-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OecmDN9x9fKxVmOVXb8Dus6E43kdMAlm+hdjJeuBBBxZuZq+ZGQsSaeRcqK5piQI QFM2Mc81qTP/il+02Cvyww== 0000892626-01-500161.txt : 20020410 0000892626-01-500161.hdr.sgml : 20020410 ACCESSION NUMBER: 0000892626-01-500161 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMLI RESIDENTIAL PROPERTIES TRUST CENTRAL INDEX KEY: 0000914724 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363925916 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12784 FILM NUMBER: 1783385 BUSINESS ADDRESS: STREET 1: 125 S WACKER DR STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124431477 FORMER COMPANY: FORMER CONFORMED NAME: AMLI RESIDENTIAL PROPERTIES INC DATE OF NAME CHANGE: 19931112 10-Q 1 amli_901.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2001 Commission File Number 1-12784 AMLI RESIDENTIAL PROPERTIES TRUST (Exact name of registrant as specified in its charter) Maryland 36-3925916 (State of Organization) (I.R.S. Employer Identification No.) 125 South Wacker Drive, Suite 3100, Chicago, Illinois 60606 (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: (312) 443-1477 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ( X ) No ( ) The number of the Registrant's Common Shares of Beneficial Interest outstanding was 17,847,398 as of September 30, 2001. INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000 . . . . 3 Consolidated Statements of Operations for the three and nine months ended September 30, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . 5 Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 2001 . . 7 Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2000. . 9 Notes to Consolidated Financial Statements . . . . 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . 38 Item 3. Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . . . . 47 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 53 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 54 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2001 AND DECEMBER 31, 2000 (Dollars in thousands, except share data) SEPTEMBER 30, DECEMBER 31, 2001 2000 (UNAUDITED) (AUDITED) ------------- ------------ ASSETS: Rental apartments: Land. . . . . . . . . . . . . . . $ 99,776 91,242 Depreciable property. . . . . . . 643,335 604,081 ---------- ---------- 743,111 695,323 Less accumulated depreciation . . (101,858) (94,590) ---------- ---------- 641,253 600,733 Rental community under development . . . . . . . . . . . 6,791 -- Land held for development or sale . 48,288 53,022 Investments in partnerships . . . . 183,606 166,569 Cash and cash equivalents . . . . . 3,774 5,106 Deferred expenses, net. . . . . . . 4,054 3,425 Notes receivable from and advances to Service Companies. . . . . . . 17,161 4,857 Other assets. . . . . . . . . . . . 8,060 32,279 ---------- ---------- Total assets $ 912,987 865,991 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY: LIABILITIES: Debt (note 5) . . . . . . . . . . . $ 408,475 385,981 Accrued interest payable. . . . . . 1,905 1,783 Accrued real estate taxes payable . 11,228 10,806 Construction costs payable. . . . . 3,135 1,501 Security deposits and prepaid rents 2,177 2,507 Other liabilities . . . . . . . . . 7,288 3,937 ---------- ---------- Total liabilities . . . . 434,208 406,515 ---------- ---------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS - CONTINUED SEPTEMBER 30, DECEMBER 31, 2001 2000 (UNAUDITED) (AUDITED) ------------- ------------ Commitments and contingencies (note 6) Minority interest . . . . . . . . . 69,658 59,537 ---------- ---------- SHAREHOLDERS' EQUITY (note 2): Series A Cumulative Convertible Preferred shares of beneficial interest, $0.01 par value, 1,500,000 authorized, 1,200,000 issued and 350,000 outstanding (aggregate liquidation preference of $7,073) . . . . . . . . . . . . 4 4 Series B Cumulative Convertible Preferred shares of beneficial interest, $0.01 par value, 3,125,000 authorized, issued and outstanding (aggregate liquidation preference of $76,469) . . . . . . . . . . . . . 31 31 Shares of beneficial interest, $0.01 par value, 145,375,000 authorized, 17,847,398 and 17,849,504 common shares issued and outstanding, respectively. . . 178 178 Additional paid-in capital. . . . . 430,069 427,939 Employees' and Trustees' notes. . . (11,808) (12,231) Accumulated other comprehensive loss. . . . . . . . . . . . . . . (3,216) -- Distributions in excess of earnings (6,137) (15,982) ---------- ---------- Total shareholders' equity. . . . . . . . . 409,121 399,939 ---------- ---------- Total liabilities and shareholders' equity. . $ 912,987 865,991 ========== ========== See accompanying notes to consolidated financial statements. AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (UNAUDITED) (Dollars in thousands, except share data)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 2001 2000 2001 2000 -------- -------- -------- -------- Revenues: Property: Rental. . . . . . . . . . . . . . . . . . . . $ 27,263 26,831 81,092 79,880 Other . . . . . . . . . . . . . . . . . . . . 1,856 1,823 5,186 5,018 Interest and share of income (loss) from Service Companies . . . . . . . . . . . . . . (169) 571 (281) 4,397 Other interest. . . . . . . . . . . . . . . . . 349 381 1,152 990 Income from partnerships. . . . . . . . . . . . 2,059 1,999 6,724 4,516 Other . . . . . . . . . . . . . . . . . . . . . 2,940 2,530 4,202 4,256 -------- -------- -------- -------- Total revenues. . . . . . . . . . . . . 34,298 34,135 98,075 99,057 -------- -------- -------- -------- Expenses: Personnel . . . . . . . . . . . . . . . . . . . 2,916 2,773 8,611 8,322 Advertising and promotion . . . . . . . . . . . 820 667 2,150 1,759 Utilities . . . . . . . . . . . . . . . . . . . 1,046 975 2,691 2,474 Building repairs and maintenance and services. . . . . . . . . . . . . . . . . 1,818 1,548 4,754 4,378 Landscaping and grounds maintenance . . . . . . 664 617 1,816 1,833 Real estate taxes . . . . . . . . . . . . . . . 3,474 3,391 10,429 10,218 Insurance . . . . . . . . . . . . . . . . . . . 284 211 880 669 Property management fees. . . . . . . . . . . . 865 714 2,294 2,120 Other operating expenses. . . . . . . . . . . . 262 373 862 1,028 Interest. . . . . . . . . . . . . . . . . . . . 6,824 6,353 19,603 18,243 Amortization of deferred costs. . . . . . . . . 154 101 599 340 Depreciation . . . . . . . . . . . . . . . . . 5,158 4,638 15,798 14,630 General and administrative. . . . . . . . . . . 1,221 842 3,890 2,700 -------- -------- -------- -------- Total expenses. . . . . . . . . . . . . 25,506 23,203 74,377 68,714 -------- -------- -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 2001 2000 2001 2000 -------- -------- -------- -------- Income before gains on sales and minority interest . . . . . . . . . . . . . . . 8,792 10,932 23,698 30,343 Gains on sales of residential properties, including share of gains on sales of partnership properties of $9,603 and $6,807 in the periods ended September 30, 2001 and 2000, respectively. . . . . . . . . . . . . 14,047 6,807 23,296 37,274 -------- -------- -------- -------- Income before minority interest . . . . . . . . . 22,839 17,739 46,994 67,617 Minority interest . . . . . . . . . . . . . . . . 3,595 2,497 7,120 10,353 -------- -------- -------- -------- Net income. . . . . . . . . . . . . . . 19,244 15,242 39,874 57,264 Less income attributable to preferred shares. . . . . . . . . . . . . . . . 1,633 1,766 4,899 5,424 -------- -------- -------- -------- Net income attributable to common shares . . . . . . . . . . . . $ 17,611 13,476 34,975 51,840 ======== ======== ======== ======== Net income per common share - basic . . . . . . . $ 0.99 0.77 1.97 3.02 ======== ======== ======== ======== Net income per common share - diluted . . . . . . $ 0.89 0.71 1.86 2.70 ======== ======== ======== ======== Dividends declared and paid per common share. . . . . . . . . . . . . . . . $ 0.47 0.47 1.41 1.40 ======== ======== ======== ======== See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2001 (Dollars in thousands)
SHARES OF BENEFICIAL INTEREST EMPLOYEES' ACCUMULATED -------------------------------- ADDITIONAL AND OTHER DIVIDENDS PREFERRED COMMON PAID-IN TRUSTEES' COMPREHEN- IN EXCESS SHARES SHARES AMOUNT CAPITAL NOTES SIVE LOSS OF EARNINGS TOTAL --------- ---------- ------ --------- ----------- ---------- ----------- -------- Balance at December 31, 2000 3,475,000 17,849,504 $213 427,939 (12,231) -- (15,982) 399,939 Comprehensive income: Net income. . . . -- -- -- -- -- -- 39,874 39,874 Preferred Share dividends paid . -- -- -- -- -- -- (4,900) (4,900) Net cumulative effect adjustment of loss on deriva- tive contracts . -- -- -- -- -- (1,249) -- (1,249) Current period loss on derivative contracts. . . . -- -- -- -- -- (1,967) -- (1,967) -------- Comprehensive income attributable common shares. . . 31,758 -------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED NINE MONTHS ENDED SEPTEMBER 30, 2001 (Dollars in thousands) SHARES OF BENEFICIAL INTEREST EMPLOYEES' ACCUMULATED -------------------------------- ADDITIONAL AND OTHER DIVIDENDS PREFERRED COMMON PAID-IN TRUSTEES' COMPREHEN- IN EXCESS SHARES SHARES AMOUNT CAPITAL NOTES SIVE LOSS OF EARNINGS TOTAL --------- ---------- ------ --------- ----------- ---------- ----------- -------- Common Share distributions. . . -- -- -- -- -- -- (25,129) (25,129) Shares issued in connection with: Executive Share Purchase Plan. . -- 12,434 -- 282 -- -- -- 282 Option Plan . . . -- 37,000 -- 690 -- -- -- 690 Units converted . -- 118,860 1 2,163 -- -- -- 2,164 Employees' and Trustees' notes, net of repayments -- -- -- -- 423 -- -- 423 Shares repurchased. -- (170,400) (1) (3,736) -- -- -- (3,737) Reallocation of minority interest. -- -- -- 2,731 -- -- -- 2,731 --------- ---------- ---- ------- ------- ------- ------- ------- Balance at September 30, 2001. . . . . . . 3,475,000 17,847,398 $213 430,069 (11,808) (3,216) (6,137) 409,121 ========= ========== ==== ======= ======= ======= ======= ======= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (UNAUDITED) (Dollars in thousands) 2001 2000 -------- -------- Cash flows from operating activities: Net income. . . . . . . . . . . . . . . . $ 39,874 57,264 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . 16,397 14,970 Cash distributions from partnerships in excess of share of income. . . . 3,290 2,497 Loss (income) from Service Companies. 1,022 (883) Gains on sales of residential properties. . . . . . . . . . . . . (13,693) (30,467) Share of partnership gain on sale of a residential property. . . . . . . (9,603) (6,807) Minority interest . . . . . . . . . . 7,120 10,353 Changes in assets and liabilities: Increase in deferred costs. . . . . . (251) (176) Decrease (increase) in other assets . 20 (3,053) (Decrease) increase in accrued real estate taxes. . . . . . . . . . . . (357) 774 Increase in accrued interest payable. 122 16 Decrease in tenant security deposits and prepaid rents . . . . . . . . . (330) (268) Increase (decrease) in other liabilities . . . . . . . . . . . . 134 (336) -------- ------- Net cash provided by operating activities. . . . . . 43,745 43,884 -------- ------- Cash flows from investing activities: Net cash proceeds from sales of residential properties. . . . . . . . . 59,799 64,862 Investments in partnerships, net of Operating Partnership units issued. . . (3,693) (34,779) Share of partnership net cash proceeds from sale of a residential property . . 10,467 5,904 (Advances to) repayments from affiliates. (6,621) 5,300 Decrease (increase) in earnest money deposits. . . . . . . . . . . . . . . . 590 (3,233) Acquisition properties, net of Operating Partnership units issued. . . . . . . . (76,866) (43,879) Capital expenditures - rehab properties . (1,110) (5,641) Capital expenditures - other properties . (4,584) (3,700) Properties under development, net of co-investors' share of costs. . . . . . (8,661) (25,749) Increase in construction costs payable. . 1,634 65 -------- ------- Net cash used in investing activities. . . . . . (29,045) (40,850) -------- ------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 2001 2000 -------- -------- Cash flows from financing activities: Debt proceeds, net of financing costs . . 256,893 331,000 Debt repayments . . . . . . . . . . . . . (235,406) (301,585) Proceeds from issuance of Executive Share Purchase Plan shares and Option Plan shares, net of Employees' and Trustees' notes . . . . . . . . . . . . 1,394 871 Repurchase of shares of beneficial interest - common shares. . . . . . . . (3,737) -- Distributions to partners . . . . . . . . (5,147) (4,775) Dividends paid. . . . . . . . . . . . . . (30,029) (29,343) -------- ------- Net cash used in financing activities. . . . . . (16,032) (3,832) -------- ------- Net change in cash and cash equivalents . . (1,332) (798) Cash and cash equivalents at beginning of period . . . . . . . . . . . 5,106 2,318 -------- ------- Cash and cash equivalents at end of period . . . . . . . . . . . . . . $ 3,774 1,520 ======== ======= Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest, net of amounts capitalized. . . . . . . $ 19,481 18,227 ======== ======== See accompanying notes to consolidated financial statements. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2001 AND 2000 (Unaudited) (Dollars in thousands, except share data) 1. ORGANIZATION AND BASIS OF PRESENTATION Organization AMLI Residential Properties Trust (the "Company") commenced operations upon the completion of its initial public offering on February 15, 1994. In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the financial position at September 30, 2001 and December 31, 2000 and the results of operations and cash flows for the periods presented, have been made. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2000 Annual Report and in Form 10-K filed with the Securities and Exchange Commission. The results for the nine months ended September 30, 2001 are not necessarily indicative of expected results for the entire year. The consolidated financial statements include the accounts of the Company and AMLI Residential Properties, L. P. (the "Operating Partnership" which holds the operating assets of the Company). The Company is the sole general partner and owned an 85% majority interest in the Operating Partnership at September 30, 2001. The limited partners hold Operating Partnership units ("OP Units") which are convertible into shares of the Company on a one-for-one basis, subject to certain limitations. At September 30, 2001, there are 3,684,866 OP Units held by the limited partners. The Company owns 5% of the voting control and 95% of economic benefit of unconsolidated subsidiaries which provide property management, construction, and institutional advisory services for the Company and its co-investment partnerships. These Service Company subsidiaries elected taxable REIT subsidiary status for IRS reporting purposes as of January 1, 2001. This election has not affected the ownership structure of the Service Company subsidiaries and, accordingly, the Company's use of the equity method to account for these subsidiaries continues to be applied consistently with prior years. The Company's management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the report periods to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual amounts realized or paid could differ from these estimates. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Real Estate Assets At September 30, 2001, the Company was continuing the second phase of the rehab of AMLI at Valley Ranch. Starting in 1999 and through September 30, 2001, the Company has spent $2,090 on the rehab of this property and expects to spend an additional $1,042 in the period from October 2001 through December 2002 to complete the rehab. All costs (except costs to routinely paint the interiors of units at turnover) associated with a rehab are capitalized and depreciated over their policy lives. Rental Communities Under Development At September 30, 2001, the Company has eight communities under development including seven in joint ventures with co-investment partners as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
TOTAL NUMBER NUMBER TOTAL ESTIMATED OF OF EXPENDED COSTS UPON COMMUNITY LOCATION ACRES UNITS THRU 9/30/01 COMPLETION - --------- -------- ------ ------ ------------ ---------- Wholly-Owned: Development Communities: AMLI: at Carmel Center Carmel, IN 15 322 $ 6,791 28,400 --- ----- -------- -------- Co-Investments (Company Ownership Percentage): Development Communities: AMLI: at Mill Creek (25%) Gwinnett County, GA 33 400 25,544 27,100 at Milton Park (25%) Alpharetta, GA 21 461 10,526 35,000 at Kedron Village (20%) Peachtree City, GA 21 216 11,650 20,200 at King's Harbor (25%) Houston, TX 15 300 19,331 19,800 at Cambridge Square (30%) Overland Park, KS 21 408 22,661 32,200 at Summit Ridge (25%) Lee's Summit, MO 24 432 27,992 29,300 at Seven Bridges (20%) Woodridge, IL 13 520 11,106 82,200 --- ----- -------- -------- Total co-investment development communities 148 2,737 128,810 245,800 --- ----- -------- -------- Total wholly-owned and co-investments 163 3,059 $135,601 274,200 === ===== ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Land Held for Development or Sale At September 30, 2001, the Company owns several parcels of land, which are currently being planned for development, being held for future development or being considered for sale.
NUMBER NUMBER TOTAL OF OF EXPENDED COMMUNITY LOCATION ACRES UNITS THRU 9/30/01 - --------- -------- ------ ------ ------------ Wholly-Owned: Land Held for Development or Sale: AMLI: at Champions II (1) Houston, TX 14 288 $ 3,059 at Mesa Ridge (1) Ft. Worth, TX 27 520 4,556 at Fossil Lake (1) Ft. Worth, TX 19 324 3,371 at Fossil Creek IV-A (1) Ft. Worth, TX 15 240 2,396 at Prairie Lakes I Noblesville, IN 17 228 1,136 at Prairie Lakes II-IV Noblesville, IN 103 1,100 6,145 at Anderson Mill (1) Austin, TX 39 520 4,518 at Downtown Austin Austin, TX 2 220 10,746 at Parmer Park Austin, TX 28 480 4,576 at Vista Ridge City of Lewisville, TX 15 340 3,569 at Westwood Ridge Overland Park, KS 30 428 3,443 at Lexington Farms II Overland Park, KS 7 104 773 --- ----- -------- Total land held for development 316 4,792 $ 48,288 === ===== ======== (1) The Company has expensed interest carry of $813 on these land parcels for the nine months ended September 30, 2001.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Acquisition The table below summarizes the properties acquired by the Company during 2000-2001:
Year Number Com- of pleted Date Purchase Total Community Location Units (1) Acquired Price Debt Equity - --------- -------- -------- -------- -------- -------- ------ -------- WHOLLY-OWNED: AMLI: at StoneHollow (2). . . . . . Austin, TX 606 1997 2/3/00 $36,806 -- 36,806 at Towne Creek (2)(3) . . . . Gainesville, GA 150 1989 2/8/00 6,617 -- 6,617 at Western Ridge (2). . . . . . Houston, TX 318 2000 12/28/00 20,000 -- 20,000 at Gateway Park (2). . . . . . Denver, CO 328 2000 1/29/01 33,050 -- 33,050 at Stonebridge Ranch (2). . . McKinney, TX 250 2001 6/11/01 17,110 -- 17,110 at the Medical Center (2) . . Houston, TX 334 2000 8/7/01 27,150 -- 27,150 at Shadow Ridge (2). . . . . . Flower Mound, TX 222 2000 8/31/01 18,000 -- 18,000 ------ -------- ------ ------- Total wholly-owned 2,208 158,733 -- 158,733 ------ -------- ------ ------- CO-INVESTMENTS (Company ownership percentage): AMLI: Midtown (45%). . Houston, TX 419 1998 1/13/00 33,250 21,945 11,305 on Frankford (45%) . . . . . Dallas, TX 582 1998 6/27/00 38,819 25,710 13,109 at Peachtree City I (20%) (4) . . . . . . Fayette County, GA 312 1998 6/29/00 28,630 -- 28,630 at Scofield Ridge (45%) . . . . . Austin, TX 487 2000 8/15/00 37,300 24,618 12,682 at Breckinridge Point (45%) . . Richardson, TX 440 1999 9/11/00 33,500 22,110 11,390 AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Year Number Com- of pleted Date Purchase Total Community Location Units (1) Acquired Price Debt Equity - --------- -------- -------- -------- -------- -------- ------ -------- at Lowry Estates (50%) . . . . . Denver, CO 414 2000 12/19/00 51,200 33,900 17,300 Towne Square (45%) . . . . . Houston, TX 380 1999 12/28/00 32,500 21,450 11,050 at Osprey Lake (69%) (5) . . . Gurnee, IL 483 1997/99 2/1/01 52,000 35,320 16,680 ------ -------- ------- ------- Total co-investments 3,517 307,199 185,053 122,146 ------ -------- ------- ------- Total wholly-owned and co-investments 5,725 $465,932 185,053 280,879 ====== ======== ======= ======= (1) These acquisitions, coupled with new development and the dispositions of selected older communities, have decreased the weighted average age of AMLI's wholly-owned and co-investment portfolio of apartment homes to approximately six years (approximately eight years for the wholly-owned portfolio and four years for the co-investment portfolio). (2) These acquisitions completed deferred third party exchanges for Federal income tax purposes. The Company issued 86,494 and 109,748 OP Units as part of the total payment for the acquisition of AMLI at Gateway Park and AMLI at the Medical Center, respectively. (3) The Company acquired the 99% interest in the community that it did not already own. This property was a leasehold interest subject to a ground lease. The Company acquired the fee ownership of the underlying land which was contributed on March 30, 2001 to the Company in exchange for 40,136 OP Units. (4) The Company's 20% interest in AMLI at Peachtree City I is a result of the Company's sale of an 80% interest in this property. (5) The Company issued 333,610 OP Units for a 43% interest in this property which was contributed to a joint venture with a private real estate investment trust in which AMLI owned a 44% interest.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED DISPOSITION The Company selectively sells properties and reinvests the proceeds in new communities to continually improve the quality of its portfolio and increase the potential for growth in net operating income. The gains on sales of residential communities are reported separately in the accompanying Statements of Operations and neither the properties' selling prices nor related gains are included in revenues in the accompanying consolidated Statements of Operations. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The table below summarizes the properties sold by the Company during 2000-2001
Net Operating Income in Twelve Months Costs Immediately Year Before Prior to Number Acquired/ Date Depre- Sale Net Date of Community Location of Units Developed Sold ciation Price Proceeds Gain (6) Sale - --------- -------- -------- --------- -------- -------- -------- -------- -------- ----------- WHOLLY-OWNED: AMLI at: Sope Creek (1) Marietta, GA 695 82/83/95 2/3/00 27,604 42,500 42,105 22,316 4,014 Peachtree City I (2) Fayette County, GA 312 1998 6/29/00 16,062 22,904 22,757 8,151 2,084 the Arbore- tum and Austin, TX 591 1986 12/6/00 28,074 35,650 35,062 12,914 3,029 Martha's Vineyard (3) 1992 12/21/00 AutumnChase (4) Carrollton, TX 690 87/96/99 6/5/01 29,850 40,550 39,144 9,249 3,608 Alvamar Lawrence, KS 152 1994 7/27/01 8,263 8,900 8,794 2,036 740 Rosemeade (5)Dallas, TX 236 1990 8/24/01 11,653 12,430 11,861 2,408 1,045 ----- ------- ------- ------- ------- ------- Total wholly-owned 2,676 121,506 162,934 159,723 57,074 14,520 ----- ------- ------- ------- ------- ------- AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Net Operating Income in Twelve Months Costs Immediately Year Before Prior to Number Acquired/ Date Depre- Sale Net Date of Community Location of Units Developed Sold ciation Price Proceeds Gain (6) Sale - --------- -------- -------- --------- -------- -------- -------- -------- -------- ----------- CO-INVESTMENTS (Company owner- ship percentage): AMLI at: Pleasant Hill (40%) Atlanta, GA 502 1996 9/28/00 26,445 39,104 37,983 13,829 3,382 Willowbrook (40%) Willowbrook, IL 488 1996 7/31/01 39,402 58,500 57,611 24,008 4,209 ----- -------- ------- ------- ------- ------- Total co-investments 990 65,847 97,604 95,594 37,837 7,591 ----- -------- ------- ------- ------- ------- Total wholly-owned and co-investments 3,666 $187,353 260,538 255,317 94,911 22,111 ===== ======== ======= ======= ======= ======= (1) The net proceeds from this sale were used to acquire AMLI at StoneHollow and AMLI at Towne Creek in completion of a deferred third party exchange for Federal income tax purposes. (2) Costs, sale price, net proceeds and gain are stated at 80%, which represents the Company's ownership percentage that was sold to a co-investment partnership. The Company contributed its remaining ownership in the property for which it received a 20% partnership interest. (3) The net proceeds from these sales were used toward the acquisitions of AMLI at Western Ridge and AMLI at Gateway Park, in completion of deferred third party exchanges for Federal income tax purposes. (4) The net proceeds from the sale of Phase I of this community were used to acquire AMLI at Stonebridge Ranch in a deferred third party exchange for Federal income tax purposes. The remaining proceeds were used for the acquisition of AMLI at the Medical Center to complete the deferred third party exchange for Federal income tax purposes. (5) The net proceeds from this sale were used to fund the acquisition of AMLI at Shadow Ridge in completion of a deferred third party exchange for Federal income tax purposes. (6) Gains on sales of co-investment properties are shown net of disposition fees paid to the Company by the co-investment partnerships.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED DERIVATIVE/FINANCIAL INSTRUMENTS In the normal course of business, the Company uses a variety of derivative financial instruments to manage or hedge interest rate risks. The Company requires that hedging derivative instruments are effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Some derivative instruments are associated with the hedge of an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income each period until the instrument matures. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market each period. To determine the fair values of derivative instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost, and termination costs are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such value may or may not actually be realized. STANDARDS IMPLEMENTED AND TRANSITION ADJUSTMENT On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments. Specifically SFAS No. 133 requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either shareholders' equity or net income depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity. As of January 1, 2001, the adoption of the new standard resulted in derivative instruments reported on the balance sheet as liabilities of $1,277 and as "Accumulated Other Comprehensive Income (Loss)" of $1,249, which are gains and losses not affecting retained earnings in the Consolidated Statement of Stockholders' Equity. As of September 30, 2001, the liabilities increased by $2,828 to $4,105 and Accumulated Other Comprehensive Loss increased by $1,967 to $3,216. The Company anticipates that approximately $1,900 of the $3,216 Other Comprehensive Loss will be charged against earnings over the twelve months ending September 30, 2002. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED As a result of a reduced level of borrowings under the Company's unsecured line of credit following a $140,000 fixed rate financing and a sale of a co-investment property, $20,000 of the total $75,000 in interest rate swap contracts held by the Company no longer hedge any exposure to floating rate debt. A $785 charge against earnings was recorded in the three and nine months ended September 30, 2001 for the value of this $20,000 notional amount of derivative contracts. "Accounting for Certain Transactions Involving Stock Compensation," an interpretation of APB No. 25, became effective July 1, 2000 and had no material impact on the Company's financial statements. The Service Companies recorded a pre-tax charge against earnings of $195 for the nine months ended September 30, 2001 as a result of implementing this statement. Statement of Financial Accounting Standards No. 142 "Accounting for Goodwill and Other Intangible Assets," issued in 2001, requires, among other things, that effective January 1, 2002 goodwill resulting from a business combination accounted for as a purchase no longer be amortized, but be subjected to ongoing impairment review. The only goodwill included in the accounts of the Company and its unconsolidated subsidiaries is $3,300 recorded on the books of an unconsolidated subsidiary. This amount is being amortized using the straight-line method over the five year period ended December 31, 2002. When the new accounting literature is implemented by the Company on the effective date, the remaining unamortized goodwill of $668 will not be charged to expense in 2002, so that the Company's share of income in 2002, net of tax effect will be approximately $400 greater than would have otherwise been recorded had this change not been required. On July 19, 2001, the SEC issued interpretative guidance relating to the "Classification and Measurement of Redeemable Securities". This ruling requires, among other things, that preferred shares subject to redemption upon change in control (as is the case with both the Company's Series B Preferred Shares issued on February 20, 1998 and its Series D Preferred Shares issued on October 31, 2001) be classified outside of permanent equity. In accordance with the required implementation of this new requirement, the Company will restate its balance sheets from prior periods to reflect its Series B Preferred Shares outside of its permanent capital, starting with its annual report on Form 10-K reporting its financial position as of December 31, 2001 and 2000. This restatement of the Company's balance sheets will have no effect on its income reported during those periods. DERIVATIVES AND HEDGING In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company limits these risks by following established risk management policies and procedures including the use of derivatives. For interest rate exposures, derivatives are used primarily to align rate movements between interest rates associated with the Company's rental income and other financial assets with interest rates on related debt, and manage the cost of borrowing obligations. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The Company does not enter into derivative contracts for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with major financial institutions based upon their credit rating and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives. To manage interest rate risk, the Company may employ options, forwards, interest rate swaps, caps and floors or a combination thereof depending on the underlying exposure. The Company undertakes a variety of borrowings: from lines of credit, to medium- and long-term financings. To reduce overall interest cost, the Company uses interest rate instruments, typically interest rate swaps, to convert a portion of its variable rate debt to fixed rate debt, or even a portion of its fixed-rate debt to variable rate. Interest rate differentials that arise under these swap contracts are recognized in interest expense over the life of the contracts. The resulting cost of funds is usually lower than that which would have been available if debt with matching characteristics was issued directly. The Company also employs forwards or purchase options to hedge qualifying anticipated transactions. Gains and losses are deferred and recognized in net income in the same period that the underlying transaction occurs, expires or is otherwise terminated. As of September 30, 2001, there were deferred losses from hedging positions of $3,216, which are reported in Accumulated Other Comprehensive Loss, a shareholders' equity account. As of January 1, 2001, $1,249 was incurred and an additional $1,967 was recorded during the nine months ended September 30, 2001. The following table summarizes the notional value, carrying value and fair value of the Company's derivative financial instruments, principally interest rate swap contracts. The notional value at September 30, 2001, provides an indication of the extent of the Company's involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Approximate Cumulative Liability at Notional Fixed Term of Contract Cash September 30, Amount Rate(1) Contract Maturity Paid, Net 2001 (2) - -------- ------- -------- --------- ---------- ------------- $10,000(3) 6.216% 5 years 11/01/02 $ 246 403 10,000(3) 6.029% 5 years 11/01/02 176 382 20,000 6.145% 5 years 02/15/03 440 923 10,000 6.070% 5 years 02/18/03 193 459 15,000 6.405% 5 years 09/20/04 216 1,149 10,000 6.438% 5 years 10/04/04 131 789 - ------- ------ ----- $75,000 $1,402 4,105 ======= ====== ===== (1) The fixed rate for the swaps includes the swap spread (the risk component added to the Treasury yield to determine a fixed rate) and excludes lender's spread. (2) Represents the approximate amount which the Company would have paid as of September 30, 2001 if these contracts were terminated. This amount was recorded as a liability in the accompanying balance sheet as of September 30, 2001. (3) These contracts were marked-to-market in the quarter ended September 30, 2001 and the Company recorded interest expense of $785 included in the accompanying Statements of Operations for the three and nine months ended September 30, 2001.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED On September 30, 2001, the derivative instruments were reported at their fair value as Other Liabilities of $4,105 which increased by $2,828 from $1,277 as of January 1, 2001. The offsetting adjustments were reported as losses in Accumulated Other Comprehensive Loss of $3,216 ($1,249 at January 1, 2001 and increased by $1,967 at September 30, 2001) and an adjustment to earnings of $104 due to a small ineffectiveness on the swaps ($28 as of January 1, 2001 and $76 for the nine months ended September 30, 2001). Furthermore, two $10,000 notional amount swap contracts were marked-to-market resulting in an additional $785 interest expense recorded in the third quarter ended September 30, 2001. All the Company's hedges that are reported at fair value and are represented on the balance sheet are characterized as cash flow hedges. These transactions hedge the future cash flows of debt transactions. Interest rate swaps that convert variable payments to fixed payments, interest rate caps, floors, collars, and forwards are cash flow hedges. The unrealized gains/losses in the fair value of these hedges are reported on balance with a corresponding adjustment to either Accumulated Other Comprehensive Income or in earnings--depending on the type of hedging relationship. If the hedging transaction is a cash flow hedge, then the offsetting gains and losses are reported in accumulated other comprehensive income. If the hedging transaction is characterized as a fair value hedge, then the changes in fair value of the hedge and the hedged item are reflected in earnings. If the fair value hedging relationships is fully effective, there is no net effect reflected in income or FFO. Over time, the unrealized gains and losses held in accumulated other comprehensive income will be reclassified to earnings. This reclassification is consistent with when the hedged items are also recognized in earnings. The Company hedges its exposure to the variability in future cash flows for forecasted transactions over a maximum period of 12 months. During the forecasted period, unrealized gains and losses in the hedging instrument will be reported in accumulated other comprehensive income. Once the hedged transaction takes place, the hedge gains and losses will be reported in earnings during the same period in which the hedged item is recognized in earnings. TRANSACTIONS WITH CO-INVESTMENT PARTNERSHIPS The Company's co-investment partnerships are generally formed by the Company contributing its interest in property and receiving credit or reimbursement based on its cost, in which case no gain or loss is recognized upon partnership formation. During 2000, the Company contributed its interest in a property including improvements in place to a joint venture, AMLI at Peachtree City LLC, and received cash for the sale of its 80% interest in this property. The Company had no continuing involvement with this property except to the extent of its remaining 20% interest. The Company recognized $8,151 as gain on sale in 2000 in accordance with Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate" and Statement of Position No. 78-9, "Accounting for Investments in Real Estate Ventures". AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED PER SHARE DATA A reconciliation of the numerator and denominator of the basic earnings per share computation to the numerator and denominator of the diluted earnings per share computation is as follows:
Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------- 2001 2000 2001 2000 ---------- ----------- ---------- ---------- Net income. . . . . . . . . . . . . . . . $ 19,244 15,242 39,874 57,264 Less income attributable to preferred shares. . . . . . . . . . . (1,633) (1,766) (4,899) (5,424) ---------- ---------- ---------- ---------- Net income attributable to common shares - Basic . . . . . . . . . . . . . . . . $ 17,611 13,476 34,975 51,840 ========== ========== ========== ========== Net income - Diluted. . . . . . . . . . . $ 19,244 15,242 39,874 57,264 ========== ========== ========== ========== Weighted average common shares - Basic. . 17,843,476 17,538,488 17,799,804 17,240,591 ========== ========== ========== ========== Dilutive Options and Other Plan shares. . 206,362 247,308 159,719 147,444 Convertible preferred shares. . . . . . . 3,475,000 3,757,609 3,475,000 3,902,007 ---------- ---------- ---------- ---------- Weighted average common shares - Dilutive 21,524,838 21,543,405 21,343,523 21,290,042 ========== ========== ========== ========== Net income per share: Basic . . . . . . . . . . . . . . . . $ 0.99 0.77 1.97 3.02 Diluted . . . . . . . . . . . . . . . $ 0.89 0.71 1.86 2.70 ========== ========== ========== ==========
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 3. INVESTMENTS IN PARTNERSHIPS AND SERVICE COMPANIES INVESTMENTS IN PARTNERSHIPS At September 30, 2001, the Operating Partnership is a general partner in various co-investment partnerships. The Operating Partnership and the Service Companies receive various fees for services provided to these co- investment partnerships, including development fees, construction fees, acquisition fees, property management fees, asset management fees, financing fees, administrative fees and disposition fees. The Operating Partnership is entitled to shares of cash flow or liquidation proceeds in excess of its stated ownership percentages, in most cases based on returns to its partners in excess of specified rates. The Operating Partnership has received cash flow and has recorded operating income in excess of its ownership percentages of $1,666 for the nine months ended September 30, 2001. Investments in partnerships at September 30, 2001 and the Company's 2001 share of income or loss for the nine months then ended from each are summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's Company's ------------------ Company's Net Share of Share of Percentage Total Company's Investment Income Net Income Deprecia- Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion - --------- ---------- ---------- ----- --------- ---------- ----- ---------- ---------- AMLI: at Greenwood Forest 15% $ 15,577 3,874 581 564 (163) (24) 48 at Champions Park 15% 11,388 2,581 387 387 (63) (9) 40 at Champions Centre 15% 8,540 1,815 272 272 (144) (20) 29 at Windbrooke 15% 15,851 4,278 642 642 495 74 50 at Willeo Creek 30% 13,458 3,939 1,182 1,182 396 119 107 at Barrett Lakes 35% 23,987 7,322 2,563 2,665 613 214 239 at Chevy Chase 33% 40,805 12,399 4,091 4,091 1,489 556 322 at River Park 40% 13,110 4,147 1,659 1,617 368 147 136 at Fox Valley 25% 22,260 21,819 5,455 5,634 996 249 140 at Fossil Creek 25% 19,772 19,111 4,778 4,866 1,083 271 142 at Danada Farms 10% 44,060 18,928 1,893 1,884 1,517 152 105 at Verandah 35% 21,677 4,554 1,584 1,735 (20) 53 310 at Northwinds 35% 50,893 16,025 5,609 5,454 1,515 530 452 at Regents Crest 25% 31,427 15,659 3,915 3,994 373 174 182 at Oakhurst North 25% 40,614 39,857 9,964 9,965 1,416 354 265 at Wells Branch 25% 32,170 31,115 7,779 7,242 1,068 267 239 on the Parkway 25% 14,535 3,840 957 666 (96) (24) 110 on Timberglen 40% 10,055 3,312 1,325 (82) (27) (1) 153 at Castle Creek 40% 19,883 19,519 7,808 7,963 966 461 198 at Lake Clear- water 25% 15,814 15,510 3,877 3,929 701 175 100 Creekside 25% 15,525 15,332 3,832 3,956 650 207 99 at Deerfield 25% 16,677 3,907 974 822 (241) (60) 112 at Wynnewood Farms 25% 18,075 17,796 4,449 4,489 724 180 110 AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Equity Total Company's Company's Company's ------------------ Company's Net Share of Share of Percentage Total Company's Investment Income Net Income Deprecia- Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion - --------- ---------- ---------- ----- --------- ---------- ----- ---------- ---------- at Monterey Oaks 25% 29,492 27,901 6,975 7,058 1,601 400 156 at St. Charles 25% 41,594 41,134 10,284 10,298 1,858 465 255 at Park Bridge 25% 24,139 23,500 5,875 5,930 1,358 340 130 at Mill Creek 25% 25,418 24,856 6,214 6,449 57 14 85 at Lost Mountain 75% 11,568 891 659 778 (40) (28) 212 on Spring Mill 20% (Residual) 28,704 27,887 -- 1,246 742 -- -- at Prestonwood Hills 45% 17,690 5,844 2,659 2,653 146 99 170 at Windward Park 45% 27,211 8,954 4,076 4,068 157 121 256 at Summit Ridge 25% 28,187 7,746 1,937 1,663 (634) (159) 163 at Oak Bend 40% 24,914 5,633 2,253 2,253 58 151 209 Midtown 45% 33,774 11,291 5,147 5,129 581 338 305 on Frankford 45% 39,855 13,354 6,086 6,069 483 307 366 at Peachtree City I 20% 28,899 28,592 5,718 3,705 1,288 258 113 at Kedron Village 20% 11,877 982 196 182 (18) (4) -- at Scofield Ridge 45% 37,941 12,575 5,721 5,702 (36) 47 337 at Breckinridge Point 45% 34,193 11,509 5,241 5,224 289 197 302 at Cambridge Square 30% 22,914 17,680 5,257 5,451 (107) (32) 13 Towne Square 45% 33,482 11,276 5,132 5,077 89 99 298 at Lowry Estates 50% 51,846 17,311 8,656 8,504 (274) (59) 507 at King's Harbor 25% 19,259 17,697 4,424 4,696 (347) (87) 28 at Milton Park 25% 10,528 8,881 2,220 1,964 -- -- -- at Osprey Lake 69% 54,894 18,785 12,927 12,738 (278) (146) 606 at Seven Bridges 20% 11,879 10,121 2,024 2,416 -- -- -- ---------- ------- ------- ------- ------- ------ ------ 1,166,411 641,039 185,257 183,190 20,589 6,366 8,199 Other, excluding gain on sale 974 866 421 416 798 358 235 ---------- ------- ------- ------- ------- ------ ------ Total $1,167,385 641,905 185,678 183,606 21,387 6,724 8,434 ========== ======= ======= ======= ======= ====== ======
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (1) The Company's investment in partnerships differs from the Company's share of co-investment partnerships' equity primarily due to capitalized interest on its investments in properties under development, purchase price basis differences and the elimination of the Company's share of development fee income. These items are amortized over 40 years using the straight-line method. All but one debt financing have been obtained at fixed rates from various insurance companies on behalf of these co-investment partnerships. The Company's share of co-investment debt at September 30, 2001 are summarized as follows: Outstand- Total ing at Company's Interest Community Commitment 9/30/01 Share Rate Maturity - --------- ---------- --------- --------- -------- --------- AMLI: at Champions Centre $ 6,700 6,389 958 8.93% Jan. 2002 at Champions Park 9,500 8,437 1,266 7.49% Jan. 2002 at Windbrooke 11,500 11,092 1,664 9.24% Feb. 2002 at Greenwood Forest 11,625 11,227 1,684 8.95% May 2002 at Kedron Village 19,170 9,952 1,990 L+1.875% June 2002 at Chevy Chase 29,767 27,389 9,038 6.67% Apr. 2003 at Willeo Creek 10,000 9,229 2,769 6.77% May 2003 at Regents Crest 16,500 15,243 3,811 7.50% Dec. 2003 at Verandah 16,940 16,333 5,717 7.55% Apr. 2004 on Timberglen 6,770 6,440 2,576 7.70% June 2004 at Prestonwood Hills 11,649 11,411 5,168 7.17% Aug. 2006 at Windward Park 18,183 17,819 8,077 7.27% Aug. 2006 at Oak Bend 18,834 18,540 7,416 7.81% Dec. 2006 Midtown 21,945 21,599 9,794 7.52% Dec. 2006 at Deerfield 12,600 12,403 3,101 7.56% Jan. 2007 at Danada Farms 24,500 23,883 2,388 7.33% Mar. 2007 on Frankford 25,710 25,474 11,553 8.25% June 2007 at Breckinridge Point22,110 21,907 9,933 7.57% July 2007 at Scofield Ridge 24,618 24,398 11,064 7.70% Aug. 2007 Towne Square 21,450 21,298 9,670 7.60% Jan. 2008 at Lowry Estates 33,900 33,699 16,850 7.12% Jan. 2008 at Summit Ridge 20,000 19,911 4,978 7.27% Feb. 2008 at River Park 9,100 8,666 3,466 7.75% June 2008 on the Parkway 10,800 10,314 2,579 6.75% Jan. 2009 at Barrett Lakes 16,680 16,082 5,629 8.50% Dec. 2009 at Northwinds 33,800 33,556 11,745 8.25% Oct. 2010 at Osprey Lake 35,320 35,144 24,162 7.02% Mar. 2011 at Lost Mountain 10,252 10,222 7,667 6.84% Nov. 2040 -------- -------- ------- $509,923 488,057 186,713 ======== ======== ======= In general, these loans provide for monthly payments of principal and interest based on a 25 or 27 year amortization schedule and a balloon payment at maturity. Some loans provide for payments of interest only for an initial period, with principal amortization commencing generally within two years. INVESTMENTS IN SERVICE COMPANIES Combined financial information of the Service Companies at and for the nine months ended September 30, 2001 and 2000 are summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 2001 2000 ------- ------- Income (1) $14,002 15,303 General and adminis- trative expenses (11,831) (8,916) ------- ------- EBITDA 2,171 6,387 Interest (1,770) (3,206) Depreciation (1,978) (1,438) Income taxes 599 (672) ------- ------- Net income (loss) (2)(3) $ (978) 1,071 ======= ======= Total assets $31,412 49,709 ======= ======= Total liabilities $32,812 50,434 ======= ======= Total deficit $(1,400) (725) ======= ======= (1) Net of construction and landscaping costs. (2) Net of tax effect; includes $311 in amortization of goodwill in both years. (3) Includes $120 and $2,708 after-tax gain from sales of land parcels in 2001 and 2000, respectively. For 2000, substantially all interest expense of the Service Companies resulted from notes payable to the Company at interest rates ranging from 9.5% to 13.0%. For 2001, two notes payable were refinanced with direct borrowings from banks under the Company's line of credit, with interest at LIBOR + 1.05%. Amounts borrowed from the banks by the Service Companies in 2001 are guaranteed by the Company for which it received a guaranty fee from the Service Companies totaling $168 for the nine months ended September 30, 2001. Interest and share of income (loss) from Service Companies as included in the accompanying Consolidated Statements of Operations is reconciled below: September 30, ----------------- 2001 2000 ------ ------ Intercompany interest expensed . . . . . . $ 677 3,206 Intercompany interest capitalized. . . . . 64 308 Net income (loss). . . . . . . . . . . . . (978) 1,071 Intercompany eliminations and minority interests, net. . . . . . . . . (44) (188) ------ ------ $ (281) 4,397 ====== ====== 4. RELATED PARTY TRANSACTIONS During the nine months ended September 30, 2001 and 2000, the Company accrued or paid to its affiliates fees and other costs and expenses as follows: 2001 2000 ------ ----- Management fees $2,294 2,120 General contractor fees 150 176 Interest expense 44 411 Landscaping and grounds maintenance 439 1,568 ====== ===== AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED In addition, at September 30, 2001 and December 31, 2000, the Company owed Amli Residential Construction, Inc. $3,135 and $1,501, respectively, for construction costs of communities under development or rehab. During the nine months ended September 30, 2001 and 2000, the Company earned or received from its affiliates fees and other income as follows: 2001 2000 ------ ----- Development fees $1,297 1,353 Acquisition, disposition and financing fees 546 1,120 Asset management fees 416 441 Promoted interest 1,796 1,181 Interest on advances to other affiliates 216 214 Interest on notes and advances to Service Companies 741 3,514 ====== ===== In addition, during the nine months ended September 30, 2001 and 2000, total revenues of $2,452 and $1,954, respectively, were generated from leases to AMLI Corporate Homes ("ACH"), a division of one of the Service Companies. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 5. DEBT The table below summarizes certain information relating to the indebtedness of the Company.
Balance Balance Original at Interest Maturity at Encumbered Communities Amount 9/30/01 Rate Date 12/31/00 - ---------------------- -------- -------- -------- -------- -------- BOND FINANCING: Tax-Exempt Unsecured (1) $ 40,750 40,750 Rate+1.23% 10/1/24 40,750 Tax-Exempt AMLI at Poplar Creek 9,500 9,500 Rate+1.25% 2/1/24 9,500 -------- ------- ------- Total Bonds 50,250 50,250 50,250 -------- ------- ------- MORTGAGE NOTES PAYABLE TO FINANCIAL INSTITUTIONS: AMLI at Conner Farms 13,275 12,032 7.00% 6/15/03 12,238 AMLI at Riverbend 31,000 28,262 7.30% 7/1/03 28,726 AMLI in Great Hills 11,000 10,034 7.34% 7/1/03 10,198 AMLI at Valley Ranch 11,500 9,760 7.625% 7/10/03 9,969 AMLI at Nantucket 7,735 7,358 7.70% 6/1/04 7,454 AMLI at Bishop's Gate 15,380 14,304 (2) 8/1/05 14,523 AMLI at Regents Center 20,100 19,095 (3) 9/1/05 19,260 AMLI on the Green/AMLI of North Dallas (4) 43,234 39,823 7.789% 5/1/06 40,402 AMLI at Clairmont 12,880 12,615 6.95% 1/15/08 12,738 AMLI - various (5) (6) 140,000 139,753 6.56% 8/17/01 -- AMLI at Park Creek 10,322 10,189 7.875% 12/1/38 10,223 -------- ------- -------- Total Mortgage Notes Payable 316,426 303,225(7) 165,731 -------- ------- -------- AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Balance Balance Original at Interest Maturity at Encumbered Properties Amount 9/30/01 Rate Date 12/31/00 - --------------------- -------- -------- -------- -------- -------- OTHER NOTES PAYABLE: Unsecured line of credit (6)(8) 200,000 55,000 L+1.05% 11/15/03 165,000 Note payable to Service Company 5,000 -- 10.00% 1/1/03 5,000 -------- ------- --------- ------- ------- Total Other Notes Payable 205,000 55,000 170,000 -------- ------- ------- Total $571,676 408,475 385,981 ======== ======= ======= (1) The terms of these tax-exempt bonds require that a portion of the apartment units be leased to individuals who qualify based on income levels specified by the U.S. Government. The bonds bear interest at a variable rate that is adjusted weekly based upon the remarketing rate for these bonds (2.10% for AMLI at Spring Creek and 2.11% for AMLI at Poplar Creek at October 25, 2001). The credit enhancement for the AMLI at Spring Creek bonds was provided by a $41,297 letter of credit from Wachovia Bank which expires on October 11, 2002 and the credit enhancement for the AMLI at Poplar Creek bonds was provided by a $9,617 letter of credit from LaSalle National Bank that expires December 18, 2002. (2) This original $14,000 mortgage note bears interest at 9.1%. For financial reporting purposes, this mortgage note was valued at $15,380 to reflect a 7.25% market rate of interest when assumed in connection with the acquisition of AMLI at Bishop's Gate on October 17, 1997. The unamortized premium at September 30, 2001 is $724. (3) $13,800 at 8.73% and $6,300 at 9.23%. (4) These two properties secure the FNMA loan that was sold at a discount of $673. At September 30, 2001, the unamortized discount is $309. (5) This loan is secured by seven previously unencumbered properties (AMLI at Bent Tree, AMLI at Lantana Ridge, AMLI at StoneHollow, AMLI at Western Ridge, AMLI at Killian Creek, AMLI at Eagle Creek and AMLI at Gateway Park). AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (6) The Company has used interest rate swaps on $55,000 of the outstanding amount to fix its base interest rate (before current lender's spread) at an average of 6.22%. The Company paid the outstanding balance down in June 2001 by $140,000 from the proceeds of a new ten year mortgage loan secured by seven of its wholly-owned properties. Additionally, AMLI has concurrently reduced the commitment amount under its current line of credit by $50,000 to $200,000. (7) All but $20,595 is non-recourse to the partners of the Operating Partnership. (8) The Company's unsecured line of credit has been provided by a group of eight banks led by Wachovia Bank, N.A. and Bank One, N.A. In November 2000, the maturity date was extended to November 2003 with a one-year renewal option. In addition, AMC and Amrescon were added as borrowers under this line of credit, and such borrowings by the Service Companies ($14,000 at September 30, 2001) are guaranteed by the Company and count against the Company's total availability under this line of credit. This unsecured line of credit requires that the Company meet various covenants typical of such an arrangement, including minimum net worth, minimum debt service coverage and maximum debt to equity percentage. The unsecured line of credit is used for acquisition and development activities and working capital needs.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED As of September 30, 2001, the scheduled maturities of the Company's debt are as follows:
FIXED RATE MORTGAGE NOTES NOTES PAYABLE UNSECURED PAYABLE TO BOND TO FINANCIAL LINES SERVICE FINANCINGS INSTITUTIONS OF CREDIT COMPANIES TOTAL ---------- ------------- --------- ----------- ---------- 2001. . . . . . . . . . . . . . . . . $ -- 1,163 -- -- 1,163 2002. . . . . . . . . . . . . . . . . 50,250 4,862 -- -- 55,112 2003. . . . . . . . . . . . . . . . . -- 61,814 55,000 -- 116,814 2004. . . . . . . . . . . . . . . . . -- 10,745 -- -- 10,745 2005. . . . . . . . . . . . . . . . . -- 34,812 -- -- 34,812 Thereafter. . . . . . . . . . . . . . -- 189,829 -- -- 189,829 ------- ------- ------- ------ ------- $50,250 303,225 55,000 -- 408,475 ======= ======= ======= ====== =======
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 6. COMMITMENTS AND CONTINGENCIES The limited partnership Agreements of AMLI at Verandah L.P. and AMLI on Timberglen provide for the redemption (at an amount determined by formula) by the partnerships of the limited partner's entire interest, in their sole discretion, at any time after March 25, 2002 and December 16, 2003, or at any time that there is a designated event of default on related indebtedness of the partnerships, which event of default remains uncured and unwaived to the time of notice of redemption election. The redemption amount may be paid in cash or Company shares of beneficial interest, or any combination thereof, in the sole discretion of the Company. At September 30, 2001, the Company is contingently liable on $7,866 in bank letters of credit issued to secure commitments made in ordinary course of business by the Company and its co-investment partnerships. 7. SUBSEQUENT EVENTS On October 30, 2001, the Company signed an agreement to privately place $20,000 of Series D cumulative convertible preferred shares to the Equitable Life Assurance Society of the United States. The issue includes 800,000 shares at a par value of $25 per share and is convertible into 720,721 common shares at $27.75 per share, a conversion ratio of 0.9009 to 1. Required quarterly dividend payments will be equal to the greater of $0.540625 per share (based on 800,000 shares), an initial current yield of 8.65%, or the quarterly dividend then payable by the Company on the common shares into which the preferred shares could be converted. The issue is redeemable by the Company after five years and is subject to mandatory redemption by the Company, at the sole discretion of the holder, in the event of a change in control. Total net proceeds will be approximately $19,300. The Company anticipates using the proceeds to fund future acquisitions and development opportunities. In the interim, the proceeds will be used to reduce the outstanding balance on the Company's bank line of credit. 8. SEGMENT REPORTING The revenues, net operating income, FFO and assets for the Company's reportable segment are summarized as follows: Nine Months Ended September 30, ------------------------ 2001 2000 ---------- ---------- Multifamily segment revenues. . . . . . . . . $ 211,081 174,861 ========== ========== AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Nine Months Ended September 30, ------------------------ 2001 2000 ---------- ---------- Multifamily segment net operating income. . . $ 127,494 106,628 Reconciling items to FFO: Reduce co-investment net operating income to Company's share (1) . . . . . . (60,545) (44,317) Interest income and share of income (loss) from Service Companies. . . 30 4,708 Other interest income . . . . . . . . . . . 1,152 990 Other revenues. . . . . . . . . . . . . . . 4,202 4,256 General and administrative expenses . . . . (3,890) (2,700) Interest expense and loan cost amortization (20,202) (18,583) ---------- ---------- Consolidated FFO before minority interest . . 48,241 50,982 ---------- ---------- Reconciling items to net income: Depreciation - wholly owned properties. . . (15,798) (14,630) Depreciation - share of co-investment properties. . . . . . . . . . . . . . . . (8,434) (5,698) Share of Service Company's goodwill amortization. . . . . . . . . . . . . . . (311) (311) Gains on sales of residential properties. . 23,296 37,274 ---------- ---------- Income before minority interest and extraordinary items . . . . . . . . . . . . 46,994 67,617 Minority interest . . . . . . . . . . . . . . 7,120 10,353 ---------- ---------- Net income. . . . . . . . . . . . . . . . . . $ 39,874 57,264 ========== ========== September 30, December 31, 2001 2000 ------------- ----------- Segment assets (2). . . . . . . . . . . . . . $1,907,557 1,803,134 ========== ========== (1) Represents amount required to reduce co-investment properties' net operating income to the Company's share of net operating income from partnerships. (2) Represents original acquisition costs of wholly owned and co- investment properties. The Company derives no consolidated revenues from foreign countries nor has any major customers that individually account for 10% or more of the Company's consolidated revenues. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) The following discussion is based primarily on the consolidated financial statements of Amli Residential Properties Trust (the "Company") as of September 30, 2001 and December 31, 2000 and for the three and nine months ended September 30, 2001 and 2000. This information should be read in conjunction with the accompanying unaudited consolidated financial statements and notes thereto. These financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. As of September 30, 2001, the Company owned an 85% general partnership interest in AMLI Residential Properties, L.P. (the "Operating Partnership"), which holds the operating assets of the Company. The limited partners hold Operating Partnership units ("OP Units") that are convertible into common shares of the Company on a one-for-one basis, subject to certain limitations. The Company has repurchased 170,400 common shares through September 30, 2001 and 50,000 additional common shares in October 2001 of the total 500,000 shares authorized to be repurchased. The Operating Partnership issued 569,988 OP units for the acquisition of wholly-owned and co-investment communities. At September 30, 2001, the Company owned 21,322,398 OP Units and the limited partners owned 3,684,866 OP Units. The Company has qualified, and anticipates continuing to qualify, as a real estate investment trust ("REIT") for Federal income tax purposes. On October 30, 2001, the Company signed an agreement to privately place $20,000 of Series D cumulative convertible preferred shares to the Equitable Life Assurance Society of the United States. The issue includes 800,000 shares at a par value of $25 per share and is convertible into 720,721 common shares at $27.75 per share, a conversion ratio of 0.9009 to 1. Required quarterly dividend payments will be equal to the greater of $0.540625 per share (based on 800,000 shares), an initial current yield of 8.65%, or the quarterly dividend then payable by the Company on the common shares into which the preferred shares could be converted. The issue is redeemable by the Company after five years and is subject to mandatory redemption by the Company, at the sole discretion of the holder, in the event of a change in control. Total net proceeds will be approximately $19,300. The Company anticipates using the proceeds to fund future acquisitions and development opportunities. In the interim, the proceeds will be used to reduce the outstanding balance on the Company's bank line of credit. RESULTS OF OPERATIONS The increase in property revenues and property operating expenses resulted from moderate increases in same communities, acquisitions of new communities and stabilization of a newly-constructed community offset in part by sales of stabilized communities during the periods reported. During this period, the Company has sold seven stabilized communities containing a total of 2,676 apartment homes. During the same period, the Company has acquired a total of 2,208 units in seven stabilized communities. The Company also has completed development and begun rental operations of a 200 apartment homes additional phase to an existing community. Property operations from wholly-owned assets for the nine months ended September 30, 2001 and 2000 are summarized as follows: Increase 2001 2000 (Decrease) ------- ------ --------- Total Wholly-Owned Property Revenues - ------------------ Same communities . . . . . . . $68,753 66,312 2,441 New communities. . . . . . . . 1,494 768 726 Acquisition communities. . . . 11,548 4,872 6,676 Communities contributed to ventures/sold. . . . . . . 4,483 12,946 (8,463) ------- ------- ------- Total . . . . . . . . . . . $86,278 84,898 1,380 ======= ======= ======= Total Wholly-Owned Property Operating Expenses - --------------------------- Same communities . . . . . . . $27,113 25,390 1,723 New communities. . . . . . . . 587 495 92 Acquisition communities. . . . 4,820 1,867 2,953 Communities contributed to ventures/sold. . . . . . . 1,967 5,049 (3,082) ------- ------- ------- Total . . . . . . . . . . . $34,487 32,801 1,686 ======= ======= ======= Total Wholly-Owned Property Net Operating Income - ----------------------------- Same communities . . . . . . . $41,640 40,922 718 New communities. . . . . . . . 907 273 634 Acquisition communities. . . . 6,728 3,005 3,723 Communities contributed to ventures/sold. . . . . . . 2,516 7,897 (5,381) ------- ------- ------- Total . . . . . . . . . . . $51,791 52,097 (306) ======= ======= ======= The term "New Communities" refers to completed properties that were stabilized after the beginning of the earliest period for which comparative financial information is presented. Property Net Operating Income is computed before interest, taxes, depreciation and amortization. This performance measure is not intended as a replacement for net income determined in accordance with generally accepted accounting principles ("GAAP"). Since January 1, 2000, the Company has invested in eight co-investment partnerships, which have acquired eight stabilized communities. A 312-unit community, which was a wholly-owned community, was acquired by a 20% owned co-investment partnership. The communities are as follows: Date No of Market Acquired Units ------ --------- ----- AMLI: Midtown. . . . . . . . . . . . Houston Jan. 2000 419 at Peachtree City. . . . . . . Atlanta June 2000 312 on Frankford . . . . . . . . . Dallas Aug. 2000 582 at Scofield Ridge. . . . . . . Austin Aug. 2000 487 at Breckinridge Point. . . . . Dallas Sept. 2000 440 at Lowry Estates . . . . . . . Denver Dec. 2000 414 Towne Square . . . . . . . . . Houston Dec. 2000 380 at Osprey Lake . . . . . . . . Illinois Feb. 2001 483 ----- Total . . . . . . . . . . . 3,517 ===== In addition, the Company, through joint ventures with institutional investors, has completed or has under development and begun rental operations of fourteen communities. Eight communities with a total of 2,238 units were stabilized in 2000. Two communities with a total of 628 stabilized in 2001. The remaining four communities, containing a total of 1,540 apartments homes, are under development and/or in lease-up as of September 30, 2001 and are anticipated to be completed in 2001 and 2002. During 2001 and 2000, the Company sold two communities with a total of 990 apartment homes. These sales partially offset the overall revenue growth of the co-investment communities. Increase 2001 2000 (Decrease) -------- ------- --------- Total Co-investment Property Revenues - ------------------------------------- Same communities . . . . . . . . $ 61,383 60,435 948 New communities. . . . . . . . . 18,895 10,118 8,777 Development and/or lease-up communities . . . . . . . . . . 8,524 1,337 7,187 Acquisition communities. . . . . 29,756 8,858 20,898 Communities contributed to ventures/sold. . . . . . . . 6,245 9,215 (2,970) -------- ------- ------- Total . . . . . . . . . . . . $124,803 89,963 34,840 ======== ======= ======= Company's share of co-invest- ment total revenues . . . . . . $ 39,847 26,563 13,284 ======== ======= ======= Total Co-investment Property Operating Expenses - --------------------------- Same communities . . . . . . . . $ 24,354 22,611 1,743 New communities. . . . . . . . . 6,860 5,443 1,417 Development and/or lease-up communities . . . . . . . . . . 3,875 976 2,899 Acquisition communities. . . . . 11,927 3,399 8,528 Communities contributed to ventures/sold. . . . . . . . 2,084 3,002 (918) -------- ------- ------- Total . . . . . . . . . . . . $ 49,100 35,431 13,669 ======== ======= ======= Company's share of co-invest- ment property operating expenses. . . . . . . . . . . . $ 14,500 10,169 4,331 ======== ======= ======= Total Co-investment Property Net Operating Income - ---------------------------- Same communities . . . . . . . . $ 37,029 37,824 (795) New communities. . . . . . . . . 12,035 4,675 7,360 Development and/or lease-up communities . . . . . . . . . . 4,649 361 4,288 Acquisition communities. . . . . 17,829 5,459 12,370 Communities contributed to ventures/sold . . . . . . . . . 4,161 6,213 (2,052) -------- ------- ------- Total . . . . . . . . . . . . $ 75,703 54,532 21,171 ======== ======= ======= Company's share of co-invest- ment property NOI. . . . . . . . $ 26,725 17,357 9,368 ======== ======= ======= For the nine months ended September 30, 2001, total revenues were $98,075 and net income was $39,874 including gains of $23,296 from sales of residential properties. Total revenues for the year earlier period were $99,057 and net income was $57,264, which included gains of $37,274 from sales of residential properties. For the nine months ended September 30, 2001, basic earnings per common share decreased to $1.97 (included $1.09 per share from the sales of residential properties) from $3.02 (included $1.81 per share from the sales of residential properties) in the year earlier period. For the nine months ended September 30, 2001, diluted earnings per common share decreased to $1.86 (included $0.99 gains from the sales of residential properties) from $2.70 (included $1.50 share of gains from sales of residential properties) for the nine months ended September 30, 2000. On a "same community" basis, weighted average occupancy of the apartment homes owned wholly by the Company increased slightly to 92.1% for the nine months ended September 30, 2001 from 91.7% in the prior year. Weighted average collected rental rates increased by 3.3% to $790 from $765 per unit per month for the nine months ended September 30, 2001 and 2000, respectively. Including Co-Investment Communities, weighted average occupancy of the Company's apartment homes decreased to 92.3% for the nine months ended September 30, 2001 from 92.8% in the prior year, and weighted average collected rental rates increased by 3.3% to $833 from $806 per unit per month for the nine months ended September 30, 2001 and 2000, respectively. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2001 TO NINE MONTHS ENDED SEPTEMBER 30, 2000. Income before minority interest decreased to $46,994 for the nine months ended September 30, 2001 from $67,617 for the nine months ended September 30, 2000. This decrease was primarily attributable to $23,296 gains on sales of residential properties in 2001 compared to $37,274 gains on sales of residential properties in 2000. In addition, a $1,686 increase in property operating expenses, a $1,360 increase in interest expense, a $1,168 increase in depreciation and a $982 decrease in total revenues contributed to the decrease in income. The decrease in total revenues was largely from the decrease in Company's share of income from Service Companies, which in 2000 included after-tax gains on sales of non- residential land parcels of $2,708, offset in part by an increase in share of income from partnerships in 2001. Net income for the nine months ended September 30, 2001 and 2000 was $39,874 and $57,264, respectively. Total property revenues increased by $1,380 or 1.6%. This increase in property revenues was primarily from the 2,208 apartment homes acquired during 2001 and 2000. This increase was offset by a decrease resulting from 2,676 apartment homes sold during 2001 and 2000. Other property revenues include increases in various fees charged to residents. On a same community basis total property revenues increased by $2,441 or 3.7% and net operating income increased by $718 or 1.8%. The Company operates, owns and manages apartments in eight metropolitan areas. During 2001, the supply/demand characteristics in the suburban Indianapolis, Atlanta and Chicago markets have enabled the Company to increase rents at a rate in excess of the rate of inflation. Supply and demand is generally in balance in Atlanta. A combination of a moderate over-supply of rental apartments in Austin, Dallas and Kansas City coupled with a general business slow-down has contributed to overall growth in collected rents at less than the rate of inflation. Interest and share of income (loss) from Service Companies decreased 106.4% to a loss of $281 from income of $4,397 primarily due to $2,708 after-tax gains from sales of land parcels and decreased interest income as a result of Service Companies' direct borrowings under the Company's line of credit, lower construction income as a result of slower construction and development, and a $186 after-tax write-off of investment in an information technology company. During the first nine months of 2001 the Service Companies commenced or continued a variety of information technology system initiatives, most notably the implementation of an Enterprise Resource Planning ("ERP") system using the Oracle database. As of June 2001, the Company has discontinued using its predecessor General Ledger and Accounts Payable systems and has "gone live" with the ERP. Information technology expenditures that are expected to be incurred and capitalized during 2001 of approximately $6,000 will be depreciated over five years. As a result of increased expenditures by AMLI Management Company ("AMC") for information technology such as the ERP and other systems applications, AMC has increased the management fee it charges the Company for managing its wholly-owned properties to 3% from 2.5% effective July 1, 2001. Income from partnerships increased to $6,724 from $4,516, or 48.9%. This increase was a result of the acquisition of eight stabilized communities through eight new co-investment partnerships. In addition, twelve new co-investment partnerships have invested in eleven development communities and a second phase to an existing stabilized community during 2001 and 2000. During 2001, two communities achieved stabilized operations and four were still under development and/or in lease-up. On a same community basis, total property revenues increased by $823 or 1.4% and net operating income decreased by $614, or 1.6%. Other income decreased to $4,202 from $4,256, or 1.3%. This decrease is primarily due to lower acquisition and development fees as the Company's acquisition and development activities have slowed down. Property operating expenses increased by $1,686, or 5.1%. This increase is principally due to increases in exterior painting in five communities, increases in personnel costs, advertising and promotion expenses, in utilities and real estate tax expense. On a same community basis, property operating expenses increased by $1,723 or 6.8%. Interest expense, net of the amounts capitalized, increased to $19,603 from $18,243 or 7.5%, primarily due to a $785 expense relating to two interest rate swap contracts with a total notional amount of $20,000 that were marked-to-market in the third quarter of 2001. In addition, $813 carrying costs on land parcels were no longer capitalized in 2001. General and administrative expenses increased to $3,890 for the nine months ended September 30, 2001 from $2,700 for the nine months ended September 30, 2000. The increase is primarily due to costs attributable to abandoned projects and an investment in Broadband high speed internet access business that were written off. Higher personnel costs due to increased number of employees and higher shareholder service expenses also contributed to the increase. LIQUIDITY AND CAPITAL RESOURCES At September 30, 2001, the Company had $3,774 in cash and cash equivalents and $131,000 in availability under its $200,000 unsecured line of credit. The availability under the line of credit is based on total borrowings of $69,000, including $14,000 borrowed directly by unconsolidated Service Company affiliates. The borrowings of the Service Company affiliates are guaranteed by the Company. Borrowings under the line of credit bear interest at a rate of LIBOR plus 1.05%. The Company closed on the $140,000 ten-year 6.56% fixed-rate financing, which is secured by first mortgages on seven of the Company's previously unencumbered wholly-owned communities. The Company paid down its unsecured line of credit from the proceeds of this loan and concurrently reduced its line of credit to $200,000. At September 30, 2001, twelve of the Company's wholly-owned stabilized communities were unencumbered. There are no fixed rate loans on wholly- owned communities with maturity dates prior to July 2003. Net cash flows provided by operating activities for the nine months ended September 30, 2001 decreased to $43,745 from $43,884 for the nine months ended September 30, 2000. The increase in distributions from co- investment partnerships offset by decreases in other liabilities contributed to the decrease. Cash flows used in investing activities for the nine months ended September 30, 2001 decreased to $29,045 from $40,850 for the nine months ended September 30, 2000. The decrease consisted primarily of lower investments in partnerships and lower expenditures for development properties offset in part by higher expenditures for acquisitions. Net cash flows provided by financing activities for the nine months ended September 30, 2001 were $16,032, which reflect lower borrowings on the Company's line of credit offset by slightly higher dividend payments and $3,737 used to repurchase 170,400 of the Company's common shares of beneficial interests in 2001. Funds from operations ("FFO") is defined as net income (computed in accordance with GAAP), excluding extraordinary gains (losses) from debt restructuring and gains (losses) from sales of depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for unconsolidated partnerships, joint ventures and other affiliates are calculated to reflect FFO on the same basis. FFO does not represent cash flows from operations, as defined by GAAP; is not indicative that cash flows are adequate to fund all cash needs; and is not to be considered an alternative to net income or any other GAAP measure as a measurement of the results of the Company's operations or the Company's cash flows or liquidity as defined by GAAP. FFO is widely accepted in measuring the performance of equity REITs. An understanding of the Company's FFO will enhance the reader's comprehension of the Company's results of operations and cash flows as presented in the financial statements and data included elsewhere herein. FFO for the nine months ended September 30, 2001 and 2000 is summarized as follows: September 30, -------------------------- 2001 2000 ---------- --------- Income before minority interest $ 46,994 67,617 Depreciation 15,798 14,630 Share of co-investment partner- ships' depreciation 8,434 5,698 Share of Service Company's goodwill amortization 311 311 Gain on sale of residential property (23,296) (37,274) ---------- ---------- FFO $ 48,241 50,982 ========== ========== Weighted average shares and units including dilutive shares 25,043,390 24,691,685 ========== ========== The Company expects to pay quarterly dividends from cash available for distribution. Until distributed, funds available for distribution are used to temporarily reduce outstanding balances on the Company's revolving lines of credit. The Company intends to finance the majority of its future acquisition and development activities by co-investing these acquisitions and developments with institutional partners. In addition, the Company is selectively selling older communities and using proceeds of such sales to buy newly-constructed properties. The Company expects to meet its short- term liquidity requirements by using its working capital and any portion of net cash flow from operations not distributed currently. The Company believes that its future net cash flows will be adequate to meet operating requirements in both the short and the long term and provide for payment of dividends by the Company in accordance with REIT requirements. The Company qualifies as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. A REIT will generally not be subject to Federal income taxation on that portion of its income that qualifies as REIT taxable income to the extent that it distributes at least 90% of its taxable income to its shareholders and complies with certain other requirements. In 1999, the Company distributed approximately 90% of its taxable income and has designated a portion of its dividends being paid during 2000 as a throw back dividend to 1999. In 2000, the Company distributed approximately 90% of its taxable income and will again designate a portion of its dividends paid during 2001 as a throw back dividend to 2000. The Company's current dividend payment level equals an annual rate of $1.92 per common share, increased on October 29, 2001 from an annual rate of $1.88 per common share. The Company anticipates that all dividends paid in 2001 will be fully taxable. The Company has recorded no deferred taxes on gains for financial reporting purposes that have been deferred for income tax reporting purposes because the Company intends to distribute to its shareholders any deferred tax gain upon ultimate realization for income tax reporting purposes. The Company expects to meet certain long-term liquidity requirements such as scheduled debt maturities, repayment of loans for construction, development, and acquisition activities through the issuance of long-term secured and unsecured debt and additional equity securities of the Company or OP Units. Through September 30, 2001, the Company has issued preferred and common shares for an aggregate issuance price of $128,467 leaving a balance of $71,533 in shares that the Company may issue in the future under its shelf registration statement. COMPANY INDEBTEDNESS The Company's debt as of September 30, 2001 includes $303,225 which is secured by first mortgages on eighteen of the wholly-owned communities and is summarized as follows: SUMMARY DEBT TABLE ------------------ Type of Weighted Average Outstanding Percent Indebtedness Interest Rate Balance of Total - ------------ ---------------- ----------- -------- Fixed Rate Mortgages 7.1% $303,225 74.2% Tax-Exempt Tax-Exempt Rate + 1.23% 50,250 12.3% Bonds (1) Tax-Exempt Rate + 1.25% Lines of Credit (2) LIBOR + 1.05% 55,000 13.5% -------- ------ Total $408,475 100.0% ======== ====== - -------------------- (1) The tax-exempt bonds bear interest at a variable tax-exempt rate that is adjusted weekly based on the re-marketing of these bonds (2.10% for AMLI at Spring Creek and 2.11% for AMLI at Poplar Creek at October 25, 2001). The AMLI at Spring Creek bonds mature on October 1, 2024 and the related credit enhancement expires on October 15, 2002. The AMLI at Poplar Creek bonds mature on February 1, 2024 and the related credit enhancement expires on December 18, 2002. (2) Amounts borrowed under lines of credit are due in 2003. The interest rate on $55,000 has been fixed pursuant to interest rate swap contracts. Additional interest rate swap contracts on $20,000 have been marked to the value of the related liability for payment which will extend through November 2002. DEVELOPMENT ACTIVITIES The company anticipates incurring the estimated $21,600 completion costs for Carmel City Center (note 2 to Financial Statements) over the next two years. At September 30, 2001, the Company has made capital contributions totaling $206,459 to its existing co-investment partnerships and anticipates funding substantially all of its remaining commitment (net of its share of co-investment debt) of $14,277 during 2002 to complete the 2,737 homes being developed by co-investment partnerships. The Company owns land for the development of an additional 4,792 apartment homes in Ft. Worth, Houston and Austin, Texas; Indianapolis, Indiana; Kansas City, Kansas, and Chicago, Illinois. The Company has earnest money deposits of $455 for four land parcels for development anticipated to be acquired in 2001 or 2002. CAPITAL EXPENDITURES Capital expenditures are those made for assets having a useful life in excess of one year and include replacements (including carpeting and appliances) and betterments, such as unit upgrades, enclosed parking facilities and similar items. In conjunction with acquisitions of existing properties, it is the Company's policy to provide in its acquisition budgets adequate funds to complete any deferred maintenance items and to otherwise make the properties acquired competitive with comparable newly-constructed properties. In some cases, the Company will provide in its acquisition budget additional funds to upgrade or otherwise improve new acquisitions. REHAB EXPENDITURES In September 1998, AMLI initiated its first community rehab since its initial public offering. Rehab is a capital improvement program involving significant repairs, replacements and improvements at an aggregate cost of at least the greater of $3 per apartment home or 5% of the value of the entire apartment community. All costs (except costs to routinely paint the interiors of units at turnover) associated with a rehab will be capitalized and depreciated over their policy lives. At September 30, 2001, the Company was continuing the rehab of the second phase of AMLI at Valley Ranch. Starting in 1999 and through September 30, 2001, the Company has spent $2,090 on the rehab of this property and expects to spend an additional $1,042 in the period from October 2001 through December 2002 to complete the rehab. INFLATION Inflation has been low. Virtually all apartment leases at the wholly- owned communities and co-investment communities are for six or twelve months' duration. This enables the Company to pass along inflationary increases in its operating expenses on a timely basis. Because the Company's property operating expenses (exclusive of depreciation and amortization) average approximately 40.0% of rental and other property revenue, increased inflation typically results in comparable increases in income before interest and general and administrative expenses, so long as rental market conditions allow increases in rental rates while maintaining stable occupancy. An increase in general price levels may immediately precede, or accompany, an increase in interest rates. At September 30, 2001, the Company's exposure (including the Company's proportionate share of its co- investment partnerships' expense) to rising interest rates is mitigated by the existing debt level of approximately 40.9% of the Company's total market capitalization (50.8% including the Company's share of co-investment partnerships' debt), the high percentage of intermediate-term fixed-rate debt (74.2% of total debt), and the use of interest rate swaps to effectively fix the interest rate on $30,000 of floating-rate debt through February 2003, $15,000 through September 2004 and $10,000 through October 2004 (13.5% of total debt). As a result, for the foreseeable future, increases in interest expense resulting from increasing inflation are anticipated to be less than future increases in income before interest and general and administrative expenses. OTHER MATTERS On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities". SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments. Specifically SFAS No. 133 requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either shareholders' equity or net income depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity. As of January 1, 2001, the adoption of the new standards resulted in derivative instruments reported on the balance sheet as liabilities of $1,277, and as "Accumulated Other Comprehensive Income (Loss)" of $1,249, which are gains and losses not affecting retained earnings in the Consolidated Statement of Shareholders' Equity. As of September 30, 2001, as a result of significant declines in interest rate during 2001, the liabilities had increased by $2,828 to $4,105 and Accumulated Other Comprehensive Loss had increased by $1,967 to $3,216. In September 2001, the Company has marked-to-market $20,000 notional amount of interest rate swaps and recognized interest expense of $785. "Accounting for Certain Transactions involving Stock Compensation," an interpretation of APB No. 25, became effective July 1, 2000. The Service Companies recorded a pre-tax charge against earnings of $195 for the nine months ended September 30, 2001 pursuant to the provisions of this statement. Statement of Financial Accounting Standards No. 142 "Accounting for Goodwill and Other Intangible Assets," issued in 2001, requires, among other things, that effective January 1, 2002 goodwill resulting from a business combination accounted for as a purchase no longer be amortized, but be subjected to ongoing impairment review. The only goodwill included in the accounts of the Company and its unconsolidated subsidiaries is $3,300 recorded on the books of an unconsolidated subsidiary. This amount is being amortized using the straight-line method over the five year period ended December 31, 2002. When the new accounting literature is implemented by the Company on the effective date, the remaining unamortized goodwill of $668 will not be charged to expense in 2002, so that the Company's share of income in 2002, net of tax effect, will be approximately $400 greater than would have otherwise been recorded had this change not been required. On July 19, 2001, the SEC issued interpretative guidance relating to the "Classification and Measurement of Redeemable Securities". This ruling requires, among other things, that preferred shares subject to redemption upon change in control (as is the case with both the Company's Series B Preferred Shares issued on February 20, 1998 and its Series D Preferred Shares issued on October 31, 2001) be classified outside of permanent equity. In accordance with the required implementation of this new requirement, the Company will restate its balance sheets from prior periods to reflect its Series B Preferred Shares outside of its permanent capital, starting with its annual report on Form 10-K reporting its financial position as of December 31, 2001 and 2000. This restatement of the Company's balance sheets will have no effect on its income reported during these periods. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements set forth herein or incorporated by reference herein from the Company's filings under the Securities Exchange Act of 1934, as amended, contain forward-looking statements, including, without limitation, statements relating to the timing and anticipated capital expenditures of the Company's development programs. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the actual results may differ materially from that set forth in the forward-looking statements. Certain factors that might cause such differences include general economic conditions, local real estate conditions, construction delays due to the unavailability of construction materials, weather conditions or other delays beyond the control of the Company. Consequently, such forward- looking statements should be regarded solely as reflections of the Company's current operating and development plans and estimates. These plans and estimates are subject to revision from time to time as additional information becomes available, and actual results may differ from those indicated in the referenced statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As disclosed in Item 2, the Company has in 2001 been limited in its ability to raise rents and increase occupancies at many of its wholly-owned properties because of relative weak demand (in Austin in particular and, more recently, also in Atlanta). Since December 31, 2000, the Company has reduced its exposure to risks associated with interest rate charges and has significantly extended the average maturities of its fixed rate debt portfolio by refinancing $140,000 in borrowings under its floating rate line of credit with a new ten year secured 6.56% fixed interest rate refinancing. In response to a nationwide economic slowdown, the Company has slowed or curtailed its development of new apartment properties, and has acquired fewer additional properties than in prior years in anticipation of better acquisition pricing in 2002. The September 11, 2001 attack on the World Trade Center has had, among other things, the effect of increasing the cost of insurance. The Company preliminarily anticipates that its insurance costs for 2002 will increase by at least 50% even with increased deductibles. There have been no other significant changes in the Company's exposure to market risks. OCCUPANCY The following is a listing of approximate physical occupancy levels by quarter for the Company's Wholly-Owned Communities and Co-Investment Communities:
2001 2000 Location/Community Company's Number ---------------------------------------------------- - ------------------ Percentage of at at at at at at at at Wholly-owned Communities Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 - ------------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------ Dallas/Ft. Worth, TX AMLI: at AutumnChase . . . . . . N/A N/A N/A 92% 91% 93% 91% 88% at Bent Tree . . . . . . . 500 93% 92% 92% 91% 91% 97% 95% at Bishop's Gate . . . . . 266 90% 93% 90% 89% 93% 92% 91% at Chase Oaks. . . . . . . 250 95% 93% 96% 94% 94% 93% 95% at Gleneagles. . . . . . . 590 92% 94% 95% 96% 95% 95% 92% on the Green . . . . . . . 424 93% 94% 91% 91% 92% 97% 95% at Nantucket . . . . . . . 312 94% 94% 92% 96% 95% 97% 94% of North Dallas. . . . . . 1,032 92% 93% 95% 96% 93% 90% 90% on Rosemeade . . . . . . . N/A N/A 93% 94% 90% 95% 95% 96% at Valley Ranch. . . . . . 460 90% 93% 95% 94% 97% 95% 97% at Stonebridge Ranch . . . 250 90% 82% N/A N/A N/A N/A N/A at Shadow Ridge. . . . . . 222 85% N/A N/A N/A N/A N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 4,306 92% 93% 94% 93% 94% 93% 92% ------ ----- ----- ----- ----- ----- ----- ----- ----- Austin, TX AMLI: at the Arboretum . . . . . N/A N/A N/A N/A N/A 98% 94% 95% in Great Hills . . . . . . 344 92% 90% 91% 91% 95% 97% 97% at Lantana Ridge . . . . . 354 94% 89% 90% 96% 97% 93% 94% at Martha's Vineyard . . . N/A N/A N/A N/A N/A 94% 97% 98% at StoneHollow . . . . . . 606 94% 94% 89% 88% 97% 97% 98% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,304 93% 92% 90% 91% 96% 96% 97% ------ ----- ----- ----- ----- ----- ----- ----- ----- Houston, TX AMLI: at Western Ridge . . . . . . 318 98% 95% 91% 90% N/A N/A N/A at the Medical Center. . . . 334 94% N/A N/A N/A N/A N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 652 96% 95% 91% 90% 0% 0% 0% ------ ----- ----- ----- ----- ----- ----- ----- ----- 2001 2000 Company's Number ---------------------------------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 - ------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------ Atlanta, GA AMLI: at Clairmont. . . . . . . . 288 92% 95% 97% 88% 93% 96% 97% at Killian Creek. . . . . . 256 92% 93% 97% 97% 95% 96% 97% at Park Creek . . . . . . . 200 83% 91% 93% 93% 95% 91% 95% at Peachtree City . . . . . N/A N/A N/A N/A N/A N/A N/A 94% on Spring Creek . . . . . . 1,180 90% 94% 92% 94% 90% 92% 90% at Vinings. . . . . . . . . 360 90% 93% 95% 94% 96% 95% 89% at West Paces . . . . . . . 337 94% 93% 93% 90% 90% 95% 92% at Towne Creek. . . . . . . 150 93% 90% 89% 91% 93% 93% 93% ------ ----- ----- ----- ----- ----- ----- ----- ----- 2,771 91% 93% 93% 93% 92% 93% 92% ------ ----- ----- ----- ----- ----- ----- ----- ----- Kansas City, KS AMLI: at Alvamar . . . . . . . . N/A N/A 93% 86% 93% 92% 92% 86% at Centennial Park . . . . 170 96% 88% 86% 91% 81% 89% 84% at Lexington Farms . . . . 404 92% 93% 91% 81% 87% 90% 91% at Regents Center. . . . . 424 94% 93% 89% 82% 87% 89% 92% at Town Center . . . . . . 156 96% 90% 87% 88% 87% 87% 83% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,154 94% 92% 89% 85% 87% 89% 89% ------ ----- ----- ----- ----- ----- ----- ----- ----- Indianapolis, IN AMLI: at Conner Farms. . . . . . 300 92% 93% 89% 89% 93% 94% 94% at Eagle Creek . . . . . . 240 90% 93% 93% 93% 93% 93% 94% at Riverbend . . . . . . . 996 94% 90% 83% 84% 89% 84% 79% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,536 92% 91% 86% 87% 90% 87% 84% ------ ----- ----- ----- ----- ----- ----- ----- ----- Chicago, IL AMLI: at Poplar Creek. . . . . . 196 95% 94% 96% 99% 96% 93% 99% ------ ----- ----- ----- ----- ----- ----- ----- ----- DENVER, CO AMLI: at Gateway Park. . . . . . 328 91% 93% 85% N/A N/A N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 12,247 92.1% 92.4% 91.3% 91.2% 92.5% 92.5% 91.7% ====== ===== ===== ===== ===== ===== ===== ===== ===== 2001 2000 Company's Number ---------------------------------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 - ------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------ Co-investment Communities: - -------------------------- Atlanta, GA AMLI: at Barrett Lakes . . . . . 35% 446 94% 92% 94% 97% 96% 95% 96% at Northwinds. . . . . . . 35% 800 92% 95% 93% 95% 94% 96% 96% at Pleasant Hill . . . . . N/A N/A N/A N/A N/A N/A N/A 97% 97% at River Park. . . . . . . 40% 222 89% 91% 96% 93% 98% 98% 93% at Willeo Creek. . . . . . 30% 242 84% 91% 98% 94% 96% 92% 95% at Windward Park . . . . . 45% 328 90% 91% 88% 90% 93% 93% 93% at Peachtree City. . . . . 20% 312 92% 94% 89% 93% 96% 92% N/A lease lease at Lost Mountain . . . . . 75% 164 93% 95% 95% 95% up up N/A lease lease lease at Park Bridge . . . . . . 25% 352 93% 96% 95% up up up N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 2,866 91% 94% 93% 94% 95% 95% 95% ------ ----- ----- ----- ----- ----- ----- ----- ----- Chicago, IL AMLI: at Chevy Chase . . . . . . 33% 592 91% 95% 95% 96% 97% 95% 97% at Danada Farms. . . . . . 10% 600 87% 94% 96% 97% 95% 95% 93% at Fox Valley. . . . . . . 25% 272 92% 93% 94% 90% 95% 97% 92% at Willowbrook . . . . . . N/A N/A N/A 93% 93% 95% 95% 96% 90% at Windbrooke. . . . . . . 15% 236 95% 97% 96% 97% 98% 95% 98% lease at Oakhurst North. . . . . 25% 464 86% 90% 93% 92% 91% 94% up lease lease lease at St. Charles . . . . . . 25% 400 84% 91% 89% 91% up up up at Osprey Lake . . . . . . 69% 483 93% 92% 87% N/A N/A N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- 3,047 89% 93% 93% 94% 95% 95% 94% ------- ----- ----- ----- ----- ----- ----- ----- ----- Indianapolis, IN AMLI: on Spring Mill . . . . . . 20% lease residual 400 81% 78% 80% 79% 85% 91% up lease lease at Lake Clearwater . . . . 25% 216 93% 94% 94% 96% 96% up up lease lease lease lease at Castle Creek. . . . . . 40% 276 88% 91% 95% up up up up ------- ----- ----- ----- ----- ----- ----- ----- ----- 892 86% 86% 88% 85% 89% 91% 0% ------- ----- ----- ----- ----- ----- ----- ----- ----- 2001 2000 Company's Number ---------------------------------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 - ------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------ Kansas City, KS AMLI: at Regents Crest . . . . . 25% 476 89% 92% 90% 83% 86% 87% 86% lease lease lease Creekside. . . . . . . . . 25% 224 93% 88% 91% 93% up up up lease lease lease at Wynnewood Farms . . . . 25% 232 93% 92% 91% 88% up up up ------- ----- ----- ----- ----- ----- ----- ----- ----- 932 91% 91% 91% 87% 86% 87% 86% ------- ----- ----- ----- ----- ----- ----- ----- ----- Dallas, TX AMLI: at Deerfield . . . . . . . 25% 240 92% 95% 86% 90% 92% 82% 93% at Fossil Creek. . . . . . 25% 384 95% 95% 94% 90% 92% 97% 94% at Oak Bend. . . . . . . . 40% 426 96% 94% 93% 92% 94% 92% 90% on the Parkway . . . . . . 25% 240 94% 92% 91% 89% 92% 94% 95% at Prestonwood Hills . . . 45% 272 95% 97% 96% 94% 95% 92% 93% on Timberglen. . . . . . . 40% 260 94% 94% 94% 95% 96% 96% 94% at Verandah. . . . . . . . 35% 538 96% 94% 90% 90% 93% 95% 95% on Frankford . . . . . . . 45% 582 93% 93% 94% 95% 94% 90% N/A at Breckinridge Point. . . 45% 440 89% 93% 93% 88% 91% N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- 3,382 94% 94% 93% 92% 93% 92% 93% ------- ----- ----- ----- ----- ----- ----- ----- ----- Austin, TX AMLI: at Wells Branch. . . . . . 25% 576 93% 87% 81% 86% 94% 93% 94% at Scofield Ridge. . . . . 45% 487 90% 87% 80% 89% 93% N/A N/A lease lease lease at Monterey Oaks . . . . . 25% 430 94% 88% 94% 93% up up up ------- ----- ----- ----- ----- ----- ----- ----- ----- 1,493 92% 87% 88% 89% 93% 93% 94% ------- ----- ----- ----- ----- ----- ----- ----- ----- 2001 2000 Company's Number ---------------------------------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 - ------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------ Houston, TX AMLI: at Champions Centre. . . . 15% 192 93% 89% 95% 91% 94% 93% 94% at Champions Park. . . . . 15% 246 92% 94% 90% 88% 87% 93% 96% at Greenwood Forest. . . . 15% 316 93% 93% 87% 88% 92% 96% 94% Midtown. . . . . . . . . . 45% 419 97% 96% 96% 96% 97% 96% 94% Towne Square . . . . . . . 45% 380 96% 90% 95% 92% N/A N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- 1,553 94% 93% 93% 91% 93% 95% 94% ------- ----- ----- ----- ----- ----- ----- ----- ----- Denver, CO AMLI: at Lowry Estates . . . . . 50% 414 91% 88% 87% 89% N/A N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- Total co-investment communities . . . . . . . . 14,579 91.5% 92.0% 91.7% 88.9% 93.5% 93.8% 93.9% ------- ----- ----- ----- ----- ----- ----- ----- ----- Total . . . . . . . . . . . . 26,826 91.8% 92.2% 91.5% 90.0% 93.0% 93.1% 92.6% ======= ===== ===== ===== ===== ===== ===== ===== =====
PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K have been filed during the quarter ended September 30, 2001. The Exhibits filed as part of this report are listed below. EXHIBIT NO. DOCUMENT DESCRIPTION 3.1 Amended and Restated By-Laws of AMLI Residential Properties Trust. 4.1 Form of Share Certificate for Series D Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest. 4.2 Articles Supplementary Classifying and Designing a Series D Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest. 10.1 Fifth Amendment to Amended and Restated Agreement of Limited Partnership of AMLI Residential Properties, L.P. 10.2 Registration Rights Agreement between AMLI Residential Properties Trust and The Equitable Life Assurance Society of the United States. 99. Financial and Operating Data furnished to Shareholders and Analysts SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMLI RESIDENTIAL PROPERTIES TRUST Date: November 13, 2001 By: /s/ CHARLES C. KRAFT ----------------------------------- Charles C. Kraft Principal Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: November 13, 2001 By: /s/ GREGORY T. MUTZ ----------------------------------- Gregory T. Mutz Chairman of the Board of Trustees Date: November 13, 2001 By: /s/ ALLAN J. SWEET ----------------------------------- Allan J. Sweet President and Trustee Date: November 13, 2001 By: /s/ ROBERT J. CHAPMAN ----------------------------------- Robert J. Chapman Principal Financial Officer Date: November 13, 2001 By: /s/ CHARLES C. KRAFT ----------------------------------- Charles C. Kraft Principal Accounting Officer EX-3.1 3 exh_31.txt EXHIBIT 3.1 - ----------- AMLI RESIDENTIAL PROPERTIES TRUST AMENDED AND RESTATED -------------------- BYLAWS ------ ARTICLE I OFFICES SECTION 1.1 PRINCIPAL OFFICE. The principal office of the Trust shall be located at such place or places as the Board of Trustees may designate. SECTION 1.2 ADDITIONAL OFFICES. The Trust may have additional offices at such places as the Board of Trustees may from time to time determine or the business of the Trust may require. ARTICLE II MEETINGS OF SHAREHOLDERS SECTION 2.1 PLACE. All meetings of Shareholders shall be held at the principal office of the Trust or at such other place within the United States as shall be stated in the notice of the meeting. SECTION 2.2 ANNUAL MEETING. An annual meeting of the Shareholders for the election of Trustees and the transaction of any business within the powers of the Trust shall be held within a reasonable period (not less than 30 days) following delivery of the annual report described in Section 4, Article 4 of the Declaration of Trust, on a date and at the time set by the Board of Trustees, but in any event such meeting must be held within six months after the end of each full fiscal year. SECTION 2.3 SPECIAL MEETINGS. Special meetings of the Shareholders may be called by a majority of the Trustees, a majority of the Disinterested Trustees (as defined in Section 1, Article 5 of the Declaration of Trust and Section 3.2, Article III of these Amended and Restated Bylaws) or by any officer of the Trust. Special meetings of Shareholders shall also be called by the Secretary upon the written request of Shareholders holding in the aggregate not less than ten percent (10%) of the outstanding Shares of the Trust entitled to vote at such meeting. Such request shall state the purpose of such meeting and the matters proposed to be acted on at such meeting. The Secretary shall inform such Shareholders of the reasonably estimated cost of preparing and mailing notice of the meeting and, upon payment to the Trust of such costs, the Secretary shall give notice to each Shareholder entitled to notice of the meeting. Unless requested by the Shareholders entitled to cast a majority of all the votes entitled to be cast at such meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of the Shareholders held during the preceding 12 months. SECTION 2.4 NOTICE. Not less than 10 nor more than 60 days before each meeting of Shareholders, the Secretary shall give to each Shareholder of record entitled to vote at such meeting written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by statute, the purpose or purposes for which the meeting is called, either by mail or by presenting it to such Shareholder personally. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the Shareholder at his or her post office address as it appears on the records of the Trust, with postage thereon prepaid. SECTION 2.5 SCOPE OF NOTICE. Any business of the Trust may be transacted at an annual meeting of Shareholders without being specifically designated in the notice, except such business as is required by statute to be stated in such notice. No business shall be transacted at a special meeting of Shareholders except as specifically designated in the notice. SECTION 2.6 QUORUM. At any meeting of Shareholders, the presence in person or by proxy of Shareholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum; but this section shall not affect any requirement under any statute or the Declaration of Trust for the vote necessary for the adoption of any measure. If, however, such quorum shall not be present at any meeting of the Shareholders, the Shareholders entitled to vote at such meeting, present in person or by proxy, shall have power to adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 2.7 VOTING. A plurality of all the votes cast at a meeting of Shareholders duly called and at which a quorum is present shall be sufficient to elect a Trustee. Each Share may be voted for as many individuals as there are Trustees to be elected and for whose election the Share is entitled to be voted. There shall be no right of cumulative voting. A majority of the votes cast at a meeting of Shareholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Declaration of Trust. Unless otherwise provided in the Declaration of Trust, each outstanding Share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of Shareholders. SECTION 2.8 PROXIES. A Shareholder may vote the Shares owned of record by him or her, either in person or by proxy executed in writing by the Shareholder or by his or her duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Trust before or at the time of the meeting. No proxy shall be valid after 11 months from the date of its execution, unless otherwise provided in the proxy. SECTION 2.9 VOTING OF SHARES BY CERTAIN HOLDERS. Shares registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such Shares pursuant to a bylaw or a resolution of the board of directors of such corporation or other entity presents a certified copy of such bylaw or resolution, in which case such person may vote such Shares. Any director or other fiduciary may vote Shares registered in his or her name as such fiduciary, either in person or by proxy. Shares of the Trust directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding Shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding Shares at any given time. The Board of Trustees may adopt by resolution a procedure by which a Shareholder may certify in writing to the Trust that any Shares registered in the name of the Shareholder are held for the account of a specified person other than the Shareholder. The resolution shall set forth the class of Shareholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the share transfer books, the time after the record date or closing of the share transfer books within which the certification must be received by the Trust; and any other provisions with respect to the procedure which the Board of Trustees considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the Shareholder of record of the specified Shares in place of the Shareholder who makes the certification. Notwithstanding any other provision of these Amended and Restated Bylaws, the provisions of Title 3, Subtitle 6 of the Corporations and Associations Article of the Annotated Code of Maryland entitled "Special Voting Requirements" (or any successor statute) shall not apply to any business combinations with Gregory T. Mutz, Baldwin & Lyons, Inc., an Indiana corporation, Amli Realty Co., a Delaware corporation, or any of their respective existing or future affiliates and successors, and Title 3, Subtitle 7 of the Corporations and Associations Article of the Annotated Code of Maryland entitled "Voting Rights of Certain Control Shares" (or any successor statute) shall not apply to Shares owned or acquired by Gregory T. Mutz, Baldwin & Lyons, Inc., an Indiana corporation, Amli Realty Co., a Delaware corporation, or any of their respective existing or future affiliates and successors. SECTION 2.10 INSPECTORS. At any meeting of Shareholders, the chairman of the meeting may, or upon the request of any Shareholder shall, appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain and report the number of Shares represented at the meeting based upon their determination of the validity and effect of proxies, count all votes, report the results and perform such other acts as are proper to conduct the election and voting with impartiality and fairness to all the Shareholders. Each report of an inspector shall be in writing and signed by him or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of Shares represented at the meeting and the results of the voting shall be prima facie evidence thereof. SECTION 2.11 NOMINATIONS AND SHAREHOLDER BUSINESS. 2.11.1 ANNUAL MEETINGS OF SHAREHOLDERS. 2.11.1.1 Nominations of persons for election to the Board of Trustees and the proposal of business to be considered by the Shareholders may be made at an annual meeting of Shareholders (a) pursuant to the Trust's notice of meeting, (b) by or at the direction of the Board of Trustees, or (c) by any Shareholder of the Trust who was a Shareholder of record at the time of giving notice provided for in this Section 2.11.1, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 2.11.1. 2.11.1.2 For nominations or other business to be properly brought before an annual meeting by a Shareholder pursuant to clause (c) of paragraph 2.11.1.1 of this Section 2.11, the Shareholder must have given timely notice thereof in writing to the Secretary of the Trust. To be timely, a Shareholder's notice shall be delivered to the Secretary at the principal executive offices of the Trust not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the Shareholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Such Shareholder's notice shall set forth (a) as to each person whom the Shareholder proposes to nominate for election or reelection as a Trustee all information relating to such person that is required to be disclosed in solicitations of proxies for election of Trustees, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Trustee if elected), (b) as to any other business that the Shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such Shareholder and of the beneficial owner, if any, on whose behalf the proposal is made, and (c) as to the Shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such Shareholder, as they appear on the Trust's books, and of such beneficial owner and (ii) the class and number of Shares of the Trust which are owned beneficially and of record by such Shareholders and such beneficial owner. 2.11.1.3 Notwithstanding anything in the second sentence of Paragraph 2.11.1.2 of this Section 2.11 to the contrary, in the event that the number of Trustees to be elected to the Board of Trustees is increased and there is no public announcement naming all of the nominees for Trustee or specifying the size of the increased Board of Trustees made by the Trust at least 70 days prior to the first anniversary of the preceding year's annual meeting, a Shareholder's notice required by this Section 2.11.1 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Trust not later than the close of business on the 10th day following the day on which such public announcement is first made by the Trust. 2.11.2 SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall be conducted at a special meeting of Shareholders as shall have been brought before the meeting pursuant to the Trust's notice of meeting. Nominations of persons for election to the Board of Trustees may be made at a special meeting of Shareholders at which Trustees are to be elected (a) pursuant to the Trust's notice of meeting, (b) by or at the direction of the Board of Trustees, or (c) provided, that the Board of Trustees has determined that Trustees shall be elected at such special meeting, by any Shareholder of the Trust who is a Shareholder of record at the time of giving of notice provided for in this Section 2.11.2, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 2.11.2. In the event the Trust calls a special meeting of Shareholders for the purpose of electing one or more Trustees to the Board of Trustees, any such Shareholder may nominate a person or persons (as the case may be) for election to such position as specified in the Trust's notice of meeting, if the Shareholder's notice required by Paragraph 2.11.1.2 of this Section 2.11 shall be delivered to the Secretary at the principal executive offices of the Trust not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Trustees to be elected at such meeting. 2.11.3 GENERAL. 2.11.3.1 Only such persons who are nominated in accordance with the procedures set forth in this Section 2.11 shall be eligible to serve as Trustees and only such business shall be conducted at a meeting of Shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.11. The presiding officer of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 2.11 and, if any proposed nomination or business is not in compliance with this Section 2.11, to declare that such defective nomination or proposal be disregarded. 2.11.3.2 For purposes of this Section 2.11, "public announcement" shall mean disclosure in a press release reported by the Dow Jones New Service, Associated Press or comparable news service or in a document publicly filed by the Trust with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. 2.11.3.3 Notwithstanding the foregoing provisions of this Section 2.11, a Shareholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.11. Nothing in this Section 2.11 shall be deemed to affect any rights of Shareholders to request inclusion of proposals in the Trust's proxy statement pursuant to Rule 14a-8 under the Exchange Act. SECTION 2.12 INFORMAL ACTION BY SHAREHOLDERS. Any action required or permitted to be taken at a meeting of Shareholders may be taken without a meeting if a consent in writing, setting forth such action, is signed by each Shareholder entitled to vote on the matter and any other Shareholder entitled to notice of a meeting of Shareholders (but not to vote thereat) has waived in writing any right to dissent from such action, and such consent and waiver are filed with the minutes of proceedings of the Shareholders. SECTION 2.13 VOTING BY BALLOT. Voting on any question or in any election may be viva voce unless the presiding officer shall order or any Shareholder shall demand that voting by ballot. ARTICLE III TRUSTEES SECTION 3.1 GENERAL POWERS; QUALIFICATIONS. The business and affairs of the Trust shall be managed under the direction of its Board of Trustees. SECTION 3.2 NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Trustees may establish, increase or decrease the number of Trustees, provided that the number thereof shall never be less than 3 nor more than 15, and further provided that the tenure of office of a Trustee shall not be affected by any decrease in the number of Trustees. Each Trustee shall hold office for the term for which he or she is elected and until his or her successor is elected and qualified, subject, however, to prior death, resignation or removal from office. After the closing of the Initial Public Offering (as such term is defined in Article 3 of the Declaration of Trust), the Board of Trustees shall include a majority of Trustees ("Disinterested Trustees") who are not affiliated with Amli Realty Co., a Delaware corporation, and its affiliates and successors. SECTION 3.3 ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Trustees shall be held immediately after and at the same place as the annual meeting of Shareholders, no notice other than this Bylaw being necessary. The Board of Trustees may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Board of Trustees without other notice than such resolution. SECTION 3.4 SPECIAL MEETINGS. Special meetings of the Board of Trustees may be called by or at the request of the Chairman of the Board (or any Co-Chairman of the Board if more than one), the Vice Chairman of the Board (or any Vice Chairman of the Board if more than one), the President or by a majority of the Trustees then in office. The person or persons authorized to call special meetings of the Board of Trustees may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Board of Trustees called by them. SECTION 3.5 NOTICE. Notice of any special meeting shall be given by written notice delivered personally, transmitted by facsimile, telegraphed or mailed to each Trustee at his or her business or residence address. Personally delivered, facsimile-transmitted or telegraphed notices shall be given at least 2 days prior to the meeting. Notice by mail shall be given at least 5 days prior to the meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. If given by telegram, such notice shall be deemed to be given when the telegram is delivered to the telegraph company. Neither the business to be transacted at, no r the purpose of, any annual, regular or special meeting of the Board of Trustees need be stated in the notice, unless specifically required by statute or these Amended and Restated Bylaws. SECTION 3.6 QUORUM. A majority of the Trustees shall constitute a quorum for transaction of business at any meeting of the Board of Trustees, provided that, if less than a majority of such Trustees are present at said meeting, a majority of the Trustees present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to the Declaration of Trust or these Amended and Restated Bylaws, the vote of a majority of a particular group of Trustees is required for action, a quorum must also include a majority of such group. The Board of Trustees present at a meeting which has been duly called and convened may continue to transact business until adjournment, notwithstanding the withdrawal of enough Trustees to leave less than a quorum. SECTION 3.7 VOTING. Except as otherwise provided in the Declaration of Trust, the action of the majority of the Trustees present at a meeting at which a quorum is present shall be the action of the Board of Trustees, unless the concurrence of a greater proportion is required for such action by applicable statute. SECTION 3.8 TELEPHONE MEETINGS. Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting. SECTION 3.9 INFORMAL ACTION BY TRUSTEES. Any action required or permitted to be taken at any meeting of the Board of Trustees may be taken without a meeting, if a consent in writing to such action is signed by each Trustee and such written consent is filed with the minutes of proceedings of the Board of Trustees. SECTION 3.10 VACANCIES. If for any reason any or all the Trustees cease to be Trustees, such event shall not terminate the Trust or affect these Amended and Restated Bylaws or the powers of the remaining Trustees hereunder (even if fewer than 3 Trustees remain). Any vacancy on the Board of Trustees for any cause other than an increase in the number of Trustees shall be filled by a majority of the remaining Trustees, even if less than a quorum, or by a sole remaining Trustee. Any vacancy created by an increase in the number of Trustees shall be filled by a majority vote of the entire Board of Trustees. Disinterested Trustees shall nominate replacements for vacancies amongst the Disinterested Trustees' positions. Notwithstanding any other provisions of these Amended and Restated Bylaws, in the event that, after the closing of the Initial Public Offering (as such term is defined in Article 3 of the Declaration of Trust), a majority of the Board of Trustees are not Disinterested Trustees by reason of the resignation or removal of one or more Disinterested Trustees or otherwise, the remaining Disinterested Trustees (or, if there are no Disinterested Trustees, the remaining members of the Board of Trustees) shall promptly appoint that number of Disinterested Trustees necessary to cause the Board of Trustees to include a majority of Disinterested Trustees. Any Trustee elected to fill a vacancy as provided herein shall hold office until the next annual meeting of Shareholders. A Trustee elected at an annual meeting to fill a vacancy shall have the same remaining term as that of his or her predecessor. SECTION 3.11 COMPENSATION. Trustees shall not receive any stated salary for their services as Trustees but, by resolution of the Board of Trustees, may receive fixed sums per year and/or per meeting. Expenses of attendance, if any, may be allowed to Trustees for attendance at each annual, regular or special meeting of the Board of Trustees or of any committee thereof; but nothing herein contained shall be construed to preclude any Trustees from serving the Trust in any other capacity and receiving compensation therefor. SECTION 3.12 RESIGNATION, REMOVAL AND DEATH OF TRUSTEES. In the manner provided in the Declaration of Trust, a Trustee may resign, be removed for cause or have his or her status as Trustee terminated by incapacity or death. SECTION 3.13 LOSS OF DEPOSITS. No Trustee shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited. SECTION 3.14 SURETY BONDS. Unless required by law, no Trustee shall be obligated to give any bond or surety or other security for the performance of any of his or her duties. SECTION 3.15 RELIANCE. Each Trustee, officer, employee and agent of the Trust shall, in the performance of his or her duties with respect to the Trust, be fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel or upon reports made to the Trust by any of its officers or employees or by the adviser, accountants, appraisers or other experts or consultants selected by the Board of Trustees or officers of the Trust, regardless of whether such counsel or expert may also be a Trustee. SECTION 3.16 CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS. Except as otherwise provided in an agreement with the Trust, the Trustees shall have no responsibility to devote their full time to the affairs of the Trust, and any Trustee, officer, employee or agent of the Trust, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to those of or relating to the Trust. ARTICLE IV COMMITTEES SECTION 4.1 EXECUTIVE COMMITTEE. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may designate one or more Trustees to constitute an Executive Committee, to serve as such, unless the resolution designating the Executive Committee is sooner amended or rescinded by the Board of Trustees, until the next annual meeting of the Board of Trustees or until their respective successors are designated. A majority of the members of the Executive Committee shall be Disinterested Trustees. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may also designate additional Trustees as alternate members of the Executive Committee to serve as members of the Executive Committee in the place and stead of any regular member or members thereof who may be unable to attend a meeting or otherwise unavailable to act as a member of the Executive Committee. In the absence or disqualification of a member and all alternate members who may serve in the place and stead of such member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of any such absent or disqualified member. Except as expressly limited by the laws of the State of Maryland or the Declaration of Trust, the Executive Committee shall have and may exercise all the powers and authority of the Board of Trustees in the management of the business and affairs of the Trust between the meetings of the Board of Trustees. The Executive Committee shall keep a record of its acts and proceedings, which shall form a part of the records of the Trust in the custody of the Secretary, and all actions of the Executive Committee shall be reported to the Board of Trustees at the next meeting of the Board of Trustees. Meetings of the Executive Committee may be called at any time by the Chairman of the Board (or any Co-Chairman of the Board if more than one), the Vice Chairman of the Board (or any Vice Chairman of the Board if more than one), the President or any 2 of its members. No notice of meetings need be given. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business and, except as expressly limited by this Section, the act of a majority of the members present at any meeting at which there is a quorum shall be the act of the Executive Committee. Except as expressly provided in this Section, the Executive Committee shall fix its own rules of procedure. SECTION 4.2 AUDIT COMMITTEE. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may designate 2 or more Trustees to constitute an Audit Committee, to serve as such, unless the resolution designating the Audit Committee is sooner amended or rescinded by the Board of Trustees, until the next annual meeting of the Board of Trustees or until their respective successors are designated. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may also designate additional Trustees as alternate members of the Audit Committee to serve as members of the Audit Committee in the place and stead of any regular member or members thereof who may be unable to attend a meeting or otherwise unavailable to act as a member of the Audit Committee. In the absence or disqualification of a member and all alternate members who may serve in the place and stead of such member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of any such absent or disqualified member. Each member of the Audit Committee shall be independent of management of the Trust and free from any relationship that, in the opinion of the Board of Trustees, would interfere with the exercise of independent judgment as a member of the Audit Committee. Except as expressly limited by the laws of the State of Maryland or the Declaration of Trust, the Audit Committee shall have and may exercise all the powers and authority of the Board of Trustees to establish auditing procedures for the Trust and to appoint and oversee the Trust's independent public accountants to the fullest extent. The Audit Committee shall keep a record of its acts and proceedings, which shall form a part of the records of the Trust in the custody of the Secretary, and all actions of the Audit Committee shall be reported to the Board of Trustees at the next meeting of the Board of Trustees. Meetings of the Audit Committee may be called at any time by the Chairman of the Board (or any Co-Chairman of the Board if more than one), the Vice Chairman of the Board (or any Vice Chairman of the Board if more than one), the President or any 2 of its members. Two days' written or telephonic notice of meetings shall be given. A majority of the members of the Audit Committee shall constitute a quorum for the transaction of business and, except as expressly limited by this Section, the act of a majority of the members present at any meeting at which there is a quorum shall be the act of the Audit Committee. Except as expressly provided in this Section, the Audit Committee shall fix its own rules of procedure. SECTION 4.3 EXECUTIVE COMPENSATION COMMITTEE. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may designate 2 or more Trustees to constitute an Executive Compensation Committee, to serve as such, unless the resolution designating the Executive Compensation Committee is sooner amended or rescinded by the Board of Trustees, until the next annual meeting of the Board of Trustees or until their respective successors are designated. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may also designate additional Trustees as alternate members of the Executive Compensation Committee to serve as members of the Executive Compensation Committee in the place and stead of any regular member or members thereof who may be unable to attend a meeting or otherwise unavailable to act as a member of the Executive Compensation Committee. In the absence or disqualification of a member and all alternate members who may serve in the place and stead of such member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of any such absent or disqualified member. Each member of the Executive Compensation Committee shall be a "disinterested person" within the meaning of Rule 16b-3(c)(2)(i) promulgated under the Exchange Act. A majority of the members of the Executive Compensation Committee shall be Disinterested Trustees. Except as expressly limited by the laws of the State of Maryland or the Declaration of Trust, the Executive Compensation Committee shall have and may exercise such powers as the Board of Trustees may determine and specify by resolution. The Executive Compensation Committee shall keep a record of its acts and proceedings, which shall form a part of the records of the Trust in the custody of the Secretary, and all actions of the Executive Compensation Committee shall be reported to the Board of Trustees at the next meeting of the Board of Trustees. Meetings of the Executive Compensation Committee may be called at any time by the Chairman of the Board (or any Co-Chairman of the Board if more than one), the Vice Chairman of the Board (or any Vice Chairman of the Board if more than one), the President or any 2 of its members. Two days' written or telephonic notice of meetings shall be given. A majority of the members of the Executive Compensation Committee shall constitute a quorum for the transaction of business and, except as expressly limited by this Section, the act of a majority of the members present at any meeting at which there is a quorum shall be the act of the Executive Compensation Committee. Except as expressly provided in this Section, the Executive Compensation Committee shall fix its own rules of procedure. SECTION 4.4 OTHER COMMITTEES. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may designate one or more other committees, each such committee to consist of 2 or more Trustees. Except as expressly limited by the laws of the State of Maryland or the Declaration of Trust, any such committee shall have and may exercise such powers as the Board of Trustees may determine and specify in the resolution designating such committee. The Board of Trustees, by resolution adopted by a majority of the whole Board of Trustees, may also designate one or more additional Trustees as alternate members of any such committee to replace any absent or disqualified member at any meeting of the committee, and at any time may change the membership of any committee or amend or rescind the resolution designating the committee. In the absence or disqualification of a member or alternate member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of any such absent or disqualified member, provided that the Trustee so appointed meets any qualifications stated in the resolution designating the committee. Each committee shall keep a record of proceedings and report the same to the Board of Trustees to such extent and in such form as the Board of Trustees may require. Unless otherwise provided in the resolution designating a committee, a majority of all of the members of any such committee may select its chairman, fix its rules or procedure, fix the time and place of its meetings and specify what notice of meetings, if any, shall be given. SECTION 4.5 TELEPHONE MEETINGS. Members of a committee of the Board of Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting. SECTION 4.6 INFORMAL ACTION BY COMMITTEES. Any action required or permitted to be taken at any meeting of a committee of the Board of Trustees may be taken without a meeting, if a consent in writing to such action is signed by each member of the committee and such written consent is filed with the minutes of proceedings of such committee. ARTICLE V OFFICERS SECTION 5.1 GENERAL PROVISIONS. The officers of the Trust may include a Chairman of the Board (or more than one Co-Chairmen of the Board), a Vice Chairman of the Board (or more than one Vice Chairmen of the Board), a President (chief executive officer), one or more Vice Presidents, a Chief Operating Officer, a Chief Financial Officer, a Secretary, a Treasurer, one or more Assistant Secretaries and one or more Assistant Treasurers. In addition, the Board of Trustees may from time to time appoint such other officers with such powers and duties as they shall deem proper. The officers of the Trust shall be elected annually by the Board of Trustees at the first meeting of the Board of Trustees held after each annual meeting of Shareholders, except that the President may appoint one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal in the manner hereinafter provided. Any 2 or more offices except President and Vice President may be held by the same person. In its discretion, the Board of Trustees may leave unfilled any office. Election of an officer or agent shall not of itself create contract rights between the Trust and such officer or agent. SECTION 5.2 REMOVAL AND RESIGNATION. Any officer or agent of the Trust may be removed by the Board of Trustees if in its judgment the best interests of the Trust would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Trust may resign at any time by giving written notice of his or her resignation to the Board of Trustees, the Chairman of the Board (or any Co-Chairman of the Board if more than one), the Vice Chairman of the board, the President or the Secretary. Any resignation shall take effect at any time subsequent to the time specified therein or, if the time when it shall become effective is not specified therein, immediately upon its receipt. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. SECTION 5.3 VACANCIES. A vacancy in any office may be filled by the Board of Trustees for the balance of the term. SECTION 5.4 CHIEF OPERATING OFFICER. The Chief Operating Officer shall have the responsibilities and duties as set forth by the Board of Trustees. SECTION 5.5 CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall have the responsibilities and duties as set forth by the Board of Trustees. SECTION 5.6 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside over the meetings of the Board of Trustees and of the Shareholders at which he or she shall be present. If there be more than one, the Co- Chairmen designated by the Board of Trustees will perform such duties. The Chairman or Co-Chairmen of the Board shall perform such other duties as may be assigned to him or them by the Board of Trustees. SECTION 5.7 VICE CHAIRMAN OF THE BOARD. In the absence of the Chairman of the Board, the Vice Chairman of the Board shall preside over the meetings of the Board of Trustees and of the Shareholders at which he or she shall be present. If there be more than one, the Vice Chairmen designated by the Board will perform such duties. The Vice Chairman or Vice Chairmen of the Board shall perform such other duties as may be assigned to him or them by the Board of Trustees. SECTION 5.8 PRESIDENT. The President shall have general responsibility for implementation of the policies of the Trust, as determined by the Board of Trustees, and for the management, supervision and control of all of the business and affairs of the Trust. In the absence of a designation of a Chief Operating Officer by the Board of Trustees, the President shall be the Chief Operating Officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Trustees or by these Amended and Restated Bylaws to some other officer or agent of the Trust or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Trustees from time to time. SECTION 5.9 VICE PRESIDENTS. In the absence of the President or in the event of a vacancy in such office, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the President and when so acting shall have all the powers of and be subject to all the restrictions upon the President; and shall perform such other duties as from time to time may be assigned to him or her by the President or by the Board of Trustees. The Board of Trustees may designate one or more Vice Presidents as Executive Vice President or as Vice President for particular areas of responsibility. SECTION 5.10 SECRETARY. The Secretary shall (a) keep the minutes of the proceedings of the Shareholders, the Board of Trustees and committees of the Board of Trustees in one or more books provided for that purpose, (b) see that all notices are duly given in accordance with the provisions of these Amended and Restated Bylaws or as required by law, (c) be custodian of the records and of the seal of the Trust, (d) keep a register of the post office address of each Shareholder which shall be furnished to the Secretary by such Shareholder, (e) have general charge of the share transfer books of the Trust, and (f) in general perform such other duties as from time to time may be assigned to him or her by the President or by the Board of Trustees. SECTION 5.11 TREASURER. The Treasurer shall have the custody of the funds and securities of the Trust and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Trust and shall deposit all moneys and other valuable effects in the name and to the credit of the Trust in such depositories as may be designated by the Board of Trustees. In the absence of a designation of a Chief Financial Officer by the Board of Trustees, the Treasurer shall be the Chief Financial Officer of the Trust. The Treasurer shall disburse the funds of the Trust as may be ordered by the Board of Trustees, taking proper vouchers for such disbursements, and shall render to the President and Board of Trustees, at the regular meetings of the Board of Trustees or whenever it may so require, an account of all his or her transactions as Treasurer and of the financial condition of the Trust. If required by the Board of Trustees, he or she shall give the Trust a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Trustees for the faithful performance of the duties of his or her office and for the restoration to the Trust, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, moneys and other property of whatever kind in his or her possession or under his or her control belonging to the Trust. SECTION 5.12 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or Treasurer, respectively, or by the President or the Board of Trustees. The Assistant Treasurers shall, if required by the Board of Trustees, give bonds for the faithful performance of their duties in such sums and with such surety or sureties as shall be satisfactory to the Board of Trustees. SECTION 5.13 SALARIES. The salaries of the officers shall be fixed from time to time by the Board of Trustees and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a Trustee. ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS SECTION 6.1 CONTRACTS. The Board of Trustees may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Trust and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document executed by one or more of the Trustees or by an authorized person shall be valid and binding upon the Board of Trustees and upon the Trust when authorized or ratified by action of the Board of Trustees. SECTION 6.2 CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Trust shall be signed by such officer or officers, agent or agents of the Trust and in such manner as shall from time to time be determined by the Board of Trustees. SECTION 6.3 DEPOSITS. All funds of the Trust not otherwise employed shall be deposited from time to time to the credit of the Trust in such banks, trust companies or other depositories as the Board of Trustees may designate. ARTICLE VII SHARES SECTION 7.1 CERTIFICATES. Each Shareholder shall be entitled to a certificate or certificates which shall represent and certify the number of Shares of each class held by him or her in the Trust. Each certificate shall be signed by the President or a Vice President and countersigned by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be sealed with the seal, if any, of the Trust. The signatures may be either manual or facsimile. Certificates shall be consecutively numbered; and if the Trust shall, from time to time, issue several classes of Shares, each class may have its own number series. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. Each certificate representing Shares which are restricted as to their transferability or voting powers, which are preferred or limited as to their dividends or distributions or as to their allocable portion of the assets upon liquidation or which are redeemable at the option of the Trust, shall have a statement of such restriction, limitation, preference or redemption provision, or a summary thereof, plainly stated on the certificate. In lieu of such statement or summary, the Trust may set forth upon the face or back of the certificate a statement that the Trust will furnish to any Shareholder, upon request and without charge, a full statement of such information. SECTION 7.2 TRANSFERS. Upon surrender to the Trust or the transfer agent of the Trust of a share certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Trust shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. The Trust shall be entitled to treat the holder of record of any Share as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Share on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland. Any issuance, redemption or transfer of, or restriction on, Shares which would operate to disqualify the Trust as a real estate investment trust for purposes of Federal income tax is null and void ab initio. Notwithstanding the foregoing, transfers of Shares of any class will be subject in all respects to the Declaration of Trust and all of the terms and conditions contained therein. SECTION 7.3 LOST CERTIFICATE. The Board of Trustees (or any officer designated by it) may direct a new certificate to be issued in place of any certificate previously issued by the Trust alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing the issuance of a new certificate, the Board of Trustees may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or his or her legal representative to advertise the same in such manner as they shall require and/or to give bond, with sufficient surety, to the Trust to indemnify it against any loss or claim which may arise as a result of the issuance of a new certificate. SECTION 7.4 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of Trustees may set, in advance, a record date for the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders, or Shareholders entitled to receive payment of any dividend or distribution or the allotment of any other rights, or in order to make a determination of Shareholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of Shareholders, not less than 10 days, before the date on which the meeting or particular action requiring such determination of Shareholders is to be held or taken. In lieu of fixing a record date, the Board of Trustees may provide that the share transfer books shall be closed for a stated period but not longer than 20 days. If the share transfer books are closed for the purpose of determining Shareholders entitled to notice of or to vote at a meeting of Shareholders, such books shall be closed for at least 10 days before the date of such meeting. If no record date is fixed and the share transfer books are not closed for the determination of Shareholders, (a) the record date for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the day on which the notice of meeting is mailed or the 30th day before the meeting, whichever is the closer date to the meeting, and (b) the record date for the determination of Shareholders entitled to receive payment of a dividend or distribution or an allotment of any other rights shall be the close of business on the day on which the resolution of the Trustees, declaring the dividend or distribution or allotment of rights, is adopted. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof, except where the determination has been made through the closing of the transfer books and the stated period of closing has expired. SECTION 7.5 SHARE LEDGER. The Trust shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate share ledger containing the name and address of each Shareholder and the number of Shares of each class held by such Shareholder. SECTION 7.6 FRACTIONAL SHARES; ISSUANCE OF UNITS. The Board of Trustees may issue fractional Shares or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the Declaration of Trust or these Amended and Restated Bylaws, the Board of Trustees may issue units consisting of different securities of the Trust. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Trust, except that the Board of Trustees may provide that for a specified period securities of the Trust issued in such unit may be transferred on the books of the Trust only in such unit. SECTION 7.7 SERIES D PREFERRED SHARES. The provisions of Section 3- 702 of Subtitle 7 of the Maryland General Corporation Law ("MGCL") shall not apply to the acquisition, pursuant to a stock purchase agreement to which the Trust and Amli Residential Properties, L.P. become parties, of 800,000 Series D Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest in the Trust ("Series D Preferred Shares") by The Equitable Life Assurance Society of the United States and/or one or more of its affiliates ("Equitable") or to the acquisition of the common shares of beneficial interest in the Trust ("Conversion Shares") into which the Series D Preferred Shares are convertible by Equitable. This Section 7.7 constitutes an irrevocable exemption from the control shares provisions of Section 3-701 et seq. of the MGCL, pursuant to Section 3-702(b) of the MGCL, with respect to the Series D Preferred Shares and the Conversion Shares. In addition to the other rights or remedies Equitable may have with respect to the subject matter herein, this Section 7.7 shall be deemed to constitute a contract between the Trust and Equitable. No repeal or amendment of this Section 7.7, insofar as it reduces the scope of the exemption provided hereunder shall be effective without the prior written consent of Equitable. ARTICLE VIII ACCOUNTING YEAR The Board of Trustees shall have the power, from time to time, to fix the fiscal year of the Trust by a duly adopted resolution. ARTICLE IX DIVIDENDS AND DISTRIBUTIONS SECTION 9.1 DECLARATION. Dividends and distributions upon the Shares of the Trust may be declared by the Board of Trustees, subject to the provisions of law and the Declaration of Trust. Dividends and distributions may be paid in cash, property or other assets of the Trust or in securities of the Trust or from any other source as the Trustees in their discretion shall determine, subject to the provisions of law and the Declaration of Trust. SECTION 9.2 CONTINGENCIES. Before payment of any dividends or distributions, there may be set aside out of any funds of the Trust available for dividends and distributions such sum or sums as the Board of Trustees may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends and distributions, for repairing or maintaining any property of the Trust or for such other purpose as the Board of Trustees shall determine to be in the best interest of the Trust, and the Board of Trustees may modify or abolish any such reserve in the manner in which it was created. ARTICLE X INVESTMENT POLICY Subject to the provisions of law and the Declaration of Trust, the Board of Trustees may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Trust as it shall deem appropriate in its sole discretion. ARTICLE XI SEAL SECTION 11.1 SEAL. The Board of Trustees may authorize the adoption of a seal by the Trust. The seal shall have inscribed thereon the name of the Trust and the year of its organization. The Board of Trustees may authorize one or more duplicate seals and provide for the custody thereof. SECTION 11.2 AFFIXING SEAL. Whenever the Trust is required to place its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word "(SEAL)" adjacent to the signature of the person authorized to execute the document on behalf of the Trust. ARTICLE XII INDEMNIFICATION To the extent permitted by Maryland law, the Trust shall indemnify and hold harmless each Trustee from and against all claims and liabilities, whether they proceed to judgment or are settled, to which such Trustee may become subject by reason of his being or having been a Trustee, or by reason of any action alleged to have been taken or omitted by him as Trustee, and shall reimburse him for all legal and other expenses reasonably incurred by him in connection with any such claim or liability, including any claim or liability arising under the provisions of federal or state securities laws; provided, however, that no Trustee shall be entitled to indemnification under the foregoing provisions in relation to any matter if it shall have been adjudicated that his action or omission was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty or the Trustee actually received an improper personal benefit or, in the case of a criminal proceeding, the Trustee had reasonable cause to believe that the act or omission was unlawful. The foregoing indemnification shall include any action alleged to have been taken or omitted by such individual who, while a Trustee and at the request of the Trust, serves or has served another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee of such corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The Trust, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses incurred by any Trustee in connection with any threatened, pending or completed action, suit or proceeding to which such Trustee is, was or at any time becomes a party or is threatened to be made a party, as a result, directly or indirectly, of serving at any time as a Trustee; provided that if such payment or reimbursement is to be made prior to the final disposition of any proceeding to which a Trustee is a party, no payment or reimbursement shall be made by the Trust unless and until the Trust shall receive a written affirmation from such Trustee of his good faith belief that the standard for indemnification of a Trustee under Maryland law has been met and a written undertaking by such Trustee to repay such amounts paid or reimbursed by the Trust if it shall ultimately be determined that the standard for indemnification has not been met. The rights accruing to a Trustee under these provisions shall not exclude any other right to which he may be lawfully entitled, nor shall anything herein contained restrict the right of the Trust to indemnify or reimburse such Trustee in any proper cause even though not specifically provided for herein. Each officer of the Trust shall be entitled to indemnification by the Trust on the same basis provided to Trustees hereunder. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of these Amended and Restated Bylaws or Declaration of Trust inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. ARTICLE XIII WAIVER OF NOTICE Whenever any notice is required to be given pursuant to the Declaration of Trust or these Amended and Restated Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE XIV AMENDMENT OF AMENDED AND RESTATED BYLAWS The Board of Trustees shall have the exclusive power to adopt, alter or repeal any provision of these Amended and Restated Bylaws and to make new Amended and Restated Bylaws. Notwithstanding anything herein to the contrary any amendment to Sections 3.2, 3.6, 3.7, 3.10, 4.1 and 4.3 and to this ARTICLE XIV, after the closing of the Initial Public Offering (as such term is defined in Article 3 of the Declaration of Trust), shall first be approved by a majority of the Disinterested Trustees. EX-4.1 4 exh_41.txt EXHIBIT 4.1 - ----------- SPECIMEN SHARE CERTIFICATE FOR NUMBER SHARES - ------ ------ *** *** AMLI RESIDENTIAL PROPERTIES TRUST This Certifies That *** SPECIMEN *** is the owner of ****** full paid and non-assessable Series D Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest Par Value $0.01 Per Share transferable on the books of the Corporation in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be signed by its duly authorized officers and sealed with the Seal of the Corporation. this ____________________ day of _____________A.D. __________ ______________________________ ______________________________ Charlotte A. Sparrow Allan J. Sweet Secretary President FOR VALUE RECEIVED, __________ hereby sell, assign and transfer unto _________________________________________________________________________ ___________________________ Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint _____________________________ Attorney to transfer the said Shares on the books of the within named Corporation with full power of substitution in the premises. Dated ____________________ __________ In presence of __________________________ ______________________________ THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE DISPOSED OF, EXCEPT IN ACCORDANCE WITH APPLICABLE "BLUE SKY" LAWS AND PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT. Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement, or any change whatever. EX-4.2 5 exh_42.txt EXHIBIT 4.2 - ----------- AMLI RESIDENTIAL PROPERTIES TRUST ARTICLES SUPPLEMENTARY SERIES D CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED SHARES OF BENEFICIAL INTEREST (Par Value $0.01 Per Share) AMLI Residential Properties Trust, a Maryland real estate investment trust (hereinafter called the "Company"), hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: The Board of Trustees of the Company has classified and designated 1,000,000 unissued preferred shares of beneficial interest, par value $0.01 per share, of the Company as Series D Cumulative Convertible Redeemable Preferred Shares ("Series D Preferred Shares"), with the preferences, rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption thereof as follows, which upon any restatement of the Company's Declaration of Trust (the "Declaration of Trust") shall be made part of Article 2 thereof, with any necessary or appropriate changes to the enumeration or lettering of sections or subsections hereof: SECTION 1. NUMBER OF SHARES AND DESIGNATION. The Series D Preferred Shares shall be designated as "Series D Cumulative Convertible Redeemable Preferred Shares" and the authorized number of Series D Preferred Shares constituting such series shall be 1,000,000, which number may be decreased from time to time by the Board pursuant to Section 7 upon reacquisition thereof in any manner, or by retirement thereof. SECTION 2. DEFINITIONS. For purposes of the Series D Preferred Shares, the following terms shall have the meanings indicated: "Acquired Shares" shall have the meaning set forth in Section 8(d)(iv). "Affiliate" shall mean, with respect to any Person, a Person which directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Base Amount" shall mean an amount equal to $25.00 per share. "Base Common Share Distribution" shall have the meaning set forth in paragraph (a) of Section 10. "Board" shall mean the Board of Trustees of the Company or any committee authorized by such Board of Trustees to perform any of its responsibilities with respect to the Series D Preferred Shares. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which day state or federally chartered banking institutions in Chicago, Illinois are not required to be open. "Call Date" shall have the meaning set forth in Section 5(b). "Change of Control" shall have the meaning set forth in Section 6(b). "Common Shares" shall mean the common shares of beneficial interest, par value $0.01 per share, of the Company. "Conversion Price" shall mean the conversion price per Common Share for which each Series D Preferred Share is convertible, as such Conversion Price may be adjusted pursuant to Section 8(d). The initial Conversion Price shall be $27.75 (equivalent to an initial conversion ratio of 0.9009 of one Common Share for each Series D Preferred Share). "Covenant Failure" shall have the meaning set forth in Section 13(a). "Current Market Price" of publicly traded Common Shares or any other class or series of beneficial interest or other security of the Company or of any similar security of any other issuer for any day shall mean the closing price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices regular way on such day, in either case as reported on the principal national securities exchange on which such securities are listed or admitted for trading, or, if such security is not quoted on any national securities exchange, on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if such security is not quoted on the NASDAQ National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day are not reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any New York Stock Exchange or National Association of Securities Dealers, Inc. member firm regularly making a market in such security selected for such purpose by the Chief Executive Officer of the Company or the Board or if any class or series of securities is not publicly traded, the fair value of the shares of such class or series as determined reasonably and in good faith by the Board. "Distribution Payment Date" shall mean, with respect to any Distribution Period, (a) the date that cash distributions are made on the Common Shares with respect to such Distribution Period or (b) if such distributions have not been paid on the Common Shares by 9:00 a.m., New York City time, on the sixtieth day from and including the last day of such Distribution Period, then on such day; provided, further, that if any Distribution Payment Date falls on any day other than a Business Day, the distribution payment payable on such Distribution Payment Date shall be paid on the Business Day immediately following such Distribution Payment Date. "Distribution Periods" shall mean the Initial Distribution Period and each subsequent quarterly distribution period commencing on and including January 1, April 1, July 1, and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Distribution Period, other than the Distribution Period during which any Series D Preferred Share is redeemed pursuant to Section 5, which shall end on and include the Call Date with respect to the Series D Preferred Shares being redeemed. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Expiration Time" shall have the meaning set forth in Section 8(d)(iv). "Fair Market Value" shall mean the average of the daily Current Market Prices of a Common Share during the twenty (20) consecutive Trading Days immediately preceding the fifth Business Day prior to the earlier of the day in question and the day before the "ex" date with respect to the issuance or distribution requiring such computation. The term "ex' date," when used with respect to any issuance or distribution, means the first day on which Common Shares trade regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. "Initial Distribution Period" shall mean the period commencing on and including the Initial Issue Date and ending on and including December 31, 2001. "Initial Issue Date" shall mean the date on which the first Series D Preferred Shares are issued. "Interest" shall have the meaning set forth in Section 3(b). "Investor" shall mean The Equitable Life Assurance Society of the United States and one or more other investors identified by the Company and reasonably acceptable to Lend Lease Capital Markets, Inc. "Issue Date" shall mean the date on which the Company shall initially issue any Series D Preferred Share, regardless of the number of times transfer of such Series D Preferred Share shall be made on the stock records maintained by or for the Company and regardless of the number of certificates which may be issued to evidence such Series D Preferred Share (whether by reason of transfer of such Series D Preferred Share or for any other reason). "Junior Shares" shall have the meaning set forth in Section 9(c). "Junior Units" shall have the meaning set forth in the Operating Partnership Agreement. "Liquidation Preference" shall have the meaning set forth in Section 4(a). "Operating Partnership" shall mean Amli Residential Properties, L.P., a Delaware limited partnership. "Operating Partnership Agreement" shall mean the Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of February 15, 1994, as amended from time to time. "Parity Shares" shall have the meaning set forth in Section 9(b). "Parity Units" shall have the meaning set forth in the Operating Partnership Agreement. "Person" shall mean any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Preferred Dividend" shall have the meaning set forth in Section 3(a). "Preferred Trustee" shall have the meaning set forth in Section 6(b). "Property Distribution" shall have the meaning set forth in paragraph (iii) of Section 8(d). "Redemption Premium" shall have the meaning set forth in Section 4(b). "REIT" shall mean real estate investment trust. "REIT Termination Event" shall mean any event or occurrence which causes the Company to fail to continue to be taxed as a real estate investment trust (a "REIT") pursuant to Sections 856 through 860 of the Internal Revenue Code, as amended. "Senior Shares" shall have the meaning set forth in Section 9(a). "Senior Units" shall have the meaning set forth in the Operating Partnership Agreement. "Set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Company in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of distributions by the Board, the allocation of funds to be so paid on any series or class of beneficial interest of the Company; provided, however, that if any funds for any class or series of Junior Shares or any class or series of Parity Shares are placed in a separate account of the Company or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Series D Preferred Shares shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, with respect to any securities, any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted for trading or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, any Business Day. "Transaction" shall have the meaning set forth in Section 8(e). "Transfer Agent" means such transfer agent as may be designated by the Board or its designee as the transfer agent for the Series D Preferred Shares; provided that, if the Company has not designated a transfer agent, then the Company shall act as the transfer agent for the Series D Preferred Shares. SECTION 3. DISTRIBUTIONS. (a) The holders of Series D Preferred Shares shall be entitled to receive, when, as and if authorized and declared by the Board out of funds legally available for that purpose, cumulative quarterly distributions payable in cash in an amount per share equal to the greater of (i) the base distribution of $0.540625 per quarter, subject to possible adjustment as provided in Section 13 (the "Preferred Dividend") or (ii) the cash distributions declared on the number of Common Shares, or portion thereof, into which a Series D Preferred Share would then be convertible. The amount referred to in clause (ii) of this paragraph (a) with respect to each succeeding Distribution Period shall be determined as of the applicable Distribution Payment Date by multiplying the number of Common Shares, or portion thereof calculated to the fourth decimal point, into which a Series D Preferred Share is convertible at the opening of business on such Distribution Payment Date (based on the Conversion Price then in effect) by the aggregate cash distributions payable or paid for such Distribution Period in respect of a Common Share outstanding as of the record date for the distributions payable on the Common Shares for such Distribution Period. If (A) the Company pays a cash distribution on the Common Shares after the Distribution Payment Date for the corresponding Distribution Period and (B) the distribution on the Series D Preferred Shares for such Distribution Period calculated pursuant to clause (ii) of this paragraph (a), taking into account the Common Share distribution referenced in clause (A), exceeds the distribution previously declared on the Series D Preferred Shares for such Distribution Period, the Company shall pay an additional distribution to the holders of the Series D Preferred Shares on the date that the Common Share distribution referenced in clause (A) is paid, in an amount equal to the difference between the distribution calculated pursuant to clause (B) and the distributions previously declared on the Series D Preferred Shares with respect to such Distribution Period. Such distributions shall be cumulative from each Issue Date, whether or not in any Distribution Period or Periods such distributions are declared or there are funds of the Company legally available for the payment of such distributions, and shall be payable quarterly in arrears on the Distribution Payment Dates, commencing on the first Distribution Payment Date after each Issue Date. Each such distribution shall be payable in arrears to the holders of record of the Series D Preferred Shares, as they appear on the share records of the Company at the close of business on such record date as is fixed by the Board which shall be not more than sixty (60) calendar days prior to the corresponding Distribution Payment Date and, within such sixty (60) calendar day period, shall be the same date as the record date for the regular quarterly distribution payable on the Common Shares for such Distribution Period (or, if there is no such record date for the Common Shares, then such date as the Board may fix within such sixty (60) calendar day period). Accumulated, accrued and unpaid distributions for any past Distribution Periods may be authorized or declared and paid at any time, without reference to any regular Distribution Payment Date, to holders of record on such record date as may be fixed by the Board which shall be not more than forty-five (45) calendar days prior to the corresponding payment date. Any dividend payment made on the Series D Preferred Shares shall first be credited against the earliest accrued but unpaid dividend due with respect to the Series D Preferred Shares that remains payable. (b) In the case of any Series D Preferred Share the Issue Date of which is a date other than the first day of a Distribution Period, or any other period shorter than a full Distribution Period, the amount of distributions payable per such Series D Preferred Share with respect to such partial Distribution Period shall be computed ratably on the basis of a 360-day year of twelve (12), thirty (30) day months. Except as provided in the immediately following sentence, holders of Series D Preferred Shares shall not be entitled to any distributions, whether payable in cash, property or shares, in excess of cumulative distributions as herein provided on the Series D Preferred Shares. In the event that a distribution on the Series D Preferred Shares is not made on the Distribution Payment Date on which such distribution is payable, the unpaid distribution shall accrue interest, compounded quarterly, at a rate equal to 8.65% per annum (9.65% per annum during the applicable time period in the event that the Preferred Dividend has been increased pursuant to Section 13) (the "Interest") until such distribution is paid. (c) So long as any of the Series D Preferred Shares is outstanding, except as described in the immediately following sentence, (i) the Company shall not declare, pay or set apart for payment any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase, Junior Shares or Parity Shares) nor declare or make any other distribution of cash or other property, directly or indirectly, with respect to any class or series of Parity Shares, (ii) the Company shall not redeem, purchase or otherwise acquire any Parity Shares for any consideration (or any moneys paid to or made available for a sinking fund for the redemption of any Parity Shares) directly or indirectly by the Company (except by conversion into or exchange for Parity Shares), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of Parity Shares in respect thereof directly or indirectly by the Company, (iii) the Company shall not authorize, take or cause or permit to be taken or caused any action in its capacity as general partner of the Operating Partnership, that will result in (A) the declaration or payment by the Operating Partnership of any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase Junior Units or Parity Units) with respect to any class or series of Parity Units or (B) the redemption or purchase (directly or indirectly, including without limitation, through any subsidiaries of the Operating Partnership), or the setting aside of any funds or other assets for the redemption or purchase of any Parity Units (except for the exchange or conversions of partnership interests in the Operating Partnership into Common Shares as permitted under the Operating Partnership Agreement, or the payment of cash by the Operating Partnership upon the exercise by any partner of the Operating Partnership of a right to convert an interest in the Operating Partnership into shares of the Company, or by conversion into or exchange for Junior Shares or Parity Shares), unless in each case (X) all distributions (including all accumulated, accrued and unpaid distributions) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past Distribution Periods with respect to the Series D Preferred Shares and all past distribution periods with respect to any Parity Shares and (Y) a sum sufficient for the payment thereof has been or contemporaneously is paid or set apart for payment of the full distribution for the current Distribution Period with respect to the Series D Preferred Shares and the current distribution period with respect to any Parity Shares. When distributions are not paid in full or a sum sufficient for such payment is not set apart for payment as provided above, all distributions declared on the Series D Preferred Shares and all distributions declared on any other class or series of Parity Shares shall be declared ratably in proportion to the respective amounts of distributions accumulated, accrued and unpaid on the Series D Preferred Shares and on such Parity Shares. (d) So long as any of the Series D Preferred Shares is outstanding, (i) the Company shall not declare, pay or set apart for payment any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase, Junior Shares) nor declare or make any other distribution of cash or other property, directly or indirectly, with respect to any class or series of Junior Shares, (ii) the Company shall not redeem, purchase or otherwise acquire any Junior Shares (other than a redemption, purchase or other acquisition of Common Shares made for purposes of an employee incentive or benefit plan of the Company or any subsidiary) for any consideration (or any moneys paid to or made available for a sinking fund for the redemption of any Junior Shares) directly or indirectly by the Company (except by conversion into or exchange for Junior Shares), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of Junior Shares in respect thereof directly or indirectly by the Company, (iii) the Company shall not authorize, take or cause or permit to be taken or caused any action in its capacity as general partner of the Operating Partnership, that will result in (A) the declaration or payment by the Operating Partnership of any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase Junior Units) with respect to any class or series of Junior Units or (B) the redemption or purchase (directly or indirectly, including without limitation, through any subsidiaries of the Operating Partnership), or the setting aside of any funds or other assets for the redemption or purchase of any Junior Units (except for the exchange or conversions of partnership interests in the Operating Partnership into Common Shares as permitted under the Operating Partnership Agreement, or the payment of cash by the Operating Partnership upon the exercise by any partner of the Operating Partnership of a right to convert an interest in the Operating Partnership into shares of the Company, or by conversion into or exchange for Junior Shares), unless in each case (X) all distributions (including all accumulated, accrued and unpaid distributions) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past Distribution Periods with respect to the Series D Preferred Shares and all past distribution periods with respect to any Parity Shares and (Y) a sum sufficient for the payment thereof has been or contemporaneously is paid or set apart for payment of the full distribution for the current Distribution Period with respect to the Series D Preferred Shares and the current distribution period with respect to any Parity Shares. SECTION 4. LIQUIDATION PREFERENCE. (a) Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of Junior Shares, the holders of Series D Preferred Shares shall be entitled to receive a liquidation preference (the "Liquidation Preference") in an amount equal to the greater of (i) the Base Amount plus cumulative unpaid distributions which were earned but not declared, including Interest, if applicable, plus a Redemption Premium (as defined below), if applicable, and (ii) the amount that would be received if the Series D Preferred Shares were converted into Common Shares immediately prior to liquidation. Until the holders of the Series D Preferred Shares have been paid the Liquidation Preference in full, plus an amount equal to all declared distributions accumulated, accrued and unpaid thereon, plus Interest, to the date of final distribution to such holders, no payment may be made to any holder of Junior Shares upon any liquidation, dissolution or winding up of the Company. If, upon any liquidation, dissolution or winding up of the Company, the assets of the Company, or the proceeds thereof, distributable among the holders of Series D Preferred Shares are insufficient to pay in full such preferential amount and liquidating payments on any other class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series D Preferred Shares and any such other Parity Shares ratably in proportion to the respective amounts which would be payable on such Series D Preferred Shares and any such other Parity Shares if all amounts payable thereon were paid in full. (b) If the Liquidation Preference is payable prior to the second anniversary of the Issue Date, the redemption premium (the "Redemption Premium") that shall be included in the Liquidation Preference shall equal 2% of the Base Amount. If the Liquidation Preference is payable on or after the second anniversary of the Issue Date and prior to the fifth anniversary of the Issue Date, the Redemption Premium that shall be included in the Liquidation Preference shall equal 1% of the Base Amount. No Redemption Premium shall be included in a Liquidation Preference payable on or after the fifth anniversary of the Issue Date. (c) Upon any liquidation, dissolution or winding up of the Company, after payment has been made in full to the holders of Series D Preferred Shares and any Parity Shares as provided in this Section 4, any other series or class of Junior Shares shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series D Preferred Shares and any Parity Shares shall not be entitled to share therein. (d) For purposes of this Section 4, (i) a consolidation or merger of the Company with or into one or more corporations, (ii) a sale or transfer of all or substantially all of the Company's assets or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Company. SECTION 5. REDEMPTION AT THE OPTION OF THE COMPANY. (a) Series D Preferred Shares shall not be redeemable by the Company prior to the fifth anniversary of the Issue Date. On or after the fifth anniversary of the Issue Date, the Company may redeem all, but not less than all, of the outstanding Series D Preferred Shares at any time in the manner provided in this Section 5. The redemption price, in such case, shall be equal to the Liquidation Preference as of the Call Date (as defined below) pertaining to the Series D Preferred Shares being redeemed. The Series D Preferred Shares shall be redeemed in whole by the Company on the last Trading Day of August, 2051. The redemption price, in such case, shall be payable, at the option of the Company, either: (i) in cash in an amount equal to the aggregate Conversion Price (as in effect at the time) of the Series D Preferred Shares; or (ii) by issuance of that number of fully paid and non-assessable Common Shares equal to the quotient obtained by dividing (A) the aggregate Base Amount of the Series D Preferred Shares (plus an amount equal to all unpaid distributions which were earned but not declared) by (B) the Conversion Price (as in effect at the time). (b) Series D Preferred Shares shall be redeemed by the Company on the date specified in the notice to holders required under Section 5(d) (the "Call Date"). The Call Date shall be selected by the Company, shall be specified in the notice of redemption and shall be not less than thirty (30) days nor more than sixty (60) days after the date notice of redemption is sent by the Company. (c) Unless all distributions (including all accumulated, accrued and unpaid distributions) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past and current Distribution Periods with respect to the Series D Preferred Shares and all past and current distribution periods with respect to any Parity Shares, no Series D Preferred Share may be redeemed unless all outstanding Series D Preferred Shares are simultaneously redeemed and neither the Company nor any affiliate of the Company may redeem, purchase or acquire Series D Preferred Shares or Parity Shares, except pursuant to a purchase or exchange offer made on substantially equivalent terms to all holders of Series D Preferred Shares. (d) If the Company redeems Series D Preferred Shares pursuant to Section 5(a), notice of such redemption shall be given to each holder of record of shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as it appears on the share records of the Company. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to any other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the Call Date; (ii) the number of Series D Preferred Shares to be redeemed; (iii) the place or places at which certificates representing such shares are to be surrendered; (iv) the redemption price; and (v) the then-current Conversion Price. If the Company has mailed notice of the redemption of Series D Preferred Shares as provided above, then from and after the Call Date (unless the Company fails to make available to the holders of Series D Preferred Shares on the Call Date the amount of cash or the number of Common Shares, as applicable, necessary to effect such redemption), (A) except as otherwise provided herein, distributions shall cease to accumulate or accrue on the shares called for redemption (except that, in the case of a Call Date which falls after a distribution record date and prior to the related Distribution Payment Date, holders of Series D Preferred Shares on the distribution record date shall be entitled on such Distribution Payment Date to receive the distribution payable on such shares), (B) such shares shall no longer be deemed to be outstanding and (C) all rights of the holders thereof as holders of Series D Preferred Shares shall cease (except the rights to convert (within the time period set forth in Section 8(a)) and to receive the redemption price, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any distributions payable thereon). The Company's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Company: (1) deposits with a bank or trust company that has, or is an Affiliate of a bank or trust company that has, capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares called for redemption; and (2) provides notice of such arrangements to the holders of Series D Preferred Shares at least seven (7) Business Days prior to the Call Date. No interest shall accrue for the benefit of the holders of Series D Preferred Shares to be redeemed on any cash so set aside by the Company. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Call Date shall revert to the general funds of the Company, and the holders of Series D Preferred Shares so called for redemption shall look only to the general funds of the Company for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates representing any Series D Preferred Shares to be redeemed (properly endorsed or assigned for transfer, if the Company so requires and the notice so states), and in any event no later than two (2) Business Days following the later of (i) the date on which the Series D Preferred Shares are surrendered or, (ii) the Call Date, such certificates shall be exchanged for the redemption price (without interest thereon) for which such shares have been redeemed in accordance with such notice. SECTION 6. REDEMPTION AT THE OPTION OF THE HOLDERS. (a) In the event the Company experiences a Change of Control (as defined in Section 6(b)), the holders of the Series D Preferred Shares shall have the option, upon written notice to the Company within thirty (30) calendar days of such Change of Control, to require the Company to redeem all, but not part, of the Series D Preferred Shares at a price equal to the Liquidation Preference as determined as of the date of the Change of Control. (b) The term "Change of Control" means each occurrence of any of the following: (i) the acquisition, directly or indirectly, by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than the Investor, Gregory T. Mutz, UICI, a Texas corporation, Amli Realty Co., a Delaware corporation, Ronald L. Jensen, or any of their respective Affiliates) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except that such Person shall be deemed to have beneficial ownership of all shares which any such Person has the right to acquire, whether such right is exercisable immediately or only after passage of time) of (A) the Company's outstanding shares of beneficial interest with voting power, excluding the Company's outstanding shares with contingent voting rights (unless the holders of such shares were entitled to vote to elect trustees immediately prior to the acquisition of beneficial ownership), to cast more than 30% of the votes entitled to be cast to elect trustees, but only if such acquisition is not assented to by the Board, or more than 30% of the aggregate Fair Market Value of the Company's outstanding shares of beneficial interest, but only if such acquisition is not assented to by the Board, or (B) the Company's outstanding shares of beneficial interest with voting power, excluding the Company's outstanding shares with contingent voting rights (unless the holders of such shares were entitled to vote to elect trustees immediately prior to the acquisition of beneficial ownership), to cast more than 51% of the votes entitled to be cast to elect trustees of the Company or more than 51% of the aggregate Fair Market Value of the Company's outstanding shares of beneficial interest; (ii) other than with respect to the election, resignation or replacement of any trustee designated, appointed or elected by the holders of the Series D Preferred Shares (each a "Preferred Trustee"), during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (together with any new trustees whose election by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of two-thirds of the trustees of the Company (excluding Preferred Trustees) then still in office who were either trustees at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board then in office; (iii) the failure of the Company to qualify as a REIT; (iv) the Company conveying, transferring or leasing all or substantially all of its assets (including, but not limited to, real property investments) to any Person; or (v) (A) the Company consolidating with or merging into another entity or (B) any entity consolidating with or merging into the Company, which in either event (A) or (B) is pursuant to a transaction in which the holders of a majority of the Company's outstanding shares of beneficial interest with voting power, excluding the Company's outstanding shares with contingent voting rights (unless the holders of such shares were entitled to vote on such consolidation or merger immediately prior to the acquisition of beneficial ownership), immediately prior to such transaction beneficially own less than a majority of the surviving entity's outstanding shares of beneficial interest with voting power, excluding the surviving entity's outstanding shares with contingent voting rights, immediately after such transaction. (c) As promptly as practicable after the surrender of the certificates representing any Series D Preferred Shares to be redeemed pursuant to this Section 6 (properly endorsed and assigned for transfer), and in any event no later than two (2) Business Days following the later of (i) the date on which the Series D Preferred Shares are surrendered and (ii) the date of the Change in Control, such certificates shall be exchanged for the cash (without interest thereon) for which such shares have been redeemed. SECTION 7. STATUS OF REACQUIRED SHARES. All Series D Preferred Shares which are issued and reacquired in any manner by the Company (including Series D Preferred Shares which are surrendered for conversion into Common Shares) shall be returned to the status of authorized but unissued shares of beneficial interest of the Company, without designation as to class or series. SECTION 8. CONVERSION. Holders of Series D Preferred Shares shall have the right to convert all or a portion of such shares into Common Shares, as follows: (a) Subject to and upon compliance with the provisions of this Section 8, a holder of Series D Preferred Shares shall have the right, at any time, and from time to time, to convert all or any portion of such shares (unless previously redeemed) into the number of fully paid and non- assessable shares of Common Shares obtained by dividing the aggregate Base Amount of such shares (plus an amount equal to all unpaid distributions which were earned but not declared) by the Conversion Price as in effect at the time and on the date provided for in the last paragraph of paragraph (b) of this Section 8 by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (b) of this Section 8; provided, however, that the right to convert shares called for redemption pursuant to Section 5 shall terminate at the close of business on the fifth Business Day prior to the Call Date fixed for such redemption, unless the Company shall default in making payment of the cash payable upon such redemption under Section 5. (b) In order to exercise the conversion right, the holder of each Series D Preferred Share to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Company or in blank, at the office of the Transfer Agent, accompanied by written notice to the Company that such holder elects to convert such Series D Preferred Shares. Unless the Common Shares issuable on conversion are to be issued in the same name as the name in which such Series D Preferred Share is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Company, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Company demonstrating that such taxes have been paid). Holders of Series D Preferred Shares at the close of business on a distribution payment record date shall be entitled to receive the distribution payable on such shares on the corresponding Distribution Payment Date notwithstanding the conversion thereof following such distribution payment record date and prior to such Distribution Payment Date. Except as provided above, the Company shall make no payment or allowance for unpaid distributions, whether or not in arrears, on converted shares or for distributions on the Common Shares issued upon such conversion. As promptly as practicable after the surrender of certificates representing Series D Preferred Shares as provided above, the Company shall issue and deliver at such office to such holder, or send on such holder's written order, a certificate or certificates for the number of full Common Shares issuable upon conversion of such Series D Preferred Shares in accordance with the provisions of this Section 8, and any fractional interest in respect of a Common Share arising upon such conversion shall be settled as provided in Section 8(c). Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for Series D Preferred Shares have been surrendered and such notice has been received by the Company as provided above, and the Person or Persons in whose name or names any certificate or certificates for Common Shares are issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the share transfer books of the Company are closed on such date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such share transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares were surrendered and such notice was received by the Company. If the distribution payment record dates for the Series D Preferred Shares and Common Shares do not coincide, and the preceding sentence does not operate to ensure that a holder of Series D Preferred Shares whose shares are converted into Common Shares does not receive distributions on both the Series D Preferred Shares and the Common Shares into which such shares are converted for the same Distribution Period, then notwithstanding anything herein to the contrary, it is the intent, and the Transfer Agent is authorized to ensure, that no conversion after the earlier of such record dates will be accepted until after the later of such record dates. (c) No fractional Common Share or scrip representing fractions of a Common Share shall be issued upon conversion of Series D Preferred Shares. Instead of any fractional interest in a Common Share which would otherwise be deliverable upon conversion of a share of Series D Preferred Shares, the Company shall pay to the holder of such share an amount in cash based upon the Current Market Price of the Common Shares on the Trading Day immediately preceding the date of conversion. If more than one share is surrendered for conversion at one time by the same holder, the number of full Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of Series D Preferred Shares so surrendered. (d) The Conversion Price shall be adjusted from time to time as follows: (i) If the Company after the Initial Issue Date (A) makes a distribution on any of its shares of beneficial interest in Common Shares, (B) subdivides its outstanding Common Shares into a greater number of shares, (C) combines its outstanding Common Shares into a smaller number of shares or (D) issues any shares by reclassification of its outstanding Common Shares, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of holders of beneficial interest entitled to receive such distribution or at the opening of business on the day following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any Series D Preferred Share thereafter surrendered for conversion shall be entitled to receive the number of Common Shares (or fraction of a Common Share) which such holder would have owned or been entitled to receive after the happening of any of the events described above if such Series D Preferred Share had been converted immediately prior to the record date in the case of a distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this paragraph (i) shall become effective immediately after the opening of business on the day next following the record date (except as provided in Section 8(h)) in the case of a distribution or shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification. (ii) If the Company after the Initial Issue Date issues rights, options or warrants to all holders of Common Shares entitling them (for a period expiring within forty-five (45) calendar days after the record date described below) to subscribe for or purchase Common Shares at a price per share less than 95% (100% if a stand-by underwriter is used which charges the Company a commission) of the Fair Market Value per Common Share on the record date for the determination of holders of beneficial interest entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following such record date by (B) a fraction, the numerator of which shall be the sum of (1) the number of Common Shares outstanding on the close of business on such record date and (2) the number of shares which could be purchased at 95% (100% if a stand-by underwriter is used which charges the Company a commission) of such Fair Market Value from the aggregate proceeds to the Company from the exercise of such rights, options or warrants for Common Shares, and the denominator of which shall be the sum of (3) the number of Common Shares outstanding on the close of business on such record date and (4) the number of additional Common Shares offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in Section 8(h)). In determining whether any rights, options or warrants entitle the holders of Common Shares to subscribe for or purchase Common Shares at less than 95% (100% if a stand-by underwriter is used which charges the Company a commission) of such Fair Market Value, there shall be taken into account any consideration received by the Company upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board. (iii) If the Company after the Initial Issue Date makes a distribution on its Common Shares other than in cash or Common Shares (including any distribution in securities (other than rights, options or warrants referred to in paragraph (ii) of Section 8(d)) (each of the foregoing being referred to herein as a "Property Distribution"), then the Conversion Price in effect at the opening of business on the day next following the record date for determination of holders of beneficial interest entitled to receive such Property Distribution shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the record date by (B) a fraction, the numerator of which shall be the difference between (1) the number of Common Shares outstanding on the close of business on the record date and (2) the number of shares determined by dividing (x) the aggregate value of the property being distributed by (y) the Fair Market Value per Common Share on the record date, and the denominator of which shall be the number of Common Shares outstanding on the close of business on the record date. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided below). The value of the property being distributed shall be determined in good faith by the Board; provided, however, that, if the property being distributed is a publicly traded security, its value shall be calculated in accordance with the procedure for calculating the Fair Market Value of a Common Share (calculated for a period of five (5) consecutive Trading Days commencing on the twentieth Trading Day after the Property Distribution). Neither the issuance by the Company of rights, options or warrants to subscribe for or purchase securities of the Company nor the exercise thereof shall be deemed a Property Distribution under this paragraph (iii). (iv) If the Company after the Initial Issue Date acquires, pursuant to an issuer or self tender offer, all or any portion of the outstanding Common Shares and such tender offer involves the payment of consideration per Common Share having a fair market value (as determined in good faith by the Board), at the last time (the "Expiration Time") tenders may be made pursuant to such offer, which exceeds the Current Market Price per Common Share on the Trading Day next succeeding the Expiration Time, then the Conversion Price in effect on the opening of business on the Trading Day next succeeding the Expiration Time shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the Expiration Time by (B) a fraction, the numerator of which shall be (1) the number of Common Shares outstanding (including the shares acquired in the tender offer (the "Acquired Shares")) immediately prior to the Expiration Time, multiplied by (2) the Current Market Price per Common Share on the Trading Day next succeeding the Expiration Time, and the denominator of which shall be the sum of (3) the fair market value (determined as provided above) of the aggregate consideration paid to acquire the Acquired Shares and (4) the product of (x) the number of Common Shares outstanding (less any Acquired Shares) at the Expiration Time, multiplied by (y) the Current Market Price per Common Share on the Trading Day next succeeding the Expiration Time. (v) No adjustment to the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this paragraph (v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 8 (other than this paragraph (v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Common Shares. Notwithstanding any other provisions of this Section 8, the Company shall not be required to make any adjustment to the Conversion Price for the issuance of (A) any Common Shares pursuant to any plan providing for the reinvestment of distributions or interest payable on securities of the Company and the investment of optional amounts in Common Shares under such plan or (B) any options, rights or Common Shares pursuant to any share option, share purchase or other share-based plan maintained by the Company. All calculations under this Section 8 shall be made to the nearest cent (with $0.005 and above being rounded upward) or to the nearest one-tenth of a share (with 0.05 of a share being rounded upward), as the case may be. Anything in this Section 8(d) to the contrary notwithstanding, the Company shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this Section 8(d), as it in its discretion determines to be advisable in order that any share distributions, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase shares or securities, or a distribution of other assets (other than cash distributions) hereafter made by the Company to its holders of beneficial interest are not taxable, or if that is not possible, to diminish any income taxes which are otherwise payable because of such event. (e) If the Company is a party to any transaction (including without limitation a merger, consolidation, statutory share exchange, issuer or self tender offer for at least 30% of the Common Shares outstanding, a sale of all or substantially all of the Company's assets or a recapitalization of the Common Shares, but excluding any transaction as to which paragraph (i) of Section 8(d) applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which Common Shares are converted into the right to receive shares, securities or other property (including cash or any combination thereof), each share of Series D Preferred Shares which is not converted into the right to receive shares, securities or other property in connection with such Transaction shall thereupon be convertible into the kind and amount of shares, securities and other property (including cash or any combination thereof) receivable upon such consummation by a holder of that number of Common Shares into which one share of Series D Preferred Shares was convertible immediately prior to such Transaction (without giving effect to any Conversion Price adjustment pursuant to paragraph (iv) of Section 8(d)). The Company shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this Section 8(e), and it shall not consent or agree to the occurrence of any Transaction until the Company has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series D Preferred Shares which contains provisions enabling the holders of the Series D Preferred Shares which remain outstanding after such Transaction to convert into the consideration received by holders of Common Shares at the Conversion Price in effect immediately prior to such Transaction. The provisions of this Section 8(e) shall similarly apply to successive Transactions. (f) If: (i) the Company declares a distribution on the Common Shares (other than cash distributions); or (ii) the Company authorizes the granting to all holders of Common Shares of rights or warrants to subscribe for or purchase any shares of any class or series or any other rights or warrants; or (iii) there is any reclassification of the outstanding Common Shares or any consolidation or merger to which the Company is a party and for which approval of any holders of beneficial interest of the Company is required, or a statutory share exchange, or an issuer or self tender offer for at least 30% of the outstanding Common Shares (or an amendment thereto changing the maximum number of shares sought or the amount or type of consideration being offered therefor has been adopted), or the sale or transfer of all or substantially all of the assets of the Company as an entirety; or (iv) there occurs the voluntary or involuntary liquidation, dissolution or winding up of the Company, then the Company shall cause to be filed with the Transfer Agent and shall cause to be mailed to each holder of Series D Preferred Shares at such holder's address as shown on the share records of the Company, as promptly as possible but at least ten (10) Business Days prior to the applicable date specified in (A), (B) or (C) below, a notice stating (A) the record date for the payment of such distribution or rights or warrants, or, if a record date is not established, the date as of which the holders of Common Shares of record to be entitled to such distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Common Shares of record shall be entitled to exchange their Common Shares for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of any amendment thereto). Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 8. (g) Whenever the Conversion Price is adjusted as herein provided, the Company shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to each holder of Series D Preferred Shares at such holder's last address as shown on the share records of the Company. (h) In any case in which Section 8(d) provides that an adjustment shall become effective on the day next following the record date for an event, the Company may defer until the occurrence of such event (i) issuing to the holder of any Series D Preferred Share converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event over and above the Common Shares issuable upon such conversion before giving effect to such adjustment and (ii) paying to such holder any amount of cash in lieu of any fraction pursuant to Section 8(c). (i) There shall be no adjustment of the Conversion Price in case of the issuance of any shares of beneficial interest of the Company in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 8. If any action or transaction would require adjustment of the Conversion Price pursuant to more than one paragraph of this Section 8, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value. (j) If the Company takes any action affecting the Common Shares, other than action described in this Section 8, which in the opinion of the Board would materially and adversely affect the conversion rights of the holders of Series D Preferred Shares, the Conversion Price for the Series D Preferred Shares may be adjusted, to the extent permitted by law, in such manner, if any, and at such time as the Board, in its sole discretion, may determine to be equitable under the circumstances. (k) The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Shares solely for the purpose of effecting conversion of the Series D Preferred Shares, the full number of Common Shares deliverable upon conversion of all outstanding Series D Preferred Shares not theretofore converted into Common Shares. For purposes of this Section 8(k), the number of Common Shares which are deliverable upon conversion of all outstanding Series D Preferred Shares shall be computed as if at the time of computation all such outstanding shares were held by a single holder (and without regard to the Ownership Limit set forth in the Declaration of Trust). The Company covenants that any Common Share issued upon conversion of the Series D Preferred Shares shall be validly issued, fully paid and nonassessable. The Company shall use its best efforts to list the Common Shares required to be delivered upon conversion of the Series D Preferred Shares, prior to such delivery, on each national securities exchange, if any, on which the outstanding Common Shares are listed at the time of such delivery. (l) The Company shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issuance or delivery of Common Shares or other securities or property on conversion or redemption of Series D Preferred Shares pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of Common Shares or other securities or property in a name other than that of the holder of the Series D Preferred Shares to be converted or redeemed, and no such issuance or delivery shall be made unless and until the Person requesting such issuance or delivery has paid to the Company the amount of any such tax or established, to the reasonable satisfaction of the Company, that such tax has been paid. (m) In addition to any other adjustment required hereby, to the extent permitted by law, the Company from time to time may decrease the Conversion Price by any amount, permanently or for a period of at least twenty (20) Business Days, if the decrease is irrevocable during the period. (n) Notwithstanding anything to the contrary contained in this Section 8, conversion of Series D Preferred Shares pursuant to this Section 8 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Limit (as defined in the Declaration of Trust), after taking into account any waiver of such limitation granted to any holder of Series D Preferred Shares. SECTION 9. RANKING. Any class or series of shares of the Company shall be deemed to rank: (a) senior to the Series D Preferred Shares, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series are entitled to the receipt of distributions or amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series D Preferred Shares ("Senior Shares"); (b) on a parity with the Series D Preferred Shares, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the distribution rates, distribution payment dates or redemption or liquidation prices per share thereof are different from those of the Series D Preferred Shares, if the holders of such class or series and the Series D Preferred Shares are entitled to the receipt of distributions and amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid distributions per share or liquidation preferences, without preference or priority one over the other ("Parity Shares"); and (c) junior to the Series D Preferred Shares, as to the payment of distributions or as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series is Common Shares or if the holders of Series D Preferred Shares are entitled to the receipt of distributions or amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Shares"). The Series D Preferred Shares (i) are Parity Shares with respect to the Series B Cumulative Convertible Redeemable Preferred Shares of the Company, (ii) are Junior Shares with respect to the Series A Cumulative Convertible Preferred Shares of the Company, (iii) must be at least on parity with any future preferred shares of the Company, and (iv) are Senior Shares with respect to the Common Shares. SECTION 10. VOTING. (a) If and whenever (i) four quarterly distributions (whether or not consecutive) payable on the Series D Preferred Shares are in arrears (which shall, with respect to any such quarterly distribution, mean that any such distribution has not been paid in full), whether or not earned or declared, (ii) for four consecutive quarterly Distribution Periods, the Company fails to pay distributions on the Common Shares in an amount per share at least equal to $0.418 per share per quarter (subject to adjustment consistent with any adjustment of the Conversion Price pursuant to Section 8(d)) (the "Base Common Share Distribution") or (iii) the Company fails to satisfy the test set forth in Section 13(a), then the number of trustees then constituting the Board shall be increased by two (or by three if the number of trustees then constituting the Board is ten or more (without including any trustees elected pursuant to this Section 10(a)) and the holders of Series D Preferred Shares, together with the holders of every other series or class of Parity Shares (with any other such series, the "Voting Preferred Shares"), voting as a single class regardless of series, shall be entitled to elect the additional trustees to serve on the Board at any annual meeting of holders of beneficial interest or a special meeting held in lieu thereof, or at a special meeting of the holders of the Series D Preferred Shares and the Voting Preferred Shares called as hereinafter provided. Whenever (A) in the case of an arrearage in distributions described in clause (i), all distributions in arrears on the Series D Preferred Shares and the Voting Preferred Shares then outstanding have been paid and a sum sufficient for the payment thereof has been set apart for payment of the distribution for the current distribution for two consecutive quarterly Distribution Periods, (B) in the case of an arrearage in distributions described in clause (ii), the Company makes a quarterly distribution payment on the Common Shares in an amount per share equal to or exceeding the Base Common Share Distribution for two consecutive quarterly Distribution Periods, or (C) in the case of a failure described in clause (iii), the Company satisfies the test set forth in Section 13(a) for two consecutive fiscal quarters, then the right of the holders of the Series D Preferred Shares and the Voting Preferred Shares to elect such additional trustees shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as trustees by the holders of the Series D Preferred Shares and the Voting Preferred Shares shall forthwith terminate and the number of trustees constituting the Board shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Series D Preferred Shares and the Voting Preferred Shares, the Secretary of the Company may, and upon the written request of any holder of Series D Preferred Shares (addressed to the Secretary at the principal office of the Company) shall, call a special meeting of the holders of the Series D Preferred Shares and the Voting Preferred Shares for the election of the two (or three if the number of trustees then constituting the Board is ten or more) trustees to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Company for a special meeting of the holders of beneficial interest or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within twenty (20) calendar days after receipt of any such request, then any holder of Series D Preferred Shares may call such meeting, upon the notice above provided, and for that purpose shall have access to the share records of the Company. The trustees elected at such special meeting shall hold office until the next annual meeting of the holders of beneficial interest or special meeting held in lieu thereof if such office has not previously terminated as provided above. If any vacancy occurs among the trustees elected by the holders of the Series D Preferred Shares and the Voting Preferred Shares, a successor shall be elected by the Board, upon the nomination of the then-remaining director elected by the holders of the Series D Preferred Shares and the Voting Preferred Shares or the successor of such remaining director, to serve until the next annual meeting of the holders of beneficial interest or special meeting held in lieu thereof if such office has not previously terminated as provided above. (b) So long as any of the Series D Preferred Shares is outstanding, in addition to any other vote or consent of holders of beneficial interest required by law or by the Declaration of Trust of the Company, the affirmative vote of at least two-thirds of the votes entitled to be cast by the holders of the Series D Preferred Shares, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Declaration of Trust or the By-Laws of the Company which materially and adversely affects the voting powers, rights or preferences of the holders of the Series D Preferred Shares; provided, however, that the amendment of the provisions of the Declaration of Trust so as to authorize or create, or to increase the authorized amount of, any Junior Shares or any class of Parity Shares shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Series D Preferred Shares, and provided further, that if any such amendment, alteration or repeal would materially and adversely affect any voting powers, rights or preferences of the Series D Preferred Shares or another series of Voting Preferred Shares that are not enjoyed by some or all of the other series otherwise entitled to vote in accordance herewith, the affirmative vote of at least two-thirds of the votes entitled to be cast by the holders of all series similarly affected, similarly given, shall be required in lieu of the affirmative vote of at least two- thirds of the votes entitled to be cast by the holders of the Series D Preferred Shares and the Voting Preferred Shares otherwise entitled to vote in accordance herewith; or (ii) The authorization, reclassification or creation of, the increase in the authorized amount of, or the issuance of, any class of Senior Shares or any security convertible into any class of Senior Shares (whether or not such class of Senior Shares is currently authorized); provided, however, that no such vote of the holders of Series D Preferred Shares shall be required if at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Shares or convertible security is to be made, as the case may be, provision is made for the redemption of all Series D Preferred Shares at the time outstanding, if the Series D Preferred Shares are then redeemable at the option of the Company; or (iii) Any action by the Company in its capacity as General Partner of the Operating Partnership effecting the issuance of any class of Senior Units or any security convertible into any class of Senior Units (whether or not such class of Senior Units is currently authorized); provided, however, that no such vote of the holders of Series D Preferred Shares shall be required if at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Units is to be made, as the case may be, provision is made for the redemption of all Series D Preferred Shares at the time outstanding, if the Series D Preferred Shares are then redeemable at the option of the Company. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each Series D Preferred Share shall have one vote per share, except that when any other class or series of preferred shares of beneficial interest shall have the right to vote with the Series D Preferred Shares as a single class on any matter, then the Series D Preferred Shares and such other class or series shall have with respect to such matters one vote per $100 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Series D Preferred Shares shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. SECTION 11. RECORD HOLDERS. The Company and the Transfer Agent may deem and treat the record holder of any Series D Preferred Shares as the true and lawful owner thereof for all purposes, and neither the Company nor the Transfer Agent shall be affected by any notice to the contrary. SECTION 12. OWNERSHIP RESTRICTIONS. The Series D Preferred Shares shall be subject to the restrictions and limitations set forth in Section 2 of Article 3 of the Declaration of Trust, subject to waiver thereof by the Board. SECTION 13. FIXED CHARGE COVERAGE. (a) So long as any Series D Preferred Shares are outstanding, the Company must maintain a fixed charge coverage ratio of aggregate Consolidated EBITDA to aggregate Consolidated Fixed Charges for every fiscal quarter equal to or greater than 1.625 to 1. If the Company is not in compliance with the fixed charge coverage ratio (a "Covenant Failure"), the Company shall have until the end of the next fiscal quarter to cure such Covenant Failure. If the Company does not cure such Covenant Failure by the end of such fiscal quarter, then the Preferred Dividend shall be increased by 25 basis points, and such increase shall be effective retroactively for the original fiscal quarter in which the Covenant Failure occurred and all such subsequent quarters until the last day of the calendar quarter during which the Covenant Failure shall have been cured and shall no longer be continuing, subject to reinstatement (with the cure right above being afforded) in the event of any subsequent Covenant Failure. There shall be no other remedy for a Covenant Failure. (b) "Consolidated EBITDA" for any period shall mean the consolidated net income of the Company (before minority interest, extraordinary items and other gains and losses) as reported in the Company's financial statements filed with the Securities and Exchange Commission increased by the sum of the following (without duplication): (i) all income and state franchise taxes paid or accrued according to generally accepted accounting principles ("GAAP") for such period (other than income taxes attributable to extraordinary, unusual or non-recurring gains or losses except to the extent that such gains were not included in Consolidated EBITDA); (ii) all interest expense paid or accrued in accordance with GAAP for such period (including financing fees and amortization of deferred financing fees and amortization of original issue discount); (iii) depreciation and depletion reflected in such reported net income; (iv) amortization reflected in such reported net income including, without limitation, amortization of capitalized debt issuance costs (only to the extent that such amounts have not been previously included in the amount of Consolidated EBITDA pursuant to clause (ii) above), goodwill, other intangibles and management fees; (v) any fees (to the extent such fees were treated as expenses in the calculation of the consolidated net income of the Company) with respect to any interest rate protection agreement (including, without limitation, interest rate swaps, caps, floors, collars and similar agreements) and/or other types of interest hedging agreements and any currency protection agreement (including foreign exchange contracts, currency swap agreements and other currency hedging arrangements) (collectively, "Hedging Costs"); and (vi) any other non-cash charges or discretionary prepayment penalties, to the extent deducted from consolidated net income (including, but not limited to, income allocated to minority interests). (c) "Consolidated Fixed Charges" for any period means the sum of: (i) all interest expense paid or accrued in accordance with GAAP for such period (including financing fees and amortization of deferred financing fees and amortization of original issue discount; (ii) preferred share distribution requirements for such period, whether or not declared or paid; and (iii) Hedging Costs. SECTION 14. SINKING FUND. The Series D Preferred Shares shall not be entitled to the benefit of any retirement or sinking fund. SECOND: The Series D Preferred Shares have been classified and designated by the Board under the authority contained in Article 2 of the Declaration of Trust. THIRD: These Articles Supplementary have been approved by the Board in the manner and by the vote required by law. FOURTH: The undersigned President acknowledges these Articles Supplementary to be the act of the Company and, as to all other matters or facts required to be verified under oath, acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to be signed in its name and on its behalf by its President and attested to by its Secretary on this 29th day of October, 2001. AMLI RESIDENTIAL PROPERTIES TRUST By: /s/ Allan J. Sweet ------------------------------ Allan J. Sweet, President ATTEST: /s/ Fred N. Shapiro - ----------------------- Secretary EX-10.1 6 exh_101.txt EXHIBIT 10.1 - ------------ FIFTH AMENDMENT TO AMLI RESIDENTIAL PROPERTIES, L.P. AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP This Amendment, dated as of October 31, 2001, amends the Amended and Restated Agreement of Limited Partnership, dated as of February 15, 1994, as amended by the First Amendment thereto, dated as of July 3, 1995, the Second Amendment thereto, dated as of January 30, 1996, the Third Amendment thereto, dated as of July 31, 1996, and the Fourth Amendment thereto, dated as of March 9, 1998 (as so amended the "Partnership Agreement"), of Amli Residential Properties, L.P., a Delaware limited partnership (the "Partnership"), by and among Amli Residential Properties Trust, a Maryland real estate investment trust, as the general partner (the "General Partner"), and the Persons whose names are set forth on Exhibit A to the Partnership Agreement, as the Limited Partners (the "Limited Partners"), together with any other Persons who become Partners in the Partnership as provided in the Partnership Agreement. W I T N E S E T H: ----------------- WHEREAS, the Partnership is a Delaware limited partnership existing under the Delaware Revised Uniform Limited Partnership Act (the "Act") pursuant to the Partnership Agreement; WHEREAS, the General Partner is issuing Series D Preferred Shares (as defined below); WHEREAS, the General Partner will contribute the net proceeds of the issuance of Series D Preferred Shares as a Capital Contribution to the Partnership; WHEREAS, Section 4.2(b) of the Partnership Agreement provides as follows: "The Partnership also may from time to time issue to the General Partner additional Partnership Units or other Partnership Interests in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to Limited Partnership Interests, all as shall be determined by the General Partner, subject to Delaware law, including, without limitation, with respect to (i) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Interests, (ii) the right of each such class or series of Partnership Interests to share in Partnership distributions, and (iii) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership; provided that (x) the additional Partnership Interests are issued in connection with an issuance of shares of the General Partner, which shares have designations, preferences and other rights, all such that the economic interests are substantially similar to the designations, preferences and other rights of the additional Partnership Interests issued to the General Partner in accordance with this Section 4.2(b), and (y) the General Partner shall make a Capital Contribution to the Partnership in an amount equal to the net proceeds raised in connection with the issuance of such shares of the General Partner." WHEREAS, Section 14.1(b)(3) of the Partnership Agreement provides that the General Partner shall have the power, without the consent of the Limited Partners, to amend the Partnership Agreement "to set forth the rights, powers, duties, and preferences of the holders of any additional Partnership Interests issued pursuant to Section 4.2(b)" of the Partnership Agreement; and WHEREAS, the General Partner desires to amend the Partnership Agreement to set forth the rights, powers, duties, and preferences of the General Partner as the holder of certain Partnership Interests, and the Partnership Units corresponding thereto, issued pursuant to Section 4.2(b). NOW, THEREFORE, pursuant the authority granted in Section 14.1(b)(3) of the Partnership Agreement, the General Partner hereby amends the Partnership Agreement as follows: 1. AMENDMENT. Effective at (and subject to the occurrence of) the Effective Time (as defined in Section 2 below), Section 4.2 of the Partnership Agreement is hereby amended by adding the following new subsection (h) at the end of such Section: "(h) Partnership Interest and Units in Connection with Series D Cumulative Convertible Redeemable Preferred Shares. (1) Pursuant to the provisions of, and upon the Capital Contribution called for by, Section 4.2(b), there are hereby from time to time issued to the General Partner an additional Partnership Interest and, corresponding thereto, a number of Partnership Units (the "Series D Preferred Units") equal to the number of Series D Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest of the General Partner, as classified and designated by Articles Supplementary (the "Articles Supplementary") filed with the Maryland Department of Assessments and Taxation on October ___, 2001 (the "Series D Preferred Shares"), from time to time outstanding. The Series D Preferred Units shall have such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to Limited Partnership Interests, as further provided in Section 4.2(h)(2) and Section 4.2(h)(3) below and as shall be determined by the General Partner, subject to Delaware law, including, without limitation, with respect to (i) the allocations of items of Partnership income, gain, loss, deduction and credit, (ii) the right to share in Partnership distributions, and (iii) the rights upon dissolution and liquidation of the Partnership, all such that the economic interests represented by the Series D Preferred Units are substantially similar to the designations, preferences and other rights of the Series D Preferred Shares. To the extent necessary to give effect to the preceding sentence, (i) the Series D Preferred Units shall have preference over other Partnership Units with respect to distributions of Available Cash as provided in Section 5.1(i), and (ii) the General Partner shall, with respect to the Series D Preferred Units, have priority over other Partners and Assignees as to profits, losses and distributions as authorized by Section 8.4. (2) The General Partner shall be entitled to receive preferential distributions on the Series D Preferred Units corresponding to the distributions to which holders of the Series D Preferred Shares are entitled. As set forth in the Articles Supplementary, the distributions to which holders of Series D Preferred Shares are entitled are as follows (Capitalized terms used in the following subsections (2)(i) through (2)(iv) and not defined in this Amendment shall have the respective meanings assigned such terms in the in the Articles Supplementary.): (i) The holders of Series D Preferred Shares shall be entitled to receive, when, as and if authorized and declared by the Board of Trustees out of funds legally available for that purpose, cumulative quarterly distributions payable in cash in an amount per share equal to the greater of (A) the base distribution of $0.540625 per quarter, subject to possible adjustment as provided in Section 13 of the Articles Supplementary (the "Preferred Dividend") or (B) the cash distributions declared on the number of Common Shares, or portion thereof, into which a Series D Preferred Share would then be convertible. The amount referred to in clause (B) of this subsection (2)(i) with respect to each succeeding Distribution Period shall be determined as of the applicable Distribution Payment Date by multiplying the number of Common Shares, or portion thereof, calculated to the fourth decimal point, into which a Series D Preferred Share is convertible at the opening of business on such Distribution Payment Date (based on the Conversion Price then in effect) by the aggregate cash distributions payable or paid for such Distribution Period in respect of a Common Share outstanding as of the record date for the distributions payable on the Common Shares for such Distribution Period. If (X) the General Partner pays a cash distribution on the Common Shares after the Distribution Payment Date for the corresponding Distribution Period and (Y) the distribution on the Series D Preferred Shares for such Distribution Period calculated pursuant to clause (B) of this subsection (2)(i), taking into account the Common Share distribution referenced in clause (X), exceeds the distribution previously declared on the Series D Preferred Shares for such Distribution Period, the General Partner shall pay an additional distribution to the holders of the Series D Preferred Shares on the date that the Common Share distribution referenced in clause (X) is paid, in an amount equal to the difference between the distribution calculated pursuant to clause (Y) and the distributions previously declared on the Series D Preferred Shares with respect to such Distribution Period. Such distributions shall be cumulative from each Issue Date, whether or not in any Distribution Period or Periods such distributions are declared or there are funds of the General Partner legally available for the payment of such distributions, and shall be payable quarterly in arrears on the Distribution Payment Dates, commencing on the first Distribution Payment Date after each Issue Date. Each such distribution shall be payable in arrears to the holders of record of the Series D Preferred Shares, as they appear on the share records of the General Partner at the close of business on such record date as is fixed by the Board of Trustees which shall be not more than sixty (60) calendar days prior to the corresponding Distribution Payment Date and, within such sixty (60) calendar day period, shall be the same date as the record date for the regular quarterly distribution payable on the Common Shares for such Distribution Period (or, if there is no such record date for the Common Shares, then such date as the Board of Trustees may fix within such sixty (60) calendar day period). Accumulated, accrued and unpaid distributions for any past Distribution Periods may be authorized or declared and paid at any time, without reference to any regular Distribution Payment Date, to holders of record on such record date as may be fixed by the Board of Trustees which shall be not more than forty-five (45) calendar days prior to the corresponding payment date. Any dividend payment made on the Series D Preferred Shares shall first be credited against the earliest accrued but unpaid dividend due with respect to the Series D Preferred Shares that remains payable. (ii) In the case of any Series D Preferred Share the Issue Date of which is a date other than the first day of a Distribution Period, or any other period shorter than a full Distribution Period, the amount of distributions payable per such Series D Preferred Share with respect to such partial Distribution Period shall be computed ratably on the basis of a 360-day year of twelve (12), thirty (30) day months. Except as provided in the immediately following sentence, holders of Series D Preferred Shares shall not be entitled to any distributions, whether payable in cash, property or shares, in excess of cumulative distributions as herein provided on the Series D Preferred Shares. In the event that a distribution on the Series D Preferred Shares is not made on the Distribution Payment Date on which such distribution is payable, the unpaid distribution shall accrue interest, compounded quarterly, at a rate equal to 8.65% per annum (9.65% per annum during the applicable time period in the event that the Preferred Dividend has been increased pursuant to Section 13 of the Articles Supplementary) (the "Interest") until such distribution is paid. (iii) So long as any of the Series D Preferred Shares is outstanding, except as described in the immediately following sentence, (A) the General Partner shall not declare, pay or set apart for payment any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase, Junior Shares or Parity Shares) nor declare or make any other distribution of cash or other property, directly or indirectly, with respect to any class or series of Parity Shares, (B) the General Partner shall not redeem, purchase or otherwise acquire any Parity Shares for any consideration (or any moneys paid to or made available for a sinking fund for the redemption of any Parity Shares) directly or indirectly by the General Partner (except by conversion into or exchange for Parity Shares), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of Parity Shares in respect thereof directly or indirectly by the General Partner, (C) the General Partner shall not authorize, take or cause or permit to be taken or caused any action in its capacity as general partner of the Partnership, that will result in (i) the declaration or payment by the Partnership of any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase Junior Units or Parity Units) with respect to any class or series of Parity Units or (ii) the redemption or purchase (directly or indirectly, including without limitation, through any subsidiaries of the Partnership), or the setting aside of any funds or other assets for the redemption or purchase of any Parity Units (except for the exchange or conversions of partnership interests in the Partnership into Common Shares as permitted under the Partnership Agreement, or the payment of cash by the Partnership upon the exercise by any partner of the Partnership of a right to convert an interest in the Partnership into shares of the General Partner, or by conversion into or exchange for Junior Shares or Parity Shares), unless in each case (X) all distributions (including all accumulated, accrued and unpaid distributions) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past Distribution Periods with respect to the Series D Preferred Shares and all past distribution periods with respect to any Parity Shares and (Y) a sum sufficient for the payment thereof has been or contemporaneously is paid or set apart for payment of the full distribution for the current Distribution Period with respect to the Series D Preferred Shares and the current distribution period with respect to any Parity Shares. When distributions are not paid in full or a sum sufficient for such payment is not set apart for payment as provided above, all distributions declared on the Series D Preferred Shares and all distributions declared on any other class or series of Parity Shares shall be declared ratably in proportion to the respective amounts of distributions accumulated, accrued and unpaid on the Series D Preferred Shares and on such Parity Shares. (iv) So long as any of the Series D Preferred Shares is outstanding, (A) the General Partner shall not declare, pay or set apart for payment any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase, Junior Shares) nor declare or make any other distribution of cash or other property, directly or indirectly, with respect to any class or series of Junior Shares, (B) the General Partner shall not redeem, purchase or otherwise acquire any Junior Shares (other than a redemption, purchase or other acquisition of Common Shares made for purposes of an employee incentive or benefit plan of the General Partner or any subsidiary) for any consideration (or any moneys paid to or made available for a sinking fund for the redemption of any Junior Shares) directly or indirectly by the General Partner (except by conversion into or exchange for Junior Shares), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of Junior Shares in respect thereof directly or indirectly by the General Partner, (C) the General Partner shall not authorize, take or cause or permit to be taken or caused any action in its capacity as general partner of the Partnership, that will result in (i) the declaration or payment by the Partnership of any distributions (other than distributions paid in, or options, warrants or rights to subscribe for or purchase Junior Units) with respect to any class or series of Junior Units or (ii) the redemption or purchase (directly or indirectly, including without limitation, through any subsidiaries of the Partnership), or the setting aside of any funds or other assets for the redemption or purchase of any Junior Units (except for the exchange or conversions of partnership interests in the Partnership into Common Shares as permitted under the Partnership Agreement, or the payment of cash by the Partnership upon the exercise by any partner of the Partnership of a right to convert an interest in the Partnership into shares of the General Partner, or by conversion into or exchange for Junior Shares), unless in each case (X) all distributions (including all accumulated, accrued and unpaid distributions) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past Distribution Periods with respect to the Series D Preferred Shares and all past distribution periods with respect to any Parity Shares and (Y) a sum sufficient for the payment thereof has been or contemporaneously is paid or set apart for payment of the full distribution for the current Distribution Period with respect to the Series D Preferred Shares and the current distribution period with respect to any Parity Shares. (3) In the event of any liquidation, dissolution or winding up of the Partnership, whether voluntary or involuntary, the General Partner shall be entitled to receive preferential distributions with respect to the Series D Preferred Units corresponding to the liquidation preference to which holders of the Series D Preferred Shares are entitled in the event of the liquidation, dissolution or winding up of the General Partner. As set forth in the Articles Supplementary, the liquidation preference to which holders of Series D Preferred Shares are entitled is as follows (Capitalized terms used in the following subsections (3)(i) through (3)(iii) and not defined in this Amendment shall have the respective meanings assigned such terms in the in the Articles Supplementary.): (i) Upon any liquidation, dissolution or winding up of the General Partner, whether voluntary or involuntary, before any payment or distribution of the assets of the General Partner (whether capital or surplus) shall be made to or set apart for the holders of Junior Shares, the holders of Series D Preferred Shares shall be entitled to receive a liquidation preference (the "Liquidation Preference") in an amount equal to the greater of (A) the Base Amount plus cumulative unpaid distributions which were earned but not declared, including Interest, if applicable, plus a Redemption Premium, if applicable, and (B) the amount that would be received if the Series D Preferred Shares were converted into Common Shares immediately prior to liquidation. Until the holders of the Series D Preferred Shares have been paid the Liquidation Preference in full, plus an amount equal to all declared distributions accumulated, accrued and unpaid thereon, plus Interest, to the date of final distribution to such holders, no payment may be made to any holder of Junior Shares upon any liquidation, dissolution or winding up of the General Partner. If, upon any liquidation, dissolution or winding up of the General Partner, the assets of the General Partner, or the proceeds thereof, distributable among the holders of Series D Preferred Shares are insufficient to pay in full such preferential amount and liquidating payments on any other class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series D Preferred Shares and any such other Parity Shares ratably in proportion to the respective amounts which would be payable on such Series D Preferred Shares and any such other Parity Shares if all amounts payable thereon were paid in full. (ii) If the Liquidation Preference is payable prior to the second anniversary of the Issue Date, the redemption premium (the "Redemption Premium") that shall be included in the Liquidation Preference shall equal 2% of the Base Amount. If the Liquidation Preference is payable on or after the second anniversary of the Issue Date and prior to the fifth anniversary of the Issue Date, the Redemption Premium that shall be included in the Liquidation Preference shall equal 1% of the Base Amount. No Redemption Premium shall be included in a Liquidation Preference payable on or after the fifth anniversary of the Issue Date. (iii) Upon any liquidation, dissolution or winding up of the General Partner, after payment has been made in full to the holders of Series D Preferred Shares and any Parity Shares as provided in this Section 4.2(h)(3), any other series or class of Junior Shares shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series D Preferred Shares and any Parity Shares shall not be entitled to share therein. (iv) For purposes of this Section 4.2 (h)(3), (A) a consolidation or merger of the General Partner with or into one or more corporations, (B) a sale or transfer of all or substantially all of the General Partner's assets or (C) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the General Partner. (4) Upon conversion of any Series D Preferred Shares into, or redemption of any Series D Preferred Shares for, Common Shares as provided in the Articles Supplementary, a corresponding number of Series D Preferred Units will be converted into Partnership Units having such designations, preferences and relative, participating, optional or other special rights, powers and duties, including, without limitation, with respect to (i) the allocations of items of Partnership income, gain, loss, deduction and credit, (ii) the right to share in Partnership distributions, and (iii) the rights upon dissolution and liquidation of the Partnership, all such that the economic interests represented by such Partnership Units are substantially similar to the designations, preferences and other rights of the Common Shares." (5) Any class or series of Partnership Interests shall be deemed to rank: (A) senior to the Series D Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series are entitled to the receipt of distributions or amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series D Preferred Units ("Senior Units"); (B) on a parity with the Series D Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the distribution rates, distribution payment dates or redemption or liquidation prices per share thereof are different from those of the Series D Preferred Units, if the holders of such class or series and the Series D Preferred Units are entitled to the receipt of distributions and amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid distributions per share or liquidation preferences, without preference or priority one over the other ("Parity Units"); and (C) junior to the Series D Preferred Units, as to the payment of distributions or as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series is Partnership Units or if the holders of Series D Preferred Units are entitled to the receipt of distributions or amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of such class or series ("Junior Units"). The Series D Preferred Units (i) are Parity Units with respect to the Series B Preferred Units, (ii) are Junior Units with respect to the Series A Preferred Units, (iii) must be at least on parity with any future preferred units of the General Partner, and (iv) are Senior Units with respect to the Partnership Units. 2. EFFECTIVENESS. The amendment set forth in Section 1 shall become effective at the time of the first issuance of Series D Preferred Shares (the "Effective Time"). 3. CONTINUING EFFECTIVENESS. As herein amended, the Partnership Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. 4. GOVERNING LAW. This Amendment shall be governed by the internal laws of the State of Delaware. 5. DEFINED TERMS. Except as otherwise specified herein, capitalized terms used and not defined herein shall have the respective meanings assigned such terms in the Partnership Agreement. IN WITNESS WHEREOF, the undersigned, the General Partner of the Partnership, has executed this Amendment to the Partnership Agreement as of the date first above written. AMLI RESIDENTIAL PROPERTIES TRUST By: /s/ Allan J. Sweet ------------------------------ Name: Allan J. Sweet Title: President EX-10.2 7 exh_102.txt EXHIBIT 10.2 - ------------ REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of the 31st day of October 2001 by and between AMLI Residential Properties Trust, a Maryland real estate investment trust (the "Company"), and The Equitable Life Assurance Society of the United States (the "Investor"). WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of October 31, 2001 (the "Purchase Agreement") among the Company and the Investor, the Investor has agreed to purchase 800,000 Series D Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share, of the Company (the "Preferred Shares"), all of which Preferred Shares may be converted into the Company's common shares of beneficial interest, par value $0.01 per share (the "Common Shares"), pursuant to the terms of such Preferred Shares; and WHEREAS, in connection with the Purchase Agreement, the Company has agreed to register for sale by the Investor and certain transferees, the Common Shares issued or issuable upon conversion of the Preferred Shares (collectively, "Conversion Shares" or the "Registrable Shares"); and WHEREAS, the parties hereto desire to enter into this Agreement to evidence the foregoing agreement of the Company and the mutual covenants of the parties relating thereto. NOW, THEREFORE, in consideration of the foregoing and the covenants, agreements and warranties herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: SECTION 1. CERTAIN DEFINITIONS. In this Agreement, the following terms shall have the following respective meanings: "Accredited Investor" shall have the meaning set forth in Rule 501 under the Securities Act. "Affiliate" shall mean, when used with respect to any Person, another Person which directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same are in effect at the relevant time. "Holders" shall mean (a) the Investor and (b) each Person holding Registrable Shares as a result of a transfer or assignment to that Person of Registrable Shares other than pursuant to an effective registration statement or Rule 144. "Indemnified Party" shall have the meaning ascribed to it in Section 5(c) of this Agreement. "Indemnifying Party" shall have the meaning ascribed to it in Section 5(c) of this Agreement. "Other Securities" shall have the meaning ascribed to it in Section 3(a) of this Agreement. "Person" shall mean an individual, corporation, partnership, limited liability company, estate, trust, association, private foundation, joint stock company or other entity. "Preferred Shares" shall have the meaning ascribed to it in the recitals to this Agreement. "Register," "Registered" and "Registration" refer to a registration described in Section 2 hereof effected by preparing and filing a registration statement in compliance with the Securities Act providing for the sale by the Holders of Registrable Shares in accordance with the method or methods of distribution designated by the Holders, and the declaration or ordering of the effectiveness of such registration statement by the Commission. "Registrable Shares" shall have the meaning ascribed to it in the recitals to this Agreement. "Registration Expenses" shall mean all out-of-pocket expenses (excluding Selling Expenses) incurred by the Company in complying with Section 2 or Section 3, including, without limitation, the following: (a) all registration, filing and listing fees; (b) fees and expenses of compliance with federal and state securities or real estate syndication laws (including, without limitation, reasonable fees and disbursements of counsel in connection with state securities and real estate syndication qualifications of the Registrable Shares under the laws of such jurisdictions as the Holders may reasonably designate); (c) printing (including, without limitation, expenses of printing or engraving certificates for the Registrable Shares in a form eligible for deposit with The Depository Trust Company and otherwise meeting the requirements of any securities exchange on which they are listed and of printing registration statements and prospectuses), messenger, telephone, shipping and delivery expenses; (d) fees and disbursements of counsel for the Company; (e) fees and disbursements of all independent public accountants of the Company (including, without limitation, the expenses of any annual or special audit and "cold comfort" letters required by the managing underwriter); (f) fees and expenses incurred in connection with the listing of the Registrable Shares on each securities exchange on which securities of the same class are then listed; and (g) fees and expenses associated with any filing with the National Association of Securities Dealers, Inc. required to be made in connection with the registration statement. "Registration Request" shall have the meaning ascribed to it in Section 2(a) of this Agreement. "Rule 144" shall mean Rule 144 under the Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same are in effect at the relevant time. "Selling Expenses" shall mean all underwriting discounts, selling commissions and share transfer taxes applicable to any sale of Registrable Shares and, if neither the Company nor any Person not a Holder shall include securities within the subject Registration, shall include travel and other expenses of members of the management of the Company and its affiliates in connection with the matters described in Section 7 (and if the Company or any such Person shall so include securities, Selling Expenses shall include a pro rata portion of such travel and other expenses). SECTION 2. SHELF REGISTRATION. (a) The Company shall prepare and file with the Commission a resale shelf registration statement for the purpose of effecting a Registration of the sale of Registrable Shares by the Holders thereof and shall use its best efforts to have such registration statement declared effective by the Commission as soon as practicable but not later than ninety (90) days after the date of the Closing (as defined in the Purchase Agreement), (including, without limitation, the execution of an undertaking to file post-effective amendments and appropriate qualification under applicable state securities and real estate syndication laws); and shall keep such Registration continuously effective until the date on which all Registrable Shares have been sold pursuant to such registration statement or Rule 144; PROVIDED, HOWEVER, that the Company may terminate such Registration if all Registrable Shares may be sold pursuant to Rule 144 and if the Commission institutes a fee to keep such Registration effective; provided FURTHER, however, that the Company shall not be obligated to take any action to effect any such Registration, qualification or compliance pursuant to this Section 2 in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such Registration, qualification or compliance unless the Company is already subject to service in such jurisdiction. Notwithstanding the foregoing, the Company shall have the right (the "Suspension Right") to defer such filing (or suspend sales under any filed registration statement or defer the updating of any filed registration statement and suspend sales thereunder) for a single period during any consecutive twelve (12) month period, such period being the shorter of (i) the period during which it would be detrimental to the Company and its shareholders to file such registration statement or amendment thereto at such time (or to continue sales under a filed registration statement) and (ii) ninety (90) days, if the Company furnishes to the Holders a certificate signed by the President or any other executive officer or any trustee of the Company stating that, in the good faith judgment of the Company, it would be detrimental to the Company and its shareholders to file such registration statement or amendment thereto at such time (or to continue sales under a filed registration statement) and therefore the Company has elected to defer the filing of such registration statement (or to suspend sales under a filed registration statement). (b) The Company shall promptly notify the Holders of the occurrence of the following events: (i) when any registration statement relating to the Registrable Shares or post-effective amendment thereto filed with the Commission has become effective; (ii) the issuance by the Commission of any stop order suspending the effectiveness of any registration statement relating to the Registrable Shares; (iii) the suspension of an effective registration statement by the Company in accordance with the last paragraph of Section 2(a); (iv) the Company's receipt of any notification of the suspension of the qualification of any Registrable Shares covered by a registration statement for sale in any jurisdiction; and (v) the existence of any event, fact or circumstance which results in a registration statement or prospectus relating to Registrable Shares or any document incorporated therein by reference containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading during the distribution of securities. The Company agrees to use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any such registration statement or any state qualification as promptly as possible. (c) The Company shall provide to the Holders, at no cost to the Holders, a copy of the registration statement and any amendment thereto used to effect the Registration of the Registrable Shares, each prospectus contained in such registration statement or post-effective amendment and any amendment or supplement thereto and such other documents as the requesting Holders may reasonably request in order to facilitate the disposition of the Registrable Shares covered by such registration statement. The Company consents to the use of each such prospectus and any supplement thereto by the Holders in connection with the offering and sale of the Registrable Shares covered by such registration statement or any amendment thereto. The Company shall also file a sufficient number of copies of the prospectus and any post-effective amendment or supplement thereto with the New York Stock Exchange (or, if the Common Shares are no longer listed thereon, with such other securities exchange or market on which the Common Shares are then listed) so as to enable the Holders to have the benefits of the prospectus delivery provisions of Rule 153 under the Securities Act. (d) The Company agrees to use its best efforts to cause the Registrable Shares covered by a registration statement to be registered with or approved by such state securities authorities as may be necessary to enable the Holders to consummate the disposition of such shares pursuant to the plan of distribution set forth in the registration statement. (e) Subject to the Company's Suspension Right, if any event, fact or circumstance exists requiring an amendment to a registration statement relating to the Registrable Shares or supplement to a prospectus relating to the Registrable Shares, immediately upon becoming aware thereof the Company agrees to notify the Holders and prepare and furnish to the Holders a post-effective amendment to the registration statement or supplement to the prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Shares, the prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (f) The Company agrees to use its reasonable best efforts (including the payment of any listing fees) to obtain the listing of all Registrable Shares covered by the registration statement on each securities exchange on which securities of the same class are then listed. (g) The Company agrees to use its best efforts to comply with the Securities Act and the Exchange Act and, as soon as reasonably practicable following the end of any fiscal year during which a registration statement effecting a Registration of the Registrable Shares was effective, to make available to its security holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act. (h) The Company agrees to cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Registrable Shares to be sold pursuant to a Registration and not bearing any Securities Act legend; and enable certificates for such Registrable Shares to be issued for such numbers of shares and registered in such names as the Holders may reasonably request at least two (2) business days prior to any sale of Registrable Shares; PROVIDED, HOWEVER, that such certificates shall be issued no later than ten (10) business days following the receipt of such request. SECTION 3. PIGGYBACK REGISTRATION. (a) In the event that the Company proposes to file a registration statement permitting the sale of any class of equity securities ("Other Securities") under the Securities Act, in a manner that would permit registration of Registrable Shares for sale for cash to the public under the Securities Act, it shall give prompt written notice to each Holder of its intention to do so and of the rights of such Holder under this Section 3 PROVIDED, HOWEVER, that the Company shall be obligated to provide such notice and the rights described in this Section 3 only if, at the time of filing the registration statement referred to in this sentence, there is not a current effective Registration. Subject to the terms and conditions hereof, such notice shall offer each such Holder the opportunity to include in such registration statement such number of Registrable Shares as such Holder may request. Upon the written request of any such Holder made within fifteen (15) days after the receipt of the Company's notice (which request shall specify the number of Registrable Shares intended to be disposed of and the intended method of disposition thereof), the Company shall use its reasonable best efforts to effect, in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Shares which the Company has been so requested to register, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Shares so requested to be registered. (b) If, at any time after giving a written notice of its intention to register any Other Securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register the Other Securities, the Company may, at its election, give written notice of such determination to such Holders and thereupon the Company shall be relieved of its obligation to register such Registrable Shares in connection with the registration of such Other Securities. (c) If the registration referred to in the first sentence of Section 3(a) is to be an underwritten registration on behalf of the Company, and a nationally recognized investment banking firm selected by the Company advises the Company in writing that, in such firm's good faith view, the inclusion of all or a part of such Registrable Shares in such registration would be likely to have an adverse effect upon the price, timing or distribution of the offering and sale of the Other Securities then contemplated, the Company shall include in such registration: (i) first, all Other Securities the Company proposes to sell ("Company Securities"), and (ii) second, up to the full number of Registrable Shares (including the Holders) held by Holders of Registrable Shares and by holders of other Registrable Shares of the Company which have been granted piggyback registration rights that are requested to be included in such registration in excess of the number of Company Securities to be sold in such offering which, in the good faith view of such investment banking firm, can be so sold without so adversely affecting such offering in the manner described above; PROVIDED that if such number is less than the full number of such Registrable Shares, such number shall be allocated pro rata among such holders (including the Holders) on the basis of the relative number of Registrable Shares (including Registrable Shares) then held by each such holder (with any number in excess of a holder's request being reallocated among the requesting holders in a like manner); and PROVIDED FURTHER that if such investment banking firm advises the Company in writing that less than all of such Registrable Shares should be included in such offering, such Holders may withdraw their request for registration of their Registrable Shares under Section 3(a) \1. - -------------------- 1/ It being understood that the rights in this Section 3 are subject to prior piggyback registration rights of certain holders to the extent provided in Section 1.2(b) of the registration rights agreements listed as numbers 2, 4, and 5 in Section 4.15(c) of the Purchase Agreement. (d) The Company shall not be required to effect any registration of Registrable Shares under this Section 3 incidental to the registration of any of its securities in connection with mergers, acquisitions, exchange offers, dividend reinvestment plans or stock option or other executive or employee benefit or compensation plans. SECTION 4. EXPENSES OF REGISTRATION. The Company shall pay all Registration Expenses incurred in connection with the Registration, qualification or compliance pursuant to Section 2 and Section 3. All Selling Expenses incurred in connection with the sale of Registrable Shares by any of the Holders shall be borne by the Holder selling such Registrable Shares. Each Holder shall pay the expenses of its own counsel. SECTION 5. INDEMNIFICATION. (a) The Company shall indemnify each Holder, each Holder's officers and directors, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (including reasonable legal expenses), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement or prospectus relating to the Registrable Shares, or any amendment or supplement thereto, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company shall not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished in writing to the Company by such Holder for inclusion therein. (b) Each Holder shall indemnify the Company, each of its trustees and each of its officers who sign the registration statement, each underwriter, if any, of the Company's securities covered by such registration statement, and each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other Holder with Registrable Shares covered by such registration statement, and each officer, director and controlling person of each such other Holder, against all expenses, claims, losses, damages and liabilities (including reasonable legal fees and expenses) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement or prospectus, or any amendment or supplement thereto, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement or prospectus in reliance upon and in conformity with information furnished in writing to the Company or such underwriter by such Holder for inclusion therein. (c) Each party entitled to indemnification under this Section 5 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, but the omission to so notify the Indemnifying Party shall not relieve it from any liability which it may have to the Indemnified Party pursuant to the provisions of this Section 5 except to the extent of the actual damages suffered by such delay in notification. The Indemnifying Party shall assume the defense of such action, including the employment of counsel to be chosen by the Indemnifying Party to be reasonably satisfactory to the Indemnified Party, and payment of expenses. The Indemnified Party shall have the right to employ its own counsel in any such case, but the legal fees and expenses of such counsel shall be at the expense of the Indemnified Party, unless the employment of such counsel was authorized in writing by the Indemnifying Party in connection with the defense of such action, or the Indemnifying Party did not employ counsel to take charge of the defense of such action or the Indemnified Party reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party shall not have the right to direct the defense of such action on behalf of the Indemnified Party), in any of which events such fees and expenses shall be borne by the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to the entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation. (d) If the indemnification provided for in this Section 5 is unavailable to a party which would have been an Indemnified Party under this Section 5 in respect of any expenses, claims, losses, damages and liabilities referred to herein, then each party which would have been an Indemnifying Party hereunder shall, in lieu of indemnifying such Indemnified Party, contribute to the amount paid or payable by such Indemnified Party as a result of such expenses, claims, losses, damages and liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and such Indemnified Party on the other in connection with the statement or omission which resulted in such expenses, claims, losses, damages and liabilities, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or such Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each holder of Registrable Shares agrees that it would not be just and equitable if contribution pursuant to this Section were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5(d). (e) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (f) In no event shall any Holder be liable for any expenses, claims, losses, damages or liabilities pursuant to this Section 5 in excess of the net proceeds to such Holder of any Registrable Shares sold by such Holder. SECTION 6. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder shall furnish to the Company such information as the Company may reasonably request and as is required in connection with the Registration and related proceedings referred to in Section 2 and Section 3. If any Holder fails to provide the Company with such information within three weeks of the Company's request, the Company's obligations under Section 2 and Section 3 with respect to such Holder or the Registrable Shares owned by such Holder shall be suspended until such Holder provides such information. SECTION 7. UNDERTAKING TO PARTICIPATE IN UNDERWRITING. If the Holders of at least $10 million of the Registrable Shares propose to sell Registrable Shares in an underwritten public offering, the Company shall make available members of the management of the Company and its affiliates for reasonable assistance in selling efforts relating to such offering, to the extent customary for a public offering (including, without limitation, to the extent customary, senior management attendance at due diligence meetings with underwriters and their counsel and road shows) and shall enter into underwriting agreements containing usual and customary terms and conditions reasonably acceptable to the Company for such types of offerings. SECTION 8. RULE 144 SALES. (a) The Company covenants that it shall file the reports required to be filed by the Company under the Exchange Act, so as to enable any Holder to sell Registrable Shares pursuant to Rule 144. (b) In connection with any sale, transfer or other disposition by any Holder of any Registrable Shares pursuant to Rule 144, the Company shall cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Shares to be sold and not bearing any Securities Act legend, and enable certificates for such Registrable Shares to be issued for such number of shares and registered in such names as the selling Holder may reasonably request at least two (2) business days prior to any sale of Registrable Shares; PROVIDED, HOWEVER that such certificates shall be issued no later than ten (10) business days following the receipt of such request. SECTION 9. MISCELLANEOUS. (a) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without giving effect to the conflict of law provisions thereof. (b) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. (c) AMENDMENT. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party sought to be bound thereby. (d) NOTICES, ETC. Unless otherwise provided herein, any notice required or permitted under this Agreement shall be given in writing, and shall be deemed effectively given (a) upon personal delivery to the party to be notified, (b) on the fifth business day after deposit with the United States Post Office, by registered or certified mail, postage prepaid, (c) on the next business day after dispatch via nationally recognized overnight courier or (d) upon confirmation of transmission by facsimile, all addressed to the party to be notified. Notices shall be addressed as follows: (i) if to the Investor, at the Investor's address or fax number set forth below its signature hereto, or at such other address or fax number as the Investor furnished to the Company in writing, or (ii) if to any assignee or transferee of an Investor, at such address or fax number as such assignee or transferee furnished to the Company in writing, or (iii) if to the Company, at the address of its principal executive offices and addressed to the attention of the President, or at such other address or fax number as the Company furnished to the Investor or any assignee or transferee. Any notice or other communication required to be given hereunder to a Holder in connection with a registration may instead be given to the designated representative of such Holder. (e) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. (g) TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. (h) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding on the respective successors and assigns of the parties hereto. (i) REMEDIES. The Company and the Investor acknowledge that there would be no adequate remedy at law if any party fails to perform any of its obligations hereunder, and accordingly agree that the Company and each Holder, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of another party under this Agreement in accordance with the terms and conditions of this Agreement in any court of the United States or any State thereof having jurisdiction. (j) ATTORNEYS' FEES. If the Company or any Holder brings an action to enforce its rights under this Agreement, the prevailing party in the action shall be entitled to recover its costs and expenses, including, without limitation, reasonable attorneys' fees, incurred in connection with such action, including any appeal of such action. * * * * * IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first above written. AMLI RESIDENTIAL PROPERTIES TRUST By: /s/ Allan J. Sweet ------------------------------ Name: Allan J. Sweet Title: President THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES By: /s/ Nicki Livanos ------------------------------ Name: Nicki Livanos Title: Vice President Address: 1290 Avenue of the Americas New York, New York 10104 Attn: Lydia M. Pitts Fax: (212) 707-7981 with a copies to: Lend Lease Rosen Real Estate Securities, LLC Address: P.O. Box 1285 Berkley, California 94701-1285 Attn: Private Transactions Officer Goodwin Procter LLP Address: Exchange Place Boston, Massachusetts 02109 Attn: David W. Watson, P.C. Fax: (617) 570-1231 EX-99 8 exh_99.txt EXHIBIT 99 - ---------- AMLI RESIDENTIAL PROPERTIES TRUST SUPPLEMENTAL INFORMATION TO QUARTERLY FINANCIAL STATEMENTS September 30, 2001 1. Funds from Operations 2. Statements of Operations 3. Balance Sheets 4. Selected Financial Information 5. Debt 6. Debt Maturities 7. Same Community Comparison - Wholly-Owned - three months ended September 30, 2001 and 2000 8. Same Community Comparison - Wholly-Owned and Co-Investments - three months ended September 30, 2001 and 2000 9. Property Information 10. Property EBITDA - three months ended September 30, 2001 11. Development Activities AMLI RESIDENTIAL PROPERTIES TRUST FUNDS FROM OPERATIONS Unaudited - Dollars in thousands except per share data
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ------------------------ 2001 2000 2001 2000 -------- -------- -------- -------- REVENUES - -------- Property revenues: Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,263 26,831 81,092 79,880 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,856 1,823 5,186 5,018 -------- -------- -------- -------- Total Property Revenues . . . . . . . . . . . . . . . . 29,119 28,654 86,278 84,898 -------- -------- -------- -------- Property operating expenses . . . . . . . . . . . . . . . . . . (11,284) (10,555) (32,193) (30,681) Property management fees. . . . . . . . . . . . . . . . . . . . (865) (714) (2,294) (2,120) -------- -------- -------- -------- Property expenses . . . . . . . . . . . . . . . . . . . (12,149) (11,269) (34,487) (32,801) Operating expense ratio . . . . . . . . . . . . . . . . . . . . 41.7% 39.3% 40.0% 38.6% -------- -------- -------- -------- Net operating income. . . . . . . . . . . . . . . . . . 16,970 17,385 51,791 52,097 -------- -------- -------- -------- OTHER INCOME - ------------ Share of Service Cos. FFO (1) . . . . . . . . . . . . . . . . (329) (428) (711) 1,194 Interest from Service Companies (2) . . . . . . . . . . . . . 264 1,103 741 3,514 Other interest. . . . . . . . . . . . . . . . . . . . . . . 349 381 1,152 990 Share of partnerships FFO (3) . . . . . . . . . . . . . . . . 4,853 4,129 15,158 10,214 Fee income - acquisitions, dispositions and financing . . . . 297 645 546 1,120 Fee income - developments . . . . . . . . . . . . . . . . . . 708 398 1,297 1,353 Fee income - asset management . . . . . . . . . . . . . . . . 132 145 416 441 Promoted interest . . . . . . . . . . . . . . . . . . . . . . 1,796 1,181 1,796 1,181 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 161 147 161 -------- -------- -------- -------- Total other income. . . . . . . . . . . . . . . . . . . 8,077 7,715 20,542 20,168 General and administrative (4). . . . . . . . . . . . . . . . . (1,221) (842) (3,890) (2,700) -------- -------- -------- -------- EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,826 24,258 68,443 69,565 -------- -------- -------- -------- Interest expense (5). . . . . . . . . . . . . . . . . . . . . . (6,824) (6,353) (19,603) (18,243) Amortization of deferred costs. . . . . . . . . . . . . . . . . (154) (101) (599) (340) -------- -------- -------- -------- FUNDS FROM OPERATIONS (FFO) . . . . . . . . . . . . . . . . . . $ 16,848 17,804 48,241 50,982 ======== ======== ======== ======== AMLI RESIDENTIAL PROPERTIES TRUST FUNDS FROM OPERATIONS - CONTINUED Unaudited - Dollars in thousands except per share data THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ------------------------ 2001 2000 2001 2000 -------- -------- -------- -------- Capital expenditures paid from FFO (6). . . . . . . . . . . . . $ (1,147) (1,717) (4,584) (3,700) Other - share of Co-investments Cap exp . . . . . . . . . . . . (249) (240) (710) (488) -------- -------- -------- -------- Funds available for distribution (FAD). . . . . . . . . . . . . $ 15,452 15,847 42,947 46,794 ======== ======== ======== ======== FFO per share . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.67 0.72 1.93 2.07 FAD per share . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.61 0.64 1.72 1.90 Dividend per share. . . . . . . . . . . . . . . . . . . . . . . $ 0.48 0.47 1.42 1.40 Dividend as a % of FFO. . . . . . . . . . . . . . . . . . . . . 71.7% 65.5% 73.7% 67.8% Dividend as a % of FAD. . . . . . . . . . . . . . . . . . . . . 78.2% 73.5% 82.8% 73.7% ======== ======== ======== ======== NOTES: (1) Reflects share of income before goodwill amortization of $311 in each of the nine months ended September 30, 2001 and 2000. (2) Reflects the December 2000 refinancing by the Service Companies of $27 million of intercompany advances with bank debt. (3) Reflects share of income before share of depreciation of $8,434 and $5,698 for the nine months ended September 30, 2001 and 2000, respectively. (4) Includes write-offs and provision for loss on investments totaling $858 for the nine months ended September 30, 2001. (5) Includes $785 of Mark-To-Market of interest rate swap contracts for the three and nine months ended September 30, 2001. (6) Rehab costs of approximately $1,110 and $5,641 for the nine months ended September 30, 2001 and 2000, respectively, are not reflected in cap ex paid from FFO.
AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS Unaudited - Dollars in thousands except per share data
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ------------------------ 2001 2000 2001 2000 -------- -------- -------- -------- REVENUES - -------- Property revenues: Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,263 26,831 81,092 79,880 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,856 1,823 5,186 5,018 Interest and share of income (loss) from Service Cos. . . . . . (169) 571 (281) 4,397 Other interest. . . . . . . . . . . . . . . . . . . . . . . . . 349 381 1,152 990 Share of income from co-investment partnerships . . . . . . . . 2,059 1,999 6,724 4,516 Fees from co-investment partnerships & other. . . . . . . . . . 2,940 2,530 4,202 4,256 -------- -------- -------- -------- Total revenues. . . . . . . . . . . . . . . . . . . . . 34,298 34,135 98,075 99,057 -------- -------- -------- -------- EXPENSES - -------- Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,916 2,773 8,611 8,322 Advertising and promotion . . . . . . . . . . . . . . . . . . . 820 667 2,150 1,759 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,046 975 2,691 2,474 Building repairs and maintenance. . . . . . . . . . . . . . . . 1,818 1,548 4,754 4,378 Landscaping and grounds maintenance . . . . . . . . . . . . . . 664 617 1,816 1,833 Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . 3,474 3,391 10,429 10,218 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 211 880 669 Other operating expenses. . . . . . . . . . . . . . . . . . . . 262 373 862 1,028 Property management fees. . . . . . . . . . . . . . . . . . . . 865 714 2,294 2,120 Interest, net of capitalized. . . . . . . . . . . . . . . . . . 6,824 6,353 19,603 18,243 Amortization of deferred costs. . . . . . . . . . . . . . . . . 154 101 599 340 Depreciation of real property . . . . . . . . . . . . . . . . . 3,552 3,284 10,688 10,336 Depreciation of personal property . . . . . . . . . . . . . . . 1,606 1,354 5,110 4,294 General and administrative. . . . . . . . . . . . . . . . . . . 1,221 842 3,890 2,700 -------- -------- -------- -------- Total expenses. . . . . . . . . . . . . . . . . . . . . 25,506 23,203 74,377 68,714 -------- -------- -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS - CONTINUED Unaudited - Dollars in thousands except per share data THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ------------------------ 2001 2000 2001 2000 -------- -------- -------- -------- Non-recurring item - gains on sales of properties . . . . . . . 14,047 6,807 23,296 37,274 -------- -------- -------- -------- Income before taxes, minority interest and extraordinary item . 22,839 17,739 46,994 67,617 -------- -------- -------- -------- Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 -------- -------- -------- -------- Income bef. minority interest & extraordinary items . . . . . . 22,839 17,739 46,994 67,617 Minority interest . . . . . . . . . . . . . . . . . . . . . . . 3,595 2,497 7,120 10,353 -------- -------- -------- -------- Income before extraordinary items . . . . . . . . . . . . . . . 19,244 15,242 39,874 57,264 Extraordinary items, net of minority interest . . . . . . . . . 0 0 0 0 -------- -------- -------- -------- Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . 19,244 15,242 39,874 57,264 Net income allocable to preferred shares. . . . . . . . . . . . 1,633 1,766 4,899 5,424 -------- -------- -------- -------- Net income allocable to common shares . . . . . . . . . . . . . $ 17,611 13,476 34,975 51,840 ======== ======== ======== ======== INCOME PER COMMON SHARE: - ----------------------- Before extraordinary items. . . . . . . . . . . . . . . . . . . $ 0.99 0.77 1.97 3.02 Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . $ 0.00 0.00 0.00 0.00 Income per common share . . . . . . . . . . . . . . . . . . . . $ 0.99 0.77 1.97 3.02 Income per common share - diluted . . . . . . . . . . . . . . . $ 0.89 0.71 1.86 2.70 ======== ======== ======== ======== FUNDS FROM OPERATIONS - --------------------- Income before taxes, minority interest and extraordinary item . $ 22,839 17,739 46,994 67,617 -------- -------- -------- -------- Depreciation of real property . . . . . . . . . . . . . . . . . 3,552 3,284 10,688 10,336 Depreciation of personal property . . . . . . . . . . . . . . . 1,606 1,354 5,110 4,294 Non-recurring item - gains on sale of properties. . . . . . . . (14,047) (6,807) (23,296) (37,274) Share of Co-investments depreciation. . . . . . . . . . . . . . 2,794 2,130 8,434 5,698 Share of Service Company amortization of goodwill . . . . . . . 104 104 311 311 -------- -------- -------- -------- Funds from operations (FFO) . . . . . . . . . . . . . . . . . . $ 16,848 17,804 48,241 50,982 FFO per share . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.67 0.72 1.93 2.07 ======== ======== ======== ======== AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS - CONTINUED Unaudited - Dollars in thousands except per share data THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ------------------------ 2001 2000 2001 2000 -------- -------- -------- -------- Capital expenditures paid from FFO. . . . . . . . . . . . . . . $ (1,147) (1,717) (4,584) (3,700) Other - Share Co-investments Cap exp. . . . . . . . . . . . . . (249) (240) (710) (488) -------- -------- -------- -------- Funds available for distribution (FAD). . . . . . . . . . . . . $ 15,452 15,847 42,947 46,794 FAD per share . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.61 0.64 1.72 1.90 -------- -------- -------- -------- Dividends per share . . . . . . . . . . . . . . . . . . . . . . $ 0.48 0.47 1.42 1.40 ======== ======== ======== ======== Dividends as a % of FFO . . . . . . . . . . . . . . . . . . . . 71.7% 65.5% 73.7% 67.8% Dividends as a % of FAD . . . . . . . . . . . . . . . . . . . . 78.2% 73.5% 82.8% 73.7% ======== ======== ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST CONDENSED BALANCE SHEETS Unaudited - Dollars in thousands except per share data SEPT. 30, DEC. 31, 2001 2000 -------- -------- ASSETS - ------ Rental apartments Land. . . . . . . . . . . . . . . . . . $ 99,776 91,242 Depreciable property. . . . . . . . . . 643,335 604,081 -------- -------- 743,111 695,323 Less accumulated depreciation . . . . . (101,858) (94,590) -------- -------- 641,253 600,733 Rental apartments under development . . . 6,791 -- Land held for development or sale . . . . 48,288 53,022 Investments in partnerships . . . . . . . 183,606 166,569 Cash and cash equivalents . . . . . . . . 3,774 5,106 Deferred costs, net . . . . . . . . . . . 4,054 3,425 Notes receivable and advances to Service Companies . . . . . . . . . . . 17,161 4,857 Other assets. . . . . . . . . . . . . . . 8,060 32,279 -------- -------- Total assets. . . . . . . . . . . $912,987 865,991 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Debt. . . . . . . . . . . . . . . . . . . $408,475 385,981 Accrued interest payable. . . . . . . . . 1,905 1,783 Accrued real estate taxes . . . . . . . . 11,228 10,806 Construction costs payable. . . . . . . . 3,135 1,501 Security deposits and prepaid rents . . . 2,177 2,507 Other liabilities . . . . . . . . . . . . 7,288 3,937 -------- -------- Total liabilities . . . . . . . . 434,208 406,515 -------- -------- Minority interest . . . . . . . . . . . . 69,658 59,537 -------- -------- Shareholders' equity Preferred shares, $.01 par value. . . . 35 35 Shares of beneficial interest, $.01 par value. . . . . . . . . . . . 178 178 Additional paid-in capital. . . . . . . 430,069 427,939 Employees and trustees notes. . . . . . (11,808) (12,231) Other comprehensive loss. . . . . . . . (3,216) -- Dividends paid in excess of earnings. . (6,137) (15,982) -------- -------- Total shareholders' equity. . . . 409,121 399,939 -------- -------- Total liabilities and shareholders' equity. . . . . . $912,987 865,991 ======== ======== AMLI RESIDENTIAL PROPERTIES TRUST SELECTED QUARTERLY FINANCIAL INFORMATION September 30, 2001 (dollars in thousands except for share data)
Quarter ending ----------------------------------------------------------------------------------- Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 2001 2001 2001 2000 2000 2000 2000 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Debt $ 408,475 429,489 412,242 385,981 398,956 393,168 398,867 Including share of debt of uncon- solidated affiliates $ 609,188 639,076 635,166 583,635 542,778 520,597 510,230 Total Shares and Units Outstanding (1) 25,007,264 24,891,232 24,873,832 24,558,242 24,552,642 24,544,475 24,544,475 Value per Common Share - end of quarter $ 23.60 24.60 22.30 24.6875 24.00 23.5625 20.50 Total Equity (Market Value) - end of quarter $ 590,171 612,324 554,686 606,282 589,263 578,329 503,162 Market capitalization $ 998,646 1,041,813 966,928 992,263 988,219 971,497 902,029 Including share of debt of uncon- solidated affiliates $1,199,359 1,251,400 1,189,852 1,189,917 1,132,041 1,098,926 1,013,392 Including Co-investment at completed cost $2,133,787 2,185,828 2,066,236 2,065,511 1,905,589 1,826,661 1,678,237 ========== ========== ========== ========== ========== ========== ========== AMLI RESIDENTIAL PROPERTIES TRUST SELECTED QUARTERLY FINANCIAL INFORMATION - CONTINUED September 30, 2001 (dollars in thousands except for share data) Quarter ending ----------------------------------------------------------------------------------- Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 2001 2001 2001 2000 2000 2000 2000 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Revenues (2) $ 34,298 32,449 31,328 32,689 34,135 34,097 30,825 EBITDA (3) $ 23,826 22,823 21,794 23,423 24,258 24,156 21,151 FFO $ 16,848 16,162 15,231 16,877 17,804 17,787 15,391 FAD $ 15,452 13,474 14,021 15,626 15,847 16,442 14,505 Dividends Paid (4) $ 11,751 11,686 11,740 11,541 11,537 11,290 11,290 Debt service (net of capitalized interest) $ 7,838 7,105 7,166 7,177 7,065 6,947 6,316 Interest Expense $ 6,824 6,352 6,427 6,452 6,353 6,248 5,642 G & A Expense $ 1,221 1,151 1,518 1,056 842 930 928 Total Shares and Units Outstanding - Wtd. Avg. 24,960,829 24,876,109 24,813,456 24,555,937 24,546,254 24,544,475 24,541,971 ========== ========== ========== ========== ========== ========== ========== Interest Coverage Ratio 3.49 3.59 3.39 3.63 3.82 3.87 3.75 Debt as % of Total Market Capitalization 40.90% 41.23% 42.63% 38.90% 40.37% 40.47% 44.22% Including share of debt of unconsolidated affiliates 50.79% 51.07% 53.38% 49.05% 47.95% 47.37% 50.35% EBITDA as % of Total Market Capitalization 9.54% 8.76% 9.02% 9.44% 9.82% 9.95% 9.38% FFO as % of Total Market Equity 11.42% 10.56% 10.98% 11.13% 12.09% 12.30% 12.24% G&A as % of Total Market Capitalization 0.49% 0.44% 0.63% 0.43% 0.34% 0.38% 0.41% G&A as % of Total Revenues 3.56% 3.55% 4.85% 3.23% 2.47% 2.73% 3.01% Dividends as % of FFO (5) 71.7% 72.8% 76.9% 68.8% 65.5% 65.2% 73.5% Dividends as % of FAD (5) 78.2% 87.3% 83.5% 74.3% 73.5% 70.6% 78.0% ========== ========== ========== ========== ========== ========== ========== AMLI RESIDENTIAL PROPERTIES TRUST SELECTED QUARTERLY FINANCIAL INFORMATION - CONTINUED September 30, 2001 (dollars in thousands except for share data) Quarter ending ----------------------------------------------------------------------------------- Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 2001 2001 2001 2000 2000 2000 2000 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Apartment Units - In Operation Wholly Owned 12,247 12,079 12,519 12,191 12,264 12,264 12,576 Co-investments 14,579 15,067 15,067 13,956 11,604 10,963 9,205 ---------- ---------- ---------- ---------- ---------- ---------- ---------- 26,826 27,146 27,586 26,147 23,868 23,227 21,781 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Apartment Units - Under Development or in lease up Wholly Owned 322 0 0 0 500 500 200 Co-investments 2,737 2,217 2,217 2,845 3,642 3,234 4,098 ---------- ---------- ---------- ---------- ---------- ---------- ---------- 3,059 2,217 2,217 2,845 4,142 3,734 4,298 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Units 29,885 29,363 29,803 28,992 28,010 26,961 26,079 ========== ========== ========== ========== ========== ========== ========== (1) At September 30, 2001, the total includes 3,475,000 preferred shares convertible to common shares. (2) Excluding gains on sales of completed rental properties. (3) Includes other income, net of G & A expenses and net of share of co-investment interest expense. (4) Paid in the following quarter from each quarter's FAD. Amount shown includes distribution to OP unitholders (Minority Interest). (5) Based on per share amounts.
AMLI RESIDENTIAL PROPERTIES TRUST PORTFOLIO INDEBTEDNESS SUMMARY September 30, 2001 (Dollars in thousands)
Original/Max Outstanding Interest Borrower Lender Amount Balance Rate Rate - -------- -------- ------------ ----------- --------- ---------- Weighted Avg. Percent of Interest Years to Type of Indebtedness Balance Total Interest Rate Maturity - -------------------- -------- ----------- ---------- --------- ---------- Conventional Fixed Rate $303,225 74.2% Fixed 7.14% 7.4 Tax-exempt Variable Rate (1) 50,250 12.3% Variable 4.22% 1.1 Credit Facilities (2) 55,000 13.5% Variable 7.31% 2.1 -------- ------ ------ --- Total $408,475 100.0% 6.80% 5.9 ======== ====== ====== === Weighted Balance including Avg. share of Co- Percent of Interest Years to Type of Indebtedness investment debt(3) Total Interest Rate Maturity - -------------------- ----------------- ----------- ---------- --------- ---------- Conventional Fixed Rate $489,938 82.3% Fixed 7.27% 7.3 Tax-exempt Variable Rate (1) 50,250 8.5% Variable(4) 4.22% 1.1 Credit Facilities (2) 55,000 9.2% Variable(4) 7.31% 2.1 -------- ------ ------ --- Total $595,188 100.0% 7.01% 6.3 ======== ====== ====== === (1) Maturity Date shown is expiration date of Credit Enhancement. Bonds mature in 2024. (2) $75,000 has been swapped to a fixed rate ($20,000 maturing in November 2002, $30,000 maturing in February 2003 and $25,000 maturing in September 2004). $20,000 has been marked-to-market at September 30, 2001. Effective interest rate includes swap costs. Outstanding balance excludes $14,000 borrowed by unconsolidated service company subsidiaries which reduces availability under the line of credit. The Company reduced its unsecured Line of Credit commitment by $50,000 to $200,000 in June 2001 when it closed on its $140,000 mortgage financing for seven of its stabilized properties. (3) Co-Investment debt represents Amli Residential's pro rata share of debt. Interest rate and maturity reflect average numbers based on Amli's pro rata share. (4) Weighted average interest rate reflects rate in effect of the last day of the quarter.
AMLI RESIDENTIAL PROPERTIES TRUST DEBT MATURITIES SEPTEMBER 30, 2001 Unaudited - Dollars in thousands
There- % to 2001 2002 2003 2004 2005 after Total Total -------- -------- -------- -------- -------- -------- -------- ------- Fixed Rate Mortgages $ 1,163 4,862 61,814 10,745 34,812 189,829 303,225 74.2% Tax Exempt Bonds* 50,250 50,250 12.3% Wachovia/First Chicago Line of Credit** 55,000 55,000 13.5% -------- -------- -------- -------- -------- -------- -------- ------- Total Debt $ 1,163 55,112 116,814 10,745 34,812 189,829 408,475 100.0% ======== ======== ======== ======== ======== ======== ======== ======= Percent to Total 0.3% 13.5% 28.6% 2.6% 8.5% 46.5% 100.0% 68.6% ======== ======== ======== ======== ======== ======== ======== ======= SHARE OF CO-INVESTMENT DEBT - --------------------------- Total Share of Co-Investments Debt $ 539 9,696 17,094 9,846 2,045 147,493 186,713 100.0% ======== ======== ======== ======== ======== ======== ======== ======= Percent to Total 0.3% 5.2% 9.1% 5.3% 1.1% 79.0% 100.0% 31.4% ======== ======== ======== ======== ======== ======== ======== ======= Total including Share of Co-investments Debt $ 1,702 64,808 133,908 20,591 36,857 337,322 595,188 100.0% ======== ======== ======== ======== ======== ======== ======== ======== Percent to Total 0.3% 10.9% 22.5% 3.4% 6.2% 56.7% 100.0% 100.0% ======== ======== ======== ======== ======== ======== ======== ======= * The Spring Creek Bonds mature in October 2024, but the credit enhancement expires on October 15, 2002. * The Poplar Creek Bonds mature in February 2024, but credit enhancement expires December 18, 2002. ** The Unsecured Line of Credit has a current maturity of Nov. 2003, with an additional year extension option. The Company reduced its Line of Credit commitment by $50,000 to $200,000 when it closed on its $140,000 mortgage financing for seven of its stabilized properties. At September 30, 2001, the Company's unconsolidated service company subsidiaries had borrowed $14,000 from the Company's bank group. These borrowings have been guaranteed by the Company and thus serve to reduce the Company's total availability under its $200,000 unsecured debt.
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) THREE MONTHS ENDED SEPTEMBER 30, 2001 VERSUS THREE MONTHS ENDED SEPTEMBER 30, 2000 (Includes new properties at 7/1/00 - Towne Creek in Atlanta & StoneHollow in Austin)
7/1/01-9/30/01 7/1/00-9/30/00 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ------------- Dallas 3,634 93.4% -0.8% 94.1% Atlanta 2,771 92.4% 4.8% 88.2% Austin 1,304 93.0% -3.2% 96.0% Indianapolis 1,536 92.1% 2.2% 90.1% Kansas 1,154 92.9% 3.1% 90.1% Chicago 196 94.4% 0.0% 94.4% ------ ----- ----- ----- Weighted Average 92.8% 1.2% 91.8% ===== ===== ===== Total 10,595 ====== WEIGHTED AVG. RENTAL RATE - ------------- Dallas $ 755 4.1% $ 725 Atlanta $ 839 8.6% $ 773 Austin $ 844 -0.3% $ 847 Indianapolis $ 706 2.5% $ 688 Kansas $ 831 -0.2% $ 833 Chicago $1,104 6.5% $1,036 ------ ---- ------ Weighted Average $ 796 4.1% $ 765 ====== ==== ====== TOTAL PROPERTY REVENUES Per Month Per Month - --------------- ---------- ---------- Dallas $ 8,161,576 $ 749 $ 0.86 2.9% $ 7,928,896 $ 727 $ 0.83 Atlanta $ 6,911,931 $ 831 $ 0.88 3.1% $ 6,702,857 $ 806 $ 0.85 Austin $ 3,294,720 $ 842 $ 1.00 -4.2% $ 3,437,800 $ 879 $ 1.05 Indianapolis $ 3,234,203 $ 702 $ 0.78 4.2% $ 3,104,619 $ 674 $ 0.75 Kansas $ 2,893,285 $ 836 $ 0.82 4.2% $ 2,776,010 $ 802 $ 0.79 Chicago $ 658,678 $1,120 $ 1.24 7.4% $ 613,381 $1,043 $ 1.15 ----------- ------ ------ ----- ----------- ------ ------ Total $25,154,394 $ 791 $ 0.87 2.4% $24,563,563 $ 773 $ 0.85 =========== ====== ===== ===== =========== ====== ====== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED 7/1/01-9/30/01 7/1/00-9/30/00 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $ 3,504,899 $3,858 $4.43 6.5% $ 3,290,146 $3,622 $4.16 Atlanta $ 2,596,424 $3,748 $3.97 8.1% $ 2,402,008 $3,467 $3.67 Austin $ 1,724,978 $5,291 $6.30 33.6% $ 1,290,770 $3,959 $4.72 Indianapolis $ 1,280,132 $3,334 $3.71 4.0% $ 1,230,389 $3,204 $3.56 Kansas $ 1,028,157 $3,564 $3.51 2.9% $ 999,355 $3,464 $3.41 Chicago $ 306,309 $6,251 $6.90 0.7% $ 304,140 $6,207 $6.85 ------------ ------ ----- ----- ----------- ------ ----- Total $ 10,440,898 $3,942 $4.35 9.7% $ 9,516,808 $3,593 $3.96 ============ ====== ===== ===== =========== ====== ===== Operating Efficiency 41.5% 38.7% ============ ===========
PER MONTH PER MONTH --------- ---------- NOI 2001% 2000% - --- ----- ----- Dallas 57.1% 58.5% $ 4,656,677 $427 $0.49 0.4% $ 4,638,750 $425 $0.49 Atlanta 62.4% 64.2% $ 4,315,508 $519 $0.55 0.3% $ 4,300,849 $517 $0.55 Austin 47.6% 62.5% $ 1,569,742 $401 $0.48 -26.9% $ 2,147,030 $549 $0.65 Indianapolis60.4% 60.4% $ 1,954,071 $424 $0.47 4.3% $ 1,874,229 $407 $0.45 Kansas 64.5% 64.0% $ 1,865,128 $539 $0.53 5.0% $ 1,776,655 $513 $0.50 Chicago 53.5% 50.4% $ 352,369 $599 $0.66 13.9% $ 309,241 $526 $0.58 ----- ----- ------------ ---- ----- ----- ----------- ---- ----- Total 58.5% 61.3% $ 14,713,496 $463 $0.51 -2.2% $15,046,754 $473 $0.52 ===== ===== ============ ==== ===== ===== =========== ==== ===== Operating Margin 58.5% 61.3% ============ =========== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------ ------------- Dallas $ 327,762 $ 361 $0.41 -22.4% $ 422,388 $ 465 $0.53 Atlanta $ 390,668 $ 564 $0.60 31.8% $ 296,313 $ 428 $0.45 Austin $ 166,485 $ 511 $0.61 45.4% $ 114,499 $ 351 $0.42 Indianapolis $ 83,284 $ 217 $0.24 -17.2% $ 100,530 $ 262 $0.29 Kansas $ 53,330 $ 185 $0.18 -21.7% $ 68,102 $ 236 $0.23 Chicago $ 37,857 $ 773 $0.85 -64.2% $ 105,747 $2,158 $2.38 ------------ ------ ----- ------ ---------- ------ ----- Total $ 1,059,386 $ 400 $0.44 -4.4% $1,107,578 $ 418 $0.46 ============ ====== ===== ====== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED
7/1/01-9/30/01 7/1/00-9/30/00 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 398,094 $ 438 $0.50 -10.0% $ 442,116 $ 487 $0.56 Atlanta $ 540,121 $ 780 $0.83 25.8% $ 429,462 $ 620 $0.66 Austin $ 305,629 $ 938 $1.12 153.0% $ 120,814 $ 371 $0.44 Indianapolis $ 233,204 $ 607 $0.68 7.8% $ 216,427 $ 564 $0.63 Kansas $ 125,171 $ 434 $0.43 35.2% $ 92,589 $ 321 $0.32 Chicago $ 36,364 $ 742 $0.82 -11.3% $ 41,005 $ 837 $0.92 ------------ ------ ----- ------ ---------- ------ ----- Total $ 1,638,582 $ 619 $0.68 22.1% $1,342,412 $ 507 $0.56 ============ ====== ===== ====== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 1,179,881 $1,299 $1.49 2.9% $1,146,532 $1,262 $1.45 Atlanta $ 500,161 $ 722 $0.76 8.9% $ 459,220 $ 663 $0.70 Austin $ 543,566 $1,667 $1.99 5.8% $ 513,763 $1,576 $1.88 Indianapolis $ 292,929 $ 763 $0.85 -4.4% $ 306,540 $ 798 $0.89 Kansas $ 264,692 $ 917 $0.90 0.0% $ 264,629 $ 917 $0.90 Chicago $ 148,375 $3,028 $3.34 9.0% $ 136,076 $2,777 $3.06 ------------ ------ ----- ----- ---------- ------ ----- Total $ 2,929,604 $1,106 $1.22 3.6% $2,826,760 $1,067 $1.18 ============ ====== ===== ===== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) THREE MONTHS ENDED SEPTEMBER 30, 2001 VERSUS THREE MONTHS ENDED SEPTEMBER 30, 2000 (Includes new properties at 7/1/00 - StoneHollow, Towne Creek, Midtown, Peachtree City, Oakhurst, Frankford & Springmill)
7/1/2001-9/30/2001 7/1/2000-9/30/2000 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ------------- Dallas 6,576 93.7% -0.4% 94.1% Atlanta 5,121 93.0% 1.9% 91.3% Austin 1,880 91.8% -4.3% 95.9% Houston 1,173 95.1% 1.5% 93.7% Indianapolis 1,536 92.1% 2.2% 90.1% Kansas 1,522 92.3% 3.4% 89.2% Chicago 2,360 93.5% -1.5% 94.9% ------ ----- ----- ----- Weighted Average 93.2% 0.2% 92.9% ===== ===== ===== Total 20,168 ====== WEIGHTED AVG. RENTAL RATE - ------------- Dallas $ 780 4.0% $ 750 Atlanta $ 885 5.8% $ 836 Austin $ 852 -0.9% $ 859 Houston $ 851 4.9% $ 811 Indianapolis $ 706 2.5% $ 688 Kansas $ 814 -0.4% $ 818 Chicago $1,078 5.9% $1,019 ------ ---- ------ Weighted Average $ 849 3.9% $ 818 ====== ==== ====== TOTAL PROPERTY REVENUES Per Month Per Month - --------------- ---------- ---------- Dallas $15,364,013 $ 779 $ 0.89 3.6% $14,835,503 $ 752 $ 0.86 Atlanta $13,529,371 $ 881 $ 0.89 1.6% $13,312,275 $ 867 $ 0.87 Austin $ 4,703,527 $ 834 $ 0.95 -6.0% $ 5,005,650 $ 888 $ 1.01 Houston $ 3,038,689 $ 864 $ 0.95 7.6% $ 2,822,947 $ 802 $ 0.88 Indianapolis $ 3,234,203 $ 702 $ 0.78 4.2% $ 3,104,619 $ 674 $ 0.75 Kansas $ 3,711,683 $ 813 $ 0.81 4.1% $ 3,564,638 $ 781 $ 0.78 Chicago $ 7,708,794 $1,089 $ 1.21 3.2% $ 7,468,917 $1,055 $ 1.17 ----------- ------ ------ ----- ----------- ------ ------ Total $51,290,279 $ 848 $ 0.92 2.3% $50,114,549 $ 828 $ 0.90 =========== ====== ====== ===== =========== ====== ====== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONTINUED 7/1/2001-9/30/2001 7/1/2000-9/30/2000 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $ 6,656,938 $4,049 $4.63 5.5% $ 6,309,195 $3,838 $4.38 Atlanta $ 4,780,580 $3,734 $3.76 10.8% $ 4,313,335 $3,369 $3.39 Austin $ 2,510,164 $5,341 $6.09 31.5% $ 1,908,765 $4,061 $4.63 Houston $ 1,403,204 $4,785 $5.26 12.4% $ 1,248,268 $4,257 $4.68 Indianapolis $ 1,280,132 $3,334 $3.71 4.0% $ 1,230,389 $3,204 $3.56 Kansas $ 1,342,998 $3,530 $3.53 1.2% $ 1,326,562 $3,486 $3.49 Chicago $ 2,833,393 $4,802 $5.31 2.1% $ 2,776,428 $4,706 $5.21 ------------ ------ ----- ----- ----------- ------ ----- Total $ 20,807,410 $4,127 $4.48 8.9% $19,112,942 $3,791 $4.11 ============ ====== ===== ===== =========== ====== ===== Operating Efficiency 40.6% 38.1% ============ ==========
PER MONTH PER MONTH --------- ---------- NOI 2001% 2000% - --- ----- ----- Dallas 56.7% 57.5% $ 8,707,074 $441 $0.50 2.1% $ 8,526,308 $432 $0.49 Atlanta 64.7% 67.6% $ 8,748,791 $569 $0.57 -2.8% $ 8,998,941 $586 $0.59 Austin 46.6% 61.9% $ 2,193,362 $389 $0.44 -29.2% $ 3,096,885 $549 $0.63 Houston 53.8% 55.8% $ 1,635,484 $465 $0.51 3.9% $ 1,574,679 $447 $0.49 Indianapolis60.4% 60.4% $ 1,954,071 $424 $0.47 4.3% $ 1,874,229 $407 $0.45 Kansas 63.8% 62.8% $ 2,368,684 $519 $0.52 5.8% $ 2,238,075 $490 $0.49 Chicago 63.2% 62.8% $ 4,875,401 $689 $0.76 3.9% $ 4,692,489 $663 $0.73 ----- ----- ------------ ---- ----- ----- ----------- ---- ----- Total 59.4% 61.9% $ 30,482,869 $504 $0.55 -1.7% $31,001,607 $512 $0.56 ===== ===== ============ ==== ===== ===== =========== ==== ===== Operating Margin 59.4% 61.9% ============ ===========
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONTINUED
7/1/2001-9/30/2001 7/1/2000-9/30/2000 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------ ------------ Dallas $ 543,601 $ 331 $0.38 -14.3% $ 634,570 $ 386 $0.44 Atlanta $ 522,814 $ 408 $0.41 27.1% $ 411,448 $ 321 $0.32 Austin $ 167,746 $ 357 $0.41 46.5% $ 114,499 $ 244 $0.28 Houston $ 50,607 $ 173 $0.19 -6.1% $ 53,871 $ 184 $0.20 Indianapolis $ 83,284 $ 217 $0.24 -17.2% $ 100,530 $ 262 $0.29 Kansas $ 78,270 $ 206 $0.21 -62.4% $ 208,027 $ 547 $0.55 Chicago $ 225,088 $ 382 $0.42 -17.6% $ 273,213 $ 463 $0.51 ------------ ------ ----- ------ ---------- ------ ----- Total $ 1,671,410 $ 331 $0.36 -6.9% $1,796,157 $ 356 $0.39 ============ ====== ===== ====== ========== ====== ===== REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 714,474 $ 435 $0.50 -2.3% $ 730,924 $ 445 $0.51 Atlanta $ 844,694 $ 660 $0.66 26.8% $ 666,152 $ 520 $0.52 Austin $ 429,535 $ 914 $1.04 162.8% $ 163,458 $ 348 $0.40 Houston $ 188,607 $ 643 $0.71 75.7% $ 107,331 $ 366 $0.40 Indianapolis $ 233,204 $ 607 $0.68 7.8% $ 216,427 $ 564 $0.63 Kansas $ 159,274 $ 419 $0.42 28.2% $ 124,273 $ 327 $0.33 Chicago $ 423,320 $ 717 $0.79 8.8% $ 389,036 $ 659 $0.73 ------------ ------ ----- ------ ---------- ------ ----- Total $ 2,993,109 $ 594 $0.64 24.8% $2,397,602 $ 476 $0.52 ============ ====== ===== ====== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 2,275,073 $1,384 $1.58 0.3% $2,267,261 $1,379 $1.58 Atlanta $ 1,065,732 $ 832 $0.84 28.7% $ 828,355 $ 647 $0.65 Austin $ 832,720 $1,772 $2.02 7.3% $ 776,263 $1,652 $1.88 Houston $ 504,565 $1,721 $1.89 1.1% $ 498,904 $1,701 $1.87 Indianapolis $ 292,929 $ 763 $0.85 -4.4% $ 306,540 $ 798 $0.89 Kansas $ 357,903 $ 941 $0.94 2.6% $ 348,749 $ 917 $0.92 Chicago $ 1,040,178 $1,763 $1.95 2.2% $1,017,363 $1,724 $1.91 ------------ ------ ----- ------ ---------- ------ ----- Total $ 6,369,100 $1,263 $1.37 5.4% $6,043,434 $1,199 $1.30 ============ ====== ===== ====== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES TRUST PROPERTY INFORMATION As of September 30, 2001
Qtr ended Sept. 30, 2001 Approx- Average Qtr ended imate Rental Rates Sept. 30, Number Rentable Average -------------- 2001 Year of Area Unit Size Per Per Average PROPERTIES Location Completed Units (Sq Ft) (Sq Ft) Unit Sq Ft Occupancy - ---------- -------- --------- ------ --------- --------- ---- ----- ----------- WHOLLY OWNED PROPERTIES - ------------ DALLAS/FT. WORTH, TX - ---------- Amli: at Bent Tree Dallas, TX 1996/2000 500 481,682 963 $ 857 $0.89 92.3% at Bishop's Gate West Plano, TX 1997 266 292,094 1,098 1,034 0.94 92.5% at Chase Oaks Plano, TX 1986 250 193,736 775 730 0.94 94.5% at Gleneagles Dallas, TX 87/97 590 520,357 882 748 0.85 91.8% on the Green Ft. Worth, TX 90/93 424 358,560 846 730 0.86 92.6% at Nantucket Dallas, TX 1986 312 222,208 712 603 0.85 93.4% of North Dallas Dallas, TX 85/86 1,032 906,808 879 714 0.81 93.2% at Stonebridge Ranch McKinney, TX 2001 250 214,348 857 760 0.89 92.6% at Shadow Ridge Dallas, TX 2001 222 218,309 983 1,147 1.17 80.4% at Valley Ranch Irving, TX 1985 460 389,940 848 767 0.90 92.8% ----- --------- --- ------ ----- ------ Subtotal-Dallas Ft. Worth, TX 4,306 3,798,042 882 $ 780 $0.88 92.2% ----- --------- --- ------ ----- ------ ATLANTA, GA - ----------- Amli: at Clairmont Atlanta, GA 1988 288 229,335 796 837 1.05 92.4% at Killian Creek Snellville, GA 1999 256 262,785 1,027 863 0.84 93.7% at Park Creek Gainesville, GA 1998 200 195,146 976 795 0.82 88.9% at Spring Creek Dunwoody, GA 85/86/87/89 1,180 1,080,568 916 819 0.89 92.0% at Vinings Atlanta, GA 1985 360 374,240 1,040 886 0.85 94.6% at West Paces Atlanta, GA 1992 337 353,700 1,050 957 0.91 95.7% at Towne Creek Gainesville, GA 1989 150 121,722 811 647 0.80 93.8% ------ --------- ----- ------ ----- ------ Subtotal- Atlanta, GA 2,771 2,617,496 945 839 0.89 92.9% ------ --------- ----- ------ ----- ------ Qtr ended Sept. 30, 2001 Approx- Average Qtr ended imate Rental Rates Sept. 30, Number Rentable Average -------------- 2001 Year of Area Unit Size Per Per Average PROPERTIES Location Completed Units (Sq Ft) (Sq Ft) Unit Sq Ft Occupancy - ---------- -------- --------- ------ --------- --------- ---- ----- ----------- AUSTIN, TEXAS - ------------- Amli: in Great Hills Austin, TX 1985 344 257,984 750 784 1.04 93.7% at Lantana Ridge Austin, TX 1997 354 311,857 881 907 1.03 93.6% at StoneHollow Atlanta, GA 1997 606 524,660 866 842 0.97 93.5% ----- --------- --- ---- ----- ----- Subtotal- Austin, TX 1,304 1,094,501 839 844 1.01 93.6% ----- --------- --- ---- ----- ----- KANSAS CITY - ----------- Amli: at Centennial Overland Park, KS 1998 170 204,858 1,205 981 0.81 94.2% at Lexington Farms Overland Park, KS 1998 404 392,693 972 794 0.82 94.3% at Regents Center Overland Park, KS91/95/97 424 398,674 940 767 0.82 94.7% at Town Center Overland Park, KS 1997 156 176,914 1,134 941 0.83 93.6% ----- --------- ----- ----- ----- ----- Subtotal - Kansas 1,154 1,173,139 1,017 831 0.82 94.4% ----- --------- ----- ----- ----- ----- INDIANAPOLIS, IN - ---------------- Amli: at Conner Farms Indianapolis, IN 1993 300 327,396 1,091 838 0.77 92.9% at Eagle Creek Indianapolis, IN 1998 240 233,432 973 813 0.84 93.7% at Riverbend Indianapolis, IN 83/85 996 820,712 824 641 0.78 92.0% ----- --------- ----- ---- ----- ----- Subtotal -Indianapolis, IN 1,536 1,381,540 899 706 0.78 92.4% ----- --------- ----- ---- ----- ----- Qtr ended Sept. 30, 2001 Approx- Average Qtr ended imate Rental Rates Sept. 30, Number Rentable Average -------------- 2001 Year of Area Unit Size Per Per Average PROPERTIES Location Completed Units (Sq Ft) (Sq Ft) Unit Sq Ft Occupancy - ---------- -------- --------- ------ --------- --------- ---- ----- ----------- CHICAGO, IL - ------------ Amli: at Poplar Creek Schaumburg, IL 1985 196 177,630 906 1,104 1.22 95.5% ------ ---------- ----- ----- ----- ----- Subtotal -Chicago, IL 196 177,630 906 1,104 1.22 95.5% ------ ---------- ----- ----- ----- ----- HOUSTON, TX - ----------- AMLI: at the Medical Center Houston, TX 2001 334 321,388 962 875 0.91 96.3% at Western Ridge Houston, TX 2000 318 289,612 911 844 0.93 96.0% ------ ---------- ----- ----- ----- ----- Subtotal -Houston, TX 652 611,000 937 860 0.92 96.2% ------ ---------- ----- ----- ----- ----- DENVER, CO - ---------- AMLI: at Gateway Denver, CO 2000 328 294,926 899 923 1.03 93.3% ------ ---------- ----- ----- ----- ----- Subtotal -Denver, CO 328 294,926 899 923 1.03 93.3% ------ ---------- ----- ----- ----- ----- TOTAL WHOLLY OWNED PROPERTIES 12,247 11,148,274 910 $ 809 $0.89 93.0% ====== ========== ===== ===== ===== ===== Qtr ended Sept. 30, 2001 Approx- Average Qtr ended imate Rental Rates Sept. 30, Number Rentable Average -------------- 2001 Year of Area Unit Size Per Per Average PROPERTIES Location Completed Units (Sq Ft) (Sq Ft) Unit Sq Ft Occupancy - ---------- -------- --------- ------ --------- --------- ---- ----- ----------- CO-INVESTMENT PROPERTIES - -------------- ATLANTA, GA Amli: at Barrett Lakes Cobb County, GA 1997 446 462,368 1,037 901 0.87 94.8% at River Park Norcross, GA 1997 222 226,632 1,021 993 0.97 90.6% at Willeo Creek Rosewell, GA 1989 242 297,302 1,229 928 0.76 90.1% at Northwinds Alpharetta, GA 1999 800 818,432 1,023 947 0.93 94.7% at Park Bridge Alpharetta, GA 2000 352 356,123 1,012 930 0.92 93.4% at Windward Park Alpharetta, GA 1999 328 354,900 1,082 914 0.84 92.0% Lost Mountain Dunwoody, GA 2000 164 157,142 958 798 0.83 94.2% at Peachtree City Dunwoody, GA 1998 312 305,756 980 962 0.98 94.4% ----- --------- ----- ---- ----- ------ Subtotal- Atlanta, GA 2,866 2,978,655 1,039 929 0.89 93.5% ----- --------- ----- ---- ----- ------ CHICAGO, IL - ----------- Amli: at Chevy Chase Buffalo Grove, IL 1988 592 480,820 812 1,121 1.38 94.4% at Danada Wheaton, IL 89/91 600 521,499 869 1,065 1.23 94.1% at Fox Valley Aurora, IL 1998 272 269,237 990 1,017 1.03 95.1% at Windbrooke Buffalo Grove, IL 1987 236 213,160 903 1,161 1.29 98.1% at St. Charles St. Charles, IL 2000 400 395,896 990 1,118 1.13 89.6% at Oakhurst North Aurora, IL 2000 464 470,094 1,013 1,025 1.01 90.0% at Osprey Lakes Waukegan, IL 1997/1999 483 453,150 938 999 1.06 93.1% ----- ---------- ----- ----- ----- ----- Subtotal- Chicago, IL 3,047 2,803,856 920 1,069 1.16 93.2% ----- ---------- ----- ----- ----- ----- Qtr ended Sept. 30, 2001 Approx- Average Qtr ended imate Rental Rates Sept. 30, Number Rentable Average -------------- 2001 Year of Area Unit Size Per Per Average PROPERTIES Location Completed Units (Sq Ft) (Sq Ft) Unit Sq Ft Occupancy - ---------- -------- --------- ------ --------- --------- ---- ----- ----------- KANSAS CITY - ----------- AMLI: at Regents Crest Overland Park, KS 97/00 476 451,328 948 761 0.80 90.8% Creekside Overland Park, KS 2000 224 182,192 813 795 0.98 93.0% at Wynnewood Overland Park, KS 2000 232 236,058 1,017 903 0.89 90.8% ----- --------- ----- ---- ----- ----- Subtotal - Eastern Kansas 932 869,578 933 805 0.86 91.3% ----- --------- ----- ---- ----- ----- DALLAS/FT. WORTH - ---------------- AMLI: at Deerfield Ft. Worth, TX 1999 240 238,972 996 888 0.89 93.1% at Fossil Creek Ft. Worth, TX 1998 384 384,358 1,001 864 0.86 96.2% at Oakbend Lewisville, TX 1997 426 382,690 898 785 0.87 95.6% on the Parkway Dallas, TX 1999 240 225,248 939 865 0.92 91.2% at Prestonwood Hills Dallas, TX 1997 272 245,696 903 870 0.96 95.6% on Timberglen Dallas, TX 1985 260 201,198 774 651 0.84 96.0% at Verandah Arlington, TX 86/91 538 394,304 733 704 0.96 92.6% on Frankford Dallas, TX 1998 582 517,344 889 888 1.00 94.1% at Breckinridge Point Richardson, TX 1999 440 467,934 1,063 941 0.88 91.1% ----- ---------- ----- ---- ----- ----- Subtotal - Dallas/ Ft. Worth, TX 3,382 3,057,744 904 829 0.92 93.9% ----- ---------- ----- ---- ----- ----- AUSTIN, TX - ---------- AMLI: at Scofield Ridge Austin, TX 2000 487 433,077 889 892 1.00 88.1% at Monterey Oaks Austin, TX 2000 430 412,759 960 954 0.99 93.3% at Wells Branch Austin, TX 1999 576 554,582 963 867 0.90 89.3% ----- ---------- --- ---- ----- ----- Subtotal - Austin, TX 1,493 1,400,418 938 901 0.96 90.0% ----- ---------- --- ---- ----- ----- Qtr ended Sept. 30, 2001 Approx- Average Qtr ended imate Rental Rates Sept. 30, Number Rentable Average -------------- 2001 Year of Area Unit Size Per Per Average PROPERTIES Location Completed Units (Sq Ft) (Sq Ft) Unit Sq Ft Occupancy - --------- -------- --------- ------ --------- --------- ---- ----- ----------- HOUSTON, TX - ----------- Amli: at Champions Centre Houston, TX 1994 192 164,480 857 719 0.84 95.0% at Champions Park Houston, TX 1991 246 221,986 902 699 0.77 94.0% at Greenwood ForestHouston, TX 1995 316 310,844 984 755 0.77 94.8% at Towne Square Houston, TX 1999 380 314,292 827 992 1.20 96.6% Midtown Houston, TX 1998 419 368,818 880 1,073 1.22 98.1% ------ ---------- --- ----- ----- ----- Subtotal- Houston, TX 1,553 1,380,420 889 886 1.00 96.1% ------ ---------- ---- ----- ----- ----- INDIANAPOLIS, IN - ---------------- AMLI: at Lake Clearwater Indianapolis, IN 2000 216 218,006 1,009 903 0.89 92.8% at Castle Creek Indianapolis, IN 2000 276 269,904 978 870 0.89 92.0% on Spring Mill Carmel, IN 1999 400 406,640 1,017 835 0.82 81.7% ------ --------- ----- ----- ----- ------ Subtotal- Indianapolis, IN 892 894,550 1,003 862 0.86 87.6% ------ --------- ----- ----- ----- ------ DENVER, CO - ---------- AMLI: at Lowry Estates Denver, CO 2000 414 392,208 947 1,109 1.17 89.9% ------ --------- ----- ----- ----- ----- Subtotal- Denver, CO 414 392,208 947 1,109 1.17 89.9% ------ --------- ----- ----- ----- ------ TOTAL CO-INVESTMENT PROPERTIES 14,579 13,777,429 945 $ 921 $0.97 92.8% ====== ========== ===== ===== ===== ===== TOTAL WHOLLY OWNED AND CO-INVESTMENT PROPERTIES 26,826 24,925,703 929 $ 870 $0.94 92.9% ====== ========== ===== ===== ===== =====
AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA
WHOLLY-OWNED CO-INVESTMENTS AT 100% COMBINED AT 100% ---------------------------- -------------------------- -------------------------- THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED SEPT. 30, SEPT. 30, SEPT. 30, ---------------------------- -------------------------- -------------------------- % % % 2001 2000 Change 2001 2000 Change 2001 2000 Change ------- ------- ------ ------- ------- ------ ------- ------- ------- PROPERTY REVENUES - ----------------- RENTAL INCOME - ------------- Same Store Communities (1) . . .$23,557 22,998 2.4% 24,484 23,903 2.4% 48,041 46,901 2.4% New Communities (2). . 475 393 20.8% 6,134 4,011 52.9% 6,609 4,404 50.1% Development and/ or Lease-up Communities (3) . . . 0 0 1,528 185 1,528 185 Acquisition Communities (4) . . . 2,883 0 5,957 867 8,840 867 Communities Sold/ Contributed to Ventures (5). . . . . 349 3,440 1,266 3,494 1,615 6,934 ------- ------- ------- ------- ------- ------- ------- ------- ------- Total . . . . . . .$27,263 26,831 1.6% 39,369 32,460 21.3% 66,632 59,291 12.4% ======= ======= ======= ======= ======= ======= ======= ======= ======= OTHER REVENUES - -------------- Same Store Communities . . . . .$ 1,598 1,565 2.1% 1,652 1,648 0.2% 3,249 3,214 1.1% New Communities. . . . 23 33 -30.4% 465 381 22.2% 488 414 18.0% Development and/ or Lease-up Communities . . . . . 0 0 166 31 166 31 Acquisition Communities . . . . . 198 0 403 31 601 31 1852.7% Communities Sold/ Contributed to Ventures. . . . . . . 38 225 128 250 165 476 ------- ------- ------- ------- ------- ------- ------- ------- ------- Total . . . . . . .$ 1,857 1,823 1.8% 2,814 2,341 20.2% 4,670 4,165 12.1% ======= ======= ======= ======= ======= ======= ======= ======= ======= AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA - CONTINUED WHOLLY-OWNED CO-INVESTMENTS AT 100% COMBINED AT 100% ---------------------------- -------------------------- -------------------------- THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED SEPT. 30, SEPT. 30, SEPT. 30, ---------------------------- -------------------------- -------------------------- % % % 2001 2000 Change 2001 2000 Change 2001 2000 Change ------- ------- ------ ------- ------- ------ ------- ------- ------- TOTAL PROPERTY REVENUES - --------------- Same Store Communities . . . . .$25,154 24,564 2.4% 26,136 25,551 2.3% 51,290 50,115 2.3% New Communities. . . . 497 426 16.8% 6,599 4,392 50.3% 7,097 4,818 47.3% Development and/ or Lease-up Communities . . . . . 0 0 1,694 216 1,694 216 Acquisition Communities . . . . . 3,082 0 6,359 898 9,441 898 Communities Sold/Contri- buted to Ventures . . 386 3,665 1,393 3,745 1,780 7,410 ------- ------- ------- ------- ------- ------- ------- ------- ------- Total . . . . . . .$29,120 28,655 1.6% 42,183 34,801 21.2% 71,302 63,456 12.4% ======= ======= ======= ======= ======= ======= ======= ======= ======= Company's share of Co-investment total revenues . . . . . . . 13,386 10,221 31.0% ======= ======= ======= TOTAL OPERATING EXPENSES - --------------- Same Store Communities . . . . .$ 10,441 9,517 9.7% 10,800 9,596 12.5% 21,241 19,113 11.1% New Communities. . . . 212 207 2.2% 1,834 2,053 -10.7% 2,046 2,261 -9.5% Development and/ or Lease-up Communities . . . . . 0 0 1,515 192 1,515 192 Acquisition Communities . . . . . 1,273 0 2,580 260 3,853 260 Communities Sold/Contri- buted to Ventures . . 221 1,545 187 1,286 408 2,832 ------- ------- ------- ------- ------- ------- ------- ------- ------- Total . . . . . . .$12,147 11,269 7.8% 16,918 13,387 26.4% 29,064 24,656 17.9% ======= ======= ======= ======= ======= ======= ======= ======= ======= Company's share of Co-investment total operating expenses . . 5,022 3,865 29.9% ======= ======= ======= AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA - CONTINUED WHOLLY-OWNED CO-INVESTMENTS AT 100% COMBINED AT 100% ---------------------------- -------------------------- -------------------------- THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED SEPT. 30, SEPT. 30, SEPT. 30, ---------------------------- -------------------------- -------------------------- % % % 2001 2000 Change 2001 2000 Change 2001 2000 Change ------- ------- ------ ------- ------- ------ ------- ------- ------- PROPERTY EBITDA - --------------- Same Store Communities . . . . .$14,713 15,047 -2.2% 16,239 15,955 1.8% 30,952 31,002 -0.2% New Communities. . . . 286 218 30.8% 3,070 2,339 31.3% 3,355 2,557 31.2% Development and/ or Lease-up Communities . . . . . 0 0 1,875 24 1,875 24 Acquisition Communities . . . . . 1,809 0 3,779 638 5,588 638 Communities Sold/ Contributed to Ventures. . . . . . . 162 2,120 303 2,458 465 4,579 ------- ------- ------- ------- ------- ------- ------- ------- ------- Total . . . . . . .$16,970 17,385 -2.4% 25,265 21,414 18.0% 42,235 38,800 8.9% ======= ======= ======= ======= ======= ======= ======= ======= ======= Company's share of Co-investment EBITDA (incl. share of cash flow in excess of ownership %) . . . . . 8,833 6,925 27.6% 8,833 6,925 27.6% ======= ======= ======= ======= ======= ======= Percent of Co-investment EBITDA . . . . . . . . 35% 32% 21% 18% ======= ======= ======= ======= (1) Stabilized Communities at 7/1/00. (2) Development Communities stabilized after 7/1/00 but before 7/1/01. (3) Development Communities not yet stabilized. (4) Stabilized Communities acquired after 7/1/00. (5) Communities sold or contributed to co-investment ventures.
AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES Third Quarter 2001
Construc- Percent Percent tion First Comple- Stabili- Construc- Leased Community Number Costs Percent Start Units tion zation tion as of Name of Units (millions) Ownership Date Occupied Date Date Complete 10/29/01 - ---------- -------- ---------- --------- --------- -------- ------- -------- --------- -------- Under Construc- tion and/or In Initial Lease Up - ---------------- ATLANTA, GEORGIA - ---------------- AMLI at Mill Creek 400 $ 27.1 25% 3Q/99 3Q/00 4Q/01 2Q/02 98% 83% at Milton Park 461 $ 35.0 25% 4Q/00 1Q/02 1Q/03 3Q/03 17% N/A at Kedron Village (Peachtree City Phase II) 216 $ 20.2 20% 3Q/00 3Q/01 1Q/02 3Q/02 59% 7% HOUSTON, TEXAS - -------------- AMLI at King's Harbour 300 $ 19.8 25% 2Q/00 1Q/01 4Q/01 2Q/02 99% 48% OVERLAND PARK, KANSAS - -------------- AMLI at Cambridge Square 408 $ 32.2 30% 3Q/00 3Q/01 2Q/02 1Q/03 61% 12% LEE'S SUMMIT, MISSOURI - ------------- AMLI at Summit Ridge 432 $ 29.3 25% 2Q/99 2Q/00 4Q/00 4Q/01 100% 92% AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES (continued) Construc- Percent Percent tion First Comple- Stabili- Construc- Leased Community Number Costs Percent Start Units tion zation tion as of Name of Units (millions) Ownership Date Occupied Date Date Complete 10/29/01 - ---------- -------- ---------- --------- --------- -------- ------- -------- --------- -------- INDIANAPOLIS, INDIANA - ------------- AMLI at Carmel City Center 322 $ 28.4 100% 2Q/01 2Q/02 2Q/03 3Q/03 9% N/A WOODRIDGE, ILLINOIS - ---------- AMLI at Seven Bridges 520 $ 82.2 20% 3Q/01 4Q/02 4Q/03 4Q/04 2% N/A ----- ------ TOTAL 3,059 $274.2 ===== ======
AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES (continued) PLANNING STAGES Number Community Name of Units - -------------- ---------- INDIANAPOLIS, IN - ---------------- AMLI at Prairie Lakes 228 at Prairie Lakes (phases II-IV) 1,100 AUSTIN, TX - ---------- AMLI at Anderson Mill 520 Downtown Austin - Block 20 220 Parmer Park 480 DALLAS/FT WORTH, TX - ------------------- AMLI at Mesa Ridge (Fossil Creek II) 520 Fossil Lake 324 Fossil Creek IV-A 240 at Vista Ridge 340 HOUSTON, TX - ----------- AMLI at Champions II 288 OVERLAND PARK, KS - ----------------- AMLI at Westwood Ridge 428 at Lexington Farms Phase II 104 The following is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. The projections contained in the table above that are not historical facts are forward-looking statements. Risks associated with the Company's development, construction and lease-up activities, which could impact the forward-looking statements may include: development opportunities may be abandoned; construction costs of a community may exceed original estimates, possibly making the community uneconomical; construction and lease-up may not be completed on schedule, resulting in increased debt service and construction costs; estimates of the costs of improvements to bring an acquired property up to the standards established for the market position intended for that property may prove inaccurate. -----END PRIVACY-ENHANCED MESSAGE-----