Filed Pursuant to Rule 424(b)(2)
Registration No. 333-135210
PROSPECTUS SUPPLEMENT Dated August 10, 2006
(To Prospectus Dated July 5, 2006)
$500,000,000
AMB Property, L.P.
SERIES C MEDIUM-TERM NOTES
Unconditionally Guaranteed by AMB Property Corporation
AMP Property, L.P., a Delaware limited partnership, may
offer from time to time up to $500,000,000 (or its equivalent in
foreign currencies or composite currencies) of its Series C
medium-term notes. The specific terms of any notes offered will
be included in a pricing supplement. Unless the pricing
supplement provides otherwise, the notes will have the following
general terms:
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The notes will mature in nine months or more from the date
of issue. |
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The notes will bear interest at either a fixed or floating
rate. The floating interest rate will be based on: |
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CD rate |
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CMT rate |
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Commercial paper rate |
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EURIBOR |
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Federal funds rate |
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LIBOR |
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Prime rate |
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Treasury rate |
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Any other rate specified in the applicable pricing
supplement |
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We may redeem a note prior to its maturity date and you
may have us repay a note prior to its maturity date only if the
applicable pricing supplement so specifies. |
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The notes will be denominated in U.S. dollars or a
foreign or composite currency and be issued in minimum
denominations of $1,000, or appropriate denominations in the
foreign or composite currency. |
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Fixed rate interest will be paid on June 30 and
December 30, accruing from the date of issue, unless
otherwise specified in the applicable pricing supplement. |
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Floating rate interest will be paid on the dates stated in
the applicable pricing supplement. |
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The notes will be held in global form by the depository
trust company, unless otherwise specified in the applicable
pricing supplement. |
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The notes will be our senior unsecured obligations,
effectively subordinated to our mortgages and other secured
indebtedness, and to all of the indebtedness of our
subsidiaries. |
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The notes will be unconditionally guaranteed on a senior
unsecured basis by AMB Property Corporation, a Maryland
corporation and our general partner. The guarantees will be
effectively subordinated to mortgages and other secured
indebtedness of AMB Property Corporation and to all of the
indebtedness of its subsidiaries. |
Investing in the Notes involves Risks. See “Risk
Factors” beginning on
page S-2 of this
Prospectus Supplement.
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Agent’s Discounts | |
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Proceeds to the | |
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Price to Public |
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and Commissions | |
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Operating Partnership | |
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Per note
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100%
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.125% - .750% |
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99.875% - 99.250% |
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Total
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$500,000,000
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$625,000 - $3,750,000 |
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$499,375,000 - $496,250,000 |
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Neither the U.S. Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these
securities or determined if this Prospectus Supplement or the
accompanying Prospectus are truthful or complete. Any
representation to the contrary is a criminal offense.
Offers to purchase the notes are being solicited from time to
time by the agents on our behalf. The agents have agreed to use
their reasonable best efforts to sell the notes. This offering
may be terminated at any time. We have not made arrangements to
place funds in an escrow, trust or similar account. There is no
established trading market for the notes and there can be no
assurance that a secondary market for the notes will develop. We
may also sell the notes without the assistance of any agent.
MORGAN STANLEY
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BANC OF AMERICA SECURITIES LLC |
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COMMERZBANK CORPORATES & MARKETS |
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SCOTIA CAPITAL (USA) INC. |
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WACHOVIA CAPITAL MARKETS, LLC |
TABLE OF CONTENTS
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Prospectus Supplement
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S-1 |
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S-1 |
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S-2 |
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S-5 |
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S-15 |
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S-21 |
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S-32 |
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S-34 |
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S-34 |
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Prospectus
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About This Prospectus
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Risk Factors
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Forward-Looking Statements
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AMB Property, L.P. and AMB Property
Corporation
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Use of Proceeds
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Ratios of Earnings to Fixed Charges
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Description of Debt Securities
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U.S. Federal Income Tax
Considerations
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Plan of Distribution
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Validity of the Securities
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Experts
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Incorporation of Certain
Information by Reference
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Where You Can Find More Information
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You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any pricing supplement. We have not
authorized anyone else to provide you with different or
additional information. We are offering to sell these notes and
seeking offers to buy these notes only in jurisdictions where
offers and sales are permitted.
Neither we nor the agents claim that the information contained
in this prospectus supplement, the accompanying prospectus or
the applicable pricing supplement is accurate as of any date
other than the dates on their respective covers.
ABOUT THIS PROSPECTUS SUPPLEMENT AND PRICING SUPPLEMENTS
This prospectus supplement sets forth certain terms of the
medium-term notes that we may offer. This prospectus supplement
supplements the accompanying prospectus and supersedes the
accompanying prospectus to the extent it contains information
that is different from the information in the accompanying
prospectus.
Each time we offer notes, we will attach a pricing supplement to
this prospectus supplement. The pricing supplement will contain
the specific description of the notes we are then offering and
the terms of the offering. The pricing supplement will supersede
this prospectus supplement and the accompanying prospectus to
the extent it contains information that is different from the
information contained in this prospectus supplement and the
accompanying prospectus.
It is important for you to read and consider all information
contained in this prospectus supplement, the accompanying
prospectus and the applicable pricing supplement in making your
investment decision. You should also read and consider the
information contained in the documents identified in “Where
You Can Find More Information” in the accompanying
prospectus.
Unless otherwise indicated or unless the context requires
otherwise, all references in this prospectus supplement to
“we,” “us” or “our” mean AMB
Property Corporation, AMB Property, L.P. and their respective
subsidiaries.
FORWARD-LOOKING STATEMENTS
Some of the information included and incorporated by reference
in this prospectus supplement and the accompanying prospectus
contains forward-looking statements, which are made pursuant to
the safe-harbor provisions of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Because these
forward-looking statements involve risks and uncertainties,
there are important factors that could cause our actual results
to differ materially from those in the forward-looking
statements, and you should not rely on the forward-looking
statements as predictions of future events. The events or
circumstances reflected in forward-looking statements might not
occur. You can identify forward-looking statements by the use of
forward-looking terminology such as “believes,”
“expects,” “may,” “will,”
“should,” “seeks,”
“approximately,” “intends,”
“plans,” “pro forma,” “estimates”
or “anticipates,” or the negative of these words and
phrases, or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or
intentions. Forward-looking statements should not be read as
guarantees of future performance or results, and will not
necessarily be accurate indicators of whether, or the time at
which, such performance or results will be achieved. There is no
assurance that the events or circumstances reflected in
forward-looking statements will occur or be achieved.
Forward-looking statements are necessarily dependent on
assumptions, data or methods that may be incorrect or imprecise
and we may not be able to realize them.
The following factors, among others, could cause actual results
and future events to differ materially from those set forth or
contemplated in the forward-looking statements:
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changes in general economic conditions or in the real estate
sector; |
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defaults on or non-renewal of leases by customers or renewal at
lower than expected rent; |
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difficulties in identifying properties to acquire and in
effecting acquisitions on advantageous terms and the failure of
acquisitions to perform as we expect; |
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risks and uncertainties affecting property development and
renovation (including construction delays, cost overruns, our
inability to obtain necessary permits and financing, and public
opposition to these activities); |
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risks of doing business internationally, including unfamiliarity
with new markets and currency risks; |
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a downturn in the U.S., California, or the global economy or
real estate conditions; |
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losses in excess of our insurance coverage; |
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our failure to divest of properties on advantageous terms or to
timely reinvest proceeds from any such divestitures; |
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unknown liabilities acquired in connection with acquired
properties or otherwise; |
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risks associated with using debt to fund acquisitions and
development, including re-financing risks; |
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our failure to obtain necessary financing; |
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changes in local, state and federal regulatory requirements; |
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increases in real property tax rates; |
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increases in interest rates and operating costs or greater than
expected capital expenditures; |
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environmental uncertainties; and |
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AMB Property Corporation’s failure to qualify and maintain
its status as a real estate investment trust under the Internal
Revenue Code of 1986, as amended. |
Our success also depends upon economic trends generally, various
market conditions and fluctuations and those other risk factors
discussed under the heading “Risk Factors” and
elsewhere in the most recent annual report on
Form 10-K and
subsequent quarterly reports on
Form 10-Q for AMB
Property, L.P. and AMB Property Corporation and in our other
filings with the SEC that are incorporated by reference in this
prospectus supplement and the accompanying prospectus. We
caution you not to place undue reliance on forward-looking
statements, which reflect our analysis only and speak as of the
date of this prospectus supplement or the accompanying
prospectus, as applicable, or as of the dates indicated in the
statements. All of our forward-looking statements, including
those in this prospectus supplement and the accompanying
prospectus, are qualified in their entirety by this statement.
We assume no obligation to update or supplement forward-looking
statements.
RISK FACTORS
You should carefully consider the specific risks set forth
under the caption “Risk Factors” in the accompanying
prospectus and under the caption “Risk Factors” in any
of our filings with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934
incorporated by reference herein before making an investment
decision, as well as the following risk factors before investing
in the notes offered by this prospectus supplement and the
accompanying prospectus. For more information, see “Where
You Can Find More Information.”
General Risks Relating to the Notes
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Our credit ratings may not reflect all risks of an
investment in the notes. |
Any credit ratings assigned to our medium-term note program may
not reflect the potential impact of all risks related to
structure and other factors on any trading market for or the
trading value of the notes. In addition, real or anticipated
changes in our credit ratings will generally affect any trading
market for or trading value of your notes. Accordingly, you
should consult your own financial and legal advisors as to the
risks entailed by an investment in the notes and the suitability
of investing in those notes in light of your particular
circumstances.
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Redemption may adversely affect your return on the
notes. |
If the notes are redeemable at our option, we may choose to
redeem the notes at times when prevailing interest rates are
relatively low. In addition, if the notes are subject to
mandatory redemption, we may also be required to redeem the
notes at times when prevailing interest rates are relatively
low. As a result, you generally will not be able to reinvest the
redemption proceeds in a comparable security at an effective
interest rate as high as the notes being redeemed.
S-2
Risks Relating to Indexed Notes
An investment in indexed notes presents certain significant
risks not associated with other types of securities. Investors
in indexed notes may lose their entire investment. Risks
associated with a particular indexed note may be set forth more
fully in the applicable pricing supplement.
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Because the direction and magnitude of the change in the
value of the relevant index determines the principal amount of
an indexed note payable at maturity and/or the amount of
interest payable, you may lose your principal and interest on
indexed notes. |
Indexed notes are notes that may be issued by us with the
principal amount payable at maturity, and/or the amount of
interest payable on an interest payment date, to be determined
by reference to currencies, currency units, commodity prices,
financial or nonfinancial indexes or other factors. The
direction and magnitude of the change in the value of the
relevant index will determine either or both the principal
amount of an indexed note payable at maturity or the amount of
interest payable on an interest payment date. The terms of a
particular indexed note may or may not include a guaranteed
return of a percentage of the face amount at maturity or a
minimum interest rate. Accordingly, the holder of an indexed
note may lose all or a portion of the principal invested in an
indexed note and may receive no interest on the indexed note.
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The relevant index can be volatile and your return on an
indexed note may be adversely affected by a fluctuation in the
level of the relevant index. |
Certain indices are highly volatile. The expected principal
amount payable at maturity of, or the interest rate on, an
indexed note based on a volatile index may vary substantially
from time to time. Because the principal amount payable at the
maturity of, or interest payable on, an indexed note is
generally calculated based on the value of the relevant index on
a specified date or over a limited period of time, volatility in
the index increases the risk that the return on the indexed
notes may be adversely affected by a fluctuation in the level of
the relevant index.
The volatility of an index may be affected by political or
economic events, including governmental actions, or by the
activities of participants in the relevant markets, any of which
could adversely affect the value of an indexed note.
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The tax ramifications of indexed notes are uncertain and
as a result, we cannot assure you that there will not be
negative tax consequences to your investment in an indexed
note. |
The treatment of indexed notes for United States federal income
tax purposes is often unclear due to the absence of any
authority specifically addressing the issues presented by any
particular indexed note. Accordingly, investors in indexed notes
should, in general, be capable of independently evaluating the
federal income tax consequences applicable in their particular
circumstances of purchasing an indexed note. See
“Supplemental United States Federal Income Tax
Considerations” in this prospectus supplement.
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If relevant indices are altered, become unavailable or are
infrequently traded, the value of or your return on indexed
notes could decrease. |
Some indices reference several different currencies,
commodities, securities or other financial instruments. The
compiler of an index of this type typically reserves the right
to alter the composition of the index and the manner in which
the value of the index is calculated. An alteration may result
in a decrease in the value of or return on the indexed note.
An index may become unavailable due to factors including war,
natural disasters, cessation of publication of the index, or
suspension of or disruption in trading in the currency or
currencies, commodity or commodities, security or securities or
other financial instrument or instruments comprising or
underlying the index. If an index becomes unavailable, the
determination of principal of or interest on an indexed note may
be delayed or an alternative method may be used to determine the
value of the unavailable index. Alternative methods of valuation
are generally intended to produce a value similar to the value
resulting from reference to
S-3
the relevant index. However, it is unlikely that alternative
methods of valuation will produce values identical to those
which would be produced were the relevant index to be used. An
alternative method of valuation may result in a decrease in the
value of or return on an indexed note.
Indexed notes may be linked to indices which are not commonly
utilized or have been recently developed. A lack of a trading
history may make it difficult to anticipate the volatility or
other risks to which the note is subject. In addition, there may
be less trading in indices of this type or instruments
underlying indices of this type, which could increase the
volatility of the indices and decrease the value of or return on
the indexed notes.
Foreign Currency Risks
Foreign currency rates of exchange and other factors
affecting the risks of investing in securities denominated in
foreign currencies change continuously. This prospectus
supplement summarizes some of the risks of investing in notes
denominated in a foreign currency. You should consult your own
financial and legal advisors about the risks of investing in
these notes. The notes, when denominated in a foreign currency,
are not an appropriate investment for investors who do not have
experience with foreign currency transactions.
The information in this prospectus supplement is directed to
prospective purchasers who are United States residents. If you
are a resident of a country other than the United States, you
should consult your own financial, tax and legal advisors to
discuss matters that may affect your purchase, holding or
receipt of payments of principal and interest on the notes. We
and the agents disclaim any responsibility for advising you on
these matters.
Any foreign currency specified by us for a particular note
may depreciate against the U.S. dollar, causing the
effective yield of the note to decrease below its coupon rate
and, in certain instances, resulting in a loss to you; a
specified foreign currency may become unavailable due to the
imposition of exchange controls or other circumstances beyond
our control and as a result, we may make required payments in an
equivalent amount of U.S. dollars or, in certain
circumstances, euros.
Investments in securities denominated in foreign currencies have
significant risks that are not associated with investments
denominated in U.S. dollars. These risks include, without
limitation, the possibility that rates of exchange between the
U.S. dollar and foreign currencies may change significantly
and the possibility that either the United States or foreign
governments will impose or modify foreign exchange controls.
Economic and political events over which we have no control also
may increase foreign currency risks. In recent years, rates of
exchange between the U.S. dollar and certain foreign
currencies have been highly volatile, and you may expect that
volatility to continue in the future. Historical fluctuations in
any particular exchange rate do not necessarily indicate,
however, the type of fluctuations in the rate that may occur
during the term of any note. If the currency specified by us in
the applicable pricing supplement for a particular note were to
depreciate against the U.S. dollar, the effective yield of
the note would decrease below its coupon rate and in certain
circumstances could result in a loss to the investor.
Governments have imposed exchange controls in the past and may
do so in the future. Exchange controls could affect exchange
rates and limit the availability of a foreign currency specified
in the applicable pricing supplement at the time a payment on a
note is due in that currency. Even if governments do not impose
exchange controls, it is possible that a foreign currency will
not be available at the time a payment is due in that currency.
If the specified currency is a foreign currency, in the event
the foreign currency is unavailable due to the imposition of
exchange controls or other circumstances beyond our control, we
may generally make required payments in an equivalent amount of
U.S. dollars, determined by the exchange rate agent, on the
basis of the market exchange rate for the specified currency on
the second business day prior to the payment date or, if the
market exchange rate is not then available, on the basis of the
most recently available market exchange rate. However, if the
specified currency is replaced by a single European currency,
the payment of principal of, and premium, if any, or interest,
on the note denominated in the specified currency will be paid
in the new single European currency in conformity with legally
applicable measures pursuant to the treaty establishing the
European Community, as amended by the treaty on European Unity.
The market exchange rate for the specified currency is the noon
dollar buying rate in The City of New York for cable transfers
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S-4
the specified currency as certified for customs purposes by, or
if not so certified, as otherwise determined by, the Federal
Reserve Bank of New York.
Further, if the specified currency is a composite currency that
is unavailable due to circumstances beyond our control, then we
may make payments on the note in an equivalent amount of
U.S. dollars. The amount of the U.S. dollar payment
shall be determined by the exchange rate agent by aggregating
the U.S. dollar equivalents of each of the component
currencies. The component currencies of the composite currency
for this purpose will be the currency amounts that were
components of the composite currency as of the last day on which
the composite currency was used. The exchange rate agent shall
determine the U.S. dollar equivalent of each of the
component currencies using the most recently available market
exchange rate for each component currency.
If the official unit of any component currency is altered by way
of combination or subdivision, the number of units of the
currency as a component currency will be divided or multiplied
in the same proportion. If two or more component currencies are
consolidated into a single currency, the amounts of those
currencies as component currencies will be replaced by an amount
in the single currency equal to the sum of the amounts of the
consolidated component currencies expressed in the single
currency. If any component currency is divided into two or more
currencies, the amount of the original component currency will
be replaced by the amounts of the two or more currencies, the
sum of which will be equal to the amount of the original
component currency. See “Description of Notes —
Payment Currency” in this prospectus supplement.
If we denominate notes in a foreign currency, the applicable
pricing supplement will contain information about the specified
currency, including information about any foreign exchange
controls that apply to the foreign currency as of the date of
the applicable pricing supplement. We will furnish that
information for information purposes only and you should not
regard it as indicative of the range of, or trends in,
fluctuations in currency exchange rates that may occur in the
future.
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We cannot assure you that a court in the United States
granting a judgment with respect to the notes would use the rate
of conversion into U.S. dollars that would be in effect on
the date of default, the date the judgment was rendered, or some
other date. |
The notes will be governed by and construed in accordance with
the laws of the State of New York. If an action based on the
notes resulted in a judgment against us in a court in the United
States, it is likely that the court would grant judgment only in
U.S. dollars. It is not clear, however, whether in granting
that judgment, the court would use the rate of conversion into
U.S. dollars that would be in effect on the date of
default, the date the judgment was rendered, or some other date.
DESCRIPTION OF NOTES
The following description of the notes, which supplements
“Description of Debt Securities” in the accompanying
prospectus, will apply to each note offered by this prospectus
supplement unless we specify otherwise in the pricing
supplement. The applicable pricing supplement for your notes may
specify different or additional terms.
You can find the definitions of certain capitalized terms
used in this description under the subheading
“Definitions.” In this description, the
“Operating Partnership” refers only to AMB Property,
L.P. and not to any of its subsidiaries and the
“Company” refers only to AMB Property Corporation and
not to any of its subsidiaries.
General
The Operating Partnership will issue the notes under the
Indenture dated as of June 30, 1998, as supplemented by the
Seventh Supplemental Indenture dated as of August 10, 2006
(collectively, the “indenture”), among us, AMB
Property Corporation and U.S. Bank National Association, as
successor-in-interest
to State Street Bank and Trust Company of California, N.A., as
trustee (together with any other trustee(s) appointed in a
supplemental indenture with respect to a particular series of
notes, the “trustee”).
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We have filed a copy of the indenture with the U.S. Securities
and Exchange Commission and the indenture is incorporated into
this prospectus supplement, the accompanying prospectus and the
applicable pricing supplement by reference. The provisions in
the accompanying prospectus under the heading “Description
of Debt Securities” apply to the notes unless we specify
otherwise in this prospectus supplement or the applicable
pricing supplement.
Unless the applicable pricing supplement indicates otherwise,
each note will have the following terms:
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Each note will mature in nine months or more from the date it is
issued. |
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We may only redeem a note and you may only have us repay a note
before its maturity date if the applicable pricing supplement
specifies that we or you, respectively, may do so. |
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We may issue up to $500,000,000, or its equivalent in one or
more foreign or composite currencies, of medium-term notes,
Series C, which will constitute a single series of debt
securities under the indenture, which amount may be increased
from time to time without the consent of the holders of the
notes. |
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The notes will be our senior unsecured and unsubordinated
obligations and will rank equally with all our other unsecured
and unsubordinated indebtedness from time to time outstanding. |
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Our obligations under each of the notes will be unconditionally
guaranteed on an unsecured basis by AMB Property Corporation.
See “— Guarantees.” |
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The notes will be substantially similar except possibly for
currency denomination, interest, interest payment dates,
maturity date, issue date and applicable redemption and
repayment provisions. |
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We will not have to deposit funds into a sinking fund before the
maturity date for any note. |
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We will issue the notes in fully registered, book-entry form
without coupons. |
The covenant provisions and events of default described under
the captions “Description of Debt Securities —
Certain Covenants” and “— Events of Default,
Notice and Waiver” in the accompanying prospectus will
apply to the notes. The legal defeasance and covenant defeasance
provisions of the indenture described under the caption
“Description of Debt Securities — Defeasance of
Debt Securities and Certain Covenants in Certain
Circumstances” in the accompanying prospectus will apply to
the notes.
We will sell the notes in individual issues. We and the initial
purchaser of each note will mutually agree to, among other
things, the interest rate, maturity date and issue date for the
note. Interest rates offered by us with respect to the notes may
differ depending upon, among other factors, the aggregate
principal amount of notes purchased in a single transaction. We
will only pay interest and principal on the notes on
“business days” (as defined in the Glossary).
Unless we specify otherwise in the applicable pricing
supplement, or unless we notify the holders otherwise, the place
of payment where the principal of, and premium, if any, and
interest on the notes will be payable and notes may be
surrendered for the registration of transfer or exchange will be
the office of the trustee, U.S. Bank National Association,
at 100 Wall Street, Suite 1600, New York, New York 10005;
provided, however, that at our option, interest may be paid by
check mailed to the address of the person entitled to the
payment as the person’s address appears in our security
register or by wire transfer, if proper wire instructions are on
file with the trustee or are received at presentment, to an
account maintained by the payee located in the United States.
Unless we notify the holders otherwise, the place where notices
or demands to or upon us with respect to the notes may be served
will be the corporate trust office of the trustee at
100 Wall Street, Suite 1600, New York, New York 10005.
Interest Provisions
We will generally pay interest (other than defaulted interest)
on the interest payment dates to those who are registered
holders of notes on the applicable record date as described
below under “— Fixed Rate Notes”
S-6
and “— Floating Rate Notes — Interest
Rate Reset Dates, Interest Payment Dates and Record Dates”
in this prospectus supplement, except that interest payable at
maturity will be payable to the person to whom principal is
payable. We will pay interest due on a redemption date,
repayment date or maturity date to the same person to whom we
are paying the principal amount. However, if we would have made
a regular interest payment on the redemption, repayment or
maturity date, we will make that regular interest payment to the
registered holder as of the applicable record date, even if it
is not the same person to whom we are paying the principal
amount.
If we originally issue a note between a record date and an
interest payment date, we will make the first payment of
interest on the interest payment date following the next record
date to the registered owner on that record date.
Unless the applicable pricing supplement specifies otherwise,
payments of interest on any note on any interest payment date,
maturity date, redemption date or repayment date will include
interest accrued from and including the immediately preceding
interest payment date (or from and including the date of issue
if no interest has been paid or duly provided for), to, but
excluding, the interest payment date, maturity date or
redemption date. However, in case the interest rate on a note is
reset daily or weekly, unless the applicable pricing supplement
specifies otherwise, the interest payments will include interest
accrued only from but excluding the record date through which
interest has been paid (or from and including the date of issue,
if no interest has been paid) through and including the record
date next preceding the applicable interest payment date, except
that the interest payment on maturity, redemption or repayment,
as applicable, will include interest accrued to, but excluding,
that date. If any interest payment date, maturity date,
repayment date or redemption date falls on a day that is not a
business day, we will make the required payment of principal,
premium, if any, and/or interest on the next succeeding business
day as if made on the date the payment was due, and no interest
will accrue on the payment for the period from and after the
interest payment date, maturity date or redemption date, or
repayment date, as the case may be, to the date of the payment
on the next succeeding business day.
Fixed rate notes will bear interest at the rate specified in the
applicable pricing supplement.
Unless we specify otherwise in the applicable pricing
supplement, the interest payment dates for fixed rate notes will
be June 30 and December 30 of each year. If an
interest payment date (or maturity or redemption date) for any
fixed rate note falls on a day that is not a business day, we
will pay the interest (or interest and principal) on the next
business day. However, with respect to the particular interest
payment period, interest on the payment will not accrue for the
period from the original interest payment date (or maturity or
redemption date) to the date we make the payment. We will
calculate the interest based on a
360-day year of twelve
30-day months.
Unless we specify otherwise in the applicable pricing
supplement, the record date for fixed rate notes is June 15 for
a June 30 interest payment date, December 15 for a
December 30 interest payment date and the date that is 15
calendar days before any other interest payment date, whether or
not those dates are business days.
General Information. Floating rate notes will bear
interest based on an index specified in the applicable pricing
supplement. Unless we provide otherwise in the applicable
pricing supplement, U.S. Bank National Association will be
the “calculation agent” that calculates the interest
on floating rate notes.
Each floating rate note will have the following terms, which
will be set forth in the applicable pricing supplement for that
note:
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whether the floating rate note is a “regular floating rate
note,” a “floating rate/fixed rate note” or an
“inverse floating rate note”; |
S-7
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the interest rate basis or index to be used to determine the
note’s interest rate; |
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the “index maturity,” which means the period to
maturity of the instrument or obligation on which the interest
rate formula is based (for example, LIBOR may be different for
one-month U.S. dollar deposits and for three-month
U.S. dollar deposits; if the applicable pricing supplement
for a note specifies LIBOR as the index and three months as the
index maturity, we would pay interest on the note based on LIBOR
for three-month U.S. dollar deposits); |
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the frequency of changes of the interest rate on the note (i.e.,
daily, weekly, monthly, quarterly, semi-annually or annually); |
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the dates as of which the calculation agent will determine the
new interest rate, if these dates differ from those described in
this prospectus supplement; |
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the dates on which the interest rate will change; and |
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the calculation agent for the notes, if U.S. Bank National
Association is not the calculation agent. |
Each floating rate note may also have the following terms, which
will also be set forth in the applicable pricing supplement for
that note, if applicable:
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the “spread,” which is the number of basis points that
the calculation agent will add to or subtract from the interest
rate determined for a particular date on which a new interest
rate is determined (for example, if a note bears interest at
LIBOR plus .01%, and the calculation agent determines that LIBOR
is 5.00% per year, the note will bear interest at
5.01% per year until the next date on which the interest
rate changes); |
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the “spread multiplier,” which is the number by which
the calculation agent will multiply the interest rate determined
for a particular date on which a new interest rate is determined
(for example, if a note bears interest at 90% of LIBOR, and the
calculation agent determines that LIBOR is 5.00% per year,
the note will bear interest at 4.50% per year until the
next date on which the interest rate changes); |
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the “maximum interest rate,” or the ceiling on the
rate of interest that may accrue on the note during any interest
period; and |
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the “minimum interest rate,” or the floor on the rate
of interest that may accrue during any interest period. |
Unless the applicable pricing supplement indicates otherwise,
the interest rate borne by floating rate notes will be
determined as follows:
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Unless the floating rate note is designated as a “floating
rate/fixed rate note” or an “inverse floating rate
note” or as having an addendum attached or having
“Other/ Additional Provisions” (as set forth in the
note or the applicable pricing supplement) apply, the floating
rate note will be designated as a “regular floating rate
note” and, except as described below or in the applicable
pricing supplement, will bear interest at the rate determined by
reference to the applicable interest rate basis or bases
(1) plus or minus the applicable spread, if any, and/or (2)
multiplied by the applicable spread multiplier, if any.
Commencing on the initial date on which the interest rate
changes, the rate at which interest on a regular floating rate
note will be payable will be reset as of each date on which the
interest rate changes. However, the interest rate in effect for
the period, if any, from the date of issue to the initial date
on which the interest rate changes will be the initial interest
rate. |
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If the floating rate note is designated as a “floating
rate/fixed rate note,” then, except as described below or
in the applicable pricing supplement, the floating rate note
will bear interest at the rate determined by reference to the
applicable interest rate basis or bases (1) plus or minus
the applicable spread, if any, and/or (2) multiplied by the
applicable spread multiplier, if any. Commencing on the initial
date on which the interest rate changes, the rate at which
interest on a floating rate/fixed rate note will be payable will
be reset as of each date on which the interest rate changes.
However, (1) the |
S-8
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interest rate in effect for the period, if any, from the date of
issue to the initial date on which the interest rate changes
will be the initial interest rate and (2) the interest rate
in effect for the period commencing on the date the fixed rate
commences to the maturity date will be the fixed interest rate,
if the rate is specified in the applicable pricing supplement
or, if no such fixed interest rate is specified, the interest
rate in effect thereon on the day immediately preceding the date
the fixed rate commences. |
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If the floating rate note is designated as an “inverse
floating rate note,” then, except as described below or in
the applicable pricing supplement, the floating rate note will
bear interest at the fixed interest rate specified in the
applicable pricing supplement minus the rate determined by
reference to the applicable interest rate basis or bases
(1) plus or minus the applicable spread, if any, and/or
(2) multiplied by the applicable spread multiplier, if any.
However, unless otherwise specified in the applicable pricing
supplement, the interest rate thereon will not be less than
zero. Commencing on the initial date on which the interest rate
changes, the rate at which interest on an inverse floating rate
note shall be payable shall be reset as of each date on which
the interest rate changes. However, the interest rate in effect
for the period, if any, from the date of issue to the initial
date on which the interest rate changes will be the initial
interest rate. |
If a floating rate note is designated as having an addendum
attached as specified on its face, the floating rate note will
bear interest in accordance with the terms described in the
addendum and the applicable pricing supplement. See
“— Addendum and/or Other/ Additional
Provisions” in this prospectus supplement.
The calculation agent will round all percentages resulting from
any interest rate calculations to the nearest one
hundred-thousandth of a percentage point, if necessary, with
five millionths of a percentage point rounded upward. For
example, the calculation agent will round 9.876545% to 9.87655%.
The calculation agent will also round all U.S. dollar
amounts used in or resulting from the calculations to the
nearest cent, or in the case of foreign currency or composite
currency, to the nearest unit (with one-half cent or unit being
rounded upward).
If you own a floating rate note, you may ask the calculation
agent to provide you with the current interest rate at any time.
You may also ask the calculation agent to provide you with the
interest rate that will apply as of the next date on which the
interest rate changes if the calculation agent has determined
the rate. All interest rate determinations made by the
calculation agent will, in the absence of manifest error, be
conclusive and binding for all purposes.
S-9
The following table sets forth the most common interest rate
indexes that we may use, the source in which we expect the index
rate to be published, the date on which a new interest rate is
determined and calculation basis for notes with interest rates
based on each index. The Glossary to this prospectus supplement
sets out with greater specificity the procedures to determine
interest rates based on each index, and we encourage you to
review the Glossary provisions that describe how the calculation
agent will determine the interest rate for your note.
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Interest Rate Determination |
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Calculation | |
| Index |
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Primary Source of Rate |
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Date |
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Basis* | |
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CD Rate
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H.15 (519)** under the heading
“CDs (Secondary Market)”
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Second business day preceding the
date on which the interest rate changes
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Actual/360 |
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CMT Rate
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The page of the Bridge Telerate
Inc. specified in the applicable pricing supplement under the
caption “... Treasury Constant Maturities ... Federal
Reserve Board Release H.15 (519) ... Mondays
Approximately 3:00 p.m.” under the column for the
Designated CMT Maturity Index***
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Second business day preceding the
date on which the interest rate changes
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Actual/ Actual |
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Commercial Paper Rate
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H.15 (519) under the heading
“Commercial Paper — Non-financial”
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Second business day preceding the
date on which the interest rate changes
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Actual/360 |
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EURIBOR
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On page 248 of Bridge
Telerate, Inc. (or any successor service) or any other page as
may replace page 248 on that service
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Second day on which the
Trans-European Automated Real-time Gross Settlement Transfer
System is open preceding the date on which the interest rate
changes
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Actual/360 |
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Federal Funds Rate
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H.15 (519) under the heading
“Federal Funds (Effective)”
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Second business day preceding the
date on which the interest rate changes
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Actual/360 |
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LIBOR
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Page 3750 of the Bridge
Telerate, Inc.
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Second business day preceding the
date on which the interest rate changes
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Actual/360 |
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Prime Rate
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H.15 (519) under the heading
“Bank Prime Loan”
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Second business day preceding the
date on which the interest rate changes
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Actual/360 |
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S-10
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Interest Rate Determination |
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Calculation | |
| Index |
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Primary Source of Rate |
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Date |
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Basis* | |
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Treasury Rate
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On page 56 or page 57 of
Bridge Telerate, Inc. (or any successor service) under the
caption “INVESTMENT RATE”
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The day the federal government
auctions Treasury Bills for the week in which the date on which
the interest rate change falls (generally Monday, but may be
either the following Tuesday or the preceding Friday if Monday
is a legal holiday)
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Actual/ Actual |
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The calculation agent will compute the interest for each day in
the applicable interest period by dividing the interest rate
applicable to each such day by: |
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360 (“Actual/360”), in the case of floating rate notes
for which an applicable interest rate basis is the CD rate, the
commercial paper rate, the federal funds rate, LIBOR, EURIBOR or
the prime rate; or |
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the actual number of days in the year (“Actual/
Actual”), in the case of floating rate notes for which an
applicable interest rate basis is the CMT rate or the Treasury
rate. |
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“Statistical Release H.15 (519), Selected Interest
Rates” or any successor publication of the Board of
Governors of the Federal Reserve System. |
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“Designated CMT Maturity Index” means the original
period to maturity of the U.S. Treasury securities, which
is either one, two, three, five, seven, ten, 20 or
30 years, specified in an applicable pricing supplement for
which the CMT rate will be calculated. If no maturity is
specified in the applicable pricing supplement, the Designated
CMT Maturity Index will be two years. |
Interest Rate Reset Dates, Interest Payment Dates and Record
Dates. The calculation agent will generally determine the
initial interest rate as if the issue date of the note were a
date on which the interest rate changes. Unless we specify
otherwise in the applicable pricing supplement, the record date
for floating rate notes is the close of business on the date
that is 15 calendar days before the interest payment date,
whether or not that date is a business day. The dates when the
interest rate changes and interest payment dates are determined
by the frequency with which we reset the interest rate, as
follows:
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| Frequency of Interest Reset |
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Interest Rate Reset Date* |
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Interest Payment Date** |
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Daily
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Each business day
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Third Wednesday of each month or
third Wednesday of March, June, September and December of each
year, as indicated in the applicable pricing supplement
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Weekly (other than Treasury
rate-based notes)
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Wednesday of each week
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Third Wednesday of each month or
third Wednesday of March, June, September and December of each
year, as indicated in the applicable pricing supplement
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Weekly (Treasury rate-based notes)
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Tuesday of each week
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Third Wednesday of each month or
third Wednesday of March, June, September and December of each
year, as indicated in the applicable pricing supplement
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Monthly
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Third Wednesday of each month
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Third Wednesday of each month or
third Wednesday of March, June, September and December of each
year, as indicated in the applicable pricing supplement
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S-11
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| Frequency of Interest Reset |
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Interest Rate Reset Date* |
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Interest Payment Date** |
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Quarterly
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Third Wednesday of March, June,
September and December of each year
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Third Wednesday of March, June,
September and December of each year
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Semi Annually
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Third Wednesday of the two months
in each year that we specify in the applicable pricing supplement
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Third Wednesday of the two months
in each year that we specify in the applicable pricing supplement
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Annually
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Third Wednesday of the month of
each year that we specify in the applicable pricing supplement
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Third Wednesday of the month of
each year that we specify in the applicable pricing supplement
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If a date on which the interest rate changes falls on a day that
is not a business day, we will postpone the date on which the
interest rate changes to the next business day. However, if the
postponement would cause the date on which the interest rate
changes for a LIBOR-based note or a EURIBOR-based note to be in
the next calendar month, we will move the date on which the
interest rate changes to the immediately preceding business day.
For Treasury rate-based notes, if an auction date falls on the
day that would be a date on which the interest rate changes, the
date on which the interest rate changes will be the first
business day after the auction. |
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We will also pay interest on each note on the maturity date or
redemption date of that note. If an interest payment date (other
than the maturity date or redemption date) for a floating rate
note falls on a day that is not a business day, we will postpone
the interest payment date to the next business day. However, if
the postponement would cause the interest payment date for a
LIBOR-based or EURIBOR-based note to be in the next calendar
month, we will move the interest payment date to the immediately
preceding business day. If the maturity date or redemption date
for a floating rate note falls on a day that is not a business
day, we will pay the principal and interest on the next business
day, and the calculation agent will not include the interest
payment date in calculating the interest due on that date. |
Guarantees
AMB Property Corporation will unconditionally guarantee our full
and prompt payment of the principal of, premium, if any, and
interest on each of the notes when they become due and payable.
The guarantees of each of the notes by AMB Property Corporation
will be effectively subordinated to all of the mortgages and
other secured indebtedness of AMB Property Corporation and to
all of the indebtedness of its subsidiaries. See “Risk
Factors — General Risks Relating to the Notes,”
“Description of Debt Securities — Guarantee”
and “Description of Debt Securities — Merger,
Consolidation or Sale of Assets” in the accompanying
prospectus.
Redemption and Repayment
Redemption
at our Option
We may not redeem any note prior to its maturity date unless, in
the applicable pricing supplement for the note, it either:
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identifies a redemption commencement date after which we may
redeem the note at our option at any time; or |
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identifies a stated redemption date or dates on which we may
redeem the notes at our option. |
If we specify in the applicable pricing supplement that we have
the right to redeem your note on or after a certain redemption
commencement date, then we may redeem the note, in whole or in
part, at any time after that date by giving the registered
holder of the note at least 30 but not more than 60 calendar
days’ notice. The note’s redemption date will be the
date on which the note is actually redeemed. We will redeem the
note at the applicable redemption price, plus accrued and unpaid
interest to the redemption date. The redemption price will be an
amount equal to the initial redemption percentage specified in
the applicable pricing supplement (as adjusted by the annual
redemption percentage reduction, if applicable) multiplied by
the unpaid principal amount to be redeemed. The initial
redemption percentage, if any, applicable to a note shall
decline at each anniversary of the redemption commencement date
by an amount equal to the applicable annual redemption
S-12
percentage reduction, if any, until the redemption price is
equal to 100% of the unpaid principal amount to be redeemed.
If we specify in the applicable pricing supplement for your note
that we have the right to redeem that note on a specified date
or dates, then the note may be redeemed or repurchased in whole
or in part on the specified date or dates if we give the
registered holder at least 30 but not more than 60 calendar
days’ notice. We will redeem global notes in accordance
with the applicable depository procedures, and any notices will
also be given in accordance with those procedures. Any feature
allowing us to redeem the notes might affect the market value of
the notes. Since we may be expected to redeem the notes when
prevailing interest rates are relatively low, an investor might
not be able to reinvest the proceeds at an effective interest
rate as high as the interest rate on the note.
Repayment
at the Option of the Holder
You may not require us to repay your note prior to its maturity
date unless, in the applicable pricing supplement for the note,
we identify a specific optional repayment date or dates on which
you may require us to repay your note at your option.
If we specify in the applicable pricing supplement for your note
that you have the right to require us to repay the note on a
specified date or dates, then the note may be repaid in whole or
in part in increments of $1,000 or other increments specified in
the applicable pricing supplement (as long as any remaining
principal is at least $1,000 or another specified minimum
denomination) on the specified date or dates if the registered
holder gives us at least 30 but not more than 60 calendar
days’ notice. The repayment price will be equal to 100% of
the unpaid principal amount to be repaid, together with unpaid
interest accrued to the date of repayment. We will repay global
notes in accordance with the applicable depository procedures,
and any notices will also be given in accordance with those
procedures. Only the Depository Trust Company may exercise the
repayment option in respect of global notes representing
book-entry notes. Accordingly, owners of beneficial interests in
global notes that desire to have all or any portion of the
book-entry notes represented by the global notes repaid must
instruct the participant through which they own their interest
to direct the Depository Trust Company to exercise the repayment
option on their behalf.
Payment Currency
You must pay for the notes in the currency that we specify in
the applicable pricing supplement. Currently, the United States
has limited facilities to convert U.S. dollars into foreign
currencies, and vice versa. However, you may establish
non-U.S. dollar
denominated checking or savings accounts at U.S. banks in
the United States. Principal, any premium and interest on the
notes is payable to you in the currency we specify in the
applicable pricing supplement unless that currency is
unavailable due to circumstances beyond our control. In such
event, we may make payments on the note in an equivalent amount
of U.S. dollars. The exchange rate agent will determine the
amount of the U.S. dollar payment by using the market
exchange rate for that currency on the second business day prior
to the payment date or, if the market exchange rate is not then
available, using the most recently available market exchange
rate. However, if the specified currency is replaced by a single
European currency, the payment of principal of (and premium, if
any) or interest, if any, on the note denominated in the
specified currency will be paid in the new single European
currency in conformity with legally applicable measures taken
pursuant to, or by virtue of, the treaty establishing the
European Community, as amended by the treaty on European Unity.
The market exchange rate for a specified currency is the noon
dollar buying rate in The City of New York for cable transfers
for the specified currency as certified for customs purposes by
(or if not so certified, as otherwise determined by) the Federal
Reserve Bank of New York. Payments under these circumstances in
U.S. dollars or a new single European currency will satisfy
our payment obligations on the note and will not constitute a
default under the indenture.
If the specified currency is a composite currency that is
unavailable due to circumstances beyond our control, then we may
make payments on the note in an equivalent amount of
U.S. dollars. The amount of the U.S. dollar payment
shall be determined by the exchange rate agent by aggregating
the U.S. dollar equivalents of each of the component
currencies. The component currencies of the composite currency
for this purpose
S-13
will be the currency amounts that were components of the
composite currency as of the last day on which the composite
currency was used. The U.S. dollar equivalent of each of
the component currencies shall be determined by the exchange
rate agent on the basis of the most recently available market
exchange rate for each component currency.
If the official unit of any component currency is altered by way
of combination or subdivision, the number of units of the
currency as a component currency shall be divided or multiplied
in the same proportion. If two or more component currencies are
consolidated into a single currency, the amounts of those
currencies as component currencies shall be replaced by an
amount in the single currency equal to the sum of the amounts of
the consolidated component currencies expressed in the single
currency. If any component currency is divided into two or more
currencies, the amount of the original component currency shall
be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original
component currency.
All determinations referred to above made by the exchange rate
agent shall be at its sole discretion and shall, in the absence
of manifest error, be conclusive for all purposes and binding on
the holders of the notes. See “Risk Factors —
Foreign Currency Risks” in this prospectus supplement.
Unless we provide otherwise in the applicable pricing
supplement, U.S. Bank National Association will be the
exchange rate agent.
Unless we specify otherwise in the applicable pricing
supplement, we will issue the notes:
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in a minimum denomination of U.S.$1,000, or in integral
multiples of U.S.$1,000, if the notes are denominated in
U.S. dollars; or |
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in a minimum denomination equivalent to U.S.$1,000, determined
in accordance with the market exchange rate for such foreign or
composite currency on the business day immediately preceding the
date on which we accept the offer to purchase the notes, rounded
to an integral multiple of 1,000 units of the currency in
which the notes are denominated, and in any larger amount in
integral multiples of 1,000 units of that currency, if the
notes are denominated in a currency other than U.S. dollars. |
To determine whether holders of the requisite principal amount
of notes have consented to a modification or alteration of the
indenture, in addition to the notes denominated in
U.S. dollars, the trustee will calculate the
U.S. dollar equivalent of the principal amount of notes
denominated in foreign currencies. This U.S. dollar
equivalent will be based on the market exchange rate for each
foreign currency on the latest date for which that rate was
determined on or before the date for determining the holders
that may give the required consent. See “Description of
Debt Securities — Modification and Waiver” in the
accompanying prospectus.
The exchange rate agent will determine the market exchange rate
for the applicable currency as of the day before we accept a
purchase order for a note, and will determine the minimum
denomination for that note based on that market exchange rate.
Indexed Notes
We may determine the principal amount of and/or the amount of
interest payable on certain of our indexed notes by reference to
currencies, currency units, commodity prices, financial or
non-financial indexes or other factors. We will indicate in the
applicable pricing supplement if we will determine the amount of
principal or interest payable in this manner. If you own indexed
notes, you may receive a principal amount at maturity that is
greater than or less than the face amount of the notes,
depending upon the fluctuation of the relative value, rate or
price of the specified index. If applicable, we will include in
the pricing supplement information about how we will determine
the principal amount payable at maturity, the amount of interest
payable, a historical comparison of the relative value, rate or
price of the specified index and the face amount of the indexed
note, and certain additional United States federal income tax
considerations. For particular risks relating to indexed notes,
see “Risk Factors — Risks Relating to Indexed
Notes” in this prospectus supplement.
S-14
Addendum and/or Other/ Additional Provisions
Any provisions with respect to the notes may be modified and/or
supplemented as specified under “Other/ Additional
Provisions” on the face of the note or in an addendum
relating to the note, if so specified on the face of the note.
Any addendum or Other/ Additional Provisions will be described
in the applicable pricing supplement.
GLOSSARY
“business day” means any day, other than a Saturday or
Sunday:
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that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation to
close (x) in The City of New York or (y) for notes
denominated in a specified currency other than
U.S. dollars, Australian dollars or euro, in the principal
financial center of the country of the specified currency or
(z) for notes denominated in Australian dollars, in Sydney; |
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for notes denominated in euro, that is also a day on which the
Trans-European Automated Real-time Gross Settlement Express
Transfer System is operating. |
“Calculation Date” means, unless we specify otherwise
in the applicable pricing supplement, the earlier of
(i) the tenth calendar day after each date on which a new
interest rate is determined, or, if the tenth calendar day is
not a business day, the next succeeding business day, or
(ii) the business day immediately before the applicable
interest payment date, maturity date or redemption date.
“CD rate” means, for any interest rate determination
date, the rate on that date for negotiable certificates of
deposit having the index maturity specified in the applicable
pricing supplement as published by the Board of Governors of the
Federal Reserve System in “Statistical Release H.15 (519),
Selected Interest Rates,” or any successor publication of
the Board of Governors of the Federal Reserve System (“H.15
(519)”) under the heading “CDs (Secondary
Market).”
The following procedures will be followed if the CD rate cannot
be determined as described above:
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If the above rate is not published in H.15 (519) by
9:00 a.m., New York City time, on the calculation date, the
CD rate will be the rate on that interest rate determination
date set forth in the daily update of H.15 (519), available
through the world wide website of the Board of Governors of the
Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor
site or publication, which is commonly referred to as the
“H.15 Daily Update,” for the interest rate
determination date for certificates of deposit having the index
maturity specified in the applicable pricing supplement, under
the caption “CDs (Secondary Market).” |
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If the above rate is not yet published in either H.15 (519) or
the H.15 Daily Update by 3:00 p.m., New York City time, on
the calculation date, the calculation agent will determine the
CD rate to be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on that
interest rate determination date of three leading nonbank
dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the calculation agent, after
consultation with us, for negotiable certificates of deposit of
major United States money center banks of the highest credit
standing in the market for negotiable certificates of deposit
with a remaining maturity closest to the index maturity
specified in the applicable pricing supplement in an amount that
is representative for a single transaction in that market at
that time. |
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If the dealers selected by the calculation agent are not quoting
as set forth above, the CD rate will remain the CD rate for the
immediately preceding period between interest rate changes, or,
if there was no period immediately preceding, the rate of
interest payable will be the initial interest rate. |
“CMT rate” means, for any interest rate determination
date, the rate displayed on the Designated CMT Telerate Page, as
defined below, under the caption “... Treasury Constant
Maturities ... Federal Reserve Board
S-15
Release H.15 (519) ... Mondays Approximately
3:00 p.m.,” under the column for the Designated CMT
Maturity Index, as defined below, for:
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(1) the rate on that interest rate determination date, if
the Designated CMT Telerate Page is 7051; and |
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(2) the week or the month, as applicable, ended immediately
preceding the week in which the related interest rate
determination date occurs, if the Designated CMT Telerate Page
is 7052. |
The following procedures will be followed if the CMT rate cannot
be determined as described above:
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If that rate is no longer displayed on the relevant page, or if
not displayed by 3:00 p.m., New York City time, on the
related calculation date, then the CMT rate will be the Treasury
Constant Maturity rate for the Designated CMT Maturity Index as
published in the relevant H.15 (519). |
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If the rate described in the immediately preceding sentence is
no longer published, or if not published by 3:00 p.m., New
York City time, on the related calculation date, then the CMT
rate will be the Treasury Constant Maturity rate for the
Designated CMT Maturity Index or other United States Treasury
rate for the Designated CMT Maturity Index on the interest rate
determination date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States
Department of the Treasury that the calculation agent determines
to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15
(519). |
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If the information described in the immediately preceding
sentence is not provided by 3:00 p.m., New York City time,
on the related calculation date, then the calculation agent will
determine the CMT rate to be a yield to maturity, based on the
arithmetic mean of the secondary market closing offer side
prices as of approximately 3:30 p.m., New York City time,
on the interest rate determination date, reported, according to
their written records, by three leading primary United States
government securities dealers, which we refer to as a
“reference dealer,” in The City of New York, which may
include an agent or other affiliates of ours, selected by the
calculation agent as described in the following sentence. The
calculation agent will select five reference dealers, after
consultation with us, and will eliminate the highest quotation
or, in the event of equality, one of the highest, and the lowest
quotation or, in the event of equality, one of the lowest, for
the most recently issued direct noncallable fixed rate
obligations of the United States, which are commonly referred to
as “Treasury notes,” with an original maturity of
approximately the Designated CMT Maturity Index and a remaining
term to maturity of not less than that Designated CMT Maturity
Index minus one year. If two Treasury notes with an original
maturity as described above have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes
for the Treasury note with the shorter remaining term to
maturity will be used. |
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If the calculation agent cannot obtain three Treasury notes
quotations as described in the immediately preceding sentence,
the calculation agent will determine the CMT rate to be a yield
to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 p.m., New York
City time, on the interest rate determination date of three
reference dealers in The City of New York, selected using the
same method described in the immediately preceding sentence, for
Treasury notes with an original maturity equal to the number of
years closest to but not less than the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated
CMT Maturity Index and in an amount of at least $100,000,000. |
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If three or four (and not five) of the reference dealers are
quoting as described above, then the CMT rate will be based on
the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of those quotes will be eliminated. |
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If fewer than three reference dealers selected by the
calculation agent are quoting as described above, the CMT rate
will be the CMT rate for the immediately preceding period
between interest rate changes, or, if there was no period
immediately preceding, the rate of interest payable will be the
initial interest rate. |
S-16
“commercial paper rate” means, for any interest rate
determination date, the money market yield, calculated as
described below, of the rate on that date for commercial paper
having the index maturity specified in the applicable pricing
supplement, as that rate is published in H.15 (519), under the
heading “Commercial Paper — Nonfinancial.”
The following procedures will be followed if the commercial
paper rate cannot be determined as described above:
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If the above rate is not published by 9:00 a.m., New York
City time, on the calculation date, then the commercial paper
rate will be the money market yield of the rate on that interest
rate determination date for commercial paper of the index
maturity specified in the applicable pricing supplement as
published in the H.15 Daily Update under the heading
“Commercial Paper — Nonfinancial.” |
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If by 3:00 p.m., New York City time, on that calculation
date the rate is not yet published in either H.15 (519) or the
H.15 Daily Update, then the calculation agent will determine the
commercial paper rate to be the money market yield of the
arithmetic mean of the offered rates as of 11:00 a.m., New
York City time, on that interest rate determination date of
three leading dealers of commercial paper in The City of New
York selected by the calculation agent, after consultation with
us, for commercial paper of the index maturity specified in the
applicable pricing supplement, placed for an industrial issuer
whose bond rating is “AA,” or the equivalent, from a
nationally recognized statistical rating agency. |
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If the dealers selected by the calculation agent are not quoting
as mentioned above, the commercial paper rate for that interest
rate determination date will remain the commercial paper rate
for the immediately preceding period between interest rate
changes, or, if there was no period immediately preceding, the
rate of interest payable will be the initial interest rate. |
The “money market yield” will be a yield (expressed as
a percentage) calculated in accordance with the following
formula:
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money market yield
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=
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D × 360
360
- (D × M)
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×
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100
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where “D” refers to the applicable per year rate for
commercial paper quoted on a bank discount basis and expressed
as a decimal and “M” refers to the actual number of
days in the interest period for which interest is being
calculated.
“Designated CMT Maturity Index” means the original
period to maturity of the U.S. Treasury securities
(either 1, 2, 3, 5, 7, 10, 20 or 30 years)
that we specify in the applicable pricing supplement with
respect to which the CMT rate will be calculated. If no maturity
is specified in the applicable pricing supplement, the
Designated CMT Maturity Index shall be two years.
“Designated CMT Telerate Page” means the display on
the Bridge Telerate, Inc. (or a successor service) on the page
designated in the applicable pricing supplement (or any other
page as may replace the page on that service) for the purpose of
displaying treasury constant maturities as reported in H.15
(519). If we do not specify the page in the applicable pricing
supplement, the Designated CMT Telerate Page will be
page 7052, or its successor, for the most recent week.
“Designated LIBOR Page” means (1) if “LIBOR
Reuters” is specified in the applicable pricing supplement,
the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified in the pricing
supplement (or any other page as may replace the page on the
service) for the purpose of displaying the London interbank
rates of major banks for the applicable index currency, or
(2) if “LIBOR Telerate” is specified in the
applicable pricing supplement or neither “LIBOR
Reuters” nor “LIBOR Telerate” is specified in the
applicable pricing supplement as the method for calculating
LIBOR, the display on Bridge Telerate, Inc. (or any successor
service) on the page specified in the pricing supplement (or any
other page as may replace the page on the service) for the
purpose of displaying the London interbank rates of major banks
for the applicable index currency.
S-17
“EURIBOR” means, for any interest rate determination
date, the rate for deposits in euros as sponsored, calculated
and published jointly by the European Banking Federation and
ACI — The Financial Market Association, or any company
established by the joint sponsors for purposes of compiling and
publishing those rates, for the index maturity specified in the
applicable pricing supplement as that rate appears on the
display on Bridge Telerate, Inc., or any successor service, on
page 248 or any other page as may replace page 248 on
that service, which is commonly referred to as “Telerate
Page 248,” as of 11:00 a.m. (Brussels time).
The following procedures will be followed if the rate cannot be
determined as described above:
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If the above rate does not appear, the calculation agent will
request the principal Euro-zone office of each of four major
banks in the Euro-zone interbank market, as selected by the
calculation agent, after consultation with us, to provide the
calculation agent with its offered rate for deposits in euros,
at approximately 11:00 a.m. (Brussels time) on the interest
rate determination date, to prime banks in the Euro-zone
interbank market for the index maturity specified in the
applicable pricing supplement commencing on the applicable
interest reset date, and in a principal amount not less than the
equivalent of U.S.$1 million in euro that is representative
of a single transaction in euro, in that market at that time. If
at least two quotations are provided, EURIBOR will be the
arithmetic mean of those quotations. |
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If fewer than two quotations are provided, EURIBOR will be the
arithmetic mean of the rates quoted by four major banks in the
Euro-zone, as selected by the calculation agent, after
consultation with us, at approximately 11:00 a.m. (Brussels
time), on the applicable interest reset date for loans in euro
to leading European banks for a period of time equivalent to the
index maturity specified in the applicable pricing supplement
commencing on that interest reset date in a principal amount not
less than the equivalent of U.S.$1 million in euro. |
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If the banks so selected by the calculation agent are not
quoting as mentioned in the previous bullet point, the EURIBOR
rate in effect for the applicable period will be the same as
EURIBOR for the immediately preceding period between interest
rate changes, or, if there was no period immediately preceding,
the rate of interest will be the initial interest rate. |
“Euro-zone” means the region comprised of member
states of the European Union that adopt the single currency in
accordance with the treaty establishing the European Community,
as amended by the treaty on European Union.
“federal funds rate” means, for any interest rate
determination date, the rate on that date for federal funds as
published in H.15 (519) under the heading “Federal Funds
(Effective)” as displayed on Bridge Telerate, Inc., or any
successor service, on page 120 or any other page as may
replace the applicable page on that service, which is commonly
referred to as “Telerate Page 120.”
The following procedures will be followed if the federal funds
rate cannot be determined as described above:
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If the above rate is not published by 9:00 a.m., New York
City time, on the calculation date, the federal funds rate will
be the rate on that interest rate determination date as
published in the H.15 Daily Update under the heading
“Federal Funds/ Effective Rate.” |
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If that rate is not yet published in either H.15 (519) or the
H.15 Daily Update by 3:00 p.m., New York City time, on the
calculation date, the calculation agent will determine the
federal funds rate to be the arithmetic mean of the rates for
the last transaction in overnight federal funds by each of three
leading brokers of federal funds transactions in The City of New
York selected by the calculation agent, after consultation with
us, prior to 9:00 a.m., New York City time, on that
interest rate determination date. |
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If the brokers selected by the calculation agent are not quoting
as mentioned above, the federal funds rate relating to that
interest rate determination date will remain the federal funds
rate for the immediately preceding period between interest rate
changes, or, if there was no period immediately preceding, the
rate of interest payable will be the initial interest rate. |
S-18
“H.15 (519)” means “Statistical Release H.15
(519), Selected Interest Rates” or any successor
publication of the Federal Reserve System.
“H.15 Daily Update” means the daily update of H.15
(519), available through the world-wide-web site of the Board of
Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor
site or publication.
“index currency” means the currency specified in the
applicable pricing supplement as the currency for which LIBOR
will be calculated, or, if the euro is substituted for that
currency, the index currency will be the euro. If that currency
is not specified in the applicable pricing supplement, the index
currency will be U.S. dollars.
“index maturity” is defined in “Description of
Notes — Floating Rate Notes” in this prospectus
supplement.
“LIBOR” means, initially or for any date on which the
interest rate changes, the rate determined by the calculation
agent as follows:
As of the interest rate determination date, LIBOR will be either:
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if “LIBOR Reuters” is specified in the applicable
pricing supplement, the arithmetic mean of the offered rates for
deposits in the index currency having the Index Maturity
designated in the applicable pricing supplement, commencing on
the second London banking day immediately following that
interest rate determination date, that appear on the Designated
LIBOR Page, as defined below, as of 11:00 a.m., London
time, on that interest rate determination date, if at least two
offered rates appear on the Designated LIBOR Page; except that
if the specified Designated LIBOR Page, by its terms provides
only for a single rate, that single rate will be used; or |
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if “LIBOR Telerate” is specified in the applicable
pricing supplement, the rate for deposits in the index currency
having the Index Maturity designated in the applicable pricing
supplement, commencing on the second London banking day
immediately following that interest rate determination date or,
if pounds sterling is the index currency, commencing on that
interest rate determination date, that appears on the Designated
LIBOR Page at approximately 11:00 a.m., London time, on
that interest rate determination date. |
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If (1) fewer than two offered rates appear and “LIBOR
Reuters” is specified in the applicable pricing supplement,
or (2) no rate appears and the applicable pricing
supplement specifies either (x) “LIBOR Telerate”
or (y) “LIBOR Reuters” and the Designated LIBOR
Page by its terms provides only for a single rate, then the
Calculation Agent will request the principal London offices of
each of four major reference banks in the London interbank
market, as selected by the Calculation Agent after consultation
with us, to provide the Calculation Agent with its offered
quotation for deposits in the index currency for the period of
the Index Maturity specified in the applicable pricing
supplement commencing on the second London banking day
immediately following the interest rate determination date or,
if pounds sterling is the index currency, commencing on that
interest rate determination date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time,
on that interest rate determination date and in a principal
amount that is representative of a single transaction in that
index currency in that market at that time. |
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If at least two quotations are provided, LIBOR determined on
that interest rate determination date will be the arithmetic
mean of those quotations. If fewer than two quotations are
provided, LIBOR will be determined for the applicable interest
reset date as the arithmetic mean of the rates quoted at
approximately 11:00 a.m., London time, or some other time
specified in the applicable pricing supplement, in the
applicable principal financial center for the country of the
index currency on that interest reset date, by three major banks
in that principal financial center selected by the Calculation
Agent, after consultation with us, for loans in the index
currency to leading European banks, having the Index Maturity
specified in the applicable pricing supplement and in a
principal amount that is representative of a single transaction
in that index currency in that market at that time. |
S-19
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If the banks so selected by the Calculation Agent are not
quoting as mentioned in the previous bullet point, LIBOR in
effect for the applicable period will be the same as LIBOR for
the immediately preceding period between interest rate changes,
or, if there was no period immediately preceding, the rate of
interest payable will be the initial interest rate. |
“London banking day” means any day on which dealings
in deposits in the relevant index currency are transacted in the
London interbank market.
“prime rate” means, for any interest rate
determination date, the rate on that date as published in H.15
(519) under the heading “Bank Prime Loan.”
The following procedures will be followed if the prime rate
cannot be determined as described above:
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If the rate is not published prior to 9:00 a.m., New York
City time, on the calculation date, then the prime rate will be
the rate on that interest rate determination date as published
in H.15 Daily Update under the heading “Bank Prime
Loan.” |
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If the rate is not published prior to 3:00 p.m., New York
City time, on the calculation date in either H.15 (519) or the
H.15 Daily Update, then the calculation agent will determine the
prime rate to be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters
Screen USPRIME 1 Page, as defined below, as that bank’s
prime rate or base lending rate as in effect for that interest
rate determination date. |
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If fewer than four rates appear on the Reuters Screen USPRIME 1
Page for that interest rate determination date, the calculation
agent will determine the prime rate to be the arithmetic mean of
the prime rates quoted on the basis of the actual number of days
in the year divided by 360 as of the close of business on that
interest rate determination date by at least three major banks
in The City of New York selected by the calculation agent, after
consultation with us. |
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If the banks selected are not quoting as mentioned above, the
prime rate will remain the prime rate for the immediately
preceding period between the interest rate changes, or, if there
was no period immediately preceding, the rate of interest
payable will be the initial interest rate. |
“Reuters Screen USPRIME 1 Page” means the display
designated as page “USPRIME 1” on the Reuters Monitor
Money Rates Service, or any successor service, or any other page
as may replace the USPRIME 1 Page on that service for the
purpose of displaying prime rates or base lending rates of major
United States banks.
“Treasury rate” means:
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the rate from the auction held on the applicable interest rate
determination date, which we refer to as the
“auction,” of direct obligations of the United States,
which are commonly referred to as “Treasury Bills,”
having the index maturity specified in the applicable pricing
supplement as that rate appears under the caption
“INVESTMENT RATE” on the display on Bridge Telerate,
Inc., or any successor service, on page 56 or any other
page as may replace page 56 on that service, which we refer
to as “Telerate Page 56,” or page 57 or any
other page as may replace page 57 on that service, which we
refer to as “Telerate Page 57,” or |
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if the rate described in the first bullet point is not published
by 3:00 p.m., New York City time, on the calculation date,
the bond equivalent yield of the rate for the applicable
Treasury Bills as published in the H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying
the applicable rate, under the caption
“U.S. Government Securities/ Treasury Bills/ Auction
High,” or |
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if the rate described in the second bullet point is not
published by 3:00 p.m., New York City time, on the related
calculation date, the bond equivalent yield of the auction rate
of the applicable Treasury Bills, announced by the United States
Department of the Treasury, or |
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in the event that the rate referred to in the third bullet point
is not announced by the United States Department of the
Treasury, or if the auction is not held, the bond equivalent
yield of the rate on the |
S-20
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applicable interest rate determination date of Treasury Bills
having the index maturity specified in the applicable pricing
supplement published in H.15 (519) under the caption
“U.S. Government Securities/ Treasury Bills/ Secondary
Market,” or |
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if the rate referred to in the fourth bullet point is not so
published by 3:00 p.m., New York City time, on the related
calculation date, the rate on the applicable interest rate
determination date of the applicable Treasury Bills as published
in H.15 Daily Update, or other recognized electronic source used
for the purpose of displaying the applicable rate, under the
caption “U.S. Government Securities/ Treasury Bills/
Secondary Market,” or |
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if the rate referred to in the fifth bullet point is not so
published by 3:00 p.m., New York City time, on the related
calculation date, the rate on the applicable interest rate
determination date calculated by the calculation agent as the
bond equivalent yield of the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 p.m., New York
City time, on the applicable interest rate determination date,
of three primary United States government securities dealers,
which may include the agent or its affiliates, selected by the
calculation agent, for the issue of Treasury Bills with a
remaining maturity closest to the index maturity specified in
the applicable pricing supplement, or |
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if the dealers selected by the calculation agent are not quoting
as mentioned in the sixth bullet point, the Treasury rate for
the immediately preceding period between interest rate changes,
or, if there was no period immediately preceding, the rate of
interest payable will be the initial interest rate. |
The “bond equivalent yield” means a yield (expressed
as a percentage) calculated in accordance with the following
formula:
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bond equivalent yield
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=
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D × N
360
- (D × M)
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× 100
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where “D” refers to the applicable per annum rate for
Treasury Bills quoted on a bank discount basis, “N”
refers to 365 or 366, as the case may be, and “M”
refers to the actual number of days in the interest period for
which interest is being calculated.
SUPPLEMENTAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS
The following is a general summary of certain United States
federal income tax consequences to you of purchasing, owning and
disposing of the notes. This summary is a supplement to, and
should be read in connection with, the accompanying prospectus
(including the discussion in such prospectus under the heading
“U.S. Federal Income Tax Considerations”).
However, this summary supersedes and replaces the discussion
under “United States Holders — Taxation of Stated
Interest” and “United States Holders — Sale,
Exchange or Other Taxable Disposition of the Debt
Securities” in the accompanying prospectus. Non-U.S.
holders should see the discussion under the caption
“Non-United States Holders” in the accompanying
prospectus. This summary is based on current law, is for general
information only and is not tax advice.
The information in this section is based on:
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the Internal Revenue Code of 1986, as amended (the
“Code”); |
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current, temporary and proposed Treasury regulations promulgated
under the Code; |
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the legislative history of the Code; |
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current administrative interpretations and practices of the
Internal Revenue Service (“IRS”); and |
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court decisions, |
in each case, as of the date of this prospectus supplement. In
addition, the administrative interpretations and practices of
the IRS include its practices and policies as expressed in
private letter rulings which are not binding on the IRS except
with respect to the particular taxpayers who requested and
received those rulings. Future legislation, Treasury
regulations, administrative interpretations and practices and/or
court decisions
S-21
may adversely affect the tax considerations described in this
prospectus supplement. Any such change could apply retroactively
to transactions preceding the date of the change. This summary
is subject to the qualifications and limitations set forth in
the accompanying prospectus under the heading
“U.S. Federal Income Tax Considerations,” and
terms defined therein shall have the same meaning in this
summary.
You are urged to consult your tax advisor regarding the
specific tax consequences to you of:
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the acquisition, ownership and sale or other disposition of
the notes, including the federal, state, local, foreign and
other tax consequences; |
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potential changes in applicable tax laws. |
Taxation of Note Holders
Because the exact pricing and other terms of the notes will
vary, no assurance can be given that the considerations
described below will apply to a particular issuance of notes.
Such pricing and terms will be set forth in a pricing
supplement, and you should review the summary of federal income
tax considerations contained in the prospectus and this
prospectus supplement together with the applicable pricing
supplement. Certain material United States federal income tax
consequences relating to the ownership of particular notes,
where applicable, may be summarized in the pricing supplement or
another filing we make with the U.S. Securities and Exchange
Commission relating to such notes. Persons considering the
purchase of notes should consult their tax advisors concerning
the application of United States federal income tax laws to
their particular situations as well as any consequences of the
purchase, ownership and disposition of the notes arising under
the laws of any state, local or foreign taxing jurisdiction.
United States Holders
Taxation of Interest. The taxation of interest on a note
depends on whether it constitutes “qualified stated
interest,” as defined below. Interest on a note that
constitutes qualified stated interest is includible in a United
States holder’s income as ordinary interest income when
actually or constructively received, if such holder uses the
cash method of accounting for federal income tax purposes, or
when accrued, if such holder uses an accrual method of
accounting for federal income tax purposes. Interest that does
not constitute qualified stated interest is included in a United
States holder’s income under the rules described below
under “Original Issue Discount,” regardless of such
holder’s method of accounting. Notwithstanding the
foregoing, interest that is payable on a note with a maturity of
one year or less from its issue date (a “short-term
note”) is included in a United States holder’s income
under the rules described below under “Short-Term
Notes.”
Fixed Rate Notes. Interest on a fixed rate note will
generally constitute “qualified stated interest” if
the interest is unconditionally payable, or will be
constructively received under Section 451 of the Code, in
cash or in property, other than debt instruments issued by us,
at least annually at a single fixed rate. If a note bears
interest for one or more accrual periods at a rate below the
rate applicable for the remaining term of such note (e.g., notes
with teaser rates or interest holidays), and if the greater of
either the resulting foregone interest on such note or any
“true” discount on such note (i.e., the excess of the
note’s stated principal amount over its issue price) equals
or exceeds a specified de minimis amount, then the excess of the
stated interest over any qualified stated interest on the note
would be treated as original issue discount rather than
qualified stated interest.
Floating Rate Notes. Interest on a floating rate note
that is unconditionally payable, or will be constructively
received under Section 451 of the Code, in cash or in
property, other than debt instruments issued by us, at least
annually will constitute “qualified stated interest”
if the note is a “variable rate debt instrument” under
the rules described below and the interest is payable at a
single “qualified floating rate” or single
“objective rate,” each as defined below. If the note
is a variable rate debt instrument but the interest is payable
other than at a single qualified floating rate or at a single
objective rate, special rules apply to determine the portion of
such interest that constitutes “qualified stated
interest.” See “Original Issue Discount —
Floating Rate Notes that are Variable Rate Debt
Instruments,” below.
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Definition of Variable Rate Debt Instrument, Qualified
Floating Rate and Objective Rate. A note is a variable rate
debt instrument if all of the four following conditions are met.
First, the “issue price” of the note, as described
below, must not exceed the total noncontingent principal
payments by more than an amount equal to the lesser of
(i) .015 multiplied by the product of the total
noncontingent principal payments and the number of complete
years to maturity from the issue date, or, in the case of a note
that provides for payment of any amount other than qualified
stated interest before maturity, its weighted average maturity,
and (ii) 15% of the total noncontingent principal payments.
Second, the note must provide for stated interest, compounded or
paid at least annually, at (a) one or more qualified
floating rates, (b) a single fixed rate and one or more
qualified floating rates, (c) a single objective rate or
(d) a single fixed rate and a single objective rate that is
a “qualified inverse floating rate” as defined below.
Third, the note must provide that a qualified floating rate or
objective rate in effect at any time during the term of the note
is set at the value of the rate on any day that is no earlier
than three months prior to the first day on which that value is
in effect and no later than one year following that first day.
Fourth, the note may not provide for any principal payments that
are contingent except as provided in the first requirement set
forth above.
Subject to certain exceptions, a variable rate of interest on a
note is a “qualified floating rate” if variations in
the value of the rate can reasonably be expected to measure
contemporaneous fluctuations in the cost of newly borrowed funds
in the currency in which the debt instrument is denominated. A
variable rate will be considered a qualified floating rate if
the variable rate equals (i) the product of a qualified
floating rate and a fixed multiple that is greater than 0.65,
but not more than 1.35 or (ii) the product of a qualified
floating rate and a fixed multiple that is greater than 0.65 but
not more than 1.35, increased or decreased by a fixed rate. In
addition, two or more qualified floating rates that can
reasonably be expected to have approximately the same values
throughout the term of the note (e.g., two or more qualified
floating rates with values within 25 basis points of each
other as determined on the note’s issue date) will be
treated as a single qualified floating rate. Despite the
foregoing, a variable rate will not be considered a qualified
floating rate if the variable rate is subject to a cap, floor,
governor (i.e., a restriction on the amount of increase or
decrease in the stated interest rate) or similar restriction
that is reasonably expected as of the issue date to cause the
yield on the note to be significantly more or less than the
expected yield determined without the restriction, other than a
cap, floor or governor that is fixed throughout the term of the
note.
Subject to certain exceptions, an “objective rate” is
a rate, other than a qualified floating rate, that is determined
using a single fixed formula and that is based on objective
financial or economic information that is neither within our
control (or the control of a related party) nor unique to our
circumstances (or the circumstances of a related party). For
example, an objective rate generally includes a rate that is
based on one or more qualified floating rates or on the yield of
actively traded personal property within the meaning of
Section 1092(d)(1) of the Code. Notwithstanding the first
sentence of this paragraph, a rate on a note is not an objective
rate if it is reasonably expected that the average value of the
rate during the first half of the note’s term will be
either significantly less than or significantly greater than the
average value of the rate during the final half of the
note’s term. An objective rate is a “qualified inverse
floating rate” if (a) the rate is equal to a fixed
rate minus a qualified floating rate and (b) the variations
in the rate can reasonably be expected to reflect inversely
contemporaneous variations in the cost of newly borrowed funds,
disregarding any caps, floors, governors or similar restrictions
that would not, as described above, cause a rate to fail to be a
qualified floating rate.
If interest on a note is stated at a fixed rate for an initial
period of one year or less, followed by a variable rate that is
either a qualified floating rate or an objective rate for a
subsequent period, and the value of the variable rate on the
issue date is intended to approximate the fixed rate, the fixed
rate and the variable rate together constitute a single
qualified floating rate or objective rate.
Original Issue Discount. Original issue discount with
respect to a note is the excess, if any, of the note’s
“stated redemption price at maturity” over the
note’s “issue price.” A note’s “stated
redemption price at
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maturity” is the sum of all payments provided by the note,
whether designated as interest or as principal, other than
payments of qualified stated interest. The “issue
price” of a note is the first price at which a substantial
amount of the notes in the issuance that includes such note is
sold for money, excluding sales to bond houses, brokers or
similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers.
As described more fully below, United States holders of notes
with original issue discount that mature more than one year from
their issue date generally will be required to include such
original issue discount in income as it accrues in accordance
with the constant yield method described below, irrespective of
the receipt of the related cash payments. A United States
holder’s tax basis in a note is increased by each accrual
of original issue discount and decreased by each payment other
than a payment of qualified stated interest.
The amount of original issue discount with respect to a note
will be treated as zero if the original issue discount is less
than an amount equal to 0.0025 multiplied by the product of the
stated redemption price at maturity and the number of complete
years to maturity, or, in the case of a note that provides for
payment of any amount other than qualified stated interest prior
to maturity, the weighted average maturity of the note. If the
amount of original issue discount with respect to a note is less
than that amount, the original issue discount that is not
included in payments of stated interest is generally included in
income as capital gain as principal payments are made. The
amount includible with respect to a principal payment equals the
product of the total amount of original issue discount and a
fraction, the numerator of which is the amount of such principal
payment and the denominator of which is the stated principal
amount of the note.
Fixed Rate Notes. In the case of original issue discount
with respect to a fixed rate note, the amount of original issue
discount includible in the income of a United States holder for
any taxable year is determined under the constant yield method,
as follows. First, the “yield to maturity” of the note
is computed. The yield to maturity is the discount rate that,
when used in computing the present value of all interest and
principal payments to be made under the note, including payments
of qualified stated interest, produces an amount equal to the
issue price of the note. The yield to maturity is constant over
the term of the note and, when expressed as a percentage, must
be calculated to at least two decimal places.
Second, the term of the note is divided into “accrual
periods.” Accrual periods may be of any length and may vary
in length over the term of the note, provided that each accrual
period is no longer than one year and that each scheduled
payment of principal or interest occurs either on the final day
of an accrual period or on the first day of an accrual period.
Third, the total amount of original issue discount on the note
is allocated among accrual periods. In general, the original
issue discount allocable to an accrual period equals the product
of the “adjusted issue price” of the note at the
beginning of the accrual period and the yield to maturity of the
note, less the amount of any qualified stated interest allocable
to the accrual period. The adjusted issue price of a note at the
beginning of the first accrual period is its issue price.
Thereafter, the adjusted issue price of the note is its issue
price, increased by the amount of original issue discount
previously includible in the gross income of any holder and
decreased by the amount of any payment previously made on the
note other than a payment of qualified stated interest. For
purposes of computing the adjusted issue price of a note, the
amount of original issue discount previously includible in the
gross income of any holder is determined without regard to
“premium” and “acquisition premium,” as
those terms are defined below under “Premium and
Acquisition Premium.”
Fourth, the “daily portions” of original issue
discount are determined by allocating to each day in an accrual
period its ratable portion of the original issue discount
allocable to the accrual period.
A United States holder includes in income in any taxable year
the daily portions of original issue discount for each day
during the taxable year that such holder held notes. In general,
under the constant yield method described above, United States
holders will be required to include in income increasingly
greater amounts of original issue discount in successive accrual
periods.
Floating Rate Notes that are Variable Rate Debt
Instruments. The taxation of original issue discount,
including interest that does not constitute qualified stated
interest, on a floating rate note will depend on
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whether the note is a “variable rate debt instrument,”
as that term is defined above under “Taxation of
Interest — Definition of Variable Rate Debt
Instrument, Qualified Floating Rate and Objective Rate.”
If a variable rate debt instrument provides for stated interest
at either a single qualified floating rate or a single objective
rate throughout the term thereof, any stated interest on the
note which is unconditionally payable in cash or property, other
than debt instruments of the issuer, at least annually will
constitute “qualified stated interest” and will be
taxed accordingly. Thus, this type of variable rate debt
instrument will generally not be treated as having been issued
with original issue discount unless the variable rate debt
instrument is issued at a “true” discount (i.e., at a
price below the variable rate debt instrument’s stated
principal amount) in excess of a specified de minimis amount.
Original issue discount on such a variable rate debt instrument
arising from “true discount” is allocated to an
accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to
(i) in the case of a qualified floating rate or a qualified
inverse floating rate, the value, as of the issue date, of the
qualified floating rate or qualified inverse floating rate, or
(ii) in the case of an objective rate, other than a
qualified inverse floating rate, the rate that reflects the
yield that is reasonably expected for the note. Qualified stated
interest allocable to an accrual period is increased, or
decreased, if the interest actually paid during an accrual
period exceeds, or is less than, the interest assumed to be paid
during the accrual period.
If a note that is a variable rate debt instrument does not
provide for interest at a single variable rate as described
above, the amount of interest and original issue discount
accruals are determined by constructing an equivalent fixed rate
debt instrument, as follows.
First, in the case of an instrument that provides for interest
at one or more qualified floating rates or at a qualified
inverse floating rate and, in addition, at a fixed rate, replace
the fixed rate with a qualified floating rate, or qualified
inverse floating rate, such that the fair market value of the
instrument, so modified, as of the issue date would be
approximately the same as the fair market value of the
unmodified instrument.
Second, determine the fixed rate substitute for each variable
rate provided by the note, or determined to be provided by the
note under the first step above. The fixed rate substitute for
each qualified floating rate provided by the note is the value
of that qualified floating rate on the issue date. If the note
provides for two or more qualified floating rates with different
intervals between interest adjustment dates (for example, the
30-day commercial paper
rate and quarterly LIBOR), the fixed rate substitutes are based
on intervals that are equal in length (for example, the
90-day commercial paper
rate and quarterly LIBOR, or the
30-day commercial paper
rate and monthly LIBOR). The fixed rate substitute for a
qualified inverse floating rate is the value of the qualified
inverse floating rate on the issue date. The fixed rate
substitute for an objective rate, other than a qualified inverse
floating rate, is a fixed rate that reflects the yield that is
reasonably expected for the note.
Third, construct an equivalent fixed rate debt instrument that
has terms that are identical to those provided under the note,
except that the equivalent fixed rate debt instrument provides
for the fixed rate substitutes determined in the second step, in
lieu of the qualified floating rates or objective rate provided
by the note.
Fourth, determine the amount of qualified stated interest and
original issue discount for the equivalent fixed rate debt
instrument under the rules, described above, for fixed rate
notes. These amounts are taken into account as if the United
States holder held the equivalent fixed rate debt instrument.
See “Taxation of Interest” and “Original Issue
Discount — Fixed Rate Notes,” above.
Fifth, make appropriate adjustments for the actual values of the
variable rates. In this step, qualified stated interest or
original issue discount allocable to an accrual period is
increased, or decreased, if the interest actually accrued or
paid during the accrual period exceeds, or is less than, the
interest assumed to be accrued or paid during the accrual period
under the equivalent fixed rate debt instrument.
Floating Rate Notes that are not Variable Rate Debt
Instruments. Floating rate notes that are not variable rate
debt instruments (“contingent notes”) will be taxable
under the rules applicable to contingent payment debt
instruments (the “contingent debt regulations”). Under
these Treasury regulations, any contingent and noncontingent
interest payments would be includible in income in a taxable
year whether or
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not the amount of any payment is fixed or determinable in that
year. To determine the amount of interest includible in the
holder’s income, we are first required to determine, as of
the issue date, the comparable yield for the contingent note.
The comparable yield is generally the yield at which we would
issue a fixed rate debt instrument with terms and conditions
similar to those of the contingent note, including the level of
subordination, term, timing of payments and general market
conditions, but not taking into consideration the riskiness of
the contingencies or the liquidity of the contingent note. In
certain cases where contingent notes are marketed or sold in
substantial part to tax-exempt investors or other investors for
whom the prescribed inclusion of interest is not expected to
have a substantial effect on their U.S. income tax
liability, the comparable yield for the contingent note, without
proper evidence to the contrary, is presumed to be the
applicable federal rate.
Second, solely for tax purposes, we construct a projected
schedule of payments determined under the contingent debt
regulations for the contingent note (the “Schedule”).
The Schedule is determined as of the issue date and generally
remains in place throughout the term of the contingent note. If
a right to a contingent payment is based on market information,
the amount of the projected payment is the forward price of the
contingent payment. If a contingent payment is not based on
market information, the amount of the projected payment is the
expected value of the contingent payment as of the issue date.
The Schedule must produce the comparable yield determined as set
forth above. Otherwise, the Schedule must be adjusted under the
rules set forth in the contingent debt regulations.
Third, under the usual rules applicable to original issue
discount and based on the Schedule, the interest income on the
contingent note for each accrual period is determined by
multiplying the comparable yield of the contingent note,
adjusted for the length of the accrual period, by the contingent
note’s adjusted issue price at the beginning of the accrual
period, determined under rules set forth in the contingent debt
regulations. The amount so determined is then allocated on a
ratable basis to each day in the accrual period that the United
States holder held the contingent note.
Fourth, appropriate adjustments are made to the interest income
determined under the foregoing rules to account for any
differences between the Schedule and actual contingent payments.
Under the rules set forth in the contingent debt regulations,
differences between the actual amounts of any contingent
payments made in a calendar year and the projected amounts of
such payments are generally aggregated and taken into account,
in the case of a positive difference, as additional interest
income, or, in the case of a negative difference, first as a
reduction in interest income for such year and thereafter, as
ordinary loss to the extent of the amount by which the United
States holder’s total interest inclusions on the contingent
notes exceeds the total amount of net negative adjustments
treated as ordinary loss in prior taxable years. Any remaining
excess will be a negative adjustment carryforward and treated as
a negative adjustment in the succeeding year. If a contingent
note is sold, exchanged, or retired, any negative adjustment
carryforward from the prior year will reduce the United States
holder’s amount realized on the sale, exchange or
retirement.
We are required to provide each holder of a contingent note with
the Schedule described above. If we do not create a Schedule or
the Schedule is unreasonable, a United States holder must set
its own projected payment schedule and explicitly disclose the
use of such schedule and the reason therefor. Unless otherwise
prescribed by the IRS, the United States holder must make such
disclosure on a statement attached to the United States
holder’s timely filed federal income tax return for the
taxable year in which the contingent note was acquired.
In general, any gain realized by a United States holder on the
sale, exchange or retirement of a contingent note is interest
income. In general, any loss on a contingent note accounted for
under the method described above is ordinary loss to the extent
it does not exceed such holder’s prior interest inclusions
on the contingent note, net of negative adjustments treated as
ordinary loss in price taxable years. Special rules apply in
determining the tax basis of a contingent note and the amount
realized on the retirement of a contingent note.
Other Rules. Certain notes having original issue discount
may be redeemed prior to maturity or may be repayable at the
option of the holder. Such notes may be subject to rules that
differ from the general rules discussed above relating to the
tax treatment of original issue discount. Purchasers of such
notes with a redemption feature should consult their tax
advisors with respect to such feature since the tax consequences
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with respect to original issue discount will depend, in part, on
the particular terms and the particular features of the
purchased note.
The Treasury regulations relating to the tax treatment of
original issue discount contain certain language
(“aggregation rules”) stating in general that, with
some exceptions, if more than one type of note is issued in
connection with the same transaction or related transactions,
such notes may be treated as a single debt instrument with a
single issue price, maturity date, yield to maturity and stated
redemption price at maturity for purposes of calculating and
accruing any original issue discount. Unless otherwise provided
in the applicable prospectus supplement or pricing supplement,
we do not expect to treat different types of notes as being
subject to the aggregation rules for purposes of computing
original issue discount.
Market Discount. If a United States holder acquires a
note having a maturity date of more than one year from the date
of its issuance and has a tax basis in the note that is, in the
case of a note that does not have original issue discount, less
than its issue price, or, in the case of a subsequent purchase,
its stated redemption price at maturity, or, in the case of a
note that has original issue discount, less than its adjusted
issue price as of the date of acquisition, as defined above, the
amount of such difference is treated as “market
discount” for federal income tax purposes, unless such
difference is less than 0.0025 multiplied by the stated
redemption price at maturity of the note multiplied by the
number of complete years to maturity from the date of
acquisition.
Under the market discount rules of the Code, a United States
holder is required to treat any principal payment, or, in the
case of a note that has original issue discount, any payment
that does not constitute a payment of qualified stated interest,
on, or any gain on the sale, exchange, retirement or other
disposition of, a note as ordinary income to the extent of the
accrued market discount that has not previously been included in
income. Thus, partial principal payments are treated as ordinary
income to the extent of accrued market discount that has not
previously been included in income. If such note is disposed of
by the United States holder in certain otherwise nontaxable
transactions, accrued market discount must be included as
ordinary income by the United States holder as if such holder
had sold the note at its then fair market value.
In general, the amount of market discount that has accrued is
determined on a ratable basis. A United States holder may,
however, elect to determine the amount of accrued market
discount on a constant yield to maturity basis. This election is
made on a note-by-note basis and is irrevocable.
With respect to notes with market discount, a United States
holder may not be allowed to deduct immediately a portion of the
interest expense on any indebtedness incurred or continued to
purchase or to carry such notes. A United States holder may
elect to include market discount in income currently as it
accrues, in which case the interest deferral rule set forth in
the preceding sentence will not apply. This election will apply
to all debt instruments acquired by the United States holder on
or after the first day of the first taxable year to which the
election applies and is irrevocable without the consent of the
IRS. A United States holder’s tax basis in a note will be
increased by the amount of market discount included in the
holder’s income under the election.
In lieu of the foregoing rules, different rules apply in the
case of contingent notes where a holder’s tax basis in a
contingent note is less than the contingent note’s adjusted
issue price, determined under special rules set out in the
contingent debt regulations. Accordingly, prospective purchasers
of contingent notes should consult with their tax advisors with
respect to the application of these rules to contingent notes.
Premium and Acquisition Premium. If a United States
holder purchases a note for an amount in excess of the sum of
all amounts payable on the note after the date of acquisition,
other than payments of qualified stated interest, the holder
will be considered to have purchased the note with
“amortizable bond premium” equal in amount to the
excess, and generally will not be required to include any
original issue discount in income. Generally, a United States
holder may elect to amortize the premium as an offset to
qualified stated interest income, using a constant yield method
similar to that described above (see “Original Issue
Discount”), over the remaining term of the note, where the
note is not redeemable prior to its maturity date. In the case
of notes that may be redeemed prior to maturity, the premium is
calculated assuming that we or the United States holder will
exercise or not exercise its redemption rights in a manner that
maximizes the
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United States holder’s yield. A United States holder who
elects to amortize bond premium must reduce such holder’s
tax basis in the note by the amount of the premium used to
offset qualified stated interest income as set forth above. An
election to amortize bond premium applies to all taxable debt
obligations then owned and thereafter acquired by the holder and
may be revoked only with the consent of the IRS.
If a United States holder purchases a note issued with original
issue discount at an “acquisition premium,” the amount
of original issue discount that the United States holder
includes in gross income is reduced to reflect the acquisition
premium. A note is purchased at an acquisition premium if its
adjusted basis, immediately after its purchase, is (a) less
than or equal to the sum of all amounts payable on the note
after the purchase date other than payments of qualified stated
interest and (b) greater than the note’s
“adjusted issue price” (as described above under
“Original Issue Discount — Fixed Rate
Notes”).
If a note is purchased at an acquisition premium, the United
States holder reduces the amount of original issue discount
otherwise includible in income during an accrual period by an
amount equal to (i) the amount of original issue discount
otherwise includible in income multiplied by (ii) a
fraction, the numerator of which is the excess of the adjusted
basis of the note immediately after its acquisition by the
purchaser over the adjusted issue price of the note and the
denominator of which is the excess of the sum of all amounts
payable on the note after the purchase date, other than payments
of qualified stated interest, over the note’s adjusted
issue price.
As an alternative to reducing the amount of original issue
discount otherwise includible in income by this fraction, the
United States holder may elect to compute original issue
discount accruals by treating the purchase as a purchase at
original issuance and applying the constant yield method
described above.
In lieu of the foregoing rules, different rules apply in the
case of contingent notes where a holder’s tax basis in a
contingent note is greater than the contingent note’s
adjusted issue price, determined under special rules set out in
the contingent debt regulations. Accordingly, prospective
purchasers of contingent notes should consult with their tax
advisors with respect to the application of these rules to
contingent notes.
Short-Term Notes. A short-term note will be treated as
having been issued with original issue discount if the stated
redemption price at maturity exceeds the issue price of the
note. For purposes of this discussion, a short-term note is a
note that has a fixed maturity date not more than one year from
the date of issue. United States holders that report income for
federal income tax purposes on an accrual method and certain
other United States holders, including banks and dealers in
securities, are required to include original issue discount in
income on such short-term notes on a straight-line basis, unless
an election is made to accrue the original issue discount
according to a constant yield method based on daily compounding.
Any interest payable on the obligation, other than original
issue discount, is included in gross income as it accrues.
United States holders of short-term notes who use the cash
method of accounting and certain other United States holders are
not required to accrue original issue discount for federal
income tax purposes, unless the holder elects to do so, with the
consequence that the reporting of such income is deferred until
it is received. In the case of a United States holder that is
not required, and does not elect, to include original issue
discount in income currently, any gain realized on the sale,
exchange or retirement of a short-term note is ordinary income
to the extent of the original issue discount accrued on a
straight-line basis, or, if elected, according to a constant
yield method based on daily compounding, through the date of
sale, exchange or retirement. In addition, United States holders
that are not required, and do not elect, to include original
issue discount in income currently are required to defer
deductions for any interest paid on indebtedness incurred or
continued to purchase or carry a short-term note in an amount
not exceeding the deferred interest income with respect to such
short-term note, which includes both the accrued original issue
discount and accrued interest that is payable but that has not
been included in gross income, until such deferred interest
income is realized. A United States holder of a short-term note
may elect to apply the foregoing rules, except for the rule
characterizing gain on sale, exchange or retirement as ordinary,
with respect to “acquisition discount” rather than
original issue discount. Acquisition discount is the excess of
the stated redemption price at maturity of the short-term note
over the United States holder’s basis in the short-term
note. This election applies to all obligations acquired by the
taxpayer on or after the first day of the first taxable year to
which such election
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applies, unless revoked with the consent of the IRS. A United
States holder’s tax basis in a short-term note is increased
by the amount included in such holder’s income on such a
note.
Election to Treat All Interest as Original Issue
Discount. United States holders may elect to include in
gross income all interest that accrues on a note, including any
stated interest, acquisition discount, original issue discount,
market discount, de minimis original issue discount, de minimis
market discount and unstated interest, as adjusted by
amortizable bond premium and acquisition premium, by using the
constant yield method described above under “Original Issue
Discount.” Such an election for a note with amortizable
bond premium will result in a deemed election to amortize bond
premium for all debt instruments owned and later acquired by the
United States holder with amortizable bond premium and may be
revoked only with the permission of the IRS. Similarly, such an
election for a note with market discount will result in a deemed
election to accrue market discount in income currently for such
note and for all other debt instruments acquired by the United
States holder with market discount on or after the first day of
the taxable year to which such election first applies, and may
be revoked only with the permission of the IRS. A United States
holder’s tax basis in a note will be increased by each
accrual of the amounts treated as original issue discount under
the constant yield election described in this paragraph.
Extendible Notes, Renewable Notes and Reset Notes. If so
specified in an applicable prospectus supplement or pricing
supplement relating to a note, we or a holder may have the
option to extend the maturity of or renew the note. In addition,
we may have the option to reset the interest rate, the spread or
the fixed multiple with respect to a note. The treatment of a
United States holder of notes to which these options apply will
depend, in part, on the terms we establish for the notes
pursuant to the exercise of the option by us or a holder. Upon
the exercise of any such option, the United States holder of the
notes may be treated for federal income tax purposes as having
exchanged the notes for new notes with revised terms. If the
holder is treated as having exchanged the notes for new notes,
the exchange may be treated as either a taxable exchange or a
tax-free recapitalization.
The exercise of an option provided to an issuer or a holder to
change a term of a debt instrument, such as the maturity or the
interest rate, in a manner such as that contemplated for
extendible notes, renewable notes and reset notes generally may
create a deemed exchange of the old notes for new notes if the
exercise modifies the terms to a degree that is
“economically significant.” With respect to certain
types of debt instruments, a deemed exchange for tax purposes
occurs if the exercise of such an option alters the annual yield
of the debt instrument by more than the greater of
(i) 25 basis points or (ii) 5 percent of the
annual yield of the debt instrument prior to modification. The
exercise of an option that changes the timing of payments under
a debt instrument creates a deemed exchange, whether or not the
annual yield is altered, if there is a “material
deferral” of scheduled payments. In this connection, a
deferral of scheduled payments within a safe-harbor period which
begins on the original due date for the first deferred payment
and extends for a period not longer than the lesser of five
years or 50 percent of the original term of the debt
instrument generally will not be considered to be a material
deferral.
If the exercise of the option by us or a holder is not treated
as an exchange of the old notes for new notes, no gain or loss
will be recognized by a United States holder as a result
thereof. If the exercise of the option is treated as a taxable
exchange of the old notes for new notes, a United States holder
will recognize gain or loss (subject to the possible application
of the wash sale rules) equal to the difference between the
issue price of the new notes and the holder’s tax basis in
the old notes. Any gain recognized by a U.S. holder on the
deemed exchange may be eligible for reporting under the
installment sale rules if the notes are not considered to be
traded on an established securities market for purposes of
Section 453 of the Code. Holders should consult their tax
advisors regarding the effect of the installment sale rules on
any gain resulting from the exchange (including the
applicability of the installment sale rules to notes with market
discount), and potential cost involved if the installment method
applies to such gain. However, if the exercise of the option is
treated as a tax-free recapitalization, no loss will be
recognized by a United States holder as a result thereof and
gain, if any, will be recognized to the extent of the fair
market value of the excess, if any, of the principal amount of
securities received over the principal amount of securities
surrendered. In this regard, the meaning of the term
“principal amount” is not clear. The term could be
interpreted to mean “issue price” with respect to
securities that are received and “adjusted issue
price” with respect to securities that are surrendered.
Legislation to that
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effect has been introduced in the past. It is not possible to
determine whether the legislation will be reintroduced or
enacted, and, if enacted, whether it would apply to a
recapitalization occurring prior to the date of enactment. The
“new” notes will be treated as being issued with
original issue discount if their stated redemption price at
maturity exceeds their “issue price” by more than a
statutory de minimis amount.
The presence of these options may also affect the calculation of
interest income and original issue discount, among other things.
For purposes of determining the yield and maturity of a note, if
we have an unconditional option or combination of options to
require payments to be made on the note under an alternative
payment schedule or schedules (e.g., an option to extend or an
option to redeem the note at a fixed premium), we will be deemed
to exercise or not exercise an option or combination of options
in a manner that minimizes the yield on the note. Conversely, a
holder having such option or combination of such options will be
deemed to exercise or not exercise the option or combination of
options in a manner that maximizes the yield on the note. If
both we and the holder have options, the foregoing rules are
applied to the options in the order that they may be exercised.
Thus, the deemed exercise of one option may eliminate other
options that are later in time. If the exercise of the option or
options actually occurs or does not occur, contrary to what is
deemed to occur pursuant to the foregoing rules, then, solely
for purposes of the accrual of original issue discount, the
yield and maturity of the note are redetermined by treating the
note as reissued on the date of the occurrence or non-occurrence
of the exercise for an amount equal to its adjusted issue price
on that date. As described under the heading “Original
Issue Discount — Floating Rate Notes that are not
Variable Rate Debt Instruments,” depending on the terms of
the options described above, the presence of these options may
instead cause the notes to be taxable as contingent notes.
THE FOREGOING DISCUSSION OF EXTENDIBLE NOTES, RENEWABLE
NOTES AND RESET NOTES IS PROVIDED FOR GENERAL INFORMATION
ONLY, AND IS NOT TAX ADVICE. ADDITIONAL TAX CONSIDERATIONS MAY
ARISE FROM THE OWNERSHIP OF THE NOTES IN LIGHT OF THE
PARTICULAR FEATURES OR COMBINATION OF FEATURES OF THE
NOTES AND, ACCORDINGLY, BEFORE YOU PURCHASE THE NOTES, YOU
ARE URGED TO CONSULT WITH YOUR LEGAL AND TAX ADVISORS REGARDING
THE TAX CONSEQUENCES OF THE OWNERSHIP OF THE NOTES.
Integration of Notes with Other Financial Instruments.
Any United States holder of notes that also acquires or has
acquired any financial instrument which, in combination with
such notes, would permit the calculation of a single yield to
maturity or could generally constitute a variable rate debt
instrument of an equivalent term, may in certain circumstances
treat such notes and such financial instrument as an integrated
debt instrument for purposes of the Code, with a single
determination of issue price and the character and timing of
income, deductions, gains and losses. For purposes of
determining original issue discount, none of the payments under
the integrated debt instrument will be treated as qualified
stated interest. Moreover, under the contingent debt
regulations, the IRS may require in certain circumstances that a
United States holder who owns notes integrate such notes with a
financial instrument held or acquired by such holder or a
related party. United States holders should consult their tax
advisors as to such possible integration.
Sale or Exchange of Notes. A United States holder
generally will recognize gain or loss upon the sale or exchange
of a note equal to the difference between the amount realized
upon such sale or exchange and the United States holder’s
adjusted basis in the note. The adjusted basis in the note
generally will equal the cost of the note, increased by original
issue discount, acquisition discount or market discount
previously included in respect thereof, and reduced, but not
below zero, by any payments on the note other than payments of
qualified stated interest and by any premium that the United
States holder has taken into account. To the extent attributable
to accrued but unpaid qualified stated interest, the amount
realized by the United States holder will be treated as a
payment of interest. Generally, any gain or loss will be capital
gain or loss if the note was held as a capital asset, except as
provided under “Market Discount,” “Short-Term
Notes” and “Original Issue Discount —
Floating Rate Notes that are not Variable Rate Debt
Instruments,” above. Special rules apply in determining the
tax basis of a contingent note and the amount realized on the
retirement of a contingent note. For non-corporate taxpayers,
capital gain realized on the disposition of an asset, including
a medium-term note, held for more than one year is taxed at a
maximum rate of 15%. Capital gain on the disposition of an
asset, including a medium-term note, held for not more than one
year is taxed at the rates
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applicable to ordinary income. The distinction between capital
gain or loss and ordinary income or loss is relevant for
purposes of, among other things, limitations on the
deductibility of capital losses.
Note Denominated, or in Respect of which Interest is
Payable, in a Foreign Currency. As used in this prospectus
supplement, “foreign currency” means a currency or
currency unit other than U.S. dollars.
Payments of Interest in a Foreign Currency. A United
States holder who uses the cash method of accounting for United
States federal income tax purposes and who receives a payment of
interest on a note, other than original issue discount or market
discount, will be required to include in income the
U.S. dollar value of the foreign currency payment,
determined on the date such payment is received, regardless of
whether the payment is in fact converted to U.S. dollars at
that time, and such U.S. dollar value will be the United
States holder’s tax basis in such foreign currency.
A United States holder who uses the accrual method of accounting
for United States federal income tax purposes, or who otherwise
is required to accrue interest prior to receipt, will be
required to include in income the U.S. dollar value of the
amount of interest income, including original issue discount or
market discount and reduced by amortizable bond premium to the
extent applicable, that has accrued and is otherwise required to
be taken into account with respect to a note during an accrual
period. The U.S. dollar value of such accrued income will
be determined by translating such income at the average rate of
exchange for the accrual period or, with respect to an accrual
period that spans two taxable years, at the average rate for the
partial period within the taxable year. A United States holder
may elect, however, to translate such accrued interest income
using the rate of exchange on the last day of the accrual period
or, with respect to an accrual period that spans two taxable
years, using the rate of exchange on the last day of the taxable
year. If the last day of an accrual period is within five
business days of the date of receipt of the accrued interest, a
United States holder may translate such interest using the rate
of exchange on the date of receipt. The above election will
apply to other debt obligations held by the United States holder
and may not be changed without the consent of the IRS. A United
States holder should consult a tax advisor before making the
above election. A United States holder will recognize exchange
gain or loss, which will be treated as ordinary income or loss,
with respect to accrued interest income on the date such income
is received. The amount of ordinary income or loss recognized
will equal the difference, if any, between the U.S. dollar
value of the foreign currency payment received, determined on
the date such payment is received, in respect of such accrual
period and the U.S. dollar value of interest income that
has accrued during such accrual period, as determined above.
Purchase, Sale and Retirement of Notes. A United States
holder who purchases a note with previously owned foreign
currency will recognize ordinary income or loss in an amount
equal to the difference, if any, between such United States
holder’s tax basis in the foreign currency and the
U.S. dollar fair market value of the foreign currency used
to purchase the note, determined on the date of purchase. Except
as discussed above with respect to short-term notes, upon the
sale, exchange or retirement of a note, a United States holder
will recognize taxable gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement
and such United States holder’s adjusted tax basis in the
note. Such gain or loss generally will be capital gain or loss,
except to the extent of any accrued market discount not
previously included in the United States holder’s income,
and would be long-term capital gain or loss if the holding
period for the notes is more than one year. To the extent the
amount realized represents accrued but unpaid interest, however,
such amounts must be taken into account as interest income, with
exchange gain or loss computed as described in “Payments of
Interest in a Foreign Currency” above. If a United States
holder receives foreign currency on such a sale, exchange or
retirement the amount realized will be based on the
U.S. dollar value of the foreign currency on the date the
payment is received or the note is disposed of, or deemed
disposed of in the case of a taxable exchange of the note for a
new note. In the case of a note that is denominated in foreign
currency and is traded on an established securities market, a
cash basis United States holder, or, upon election, an accrual
basis United States holder, will determine the U.S. dollar
value of the amount realized by translating the foreign currency
payment at the spot rate of exchange on the settlement date of
the sale. A U.S. holder’s adjusted tax basis in a note
will equal the cost of the note to such holder, increased by the
amounts of any market discount or original issue discount
previously included in income by the holder with respect to such
note and reduced by any amortized acquisition or other premium
and any principal payments received by the holder. A United
States holder’s tax basis in a note, and the amount of any
subsequent adjustments to such
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holder’s tax basis, will be the U.S. dollar value of
the foreign currency amount paid for such note, or of the
foreign currency amount of the adjustment, determined on the
date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a
note that is attributable to fluctuations in currency exchange
rates will be ordinary income or loss which will not be treated
as interest income or expense. Gain or loss attributable to
fluctuations in exchange rates will equal the difference between
the U.S. dollar value of the foreign currency purchase
price of the note, determined on the date such payment is
received or the note is disposed of, and the U.S. dollar
value of the foreign currency purchase price of the note,
determined on the date the United States holder acquired the
note. Such foreign currency gain or loss will be recognized only
to the extent of the total gain or loss realized by the United
States holder on the sale, exchange or retirement of the note.
Original Issue Discount. In the case of a note issued
with original issue discount or short-term note,
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original issue discount is determined in units of the foreign
currency, |
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accrued original issue discount is translated into
U.S. dollars as described in “Payments of Interest in
a Foreign Currency” above, and |
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the amount of foreign currency gain or loss on the accrued
original issue discount is determined by comparing the amount of
income received attributable to the discount, either upon
payment, maturity or an earlier disposition, as translated into
U.S. dollars at the rate of exchange on the date of such
receipt, with the amount of original issue discount accrued, as
translated above. |
Premium and Market Discount. In the case of a note with
market discount, (i) market discount is determined in units
of the foreign currency, (ii) accrued market discount taken
into account upon the receipt of any partial principal payment
or upon the sale, exchange, retirement or other disposition of
the note, other than accrued market discount required to be
taken into account currently, is translated into
U.S. dollars at the exchange rate on such disposition date,
and no part of such accrued market discount is treated as
exchange gain or loss, and (iii) accrued market discount
currently includible in income by a United State holder for any
accrual period is translated into U.S. dollars on the basis
of the average exchange rate in effect during such accrual
period, and the exchange gain or loss is determined upon the
receipt of any partial principal payment or upon the sale,
exchange, retirement or other disposition of the note in the
manner described in “Payments of Interest in a Foreign
Currency” above with respect to computation of exchange
gain or loss on accrued interest.
With respect to a note issued with amortizable bond premium,
such premium is determined in the relevant foreign currency and
reduces interest income in units of the foreign currency.
Exchange gain or loss is realized with respect to the bond
premium by treating the portion of premium amortized with
respect to any period as a return of principal. With respect to
any United States holder that does not elect to amortize bond
premium, the amount of bond premium will constitute a market
loss when the note matures. In general, a United States holder
should recognize exchange gain or loss equal to the difference
between the U.S. dollar value of the bond premium amortized
with respect to a period, determined on the date the interest
attributable to such period is received, and the
U.S. dollar value of the bond premium determined on the
date of the acquisition of the note.
Exchange of Foreign Currencies. A United States holder
will have a tax basis in any foreign currency received as
interest or on the sale, exchange or retirement of a note equal
to the U.S. dollar value of such foreign currency,
determined at the time the interest is received or at the time
of the sale, exchange or retirement. Any gain or loss realized
by a United States holder on a sale or other disposition of
foreign currency, including its exchange for U.S. dollars
or its use to purchase notes, will be ordinary income or loss.
SUPPLEMENTAL PLAN OF DISTRIBUTION
We are offering the Series C medium-term notes on a
continuing basis through Morgan Stanley & Co.
Incorporated, A.G. Edwards & Sons, Inc., Banc of
America Securities LLC, Commerzbank Capital Markets Corp.,
J.P. Morgan Securities Inc., PNC Capital Markets LLC,
Scotia Capital (USA) Inc., Wachovia
S-32
Capital Markets, LLC, Wells Fargo Securities, LLC as our agents,
who have agreed to use their commercially reasonable efforts to
solicit offers to purchase notes. An agent may reject, in whole
or in part, any offer it solicited to purchase the notes. Unless
otherwise specified in the applicable pricing supplement, we
will pay an agent, in connection with sales of these notes
resulting from a solicitation that agent made or an offer to
purchase that agent received, a commission ranging from .125% to
..750% of the initial offering price of the notes to be sold,
depending on the maturity of the notes. We and the agent will
negotiate commissions for notes with a maturity of 30 years
or greater at the time of sale.
We reserve the right to sell the notes directly on our own
behalf in jurisdictions where we and our employees are or may
become registered or qualified to do so or in transactions in
which they are exempt from having to register or qualify. We
will not pay commissions on any sales we make directly. We may
sell the notes through one or more additional agents or directly
to one or more underwriters for resale to the public.
We may also sell the notes to an agent as principal for its own
account at discounts to be agreed upon at the time of sale. That
agent may resell the notes to investors and other purchasers at
a fixed offering price or at prevailing market prices, or prices
related thereto at the time of resale or otherwise, as that
agent determines and as we will specify in the applicable
pricing supplement. An agent may offer the notes it has
purchased as principal to other dealers. That agent may sell the
notes to any dealer at a discount and, unless otherwise
specified in the applicable pricing supplement, the discount
allowed to any dealer will not be in excess of the discount that
agent will receive from us. After the initial public offering of
securities that an agent is to resell on a fixed public offering
price basis, the agent may change the public offering price,
concession and discount.
Each of the agents may be deemed to be an
“underwriter” within the meaning of the Securities Act
of 1933. We and the agents have agreed to indemnify each other
against certain liabilities, including liabilities under the
Securities Act or to contribute to payments made in respect of
those liabilities. We have agreed to reimburse the agents for
specified expenses.
Unless otherwise provided in the applicable pricing supplement,
we do not intend to apply for the listing of the notes on a
national securities exchange, but have been advised by the
agents that they intend to make a market in the notes, as
applicable laws and regulations permit. The agents are not
obligated to do so, however, and the agents may discontinue
making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the notes.
See “Risk Factors — An Absence of A Market for
the Notes May Affect the Liquidity of the Notes” in
the accompanying prospectus.
In order to facilitate the offering of the notes, the agents may
engage in transactions that stabilize, maintain or otherwise
affect the price of the notes. Specifically, the agents may
over-allot in connection with any offering of the notes,
creating a short position in the notes for their own accounts.
In addition, to cover over-allotments or to stabilize the price
of the notes, the agents may bid for, and purchase, the notes in
the open market. Finally, in any offering of the notes through a
syndicate of underwriters, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a
dealer for distributing the notes in the offering if the
syndicate repurchases previously distributed notes 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 notes above
independent market levels. The agents are not required to engage
in these activities, and may end any of these activities at any
time.
In the ordinary course of their respective businesses, certain
of the agents and their affiliates have provided various
financial advisory and other general financing and banking
services to us and AMB Property Corporation and our respective
affiliates, for which they have received compensation. The
agents and their affiliates may continue to provide these or
similar services in the future.
JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan
Securities Inc., is the administrative agent and a lender under
our $550 million credit facility. J.P. Morgan Europe
Limited, an affiliate of J.P. Morgan Securities Inc., is the
administrative agent for alternative currencies under this
credit facility. J.P. Morgan Securities Inc. and Banc of America
Securities LLC are the joint lead arrangers and joint
bookrunners under this credit facility. Bank of America, N.A. is
the syndication agent and a lender under the credit facility.
Each of Eurohypo AG, New York Branch, an affiliate of
Commerzbank Capital Markets Corp., Wachovia Bank,
S-33
N.A., and PNC Bank, National Association, is a documentation
agent and a lender under this credit facility and each of The
Bank of Nova Scotia, acting through its San Francisco agency, an
affiliate of Scotia Capital, and Wells Fargo Bank, N.A, is a
managing agent and a lender under this credit facility.
Bank of America, N.A., is the administrative agent and a lender
under a separate $250 million multicurrency credit
facility. Banc of America Securities Asia Limited is the Hong
Kong dollars agent, Banc of America, N.A., Singapore Branch is
the Singapore dollars agent and Banc of America Securities LLC
is the sole lead arranger and sole book manager under this
credit facility. The Bank of Nova Scotia, an affiliate of Scotia
Capital, is the syndication agent and a lender under this credit
facility.
The Bank of Nova Scotia, an affiliate of Scotia Capital, is also
the documentation agent and a lender under a credit facility for
45.0 billion Yen.
To the extent the proceeds of an offering of the notes are used
to repay borrowings under any of our credit facilities, one or
more of the agents may receive a portion of those proceeds. It
is possible that 10% or more of the net proceeds of an offering
of notes will be applied to the repayment of a loan or loans
made to us by one or more of the agents. Under the Conduct Rules
of the National Association of Securities Dealers, Inc., special
considerations apply to a public offering of securities where
more than 10% of the net proceeds will be paid to a
participating underwriter or any of its affiliates. Therefore,
any such offering will be conducted pursuant to
Rule 2710(c)(8) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
Wachovia Capital Markets, LLC is the trade name for the
corporate and investment banking services of Wachovia
Corporation and its subsidiaries. Any references to
“Wachovia Securities” in this prospectus, however, do
not include Wachovia Securities, Inc., a separate broker-dealer
subsidiary of Wachovia Corporation and sister affiliate of
Wachovia Capital Markets, LLC which may or may not be
participating as a separate selling dealer in the distribution
of the notes.
VALIDITY OF THE SECURITIES
Certain legal matters will be passed upon for us, including the
validity of the issuance of the notes, by Latham &
Watkins LLP, San Francisco, California and by Tamra D.
Browne, Esq., our General Counsel. Certain legal matters
relating to Maryland law will be passed upon for us by Ballard
Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
Certain legal matters will be passed upon for the agents by
Gibson, Dunn & Crutcher LLP, San Francisco,
California.
INCORPORATION OF CERTAIN INFORMATION 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
instead of having to repeat the information in this prospectus.
The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this
information. We incorporate by reference any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d)
of the Exchange Act between the date of the initial registration
statement and prior to effectiveness of the registration
statement and the following documents:
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Annual Report of AMB Property, L.P. on
Form 10-K for the
year ended December 31, 2005 filed on March 13, 2006; |
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Annual Report of AMB Property Corporation on
Form 10-K for the
fiscal year ended December 31, 2005 filed on March 10,
2006, as amended on
Form 10-K/ A filed
on March 16, 2006; |
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Quarterly Report of AMB Property, L.P. on
Form 10-Q for the
quarter ended June 30, 2006 filed on August 8, 2006, as
amended on
Form 10-Q/A filed
on August 9, 2006; |
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Quarterly Report of AMB Property, L.P. on
Form 10-Q for the
quarter ended March 31, 2006 filed on May 10, 2006; |
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Quarterly Report of AMB Property Corporation on
Form 10-Q for the
quarter ended June 30, 2006 filed on August 8, 2006; |
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Quarterly Report of AMB Property Corporation on
Form 10-Q for the
quarter ended March 31, 2006 filed on May 10, 2006; |
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Current Reports of AMB Property, L.P. on
Form 8-K filed on
January 5, 2006, February 22, 2006, March 24,
2006, June 7, 2006, June 19, 2006, June 21, 2006,
June 29, 2006 and July 3, 2006; |
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Current Reports of AMB Property Corporation on
Form 8-K filed on
January 5, 2006, February 22, 2006, March 24,
2006, June 7, 2006, June 19, 2006, June 21, 2006,
June 29, 2006 and July 3, 2006; |
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Item 8.01 of the Current Reports of AMB Property
Corporation on
Form 8-K filed on
January 24, 2006, April 12, 2006 (as amended on
form 8-K/ A filed
on May 10, 2006) and July 12, 2006; |
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AMB Property Corporation’s definitive proxy statement with
respect to the 2006 Annual Meeting of Stockholders filed on
March 30, 2006; and |
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all documents filed by either AMB Property, L.P. or AMB Property
Corporation with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) on or after the date of this
prospectus and prior to the termination of the offering (but
excluding any documents or portions of documents which are
deemed “furnished” and not filed with the SEC). |
We will furnish without charge to you, upon written or oral
request, a copy of any or all of the documents incorporated by
reference, including exhibits to these documents. You should
direct any requests for documents to:
AMB Property, L.P.
AMB Property Corporation
Attn: Investor Relations
Pier 1, Bay 1
San Francisco, CA 94111
(415) 394-9000
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PROSPECTUS
$500,000,000
AMB Property, L.P.
Debt Securities
Guarantees by AMB Property Corporation
AMP Property, L.P., a Delaware limited partnership, may
offer, from time to time, its debt securities in one or more
series, which may be either senior or subordinated, at prices
and on terms that it will determine at the time of offering,
with an aggregate public offering price of up to $500,000,000
(or its equivalent in foreign currencies or composite
currencies). AMB Property Corporation, a Maryland corporation,
may unconditionally guarantee the payment obligations on the
debt securities on the terms described in this prospectus and in
the applicable supplement to this prospectus.
The specific terms of any debt securities offered will be
included in a supplement to this prospectus. You should read
this prospectus and the applicable supplement carefully before
you invest.
We will provide specific terms of the offering in
supplements to this prospectus. You should read this prospectus
and any prospectus supplement carefully before you invest in any
of our securities.
Investing in the Debt Securities involves risk. See
“Risk Factors” beginning on page 1.
This prospectus may not be used to offer or sell any
securities unless accompanied by a prospectus supplement.
Neither the securities and exchange commission nor any
state securities commission has approved or disapproved of these
securities or determined if this Prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is July 5, 2006.
TABLE OF CONTENTS
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You should rely only on the information contained or
incorporated by reference in this prospectus and any prospectus
supplement. We have not authorized anyone else to provide you
with different or additional information. We are offering to
sell these debt securities and seeking offers to buy these debt
securities only in jurisdictions where offers and sales are
permitted.
Neither we nor the agents claim that the information contained
in this prospectus or the applicable prospectus supplement is
accurate as of any date other than the dates on their respective
covers.
We have not authorized any dealer or other person to give any
information or to make any representation other than those
contained or incorporated by reference in this prospectus and
any accompanying supplement to this prospectus. You must not
rely upon any information or representation not contained or
incorporated by reference in this prospectus or any accompanying
supplement to this prospectus. This prospectus and any
accompanying supplement to this prospectus do not constitute an
offer to sell or the solicitation of an offer to buy any
securities other than the registered securities to which they
relate, nor do this prospectus and any accompanying supplement
to this prospectus constitute an offer to sell or the
solicitation of an offer to buy securities in any jurisdiction
to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. You should not assume that
the information contained in this prospectus and any
accompanying supplement to this prospectus is accurate on any
date subsequent to the date set forth on the front of the
document or that any information we have incorporated by
reference is correct on any date subsequent to the date of the
document incorporated by reference, even though this prospectus
and any accompanying supplement to this prospectus is delivered
or securities are sold on a later date.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission, or SEC, using
a “shelf” registration process. Under this shelf
process, we may sell the debt securities described in this
prospectus in one or more offerings up to a total dollar amount
of $500,000,000. This prospectus sets forth certain terms of the
debt securities that we may offer.
Each time we offer debt securities, we will attach a prospectus
supplement to this prospectus. The supplement will contain the
specific description of the debt securities we are then offering
and the terms of the offering. The supplement will supersede
this prospectus to the extent it contains information that is
different from the information contained in this prospectus.
It is important for you to read and consider all information
contained in this prospectus and the applicable prospectus
supplement in making your investment decision. You should also
read and consider the information contained in the documents
identified in “Where You Can Find More Information” in
this prospectus.
Unless otherwise indicated or unless the context requires
otherwise, all references in this prospectus to “we”,
“us” or “our” mean AMB Property Corporation,
AMB Property, L.P. and our respective subsidiaries.
RISK FACTORS
You should carefully consider the specific risks set forth under
the caption “Risk Factors” in the applicable
prospectus supplement and under the caption “Risk
Factors” in any of our filings with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 incorporated by reference herein before
making an investment decision, as well as the following risk
factors before investing in any debt securities offered by this
prospectus or an accompanying prospectus supplement. For more
information, see “Where You Can Find More Information.”
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The debt securities will be effectively subordinated to
our secured debt and the guarantees will be structurally
subordinated and, as a result, other creditors may be entitled
to repayment before our assets are available to satisfy our
obligations under the debt securities and the guarantees. |
The debt securities will be effectively subordinated to our
mortgages and other secured indebtedness, which encumber certain
of our assets, and to all of the indebtedness of our
subsidiaries. As a result, in the event of our bankruptcy or
liquidation, any holders of our mortgages or other secured
indebtedness would be entitled to be repaid in full before our
assets would be available to satisfy our obligations on the debt
securities, and in the event of a bankruptcy or liquidation of
any of our subsidiaries, the creditors of that subsidiary would
be entitled to be repaid in full before any assets of that
subsidiary would be available to satisfy our obligations on the
debt securities. In addition, the guarantee of any debt
securities by AMB Property Corporation will be effectively
subordinated to all of the mortgages and other secured
indebtedness of AMB Property Corporation and all of the
indebtedness of its subsidiaries, including AMB Property, L.P.
Further, AMB Property Corporation’s only significant asset
is its ownership interest in AMB Property, L.P. As of
March 31, 2006, the total outstanding indebtedness for AMB
Property, L.P., its subsidiaries and the other subsidiaries of
AMB Property Corporation was approximately $3.7 billion of
which approximately $1.9 billion was secured. Approximately
$1.4 billion of this secured debt is non-recourse secured
debt of consolidated joint ventures. Subject to certain
limitations, AMB Property, L.P. and AMB Property Corporation may
each incur additional indebtedness. Although AMB Property
Corporation’s board of directors has adopted a policy of
limiting AMB Property Corporation’s
debt-to-total market
capitalization ratio to approximately 45% or less, neither AMB
Property Corporation’s nor AMB Property, L.P.’s
organizational documents limit the amount of indebtedness that
each may incur. In addition, the aggregate amount of
indebtedness that we and AMB Property Corporation may incur
under this policy varies directly with the valuation of AMB
Property Corporation’s capital stock and the number of
shares of its capital stock outstanding. Accordingly, we and AMB
Property Corporation would be able to incur additional
indebtedness as a result of increases in the market price per
share of AMB Property Corporation’s capital stock.
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The guarantees of the debt securities by AMB Property
Corporation could be voided. |
AMB Property Corporation’s obligations under its guarantees
of the debt securities issued under this prospectus may be
subject to review under state or federal fraudulent transfer
laws in the event of AMB Property Corporation’s bankruptcy
or other financial difficulty. Under those laws, in a lawsuit by
an unpaid creditor or representative of creditors of AMB
Property Corporation, such as a trustee in bankruptcy, if a
court were to find that when AMB Property Corporation entered
into the guarantees, it received less than fair consideration or
reasonably equivalent value for the guarantees and either:
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was insolvent; |
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was rendered insolvent; |
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was engaged in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital; |
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intended to incur or believed that it would incur debts beyond
its ability to pay as the debts matured; or |
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entered into the guarantees with actual intent to hinder, delay
or defraud its creditors, |
then the court could void the guarantees and AMB Property
Corporation’s obligations under the guarantees, and direct
the return of any amounts paid under the guarantees to AMB
Property Corporation or to a fund for the benefit of its
creditors. Furthermore, to the extent that AMB Property
Corporation’s obligations under the guarantees of the debt
securities exceed the actual benefit that it receives from the
issuance of the debt securities, AMB Property Corporation may be
deemed not to have received fair consideration or reasonably
equivalent value from the guarantees. As a result, the
guarantees and AMB Property Corporation’s obligations under
the guarantees may be void. The measure of insolvency for
purposes of the factors above will vary depending on the law of
the jurisdiction being applied. Generally, however, an entity
would be considered insolvent if the sum of its debts (including
contingent or unliquidated debts) is greater than all of its
property at a fair valuation or if the present fair saleable
value of its assets is less than the amount that will be
required to pay its probable liability on its existing debts as
they become absolute and matured.
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An absence of a market for the debt securities may affect
the liquidity of the debt securities. |
Unless we specify otherwise in the related prospectus
supplement, each series of debt securities offered will be a new
issue with no established trading market. We may elect to list
any series of debt securities on any exchange, but we are not
obligated to do so. It is possible that one or more underwriters
may make a market in a series of offered debt securities, but
will not be obligated to do so and may discontinue any market
making at any time without notice. If an active market for a
series of debt securities does not develop, the market price and
liquidity of that series of debt securities may be materially
and adversely affected. We cannot assure you that an active
market for the debt securities will develop. The liquidity of,
and trading market for, the debt securities may also be
materially and adversely affected by declines in the market for
debt securities generally. Such a decline may materially and
adversely affect the liquidity and trading of the debt
securities independent of our financial performance and
prospects.
FORWARD-LOOKING STATEMENTS
Some of the information included and incorporated by reference
in this prospectus and the accompanying prospectus supplement
contains forward-looking statements, which are made pursuant to
the safe-harbor provisions of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Because these
forward-looking statements involve risks and uncertainties,
there are important factors that could cause our actual results
to differ materially from those in the forward-looking
statements, and you should not rely on the forward-looking
statements as predictions of future events. The events or
circumstances reflected in forward-looking statements might not
occur. You can identify forward-looking statements by the use of
forward-looking terminology such as “believes,”
“expects,” “may,” “will,”
“should,” “seeks,”
“approximately,” “intends,”
“plans,” “pro forma,” “estimates”
or “anticipates,” or
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the negative of these words and phrases, or similar words or
phrases. You can also identify forward-looking statements by
discussions of strategy, plans or intentions. Forward-looking
statements should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indicators of whether, or the time at which, such performance or
results will be achieved. There is no assurance that the events
or circumstances reflected in forward-looking statements will
occur or be achieved. Forward-looking statements are necessarily
dependent on assumptions, data or methods that may be incorrect
or imprecise and we may not be able to realize them.
The following factors, among others, could cause actual results
and future events to differ materially from those set forth or
contemplated in the forward-looking statements:
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changes in general economic conditions or in the real estate
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defaults on or non-renewal of leases by customers or renewal at
lower than expected rent; |
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difficulties in identifying properties to acquire and in
effecting acquisitions on advantageous terms and the failure of
acquisitions to perform as we expect; |
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risks and uncertainties affecting property development and
renovation (including construction delays, cost overruns, our
inability to obtain necessary permits and financing, and public
opposition to these activities); |
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risks of doing business internationally, including unfamiliarity
with new markets and currency risks; |
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a downturn in the U.S., California, or the global economy or
real estate conditions; |
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losses in excess of our insurance coverage; |
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our failure to divest of properties on advantageous terms or to
timely reinvest proceeds from any such divestitures; |
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unknown liabilities acquired in connection with acquired
properties or otherwise; |
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risks associated with using debt to fund acquisitions and
development, including re-financing risks; |
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our failure to obtain necessary financing; |
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changes in local, state and federal regulatory requirements; |
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increases in real property tax rates; |
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increases in interest rates and operating costs or greater than
expected capital expenditures; |
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environmental uncertainties; and |
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our failure to maintain our status as a real estate investment
trust under the Internal Revenue Code of 1986, as amended. |
Our success also depends upon economic trends generally, various
market conditions and fluctuations and those other risk factors
discussed under the heading “Risk Factors” and
elsewhere in the most recent annual report on
Form 10-K and
subsequent quarterly reports on
Form 10-Q for AMB
Property, L.P. and AMB Property Corporation and in our other
filings with the SEC that are incorporated by reference in this
prospectus and the accompanying prospectus supplement. We
caution you not to place undue reliance on forward-looking
statements, which reflect our analysis only and speak as of the
date of this prospectus or the accompanying prospectus
supplement, as applicable, or as of the dates indicated in the
statements. We assume no obligation to update or supplement
forward-looking statements.
AMB PROPERTY, L.P. AND AMB PROPERTY CORPORATION
AMB Property, L.P., a Delaware limited partnership, acquires,
develops and operates industrial properties in key distribution
markets throughout North America, Europe and Asia. We use the
terms “industrial properties” or “industrial
buildings” to describe various types of industrial
properties in our
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portfolio and use these terms interchangeably with the
following: logistics facilities, centers or warehouses;
distribution facilities, centers or warehouses; High Throughput
Distribution®
(HTD®)
facilities; or any combination of these terms.
We commenced operations shortly before the consummation of AMB
Property Corporation’s initial public offering on
November 26, 1997. Our strategy focuses on providing
properties for customers who value the efficient movement of
goods in the world’s busiest distribution markets: large,
supply-constrained locations with proximity to airports,
seaports and major highway systems.
As of March 31, 2006, AMB Property Corporation owned an
approximate 95.3% general partnership interest in us, excluding
preferred units. As our sole general partner, AMB Property
Corporation has the full, exclusive and complete responsibility
for and discretion in our
day-to-day management
and control.
Our investment strategy generally targets customers whose
businesses are tied to global trade, which, according to the
World Trade Organization, has grown more than three times the
world gross domestic product growth rate during the last
20 years. To serve the facilities needs of these customers,
we seek to invest in major distribution markets, transportation
hubs and gateways, both in the U.S. and internationally. Our
investment strategy targets markets that are generally
characterized by large population densities and typically offer
substantial consumer bases, proximity to large clusters of
distribution-facility users and significant labor pools.
Our strategy is to become a leading provider of industrial
properties in supply-constrained submarkets located near key
international passenger and cargo airports, highway systems and
seaports in major metropolitan areas of North America, Europe
and Asia. These submarkets are generally tied to global trade.
Further, we focus on
HTD®
facilities, which are buildings designed to facilitate the rapid
distribution of our customers’ products rather than storage
of goods. Our investment focus on
HTD®
assets is based on what we believe to be a global trend toward
lower inventory levels and expedited supply chains.
HTD®
facilities generally have a variety of physical characteristics
that allow for the rapid transport of goods from
point-to-point. These
physical characteristics could include numerous dock doors,
shallower building depths, fewer columns, large truck courts and
more space for trailer parking. We believe that these building
characteristics represent an important success factor for
time-sensitive customers such as air express, logistics and
freight forwarding companies, and that these facilities function
best when located in convenient proximity to transportation
infrastructure, such as major airports and seaports.
Our own employees perform our corporate administrative and
management functions, rather than our relying on an outside
manager for these services. We manage our portfolio of
properties in a flexible operating model which includes both
direct property management and a Strategic Alliance
Program®
in which we have established relationships with third-party real
estate management firms, brokers and developers that provide
property-level administrative and management services under our
direction.
Our principal executive office is located at Pier 1,
Bay 1, San Francisco, California 94111; our telephone
number is (415) 394-9000. We maintain regional offices in
Amsterdam, Boston, Chicago, Los Angeles, New Jersey,
Shanghai, Singapore, Tokyo and Vancouver. Our website address is
www.amb.com. Information contained on our website is not
and should not be deemed a part of this prospectus or any other
prospectus or filing filed with the SEC.
USE OF PROCEEDS
Unless we indicate otherwise in the applicable prospectus
supplement, we intend to use the net proceeds from the sale of
debt securities offered by this prospectus for general corporate
purposes, which may include the acquisition or development of
additional properties, the repayment of indebtedness, including
inter-company indebtedness, the redemption or other repurchase
of outstanding securities, capital expenditures and increasing
our working capital. Pending the application of the net
proceeds, we may invest the proceeds in short-term securities or
temporarily reduce borrowings under revolving credit facilities.
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RATIOS OF EARNINGS TO FIXED CHARGES
AMB Property Corporation’s ratios of earnings to fixed
charges for the three-month period ended March 31, 2006 and
for each of the previous five years ended December 31 were
as follows:
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Ratio of earnings to fixed charges
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1.4 |
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1.7 |
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AMB Property, L.P.’s ratios of earnings to fixed charges
for the three-month period ended March 31, 2006 and for
each of the previous five years ended December 31 were as
follows:
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Year Ended December 31, | |
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Ratio of earnings to fixed charges
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1.4 |
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1.7 |
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We and AMB Property Corporation have computed the ratios of
earnings to fixed charges by dividing fixed charges, excluding
capitalized interest, plus income from continuing operations
including income from minority interests which have fixed
charges and including distributed operating income from
unconsolidated joint ventures instead of income from
unconsolidated joint ventures, by fixed charges. Fixed charges
consist of interest costs, whether expensed or capitalized, the
interest component of rental expense, amortization of debt
issuance costs and preferred dividends of subsidiaries not
eliminated in consolidation.
DESCRIPTION OF DEBT SECURITIES
You can find the definitions of certain capitalized terms used
in this description under the subheading
“Definitions.” In this description, the
“Operating Partnership” refers only to AMB Property,
L.P. and not to any of its subsidiaries and the
“Company” refers only to AMB Property Corporation and
not to any of its subsidiaries.
General
The debt securities will be direct, non-convertible, obligations
of the Operating Partnership, which may be secured or unsecured,
and which may be senior or subordinated indebtedness of the
Operating Partnership. The Operating Partnership will issue the
debt securities under an Indenture dated as of June 30,
1998, as amended or supplemented from time to time, among the
Operating Partnership, the Company and U.S. Bank National
Association, as
successor-in-interest
to State Street Bank and Trust Company of California, N.A., as
trustee (together with any other trustee(s) appointed in a
supplemental indenture with respect to a particular series of
debt securities, the “trustee”). The indenture is
subject to, and governed by, the Trust Indenture Act of
1939, as amended. The statements made in this section relating
to the indenture and the debt securities are summaries of
certain provisions of the debt securities and the indenture.
These summaries are not complete. For more detail you should
refer to the indenture, which we have filed as an exhibit to the
registration statement of which this prospectus is a part.
Term
We will describe the particular terms of the debt securities
offered by a prospectus supplement in the applicable prospectus
supplement, along with any applicable modifications of or
additions to the general terms of the debt securities as
described in this prospectus. Accordingly, for a description of
the terms of any series of debt securities, you must refer to
both the prospectus supplement relating to that series and the
description of the debt securities set forth in this prospectus.
A prospectus supplement may change any of the terms of the debt
securities described in this prospectus.
The Operating Partnership may offer under this prospectus up to
$500,000,000 (or its equivalent in another currency based on the
exchange rate at the time of sale) aggregate principal amount of
debt securities or if debt securities are issued at a discount,
such principal amount as may be sold for an initial public
offering
5
price of up to $500,000,000. Unless we state otherwise in any
prospectus supplement, the Operating Partnership may issue the
debt securities in one or more series, as established from time
to time by the Operating Partnership. The Operating Partnership
need not issue all debt securities of one series at the same
time and, unless otherwise provided, a series may be reopened,
without the consent of the holders of the debt securities of
that series, for issuances of additional debt securities of that
series.
The Operating Partnership may, but need not, designate more than
one trustee under the indenture, each with respect to one or
more series of debt securities. Any trustee may resign or be
removed with respect to one or more series of debt securities,
and a successor trustee may be appointed to act with respect to
the series. If two or more persons are acting as trustee with
respect to different series of debt securities, each such
trustee will be a trustee of a trust under the indenture
separate and apart from the trust administered by any other
trustee and, except as we state otherwise in this prospectus,
any action to be taken by a trustee may be taken by each trustee
with respect to, and only with respect to, the one or more
series of debt securities for which it is trustee.
The following summaries set forth certain general terms and
provisions of the indenture and the debt securities. The
prospectus supplement relating to the series of debt securities
being offered will contain further terms of the debt securities,
including the following specific terms:
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the title of the debt securities; |
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the limit on the aggregate principal amount of the debt
securities of the series that may be authenticated and delivered
under the indenture; |
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the date or dates, or the method for determining the date or
dates, on which the Operating Partnership will pay the principal
of the debt securities; |
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the rate or rates (which may be fixed or variable), or the
method by which such rate or rates will be determined, at which
the debt securities will bear interest, if any; |
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the date or dates (or the method for determining the date or
dates) from which any interest will accrue, the dates upon which
any interest will be payable and the record dates for payment of
interest (or the method by which the record dates will be
determined); |
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the place or places, if any, other than or in addition to the
Borough of Manhattan, The City of New York, where the
principal of (and premium, if any) and interest, if any, on the
debt securities will be payable, where the debt securities may
be surrendered for conversion or registration of transfer or
exchange and where notices or demands to or upon the Operating
Partnership in respect of the debt securities and the indenture
may be served; |
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any obligation the Operating Partnership has to redeem, repay or
repurchase the debt securities, in whole or in part, at the
option of a holder of the debt securities, and the period or
periods within which, the date or dates on which the price or
prices at which and the terms and conditions upon which the
Operating Partnership will redeem, repay or repurchase the debt
securities; |
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if other than the trustee, the identity of each security
registrar and/or paying agent; |
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any provisions granting special rights to holders of the debt
securities; |
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any deletions from, modifications of, or additions to the events
of default or covenants of the Operating Partnership with
respect to the debt securities, whether or not such events of
default or covenants are consistent with the events of default
or covenants in the indenture; |
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the person to whom any interest will be payable, if other than
the person in whose name the debt security is
registered; and |
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any other terms of the debt securities and any deletions from or
modifications or additions to the indenture in respect of the
debt securities (whether or not consistent with the other
provisions of the indenture). |
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The Operating Partnership may issue debt securities at a
discount below their principal amount and provide for less than
the entire principal amount of the debt securities to be payable
upon declaration of acceleration of maturity. In such cases, we
will describe any material U.S. federal income tax,
accounting and other considerations in the applicable prospectus
supplement.
Denominations And Interest
Unless we specify otherwise in the applicable prospectus
supplement, the debt securities of any series will be issuable
in denominations of $1,000 and integral multiples thereof.
Unless we specify otherwise in the applicable prospectus
supplement, interest on any series of debt securities will be
payable to the person in whose name the security is registered
at the close of business on the record date for such interest at
the office of the Operating Partnership maintained for such
purpose within the City and State of New York. However, unless
we provide otherwise in the applicable prospectus supplement,
the Operating Partnership may make interest payments by check
mailed to the address of the person entitled to the interest as
it appears in the applicable register for debt securities or by
wire transfer of funds to such person at an account maintained
within the United States.
Global Notes
Unless we specify otherwise in the applicable prospectus
supplement, the debt securities of each series will be issued in
the form of one or more fully registered book-entry debt
securities of such series (each, a “Global Note”) that
will be deposited with, or on behalf of The Depository Trust
Company, New York, New York, or DTC. Global Notes will be
issued in fully registered form.
The Operating Partnership anticipates that the Global Notes will
be deposited with, or on behalf of, DTC and that such Global
Note will be registered in the name of Cede & Co.,
DTC’s nominee. Unless we specify otherwise in the
applicable prospectus supplement, the Operating Partnership
further anticipates that the following provisions will apply to
the depository arrangements with respect to the Global Notes.
So long as DTC or its nominee is the registered owner of the
Global Notes, DTC or its nominee, as the case may be, will be
considered the sole holder of the debt securities represented by
the Global Note for all purposes under the indenture. Except as
described below, owners of beneficial interests in the Global
Notes will not be entitled to have debt securities represented
by such Global Note registered in their names, will not receive
or be entitled to receive physical delivery of debt securities
in certificated form and will not be considered the owners or
holders of the debt securities under the indenture. The laws of
some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in certificated form;
accordingly, such laws may limit the transferability of
beneficial interests in the Global Notes.
The Global Notes will be exchangeable for certificated debt
securities only if:
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DTC notifies the Operating Partnership that it is unwilling or
unable to continue as depository or DTC ceases to be a clearing
agency registered under the Exchange Act (if so required by
applicable law or regulation) and, in either case, a successor
depository is not appointed by the Operating Partnership within
90 days after the Operating Partnership receives such
notice or becomes aware of such ineligibility; |
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the Operating Partnership in its sole discretion determines that
the Global Notes shall be exchangeable for certificated debt
securities; or |
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there shall have occurred and be continuing an event of default
with respect to debt securities of any series under the
indenture and beneficial owners representing a majority in
aggregate principal amount of the debt securities of such series
represented by a Global Note advise DTC to cease acting as
depository. |
Upon any such exchange, owners of a beneficial interest in such
Global Note will be entitled to physical delivery of individual
debt securities of such series in certificated form of like
tenor, terms and rank, equal in principal amount to such
beneficial interest, and to have such debt securities in
certificated form registered in
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the names of the beneficial owners, which names are expected to
be provided by DTC’s relevant participants (as identified
by DTC) to the trustee. Debt securities so issued in
certificated form will be issued in denominations of $1,000 or
any integral multiple thereof, and will be issued in registered
form only, without coupons.
The following is based on information furnished to us by DTC:
DTC will act as securities depository for the debt securities.
The debt securities will be issued as fully registered
securities registered in the name of Cede & Co.
(DTC’s partnership nominee) or such other name as may be
requested by an authorized representative of DTC. One fully
registered certificate will be issued with respect to each
$500 million (or such other amount as shall be permitted by
DTC from time to time) of principal amount of each series of
debt securities, and additional certificates will be issued with
respect to any remaining principal amounts.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a “banking organization” within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a “clearing corporation” within the
meaning of the New York Uniform Commercial Code, and a
“clearing agency” registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants (“participants”)
deposit with DTC. Direct participants include securities brokers
and dealers, banks, trust companies, clearing corporations and
certain other organizations (“direct participants”).
DTC also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry
changes in participants’ accounts, thereby eliminating the
need for physical movement of securities certificates. DTC is a
wholly-owned subsidiary of The Depository Trust &
Clearing Corporation, which in turn is owned by a number of
DTC’s direct participants and members of the National
Securities Clearing Corporation, Fixed Income Clearing
Corporation and Emerging Markets Clearing Corporation, as well
as by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to
others, such as securities brokers and dealers, and banks and
trust companies, and clearing corporations that clear through or
maintain a custodial relationship with a direct participant,
either directly or indirectly (“indirect
participants”). The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of debt securities under the DTC system must be made
by or through direct participants, which will receive a credit
for the debt securities on DTC’s records. The ownership
interest of each actual purchaser of each debt security
(“beneficial owner”) is in turn recorded on the direct
and indirect participants’ records. A beneficial owner does
not receive written confirmation from DTC of its purchase, but
is expected to receive a written confirmation providing details
of the transaction, as well as periodic statements of its
holdings, from the direct or indirect participant through which
such beneficial owner entered into the transaction. Transfers of
ownership interests in debt securities are accomplished by
entries made on the books of direct and indirect participants
acting on behalf of beneficial owners. Beneficial owners do not
receive certificates representing their ownership interests in
debt securities, except under the circumstances described above.
To facilitate subsequent transfers, the debt securities are
registered in the name of DTC’s nominee, Cede &
Co. or such other name as may be requested by an authorized
representative of DTC. The deposit of the debt securities with
DTC and their registration in the name of Cede & Co.
will effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the debt
securities; DTC records reflect only the identity of the direct
participants to whose accounts debt securities are credited,
which may or may not be the beneficial owners. The participants
remain responsible for keeping account of their holdings on
behalf of their customers.
Delivery of notices and other communications by DTC to direct
participants, by direct participants to indirect participants,
and by direct participants and indirect participants to
beneficial owners are governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
8
Neither DTC nor Cede & Co. consents or votes with
respect to the debt securities unless authorized by a direct
participant in accordance with DTC’s procedures. Under its
usual procedures, DTC mails a proxy (an “omnibus
proxy”) to the issuer as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.’s
consenting or voting rights to those direct participants to
whose accounts the debt securities are credited on the record
date (identified on a list attached to the omnibus proxy).
Principal payments, premium payments, if any, and interest
payments, if any, on the debt securities will be made to
Cede & Co. or such other nominee as may be requested by
an authorized representative of DTC. DTC’s practice is to
credit direct participants’ accounts on the payment date in
accordance with their respective holdings as shown on DTC’s
records upon receipt of the funds. Payments by direct and
indirect participants to beneficial owners are governed by
standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer
form or registered in “street name” and are the
responsibility of such direct and indirect participants and not
of DTC, the trustee or the Operating Partnership, subject to any
statutory or regulatory requirements as may be in effect from
time to time. Payment of principal (and premium, if any) and
interest, if any, to Cede & Co. (or such other nominee
as may be requested by an authorized representative of DTC) is
the responsibility of the Operating Partnership or the trustee,
disbursement of such payments to direct participants is the
responsibility of DTC, and disbursement of such payments to the
beneficial owners is the responsibility of direct and indirect
participants.
If applicable, redemption notices shall be sent to DTC. If less
than all of the debt securities of any series represented by the
Global Notes are being redeemed, DTC’s practice is to
determine by lot the amount of the interest of each direct
participant in such issue to be redeemed.
DTC may discontinue providing its services as securities
depository with respect to the debt securities of any series at
any time by giving reasonable notice to the Operating
Partnership or the trustee. Under such circumstances, in the
event that a successor securities depository is not appointed,
certificates are required to be printed and delivered as
described above.
The Operating Partnership may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor
securities depository). In that event, certificates will be
printed and delivered as described above.
None of the Operating Partnership, the Company, the
underwriters, the trustee, or any applicable paying agent will
have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
interests in the debt securities, or for maintaining,
supervising or reviewing any records relating to such beneficial
interest.
Notices or demands to or upon the Operating Partnership in
respect of the debt securities and the indenture may be served
and, in the event that debt securities are issued in definitive
certificated form, debt securities may be surrendered for
payment, registration of transfer or exchange, at the office or
agency of the Operating Partnership maintained for such purpose
in the Borough of Manhattan, The City of New York, which shall
initially be the office of State Street Bank and Trust Company,
an affiliate of the trustee, which on the date of this
Prospectus is located at 61 Broadway, 15th Floor, New York,
New York.
Guarantees
Unless we specify otherwise in the applicable prospectus
supplement, the indenture provides that the Operating
Partnership’s obligations under the debt securities will be
guaranteed by the Company. The obligations of the Company under
any guarantee will be limited to the maximum amount permitted
under applicable federal or state law. A supplemental indenture
establishing the terms of a particular series of debt securities
may provide that such series will not be guaranteed by the
Company.
Merger, Consolidation Or Sale Of Assets
Unless we specify otherwise in the applicable prospectus
supplement, the indenture provides that the Operating
Partnership will not, in any transaction or series of related
transactions, consolidate with, or sell,
9
lease, assign, transfer or otherwise convey all or substantially
all of its assets to, or merge with or into any other person
unless:
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either the Operating Partnership is the continuing person or the
successor person (if other than the Operating Partnership) is a
corporation, partnership, limited liability company or other
entity organized and existing under the laws of the United
States of America or a State of the United States of America or
the District of Columbia and expressly assumes the Operating
Partnership’s obligations on the debt securities and under
the indenture; |
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immediately after giving effect to the transaction and treating
any Debt (including Acquired Debt) which becomes an obligation
of the Operating Partnership or any of its affiliates as a
result of such transaction as having been incurred by the
Operating Partnership or such affiliate at the time of such
transaction, no event of default under the indenture, and no
event which, after notice or lapse of time, or both, would
become an event of default, shall have occurred and be
continuing; and |
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the Operating Partnership delivers to the trustee an
officers’ certificate and legal opinion covering these
conditions. |
In the event that the Operating Partnership is not the
continuing person, then, for purposes of the second bullet point
above, the successor person will be deemed to be the Operating
Partnership.
Upon any such merger, consolidation, sale, assignment, transfer,
lease or conveyance in which the Operating Partnership is not
the continuing legal entity, the successor entity formed by the
consolidation or into which the Operating Partnership is merged
or to which the sale, assignment, transfer, lease or other
conveyance is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Operating Partnership
under the indenture with the same effect as if the successor
entity has been named as the Operating Partnership in the
indenture and the Operating Partnership will be released (except
in the case of a lease) from its obligations under the indenture
and the debt securities.
The indenture provides that the Company, as guarantor of a
series of debt securities, and any other guarantor, will not, in
any transaction or series of transactions, consolidate with, or
sell, lease, assign, transfer or otherwise convey all or
substantially all of its assets to, or merge with or into any
other person unless:
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either such guarantor is the continuing person or the successor
person (if other than such guarantor) is a corporation,
partnership, limited liability company or other entity organized
and existing under the laws of the United States of America or a
State of the United States of America or the District of
Columbia and expressly assumes such guarantor’s obligations
with respect to the debt securities and the observance of all of
the covenants and conditions contained in the indenture and its
guarantee; |
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immediately after giving effect to the transaction, no event of
default, and no event which, after notice or lapse of time, or
both, would become an event of default, shall have occurred and
shall be continuing; and |
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such guarantor delivers to the trustee an officers’
certificate and legal opinion covering compliance with these
conditions. |
In the event that such guarantor is not the continuing
corporation, then, for purposes of the second bullet point
above, the successor corporation will be deemed to be such
guarantor.
Any consolidation, merger, sale, lease, assignment, transfer or
conveyance permitted above is also subject to the condition
precedent that the trustee receive an officers’ certificate
and legal opinion to the effect that any such consolidation,
merger, sale, lease, assignment, transfer or conveyance, and the
assumption by any successor corporation, complies with the
provisions of the indenture and that all conditions precedent
provided for in the indenture relating to such transaction have
been complied with.
A supplemental indenture establishing the terms of a particular
series of debt securities may provide that such series will not
be guaranteed by the Company.
10
Certain Covenants
Unless we specify otherwise in the applicable prospectus
supplement, the debt securities will be subject to the following
covenants:
Aggregate Debt Test. The Operating Partnership will not,
and will not permit any of its subsidiaries to, incur any Debt
(including without limitation Acquired Debt) if, immediately
after giving effect to the incurrence of such Debt and the
application of the proceeds from such Debt on a pro forma basis,
the aggregate principal amount of all outstanding Debt of the
Operating Partnership and its subsidiaries (determined on a
consolidated basis in accordance with United States generally
accepted accounting principles) is greater than 60% of the sum
of the following (without duplication):
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the Total Assets of the Operating Partnership and its
subsidiaries as of the last day of the then most recently ended
fiscal quarter; and |
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the aggregate purchase price of any real estate assets or
mortgages receivable acquired, and the aggregate amount of any
securities offering proceeds received (to the extent such
proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Debt) by the Operating
Partnership or any of its subsidiaries since the end of such
fiscal quarter, including the proceeds obtained from the
incurrence of such additional Debt, determined on a consolidated
basis in accordance with United States generally accepted
accounting principles. |
For purposes of the foregoing, Debt will be deemed to be
incurred by the Operating Partnership or a subsidiary whenever
the Operating Partnership or its subsidiary shall create,
assume, guarantee, or otherwise become liable in respect thereof.
Debt Service Test. The Operating Partnership will not,
and will not permit any of its subsidiaries to, incur any Debt
(including without limitation Acquired Debt) if the ratio of
Consolidated Income Available for Debt Service to Annual Debt
Service Charge for the period consisting of the four consecutive
fiscal quarters most recently ended prior to the date on which
such additional Debt is to be incurred shall have been less than
1.5:1 on a pro forma basis after giving effect to the incurrence
of such Debt and the application of the proceeds from such Debt,
and calculated on the following assumptions:
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such Debt and any other Debt (including without limitation
Acquired Debt) incurred by the Operating Partnership or any of
its subsidiaries since the first day of such four-quarter period
had been incurred, and the application of the proceeds from such
Debt (including to repay or retire other Debt) had occurred, on
the first day of such period; |
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the repayment or retirement of any other Debt of the Operating
Partnership or any of its subsidiaries since the first day of
such four-quarter period had occurred on the first day of such
period (except that, in making this computation, the amount of
Debt under any revolving credit facility, line of credit or
similar facility will be computed based upon the average daily
balance of such Debt during such period); and |
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in the case of any acquisition or disposition by the Operating
Partnership or any of its subsidiaries of any asset or group of
assets with a fair market value in excess of $1 million,
since the first day of such four-quarter period, whether by
merger, stock purchase or sale or asset purchase or sale or
otherwise, such acquisition or disposition had occurred as of
the first day of such period with the appropriate adjustments
with respect to such acquisition or disposition being included
in such pro forma calculation. |
If the Debt giving rise to the need to make the calculation
described above or any other Debt incurred after the first day
of the relevant four-quarter period bears interest at a floating
rate, then, for purposes of calculating the Annual Debt Service
Charge, the interest rate on such Debt will be computed on a pro
forma basis by applying the average daily rate which would have
been in effect during the entire four-quarter period to the
greater of the amount of such Debt outstanding at the end of
such period or the average amount of Debt outstanding during
such period. For purposes of the foregoing, Debt will be deemed
to be incurred by the
11
Operating Partnership or a subsidiary whenever the Operating
Partnership or its subsidiary shall create, assume, guarantee,
or otherwise become liable in respect thereof.
Secured Debt Test. The Operating Partnership will not,
and will not permit any of its subsidiaries to, incur any Debt
(including without limitation Acquired Debt) secured by any Lien
on any property or assets of the Operating Partnership or any of
its subsidiaries, whether owned on the date of the indenture or
subsequently acquired, if, immediately after giving effect to
the incurrence of such Debt and the application of the proceeds
from such debt on a pro forma basis, the aggregate principal
amount (determined on a consolidated basis in accordance with
United States generally accepted accounting principles) of all
outstanding Debt of the Operating Partnership and its
subsidiaries which is secured by a Lien on any property or
assets of the Operating Partnership or any of its subsidiaries
is greater than 40% of the sum of (without duplication) the
following:
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the Total Assets of the Operating Partnership and its
subsidiaries as of the last day of the then most recently ended
fiscal quarter; and |
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the aggregate purchase price of any real estate assets or
mortgages receivable acquired, and the aggregate amount of any
securities offering proceeds received (to the extent such
proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Debt) by the Operating
Partnership or any of its subsidiaries since the end of such
fiscal quarter, including the proceeds obtained from the
incurrence of such additional debt, determined on a consolidated
basis in accordance with United States generally accepted
accounting principles. |
For purposes of the foregoing, Debt will be deemed to be
incurred by the Operating Partnership or a subsidiary whenever
the Operating Partnership or its subsidiary shall create,
assume, guarantee, or otherwise become liable in respect thereof.
Maintenance of Total Unencumbered Assets. The Operating
Partnership will not have at any time Total Unencumbered Assets
of less than 150% of the aggregate principal amount of all
outstanding Unsecured Debt of the Operating Partnership and its
subsidiaries determined on a consolidated basis in accordance
with United States generally accepted accounting principles.
Existence. Except as permitted under “Merger,
Consolidation or Sale of Assets,” the Operating Partnership
will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights (charter and
statutory) and franchises. However, the Operating Partnership
will not be required to preserve any right or franchise if the
Board of Directors of the Company determines that the
preservation of the right or franchise is no longer desirable in
the conduct of its business and that the loss of the right or
franchise is not disadvantageous in any material respect to the
holders of the debt securities.
Maintenance of Properties. The Operating Partnership will
cause all of its properties used or useful in the conduct of its
business or the business of any subsidiary to be maintained and
kept in good condition, repair and working order and supplied
with all necessary equipment and cause all necessary repairs,
renewals, replacements, betterments and improvements to be made,
all as in the judgment of the Operating Partnership and the
Company may be necessary in order for the Operating Partnership
to all times properly and advantageously conduct its business in
connection with the properties.
Insurance. The Operating Partnership will, and will cause
each of its subsidiaries to, keep in force upon all of its
properties and operations insurance policies carried with
responsible companies in customary amounts and covering
customary risks in accordance with prevailing market conditions
and availability.
Payment of Taxes and Other Claims. The Operating
Partnership will pay or discharge or cause to be paid or
discharged before it becomes delinquent:
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all taxes, assessments and governmental charges levied or
imposed on it or any subsidiary or on its or any
subsidiary’s income, profits or property; and |
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all lawful claims for labor, materials and supplies that, if
unpaid, might by law become a lien upon its or any
subsidiary’s property. However, the Operating Partnership
will not be required to pay or discharge or cause to be paid or
discharged any tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good
faith by appropriate proceedings. |
Provision of Financial Information. The Operating
Partnership will:
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file with the trustee, within 15 days after the Operating
Partnership or the Company is required to file them with the
SEC, copies of the annual reports and information, documents and
other reports which the Operating Partnership or the Company may
be required to file with the SEC pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Operating
Partnership or the Company is not required to file information,
documents or reports pursuant to those Sections, then the
Operating Partnership will file with the trustee and the SEC, in
accordance with rules and regulations prescribed by the SEC,
such of the supplementary and periodic information, documents
and reports which Section 13 of the Exchange Act may
require with respect to a security listed and registered on a
national securities exchange; |
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file with the trustee and the SEC, in accordance with the rules
and regulations prescribed from time to time by the SEC, any
additional information, documents and reports with respect to
compliance by the Operating Partnership and the Company with the
conditions and covenants of the indenture as such rules and
regulations may require; and |
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transmit to the holders of the debt securities, within
30 days after filing with the trustee, in the manner and to
the extent provided in the Trust Indenture Act of 1939, as
amended, such summaries of any information, documents and
reports required to be filed by the Operating Partnership and
the Company pursuant to the bullet points above as the
SEC’s rules and regulations may require. |
Subsidiary Guarantees. The Operating Partnership will not
permit any of its subsidiaries to guarantee or secure through
the granting of liens, the payment of any Debt of the Operating
Partnership or any guarantor and the indenture also provides
that the Operating Partnership will not and will not permit any
of its subsidiaries to pledge any intercompany notes
representing obligations of any of its subsidiaries, to secure
the payment of any debt of the Operating Partnership or any
guarantor, in each case unless such subsidiary (a
“Subsidiary Guarantor”), the Operating Partnership and
the trustee execute and deliver a supplemental indenture
evidencing such subsidiary’s guarantee providing for the
unconditional guarantee by the subsidiary, on a senior basis, of
the debt securities. If any Subsidiary Guarantor is released
from all of its obligations described above, it will also be
released from its unconditional guarantee.
Deletions, Modifications or Additions. We will specify in
the applicable prospectus supplement any deletions of,
modifications of, or additions to the covenants described above
with respect to any series of debt securities.
Events Of Default, Notice And Waiver
Unless we specify otherwise in the applicable prospectus
supplement, the indenture provides that the following events are
“events of default” with respect to any series of debt
securities issued under the indenture:
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default in the payment of any interest upon any debt security of
that series when such interest becomes due and payable, and
continuance of that default for a period of 30 days; |
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default in the payment of principal of or premium, if any, on
any debt security of that series when due and payable; |
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default in the performance or breach of any covenant or warranty
of the Operating Partnership in the indenture with respect to
any debt security of that series (other than a covenant or
warranty the default or breach of which is specifically dealt
with in the indenture or that has been included in the indenture
solely for the benefit of a series of debt securities other than
that series), which default continues uncured for a period of
60 days after receipt of written notice as provided in the
indenture; |
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default by the Operating Partnership or any subsidiary of the
Operating Partnership in the payment (whether at stated
maturity, upon acceleration, upon required prepayment or
otherwise), beyond any grace period, of any principal of or
interest on any bond, note, debenture or other evidence of
indebtedness; or |
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any other breach or default (or other event or condition) under
any agreement, indenture or instrument relating to any such
bond, security, debenture or other evidence of indebtedness
beyond any cure period, if as a result, the holder or holders of
any such bond, security, debenture or other evidence of
indebtedness has the immediate right to cause any such
instrument to become or be declared due and payable, or required
to be prepaid, redeemed, purchased or defeased (or an offer of
prepayment, redemption, purchase or defeasance be made), prior
to its stated maturity (other than by a scheduled mandatory
prepayment), |
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which in the aggregate under the bullet points above have a
principal amount equal to or greater than $20,000,000 without
such instrument having been discharged, or such breach or
default having been cured, within a period of 10 days after
the notice specified in the indenture has been provided; |
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certain events of bankruptcy, insolvency or reorganization with
respect to the Operating Partnership, the Company or any
significant subsidiary of the Operating Partnership (as defined
in Regulation S-X
under the Securities Act); and |
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any other event of default provided with respect to debt
securities of that series that is described in the applicable
prospectus supplement. |
A supplemental indenture establishing the terms of a particular
series of debt securities may delete, modify or add to the
events of default described above.
No event of default with respect to a particular series of debt
securities necessarily constitutes an event of default with
respect to any other series of debt securities. The occurrence
of an event of default may constitute an event of default under
our bank credit agreements in existence from time to time. In
addition, the occurrence of certain events of default or an
acceleration under the indenture may constitute an event of
default under certain of our other indebtedness outstanding from
time to time.
If an event of default with respect to debt securities of any
series at the time outstanding occurs and is continuing, then
the trustee or the holders of 25% in principal amount of the
outstanding debt securities of that series may, by a notice in
writing to us (and to the trustee if given by the holders),
declare all debt securities of that series to be due and payable
immediately.
At any time after a declaration of acceleration with respect to
debt securities of any series has been made, but before a
judgment or decree for payment of the money due has been
obtained by the trustee, the holders of a majority in principal
amount of the outstanding debt securities of that series may
rescind and annul the declaration of acceleration and its
consequences if:
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the Operating Partnership has paid or deposited with the trustee
a sum sufficient to pay: |
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all overdue installments of interest on all outstanding debt
securities of that series; |
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the principal of (and premium, if any, on) any outstanding debt
securities of that series which have become due otherwise than
by such declaration of acceleration, and interest thereon at the
rates provided for in such debt securities; |
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to the extent lawful, interest upon overdue installments of
interest at the rate or rates provided in such debt securities;
and |
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all sums paid or advanced by the trustee under the indenture and
reasonable compensation, expenses, disbursements and the
advances of the trustee, its agents and counsel; and |
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all events of default with respect to debt securities of that
series, other than the nonpayment of the principal of (or
premium, if any) or interest on debt securities of that series
which have become due solely by such declaration of
acceleration, have been cured or waived. |
The indenture also provides that the holders of a majority in
principal amount of the outstanding debt securities of any
series may on behalf of the holders of all debt securities of
such series waive any past default under the indenture with
respect to such debt securities and its consequences, except a
default:
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in the payment of the principal of (or premium, if any) or
interest on or payable in respect of any debt security of such
series; or |
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in respect of a covenant or provision of the indenture which
cannot be modified or amended without the consent of the holder
of each outstanding debt security of such series affected. |
If the trustee knows of a default with respect to the debt
securities of any series, the indenture requires the trustee,
within 90 days after the default, to give notice to the
holders of such debt securities, unless such default shall have
been cured or waived. However the trustee may withhold notice to
the holders of any debt securities of such series of any default
(except a default in the payment of the principal of (or
premium, if any) or interest, if any, on any debt security of
such series) if the trustee determines such withholding is in
the interest of such holders.
The indenture provides that the trustee will be under no
obligation to exercise any of its rights or powers under the
indenture at the request of any holders of outstanding debt
securities, unless the holders offer the trustee security or
indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in
compliance with such request. Subject to certain rights of the
trustee, the holders of a majority in principal amount of the
outstanding debt securities of any series will have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the trustee or exercising any trust
or power conferred on the trustee with respect to the debt
securities of that series.
No holder of any debt security of any series will have any right
to institute any proceeding, judicial or otherwise, with respect
to the indenture or for the appointment of a receiver or
trustee, or for any remedy under the indenture, unless:
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that holder has previously given to the trustee written notice
of a continuing event of default with respect to debt securities
of that series; and |
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the holders of not less than 25% in principal amount of the
outstanding debt securities of that series have made written
request, and offered reasonable indemnity, to the trustee to
institute the proceeding as trustee, and the trustee has not
received from the holders of a majority in principal amount of
the outstanding debt securities of that series a direction
inconsistent with that request and has failed to institute the
proceeding within 60 days. |
Notwithstanding the foregoing, the holder of any debt security
will have an absolute and unconditional right to receive payment
of the principal of, premium and any interest on that debt
security on or after the due dates expressed in that debt
security and to institute suit for the enforcement of payment.
The indenture requires the Operating Partnership, within
120 days after the end of each fiscal year, to furnish to
the trustee a statement as to compliance with the indenture.
Further, upon any request by the Operating Partnership to take
any action under the indenture, the Operating Partnership will
furnish to the trustee:
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an officers’ certificate stating that all conditions
precedent, if any, provided for in the indenture relating to the
proposed action have been complied with; and |
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an opinion of counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been
complied with. |
15
Modification And Waiver
We may modify and amend the indenture with the consent of the
holders of a majority in principal amount of the outstanding
debt securities of each series affected by the modifications or
amendments except that we may not make any modification or
amendment without the consent of the holders of each affected
debt security then outstanding if that amendment will:
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change the stated maturity of the principal of (or premium, if
any, on) or any installment of principal of, or premium, if any,
or the interest payment date with respect to such debt security; |
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reduce the principal amount of debt securities or the rate or
amount of interest on such debt securities, or any premium
payable on such debt security; |
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adversely affect the right of any holder of debt securities to
repayment of such debt security at the holder’s option; |
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change any place, or the currency, for payment of principal on
any debt security or any premium or interest thereon; |
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impair the right to institute suit for enforcement of any
payment on or with respect to such debt security; |
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reduce the amount of debt securities whose holders must consent
to an amendment or waiver or reduce the quorum or voting
requirements set forth in the indenture; or |
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modify any of the foregoing provisions or any of the provisions
relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect
such action or to provide that certain other provisions may not
be modified or waived without the consent of the holder of such
debt security. |
The holders of a majority in principal amount of the outstanding
debt securities of any series may on behalf of the holders of
all debt securities of that series waive the Operating
Partnership’s compliance with certain covenants of the
indenture.
Modifications and amendments of the indenture may be made by the
Operating Partnership and the trustee without the consent of any
holder of debt securities issued thereunder for any of the
following purposes:
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to evidence the succession of another person to the Operating
Partnership or any guarantor under the indenture; |
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to add to the covenants of the Operating Partnership or any
guarantor for the benefit of the holders of the debt securities
or to surrender any right or power conferred upon the Operating
Partnership or any guarantor in the indenture; |
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to add events of default for the benefit of the holders of all
or any series of debt securities; |
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to add or change any provisions of the indenture to facilitate
the issuance of the debt securities in certificated form,
provided that such action shall not adversely affect the
interests of the holders of any debt securities in any material
respect; |
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to secure the debt securities or guarantees; |
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to evidence and provide for the acceptance of appointment by a
successor trustee or to facilitate the administration of the
trusts under the indenture by more than one trustee; |
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to cure any ambiguity, defect or inconsistency in the indenture
or to add or change any other provisions with respect to matters
or questions arising under the indenture, provided that such
action shall not adversely affect the interests of holders of
debt securities of any series or any related guarantees in any
material respect; or |
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to supplement any of the provisions of the indenture to the
extent necessary to permit or facilitate discharge, legal
defeasance, or covenant defeasance of any series of debt
securities, provided that such |
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action shall not adversely affect the interests of the holders
of the debt securities and any related guarantees in any
material respect. |
The indenture provides that in determining whether the holders
of the requisite principal amount of outstanding debt securities
of a series have given any request, demand, authorization,
direction, notice, consent or waiver under the indenture or
whether a quorum is present at a meeting of holders of the debt
securities of a series, debt securities of each series owned by
the Operating Partnership or any other obligor upon such debt
securities or any affiliate of the Operating Partnership or of
such other obligor will be disregarded.
The indenture contains provisions for convening meetings of the
holders of debt securities of a series. A meeting may be called
at any time by the trustee and also, upon request, by the
Operating Partnership or the holders of at least 25% in
principal amount of the outstanding debt securities of such
series, in any such case upon notice given as provided in the
indenture. Except for any consent that must be given by the
holder of each debt security affected by certain modifications
and amendments of the indenture, any resolution presented at a
meeting or adjourned meeting duly reconvened at which a quorum
is present may be adopted by the affirmative vote of the holders
of a majority in principal amount of the outstanding debt
securities of such series. However, except as referred to above,
any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the holders of a
specified percentage, which is less or more than a majority, in
principal amount of the outstanding debt securities of such
series may be adopted at a meeting or adjourned meeting duly
reconvened at which a quorum is present by the affirmative vote
of the holders of such specified percentage in principal amount
of the outstanding debt securities of such series. Any
resolution passed or decision taken at any meeting of holders of
debt securities of any series duly held in accordance with the
indenture will be binding on all holders of debt securities of
such series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons
holding or representing a majority in principal amount of the
outstanding debt securities of any series; provided, however,
that if any action is to be taken at such meeting with respect
to a consent or waiver which may be given by the holders of not
less than a specified percentage, which is less or more than a
majority, in principal amount of the outstanding debt securities
of such series, the persons holding or representing such
specified percentage in principal amount of the outstanding debt
securities of such series will constitute a quorum.
Notwithstanding the provisions described above, the indenture
provides that if any action is to be taken at a meeting of
holders of debt securities of any series with respect to any
request, demand, authorization, direction, notice, consent,
waiver or other action that the indenture expressly provides may
be made, given or taken by the holders of a specified percentage
in principal amount of all outstanding debt securities of such
series affected thereby:
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there shall be no minimum quorum requirement for such meeting;
and |
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the principal amount of the outstanding debt securities of such
series that are entitled to vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or
other action shall be taken into account in determining whether
such request, demand, authorization, direction, notice, consent,
waiver or other action has been made, given or taken under the
indenture. |
Defeasance Of Debt Securities And Certain Covenants In
Certain Circumstances
Legal Defeasance and Covenant Defeasance. Unless we
specify otherwise in the applicable prospectus supplement, the
indenture provides that the Operating Partnership may elect:
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to be discharged from any and all obligations in respect of the
debt securities of any series (except for certain obligations to
register the transfer or exchange of debt securities of such
series, to replace stolen, lost or mutilated debt securities of
such series, and to maintain paying agencies and certain
provisions relating to the treatment of funds held by paying
agents) (“legal defeasance”); or |
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to be released from compliance with the covenants in the
indenture (“covenant defeasance”). |
17
The Operating Partnership will be so discharged upon the deposit
with the trustee, in trust, of money and/or Government
Obligations that, through the payment of interest and principal
in accordance with their terms, will provide money in an amount
sufficient to pay and discharge each installment of principal
(and premium, if any) and interest on the debt securities of
that series on the scheduled due dates or the applicable
redemption date in accordance with the terms of the indenture
and those debt securities.
This trust may only be established if, among other things:
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the Operating Partnership has delivered to the trustee a legal
opinion to the effect that the holders of the debt securities
will not recognize income, gain or loss for United States
federal income tax purposes as a result of such legal defeasance
or covenant defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such legal
defeasance or covenant defeasance had not occurred, and such
legal opinion, in the case of legal defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service or a
change in applicable United States federal, income tax law
occurring after the date of the indenture; |
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if the cash and Government Obligations deposited are sufficient
to pay the principal of, and premium, if any, and interest on
such debt securities of such series, provided such debt
securities are redeemed on a particular redemption date, the
Operating Partnership shall have given the trustee irrevocable
instructions to redeem the debt securities of such series on
such date and shall have provided notice of such redemption to
the holders of such series of debt securities; |
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such legal defeasance or covenant defeasance will not result in
a breach or violation of, or constitute a default under, the
indenture or any other material agreement or instrument to which
the Operating Partnership is a party or by which it is
bound; and |
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no event of default or event which with notice or lapse of time
or both would become an event of default with respect to the
debt securities shall have occurred and shall be continuing on
the date of, or, solely in the case of events of default due to
certain events of bankruptcy, insolvency, or reorganization,
during the period ending on the 91st day after the date of,
such deposit into trust. |
Covenant Defeasance and Events of Default. In the event
the Operating Partnership exercises its option to effect
covenant defeasance with respect to any series of debt
securities and the debt securities of that series are declared
due and payable because of the occurrence of any event of
default, the amount of money and/or Government Obligations on
deposit with the trustee will be sufficient to pay amounts due
on the debt securities of that series at the time of their
stated maturity but may not be sufficient to pay amounts due on
the debt securities of that series at the time of the
acceleration resulting from the event of default. However, the
Operating Partnership will remain liable for those payments.
Definitions
As used in this “Description of the Debt Securities”,
“Acquired Debt” means Debt of a person:
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existing at the time such person is merged or consolidated with
or into, or becomes a subsidiary of, the Operating
Partnership; or |
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assumed by the Operating Partnership or any of its subsidiaries
in connection with the acquisition of assets from such person. |
Acquired Debt shall be deemed to be incurred on the date the
acquired person is merged or consolidated with or into, or
becomes a subsidiary of, the Operating Partnership or the date
of the related acquisition.
18
“Annual Debt Service Charge” means, for any
period, the interest expense of the Operating Partnership and
its subsidiaries for such period, determined on a consolidated
basis in accordance with generally accepted accounting
principles, including, without duplication:
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all amortization of debt discount and premiums; |
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all accrued interest; |
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all capitalized interest; and |
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the interest component of capitalized lease obligations. |
“Consolidated Income Available for Debt Service”
for any period means Consolidated Net Income of the
Operating Partnership and its subsidiaries for such period, plus
amounts which have been deducted and minus amounts which have
been added for, without duplication:
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interest expense on Debt; |
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provision for taxes based on income; |
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amortization of debt discount, premium and deferred financing
costs; |
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• |
provisions for gains and losses on sales or other dispositions
of properties and other investments; |
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property depreciation and amortization; |
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the effect of any non-cash items; and |
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amortization of deferred charges, all determined on a
consolidated basis in accordance with generally accepted
accounting principles. |
“Consolidated Net Income” for any period means
the amount of net income (or loss) of the Operating Partnership
and its subsidiaries for such period, excluding, without
duplication:
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extraordinary items; and |
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the portion of net income (but not losses) of the Operating
Partnership and its subsidiaries allocable to minority interests
in unconsolidated persons to the extent that cash dividends or
distributions have not actually been received by the Operating
Partnership or one of its subsidiaries, all determined on a
consolidated basis in accordance with generally accepted
accounting principles. |
“Debt” means, with respect to any person, any
indebtedness of such person, whether or not contingent, in
respect of:
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borrowed money or evidenced by bonds, notes, debentures or
similar instruments; |
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indebtedness secured by any Lien on any property or asset owned
by such person, but only to the extent of the lesser of: |
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the amount of indebtedness so secured; and |
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the fair market value (determined in good faith by the board of
directors of such person or, in the case of the Operating
Partnership or a subsidiary, by the Company’s Board of
Directors) of the property subject to such Lien; |
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reimbursement obligations, contingent or otherwise, in
connection with any letters of credit actually issued or amounts
representing the balance deferred and unpaid of the purchase
price of any property except any such balance that constitutes
an accrued expense or trade payable; or |
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any lease of property by such person as lessee which is required
to be reflected on such person’s balance sheet as a
capitalized lease in accordance with generally accepted
accounting principles, and also includes, to the extent not
otherwise included, any obligation of such person to be liable
for, or to pay, as obligor, guarantor or otherwise (other than
for purposes of collection in the ordinary course of business),
Debt of the types referred to above of another person (it being
understood that Debt shall |
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be deemed to be incurred by such person whenever such person
shall create, assume, guarantee or otherwise become liable in
respect thereof). |
“Government Obligations” means securities which
are:
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direct obligations of the United States of America, for the
payment of which its full faith and credit is pledged; or |
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obligations of a person controlled or supervised by and acting
as an agency or instrumentality of the United States of America,
the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America |
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and which, in either of the above cases, are not callable or
redeemable at the option of the issuer thereof and also includes
a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such
Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as
provided by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in
respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced
by such depository receipt. |
“Lien” means any mortgage, deed of trust, lien,
charge, pledge, security interest, security agreement, or other
encumbrance of any kind.
“Total Assets” means the sum of, without
duplication:
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Undepreciated Real Estate Assets; and |
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all other assets (excluding accounts receivable and intangibles)
of the Operating Partnership and its subsidiaries, all
determined on a consolidated basis in accordance with generally
accepted accounting principles. |
“Total Unencumbered Assets” means the sum of,
without duplication:
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those Undepreciated Real Estate Assets which are not subject to
a Lien securing Debt; and |
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all other assets (excluding accounts receivable and intangibles)
of the Operating Partnership and its subsidiaries not subject to
a Lien securing Debt, all determined on a consolidated basis in
accordance with generally accepted accounting principles. |
“Undepreciated Real Estate Assets” means, as of
any date, the cost (original cost plus capital improvements) of
real estate assets of the Operating Partnership and its
subsidiaries on such date, before depreciation and amortization,
all determined on a consolidated basis in accordance with
generally accepted accounting principles.
“Unsecured Debt” means Debt of the Operating
Partnership or any of its subsidiaries which is not secured by a
Lien on any property or assets of the Operating Partnership or
any of its subsidiaries.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain material United
States federal income tax consequences that may be relevant to
the purchase, ownership and disposition of the debt securities
offered by this prospectus. This summary is for general
information only and is not intended to be, nor should it be
construed as, tax advice.
The information in this summary is based on:
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the Internal Revenue Code of 1986, as amended (the
“Code”); |
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current, temporary and proposed Treasury Regulations promulgated
under the Code; |
20
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the legislative history of the Code; |
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current administrative interpretations and practices of the
Internal Revenue Service (“IRS”); and |
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court decisions; |
in each case, as of the date of this prospectus and all of which
are subject to change and to different interpretations. In
addition, the administrative interpretations and practices of
the IRS include its practices and policies as expressed in
private letter rulings that are not binding on the IRS except
with respect to the particular taxpayers who requested and
received those rulings. Changes to any of the foregoing
authorities could apply on a retroactive basis and may adversely
affect the tax considerations described in this prospectus. We
have not requested, and do not plan to request, any rulings from
the IRS concerning our tax treatment with respect to matters
discussed in this summary, and the statements in this prospectus
are not binding on the IRS or any court. Thus, we can provide no
assurance that the tax considerations contained in this summary
will not be challenged by the IRS or will be sustained by a
court if challenged by the IRS. This summary does not discuss
any state, local or
non-U.S. tax
considerations.
Prospective investors are urged to consult their tax advisors
regarding the tax consequences of:
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the acquisition, ownership and sale or other disposition of
the debt securities offered under this prospectus, including the
federal, state, local, foreign and other tax consequences;
and |
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potential changes in the tax laws. |
Scope of Discussion. This general discussion of certain
U.S. federal income tax considerations may be relevant to
prospective investors who acquire the debt securities upon their
initial issuance at the issue price (which will be set forth on
the cover of the related prospectus supplement) for cash and
hold the debt securities as a “capital asset,”
generally, property held for investment, as defined in
Section 1221 of the Code. This summary does not consider
all of the rules which may be relevant in determining the United
States federal income tax treatment of an investment in the debt
securities based on the prospective investor’s particular
circumstances. For example, this general discussion does not
address tax considerations which may be applicable to a
prospective investor who is:
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a broker-dealer or a dealer in securities or currencies; |
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an S corporation; |
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a bank, thrift or other financial institution; |
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a regulated investment company or a real estate investment trust; |
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an insurance company; |
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a tax-exempt organization; |
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subject to the alternative minimum tax provisions of the Code; |
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holding the debt securities as part of a hedge, straddle,
conversion, integrated or other risk reduction or constructive
sale transaction; |
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holding the debt securities through a partnership or other
pass-through entity; |
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a person whose “functional currency” is not the
U.S. dollar; or |
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a United States expatriate. |
This discussion assumes the debt securities will be issued
without original issue discount, sometimes referred to as
“OID.” If one or more series of debt securities are
issued with OID, disclosure concerning the tax considerations
arising therefrom will be included with the applicable
prospectus supplement.
21
United States Holders
As the term is used in this summary, a “United States
holder” is a beneficial holder of debt securities and who
is:
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a citizen or resident of the United States; |
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a corporation or partnership, including a limited liability
company or other entity treated as a corporation or partnership
for United States federal income tax purposes, created or
organized under the laws of the United States, any state thereof
or the District of Columbia, unless, in the case of a
partnership, Treasury Regulations provide otherwise; |
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an estate, the income of which is subject to United States
federal income tax regardless of its source; or |
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a trust, if a United States court can exercise primary
supervision over the administration of the trust and one or more
United States persons have the authority to control all
substantial decisions of the trust, or if the trust was in
existence on August 20, 1996 and has elected to continue to
be treated as a United States person. |
Taxation of Stated Interest. United States holders
generally must include interest on the debt securities in their
federal taxable income as ordinary income:
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when it accrues, for United States holders that use the accrual
method of accounting for United States federal income tax
purposes; or |
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when it is actually or constructively received, for United
States holders that use the cash method of accounting for United
States federal income tax purposes. |
If we call a series of debt securities for redemption, we may be
obligated to pay additional amounts in excess of stated
principal and interest. We intend to take the position that the
debt securities should not be treated as contingent payment debt
instruments because of this additional payment. Assuming such
position is respected, a United States holder would be required
to include in income the amount of any such additional payment
at the time such payment is received or accrued in accordance
with such United States holder’s method of accounting for
United States federal income tax purposes. If the IRS
successfully challenged this position, and the debt securities
were treated as contingent payment debt instruments, United
States holders could be required to accrue interest income at a
rate higher than the stated interest rate on the debt securities
and to treat as ordinary income, rather than capital gain, any
gain recognized on a sale, exchange or redemption of a debt
security. United States holders are urged to consult their tax
advisors regarding the potential application to the debt
securities of the contingent payment debt instrument rules and
the consequences thereof.
Sale, Exchange or Other Taxable Disposition of the Debt
Securities. Unless a nonrecognition provision applies,
United States holders must recognize taxable gain or loss on the
sale, exchange, redemption, retirement or other taxable
disposition of a debt security. The amount of gain or loss
equals the difference between (i) the amount the United
States holder receives for the debt security in cash or other
property, valued at fair market value, less the amount thereof
that is attributable to accrued but unpaid interest on the debt
security and (ii) the United States holder’s adjusted
tax basis in the debt security. A United States holder’s
initial tax basis in a debt security generally will equal the
price the holder paid for the debt security.
Gain or loss generally will be long-term capital gain or loss if
at the time the debt security is disposed of the United States
holder has held it for more than one year. Otherwise, it will be
a short-term capital gain or loss. The deductibility of capital
losses is subject to limitations. Payments attributable to
accrued interest which has not yet been included in income will
be taxed as ordinary interest income.
Information Reporting and Backup Withholding. Under
Section 3406 of the Code and the Treasury Regulations,
backup withholding at the applicable statutory rate may apply
when United States holders receive interest payments on a debt
security or proceeds from the sale or other disposition of a
debt security. Certain holders including, among others,
corporations, financial institutions and certain tax-exempt
organiza-
22
tions, are generally not subject to backup withholding. In
addition, backup withholding will not apply to any United States
holder that provides a social security or other taxpayer
identification number in the prescribed manner unless:
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the IRS notifies us or our paying agent that the taxpayer
identification number provided is incorrect; |
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the United States holder fails to report interest and dividend
payments received on the holder’s tax return and the IRS
notifies us or our paying agent that backup withholding is
required; or |
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the United States holder fails to certify under penalty of
perjury that backup withholding does not apply to the holder. |
A United States holder of debt securities who does not provide
us or our paying agent with his or her correct taxpayer
identification number may be subject to penalties imposed by the
IRS. If backup withholding does apply to any United States
holder, that holder may request a refund of the amounts withheld
or use the amounts withheld as a credit against the
holder’s United States federal income tax liability as long
as the United States holder provides the required information to
the IRS. United States holders should consult their tax advisors
as to their qualification for exemption from backup withholding
and the procedures for obtaining the exemption.
We will be required annually to furnish the IRS and holders of
debt securities information relating to the amount of interest
paid on the debt securities, and that information reporting may
also apply to payments of proceeds from the sale of the debt
securities to those holders. Some United States holders,
including corporations, financial institutions and certain
tax-exempt organizations, are generally not subject to
information reporting.
Non-United States Holders
This section applies to non-United States holders of the debt
securities. The term “non-United States holder” means
a beneficial owner of a debt security that is not a United
States holder.
Special rules may apply to certain non-United States holders
such as “controlled foreign corporations” and
“passive foreign investment companies.” Such entities
are urged to consult their tax advisors to determine the United
States federal, state, local and other tax consequences that may
be relevant to them.
Payments of Interest. Interest paid to non-United States
holders will not be subject to United States federal income or
withholding tax if the interest is not effectively connected
with the non-United States holders’ conduct of a trade or
business within the United States, and the non-United States
holder:
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does not actually or constructively own a 10% or greater
interest in our capital or profits; |
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is not a controlled foreign corporation with respect to which we
are a “related person” within the meaning of
Section 864(d)(4) of the Code; |
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is not a bank that received such debt securities on an extension
of credit made pursuant to a loan agreement entered into in the
ordinary course of trade or business; and |
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provides the appropriate certification as to the holder’s
foreign status. |
This certification requirement generally can be met by providing
a properly executed IRS Form W-8BEN or appropriate
substitute form to us or our paying agent. If the debt
securities are held through a financial institution or other
agent acting on behalf of the non-United States holder, such
holder may be required to provide appropriate documentation to
his or her agent. The agent will then generally be required to
provide appropriate certifications to us or our paying agent,
either directly or through other intermediaries. Special
certification rules apply to foreign partnerships, estates and
trusts, and in certain circumstances certifications as to
foreign status of partners, trust owners or beneficiaries may
have to be provided to us or our paying agent.
If the non-United States holder does not qualify for an
exemption under these rules, interest income from the debt
securities may be subject to withholding tax at the rate of 30%
(or lower applicable treaty rate) at the time such interest is
paid. The payment of interest effectively connected with a
United States trade or
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business, however, would not be subject to a 30% withholding tax
so long as the non-United States holder provides us or our
paying agent an adequate certification (currently on IRS
Form W-8ECI), but such interest would be subject to United
States federal income tax on a net basis at the rates applicable
to United States persons generally. In addition, if the
non-United States holder is a foreign corporation and the
payment of interest is effectively connected with the conduct of
a United States trade or business, the non-United States holder
may also be subject to a 30% (or lower applicable treaty rate)
branch profits tax. To claim the benefit of a tax treaty, the
non-United States holder must provide a properly executed IRS
Form W-8BEN before the payment of interest and the
non-United States holder may be required to obtain a United
States taxpayer identification number and provide documentary
evidence issued by foreign governmental authorities to prove
residence in the foreign country.
Sale, Exchange or Other Taxable Disposition of Debt
Securities. A non-United States holder generally will not be
subject to United States federal income tax on any amount that
constitutes capital gain upon a sale, exchange, redemption,
retirement or other taxable disposition of a debt security,
except as provided below:
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the net gain derived from the retirement or disposition of debt
securities generally would be subject to United States federal
income tax at the rate applicable to United States persons
generally (or lower applicable treaty rate) if the investment in
the debt securities is effectively connected with the non-United
States holder’s conduct of a United States trade or
business. In addition, foreign corporations may be subject to a
30% (or lower applicable treaty rate) branch profits tax if the
investment in the debt security is effectively connected with
the foreign corporation’s conduct of a United States trade
or business; or |
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the gain derived from the retirement or disposition of debt
securities generally would be subject to a flat 30% United
States federal income tax, which may be offset by United States
source capital losses, if the non-United States holder
(i) is a nonresident alien individual holding the debt
security as a capital asset, (ii) is present in the United
States for 183 or more days in the taxable year within which the
sale, redemption or other disposition takes place, and
(iii) certain other requirements are met; or |
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the gain derived from the retirement or disposition of debt
securities generally may be subject to U.S. federal income
tax if the non-United States holder is subject to provisions of
United States tax laws applicable to certain United States
expatriates, and we encourage such holders to consult their tax
advisor to determine the United States federal, state, local and
other tax consequences that may be relevant to them. |
Backup Withholding and Information Reporting. No backup
withholding or information reporting will generally be required
with respect to interest paid to non-United States holders of
debt securities if the beneficial owner of the debt security
provides the certification described above in “Non-United
States Holders — Payments of Interest” or is an
exempt recipient and, in each case, we do not have actual
knowledge that the beneficial owner is a United States person.
Information reporting requirements and backup withholding tax
generally will not apply to any payments of the proceeds of the
sale of a debt security effected outside the United States by a
foreign office or a foreign broker (as defined in applicable
Treasury Regulations). However, unless such broker has
documentary evidence in its records that the beneficial owner is
a non-United States holder and certain other conditions are met,
or the beneficial owner otherwise establishes an exemption,
information reporting but not backup withholding will apply to
any payment of the proceeds of the sale of a debt security
effected outside the United States by such a broker if it:
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is a United States person, as defined in the Code; |
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derives 50% or more of its gross income for certain periods from
the conduct of a trade or business in the United States; |
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is a controlled foreign corporation for United States federal
income tax purposes; or |
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is a foreign partnership that, at any time during its taxable
year, has 50% or more of its income or capital interests owned
by United States persons or is engaged in the conduct of a
United States trade or business. |
Payment of the proceeds of any sale by a non-United States
holder of a debt security effected by the United States office
of a broker will be subject to information reporting and backup
withholding requirements, unless the holder or beneficial owner
of the debt security provides the certification described above
in “Non-United States Holders — Payments of
Interest” or otherwise establishes an exemption from
back-up withholding.
Non-United States holders of debt securities should consult
their tax advisors regarding the application of information
reporting and backup withholding in their particular situation,
the availability of an exemption therefrom, and the procedure
for obtaining the exemption, if available. Any amounts withheld
from payments to a non-United States holder under the backup
withholding rules will be allowed as a refund or a credit
against the non-United States holder’s federal income tax
liability, provided that the required information is furnished
to the IRS.
PLAN OF DISTRIBUTION
We may sell the debt securities offered pursuant to any
applicable prospectus supplement, directly to one or more
purchasers or though dealers, agents or underwriters. We may
sell the debt securities offered pursuant to any applicable
prospectus supplement in
at-the-market equity
offerings or on a negotiated or competitive bid basis through
underwriters or dealers or directly to other purchasers or
through agents. We will name any underwriter, dealer or agent
involved in the offer and sale of the debt securities in the
applicable prospectus supplement. We reserve the right to sell
the debt securities directly to investors on our own behalf in
those jurisdictions where and in such manner as we are
authorized to do so.
We may distribute the debt securities from time to time in one
or more transactions:
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at a fixed price or prices, which may be changed; |
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at market prices prevailing at the time of sale; |
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at prices related to prevailing market prices; or |
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at negotiated prices. |
We may also, from time to time, authorize dealers, acting as our
agents, to offer and sell the debt securities upon the terms and
conditions as are set forth in the applicable prospectus
supplement. In connection with the sale of the debt securities,
underwriters may be deemed to have received compensation from us
in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of the debt securities
for whom they may act as agent. Underwriters may sell the debt
securities to or through dealers, and dealers may receive
compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
We will describe in the applicable prospectus supplement any
underwriting compensation we pay to underwriters or agents in
connection with the offering of the debt securities, and any
discounts, concessions or commissions allowed by underwriters to
participating dealers. Dealers and agents participating in the
distribution of the debt securities may be deemed to be
underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the debt securities
may be deemed to be underwriting discounts and commissions. We
may enter into agreements with any underwriters, dealers and
agents which may entitle them to indemnification against and
contribution toward certain civil liabilities, including
liabilities under the Securities Act, and to reimbursement for
certain expenses. We will describe any indemnification
agreements in the applicable prospectus supplement.
Unless we specify otherwise in the related prospectus
supplement, each series of debt securities offered will be a new
issue with no established trading market. We may elect to list
any series of debt securities on any exchange, but we are not
obligated to do so. It is possible that one or more underwriters
or agents may make a
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market in a series of offered debt securities, but will not be
obligated to do so and may discontinue any market making at any
time without notice. Therefore, we cannot assure you as to the
liquidity of the trading market for the debt securities.
If indicated in the applicable prospectus supplement, we may
authorize underwriters, dealers or other persons acting as our
agents to solicit offers by certain institutions or other
suitable persons to purchase the debt securities from us at the
public offering price set forth in the prospectus supplements
pursuant to delayed delivery contracts providing for payment and
delivery on the date or dates stated in the prospectus
supplement. We may make delayed delivery with various
institutions, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational
and charitable institutions. Delayed delivery contracts will be
subject to the condition that the purchase of the debt
securities covered by the delayed delivery contracts will not at
the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which the purchaser is
subject. The underwriters and agents will not have any
responsibility with respect to the validity or performance of
these contracts.
To facilitate an offering of a series of the debt securities,
certain persons participating in the offering may engage in
transactions that stabilize, maintain, or otherwise affect the
price of the debt securities. This may include over-allotments
or short sales of the debt securities, which involves the sale
by persons participating in the offering of more debt securities
than we sold to them. In these circumstances, these persons
would cover the over-allotments or short positions by making
purchases in the open market or by exercising their
over-allotment option. In addition, these persons may stabilize
or maintain the price of the debt securities by bidding for or
purchasing debt securities in the open market or by imposing
penalty bids, whereby selling concessions allowed to dealers
participating in the offering may be reclaimed if debt
securities sold by them are repurchased in connection with
stabilization transactions. The effect of these transactions may
be to stabilize or maintain the market price of the debt
securities at a level above that which might otherwise prevail
in the open market. These transactions may be discontinued at
any time.
Certain of the underwriters, dealers or agents and their
respective associates may be customers of, and/or engage in
transactions with and perform services for, us in the ordinary
course of business.
VALIDITY OF THE SECURITIES
The validity of the debt securities will be passed upon for us
by Latham & Watkins LLP, San Francisco,
California. Certain legal matters relating to Maryland law will
be passed upon for us by Ballard Spahr Andrews &
Ingersoll, LLP, Baltimore, Maryland.
EXPERTS
The financial statements and financial statement schedules
incorporated by reference to AMB Property Corporation’s and
AMB Property, L.P.’s Current Reports on
Form 8-K dated
June 21, 2006 and management’s assessment of the
effectiveness of internal control over financial reporting
(which is included in Management’s Report on Internal
Control Over Financing Reporting) incorporated in this
prospectus by reference to AMB Property Corporation’s and
AMB Property, L.P.’s Annual Reports on
Form 10-K for the
year ended December 31, 2005 have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the
authority of said firms as experts in auditing and accounting.
INCORPORATION OF CERTAIN INFORMATION 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
instead of having to repeat the information in this prospectus.
The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this
information. We incorporate by reference any future filings made
with the SEC under Sections 13(a),
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13(c), 14, or 15(d) of the Exchange Act between the date of
the initial registration statement and prior to effectiveness of
the registration statement and the following documents:
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Annual Report of AMB Property, L.P. on
Form 10-K for the
year ended December 31, 2005 filed on March 13, 2006; |
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Annual Report of AMB Property Corporation on
Form 10-K for the
fiscal year ended December 31, 2005 filed on March 10,
2006, as amended on
Form 10-K/ A filed
on March 16, 2006; |
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Quarterly Report of AMB Property, L.P. on
Form 10-Q for the
quarter ended March 31, 2006 filed on May 10, 2006; |
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Quarterly Report of AMB Property Corporation on
Form 10-Q for the
quarter ended March 31, 2006 filed on May 10, 2006; |
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Current Reports of AMB Property, L.P. on
Form 8-K filed on
January 5, 2006, February 22, 2006, March 24,
2006, June 7, 2006, June 19, 2006 and June 21,
2006; |
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Current Reports of AMB Property Corporation on
Form 8-K filed on
January 5, 2006, February 22, 2006, March 24,
2006, June 7, 2006, June 19, 2006 and June 21,
2006; |
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Item 8.01 of the Current Reports of AMB Property
Corporation on
Form 8-K filed on
January 24, 2006 and April 12, 2006 (as amended on
form 8-K/ A filed
on May 10, 2006); |
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AMB Property Corporation’s definitive proxy statement with
respect to the 2006 Annual Meeting of Stockholders filed on
March 30, 2006; and |
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all documents filed by either AMB Property, L.P. or AMB Property
Corporation with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) after the date of this prospectus
and prior to the termination of the offering (but excluding any
documents or portions of documents which are deemed
“furnished” and not filed with the SEC). |
This prospectus is part of a registration statement on
Form S-3 we have
filed with the SEC under the Securities Act. This prospectus
does not contain all of the information in the registration
statement. We have omitted certain parts of the registration
statement, as permitted by the rules and regulations of the SEC.
You may inspect and copy the registration statement, including
exhibits, at the SEC’s Public Reference Room or website at
www.amb.com. Information contained on our website is not
and should not be deemed a part of this prospectus or any other
report or filing filed with the SEC. Our statements in this
prospectus about the contents of any contract or other document
are not necessarily complete. You should refer to the copy of
each contract or other document we have filed as an exhibit to
the registration statement for complete information.
We will furnish without charge to you, upon written or oral
request, a copy of any or all of the documents incorporated by
reference, including exhibits to these documents. You should
direct any requests for documents to:
AMB Property, L.P.
AMB Property Corporation
Attn: Investor Relations
Pier 1, Bay 1
San Francisco, CA 94111
(415) 394-9000
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
document we file at the SEC’s Public Reference Room located
at 100 F Street, N.E., Washington, D.C. 20549. Please call
the SEC at
1-800-SEC-0330 for
further information on the Public Reference Room. Our filings
with the SEC are also available to the public at the SEC’s
website at www.sec.gov. You may also obtain copies of the
documents at prescribed rates by writing to the SEC’s
Public Reference Section at 100 F Street, N.E.,
Washington, D.C. 20549.
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