiaries. We treated these subsidiaries,
until the Five Star spin-off, as so-called taxable REIT subsidiaries, as
provided under applicable provisions of the Tax Code, in reliance on our belief
and an opinion from our counsel that although the matter is not free from doubt,
it is more likely than not that these subsidiaries qualified for this treatment.
We cannot assure you that, upon review or audit, the IRS will agree with our
conclusions. Different conclusions may jeopardize our REIT status. If we cease
to be a REIT, we would violate a covenant in our current credit facility, our
ability to raise capital could be adversely affected and we may be subject to
material amounts of federal and state income taxes.
Ownership limitations and anti-takeover provisions may prevent you from
receiving a takeover premium.
Our declaration of trust prohibits any shareholder other than HRPT Properties,
RMR and their affiliates from owning more than 9.8% of our outstanding shares.
This provision of the declaration of trust may help us comply with REIT tax
requirements. This provision will also inhibit a change of control. Our
declaration of trust and bylaws contain other provisions that may increase the
difficulty of acquiring control of us by means of a tender offer, open market
purchases, a proxy fight or otherwise, if the acquisition is not approved by our
board of trustees. These other anti-takeover provisions include the following:
- a staggered board of trustees with three separate classes;
- the two-thirds majority shareholder vote required for removal of trustees;
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S-7
Risk factors
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- the availability of additional shares that the board of trustees may
authorize and issue on terms that it determines;
- advance notice procedures with respect to nominations of trustees and
shareholder proposals; and
- the facts that only the board of trustees may call shareholder meetings and
that shareholders are not entitled to act without a meeting.
For all of these reasons, you may be unable to realize a change of control
premium for shares which you purchase in this offering.
Real estate ownership creates risks and liabilities.
Our business is subject to the following risks associated with real estate
acquisitions and ownership:
- casualty losses, some of which may be uninsured;
- defaults and bankruptcies by our tenants;
- the illiquid nature of real estate and real estate markets impair our
ability to purchase or sell our assets rapidly to respond to changing
economic conditions;
- lease expirations which are not renewed or for facilities which can only be
relet at lower rents;
- costs may be incurred relating to maintenance and repair, and the need to
make expenditures due to changes in governmental regulations, including the
Americans with Disabilities Act; and
- environmental hazards created by prior owners or occupants, existing
tenants, abutters or other persons for which we may be liable.
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S-8
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Recent share prices
Our shares are listed on the New York Stock Exchange under the symbol "SNH". The
following table shows the high and low closing sale prices per share of our
shares for the periods indicated as reported on the New York Stock Exchange:
Year Ended December 31, 2001 High Low
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First Quarter............................................... $11.27 $ 9.75
Second Quarter.............................................. $13.15 $11.06
Third Quarter............................................... $13.85 $12.40
Fourth Quarter.............................................. $13.95 $12.21
Year Ending December 31, 2002
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First Quarter (through February 14, 2002)................... $14.46 $13.19
The last reported sale price for our shares on February 15, 2002 prior to the
determination of the offering price was $13.89 per share.
Use of proceeds
We estimate that the net proceeds of this offering, after paying underwriting
commissions and other expenses, will be $195 million ($225 million, if the
underwriters' over-allotment option is exercised in full). We expect to apply
the net proceeds from this offering for repayment of a $25 million 10% unsecured
promissory note which we issued to the seller of 31 senior living communities we
acquired in January 2002, for repayment of amounts outstanding under our
revolving bank credit facility and for general business purposes. At
February 14, 2002, the interest rate payable on our revolving bank credit
facility was 3.8% per year and the amount outstanding was $197 million.
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S-9
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Capitalization
The following table describes our actual capitalization as of September 30,
2001, and our capitalization on a pro forma basis as of that date to reflect the
Five Star spin-off and financings and acquisitions subsequent to September 30,
2001 and as adjusted to reflect the issuance of the shares of beneficial
interest in this offering and the application of the net proceeds thereof as
described under "Use of proceeds".
----------------------------------------
September 30, 2001
----------------------------------------
As adjusted
Actual Pro forma(1) pro forma(2)
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Debt:
Bank credit facility...................................... $ 31,000 $ 197,000 $ 27,000
Unsecured Senior Notes due 2012........................... -- 243,607 243,607
Other debt................................................ 9,100 58,154 33,154
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Total debt................................................ 40,100 498,761 303,761
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Mandatorily redeemable preferred securities of a subsidiary
whose sole assets are the Company's junior subordinated
debentures due 2041 ("Trust Preferred Securities")........ 27,394 27,394 27,394
-------- ---------- ----------
Shareholders' equity........................................ 459,861 581,496 776,706
-------- ---------- ----------
Total capitalization........................................ $527,355 $1,107,651 $1,107,861
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(1) Pro forma amounts give effect to our October 2001 public offering of
14,047,000 common shares, and, as described above in "Recent Developments",
our December 2001 public offerings of $245 million of senior notes, and our
January 2002 acquisition of 31 senior living communities for $600 million. A
portion of the $172 million net proceeds of our October 2001 common share
public offering and $238 million net proceeds of our December public debt
offerings were used to repay debts outstanding at that time, to capitalize
Five Star at the time of its spin-off and partially to fund our January 2002
acquisition of 31 senior living communities.
(2) As adjusted pro forma amounts give effect to the transactions described in
footnote (1) above, the issuance of the common shares of beneficial interest
in this offering and the application of the net proceeds thereof as
described under "Use of proceeds".
--------------------------------------------------------------------------------
S-10
--------------------------------------------------------------------------------
Selected financial data
Set forth below is selected financial data for the periods and dates indicated.
Prior to October 12, 1999, we and our facilities were owned by HRPT Properties.
The following data is presented as if we were a separate entity from HRPT
Properties for all periods. This financial data has been derived from HRPT
Properties' historical financial statements for periods prior to October 12,
1999. Per share data has been presented as if our shares were outstanding for
all periods prior to October 12, 1999. The following table includes pro rata
allocations of HRPT Properties' interest expense and general and administrative
expenses for periods prior to October 12, 1999. In the opinion of our
management, the methods used for allocating interest and general and
administrative expenses are reasonable. However, it is impossible to estimate
all operating costs that we would have incurred as a public company separate
from HRPT Properties. Accordingly, the net income and funds from operations
shown is not necessarily indicative of results that we would have realized as a
separate company. Additionally, year to year comparisons are impacted by
facility acquisitions and dispositions during historical periods. The data for
the nine month periods ended September 30, 2000 and 2001, are derived from our
unaudited financial statements which, in the opinion of our management, include
all adjustments necessary for a fair presentation of our results of operations
and financial position for such periods. The results of operations for the nine
months ended September 30, 2001, are not necessarily indicative of full year
results.
This data should be read in conjunction with, and is qualified in its entirety
by reference to, the consolidated financial statements and accompanying notes
included in our 2000 Annual Report on Form 10-K and our Quarterly Report on
Form 10-Q for the period ended September 30, 2001. In addition, you should
review our Current Report on Form 8-K dated December 20, 2001 which includes,
among other things, pro forma financial information relating to the Five Star
spin-off and our acquisition of 31 senior living communities. Amounts below are
in thousands, except per share information.
Nine Months Ended
------------------------------------------------------ ---------------------
Year Ended December 31, September 30,
Income Statement Data: 1996 1997 1998 1999 2000 2000 2001
---------------------------------------------------------------------------------------------------------------------
Total revenues (1)................... $70,442 $84,171 $88,306 $90,790 $75,522 $ 52,437 $204,880
Income before gain on sale of
facilities......................... 36,441 44,723 46,236 14,834 31,022 19,202 11,108
Net income........................... 36,441 44,723 46,236 14,834 58,437 19,202 11,108
Per share:
Income before gain on sale of
facilities......................... $ 1.40 $ 1.72 $ 1.78 $ 0.57 $ 1.20 $ 0.74 $ 0.41
Net income........................... 1.40 1.72 1.78 0.57 2.25 0.74 0.41
---------
(1) During 2001, our investments in properties formerly leased to bankrupt
tenants began to be operated for our account and as a result we began to
account for facilities operating revenues.
At December 31, At September 30,
--------------------------------------------------------------- ----------------
Balance Sheet Data: 1996 1997 1998 1999 2000 2001
------------------------------------------------------------------------------------------------------------------
Real estate properties, at
cost........................ $692,034 $720,987 $732,393 $708,739 $593,395 $597,865
Real estate mortgages
receivable, net............. 38,270 38,134 37,826 22,939 -- --
Total assets.................. 679,201 692,586 686,296 654,000 530,573 561,648
Total indebtedness............ -- -- -- 200,000 97,000 40,100
Trust preferred securities.... -- -- -- -- -- 27,394
Total shareholders' equity.... 664,492 646,938 642,069 409,406 422,310 459,861
--------------------------------------------------------------------------------
S-11
--------------------------------------------------------------------------------
Our Company
We are a REIT which invests in senior housing real estate, including apartment
buildings for aged residents, assisted living facilities, congregate care
communities and nursing homes.
EXISTING PROPERTIES
We currently own 112 operating facilities, which had a net book value before
depreciation of $1.2 billion at January 31, 2002. The facilities are located in
28 states.
Number of Book value
Location of Properties by State properties before depreciation
-----------------------------------------------------------------------------------------------
(in thousands)
Arizona..................................................... 8 $92,377
California.................................................. 9 111,379
Colorado.................................................... 7 27,805
Connecticut................................................. 2 10,963
Delaware.................................................... 5 57,745
Florida..................................................... 11 217,193
Georgia..................................................... 4 12,308
Illinois.................................................... 1 36,742
Indiana..................................................... 1 18,976
Iowa........................................................ 7 11,377
Kansas...................................................... 2 18,843
Kentucky.................................................... 3 41,112
Maryland.................................................... 1 33,080
Massachusetts............................................... 3 65,272
Michigan.................................................... 2 9,086
Missouri.................................................... 2 3,788
Nebraska.................................................... 15 13,437
New Jersey.................................................. 2 46,343
New Mexico.................................................. 1 26,125
Ohio........................................................ 2 30,933
Pennsylvania................................................ 1 15,598
South Carolina.............................................. 1 3,706
South Dakota................................................ 3 7,589
Texas....................................................... 6 152,479
Virginia.................................................... 3 57,666
Washington.................................................. 1 5,192
Wisconsin................................................... 7 24,868
Wyoming..................................................... 2 7,245
----------- -------------------
Total Investments........................................... 112 $1,159,227
=========== ===================
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S-12
Our Company
--------------------------------------------------------------------------------
TYPES OF FACILITIES
Our present business plan contemplates investments in properties which offer
four types of senior housing accommodations, including some properties that
combine more than one type in a single building or campus.
SENIOR APARTMENTS. Senior apartments are marketed to residents who are
generally capable of caring for themselves. Residence is usually restricted on
the basis of age. Purpose built properties may have special function rooms,
concierge services, high levels of security and assistance call systems for
emergency use. Residents at these properties who need healthcare or assistance
with the activities of daily living are expected to contract independently for
these services with homemakers or home healthcare companies.
INDEPENDENT LIVING PROPERTIES. Independent living properties, or congregate
communities, also provide high levels of privacy to residents and require
residents to be capable of relatively high degrees of independence. Unlike a
senior apartment property, an independent living property usually bundles
several services as part of a regular monthly charge--for example, one or two
meals per day in a central dining room, weekly maid service or a social director
may be offered. Additional services are generally available from staff employees
on a fee-for-service basis. In some independent living properties, separate
parts of the property are dedicated to assisted living or nursing services.
ASSISTED LIVING FACILITIES. Assisted living facilities are typically comprised
of one bedroom suites which include private bathrooms and efficiency kitchens.
Services bundled within one charge usually include three meals per day in a
central dining room, daily housekeeping, laundry, medical reminders and 24 hour
availability of assistance with the activities of daily living such as dressing
and bathing. Professional nursing and healthcare services are usually available
at the property on call or at regularly scheduled times. Since the early 1990s
there has been significant growth in the number of purpose built assisted living
facilities.
NURSING HOMES. Nursing homes generally provide extensive nursing and healthcare
services similar to those available in hospitals, without the high costs
associated with operating theaters, emergency rooms or intensive care units. A
typical purpose built nursing home includes mostly two-bed units with a separate
bathroom in each unit and shared dining and bathing facilities. Some private
rooms are often available for those residents who pay higher rates or for
patients whose medical conditions require segregation. Nursing homes are
generally staffed by licensed nursing professionals 24 hours per day.
During the past few years, nursing home owners and operators have faced two
significant business challenges. First, the rapid expansion of the assisted
living industry which started in the early 1990s has attracted a number of
residents away from nursing homes. This was especially significant because the
residents who chose assisted living facilities previously had often been the
most profitable residents in the nursing homes. These residents required a
lesser amount of care and were able to pay higher private rates rather than
government rates.
The second major challenge arose as a result of Medicare and Medicaid cost
containment laws, particularly 1997 federal legislation that required the
Medicare program to implement a prospective payment program for various subacute
services provided in nursing homes. Implementation of this Medicare prospective
payment program began on July 1, 1998. Prior to the prospective payment program,
Medicare generally paid nursing home operators based upon audited costs for
services provided. The prospective payment system sets Medicare rates based upon
government estimated costs of treating specified medical conditions. Although it
is possible that a nursing home may increase its profit if it is able to provide
quality services at below average costs, we believe that the effect of the new
Medicare rate setting methodology has been and will be to reduce the
profitability of Medicare services in nursing homes. This belief is based upon
our observation of the impact of similar Medicare changes that were implemented
for hospitals during the 1980s and the large number of bankruptcies which have
occurred in the nursing home industry since the implementation of the Medicare
prospective payment system began.
--------------------------------------------------------------------------------
S-13
--------------------------------------------------------------------------------
Our tenants and property operations
Our financial condition depends, in part, on the financial condition of our
tenants and upon our properties' operations.
The following table lists our total current annual rent, after giving effect to
the Five Star spin-off, the acquisition of 31 senior living communities in
January 2002 and changes to HEALTHSOUTH's lease described in "Recent
Developments".
Annual rent Percent of Current lease
Tenant/Operator (dollars in thousands) total annual rent expiration
----------------------------------------------------------------------------------------------------------------------
Five Star/Marriott................................... $ 63,000 55% 12/31/17
Marriott International............................... 30,482 26% 12/31/13
HEALTHSOUTH.......................................... 8,700 8% 12/31/11
Five Star............................................ 7,000 6% 12/31/18
Genesis Health....................................... 1,483 1% 12/31/05
Integrated Health.................................... 1,200 1% 12/31/10
Private companies (by location):
Huron & Sioux Falls, SD (3 properties)............. 1,074 1% 1/31/13
Fresno, CA......................................... 900 1% 9/30/15
Seattle, WA........................................ 803 1% 12/31/05
Grove City, OH..................................... 378 --% 12/31/03
St. Joseph, MO..................................... 307 --% month-to-month
-------- --- ------------------
$115,327 100% 2/1/16
14 years average
(weighted by rent)
MARRIOTT. Marriott is our most important tenant and property operator. The
14 properties (4,030 units) which we lease to Marriott International
predominately offer independent and assisted living services, and 89% of
revenues at these properties are paid by residents from private resources. Our
lease to Marriott International expires in 2013. This lease requires minimum
annual rent of $28 million, plus increases equal to 4.5% of net patient revenue
increases at these properties after 1994. Marriott International has guaranteed
our lease for these 14 properties. We lease an additional 31 properties to Five
Star which are managed by Marriott. The minimum rent for these 31 properties is
$63 million per year plus 5% of net patient revenues increases at these
properties after 2002. Marriott International has not guaranteed Five Star's
lease obligations. Marriott International is a NYSE listed company whose major
businesses are developing, operating and managing hotels, senior living
properties and timeshare resorts. At September 7, 2001, Marriott International
reported total assets of $9.0 billion and stockholders' equity of $3.6 billion
and its unsecured senior debt is investment grade rated.
HEALTHSOUTH. As described above in "Recent Developments", during January 2002
we and HEALTHSOUTH exchanged properties. We transferred five nursing homes
properties to HEALTHSOUTH and HEALTHSOUTH transferred two hospitals to us. We
now lease two rehabilitation hospitals (364 beds) to HEALTHSOUTH. This lease
expires on December 31, 2011. The lease requires annual rent of $8.7 million.
HEALTHSOUTH is a NYSE listed company whose principal businesses are in-hospital
rehabilitation services, outpatient rehabilitation services and outpatient
surgery services. At September 30, 2001, HEALTHSOUTH reported total assets of
$7.4 billion and stockholders' equity of $3.7 billion and its senior unsecured
long-term debt is currently rated Ba1 by Moody's Investors Service and BBB- by
Standard & Poor's.
--------------------------------------------------------------------------------
S-14
Our tenants and property operations
--------------------------------------------------------------------------------
FIVE STAR. In 2000, two of our tenants, Integrated Health Services, Inc. and
Mariner Post-Acute Network, Inc., filed for bankruptcy. Effective July 1, 2000,
we entered settlements with these tenants. Pursuant to the Integrated
settlement, we assumed the financial responsibility for 41 nursing homes,
operations for five nursing homes formerly managed by Integrated were assumed by
the primary tenant, HEALTHSOUTH, and the lease for one nursing home was amended
as described below. Pursuant to the Mariner settlement, we assumed financial
responsibility for 17 nursing homes. Subsequent to July 1, 2000, we closed
operations at two of these nursing homes, and we purchased an assisted living
facility in the vicinity of a nursing home formerly leased to Mariner. As a
result of these activities, at September 30, 2001, 56 healthcare properties,
including 54 nursing homes and two assisted living facilities, located in 12
states, with 5,270 beds were managed for our account. As described in "Recent
Developments", we completed a spin-off of substantially all of our equity
interest in Five Star to our shareholders on December 31, 2001. All of these
56 nursing homes began to be leased to Five Star as of the spin-off date. The
Five Star lease expires in 2018 and the annual rent payable to us is $7 million
plus increases beginning in 2004 equal to 3% of revenues at each property during
a year in excess of revenues at each property during 2003. We also lease
31 senior living communities operated by Marriott to Five Star. This lease
expires in 2017, and the annual rent payable to us is $63 million plus increases
beginning 2003 equal to 5% of revenues at each property during a year in excess
of revenues at each property during 2002.
Five Star is a public company listed on the American Stock Exchange; its book
equity capitalization at the time of the spin-off was $50 million and Five Star
has no debt.
INTEGRATED HEALTH. We lease one nursing home (140 beds) to Integrated Health
Services, Inc. This lease expires in 2010, the annual rent payable to us is
$1.2 million plus annual increases beginning in 2004 based upon the Consumer
Price Index. Integrated is a large, publicly owned, nursing home and home health
services company. Integrated filed for bankruptcy in 2000, but the lease for
this property was amended pursuant to an agreement of the parties, and our lease
payments have remained current since then.
GENESIS. We lease one nursing home (150 beds) to a subsidiary of Genesis Health
Ventures, Inc. This lease expires in 2005, and Genesis has three renewal options
totaling an additional 25 years. The lease currently requires annual rent of
$2 million which increases annually by $13,000. Genesis Health Ventures, Inc.,
is a large, publicly owned, nursing home company. Genesis and its subsidiary
which is our tenant filed for bankruptcy in 2000. A plan of reorganization was
confirmed and both Genesis and its subsidiary which is our tenant were
discharged from bankruptcy on October 2, 2001.
--------------------------------------------------------------------------------
S-15
Our tenants and property operations
--------------------------------------------------------------------------------
OTHER TENANTS. As of September 30, 2001, and continuing through the date of
this prospectus supplement, we lease seven properties to five privately owned
tenants as follows (dollars in thousands):
Type of
property/no. of Current Current
Location beds or units rent/year lease expiration
------------------------------------------------------------------------------------------------------------------
Huron and Sioux Falls, SD 2 nursing homes and $ 1,074 January 31, 2013
(3 properties) 1 assisted living
facility; 361 beds/units
Seattle, WA nursing home; 803 December 31, 2005
103 beds
Fresno, CA nursing home; 900 September 30, 2015
180 beds
Grove City (Columbus), OH nursing home; 378 December 31, 2003
200 beds
St. Joseph, MO nursing home; 307 (1)
120 beds
------------------------------------------------------------------------------------------------------------------
7 properties, in 5 states, 6 nursing homes and $ 3,462 2002 to 2015
leased to 5 tenants 1 assisted living
facility; 964 beds/units
---------
(1) The lease for the Missouri property expired December 31, 2001. We continue
to have discussions with this tenant regarding a possible purchase or lease
extension. Since December 31, 2001, this tenant has continued to occupy the
property and pay rent on a month-to-month basis under the terms of the now
expired lease.
--------------------------------------------------------------------------------
S-16
--------------------------------------------------------------------------------
Federal income tax and ERISA considerations
The following summary of federal income tax considerations and Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), considerations
relating to the acquisition, ownership and disposition of our shares supplements
and updates the more detailed description of these matters in our Current Report
on Form 8-K dated February 13, 2002, which we incorporate in this prospectus
supplement by reference. Sullivan & Worcester LLP, Boston, Massachusetts, has
rendered a legal opinion that the discussions in this section and the section of
our Current Report on Form 8-K captioned "Federal Income Tax and ERISA
Considerations" are accurate in all material respects and, taken together,
fairly summarize the federal income tax and ERISA issues discussed in these
sections, and the opinions of counsel referred to in these sections represent
Sullivan & Worcester LLP's opinions on those subjects. Specifically, subject to
qualifications and assumptions contained in its opinion and in our Current
Report on Form 8-K, Sullivan & Worcester LLP has given opinions to the effect
(1) that we have been organized and have qualified as a REIT under the Tax Code
for our 1999 through 2001 taxable years, and that our current investments and
plan of operation will enable us to continue to meet the requirements for
qualification and taxation as a REIT under the Tax Code, and (2) that under the
"plan assets" regulations promulgated by the Department of Labor under ERISA,
our shares are publicly offered securities and our assets will not be deemed to
be "plan assets" under ERISA.
Subject to the detailed discussion contained in our Current Report on Form 8-K,
we believe that we have qualified, and we intend to remain qualified, as a REIT
under the Tax Code. As a REIT, we generally will not be subject to federal
income tax on our net income distributed as dividends to our shareholders.
Distributions to you generally will be includable in your income as dividends to
the extent these distributions do not exceed allocable current or accumulated
earnings and profits; distributions in excess of allocable current or
accumulated earnings and profits generally will be treated for tax purposes as a
return of capital to the extent of your basis in our shares, and will reduce
your basis. Subject to the detailed discussion contained in our Current Report
on Form 8-K, we intend to conduct our affairs so that our assets will not be
deemed to be "plan assets" of any individual retirement account, employee
benefit plan subject to Title 1 of ERISA, or other qualified retirement plan
subject to Section 4975 of the Tax Code which acquires our shares.
Information reporting and backup withholding may apply to payments you receive
on the shares, as described in our Current Report on Form 8-K. Amounts withheld
under backup withholding are generally not an additional tax and may be refunded
or credited against your federal income tax liability, provided that you furnish
the required information to the IRS. The backup withholding rate is currently
30%, but this rate will fall to 28% over the next several years.
We advise you to consult your own advisor regarding the specific federal, state,
local, foreign and other tax and ERISA consequences to you of the acquisition,
ownership and disposition of our shares.
--------------------------------------------------------------------------------
S-17
--------------------------------------------------------------------------------
Underwriting
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated February 15, 2002, each of the Underwriters named below has
severally agreed to purchase, and we have agreed to sell to each of the
Underwriters, the number of shares listed opposite its name below:
Number
Underwriter of shares
-------------------------------------------------------------------------
UBS Warburg LLC............................................. 2,910,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................... 2,910,000
A.G. Edwards & Sons, Inc.................................... 2,182,500
First Union Securities, Inc. (1)............................ 2,182,500
Legg Mason Wood Walker, Incorporated........................ 2,182,500
Raymond James & Associates, Inc............................. 1,091,250
RBC Dain Rauscher Inc....................................... 1,091,250
CIBC World Markets Corp..................................... 75,000
Dresdner Kleinwort Wasserstein Securities LLC............... 75,000
J.J.B. Hilliard, W.L. Lyons, Inc............................ 75,000
ING Barings LLC............................................. 75,000
SG Cowen Securities Corporation............................. 75,000
Wells Fargo Securities, LLC................................. 75,000
----------
Total..................................................... 15,000,000
==========
---------
(1) First Union Securities, Inc. is acting under the trade name of Wachovia
Securities.
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to the
approval of specified legal matters by their counsel and to other conditions. In
the Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions described in the Underwriting Agreement, to purchase all
the shares offered in this issuance, if any are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in some
circumstances, the purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
The Underwriters propose to offer the shares directly to the public at the
public offering price set forth on the cover page of this prospectus supplement
and to dealers at that price less a concession not in excess of $0.40 per share.
The Underwriters may allow, and the dealers may reallow, a concession not in
excess of $0.10 per share to other dealers. After the initial offering of the
shares, the public offering price, concession and other selling terms may be
changed.
We have granted an option to the Underwriters, exercisable during the 30-day
period after the date of this prospectus supplement, to purchase up to an
aggregate of 2,250,000 additional shares at the price to the public set forth on
the cover page of this prospectus supplement less underwriting discounts and
commissions. The Underwriters may exercise this option only to cover
over-allotments, if any. If the Underwriters exercise this option, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase the same percentage of the additional shares which the number of shares
to be purchased by it shown in the foregoing table bears to the 15,000,000
shares offered by this prospectus supplement.
--------------------------------------------------------------------------------
S-18
Underwriting
--------------------------------------------------------------------------------
The following table shows the per share and total underwriting discounts and
commissions that we will pay to the Underwriters. These amounts are shown
assuming both no exercise and full exercise of the Underwriters' option to
purchase up to an additional 2,250,000 shares from us.
No exercise Full exercise
------------------------------------------------------------------------------------------
Per share................................................... $ 0.686 $ 0.686
Total..................................................... $10,290,000 $11,833,500
We estimate that the total expenses of this offering payable by us, excluding
underwriting discounts and commissions, will be $300,000.
We, HRPT Properties, our managing trustees and our executive officers have
agreed that, without the prior written consent of UBS Warburg LLC, neither we
nor they will, during the period ending 90 days after the date of this
prospectus supplement and the delivery of the shares, directly or indirectly,
publicly issue, sell, offer or contract to sell any shares or substantially
similar securities to the shares, subject to certain limited exceptions.
In order to facilitate the offering of the shares, the Underwriters may engage
in transactions that stabilize, maintain, or otherwise affect the price of the
shares. Specifically, the Underwriters may over-allot in connection with the
offering, creating a short position in the shares for their account. In
addition, to cover over-allotments or to stabilize the price of the shares, the
Underwriters may bid for, and purchase, the shares in the open market. Finally,
the underwriting syndicate may reclaim selling concessions allowed to an
Underwriter or a dealer for distributing the shares in the offering if the
syndicate repurchases previously distributed shares in transactions to cover
syndicate short positions, in stabilization transactions, or otherwise. Any of
these activities may stabilize or maintain the market price of the shares above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.
We have agreed to indemnify the Underwriters against, or contribute to payments
the Underwriters may be required to make in respect of, certain liabilities,
including liabilities under the Securities Act.
Some of the Underwriters engage in transactions with, and from time to time have
performed services for, us and our subsidiaries in the ordinary course of
business. UBS Warburg LLC was our financial advisor in connection with our
January 2002 acquisition of 31 senior living communities and the Five Star
spin-off. First Union Securities, Inc., Dresdner Kleinwort Wasserstein
Securities LLC and ING Barings LLC are, or are affiliated with, lenders of ours
under our revolving bank credit facility which will receive a portion of the net
proceeds of this offering in connection with repayment of amounts outstanding
under the revolving bank credit facility.
Legal matters
Sullivan & Worcester LLP, Boston, Massachusetts, our lawyers, will issue an
opinion about the legality of the shares we are offering. Dewey Ballantine LLP,
New York, New York, is counsel to the Underwriters in connection with this
offering. Sullivan & Worcester LLP and Dewey Ballantine LLP will rely, as to
certain matters of Maryland law, upon an opinion of Ballard Spahr Andrews &
Ingersoll, LLP, Baltimore, Maryland. Barry M. Portnoy was a partner in the firm
of Sullivan & Worcester LLP until March 31, 1997 and is one of our managing
trustees, a managing trustee of HRPT Properties, a director and 50% owner of
RMR, our investment manager, and a managing director of Five Star. Sullivan &
Worcester LLP represents HRPT Properties, RMR, Five Star and their affiliates on
various matters.
---------
The Articles of Amendment and Restatement establishing Senior Housing Properties
Trust, dated September 20, 1999, a copy of which, together with all amendments
thereto, is duly filed in the office
--------------------------------------------------------------------------------
S-19
--------------------------------------------------------------------------------
of the Department of Assessments and Taxation of the State of Maryland, provides
that the name "Senior Housing Properties Trust" refers to the trustees under the
Declaration of Trust, but not individually or personally, and that no trustee,
officer, shareholder, employee or agent of Senior Housing Properties Trust shall
be held to any personal liability, for any obligation of, or claim against,
Senior Housing Properties Trust. All persons dealing with Senior Housing
Properties Trust, shall look only to the assets of Senior Housing Properties
Trust for the payment of any sum or the performance of any obligation.
--------------------------------------------------------------------------------
S-20
PROSPECTUS
--------------------------------------------------------------------------------
$2,000,000,000
Senior Housing Properties Trust
Debt Securities, Preferred Shares of Beneficial Interest, Depositary Shares,
Common Shares of Beneficial Interest and Warrants
SNH Capital Trusts
Trust Preferred Securities Fully and Unconditionally Guaranteed
----------------------------------------------------------------------
We may offer and sell, from time to time, in one or more offerings:
- common shares
- preferred shares
- debt securities
- warrants
- depositary shares
These securities may be offered and sold separately, together or as units with
other securities described in this prospectus. Our debt securities may be senior
or subordinated.
SNH Capital Trust II and III may offer and sell, from time to time, in one or
more offerings, trust preferred securities which will be fully and
unconditionally guaranteed by us. Our guarantees may be senior or subordinated.
The trust preferred securities may be offered and sold separately, together or
as units with other securities described in this prospectus.
The securities described in this prospectus offered by us or by SNH Capital
Trust II and III may be issued in one or more series or issuances. The total
offering price of these securities, in the aggregate, will not exceed
$2,000,000,000. We will provide the specific terms of any securities we actually
offer in supplements to this prospectus. You should carefully read this
prospectus and the supplements before you decide to invest in any of these
securities.
Risks associated with an investment in the securities will be described in the
applicable prospectus supplement, as described under "Risk factors" on page 3.
The applicable prospectus supplement will also contain information, where
applicable, about United States federal income tax considerations and any
listing on a securities exchange. Our common shares are listed on the New York
Stock Exchange under the symbol "SNH."
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 and complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is January 30, 2002.
TABLE OF CONTENTS
--------------------------------------------------------------------------------
Page
--------
Senior Housing Properties Trust..... 1
SNH Capital Trusts.................. 1
Risk factors........................ 3
Use of proceeds..................... 3
Ratio of earnings to fixed
charges........................... 3
Description of debt securities...... 4
Description of common shares........ 12
Description of preferred shares..... 13
Description of depositary shares.... 18
Description of warrants............. 22
Page
--------
Description of trust preferred
securities and trust guarantee.... 23
Description of certain provisions of
Maryland law and our declaration
of trust and bylaws............... 27
Plan of distribution................ 35
Validity of the offered
securities........................ 37
Experts............................. 37
Where you can find more
information....................... 38
Documents incorporated by
reference......................... 39
---------
About this prospectus
This prospectus is part of a registration statement we and the SNH Capital
Trusts filed with the Securities and Exchange Commission using a "shelf"
registration process. Under this shelf process, we may sell any combination of
the securities described in this prospectus from time to time in one of more
offerings up to a total amount of proceeds of $2,000,000,000.
This prospectus provides you only with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement containing specific information about the terms of that offering. The
prospectus supplement may also add to, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where you can find more information" and "Documents incorporated by reference."
No separate financial statements of the SNH Capital Trusts have been included or
incorporated by reference. Neither we nor the SNH Capital Trusts consider
financial statements of the SNH Capital Trusts material to holders of the trust
preferred securities because:
- all of the voting securities of the SNH Capital Trusts will be owned,
directly or indirectly, by us, a reporting company under the Securities
Exchange Act of 1934, as amended;
- each SNH Capital Trust has no independent operations and exists for the
purpose of issuing securities representing undivided beneficial interests in
the assets of the SNH Capital Trust and investing the proceeds in the debt
securities issued by us; and
- the obligations of each SNH Capital Trust under the trust preferred
securities issued by it will be fully and unconditionally guaranteed by us
to the extent described in this prospectus.
You should rely only on the information incorporated by reference or provided in
this document. We have not authorized anyone to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. We will not make an offer of these securities in any
jurisdiction where it is unlawful. You should assume that the information in
this prospectus, as well as the information we have previously filed with the
SEC and incorporated by reference in this prospectus, is accurate only as of the
date of the documents containing the information.
REFERENCES IN THIS PROSPECTUS TO "WE," "US," "OUR" OR "SNH" MEAN SENIOR HOUSING
PROPERTIES TRUST. REFERENCES IN THIS PROSPECTUS TO THE "SNH CAPITAL TRUSTS" MEAN
SNH CAPITAL TRUST II AND SNH CAPITAL TRUST III.
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Cautionary note regarding forward-looking statements
We have made and incorporated by reference statements in this document that
constitute "forward-looking statements" as that term is defined in the federal
securities laws. These forward-looking statements concern:
- our tenants' ability to operate successfully properties or pay rent to us;
- the possible expansion of our portfolio;
- the performance of our tenants and properties;
- our ability to pay debt service or make distributions;
- our policies and plans regarding investments, financings and other matters;
- our tax status as a real estate investment trust;
- our ability to balance appropriately the use of debt and equity; and
- our ability to access capital markets or other sources of funds.
When we use words such as "believes," "expects," "anticipates," "estimates" or
similar expressions, we are making forward-looking statements.
Forward-looking statements are not guarantees of future performance and involve
risks and uncertainties. Our expected results may not be achieved, and actual
results may differ materially from our expectations. This may be a result of
various factors, including:
- the status of the economy;
- the status of capital markets (including prevailing interest rates);
- compliance with and changes to regulations and payment policies within the
health care industry;
- changes in financing terms;
- competition within the health care and senior housing industries; and
- changes in federal, state and local legislation.
Other important factors are identified in our Annual Report on Form 10-K which
is incorporated into this prospectus, including under the headings "Business"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations." We assume no obligation to update or revise any forward-looking
statements or to update the reasons why actual results could differ from those
projected in any forward-looking statements.
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Senior Housing Properties Trust
We are a real estate investment trust, and our primary business is to acquire,
own and lease senior apartments, congregate care communities, assisted living
properties and nursing homes. On January 11, 2002, we completed an acquisition
of 31 senior living communities for which we paid approximately $600 million.
Giving effect to the completion of this acquisition, we own 112 properties
located in 28 states, which have an undepreciated combined carrying value of
approximately $1.2 billion. As of December 31, 2001, we had 43,421,700 common
shares outstanding, including 12,809,238 owned by HRPT Properties Trust, our
former parent company.
We are organized as a Maryland real estate investment trust under the Maryland
REIT Law. Our principal place of business is 400 Centre Street, Newton,
Massachusetts 02458, and our telephone number is (617) 796-8350.
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SNH Capital Trusts
Each SNH Capital Trust is a statutory business trust formed under Maryland law
pursuant to:
- a declaration of trust executed by us, as sponsor for the SNH Capital Trust
and the trustees of the SNH Capital Trust; and
- the filing of a certificate of trust with the State Department of
Assessments and Taxation of Maryland.
Unless an accompanying prospectus supplement provides otherwise, each SNH
Capital Trust exists for the sole purposes of:
- selling trust preferred securities and investing the proceeds in a specific
series of our debt securities;
- selling trust common securities to us or our subsidiaries in exchange for
cash and investing the proceeds in additional debt securities issued by us;
or
- engaging in other activities that are necessary, convenient or incidental to
the sale of trust preferred and common securities or the purchase of our
debt securities.
No SNH Capital Trust will borrow money, issue debt or reinvest proceeds derived
from investments, pledge any of its assets, or otherwise undertake, or permit to
be undertaken, any activity that would cause that SNH Capital Trust not to be
classified for United States federal income tax purposes as a grantor trust. We
will own directly or indirectly all of the trust common securities issued by
each SNH Capital Trust. The trust common securities will rank on parity, and
payments will be made thereon pro rata, with the trust preferred securities,
except that upon the occurrence and during continuance of an event of default
under the declaration of trust of a SNH Capital Trust, the rights of the holders
of the trust common securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the trust preferred securities. In connection with the
issuance of trust preferred securities by a SNH Capital Trust, we or our
subsidiaries will acquire trust common securities of such SNH Capital Trust
having an aggregate liquidation amount equal to a minimum of 3% of the total
capital of such SNH Capital Trust. Each SNH Capital Trust will have a term of at
least 20 but no more than 50 years, but may terminate earlier as provided in its
declaration of trust.
Each SNH Capital Trust's business and affairs will be conducted by its trustees.
The holders of the trust common securities will be entitled to appoint, remove
or replace any of, or increase or reduce the
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SNH Capital Trusts
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number of, the trustees of each SNH Capital Trust. The duties and obligations of
the trustees will be governed by the SNH Capital Trust's declaration of trust.
At least one of the trustees of each SNH Capital Trust will be a person who is
one of our officers or trustees or who is affiliated with us (a "Regular
Trustee"). One trustee of each SNH Capital Trust will be a financial institution
that is not affiliated with us (the "Property Trustee"), which will act as
property trustee and as indenture trustee for the purposes of the Trust
Indenture Act of 1939, as amended, pursuant to the terms set forth in the
applicable prospectus supplement.
We will pay all fees and expenses related to each SNH Capital Trust and any
offering of the trust preferred securities. The principal place of business of
each SNH Capital Trust is c/o Senior Housing Properties Trust at 400 Centre
Street, Newton, Massachusetts 02458 (telephone: (617) 796-8350).
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Risk factors
Certain of the securities to be offered hereby themselves may involve risks.
Such risks will be set forth in the prospectus supplement relating to such
offered securities.
Use of proceeds
Unless otherwise described in a prospectus supplement, we intend to use the net
proceeds from the sale of any securities under this prospectus for general
business purposes, which may include acquiring and investing in additional
properties and the repayment of borrowings under our revolving bank credit
facility or other debt. Unless otherwise described in a prospectus supplement,
each SNH Capital Trust will use the net proceeds from the sale of any securities
under this prospectus to purchase our debt securities. Until the proceeds from a
sale of securities by us or any SNH Capital Trust are applied to their intended
purposes, they may be invested in short-term investments, including repurchase
agreements, some or all of which may not be investment grade.
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Ratio of earnings to fixed charges
The following table sets forth our consolidated ratios of earnings to fixed
charges for the periods indicated:
Nine Months
Ended Fiscal Year Ended December 31,
September 30, --------------------------------------------------------------------
2001 2000 1999 1998 1997 1996
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Ratio of earnings to fixed charges..... 3.0x 4.8x 1.8x 3.4x 3.6x 3.5x
The ratios of earnings to fixed charges presented above were computed by
dividing our consolidated earnings by our consolidated fixed charges. For this
purpose, earnings have been calculated by adding fixed charges to net income.
Fixed charges consist of interest costs, whether expensed or capitalized, and
any interest component of capitalized lease expense, amortization of debt
discounts and deferred financing costs, whether expensed or capitalized, and
distributions on trust preferred securities. During the periods presented, we
had not issued any preferred shares, and so the ratio of earnings to combined
fixed charges and preferred shares distributions are the same as the ratios of
earnings to fixed charges presented above.
On October 12, 1999, HRPT Properties Trust, our former parent, distributed 50.7%
of its ownership interest in us to its shareholders. The ratios presented above
have been calculated as if we were separate from HRPT Properties Trust for all
periods. For all periods prior to October 12, 1999, interest expense was
allocated based on HRPT Properties Trust's historical interest expense as a
percentage of its average historical costs of real estate investments.
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3
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Description of debt securities
The debt securities sold under this prospectus will be our direct obligations,
which may be secured or unsecured, and which may be senior or subordinated
indebtedness. Our senior unsecured debt securities will be issued under the
indenture, dated as of December 20, 2001, between us and State Street Bank and
Trust Company, as it may be amended, supplemented or otherwise modified from
time to time, or under one or more other indentures between us and that trust
company or another trustee. Our other debt securities will be issued under one
or more indentures between us and a trustee. Any indenture will be subject to
and governed by the Trust Indenture Act of 1939, as amended. The statements made
in this prospectus relating to any indentures and the debt securities to be
issued under the indentures are summaries of certain anticipated provisions of
the indentures and are not complete.
The following is a summary of the material terms of our debt securities. Because
it is a summary, it does not contain all of the information that may be
important to you. If you want more information, you should read the forms of
indentures which we have filed as exhibits to the registration statement of
which this prospectus is part. We will file any indentures and supplemental
indentures if we issue debt securities. See "Where you can find more
information." You may also review our December 20, 2001, senior debt indenture
at the corporate trust offices of State Street Bank and Trust Company, Two
International Place, Boston, Massachusetts 02110. This summary is also subject
to and qualified by reference to the descriptions of the particular terms of
securities described in the applicable prospectus supplement.
General
We may issue debt securities that rank "senior," "senior subordinated" or
"junior subordinated." The debt securities that we refer to as "senior" will be
our direct obligations and will rank equally and ratably in right of payment
with our other indebtedness not subordinated. We may issue debt securities that
will be subordinated in right of payment to the prior payment in full of senior
debt, as defined in the applicable prospectus supplement, and may rank equally
and ratably with the other senior subordinated indebtedness. We refer to these
as "senior subordinated" securities. We may also issue debt securities that may
be subordinated in right of payment to the senior subordinated securities. These
would be "junior subordinated" securities. We have filed with the registration
statement of which this prospectus is part three separate forms of indenture,
one for the senior securities, one for the senior subordinated securities and
one for the junior subordinated securities. We refer to senior subordinated and
junior subordinated securities as "subordinated."
We may issue the debt securities without limit as to aggregate principal amount,
in one or more series, in each case as we establish in one or more supplemental
indentures. We need not issue all debt securities of one series at the same
time. Unless we otherwise provide, we may reopen a series, without the consent
of the holders of the series, for issuances of additional securities of that
series.
We anticipate that any indenture will provide that we may, but need not,
designate more than one trustee under an indenture, each with respect to one or
more series of debt securities. Any trustee under any indenture may resign or be
removed with respect to one or more series of debt securities, and we may
appoint a successor trustee to act with respect to that series.
The applicable prospectus supplement will describe the specific terms relating
to the series of debt securities we will offer, including, where applicable, the
following:
- the title and series designation and whether they are senior securities,
senior subordinated securities or junior subordinated securities;
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4
Description of debt securities
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- the aggregate principal amount of the securities;
- the percentage of the principal amount at which we will issue the debt
securities and, if other than the principal amount of the debt securities,
the portion of the principal amount of the debt securities payable upon
maturity of the debt securities;
- if convertible, the initial conversion price, the conversion period and any
other terms governing such conversion;
- the stated maturity date;
- any fixed or variable interest rate or rates per annum;
- the place where principal, premium, if any, and interest will be payable and
where the debt securities can be surrendered for transfer, exchange or
conversion;
- the date from which interest may accrue and any interest payment dates;
- any sinking fund requirements;
- any provisions for redemption, including the redemption price and any
remarketing arrangements;
- whether the securities are denominated or payable in United States dollars
or a foreign currency or units of two or more foreign currencies;
- the events of default and covenants of such securities, including the
required conditions to our ability to merge or consolidate or sell
substantially all of our assets, to the extent different from or in addition
to those described in this prospectus;
- whether we will issue the debt securities in certificated or book-entry
form;
- whether the debt securities will be in registered or bearer form and, if in
registered form, the denominations if other than in even multiples of $1,000
and, if in bearer form, the denominations and terms and conditions relating
thereto;
- whether we will issue any of the debt securities in permanent global form
and, if so, the terms and conditions, if any, upon which interests in the
global security may be exchanged, in whole or in part, for the individual
debt securities represented by the global security;
- the applicability, if any, of the defeasance and covenant defeasance
provisions described in this prospectus or any prospectus supplement;
- whether we will pay additional amounts on the securities in respect of any
tax, assessment or governmental charge and, if so, whether we will have the
option to redeem the debt securities instead of making this payment;
- the subordination provisions, if any, relating to the debt securities;
- if the debt securities are to be issued upon the exercise of debt warrants,
the time, manner and place for them to be authenticated and delivered;
- whether any of our subsidiaries will be bound by the terms of the indenture,
in particular any restrictive covenants;
- the provisions relating to any security provided for the debt securities;
and
- the provisions relating to any guarantee of the debt securities.
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5
Description of debt securities
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We may issue debt securities at less than the principal amount payable at
maturity. We refer to these securities as "original issue discount" securities.
If material or applicable, we will describe in the applicable prospectus
supplement special U.S. federal income tax, accounting and other considerations
applicable to original issue discount securities.
Except as may be described in any prospectus supplement, an indenture will not
contain any other provisions that would limit our ability to incur indebtedness
or that would afford holders of the debt securities protection in the event of a
highly leveraged or similar transaction involving us or in the event of a change
of control. You should review carefully the applicable prospectus supplement for
information with respect to events of default and covenants applicable to the
securities being offered.
Denominations, interest, registration and transfer
Unless otherwise described in the applicable prospectus supplement, we will
issue the debt securities of any series that are registered securities in
denominations that are even multiples of $1,000, other than global securities,
which may be of any denomination.
Unless otherwise specified in the applicable prospectus supplement, we will pay
the interest, principal and any premium at the corporate trust office of the
trustee. At our option, however, we may make payment of interest by check mailed
to the address of the person entitled to the payment as it appears in the
applicable register or by wire transfer of funds to that person at an account
maintained within the United States.
If we do not punctually pay or otherwise provide for interest on any interest
payment date, the defaulted interest will be paid either:
- to the person in whose name the debt security is registered at the close of
business on a special record date the trustee will fix; or
- in any other lawful manner, all as the applicable indenture describes.
You may have your debt securities divided into more debt securities of smaller
denominations or combined into fewer debt securities of larger denominations, as
long as the total principal amount is not changed. We call this an "exchange."
You may exchange or transfer debt securities at the office of the applicable
trustee. The trustee acts as our agent for registering debt securities in the
names of holders and transferring debt securities. We may change this
appointment to another entity or perform it ourselves. The entity performing the
role of maintaining the list of registered holders is called the "registrar." It
will also perform transfers.
You will not be required to pay a service charge to transfer or exchange debt
securities, but you may be required to pay for any tax or other governmental
charge associated with the exchange or transfer. The security registrar will
make the transfer or exchange only if it is satisfied with your proof of
ownership.
Merger, consolidation or sale of assets
Under any indenture, we are generally permitted to consolidate or merge with
another company. We are also permitted to sell substantially all of our assets
to another company, or to buy substantially all
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6
Description of debt securities
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of the assets of another company. However, we may not take any of these actions
unless the following conditions are met:
- If we merge out of existence or sell our assets, the other company must be
an entity organized under the laws of a State or the District of Columbia or
under federal law and must agree to be legally responsible for our debt
securities; and
- Immediately after the merger, sale of assets or other transaction, we may
not be in default on the debt securities. A default for this purpose would
include any event that would be an event of default if the requirements for
giving us default notice or our default having to exist for a specific
period of time were disregarded.
Certain covenants
EXISTENCE. Except as permitted as described above under "--Merger,
consolidation or sale of assets," we will agree to do all things necessary to
preserve and keep our trust existence, rights and franchises provided that it is
in our best interests for the conduct of business.
PROVISIONS OF FINANCIAL INFORMATION. Whether or not we remain required to do so
under the Securities Exchange Act of 1934, as amended, to the extent permitted
by law, we will agree to file all annual, quarterly and other reports and
financial statements with the SEC and an indenture trustee on or before the
applicable SEC filing dates as if we were required to do so.
Events of default and related matters
EVENTS OF DEFAULT. The term "event of default" for any series of debt
securities means any of the following:
- We do not pay the principal or any premium on a debt security of that series
within 30 days after its maturity date;
- We do not pay interest on a debt security of that series within 30 days
after its due date;
- We do not deposit any sinking fund payment for that series within 30 days
after its due date;
- We remain in breach of any other term of the applicable indenture (other
than a term added to the indenture solely for the benefit of other series)
for 60 days after we receive a notice of default stating we are in breach.
Either the trustee or holders of more than 50% in principal amount of debt
securities of the affected series may send the notice;
- We default under any of our other indebtedness in an aggregate principal
amount exceeding $25,000,000 after the expiration of any applicable grace
period, which default results in the acceleration of the maturity of such
indebtedness. Such default is not an event of default if the other
indebtedness is discharged, or the acceleration is rescinded or annulled,
within a period of 10 days after we receive notice specifying the default
and requiring that we discharge the other indebtedness or cause the
acceleration to be rescinded or annulled. Either the trustee or the holders
of more than 50% in principal amount of debt securities of the affected
series may send the notice;
- We or one of our "significant subsidiaries," if any, files for bankruptcy or
certain other events in bankruptcy, insolvency or reorganization occur; or
- Any other event of default described in the applicable prospectus supplement
occurs.
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7
Description of debt securities
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The term "significant subsidiary" means each of our significant subsidiaries, if
any, as defined in Regulation S-X under the Securities Act of 1933, as amended.
REMEDIES IF AN EVENT OF DEFAULT OCCURS. If an event of default has occurred and
has not been cured, the trustee or the holders of at least a majority in
principal amount of the debt securities of the affected series may declare the
entire principal amount of all the debt securities of that series to be due and
immediately payable. If an event of default occurs because of certain events in
bankruptcy, insolvency or reorganization, the principal amount of all the debt
securities of that series will be automatically accelerated, without any action
by the trustee or any holder. At any time after the trustee or the holders have
accelerated any series of debt securities, but before a judgment or decree for
payment of the money due has been obtained, the holders of at least a majority
in principal amount of the debt securities of the affected series may, under
certain circumstances, rescind and annul such acceleration.
The trustee will be required to give notice to the holders of debt securities
within 90 days after a default under the applicable indenture unless the default
has been cured or waived. The trustee may withhold notice to the holders of any
series of debt securities of any default with respect to that series, except a
default in the payment of the principal of or interest on any debt security of
that series, if specified responsible officers of the trustee in good faith
determine that withholding the notice is in the interest of the holders.
Except in cases of default, where the trustee has some special duties, the
trustee is not required to take any action under the applicable indenture at the
request of any holders unless the holders offer the trustee reasonable
protection from expenses and liability. We refer to this as an "indemnity." If
reasonable indemnity is provided, the holders of a majority in principal amount
of the outstanding securities of the relevant series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee. These majority holders may also direct the
trustee in performing any other action under the applicable indenture, subject
to certain limitations.
Before you bypass the trustee and bring your own lawsuit or other formal legal
action or take other steps to enforce your rights or protect your interests
relating to the debt securities, the following must occur:
- You must give the trustee written notice that an event of default has
occurred and remains uncured;
- The holders of at least a majority in principal amount of all outstanding
securities of the relevant series must make a written request that the
trustee take action because of the default, and must offer reasonable
indemnity to the trustee against the cost and other liabilities of taking
that action; and
- The trustee must have not taken action for 60 days after receipt of the
notice and offer of indemnity.
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your security after its due date.
Every year we will furnish to the trustee a written statement by certain of our
officers certifying that to their knowledge we are in compliance with the
applicable indenture and the debt securities, or else specifying any default.
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8
Description of debt securities
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Modification of an indenture
There are three types of changes we can make to the indentures and the debt
securities:
CHANGES REQUIRING YOUR APPROVAL. First, there are changes we cannot make to
your debt securities without your specific approval. The following is a list of
those types of changes:
- change the stated maturity of the principal or interest on a debt security;
- reduce any amounts due on a debt security;
- reduce the amount of principal payable upon acceleration of the maturity of
a debt security following a default;
- change the currency of payment on a debt security;
- impair your right to sue for payment;
- modify the subordination provisions, if any, in a manner that is adverse to
you;
- reduce the percentage of holders of debt securities whose consent is needed
to modify or amend an indenture or to waive compliance with certain
provisions of an indenture;
- reduce the percentage of holders of debt securities whose consent is needed
to waive past defaults or change certain provisions of the indenture
relating to waivers of default;
- waive a default or event of default in the payment of principal of or
premium, if any, or interest on the debt securities; or
- modify any of the foregoing provisions.
CHANGES REQUIRING A MAJORITY VOTE. The second type of change to an indenture
and the debt securities is the kind that requires a vote in favor by holders of
debt securities owning a majority of the principal amount of the particular
series affected. Most changes fall into this category, except for clarifying
changes and certain other changes that would not materially adversely affect
holders of the debt securities. We require the same vote to obtain a waiver of a
past default. However, we cannot obtain a waiver of a payment default or any
other aspect of an indenture or the debt securities listed in the first category
described above under "--Changes requiring your approval" unless we obtain your
individual consent to the waiver.
CHANGES NOT REQUIRING APPROVAL. The third type of change does not require any
vote by holders of debt securities. This type is limited to clarifications and
certain other changes that would not materially adversely affect holders of the
debt securities.
FURTHER DETAILS CONCERNING VOTING. Debt securities are not considered
outstanding, and holders of debt securities are not eligible to vote, if we have
deposited or set aside in trust for you money for their payment or redemption or
if we or one of our affiliates own them. The holders of debt securities may not
be able to vote if the securities have been fully defeased as described
immediately below under "--Discharge, defeasance and covenant defeasance--full
defeasance." For original issue discount securities, we will use the principal
amount that would be due and payable on the voting date if the maturity of the
debt securities were accelerated to that date because of a default.
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9
Description of debt securities
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Discharge, defeasance and covenant defeasance
DISCHARGE. We may discharge some obligations to holders of any series of debt
securities that either have become due and payable or will become due and
payable within one year, or scheduled for redemption within one year, by
irrevocably depositing with the trustee, in trust, funds in the applicable
currency in an amount sufficient to pay the debt securities, including any
premium and interest.
FULL DEFEASANCE. We can, under particular circumstances, effect a full
defeasance of your series of debt securities. By this we mean we can legally
release ourselves from any payment or other obligations on the debt securities
if, among other things, we put in place the arrangements described below to
repay you and deliver certain certificates and opinions to the trustee:
- We must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money or U.S.
government or U.S. government agency notes or bonds (or, in some
circumstances, depositary receipts representing these notes or bonds) that
will generate enough cash to make interest, principal and any other payments
on the debt securities on their various due dates;
- The current federal tax law must be changed or an IRS ruling must be issued
permitting the above deposit without causing you to be taxed on the debt
securities any differently than if we did not make the deposit and just
repaid the debt securities ourselves. Under current federal income tax law,
the deposit and our legal release from the debt securities would be treated
as though we took back your debt securities and gave you your share of the
cash and notes or bonds deposited in trust. In that event, you could
recognize gain or loss on the debt securities you give back to us; and
- We must deliver to the trustee a legal opinion confirming the tax law change
described above.
If we did accomplish full defeasance, you would have to rely solely on the trust
deposit for repayment on the debt securities. You could not look to us for
repayment in the unlikely event of any shortfall. Conversely, the trust deposit
would most likely be protected from claims of our lenders and other creditors if
we ever became bankrupt or insolvent. You would also be released from any
subordination provisions.
COVENANT DEFEASANCE. Under current federal income tax law, we can make the same
type of deposit described above and be released from some of the restrictive
covenants in the debt securities. This is called "covenant defeasance." In that
event, you would lose the protection of those restrictive covenants but would
gain the protection of having money and securities set aside in trust to repay
the securities and you would be released from any subordination provisions.
If we accomplish covenant defeasance, the following provisions of an indenture
and the debt securities would no longer apply:
- any covenants applicable to the series of debt securities and described in
the applicable prospectus supplement;
- any subordination provisions; and
- certain events of default relating to breach of covenants and acceleration
of the maturity of other debt set forth in any prospectus supplement.
If we accomplish covenant defeasance, you can still look to us for repayment of
the debt securities if a shortfall in the trust deposit occurred. If one of the
remaining events of default occurs, for example, our bankruptcy, and the debt
securities become immediately due and payable, there may be a shortfall.
Depending on the event causing the default, you may not be able to obtain
payment of the shortfall.
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10
Description of debt securities
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Subordination
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which any series of senior subordinated securities or
subordinated securities is subordinated to debt securities of another series or
to our other indebtedness. The terms will include a description of:
- the indebtedness ranking senior to the debt securities being offered;
- the restrictions, if any, on payments to the holders of the debt securities
being offered while a default with respect to the senior indebtedness is
continuing;
- the restrictions, if any, on payments to the holders of the debt securities
being offered following an event of default; and
- provisions requiring holders of the debt securities being offered to remit
some payments to holders of senior indebtedness.
Global securities
If so set forth in the applicable prospectus supplement, we may issue the debt
securities of a series in whole or in part in the form of one or more global
securities that will be deposited with a depositary identified in the prospectus
supplement. We may issue global securities in either registered or bearer form
and in either temporary or permanent form. The specific terms of the depositary
arrangement with respect to any series of debt securities will be described in
the prospectus supplement.
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11
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Description of common shares
Our declaration of trust authorizes us to issue up to an aggregate of 50,000,000
shares of beneficial interest, all of which we have initially designated as
common shares of beneficial interest. As of December 31, 2001, we had 43,421,700
common shares issued and outstanding. As permitted by the Maryland REIT Law, our
declaration of trust contains a provision permitting our board of trustees,
without any action by our shareholders, to amend the declaration of trust to
increase or decrease the total number of shares of beneficial interest, to issue
new and different classes of shares in any amount or to reclassify any unissued
shares into other classes or series of classes that we choose. We believe that
giving these powers to our board of trustees will provide us with increased
flexibility in structuring possible future financings and acquisitions and in
meeting other business needs which might arise. Although our board of trustees
has no intention at the present time of doing so, it could authorize us to issue
a class or series that could, depending upon the terms of the class or series,
delay or prevent a change in control.
The following is a summary description of the material terms of our common
shares of beneficial interest. Because it is a summary, it does not contain all
of the information that may be important to you. If you want more information,
you should read our declaration of trust and bylaws, copies of which have been
filed with the SEC. See "Where you can find more information." This summary is
also subject to and qualified by reference to the description of the particular
terms of your securities described in the applicable prospectus supplement.
Except as otherwise described in the applicable prospectus supplement, all of
our common shares are entitled to the following, subject to the preferential
rights of any other class or series of shares which may be issued and to the
provisions of our declaration of trust regarding the restriction of the
ownership of shares of beneficial interest:
- to receive distributions on their shares if, as and when authorized and
declared by our board of trustees out of assets legally available for
distribution; and
- to share ratably in our assets legally available for distribution to our
shareholders in the event of our liquidation, dissolution or winding up
after payment of or adequate provision for all of our known debts and
liabilities.
Subject to the provisions of our declaration of trust regarding the restriction
on the transfer of shares of beneficial interest, each outstanding common share
entitles the holder to one vote on all matters submitted to a vote of
shareholders, including the election of trustees.
Holders of common shares have no preference, conversion, exchange, sinking fund,
redemption or appraisal rights.
Shareholders will have no preemptive rights to subscribe for any of our
securities. Subject to the provisions of our declaration of trust regarding the
restriction on ownership of shares of beneficial interest, common shares will
have equal distribution, liquidation and other rights.
For other information with respect to our shares, including effects that
provisions in our declaration of trust and bylaws may have in delaying or
deterring a change in our control, see "Description of certain provisions of
Maryland law and our declaration of trust and bylaws" below.
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Description of preferred shares
Preferred shares
The following is a summary description of the material terms of our preferred
shares of beneficial interest. Because it is a summary, it does not contain all
of the information that may be important to you. If you want more information,
you should read our declaration of trust and bylaws, copies of which have been
filed with the SEC. See "Where you can find more information." This summary is
also subject to and qualified by reference to the description of the particular
terms of securities described in the applicable prospectus supplement.
GENERAL. Our board of trustees will determine the designations, preferences,
limitations and relative rights of our authorized and unissued preferred shares.
These may include:
- the distinctive designation of each series and the number of shares that
will constitute the series;
- the voting rights, if any, of shares of the series;
- the distribution rate on the shares of the series, any restriction,
limitation or condition upon the payment of the distribution, whether
distributions will be cumulative, and the dates on which distributions are
payable;
- the prices at which, and the terms and conditions on which, the shares of
the series may be redeemed, if the shares are redeemable;
- the purchase or sinking fund provisions, if any, for the purchase or
redemption of shares of the series;
- any preferential amount payable upon shares of the series upon our
liquidation or the distribution of our assets;
- if the shares are convertible, the price or rates of conversion at which,
and the terms and conditions on which, the shares of the series may be
converted into other securities; and
- whether the series can be exchanged, at our option, into debt securities,
and the terms and conditions of any permitted exchange.
The issuance of preferred shares, or the issuance of rights to purchase
preferred shares, could discourage an unsolicited acquisition proposal. In
addition, the rights of holders of common shares will be subject to, and may be
adversely affected by, the rights of holders of any preferred shares that we may
issue in the future.
The following describes some general terms and provisions of the preferred
shares to which a prospectus supplement may relate. The statements below
describing the preferred shares are in all respects subject to and qualified in
their entirety by reference to the applicable provisions of our declaration of
trust, including any applicable articles supplementary, and our bylaws.
The prospectus supplement will describe the specific terms as to each issuance
of preferred shares, including:
- the description of the preferred shares;
- the number of the preferred shares offered;
- the voting rights, if any, of the holders of the preferred shares;
- the offering price of the preferred shares;
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Description of preferred shares
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- the distribution rate, when distributions will be paid, or the method of
determining the distribution rate if it is based on a formula or not
otherwise fixed;
- the date from which distributions on the preferred shares shall accumulate;
- the provisions for any auctioning or remarketing, if any, of the preferred
shares;
- the provision, if any, for redemption or a sinking fund;
- the liquidation preference per share;
- any listing of the preferred shares on a securities exchange;
- whether the preferred shares will be convertible and, if so, the security
into which they are convertible and the terms and conditions of conversion,
including the conversion price or the manner of determining it;
- whether interests in the preferred shares will be represented by depositary
shares as more fully described below under "Description of depositary
shares;"
- a discussion of federal income tax considerations;
- the relative ranking and preferences of the preferred shares as to
distribution and liquidation rights;
- any limitations on issuance of any preferred shares ranking senior to or on
a parity with the series of preferred shares being offered as to
distribution and liquidation rights;
- any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve our status as a
real estate investment trust; and
- any other specific terms, preferences, rights, limitations or restrictions
of the preferred shares.
As described under "Description of depositary shares," we may, at our option,
elect to offer depositary shares evidenced by depositary receipts. If we elect
to do this, each depositary receipt will represent a fractional interest in a
share of the particular series of the preferred shares issued and deposited with
a depositary. The applicable prospectus supplement will specify that fractional
interest.
Rank
Unless our board of trustees otherwise determines and we so specify in the
applicable prospectus supplement, we expect that the preferred shares will, with
respect to distribution rights and rights upon liquidation or dissolution, rank
senior to all our common shares.
Distributions
Holders of preferred shares of each series will be entitled to receive cash
and/or share distributions at the rates and on the dates shown in the applicable
prospectus supplement. Even though the preferred shares may specify a fixed rate
of distribution, our board of trustees must authorize and declare those
distributions and they may be paid only out of assets legally available for
payment. We will pay each distribution to holders of record as they appear on
our share transfer books on the record dates fixed by our board of trustees. In
the case of preferred shares represented by depositary receipts, the records of
the depositary referred to under "Description of depositary shares" will
determine the persons to whom distributions are payable.
Distributions on any series of preferred shares may be cumulative or
noncumulative, as provided in the applicable prospectus supplement. We refer to
each particular series, for ease of reference, as the
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Description of preferred shares
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applicable series. Cumulative distributions will be cumulative from and after
the date shown in the applicable prospectus supplement. If our board of trustees
fails to authorize a distribution on any applicable series that is
noncumulative, the holders will have no right to receive, and we will have no
obligation to pay, a distribution in respect of the applicable distribution
period, whether or not distributions on that series are declared payable in the
future.
If the applicable series is entitled to a cumulative distribution, we may not
declare, or pay or set aside for payment, any full distributions on any other
series of preferred shares ranking, as to distributions, on a parity with or
junior to the applicable series, unless we declare, and either pay or set aside
for payment, full cumulative distributions on the applicable series for all past
distribution periods and the then current distribution period. If the applicable
series does not have a cumulative distribution, we must declare, and pay or set
aside for payment, full distributions for the then current distribution period
only. When distributions are not paid, or set aside for payment, in full upon
any applicable series and the shares of any other series ranking on a parity as
to distributions with the applicable series, we must declare, and pay or set
aside for payment, all distributions upon the applicable series and any other
parity series proportionately, in accordance with accrued and unpaid
distributions of the several series. For these purposes, accrued and unpaid
distributions do not include unpaid distribution periods on noncumulative
preferred shares. No interest will be payable in respect of any distribution
payment that may be in arrears.
Except as provided in the immediately preceding paragraph, unless we declare,
and pay or set aside for payment, full cumulative distributions, including for
the then current period, on any cumulative applicable series, we may not
declare, or pay or set aside for payment, any distributions upon common shares
or any other equity securities ranking junior to or on a parity with the
applicable series as to distributions or upon liquidation. The foregoing
restriction does not apply to distributions paid in common shares or other
equity securities ranking junior to the applicable series as to distributions
and upon liquidation. If the applicable series is noncumulative, we need only
declare, and pay or set aside for payment, the distribution for the then current
period, before declaring distributions on common shares or junior or parity
securities. In addition, under the circumstances that we could not declare a
distribution, we may not redeem, purchase or otherwise acquire for any
consideration any common shares or other parity or junior equity securities,
except upon conversion into or exchange for common shares or other junior equity
securities. We may, however, make purchases and redemptions otherwise prohibited
pursuant to certain redemptions or pro rata offers to purchase the outstanding
shares of the applicable series and any other parity series of preferred shares.
We will credit any distribution payment made on an applicable series first
against the earliest accrued but unpaid distribution due with respect to the
series.
Redemption
We may have the right or may be required to redeem one or more series of
preferred shares, as a whole or in part, in each case upon the terms, if any,
and at the times and at the redemption prices shown in the applicable prospectus
supplement.
If a series of preferred shares is subject to mandatory redemption, we will
specify in the applicable prospectus supplement the number of shares we are
required to redeem, when those redemptions start, the redemption price, and any
other terms and conditions affecting the redemption. The redemption price will
include all accrued and unpaid distributions, except in the case of
noncumulative preferred shares. The redemption price may be payable in cash or
other property, as specified in the applicable prospectus supplement. If the
redemption price for preferred shares of any series is payable only from the net
proceeds of our issuance of shares of beneficial interest, the terms of the
preferred shares may
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Description of preferred shares
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provide that, if no shares of beneficial interest shall have been issued or to
the extent the net proceeds from any issuance are insufficient to pay in full
the aggregate redemption price then due, the preferred shares will automatically
and mandatorily be converted into shares of beneficial interest pursuant to
conversion provisions specified in the applicable prospectus supplement.
Liquidation preference
The applicable prospectus supplement will show the liquidation preference of the
applicable series. Upon our voluntary or involuntary liquidation, before any
distribution may be made to the holders of our common shares or any other shares
of beneficial interest ranking junior in the distribution of assets upon any
liquidation to the applicable series, the holders of that series will be
entitled to receive, out of our assets legally available for distribution to
shareholders, liquidating distributions in the amount of the liquidation
preference, plus an amount equal to all distributions accrued and unpaid. In the
case of a noncumulative applicable series, accrued and unpaid distributions
include only the then current distribution period. After payment of the full
amount of the liquidating distributions to which they are entitled, the holders
of preferred shares will have no right or claim to any of our remaining assets.
If liquidating distributions shall have been made in full to all holders of
preferred shares, our remaining assets will be distributed among the holders of
any other shares of beneficial interest ranking junior to the preferred shares
upon liquidation, according to their rights and preferences and in each case
according to their number of shares.
If, upon any voluntary or involuntary liquidation, our available assets are
insufficient to pay the amount of the liquidating distributions on all
outstanding shares of that series and the corresponding amounts payable on all
shares of beneficial interest ranking on a parity in the distribution of assets
with that series, then the holders of that series and all other equally ranking
shares of beneficial interest shall share ratably in the distribution in
proportion to the full liquidating distributions to which they would otherwise
be entitled.
For these purposes, our consolidation or merger with or into any other trust or
corporation or other entity, or the sale, lease or conveyance of all or
substantially all of our property or business, will not be a liquidation.
Voting rights
Holders of the preferred shares will not have any voting rights, except as shown
below or as otherwise from time to time required by law or as specified in the
applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, holders of
our preferred shares will be entitled to elect two additional trustees to our
board of trustees at our next annual meeting of shareholders and at each
subsequent annual meeting if at any time distributions on the applicable series
are in arrears for six consecutive quarterly periods. If the applicable series
has a cumulative distribution, the right to elect additional trustees described
in the preceding sentence shall remain in effect until we declare or pay and set
aside for payment all distributions accrued and unpaid on the applicable series.
If the applicable series does not have a cumulative distribution, the right to
elect additional trustees described above shall remain in effect until we
declare or pay and set aside for payment distributions accrued and unpaid on
four consecutive quarterly periods on the applicable series.
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Description of preferred shares
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Unless otherwise provided for in an applicable series, so long as any preferred
shares are outstanding, we may not, without the affirmative vote or consent of a
majority of the shares of each series of preferred shares outstanding at that
time:
- authorize, create or increase the authorized or issued amount of any class
or series of shares of beneficial interest ranking senior to that series of
preferred shares with respect to distribution and liquidation rights;
- reclassify any authorized shares of beneficial interest into a series of
shares of beneficial interest ranking senior to that series of preferred
shares with respect to distribution and liquidation rights;
- create, authorize or issue any security or obligation convertible into or
evidencing the right to purchase any shares of beneficial interest ranking
senior to that series of preferred shares with respect to distribution and
liquidation rights; and
- amend, alter or repeal the provisions of our declaration of trust or any
articles supplementary relating to that series of preferred shares that
materially and adversely affects the series of preferred shares.
The authorization, creation or increase of the authorized or issued amount of
any class or series of shares of beneficial interest ranking on parity or junior
to a series of preferred shares with respect to distribution and liquidation
rights will not be deemed to materially and adversely affect that series.
As more fully described under "Description of depositary shares" below, if we
elect to issue depositary shares, each representing a fraction of a share of a
series, each depositary will in effect be entitled to a fraction of a vote per
depositary share.
Conversion rights
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which you may, or we may require you to, convert shares
of any series of preferred shares into common shares or any other class or
series of shares of beneficial interest. The terms will include the number of
common shares or other securities into which the preferred shares are
convertible, the conversion price (or the manner of determining it), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the series or at our option, the events requiring an adjustment
of the conversion price, and provisions affecting conversion upon the redemption
of shares of the series.
Our exchange rights
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which we can require you to exchange shares of any
series of preferred shares for debt securities. If an exchange is required, you
will receive debt securities with a principal amount equal to the liquidation
preference of the applicable series of preferred shares. The other terms and
provisions of the debt securities will not be materially less favorable to you
than those of the series of preferred shares being exchanged.
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Description of depositary shares
General
The following is a summary of the material provisions of any deposit agreement
and of the depositary shares and depositary receipts representing depositary
shares. Because it is a summary, it does not contain all of the information that
may be important to you. If you want more information, you should read the form
of deposit agreement and depositary receipts which we will filed as exhibits to
the registration statement of which this prospectus is part prior to an offering
of depositary shares. See "Where you can find more information." This summary is
also subject to and qualified by reference to the descriptions of the particular
terms of your securities described in the applicable prospectus supplement.
We may, at our option, elect to offer fractional interests in shares of
preferred shares, rather than shares of preferred shares. If we exercise this
option, we will appoint a depositary to issue depositary receipts representing
those fractional interests. Preferred shares of each series represented by
depositary shares will be deposited under a separate deposit agreement between
us and the depositary. The prospectus supplement relating to a series of
depositary shares will show the name and address of the depositary. Subject to
the terms of the applicable deposit agreement, each owner of depositary shares
will be entitled to all of the distribution, voting, conversion, redemption,
liquidation and other rights and preferences of the preferred shares represented
by those depositary shares.
Depositary receipts issued pursuant to the applicable deposit agreement will
evidence ownership of depositary shares. Upon surrender of depositary receipts
at the office of the depositary, and upon payment of the charges provided in and
subject to the terms of the deposit agreement, a holder of depositary shares
will be entitled to receive the preferred shares underlying the surrendered
depositary receipts.
Distributions
A depositary will be required to distribute all cash distributions received in
respect of the applicable preferred shares to the record holders of depositary
receipts evidencing the related depositary shares in proportion to the number of
depositary receipts owned by the holders. Fractions will be rounded down to the
nearest whole cent.
If the distribution is other than in cash, a depositary will be required to
distribute property received by it to the record holders of depositary receipts
entitled thereto, unless the depositary determines that it is not feasible to
make the distribution. In that case, the depositary may, with our approval, sell
the property and distribute the net proceeds from the sale to the holders.
Depositary shares that represent preferred shares converted or exchanged will
not be entitled to distributions. The deposit agreement will also contain
provisions relating to the manner in which any subscription or similar rights we
offer to holders of the preferred shares will be made available to holders of
depositary shares. All distributions will be subject to obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the depositary.
Withdrawal of preferred shares
You may receive the number of whole shares of your series of preferred shares
and any money or other property represented by those depositary receipts after
surrendering the depositary receipts at the corporate trust office of the
depositary. Partial shares of preferred shares will not be issued. If the
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Description of depositary shares
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depositary shares that you surrender exceed the number of depositary shares that
represent the number of whole preferred shares you wish to withdraw, then the
depositary will deliver to you at the same time a new depositary receipt
evidencing the excess number of depositary shares. Once you have withdrawn your
preferred shares, you will not be entitled to re-deposit those preferred shares
under the deposit agreement in order to receive depositary shares. We do not
expect that there will be any public trading market for withdrawn preferred
shares.
Redemption of depositary shares
If we redeem a series of the preferred shares underlying the depositary shares,
the depositary will redeem those shares from the proceeds received by it. The
depositary will mail notice of redemption not less than 30 and not more than
60 days before the date fixed for redemption to the record holders of the
depositary receipts evidencing the depositary shares we are redeeming at their
addresses appearing in the depositary's books. The redemption price per
depositary share will be equal to the applicable fraction of the redemption
price per share payable with respect to the series of the preferred shares. The
redemption date for depositary shares will be the same as that of the preferred
shares. If we are redeeming less than all of the depositary shares, the
depositary will select the depositary shares we are redeeming by lot or pro rata
as the depositary may determine.
After the date fixed for redemption, the depositary shares called for redemption
will no longer be deemed outstanding. All rights of the holders of the
depositary shares and the related depositary receipts will cease at that time,
except the right to receive the money or other property to which the holders of
depositary shares were entitled upon redemption. Receipt of the money or other
property is subject to surrender to the depositary of the depositary receipts
evidencing the redeemed depositary shares.
Voting of the preferred shares
Upon receipt of notice of any meeting at which the holders of the applicable
preferred shares are entitled to vote, a depositary will be required to mail the
information contained in the notice of meeting to the record holders of the
applicable depositary receipts. Each record holder of depositary receipts on the
record date, which will be the same date as the record date, will be entitled to
instruct the depositary as to the exercise of the voting rights pertaining to
the amount of preferred shares represented by the holder's depositary shares.
The depositary will try, as practical, to vote the shares as you instruct. We
will agree to take all reasonable action that the depositary deems necessary in
order to enable it to do so. If you do not instruct the depositary how to vote
your shares, the depositary will abstain from voting those shares.
Liquidation preference
Upon our liquidation, whether voluntary or involuntary, each holder of
depositary shares will be entitled to the fraction of the liquidation preference
accorded each preferred share represented by the depositary shares, as shown in
the applicable prospectus supplement.
Conversion or exchange of preferred shares
The depositary shares will not themselves be convertible into or exchangeable
for common shares, preferred shares or any of our other securities or property.
Nevertheless, if so specified in the applicable prospectus supplement, the
depositary receipts may be surrendered by holders to the
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Description of depositary shares
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applicable depositary with written instructions to it to instruct us to cause
conversion of the preferred shares represented by the depositary shares.
Similarly, if so specified in the applicable prospectus supplement, we may
require you to surrender all of your depositary receipts to the applicable
depositary upon our requiring the conversion or exchange of the preferred shares
represented by the depositary shares into our debt securities. We will agree
that, upon receipt of the instruction and any amounts payable in connection with
the conversion or exchange, we will cause the conversion or exchange using the
same procedures as those provided for delivery of preferred shares to effect the
conversion or exchange. If you are converting only a part of the depositary
shares, the depositary will issue you a new depositary receipt for any
unconverted depositary shares.
Taxation
As owner of depositary shares, you will be treated for U.S. federal income tax
purposes as if you were an owner of the series of preferred shares represented
by the depositary shares. Therefore, you will be required to take into account
for U.S. federal income tax purposes income and deductions to which you would be
entitled if you were a holder of the underlying series of preferred shares. In
addition:
- no gain or loss will be recognized for U.S. federal income tax purposes upon
the withdrawal of preferred shares in exchange for depositary shares
provided in the deposit agreement;
- the tax basis of each preferred share to you as exchanging owner of
depositary shares will, upon exchange, be the same as the aggregate tax
basis of the depositary shares exchanged for the preferred shares; and
- if you held the depositary shares as a capital asset at the time of the
exchange for preferred shares, the holding period for the preferred shares
will include the period during which you owned the depositary shares.
Amendment and termination of a deposit agreement
We and the applicable depositary are permitted to amend the provisions of the
depositary receipts and the deposit agreement. However, the holders of at least
a majority of the applicable depositary shares then outstanding must approve any
amendment that adds or increases fees or charges or prejudices an important
right of holders. Every holder of an outstanding depositary receipt at the time
any amendment becomes effective, by continuing to hold the receipt, will be
bound by the applicable deposit agreement, as amended.
Any deposit agreement may be terminated by us upon not less than 30 days' prior
written notice to the applicable depositary if (1) the termination is necessary
to preserve our status as a Maryland real estate investment trust or (2) a
majority of each series of preferred shares affected by the termination consents
to the termination. When either event occurs, the depositary will be required to
deliver or make available to each holder of depositary receipts, upon surrender
of the depositary receipts held by the holder, the number of whole or fractional
shares of preferred shares as are represented by the depositary shares evidenced
by the depositary receipts, together with any other property held by the
depositary with respect to the depositary receipts. In addition, a deposit
agreement will automatically terminate if:
- all depositary shares have been redeemed;
- there shall have been a final distribution in respect of the related
preferred shares in connection with our liquidation and the distribution has
been made to the holders of depositary receipts evidencing the depositary
shares underlying the preferred shares; or
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Description of depositary shares
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- each related preferred share shall have been converted or exchanged into
securities not represented by depositary shares.
Charges of a depositary
We will pay all transfer and other taxes and governmental charges arising solely
from the existence of a deposit agreement. In addition, we will pay the fees and
expenses of a depositary in connection with the initial deposit of the preferred
shares and any redemption of preferred shares. However, holders of depositary
receipts will pay any transfer or other governmental charges and the fees and
expenses of a depositary for any duties the holders request to be performed that
are outside of those expressly provided for in the applicable deposit agreement.
Resignation and removal of depositary
A depositary may resign at any time by delivering to us notice of its election
to do so. In addition, we may at any time remove a depositary. Any resignation
or removal will take effect when we appoint a successor depositary and it
accepts the appointment. We must appoint a successor depositary within 60 days
after delivery of the notice of resignation or removal. A depositary must be a
bank or trust company having its principal office in the United States that has
a combined capital and surplus of at least $50 million.
Miscellaneous
A depositary will be required to forward to holders of depositary receipts any
reports and communications from us that it receives with respect to the related
preferred shares. Holders of depository receipts will be able to inspect the
transfer books of the depository and the list of holders of receipts upon
reasonable notice.
Neither a depositary nor our company will be liable if it is prevented from or
delayed in performing its obligations under a deposit agreement by law or any
circumstances beyond its control. Our obligations and those of the depositary
under a deposit agreement will be limited to performing duties in good faith and
without gross negligence or willful misconduct. Neither we nor any depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
depositary receipts, depositary shares or related preferred shares unless
satisfactory indemnity is furnished. We and each depositary will be permitted to
rely on written advice of counsel or accountants, on information provided by
persons presenting preferred shares for deposit, by holders of depositary
receipts, or by other persons believed in good faith to be competent to give the
information, and on documents believed in good faith to be genuine and signed by
a proper party.
If a depositary receives 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 the claims, requests or instructions
received from us.
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Description of warrants
We may issue, together with any other securities being offered or separately,
warrants entitling the holder to purchase from or sell to us, or to receive from
us the cash value of the right to purchase or sell, debt securities, preferred
shares, depositary shares, common shares or trust preferred shares. We and a
warrant agent will enter a warrant agreement pursuant to which the warrants will
be issued. The warrant agent will act solely as our agent in connection with the
warrants and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of warrants. We will file a copy of
the form of warrants and the warrant agreement with the SEC at or before the
time of the offering of the applicable series of warrants.
The following is a summary of the material terms of our warrants and the warrant
agreement. Because it is a summary, it does not contain all of the information
that may be important to you. If you want more information, you should read the
forms of copy of the warrants and the warrant agreement which we will file as
exhibits to the registration statement of which this prospectus is part. See
"Where you can find more information." This summary is also subject to and
qualified by reference to the descriptions of the particular terms of your
securities described in the applicable prospectus supplement.
In the case of each series of warrants, the applicable prospectus supplement
will describe the terms of the warrants being offered thereby. These include the
following, if applicable:
- the offering price;
- the number of warrants offered;
- the securities underlying the warrants;
- the exercise price, the procedures for exercise of the warrants and the
circumstances, if any, that will cause the warrants to be automatically
exercised;
- the date on which the warrants will expire;
- federal income tax consequences;
- the rights, if any, we have to redeem the warrant;
- the name of the warrant agent; and
- the other terms of the warrants.
Warrants may be exercised at the appropriate office of the warrant agent or any
other office indicated in the applicable prospectus supplement. Before the
exercise of warrants, holders will not have any of the rights of holders of the
securities purchasable upon exercise and will not be entitled to payments made
to holders of those securities.
The warrant agreements may be amended or supplemented without the consent of the
holders of the warrants to which the amendment or supplement applies to effect
changes that are not inconsistent with the provisions of the warrants and that
do not adversely affect the interests of the holders of the warrants. However,
any amendment that materially and adversely alters the rights of the holders of
warrants will not be effective unless the holders of at least a majority of the
applicable warrants then outstanding approve the amendment. Every holder of an
outstanding warrant at the time any amendment becomes effective, by continuing
to hold the warrant, will be bound by the applicable warrant agreement as
amended thereby. The prospectus supplement applicable to a particular series of
warrants may provide that certain provisions of the warrants, including the
securities for which they may be exercisable, the exercise price, and the
expiration date may not be altered without the consent of the holder of each
warrant.
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Description of trust preferred securities and trust guarantee
Trust preferred securities
If and when trust preferred securities are issued by a SNH Capital Trust, its
declaration of trust will be replaced by an amended and restated trust agreement
which will authorize its trustees to issue one series of trust preferred
securities and one series of trust common securities. The form of amended and
restated trust agreement is filed with the SEC as an exhibit to the registration
statement of which this prospectus is a part.
The following is a summary of the material terms of the trust preferred
securities and the trust agreement of each SNH Capital Trust. Because it is a
summary, it does not contain all of the information that may be important to
you. If you want more information, you should read the form of amended and
restated trust agreement which we have filed as an exhibit to the registration
statement of which this prospectus is part. Each SNH Capital Trust will file any
final amended and restated trust agreement if it issues trust preferred
securities. See "Where you can find more information." This summary is also
subject to and qualified by reference to the descriptions of the particular
terms of your securities described in the applicable prospectus supplement.
The trust agreement of each SNH Capital Trust will be subject to, and governed
by, the Trust Indenture Act of 1939, as amended. The trust preferred securities
will be issued to the public under the registration statement of which this
prospectus is a part. The trust common securities will be issued directly or
indirectly to us.
The trust preferred securities will have the terms, including distributions,
redemption, voting, conversion, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as set forth in the trust
agreement or made part of the trust agreement by the Trust Indenture Act of
1939, as amended. A prospectus supplement will describe the specific terms of
the trust preferred securities that a SNH Capital Trust is offering, including:
- the distinctive designation of trust preferred securities;
- the number of trust preferred securities issued by the SNH Capital Trust;
- the annual distribution rate, or method of determining the rate, for trust
preferred securities and the date(s) upon which distributions will be
payable;
- whether distributions on trust preferred securities will be cumulative, and,
in the case of trust preferred securities having cumulative distribution
rights, the date or dates or method of determining the date(s) from which
distributions on trust preferred securities will be cumulative;
- the amount or amounts that will be paid out of the assets of the SNH Capital
Trust to the holders of trust preferred securities upon voluntary or
involuntary dissolution, winding up or termination of that SNH Capital
Trust;
- any terms and conditions under which trust preferred securities may be
converted into our shares of beneficial interest, including the conversion
price per share and any circumstances under which the conversion right will
expire;
- any terms and conditions upon which the related series of our debt
securities may be distributed to holders of trust preferred securities;
- any obligation of the SNH Capital Trust to purchase or redeem trust
preferred securities and the price(s) at which, the period(s) within which
and the terms and conditions upon which trust preferred securities will be
purchased or redeemed, in whole or in part, under that obligation;
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Description of trust preferred securities and trust guarantee
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- any voting rights of trust preferred securities in addition to those
required by law, including the number of votes per trust preferred security
and any requirement for the approval by the holders of trust preferred
securities, as a condition to specified action or amendments to the trust
agreement; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of trust preferred securities consistent with the trust
agreement or with applicable law.
Under the trust agreement, the Property Trustee will own a series of our debt
securities purchased by the SNH Capital Trust for the benefit of the holders of
its trust preferred securities and the trust common securities. The payment of
distributions out of money held by the SNH Capital Trusts, and payments upon
redemption of trust preferred securities or liquidation of the SNH Capital
Trusts, will be guaranteed by us to the extent described under "Trust
guarantee." The debt securities purchased by a SNH Capital Trust may be senior
or subordinated and may be convertible, as described in the applicable
prospectus supplement.
Certain United States federal income tax considerations applicable to an
investment in trust preferred securities will be described in the applicable
prospectus supplement.
In connection with the issuance of trust preferred securities, each SNH Capital
Trust will also issue one series of trust common securities. The trust agreement
will authorize the trustees, other than the Property Trustee, of the SNH Capital
Trust to issue on behalf of the SNH Capital Trust one series of trust common
securities having such terms as will be set forth in the trust agreement. These
terms will include distributions, conversion, redemption, voting, liquidation
rights and any restrictions as may be contained in the trust agreement.
Except as otherwise provided in the prospectus supplement, the terms of the
trust common securities will be substantially identical to the terms of the
trust preferred securities. The trust common securities will rank on parity
with, and payments will be made on the trust common securities pro rata with the
trust preferred securities, except that, upon an event of default under the
trust agreement, the rights of the holders of the trust common securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the trust
preferred securities. Except in limited circumstances, the holders of the trust
common securities will also have the right to vote and appoint, remove or
replace any of the trustees of the SNH Capital Trust. All of the trust common
securities of each SNH Capital Trust will be directly or indirectly owned by us.
Trust guarantee
We will execute and deliver a guarantee concurrently with the issuance by each
SNH Capital Trust of its trust preferred securities, for the benefit of the
holders from time to time of the trust preferred securities. The applicable
prospectus supplement will describe any significant differences between the
actual terms of our guarantee and the summary below. The following summary of
our guarantee is not complete. For more information, you should refer to the
full text of our guarantee, including the definitions of the terms used and not
defined in this prospectus or the related prospectus supplement and those terms
made a part of the guarantee by the Trust Indenture Act of 1939, as amended. The
form of trust guarantee is filed as an exhibit to this registration statement of
which this prospectus is a part.
GENERAL. We will irrevocably and unconditionally agree, to the extent set forth
in the trust guarantee, to pay in full to the holders of trust preferred
securities the guaranteed payments, except to the extent paid by the SNH Capital
Trust, as and when due, regardless of any defense, right of set-off or
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Description of trust preferred securities and trust guarantee
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counterclaim that the SNH Capital Trust may have or assert. The following
payments, to the extent not paid by the SNH Capital Trust, will be subject to
our guarantee:
- any accrued and unpaid distributions that are required to be paid on the
trust preferred securities, to the extent the SNH Capital Trust has funds
legally available therefor;
- the redemption price, including all accrued and unpaid distributions,
payable out of funds legally available therefor, with respect to any trust
preferred securities called for redemption by the SNH Capital Trust; and
- upon a liquidation of a SNH Capital Trust, other than in connection with the
distribution of our subordinated debt securities to the holders of the trust
preferred securities or the redemption of all of the trust preferred
securities issued by that SNH Capital Trust, the lesser of:
(1) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities to the date of payment;
and
(2) the amount of assets of the SNH Capital Trust remaining available for
distribution to holders of trust preferred securities in liquidation of
that SNH Capital Trust.
Our obligation to make a guarantee payment may be satisfied by the SNH Capital
Trust's direct payment of the required amounts to the holders of trust preferred
securities or by causing the SNH Capital Trust to pay the amount to the holders.
AMENDMENT AND ASSIGNMENT. Except with respect to any changes that do not
adversely affect the rights of holders of trust preferred securities, in which
case no vote will be required, a trust guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation amount
of the outstanding affected trust preferred securities. The manner of obtaining
any approval of the holders will be described in our prospectus supplement. All
guarantees and agreements contained in our guarantee will bind our successors
and assigns and will inure to the benefit of the holders of the related trust
preferred securities then outstanding.
TERMINATION. Our guarantee will terminate:
- upon full payment of the redemption price of all related trust preferred
securities;
- upon distribution of our debt securities held by the SNH Capital Trust to
the holders of the trust preferred securities; or
- upon full payment of the amounts payable in accordance with the trust
agreement upon liquidation of the SNH Capital Trust.
Our guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of trust preferred securities must restore
payment of any sums paid under those trust preferred securities or the
guarantee. If the debt securities purchased by the SNH Capital Trust or our
guarantee are subordinated, the applicable subordination provisions will provide
that in the event payment is made on the subordinated debt securities or the
subordinated guarantee in contravention of the subordination provisions, such
payments will be paid over to the holders of our senior debt securities.
RANKING OF OUR GUARANTEE. Each guarantee may be our secured or unsecured
obligation and may be senior or subordinated, as described in the applicable
prospectus supplement. The trust agreement will provide that each holder of
trust preferred securities by acceptance of those securities agrees to the
subordination provisions, if any, and other terms of the guarantee.
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Description of trust preferred securities and trust guarantee
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Our guarantee will constitute a guarantee of payment and not of collection. The
guarantee will be deposited with the Property Trustee to be held for the benefit
of the trust preferred securities. The Property Trustee will have the right to
enforce our guarantee on behalf of the holders of the trust preferred
securities. The holders of not less than a majority in aggregate liquidation
amount of the affected trust preferred securities will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
in respect of our guarantee, including the giving of directions to the Property
Trustee. Any holder of trust preferred securities may institute a legal
proceeding directly against us to enforce its rights under our guarantee,
without first instituting a legal proceeding against the related SNH Capital
Trust, or any other person or entity. Our guarantee will not be discharged
except by payment of the guarantee payments in full to the extent not paid by
the SNH Capital Trust, and by complete performance of all obligations under the
guarantee.
GOVERNING LAW. Our guarantee will be governed by and construed in accordance
with the laws of the State of New York.
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Description of certain provisions of Maryland law and of our declaration of
trust and bylaws
We are organized as a Maryland real estate investment trust. The following is a
summary of our declaration of trust and bylaws and several provisions of
Maryland law. Because it is a summary, it does not contain all the information
that may be important to you. If you want more information, you should read our
entire declaration of trust and bylaws, copies of which we have previously filed
with the SEC, or refer to the provisions of Maryland law.
Trustees
Our declaration of trust and bylaws provide that our board of trustees will
establish the number of trustees. The number of trustees constituting our entire
board of trustees may be increased or decreased from time to time only by a vote
of the trustees, provided however that the tenure of office of a trustee will
not be affected by any decrease in the number of trustees. Any vacancy on the
board of trustees may be filled only by a majority of the remaining trustees,
even if the remaining trustees do not constitute a quorum. Any trustee elected
to fill a vacancy will hold office for the remainder of the full term of the
class of trustees in which the vacancy occurred and until a successor is elected
and qualifies. Our bylaws require that a majority of our trustees be independent
trustees except for temporary periods due to vacancies.
Our declaration of trust divides our board of trustees into three classes.
Shareholders elect our trustees of each class for three-year terms upon the
expiration of their current terms. Shareholders elect only one class of trustees
each year. We believe that classification of our board helps to assure the
continuity of our business strategies and policies. There is no cumulative
voting in the election of trustees. Consequently, at each annual meeting of
shareholders, the holders of a majority of our shares are able to elect all of
the successors of the class of trustees whose terms expire at that meeting.
The classified board provision could have the effect of making the replacement
of our incumbent trustees more time consuming and difficult. At least two annual
meetings of shareholders are generally required to effect a change in a majority
of our board of trustees.
Our declaration of trust provides that a trustee may be removed with or without
cause by the affirmative vote of at least two-thirds of our shares entitled to
be cast in the election of trustees. This provision precludes shareholders from
removing our incumbent trustees unless they can obtain a substantial affirmative
vote of shares.
Advance notice of trustee nominations and new business
Our bylaws provide that nominations of persons for election to our board of
trustees and business to be transacted at shareholder meetings may be properly
brought pursuant to our notice of the meeting, by our board of trustees, or by a
shareholder who is (i) a shareholder of record at the time of giving the advance
notice and at the time of the meeting, (ii) entitled to vote at the meeting and
(iii) has complied with the advance notice and other applicable terms and
provisions set forth in our bylaws.
Under our bylaws, a shareholder's notice of nominations for trustee or business
to be transacted at an annual meeting of shareholders must be delivered to our
secretary at our principal office not later than the close of business on the
90th day and not earlier than the close of business on the 120th day prior to
the first anniversary of the date of mailing of our notice for the preceding
year's annual meeting. In the event that the date of mailing of our notice of
the annual meeting is advanced or delayed by more
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than 30 days from the anniversary date of the mailing of our notice for the
preceding year's annual meeting, a shareholder's notice must be delivered to us
not earlier than the close of business on the 120th day prior to the mailing of
notice of such annual meeting and not later than the close of business on the
later of: (i) the 90th day prior to the date of mailing of the notice for such
annual meeting, or (ii) the 10th day following the day on which we first make a
public announcement of the date of mailing of our notice for such meeting. The
public announcement of a postponement of the mailing of the notice for such
annual meeting or of an adjournment or postponement of an annual meeting to a
later date or time will not commence a new time period for the giving of a
shareholder's notice. If the number of trustees to be elected to our board of
trustees is increased and we make no public announcement of such action or do
not specify the size of the increased board of trustees at least one hundred
(100) days prior to the first anniversary of the date of mailing of notice for
our preceding year's annual meeting, a shareholder's notice also will be
considered timely, but only with respect to nominees for any new positions
created by such increase, if the notice is delivered to our secretary at our
principal office not later than the close of business on the 10th day
immediately following the day on which such public announcement is made.
For special meetings of shareholders, our bylaws require a shareholder who is
nominating a person for election to our board of trustees at a special meeting
at which trustees are to be elected to give notice of such nomination to our
secretary at our principal office not earlier than the close of business on the
120th day prior to such special meeting and not later than the close of business
on the later of: (1) the 90th day prior to such special meeting or (2) the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the trustees to be elected
at such meeting. The public announcement of a postponement or adjournment of a
special meeting to a later date or time will not commence a new time period for
the giving of a shareholder's notice as described above.
Any notice from a shareholder of nominations for trustee or business to be
transacted at a shareholder meeting must be in writing and include the
following:
- as to each person nominated for election or reelection as a trustee,
(i) the nominee's name, age, business and residence addresses, (ii) the
class and number of shares beneficially owned or owned of record by the
nominee and (iii) all information relating to the person that is required to
be disclosed in solicitations of proxies for election of trustees or
otherwise required by Regulation 14A under the Securities Exchange Act of
1934, as amended, together with the nominee's written consent to being named
in the proxy statement as a nominee and to serving as a trustee if elected;
- as to other business that the shareholder proposes to bring before the
meeting, a brief description of the business, the reasons for conducting the
business and any material interest in the business of the shareholder and of
the beneficial owner, if any, on whose behalf the proposal is made; and
- as to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination or proposal is made, the name and address of the
shareholder and beneficial owner and the number of our shares which (s)he or
they own beneficially and of record.
Meetings of shareholders
Under our bylaws, our annual meeting of shareholders will take place within six
months after the end of each fiscal year, unless a different date is set by the
board of trustees. Meetings of shareholders may be called only by our board of
trustees.
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Liability and indemnification of trustees and officers
To the maximum extent permitted by Maryland Law, our declaration of trust and
bylaws include provisions limiting the liability of our present and former
trustees, officers and shareholders for damages and obligating us to indemnify
them against any claim or liability to which they may become subject by reason
of their status or actions as our present or former trustees, officers or
shareholders. Our bylaws also obligate us to pay or reimburse the people
described above for reasonable expenses in advance of final disposition of a
proceeding.
The Maryland REIT Law permits a real estate investment trust to indemnify and
advance expenses to its trustees, officers, employees and agents to the same
extent permitted by the Maryland General Corporation Law for directors and
officers of Maryland corporations. The Maryland corporation statute permits a
corporation to indemnify its present and former directors and officers against
judgments, penalties, fines, settlements and reasonable expenses incurred in
connection with any proceeding to which they may be made a party by reason of
their service in those capacities. However, a Maryland corporation is not
permitted to provide this type of indemnification if the following is
established:
- the act or omission of the director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty;
- the director or officer actually received an improper personal benefit in
money, property or services; or
- in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
The Maryland corporation statute permits a corporation to advance reasonable
expenses to a director or officer upon the corporation's receipt of the
following:
- a written affirmation by the director or officer of his good faith belief
that he has met the standard of conduct necessary for indemnification by the
corporation; and
- a written undertaking by him or on his behalf to repay the amount paid or
reimbursed by the corporation if it is ultimately determined that this
standard of conduct was not met.
The SEC has expressed the opinion that indemnification of trustees, officers or
persons otherwise controlling a company for liabilities arising under the
Securities Act of 1933, as amended, is against public policy and is therefore
unenforceable.
Shareholder liability
Under the Maryland REIT Law, a shareholder is not personally liable for the
obligations of a real estate investment trust solely as a result of his status
as a shareholder. Our declaration of trust provides that no shareholder will be
liable for any debt, claim, demand, judgment or obligation of any kind of,
against or with respect to us by reason of being a shareholder. Despite these
facts, our legal counsel has advised us that in some jurisdictions the
possibility exists that shareholders of a trust entity such as ours may be held
liable for acts or obligations of the trust. While we intend to conduct our
business in a manner designed to minimize potential shareholder liability, we
can give no assurance that you can avoid liability in all instances in all
jurisdictions. Our trustees have not provided in the past and do not intend to
provide insurance covering these risks to our shareholders.
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Description of certain provisions of Maryland law and of our declaration of
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Transactions with affiliates
Our declaration of trust allows us to enter into contracts and transactions of
any kind with any person, including any of our trustees, officers, employees or
agents or any person affiliated with them. Other than general legal principles
applicable to self-dealing by fiduciaries, there are no prohibitions in our
declaration of trust or bylaws which would prohibit dealings between us and our
affiliates.
Voting by shareholders
Whenever shareholders are required or permitted to take any action by a vote,
the action may only be taken by a vote at a shareholders meeting. Under our
declaration of trust and bylaws shareholders do not have the right to take any
action by written consents instead of a vote.
Restrictions on transfer of shares
Our declaration of trust restricts the amount of shares that individual
shareholders may own. These restrictions are intended to assist with REIT
compliance under the Internal Revenue Code of 1986, as amended, and otherwise to
promote our orderly governance. These restrictions do not apply to HRPT
Properties Trust, REIT Management & Research LLC or their affiliates. All
certificates evidencing our shares will bear a legend referring to these
restrictions.
Our declaration of trust provides that no person may own, or be deemed to own by
virtue of the attribution provisions of the Internal Revenue Code of 1986, as
amended, more than 9.8% of the number or value of our outstanding shares. Our
declaration of trust also prohibits any person from beneficially or
constructively owning shares if that ownership would result in us being closely
held under Section 856(h) of the Internal Revenue Code of 1986, as amended, or
would otherwise cause us to fail to qualify as a REIT.
Our board of trustees, in its discretion, may exempt a proposed transferee from
the share ownership limitation. So long as our board of trustees determines that
it is in our best interest to qualify as a REIT, the board may not grant an
exemption if the exemption would result in us failing to qualify as a REIT. In
determining whether to grant an exemption, our board of trustees may consider,
among other factors, the following:
- the general reputation and moral character of the person requesting an
exemption;
- whether the person's ownership of shares would be direct or through
ownership attribution;
- whether the person's ownership of shares would adversely affect our ability
to acquire additional properties; and
- whether granting an exemption would adversely affect any of our existing
contractual arrangements or business policies.
In addition, our board of trustees may require rulings from the Internal Revenue
Service, opinions of counsel, affidavits, undertakings or agreements it deems
advisable in order to make the foregoing decisions.
If a person attempts a transfer of our shares in violation of the ownership
limitations described above, then that number of shares which would cause the
violation will be automatically transferred to a trust for the exclusive benefit
of one or more charitable beneficiaries designated by us. The prohibited owner
will not acquire any rights in these excess shares, will not benefit
economically from ownership of any excess shares, will have no rights to
distributions and will not possess any rights to vote. This
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Description of certain provisions of Maryland law and of our declaration of
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automatic transfer will be deemed to be effective as of the close of business on
the business day prior to the date of the violative transfer.
Within 20 days after receiving notice from us that its shares have been
transferred to an excess share trust, the excess share trustee will sell the
shares held in the excess share trust to a person designated by the excess share
trustee whose ownership of the shares will not violate the ownership limitations
set forth in our declaration of trust. Upon this sale, the interest of the
charitable beneficiary in the shares sold will terminate and the excess share
trustee will distribute the net proceeds of the sale to the prohibited owner and
to the charitable beneficiary as follows:
- The prohibited owner will receive the lesser of:
(1) the price paid by the prohibited owner for the shares or, if the
prohibited owner did not give value for the shares in connection with the
event causing the shares to be held in the excess share 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 transferred to the
excess share trust; and
(2) the net price received by the excess share trustee from the sale of the
shares held in the excess share trust.
- Any net sale proceeds in excess of the amount payable to the prohibited
owner shall be paid to the charitable beneficiary.
If, prior to our discovery that shares of beneficial interest have been
transferred to the excess share trust, a prohibited owner sells those shares,
then:
(1) those shares will be deemed to have been sold on behalf of the excess
share trust; and
(2) to the extent that the prohibited owner received an amount for those
shares that exceeds the amount that the prohibited owner was entitled to
receive from a sale by an excess share trustee, the prohibited owner must
pay the excess to the excess share trustee upon demand.
Also, shares of beneficial interest held in the excess share trust will be
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 excess share 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 accepts the offer.
We will have the right to accept the offer until the excess share trustee has
sold the shares held in the excess share trust. The net proceeds of the sale to
us will be distributed similar to any other sale by an excess share trustee.
Every owner of 5% or more of all classes or series of our shares is required to
give written notice to us within 30 days after the end of each taxable year
stating the name and address of the owner, the number of shares of each class
and series of our shares which the owner beneficially owns, and a description of
the manner in which those shares are held. If the Internal Revenue Code of 1986,
as amended, or applicable tax regulations specify a threshold below 5%, this
notice provision will apply to those persons who own our shares of beneficial
interest at the lower percentage. In addition, each shareholder is required to
provide us upon demand with any additional information that we may request in
order to determine our status as a REIT, to determine our compliance with the
requirements of any taxing authority or government and to determine and ensure
compliance with the foregoing share ownership limitations.
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Description of certain provisions of Maryland law and of our declaration of
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The restrictions described above will not preclude the settlement of any
transaction entered into through the facilities of the NYSE or any other
national securities exchange or automated inter-dealer quotation system. Our
declaration of trust provides, however, that the fact that the settlement of any
transaction occurs will not negate the effect of any of the foregoing
limitations and any transferee in this kind of transaction will be subject to
all of the provisions and limitations described above.
Business combinations
The Maryland corporation statute contains a provision which regulates business
combinations with interested shareholders. This provision applies to Maryland
real estate investment trusts like us. Under the Maryland corporation statute,
business combinations such as mergers, consolidations, share exchanges and the
like between a Maryland real estate investment trust and an interested
shareholder are prohibited for five years after the most recent date on which
the shareholder becomes an interested shareholder. Under the statute the
following persons are deemed to be interested shareholders:
- any person who beneficially owns 10% or more of the voting power of the
trust's shares;
- an affiliate or associate of the trust 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 the then outstanding voting shares of the trust;
or
- an affiliate of an interested shareholder.
After the five-year prohibition period has ended, a business combination between
a trust and an interested shareholder must be recommended by the board of
trustees of the trust and must receive the following shareholder approvals:
- the affirmative vote of at least 80% of the votes entitled to be cast; and
- the affirmative vote of at least two-thirds of the votes entitled to be cast
by holders of shares other than shares held by the interested shareholder
with whom or with whose affiliate or associate the business combination is
to be effected.
The shareholder approvals discussed above are not required if the trust's
shareholders receive the minimum price set forth in the Maryland corporation
statute for their shares and the consideration is received in cash or in the
same form as previously paid by the interested shareholder for its shares.
The foregoing provisions of the Maryland corporation statute do not apply,
however, to business combinations that are approved or exempted by the board of
trustees of the trust prior to the time that the interested shareholder becomes
an interested shareholder. A person is not an interested shareholder under the
statute if the board of trustees approved in advance the transaction by which
the person otherwise would have become an interested shareholder. The board of
trustees may provide that its approval is subject to compliance with any terms
and conditions determined by the board. Our board of trustees has adopted a
resolution that any business combination between us and any other person is
exempted from the provisions of the Maryland corporation statute described in
the preceding paragraphs, provided that the business combination is first
approved by the board of trustees, including the approval of a majority of the
members of the board of trustees who are not affiliates or associates of the
acquiring person. This resolution, however, may be altered or repealed in whole
or in part at any time.
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Control share acquisitions
The Maryland corporation statute contains a provision which regulates control
share acquisitions. This provision also applies to Maryland real estate
investment trusts. The Maryland corporation statute provides that control shares
of a Maryland real estate investment trust acquired in a control share
acquisition have no voting rights except to the extent that the acquisition is
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of beneficial interest owned by the acquiror, by officers or by
trustees who are employees of the trust. Control shares are voting shares of
beneficial interest which, if aggregated with all other shares of beneficial
interest previously acquired by the acquiror, or in respect of which the
acquiror is able to exercise or direct the exercise of voting power, would
entitle the acquiror to exercise voting power in electing trustees within one of
the following ranges of voting power:
- one-tenth or more but less than one-third;
- one-third or more but less than a majority; or
- a majority or more of all voting power.
An acquiror must obtain the necessary shareholder approval each time he acquires
control shares in an amount sufficient to cross one of the thresholds noted
above.
Control shares do not include shares which the acquiring person is entitled to
vote as a result of having previously obtained shareholder approval by virtue of
a revocable proxy. The Maryland corporation statute provides a list of
exceptions from the definition of control share acquisition.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of the conditions set forth in the statute, including an
undertaking to pay expenses, may compel the board of trustees of the trust to
call a special meeting of shareholders to be held within 50 days after demand to
consider the voting rights of the shares. If no request for a meeting is made,
the trust may itself present the matter at any shareholders 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 the
trust may redeem any or all of the control shares for fair value determined as
of the date of the last control share acquisition by the acquiror or of any
meeting of shareholders at which the voting rights of those shares are
considered and not approved. The right of the trust to redeem any or all of the
control shares is subject to conditions and limitations listed in the statute.
The trust may not redeem shares for which voting rights have previously been
approved. Fair value is determined without regard to the absence of voting
rights for the control shares. If voting rights for control shares are approved
at a shareholders meeting and the acquiror becomes entitled to vote a majority
of the shares entitled to vote, all other shareholders may exercise appraisal
rights. The fair value of the shares as determined for purposes of these
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 to the following:
- shares acquired in a merger, consolidation or share exchange if the trust is
a party to the transaction; or
- acquisitions approved or exempted by a provision in the declaration of trust
or bylaws of the trust adopted before the acquisition of shares.
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Description of certain provisions of Maryland law and of our declaration of
trust and bylaws
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Our bylaws contain a provision exempting any and all acquisitions by any person
of our shares of beneficial interest from the control share acquisition statute.
This provision may be amended or eliminated at any time in the future.
Amendment to our declaration of trust, dissolution and mergers
Under the Maryland REIT Law, a real estate investment trust generally cannot
dissolve, amend its declaration of trust or merge, unless these actions are
approved by at least two-thirds of all shares entitled to be cast on the matter.
The statute allows a trust's declaration of trust to set a lower percentage, so
long as the percentage is not less than a majority. Our declaration of trust
provides for approval of any of the foregoing actions by a majority of shares
entitled to vote on these actions provided the action in question has been
approved by our board of trustees. Our declaration of trust further provides
that if permitted in the future by Maryland law, the majority required to
approve any of the foregoing actions will be the majority of shares voted. Under
the Maryland REIT Law, a declaration of trust may permit the trustees by a
two-thirds vote to amend the declaration of trust from time to time to qualify
as a real estate investment trust under the Internal Revenue Code of 1986, as
amended, or the Maryland REIT Law without the affirmative vote or written
consent of the shareholders. Our declaration of trust permits this type of
action by our board of trustees. Our declaration of trust also permits our board
of trustees to effect changes in our unissued shares, as described more fully
above, and to change our name without shareholder approval, and provides that,
to the extent permitted in the future by Maryland law, our board of trustees may
amend any other provision of our declaration of trust without shareholder
approval. The Maryland REIT Law provides that a majority of our entire board of
trustees, without action by the shareholders, may amend our declaration of trust
to change our name or to change the name or other designation or the par value
of any class or series of our shares and the aggregate par value of our shares.
Anti-takeover effect of Maryland law and of our declaration of trust and bylaws
The following provisions in our declaration of trust and bylaws and in Maryland
law could delay or prevent a change in our control:
- the limitation on ownership and acquisition of more than 9.8% of our shares;
- the classification of our board of trustees into classes and the election of
each class for three-year staggered terms;
- the requirement of a two-thirds majority vote of shareholders for removal of
our trustees;
- the facts that the number of our trustees may be fixed only by vote of our
board of trustees, that a vacancy on our board of trustees may be filled
only by the affirmative vote of a majority of our remaining trustees and
that our shareholders are not entitled to act without a meeting;
- the provision that only our board of trustees may call meetings of
shareholders;
- the advance notice requirements for shareholder nominations for trustees and
other proposals;
- the control share acquisitions provisions of Maryland law, if the applicable
provisions in our bylaws are rescinded;
- the business combination provisions of Maryland law, if the applicable
resolution of our board of trustees is rescinded or if our board of
trustees' approval of a combination is not obtained; and
- the ability of our board of trustees to authorize and issue additional
shares, including additional classes of shares with rights defined at the
time of issuance, without shareholder approval.
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Plan of distribution
We and/or the SNH Capital Trusts may sell the offered securities (a) through
underwriters or dealers, (b) directly to purchasers, including our affiliates,
(c) through agents or (d) through a combination of any of these methods. The
prospectus supplement will include the following information:
- the terms of the offering;
- the names of any underwriters or agents;
- the name or names of any managing underwriter or underwriters;
- the purchase price of the securities;
- the net proceeds from the sale of the securities;
- any delayed delivery arrangements;
- any underwriting discounts, commissions and other items constituting
underwriters' compensation;
- any initial public offering price; and
- any discounts or concessions allowed or reallowed or paid to dealers; and
any commissions paid to agents.
In compliance with NASD guidelines, the maximum commission or discount to be
received by any NASD member or independent broker dealer may not exceed 8% of
the aggregate amount of the securities offered pursuant to this prospectus and
any applicable prospectus supplement.
Sale through underwriters or dealers
If underwriters are used in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered securities if they
purchase any of them. The underwriters may change from time to time any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
In order to facilitate the offering of securities, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the price of the
securities. Specifically, the underwriters may over-allot in connection with the
offering, creating a short position in the securities for their account. In
addition, to cover over-allotments or to stabilize the price of the shares, the
underwriters may bid for, and purchase, shares in the open market. Finally, an
underwriting syndicate may reclaim selling concessions allowed to an underwriter
or a dealer for distributing the securities in the offering if the syndicate
repurchases previously distributed shares in transactions to cover syndicate
short positions, in stabilization transactions, or otherwise. Any of these
activities may stabilize or maintain the market price of the offered securities
above independent market levels. The underwriters are not required to engage in
these activities, and may end any of these activities at any time.
Some or all of the securities that we and/or the SNH Capital Trusts offer though
this prospectus may be new issues of securities with no established trading
market. Any underwriters to whom we and/or
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Plan of distribution
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the SNH Capital Trusts sell securities for public offering and sale may make a
market in those securities, but they will not be obligated to and they may
discontinue any market making at any time without notice. Accordingly, we cannot
assure you of the liquidity of, or continued trading markets for, any securities
offered pursuant to this prospectus.
If dealers are used in the sale of securities, we and/or the SNH Capital Trusts
will sell the securities to them as principals. They may then resell those
securities to the public at varying prices determined by the dealers at the time
of resale. We will include in the prospectus supplement the names of the dealers
and the terms of the transaction.
Direct sales and sales through agents
We and/or the SNH Capital Trusts may sell the securities directly. In this case,
no underwriters or agents would be involved. We and/or the SNH Capital Trusts
may also sell the securities through agents designated from time to time. In the
prospectus supplement, we will name any agent involved in the offer or sale of
the offered securities, and we will describe any commissions payable to the
agent. Unless we inform you otherwise in the prospectus supplement, any agent
will agree to use its reasonable best efforts to solicit purchases for the
period of its appointment.
We and/or the SNH Capital Trusts may sell the securities directly to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act of 1933 with respect to any sale of those
securities. We will describe the terms of any such sales in the prospectus
supplement.
Delayed delivery contracts
If we so indicate in the prospectus supplement, we and/or the SNH Capital Trusts
may authorize agents, underwriters or dealers to solicit offers from certain
types of institutions to purchase securities at the public offering price under
delayed delivery contracts. These contracts would provide for payment and
delivery on a specified date in the future. The contracts would be subject only
to those conditions described in the prospectus supplement. The prospectus
supplement will describe the commission payable for solicitation of those
contracts.
General information
We and/or the SNH Capital Trusts may have agreements with the agents, dealers
and underwriters to indemnify them against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribute with respect to
payments that the agents, dealers or underwriters may be required to make.
Agents, dealers and underwriters may be customers of, engage in transactions
with or perform services for us in the ordinary course of their businesses.
Each underwriter, dealer and agent participating in the distribution of any of
the securities that are issuable in bearer form will agree that it will not
offer, sell or deliver, directly or indirectly, securities in bearer form in the
United States or to United States persons, other than qualifying financial
institutions, during the restricted period, as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7).
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Validity of the offered securities
Sullivan & Worcester LLP, as to certain matters of New York law, and Ballard
Spahr Andrews & Ingersoll, LLP, as to certain matters of Maryland law, will pass
upon the validity of the offered securities for us. Barry M. Portnoy, a former
partner of the firm of Sullivan & Worcester LLP, is one of our managing
trustees, and he is a managing trustee of HRPT Properties Trust and Hospitality
Properties Trust and a managing director of Five Star Quality Care, Inc.
Mr. Portnoy is also a director and 50% owner of REIT Management & Research LLC,
our investment manager, and a director of certain of our subsidiaries.
Sullivan & Worcester LLP represents HRPT Properties Trust, Hospitality
Properties Trust, Five Star Quality Care, Inc., REIT Management & Research LLC
and certain of their affiliates. Ballard Spahr Andrews & Ingersoll, LLP is
special Maryland counsel to HRPT Properties Trust, Hospitality Properties Trust
and Five Star Quality Care, Inc.
Experts
Ernst & Young LLP, independent auditors, have audited our consolidated financial
statements and schedules included in our Annual Report on Form 10-K for the year
ended December 31, 2000, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement.
Ernst & Young LLP, independent auditors, have also audited the combined
financial statements of Certain Mariner Post-Acute Network Facilities (Operated
by AMS Properties, Inc. and GCI Health Care Centers, Inc., wholly-owned
subsidiaries of Mariner Post-Acute Network, Inc.) included in our Current Report
on Form 8-K dated January 30, 2001, as amended, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. Our financial statements and schedules and the combined
financial statements of Certain Mariner Post-Acute Network Facilities (Operated
by AMS Properties, Inc. and GCI Health Care Centers, Inc., wholly-owned
subsidiaries of Mariner Post-Acute Network, Inc.), are incorporated by reference
in reliance on Ernst & Young LLP's reports, given on their authority as experts
in accounting and auditing.
KPMG LLP, independent auditors, have audited the combined financial statements
of forty-two facilities acquired by us from Integrated Health Services, Inc.
included in our Form 8-K dated January 30, 2001, as amended, as set forth in
their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. These combined financial statements are
incorporated by reference in reliance on KPMG LLP's report, given on their
authority as experts in accounting and auditing.
Arthur Andersen LLP, independent public accountants, have audited the
consolidated financial statements of CSL Group, Inc. and subsidiaries (a
business unit wholly owned by Crestline Capital Corporation) as partitioned for
sale to SNH/CSL Properties Trust included in our Current Report on Form 8-K
dated September 21, 2001, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. These
consolidated financial statements are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving their report.
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Where you can find more information
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information on file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You can request copies of those documents upon
payment of a duplicating fee to the SEC. This prospectus is part of a
registration statement and does not contain all of the information set forth in
the registration statement. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. You can review our
SEC filings and the registration statement by accessing the SEC's Internet site
at http://www.sec.gov.
Our common shares are traded on the New York Stock Exchange under the symbol
"SNH," and you can review similar information concerning us at the office of the
NYSE at 20 Broad Street, New York, New York 10005.
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Documents incorporated by reference
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus. Statements in this prospectus regarding the
contents of any contract or other document may not be complete. You should refer
to the copy of the contract or other document filed as an exhibit to the
registration statement. Later information filed with the SEC will update and
supersede information we have included or incorporated by reference in this
prospectus.
The following documents are hereby incorporated by reference into this
prospectus and specifically made a part hereof:
- our Annual Report on Form 10-K for the fiscal year ended December 31, 2000;
- our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2001, June 30, 2001 and September 30, 2001;
- our Current Reports on Form 8-K dated January 30, 2001, as amended, May 16,
2001, June 11, 2001, June 18, 2001, June 27, 2001, August 9, 2001,
September 21, 2001, October 3, 2001, as amended, November 5, 2001,
December 6, 2001, December 13, 2001, December 18, 2001, December 20, 2001
and December 31, 2001; and
- the description of our common shares contained in our registration statement
on Form 8-A (File No. 001-15319), filed on September 22, 1999.
All filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, subsequent to the date of this
prospectus and prior to the termination or completion of any offering of offered
securities, shall be deemed to be incorporated by reference into this prospectus
and to be a part hereof from the respective dates of filing of such documents.
We will provide you with a copy of the information we have incorporated by
reference, excluding exhibits other than those which we specifically incorporate
by reference in this prospectus. You may obtain this information at no cost by
writing or telephoning us at: 400 Centre Street, Newton, Massachusetts, 02458,
(617) 796-8350, Attention: Investor Relations.
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THE ARTICLES OF AMENDMENT AND RESTATEMENT ESTABLISHING SENIOR HOUSING PROPERTIES
TRUST, DATED SEPTEMBER 20, 1999, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO, IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND, PROVIDES THAT THE NAME "SENIOR HOUSING PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF SENIOR HOUSING PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL
LIABILITY FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SENIOR HOUSING PROPERTIES
TRUST. ALL PERSONS DEALING WITH SENIOR HOUSING PROPERTIES TRUST SHALL LOOK ONLY
TO THE ASSETS OF SENIOR HOUSING PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR
THE PERFORMANCE OF ANY OBLIGATION.
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