| | ||||||||||||||||||||||||||||
Title of Each Class of
Securities to be Registered(1) |
| | |
Amount
to be Registered(2) |
| | |
Proposed
Maximum Aggregate Price Per Share(3) |
| | |
Proposed
Maximum Aggregate Offering Price(3) |
| | |
Amount of
Registration Fee(4) |
| ||||||||||||
Common Shares of Beneficial Interest, par value $0.01 per share
|
| | | | | 13,241,041 | | | | | | $ | 31.87 | | | | | | $ | 421,991,977 | | | | | | $ | 46,040 | | |
| | |
Page
|
| |||
| | | | S-ii | | | |
| | | | S-iii | | | |
| | | | S-1 | | | |
| | | | S-3 | | | |
| | | | S-4 | | | |
| | | | S-6 | | | |
| | | | S-18 | | | |
| | | | S-18 | | | |
| | | | S-18 | | | |
| | | | S-18 | | | |
| | | | S-19 | | |
| | | | | 1 | | | |
| | | | | 2 | | | |
| | | | | 3 | | | |
| | | | | 4 | | | |
| | | | | 5 | | | |
| | | | | 6 | | | |
| | | | | 7 | | | |
| | | | | 9 | | | |
| | | | | 11 | | | |
| | | | | 15 | | | |
| | | | | 16 | | | |
| | | | | 17 | | | |
| | | | | 23 | | | |
| | | | | 31 | | | |
| | | | | 34 | | | |
| | | | | 36 | | | |
| | | | | 39 | | | |
| | | | | 40 | | | |
| | | | | 40 | | | |
| | | | | 41 | | | |
| | | | | 42 | | |
|
OP Units
|
| |
Common Shares
|
|
|
Form of Organization and Purposes
|
| |||
| The Operating Partnership is organized as a Delaware limited partnership. The Operating Partnership’s purpose is (i) to conduct any business that may be lawfully conducted by a limited partnership formed pursuant to the Delaware Revised Uniform Limited Partnership Act (“DRULPA”), (ii) to enter into any corporation, partnership, joint venture, trust, limited liability company or other similar arrangement to engage in any of the foregoing or to own interests in any entity engaged, directly or indirectly, in any of the foregoing, and (iii) to do anything necessary, convenient or incidental to the foregoing; provided that such business is to be conducted in a manner that permits us at all times to qualify as a REIT unless we cease to qualify as a REIT for reasons other than the conduct of the business of the Operating Partnership or voluntarily revokes its election to be a REIT. We may cause the Operating Partnership not to take, or to refrain from taking, any action that, in our judgment as general partner, in our sole and absolute discretion, (i) could adversely affect our ability to continue to qualify as a REIT, (ii) could subject us to any additional taxes under Section 857 or Section 4981 of the Code, or (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over us, our securities or the Operating Partnership, unless such action (or inaction) is specifically consented to by us as general partner in writing. | | | We are a Maryland real estate investment trust. We have elected to be taxed as a REIT under the Code and intend to maintain our qualification as a REIT. Under our declaration of trust, we have all of the powers granted to real estate investment trusts by Title 8 of the Corporations and Associations Articles of the Annotated Code of Maryland or any successor statute and all other powers set forth in our declaration of trust which are not inconsistent with law and are appropriate to promote and attain the purposes set forth in the declaration of trust. | |
|
Nature of Investment
|
| |||
| The OP Units constitute common limited partnership interests in JBG SMITH Properties LP, a Delaware limited partnership. | | | The common shares constitute equity securities in JBG SMITH Properties, a Maryland real estate investment trust. | |
|
OP Units
|
| |
Common Shares
|
|
|
Borrowing Policies
|
| |||
| The Operating Partnership has no restrictions on borrowings, and the general partner has full power and authority to borrow money on behalf of the Operating Partnership. | | | Neither our declaration of trust nor our bylaws impose any restrictions on our ability to incur borrowings. | |
|
Other Investment Restrictions
|
| |||
| Other than restrictions precluding investments by the Operating Partnership that would adversely affect our qualification as a REIT and restrictions on transactions with affiliates, the partnership agreement does not generally restrict the Operating Partnership’s authority to enter into certain transactions, including, among others, making investments, lending Operating Partnership funds, or reinvesting the Operating Partnership’s cash flow and other assets. | | | Neither our declaration of trust nor our bylaws impose any restrictions upon the types of investments made by us. | |
|
Additional Equity
|
| |||
|
Under the partnership agreement, we are obligated to contribute the proceeds of any offering of shares as additional capital to our Operating Partnership. We are authorized to cause the Operating Partnership to issue partnership interests for less than fair market value if we conclude in good faith that such issuance is in both the Operating Partnership’s and our best interests.
The partnership agreement provides that we may make additional capital contributions, including assets, to the Operating Partnership in exchange for additional partnership units. If we contribute additional capital to the partnership and receive additional partnership interests for such capital contribution, our percentage interests will be increased on a proportionate basis based on the amount of such additional capital contributions and the value of the Operating Partnership at the time of such contributions. Conversely, the percentage interests of the other limited partners will be decreased on a proportionate basis. In addition, if we contribute additional capital to the Operating Partnership and receive additional partnership interests for such capital contribution, the capital accounts of the partners will be adjusted upward or downward to reflect any unrealized gain or loss attributable to our assets as if there were an actual sale of such assets at the fair market value thereof. Limited partners have no preemptive right to make additional capital contributions.
|
| | The board of trustees may issue, in its discretion, additional equity securities consisting of common shares or preferred shares provided that the total number of shares issued does not exceed the authorized number of shares set forth in our declaration of trust. | |
|
OP Units
|
| |
Common Shares
|
|
|
We, as general partner, are authorized to cause the Operating Partnership to issue additional limited partnership units or other partnership interests to its partners, including us and our affiliates, or other persons without the approval of any limited partners. These limited partnership units may be issued in one or more classes or in one or more series of any class, with designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to one or more other classes of partnership interests (including limited partnership units held by us), as determined by us in our sole and absolute discretion without the approval of any limited partner, subject to limitations described below.
No limited partnership unit or interest may be issued to us as general partner or limited partner unless (i) the Operating Partnership issues limited partnership units or other partnership interests in connection with the grant, award or issuance of shares or other equity interests in us having designations, preferences and other rights so that the economic interests attributable to the newly issued shares or other equity interests in us are substantially similar to the designations, preferences and other rights, except voting rights, of the limited partnership units or other partnership interests issued to us and we contribute to the Operating Partnership the proceeds received by us from the issuance of such shares or other equity securities; (ii) we make an additional capital contribution to the Operating Partnership; or (iii) the Operating Partnership issues the additional limited partnership units or other partnership interests to all partners holding limited partnership units or other partnership interests in the same class or series in proportion to their respective percentage interests in that class or series.
|
| | ||
|
Voting Rights
|
| |||
|
Under the partnership agreement, OP Unit holders have voting rights as limited partners only with respect to certain limited matters, such as certain types of amendments to the partnership agreement.
We may not engage in a merger, consolidation or other combination with or into another person, a sale of all or substantially all of our assets, or a reclassification, recapitalization or a change in outstanding shares (except for changes in par value, or from par value to no par value, or as a result of a subdivision or combination of our common shares),
|
| |
Each outstanding common share entitles the holder thereof to one vote on all matters submitted to a vote of our shareholders, including the election of trustees to our board of trustees.
In addition to election of trustees, such matters include, among other things, amendments to our declaration of trust, a merger of JBG SMITH and the sale or disposition of substantially all of JBG SMITH’s assets. Our declaration of trust permits our board of trustees to classify and issue shares of beneficial interest in one or more series having
|
|
|
OP Units
|
| |
Common Shares
|
|
|
which we refer to collectively as an “extraordinary transaction,” unless (i) we receive “partnership approval” (as defined below) of the extraordinary transaction, if partners will receive consideration for their partnership units as described in clause (ii) and we are required to seek approval of our shareholders of the extraordinary transaction, or if we would be required to obtain such shareholder approval but for the fact that a tender offer has been accepted by a sufficient number of shareholders to permit consummation of the extraordinary transaction without such approval, and (ii) each partner receives or has the right to receive in the extraordinary transaction cash, securities or other property for each operating partnership unit owned by such partner in the same form as, and equal to the greatest per-share amount paid to, our shareholder (or equal to a proportional amount, if the OP Units are no longer redeemable for shares on a one-for-one basis).
To obtain “partnership approval,” we must obtain the consent of our limited partners (including us and any limited partners majority owned, directly or indirectly, by us) representing a percentage interest in the Operating Partnership that is equal to or greater than the percentage of our outstanding common shares required (or, if there is no shareholder vote with respect to such extraordinary transaction because a tender offer shall have been accepted with respect to a sufficient number of our common shares to permit consummation of the extraordinary transaction without shareholder approval, the percentage of our outstanding common shares that would have been required in the absence of a tender offer) to approve the extraordinary transaction. For purposes of calculating whether this percentage interest in the Operating Partnership has been obtained, we and any limited partners majority owned, directly or indirectly, by us will be deemed to have provided consent for our partnership units solely in proportion to the percentage of our common shares approving the extraordinary transaction (or, in the case of a tender offer, the percentage of our common shares with respect to which such tender offer shall have been accepted). The “partnership approval” requirement will be satisfied, with respect to such extraordinary transaction when the sum of (i) the percentage interest of limited partners consenting to the extraordinary transaction, plus (ii) the product of (a) the percentage of the outstanding partnership units held by us or by limited partners majority owned, directly or
|
| |
voting power which may differ from that of our common shares.
Under our declaration of trust, a consolidation, merger, or transfer of all or substantially all of our assets or the termination of JBG SMITH requires the affirmative vote of a majority of all the votes entitled to be cast by shareholders on the matter.
|
|
|
OP Units
|
| |
Common Shares
|
|
| indirectly, by us multiplied by (b) the percentage of our outstanding common shares (or of votes cast, as the case may be) that were cast in favor of the extraordinary transaction (or with respect to which such tender offer shall have been accepted) equals or exceeds the percentage required (or that would have been required in the absence of such tender offer) for our common shareholders to approve the extraordinary transaction. | | | | |
|
Management Control
|
| |||
| Pursuant to the partnership agreement, we, as the general partner, have full, exclusive and complete responsibility for and discretion in the management, operation and control of the Operating Partnership, including the ability to cause the Operating Partnership to enter into certain major transactions, including acquisitions, developments and dispositions of assets, borrowings and refinancings of existing indebtedness, and the merger, consolidation, reorganization or other combination of the Operating Partnership or its subsidiaries with or into another person. No limited partner may take part in the operation, management or control of the business of our Operating Partnership by virtue of being a holder of limited partnership units. We may not be removed as general partner of the Operating Partnership. | | |
Under our declaration of trust and bylaws:
•
our business and affairs are managed under the direction of our board of trustees and our board of trustees has full, exclusive and absolute power, control and authority over our property and business;
•
all trustees are elected annually for a term of one year and shall hold office until the next succeeding annual meeting and until their successors are duly elected and qualify;
•
if our board of trustees determines that it is no longer in our best interests to continue to be qualified as a REIT, our board of trustees may revoke or otherwise terminate our REIT election pursuant to Section 856 of the Code;
•
our declaration of trust may be amended only if the amendment is declared advisable by our board of trustees and approved by the affirmative vote of a majority of all the votes entitled to be cast on the matter (except as otherwise specified in our declaration of trust); and
•
our bylaws may be amended, altered or repealed, and new bylaws adopted, by our board of trustees or by the affirmative vote of holders of shares of JBG SMITH representing not less than a majority of all the votes entitled to be cast on the matter.
|
|
|
Distributions/Dividends
|
| |||
|
Holders of OP Units are entitled to receive cash distributions as and when determined by the general partner in its sole and absolute discretion. Distributions shall be made to holders of OP Units in accordance with their respective percentage interests in our Operating Partnership.
In no event may a holder of OP Units receive a distribution of cash with respect to an OP Unit if such holder is entitled to receive a cash distribution
|
| |
The holders of common shares are entitled to receive dividends when, if and as authorized by the board of trustees and declared by us out of assets legally available to pay dividends, if receipt of the dividends complies with the provisions in the declaration of trust restricting the ownership and transfer of our shares and the preferential rights of any other class or series of our shares.
Under the REIT rules, we are required to distribute
|
|
|
OP Units
|
| |
Common Shares
|
|
| as the holder of record of a common share for which all or part of such OP Unit has been or will be exchanged or redeemed. | | | dividends (other than capital gain dividends) to our shareholders in an amount at least equal to (i) the sum of (A) 90% of our “REIT taxable income” (computed without regard to the dividends paid deduction and our net capital gain) and (B) 90% of the income (after tax), if any, from foreclosure property, minus (ii) the sum of certain items of non-cash income. See “Material U.S. Income Tax Considerations” in the accompanying prospectus and “Taxation of JBG SMITH as a REIT — Annual Distribution Requirements” in the 2020 Form 10-K, which is incorporated by reference in this prospectus supplement. | |
|
Fiduciary Duties of General Partners and Trustees
|
| |||
| The partnership agreement contains provisions that expressly limit the duties, fiduciary or otherwise, that we, as general partner, owe to the limited partners of the Operating Partnership. Any decisions or actions taken or not taken in accordance with the terms of the partnership agreement will not constitute a breach of any duty owed to the Operating Partnership or its limited partners by law or equity, fiduciary or otherwise. Pursuant to the partnership agreement, we act on behalf of the Operating Partnership and its equityholders, and on behalf of our shareholders, and generally are under no obligation to consider or give priority to the separate interests of the limited partners in the Operating Partnership (including, without limitation, the tax consequences to such limited partners) in deciding whether to cause the Operating Partnership to take (or decline to take) any actions. | | | Under Maryland law, the trustees must perform their duties in good faith, in a manner that they reasonably believe to be in the best interests of the Company and with the care of an ordinarily prudent person in a like position. Any trustee who acts in such a manner generally will not be liable to the Company for money damages arising from his or her acts as a trustee of the Company. | |
|
Management Liability and Indemnification
|
| |||
|
The partnership agreement provides that none of the general partner, its affiliates nor any of their respective directors, trustees, officers, shareholders, partners, members, employees, representatives or agents (each of which we refer to as a “covered person”) will be liable to the Operating Partnership or to any of its partners as a result of errors in judgment or of any act or omission, if such covered person’s conduct did not constitute bad faith, gross negligence or willful misconduct.
In addition, the partnership agreement requires our Operating Partnership to indemnify the general partner and its trustees, officers, shareholders, partners, members, employees, representatives or agents from and against any and all claims that relate to the operations of our Operating
|
| |
The Maryland law permits a Maryland real estate investment trust to include in its declaration of trust a provision eliminating the liability of its trustees and officers to the REIT and its shareholders for money damages except for liability resulting from (i) actual receipt of an improper benefit or profit in money, property or services or (ii) active and deliberate dishonesty that is established by a final judgment and which is material to the cause of action. Our declaration of trust includes such a provision eliminating such liability to the maximum extent permitted by Maryland law.
Our declaration of trust and bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to indemnify and to pay or reimburse reasonable expenses in advance of final
|
|
|
OP Units
|
| |
Common Shares
|
|
|
Partnership or the general partner in which any such indemnitee may be involved, or is threatened to be involved, as a party or otherwise, except to the extent such indemnitee acted in bad faith or with gross negligence or willful misconduct.
No indemnitee may subject any partner of our Operating Partnership to personal liability with respect to this indemnification obligation as this indemnification obligation will be satisfied solely out of the assets of the partnership.
|
| |
disposition of a proceeding, without requiring a preliminary determination of the trustee’s or officer’s ultimate entitlement to indemnification, to (i) any present or former trustee or officer who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity, or (ii) any individual who, while serving as our trustee or officer and at our request, serves or has served as a director, trustee, officer, partner, member or manager of another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity. Our declaration of trust and bylaws also permit us, with the approval of the board of trustees, to indemnify and advance expenses to any person who served one of our predecessors in any of the capacities described above and to any of our employees, agents or predecessors.
The Maryland law permits a Maryland REIT to indemnify and advance expenses to its trustees and officers to the same extent as permitted by the Maryland General Corporation Law (“MGCL”) for directors and officers of Maryland corporations. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless, in either case, a court orders indemnification and then only for expenses. In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met
|
|
|
OP Units
|
| |
Common Shares
|
|
| | | | the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or on his behalf to repay the amount paid or reimbursed by the corporation if it shall ultimately be determined that the standard of conduct was not met. | |
|
Liquidity and Transferability/Redemption at Holder’s Option
|
| |||
| There is no public market for the OP Units and the OP Units are not listed on any securities exchange. | | | Our common shares are listed on the NYSE under the symbol “JBGS.” | |
|
Transfers of OP Units are subject to a number of restrictions contained in the partnership agreement. A limited partner may not transfer its limited partnership interest in the Operating Partnership without first obtaining the approval of the general partner. The partnership agreement prohibits the transfer (including the sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition) of all or any portion of the OP Units without the general partner’s consent, which may be given or withheld in its sole discretion, except for (i) transfers to affiliates of the transferor limited partner, which are permissible without the general partner’s consent, and (ii) transfers by an incapacitated limited partner, in which case such incapacitated limited partner may transfer all or any portion of its partnership units, and (iii) certain other permitted transfers.
The partnership agreement contains other restrictions on transfer if, among other things, that transfer would adversely affect JBG SMITH’s ability to qualify as a REIT or would subject JBG SMITH to any additional taxes under the Code.
|
| | Transfers of our common shares are subject to the ownership limits set forth in our declaration of trust as such limits may be changed by our board of trustees. | |
| Holders of OP Units maintain a right to redeem their OP Units. At any time after the OP Units shall have been outstanding for at least 12 months, each holder of OP Units has the right to require our Operating Partnership to redeem the OP Units held by such limited partners in exchange for cash, subject to certain limitations in terms of timing and the total number of OP Units that can be redeemed in a single year. In our sole and absolute discretion, as general partner, we may assume and satisfy the redemption right by paying either cash or common shares on a one-for-one basis. The cash redemption amount per OP Unit will be equal to the closing price of our common shares on the NYSE on the first business day occurring after the 60th day following the day on which the general partner received the notice of redemption (or on an earlier business day following the receipt of the notice of redemption in the event that we reduce or waive the | | | Our common shares are not redeemable or convertible at the option of the holder. | |
|
OP Units
|
| |
Common Shares
|
|
| notice period). The number of our common shares issuable upon redemption of OP Units held by limited partners may be adjusted as specified in the partnership agreement to take into account prior share dividends or any subdivisions or combinations of our common shares. | | | | |
|
Liquidation Rights
|
| |||
| Upon liquidation of the Operating Partnership, after payment of, or adequate provisions for, debts and obligations of the Operating Partnership, including any partner loans, any remaining assets of the Operating Partnership will be distributed to us and the other limited partners with positive capital accounts in accordance with the respective positive capital account balances of the partners. | | | Holders of our common shares are entitled to share ratably in our assets legally available for distribution to our shareholders in the event of our termination or winding up, after payment of or adequate provision for all of our known debts and liabilities. These rights are subject to the preferential liquidation rights of any other class or series of our shares of beneficial interest. | |
|
Potential Dilution of Rights
|
| |||
| The general partner of the Operating Partnership is authorized, in its sole discretion and without limited partner approval, to cause the Operating Partnership to issue additional limited partnership interests at any time to any person, subject to certain restrictions on issuing limited partnership interests to the general partner. | | | The board of trustees may issue, in its discretion, additional common shares or preferred shares, or securities convertible into common shares or preferred shares. The issuance of additional common shares or preferred shares or other convertible securities may result in the dilution of the interests of the shareholders. | |
|
Liability of Investors
|
| |||
| Under the partnership agreement and applicable Delaware law, the liability of the limited partners for the Operating Partnership’s debts and obligations is generally limited to the amount of their investment in the Operating Partnership. | | | Under Maryland law and our declaration of trust, none of our shareholders will be personally liable by reason of such shareholder’s status as a shareholder for any of our obligations. | |
|
Amendment of the Partnership Agreement or our Declaration of Trust
|
| |||
| Amendments to the partnership agreement may be proposed only by the general partner. The general partner has the power, subject to certain exceptions, to amend the partnership agreement without the consent of the limited partners. However, the partnership agreement may not be amended with respect to any partner adversely affected by such amendment without the consent of such limited partner if such amendment would convert a limited partner’s interest into a general partner’s interest, modify the limited liability of a general partner, or amend certain specified sections of the partnership agreement, including the unit redemption right of the limited partners and the distribution rights of and allocations to the limited partners (except in connection with the creation or issuance of new or additional partnership interests or as otherwise | | | Under Maryland law and our declaration of trust, amendments to our declaration of trust generally must be advised by the board of trustees and approved by the holders of at least a majority of the votes entitled to vote on the matter. | |
|
OP Units
|
| |
Common Shares
|
|
| permitted by the partnership agreement). In addition, certain specified sections of the partnership agreement, including restrictions on the issuance of limited partnership units and restrictions on the transfers by us of limited partnership units, may not be amended without the consent of a majority of the holders of limited partnership units (other than us and our affiliates). | | | | |
|
Certain U.S. Federal Income Tax Matters
|
| |||
| THE U.S. FEDERAL INCOME TAX RULES APPLICABLE TO THE REDEMPTION OF OP UNITS AND THE RECEIPT OF EITHER CASH OR OUR COMMON SHARES, AND THE SUBSEQUENT OWNERSHIP AND DISPOSITION OF OUR COMMON SHARES ARE HIGHLY TECHNICAL AND COMPLEX AND DEPEND TO A SIGNIFICANT DEGREE UPON THE SPECIFIC CIRCUMSTANCES OF THE HOLDER OF OP UNITS. ACCORDINGLY, HOLDERS OF OUR OP UNITS CONSIDERING EXERCISING THEIR REDEMPTION RIGHT ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE REDEMPTION AND SUBSEQUENT OWNERSHIP AND DISPOSITION OF COMMON SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX LAWS, AND POTENTIAL CHANGES IN APPLICABLE TAX LAWS, IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES. | | |||
|
The Operating Partnership itself generally is not required to pay U.S. federal income taxes. Instead, each holder of OP Units includes its allocable share of partnership taxable income or loss in determining its individual U.S. federal income tax liability. Income and loss generally is subject to “passive activity” limitations. Under the “passive activity” rules, partners can generally offset income and loss that is considered “passive” against income and loss from other investments that constitute “passive activities.”
Partnership cash distributions are generally not taxable to a holder of OP Units except to the extent they exceed the holder’s basis in its partnership interest, which will include such holder’s allocable share of the debt of the partnership and income allocated to the partner.
|
| |
We have elected to be taxed as a REIT for federal income tax purposes. A REIT generally is not subject to federal income tax on the income that it distributes to shareholders if it meets the applicable REIT distribution requirements and other requirements for qualification as a REIT. Even a REIT, however, is subject to federal income tax on income that is not distributed and also may be subject to federal income and excise taxes in certain circumstances. In addition, certain subsidiaries of a REIT may be subject to federal income taxation. The maximum federal income tax rate for corporations under current law is 21 percent, but applicable federal income tax rates could change and significant tax rate increases (and other changes) are part of current Biden Administration proposals. In addition, we are subject to applicable state and local taxes and our taxable REIT subsidiaries are subject to federal income tax and applicable state and local taxes.
As long as we qualify as a REIT, distributions of our current or accumulated earnings and profits, other than capital gain dividends discussed below, generally will constitute dividends taxable to our taxable U.S. shareholders as ordinary income and will not be eligible for the dividends-received deduction in the case of U.S. shareholders that are corporations. In addition, these distributions generally will not be eligible for treatment as “qualified dividend income” for individual U.S. shareholders. Generally, the Section 199A 20%
|
|
|
OP Units
|
| |
Common Shares
|
|
| | | |
pass-through business deduction for individuals, estates and trusts (generally available through December 31, 2025) applies to ordinary REIT dividends that are not otherwise treated as capital gains or “qualified dividend income.” Distributions that we properly designate as capital gain dividends will be taxable to our taxable U.S. shareholders as gain from the sale or disposition of a capital asset, to the extent that such gain does not exceed our actual net capital gain for the taxable year. Distributions in excess of current and accumulated earnings and profits will be treated as a nontaxable return of capital to the extent of a U.S. shareholder’s adjusted basis in his common shares, with the excess taxed as capital gain.
Distributions we make and gain arising from the sale or exchange by a U.S. shareholder of our shares will not be treated as passive activity income. As a result, U.S. shareholders generally will not be able to apply any “passive losses” against this income or gain.
|
|
| Holders of units are required, in some cases, to file state income tax returns and/or pay state income taxes in the states in which our Operating Partnership owns property, even if they are not residents of those states. | | | Shareholders who are individuals generally will not be required to file state income tax returns and/or pay state income taxes with respect to our operations and distributions outside of their state of residence. | |
| Non-U.S. holders of units are generally considered to be engaged in a U.S. trade or business on account of their ownership of OP Units. As a result, such holders are generally required to file U.S. federal income tax returns that include their allocable share of our Operating Partnership’s income that is effectively connected to its U.S. trade or business. We generally will withhold at the maximum applicable rate on a non-U.S. holder’s share of our Operating Partnership’s taxable income. If a non-U.S. holder sells or otherwise disposes of its OP Units in a taxable transaction, any gain attributable to U.S. real property interests or a U.S. trade or business generally will be subject to tax (and withholding) as effectively connected income. | | |
Non-U.S. shareholders are not generally considered to be engaged in a U.S. trade or business solely on account of their ownership of our shares. However, non-U.S. shareholders will be treated as recognizing gain that is effectively connected with a U.S. trade or business and subject to U.S. federal income tax to the extent of any distributions with respect to our common shares that are attributable to gain from the sale or exchange of U.S. real property interests, unless the non-U.S. shareholder did not own more than 10% of our common shares at any time during the 1-year period ending on the applicable distribution date. Distributions paid out of our earnings and profits and not designated as capital gain dividends (and, in the case of a non-U.S. shareholder whose ownership of our common shares exceeded 10% during the 1-year period ending on the distribution date, not attributable to gain from the sale or exchange of U.S. real property interests), will be subject to 30% U.S. withholding tax unless a treaty reduction applies. In any event, we generally expect to withhold at least 30% of any distribution (absent appropriate documentation to apply a lower treaty rate). If a non-U.S. shareholder sells or otherwise disposes of our common shares, any gain would be taxed as income effectively connected with a U.S. trade or business (generally in
|
|
|
OP Units
|
| |
Common Shares
|
|
| | | | the same manner as U.S. shareholders are taxed) unless at all times during the 5-year period ending on the date of disposition (i) the non-U.S. shareholder did not own more than 10% of our common shares or (ii) we qualified as a “domestically controlled” REIT. Non-U.S. shareholders subject to withholding under the “Foreign Account Tax Compliance Act,” or “FATCA,” will be subject to 30% withholding on our dividends and, beginning in 2019, on gross proceeds from dispositions of our shares. | |
| | |
Page
|
| |||
| | | | 1 | | | |
| | | | 2 | | | |
| | | | 3 | | | |
| | | | 4 | | | |
| | | | 5 | | | |
| | | | 6 | | | |
| | | | 7 | | | |
| | | | 9 | | | |
| | | | 11 | | | |
| | | | 15 | | | |
| | | | 16 | | | |
| | | | 17 | | | |
| | | | 23 | | | |
| | | | 31 | | | |
| | | | 34 | | | |
| | | | 36 | | | |
| | | | 39 | | | |
| | | | 40 | | | |
| | | | 40 | | | |
| | | | 41 | | | |
| | | | 42 | | |
W>*'!,B,SM39VMC 'A!Q(/XX'!5N5A:O*41:".@:T16W.H'U,
M,)[!K6BO6]O(WQE2\VSHUA8GM=RT" O<*B6WH;-(=K:!BUKVN
MAZEKPV &&WG95!<'&?1D4]0 D@9=9;X81SBV;N>D]O,V=I25PWMCI2]
ML8L!_4T0 6-9^%
M/CJJ>%**H@G91,$HJ$KM=EV+>F2+EB[,Q]:=QWO=TTN#:(MJU(61GYR17'MY
M;.,BV[IXN)2]IA*00(4!$P@ "-=*NN%#;*9];<9TJ11L$7/F.:QC1UN<0!XR
MN
]HN47L"E=D'939^V5!=I(.\:65;&.YA\R<%]!PQ=35KN#(
M*%$2'1$IBB(" CZ7
=CU%,'
M5%J)G2XQ+".V!U8G7#HP/ !Q4;.[+/NVP[@D;4OBU[ALVZ8=86TM;=U0LE;T
M]%N #7D2$/+-FD@R5T'7A43*.E;0T=;1W"G95T,V7.I'B+7RW!['#I:YI((Z
MP5@SO6Q7L5P\XS#E
M5.5DF2TW%VQ;5JVX5BM
DE%[F-$W4X @8$L CCQ6-V_>]+7UDJB;(F-=,>&Q
M)$!')7V@'4/W?J#I4!+-PM:(K6^_[JJ8EZ>UW8\M/)..LC7JXR) S4]&N;("
MVN0Q;PKYG'K)/!GYR)4,LLJ\ 2\LIR\(#J.H:5*G+KE/=^8]+55=LJ::1+I9
MC6.$W7%Q>W4"W0UV &&/%8W?=R2+$^7+FRGS'3 2($"$##CX0NR=/CJ8XJZB
M8Y<#&5@Y L?Y'_4'SL;Z]7 \S'('KIY;Y7ZOS4O_ ,2]2''/YO+^ZI\'%Z7#
M\>8W*ZZ\MO(_I.IIZCRWOM/=:^SW/=1U:VMS[T0A'(QX+G8=PRK]WO=2W2^Z
MTQB08ZM71T:?15R2HQ60I1%$/]IY_#/:%^*^8?OMC^MQ_-9_0;S\=3^]FJ*^
M8?Z72_%S/3:N3V88/Z7;OQ[/P;PY]\\B53SI_P!!LWQM3[V2G+S]+JOBV>FY
M2#^I3^K_ -XWT>,H_DL_K77E=^L2R_:,GWX6=;B^HZKXDK' 8ULEWDK(U@XY
M8/6\:^O^];6LIE(NR**M6#NZIUA!-GKE)$065;M5GY3G*3TC%*(!VUZ77.N9
M;+;/N4QI=+IY#YA S(8TN($<(D" 4"RV.FO$IGJG.@(X8QXE2)7OLS^X))FH
MNRW&XCF<
M.XJLK*-OST'88=-/
M_.JY\Q,:BD]Q,]\Q>5>S(_GMW0?U6V3^5C^KUYT?W>M?SQ_R:ZNP/K6;\W/O
MV*4AO _1-W/?1ZS3\VMS5J7M#[WVC[4I?EV*3+I]65/S>;[QRQC=H?A9; _\
MX(;[X-Z]4*C]'?[@^D5KI._)O]R?2*RMQ?L2_P#!#]ZO(Y;,G-;J(H(GM$(?
M^(.4?_T7C7ZK^[:W^\W+]7(^?3_\Q0MO7Z^=\4SWH5XSV:3]#?-?TFYWYJ\5
M5"OG/_?.@^S&_+SUE?+_ .K9WQH]Z%(OK6M9\K/W7=#_ ,,G/']^,0?/'8=3
M-R!_6C0?%U']GF+%-Z_4$WW
IX+Z+\DCY?X)QYKX7R_DJ>+\;RO">'X1YOB
M>=]JY/!KQ<7HZ=_97T9KUCNM7>1$-,8QX0AC'P*ATP.J&F!C'*$,8^)=*+\E
M/"'#\GW#IV?@[W5WF_2NGL^4:?VZZI\@CCW,?VJU'Y*].WY/_P#J[51]+\/*
M?WZ?F/\ (_O5VIAY%X4GEGEG@>SE^!\-X/30NG+\/]HTTX>[X*MT_5WCO*M7
M>0QUQC#]MP]!=B3W>GX#3I]K"&6.75Z"^L7AT#ATTT[-.[3X/
3"3ULY3U*]?M#LWNH)J-&Q1%0.UI_.7MU3>GTM=;ILO3#QE$QK
MXSQ'#.Y@@V!![UCLS81#WQ9G#2KE40FR*AKKF#$M(][/,''&/.X 1Y-I[
M\V_>;'ES:[<,;MZ\R[#T_C&59=*+@,P0%HIM(&0C&7*S1?24!;B2EOSD.B)!
M)[UM85VO*!2>!*8BB@X[J/@Y9=64S]3\*:Z55R7]9].^9%P<8N(:]_78\Q^#
MJ,IB22_$!=E;=9UUH>VV:IIW2GM F!H&&P$M;U2 /7RR00, 22XV \>9/Q]
ME>UH^]<<7I;-\6G*IE5C[@MB983,6X 2%. ]Z'1.Q8+[D7!FS+T/BI^H];\EYQ\
8XD*)4DZ%:SO5MU%J>JO-II&45#.?U9;1",(^^. BT/?',
M\,@R.R)BXS]8J&JMMKE45;-,ZH8,7$QA[4' EK=@+L8:9-.1I[C!,(YX%9M&RQI&*@YV"<.@ 01,\8H(.#@)$E#F*(5(>B^*6DM=S'
M4MHFS)=P:W-V,YH9,+1M