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Filed Pursuant to Rule 424(b)(5)
Registration Nos. 333-33545
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 15, 1997)
LOGO
SIMON DEBARTOLO GROUP, L.P.
$150,000,000 6 7/8% NOTES DUE OCTOBER 27, 2005
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Simon DeBartolo Group, L.P., a Delaware limited partnership (the "Operating
Partnership"), will issue the 6 7/8% Notes due October 27, 2005 (the "Notes")
offered hereby (the "Offering"), in an aggregate principal amount of $150
million. The Notes will mature on October 27, 2005. The Notes are redeemable at
any time at the option of the Operating Partnership, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of the Notes being
redeemed plus accrued interest to the redemption date and (ii) the Make-Whole
Amount (as defined in "Description of the Notes -- Optional Redemption"), if
any. Interest on the Notes is payable semi-annually in arrears on each October
15 and April 15, commencing on April 15, 1998. The Notes are unsecured
obligations of the Operating Partnership and will rank pari passu with each
other and all unsecured unsubordinated indebtedness of the Operating
Partnership. Simon Property Group, L.P., a Delaware limited partnership and a
subsidiary partnership of the Operating Partnership, will guarantee (the
"Guarantee") the due and punctual payment of the principal of, premium, if any,
interest on, and any other amounts payable with respect to the Notes, when and
as the same shall become due and payable, whether at a maturity date, on
redemption, by declaration of acceleration or otherwise. On June 30, 1997, the
Operating Partnership had unsecured unsubordinated indebtedness aggregating
approximately $875 million. See "Description of the Notes."
The Notes will be represented by a fully-registered global note in
book-entry form, without coupons (the "Global Note"), registered in the name of
the nominee of The Depository Trust Company ("DTC"). Beneficial interests in the
Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by DTC (with respect to beneficial interests of
participants) or by participants or persons that hold interests through
participants (with respect to beneficial interests of beneficial owners). Owners
of beneficial interests in the Global Note will be entitled to physical delivery
of Notes in definitive form equal in principal amount to their respective
beneficial interest only under the limited circumstances described under
"Description of the Notes -- Book Entry System." Settlement for the Notes will
be made in immediately available funds. The Notes will trade in DTC's Same-Day
Funds Settlement System until maturity or until the Notes are issued in
definitive form, and secondary market trading activity in the Notes will
therefore settle in immediately available funds. All payments of principal and
interest in respect of the Notes will be made by the Operating Partnership in
immediately available funds. See "Description of the Notes -- Same Day
Settlement and Payment." The Operating Partnership does not intend to apply for
listing of the Notes on a national securities exchange.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
===========================================================================================================
PROCEEDS TO THE
PRICE TO UNDERWRITING OPERATING
PUBLIC(1) DISCOUNT(2) PARTNERSHIP(3)
- -----------------------------------------------------------------------------------------------------------
Per Note............................ 99% .6375% 98.3625%
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Total(3)............................ $148,500,000 $956,250 $147,543,750
===========================================================================================================
(1) Plus accrued interest, if any, from October 27, 1997.
(2) The Operating Partnership has agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Before deducting expenses payable by the Operating Partnership estimated at
$250,000.
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The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters. The Underwriters reserve
the right to withdraw, cancel or modify such offer and to reject orders in whole
or in part. It is expected that delivery of the Notes will be made in New York,
New York on or about October 27, 1997.
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MERRILL LYNCH & CO.
LEHMAN BROTHERS
J.P. MORGAN & CO.
UBS SECURITIES
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THE DATE OF THIS PROSPECTUS SUPPLEMENT IS OCTOBER 22, 1997.
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[MAP OF REGIONAL MALLS]
[MAP OF COMMUNITY MALLS]
SIMON DEBARTOLO GROUP
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REGIONAL MALLS & COMMUNITY CENTER PORTFOLIOS
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED HEREBY.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING TRANSACTIONS, THE PURCHASE OF NOTES TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
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The following information in this Prospectus Supplement is qualified in its
entirety by, and should be read in conjunction with, the more detailed
information appearing in the accompanying Prospectus or incorporated herein and
therein by reference. Unless indicated otherwise, the information contained in
this Prospectus Supplement is presented as of June 30, 1997. All references to
the "Operating Partnership" or the "Company" (as defined below) in this
Prospectus Supplement and the accompanying Prospectus include the Operating
Partnership or the Company, as the case may be, those entities owned or
controlled by it (including, in the case of the Operating Partnership, SPG, LP,
as defined below) and its predecessors, unless the context indicates otherwise.
THE OPERATING PARTNERSHIP
Simon DeBartolo Group, L.P. (the "Operating Partnership") is a subsidiary
partnership of Simon DeBartolo Group, Inc. (the "Company"). The Company is a
self-administered and self-managed real estate investment trust ("REIT"). Simon
Property Group, L.P. ("SPG, LP") is a subsidiary partnership of the Operating
Partnership and is also a subsidiary partnership of the Company. The Operating
Partnership is engaged primarily in the ownership, development, management,
leasing, acquisition and expansion of income producing properties, primarily
regional malls and community shopping centers. On August 9, 1996, the Company
acquired the national shopping center business of DeBartolo Realty Corporation
("DRC"), The Edward J. DeBartolo Corporation ("EJDC") and their affiliates as
the result of the merger (the "Merger") of DRC with a subsidiary of the Company.
As a result of the Merger, the Portfolio Properties (as defined below) were
expanded by 61 properties and the management resources of the merged entities
were combined to create one of the most experienced management teams in the
shopping center business. Management believes that the Portfolio Properties, as
measured in gross leasable area ("GLA"), constitute the largest and most
geographically diverse portfolio of any publicly traded REIT in North America
and that the Company's market capitalization is the largest of any publicly
traded real estate company in North America.
In addition, SPG, LP holds substantially all of the economic interest in
M.S. Management Associates, Inc. (the "SPG Management Company"), which manages
certain regional malls and community shopping centers not wholly owned by the
Operating Partnership and certain other properties and also engages in certain
property development activities. The Operating Partnership holds substantially
all of the economic interest in, and the SPG Management Company holds
substantially all of the voting stock of, DeBartolo Properties Management, Inc.
(the "DRC Management Company"), which provides architectural, design,
construction and other services to substantially all of the Portfolio Properties
owned by the Operating Partnership, as well as certain other regional malls and
community shopping centers owned by third parties.
The Operating Partnership owns or holds interests in a diversified
portfolio of 186 income producing properties (the "Portfolio Properties"),
including 114 super-regional and regional malls, 65 community shopping centers,
three specialty retail centers and four mixed-use properties located in 33
states. The Portfolio Properties contain an aggregate of approximately 114
million square feet of GLA, of which approximately 68 million square feet is GLA
owned by the Operating Partnership ("Owned GLA"). Approximately 3,100 different
retailers occupy approximately 12,000 stores in the Portfolio Properties. Total
estimated retail sales at the Portfolio Properties exceeded $16 billion in 1996.
In addition, the Operating Partnership has interests in six properties under
construction in the United States aggregating an additional 4.4 million square
feet of GLA, and owns land held for future development. The Operating
Partnership, together with the SPG Management Company and its affiliated
management companies, manage approximately 130 million square feet of GLA of
retail and mixed-use properties.
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THE OFFERING
All capitalized terms used herein and not defined herein have meanings
provided in "Description of the Notes." For a more complete description of the
terms of the Notes specified in the following summary, see "Description of the
Notes."
Securities Offered......... $150 million aggregate principal amount 6 7/8%
Notes due October 27, 2005.
Maturity................... The Notes will mature on October 27, 2005.
Interest Payment Dates..... Semi-annually on each October 15 and April 15,
commencing April 15, 1998.
Ranking.................... The Notes will rank pari passu with each other and
with all other unsecured and unsubordinated
indebtedness of the Operating Partnership except
that the Notes will be effectively subordinated to
(i) the prior claims of each secured mortgage
lender to any specific Portfolio Property which
secures such lender's mortgage and (ii) any claims
of creditors of entities wholly or partly owned,
directly or indirectly, by the Operating
Partnership. As of June 30, 1997 the Operating
Partnership's unsecured unsubordinated indebtedness
aggregated approximately $875 million and total
consolidated mortgage indebtedness on the Portfolio
Properties aggregated approximately $3,054 million.
Guarantee.................. SPG, LP will guarantee the due and punctual payment
of the principal of, premium, if any, interest on,
and any other amounts payable with respect to the
Notes, when and as the same shall become due and
payable, whether at a maturity date, on redemption,
by declaration of acceleration or otherwise.
Use of Proceeds............ The net proceeds to the Operating Partnership from
the Offering (approximately $147 million) will be
used to repay secured debt totalling approximately
$115 million, and to reduce the amount outstanding
under the Operating Partnership's Credit Facility
(as defined herein) by approximately $32 million.
Limitations on Incurrence
of Debt.................... The Notes contain various covenants, including the
following:
(1) The Operating Partnership will not incur any
Debt if, after giving effect thereto, the
aggregate principal amount of all outstanding
Debt is greater than 60% of the sum of (i) the
Operating Partnership's Adjusted Total Assets
as of the end of the most recent fiscal quarter
and (ii) any increase in Adjusted Total Assets
from the end of such quarter, including any pro
forma increase resulting from the application
of proceeds of such additional Debt.
(2) The Operating Partnership will not incur any
Secured Debt if, after giving effect thereto,
the aggregate principal amount of all
outstanding Secured Debt is greater than 55% of
the sum of (i) the Operating Partnership's
Adjusted Total Assets as of the end of the
fiscal quarter prior to the incurrence of such
additional Secured Debt and (ii) any increase
in Adjusted Total Assets from the end of such
quarter, including any pro forma increase
resulting from the application of proceeds of
such additional Secured Debt.
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(3) The Operating Partnership will not incur any
Debt if the ratio of EBITDA After Minority
Interest to Interest Expense for the four
consecutive fiscal quarters most recently ended
prior to the incurrence of such Debt, on a pro
forma basis, is less than 1.75 to 1.
(4) The Operating Partnership is required to
maintain Unencumbered Assets of not less than
150% of the aggregate outstanding principal
amount of Unsecured Debt.
For definitions of the capitalized terms used in
the foregoing covenants, see "Descriptions of the
Notes -- Certain Covenants."
Optional Redemption........ The Notes are redeemable at any time at the option
of the Operating Partnership, in whole or in part,
at a redemption price equal to the sum of (i) the
principal amount of the Notes being redeemed plus
accrued interest to the redemption date and (ii)
the Make-Whole Amount, if any. See "Description of
the Notes -- Optional Redemption."
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RECENT DEVELOPMENTS
ACQUISITIONS, DEVELOPMENT AND EXPANSION
On August 29, 1997, the Operating Partnership opened the $89 million phase
II expansion of The Forum Shops at Caesar's ("Forum") comprising an additional
235,000 square feet of GLA. This expansion nearly doubled the size of the
existing center in Las Vegas, Nevada. The Operating Partnership has a 60%
ownership interest in the original phase of Forum and a 55% ownership interest
in this new expansion, and accounts for both phases on the consolidated method
of accounting.
On September 5, 1997, the Operating Partnership opened The Source, an
approximately $150 million value-oriented retail and entertainment development
project containing 730,000 square feet of GLA in Westbury (Long Island), New
York. This 50%-owned joint venture is accounted for using the equity method of
accounting.
On September 29, 1997, the Operating Partnership completed its cash tender
offer for shares of beneficial interests ("Shares") of The Retail Property
Trust, a Massachusetts business trust ("RPT"), at $19 3/8 per share. The
Operating Partnership acquired approximately 35,817,000 Shares in the tender
offer, which together with Shares previously owned by the Operating Partnership,
represents approximately 99.2% of the outstanding Shares. The Operating
Partnership is in negotiations to acquire the remaining Shares. RPT owns 98.8%
of Shopping Center Associates, a New York general partnership ("SCA"). SCA owns
or has interests in twelve regional malls and one community center, comprising
approximately twelve million square feet of GLA in eight states. The Operating
Partnership expects to purchase the interests in two SCA properties owned by a
third party and sell its interests in two other SCA properties to such third
party. The Operating Partnership expects to acquire the remaining 1.2% interest
in SCA from its current managing general partner. The total purchase price of
this acquisition is estimated to be approximately $1.2 billion, which includes
approximately $300 million of SCA's debt and approximately $154 million of SCA's
pro rata share of joint venture debt. The Operating Partnership funded this
acquisition with aggregate borrowings of $730 million under its $750 million
unsecured revolving credit facility (the "Credit Facility") and an additional
$500 million unsecured credit facility.
FINANCINGS AND INDEBTEDNESS
On July 9, 1997 the Company sold 3,000,000 shares of 7.89% Series C
Cumulative Step-Up Premium Rate(sm) Preferred Stock (the "Series C Preferred
Shares") in a public offering at $50.00 per share. Beginning October 1, 2012,
the rate increases to 9.89% of the liquidation preference per annum. The Series
C Preferred Shares are not redeemable prior to September 30, 2007. Beginning
September 30, 2007, the Series C Preferred Shares may be redeemed at the option
of the Company in whole or in part, at a redemption price of $50.00 per share,
plus accrued and unpaid distributions, if any, thereon. The redemption price of
the Series C Preferred Shares may only be paid from the sale proceeds of other
capital stock of the Company, which may include other classes or series of
preferred stock. Additionally, the Series C Preferred Shares have no stated
maturity and are not subject to any mandatory redemption provisions, nor are
they convertible into any other securities of the Company. The Company
contributed the net proceeds of this offering of approximately $146 million to
the Operating Partnership in exchange for preferred units, the economic terms of
which are substantially identical to the Series C Preferred Shares. The
Operating Partnership used the proceeds to increase its ownership interest in
West Town Mall, to pay down the Credit Facility and for general working capital
purposes.
On July 17, 1997, the Operating Partnership completed a $250 million public
offering of two tranches of its seven-year and twelve-year non-convertible
senior unsecured debt securities. The first tranche was for $100 million, bears
interest at 6 3/4% and matures on July 15, 2004. The second tranche was for $150
million, bears interest at 7% and matures on July 15, 2009. The notes pay
interest semi-annually, are guaranteed by SPG, LP, and contain covenants
relating to minimum leverage, EBITDA and unencumbered EBITDA ratios. The
Operating Partnership used $225 million of the net proceeds of approximately
$246 million to reduce the amount outstanding on the Credit Facility.
On September 2, 1997, the Operating Partnership completed the refinancing
of $453 million of commercial mortgage pass through certificates and a $48
million mortgage loan, resulting in releases of
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mortgages encumbering 18 of the Portfolio Properties. The Operating Partnership
funded this refinancing with the proceeds of a $225 million secured loan, which
is secured by cross-collateralized mortgages encumbering seven of the Portfolio
Properties and borrowings of $294 million under the Credit Facility which were
reduced with the proceeds from the sale of $180 million of notes as described in
the following paragraph. The Operating Partnership intends to refinance the $225
million secured loan.
On September 10, 1997, the Operating Partnership issued $180 million
principal amount of notes under its Medium-Term Note ("MTN") program. These
notes mature on September 20, 2007 and have an interest rate of 7.125% per
annum. The Operating Partnership used the net proceeds of this offering to pay
down the borrowings made under the Credit Facility in connection with the
refinancing described in the preceding paragraph.
On September 16, 1997, the Company issued 747,000 shares of its Common
Stock in an underwritten public offering. The Company contributed the net
proceeds of approximately $23.6 million to the Operating Partnership in exchange
for an equal number of units of limited partnership interest in the Operating
Partnership ("Units"). The Operating Partnership subsequently combined the net
proceeds with approximately $4 million of working capital to retire an existing
mortgage on O'Hare International Center.
On September 19, 1997, the Company issued 4,500,000 shares of its Common
Stock in an underwritten public offering. The Company contributed the net
proceeds of approximately $146.8 million to the Operating Partnership in
exchange for an equal number of Units. The Operating Partnership used the net
proceeds to pay down the outstanding balance on the Credit Facility.
On September 26, 1997, the Operating Partnership obtained an additional
unsecured revolving credit facility in the amount of $500 million. This new
credit facility has terms substantially similar to the Credit Facility,
including an interest rate of LIBOR plus 0.75% and an initial maturity of
September 1999. The primary reason for obtaining this facility was to fund a
portion of the cost of the acquisition of RPT. This facility may, however, be
used to fund real estate acquisition, development and general working capital
requirements. As of October 21, 1997, $500 million was outstanding under this
facility.
On September 4, 1997, the Operating Partnership transferred ownership of
one Portfolio Property and paid $6.6 million to its lender, fully satisfying the
property's mortgage note payable of $42 million. This property no longer met the
Operating Partnership's criteria for its ongoing strategic plan. The Operating
Partnership will recognize a gain on this transaction of approximately $31
million in the third quarter.
On September 17, 1997, the Operating Partnership retired a $63 million
mortgage loan secured by Lincolnwood Towne Center with a new unsecured loan. The
mortgage loan bore interest at LIBOR plus 1.25% and had an initial maturity of
January 31, 1998. The new unsecured loan bears interest at LIBOR plus 0.75% and
matures on January 31, 1998, subject to two one-year extensions.
On October 17, 1997, West Town Mall obtained a $76 million mortgage note
which bears interest at 6.9% and matures on May 1, 2008. The Operating
Partnership's share of this mortgage note is $38 million. This property was
previously unencumbered.
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As of June 30, 1997, the Operating Partnership's share of total
consolidated and joint venture debt as adjusted to give effect to the Offering
(as defined below), the application of the net proceeds thereof as described in
"Use of Proceeds" and the significant financing transactions that occurred after
June 30, 1997 and are summarized above was approximately $5,449 million.
Scheduled maturities of this debt for periods reflected are as follows:
MORTGAGE
DEBT(1)
UNSECURED -------------- TOTAL
YEAR OF MATURITY DEBT(1) DEBT(1)
- ---------------------------------------------------- ------------- (IN THOUSANDS) ----------
1997(7/1 to 12/31).................................. -- $ 40,682 $ 40,682
1998................................................ $ 70,000 335,288 405,288
1999................................................ 908,000(2) 208,216 1,116,216
2000................................................ 63,000 306,217 369,217
2001................................................ -- 274,435 274,435
2002................................................ -- 421,699 421,699
2003................................................ 100,000 337,860(3) 437,860
2004................................................ 249,456 523,465 772,921
2005................................................ 359,706(4) 179,814 539,520
2006................................................ 250,000 160,878 410,878
2007................................................ 180,000 190,013 370,013
2008................................................ -- 38,000 38,000
Thereafter.......................................... 150,000 98,816 248,816
-------- -------- --------
Total Principal Maturities................ $ 2,330,162 $3,115,383 $5,445,545
======== ======== ========
Net Unamortized Debt Premiums....................... 3,658
--------
Operating Partnership's Share of Total Debt......... $5,449,203
========
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(1) Represents the Operating Partnership's pro rata share of total consolidated
and joint venture debt.
(2) Represents amount outstanding on the Credit Facility, as adjusted to reflect
a $32 million reduction from the proceeds of the Offering.
(3) Includes a total reduction in debt of $119 million from the application of
the net proceeds of the Offering and the use of $4 million in escrow.
(4) Includes the Notes.
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USE OF PROCEEDS
The net proceeds to the Operating Partnership from the sale of the Notes
offered hereby (the "Offering"), after the underwriting discount and total
expenses estimated to be approximately $1 million, are estimated to be
approximately $147 million. The Operating Partnership intends to use the
proceeds of the Offering primarily to repay secured debt totalling $115 million
and to repay approximately $32 million in borrowings under the Credit Facility.
The secured debt to be repaid bears interest at a weighted average annual rate
of 6.57% and matures on December 15, 2003, subject to provisions for adjustment
in the interest rate during the last six months of 1998 or, alternatively, an
acceleration of the maturity date. The repayment of the secured debt and the
application of a $4 million escrow will result in the release of mortgages on
Miller Hill Mall (Duluth, MN), Muncie Mall (Muncie, IN) and Towne West Square
(Wichita, KS). The Credit Facility is an unsecured revolving line of credit
which matures initially in September 1999, has an automatic one-year extension
and bears interest at LIBOR plus 75 basis points. On October 21, 1997, the
interest rate on the Credit Facility was 6.41%.
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CAPITALIZATION
The following table sets forth the capitalization of the Operating
Partnership as of June 30, 1997, on a historical basis and as adjusted to give
effect to the Offering, the application of the net proceeds thereof as described
in "Use of Proceeds" and the significant financing transactions that occurred
after June 30, 1997 as summarized under "Recent Developments."
AS OF JUNE 30, 1997
--------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN MILLIONS)
Debt:
Mortgages and other indebtedness................................... $3,054 $ 2,560
Unsecured Debt:
Credit Facilities............................................... 370 908
6 7/8% Unsecured Notes due November 15, 2006.................... 250 250
6 3/4% Putable Asset Trust Securities due November 15, 2003..... 100 100
7 1/8% Medium-Term Notes due June 24, 2005...................... 100 100
Term Loan due September 25, 1998................................ 55 70
Term Loan due January 31, 1998.................................. -- 63
6 3/4% Notes due July 15, 2004.................................. -- 100
7% Notes due July 15, 2009...................................... -- 150
6 3/4% Notes due January 15, 2004............................... -- 150
7 5/8% Notes due May 15, 2005................................... -- 110
7 1/8% Medium Term Notes due September 20, 2007................. -- 180
6 7/8% Notes due October 27, 2005............................... -- 150
------ ------
Total Debt................................................. 3,929 4,891
------ ------
Partners' Equity:
Series A Preferred Units, 4,000,000 units authorized, issued and
outstanding(1).................................................. 100 100
Series B Preferred Units, 9,200,000 units authorized, 8,000,000
units issued and outstanding(1)................................. 193 193
Series C Preferred Units, 3,000,000 units authorized, issued and
outstanding on an As Adjusted basis(1).......................... -- 146
General Partners, 97,656,615 Units issued and outstanding on a
Historical basis and 103,562,322 Units issued and outstanding on
an As Adjusted basis............................................ 970 1,112
Limited Partners, 60,974,050 Units issued and outstanding.......... 606 655
Unamortized Restricted Stock Award................................. (18) (18)
------ ------
Total Partners' Equity..................................... 1,851 2,188
------ ------
Total Capitalization....................................... $5,780 $ 7,079
====== ======
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(1) The Operating Partnership is required to pay the Company preferred
distributions equal to the dividends paid by the Company on the Series A
Preferred Shares, the Series B Preferred Shares and the Series C Preferred
Shares, respectively.
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SELECTED FINANCIAL AND OPERATING DATA
The following tables set forth certain selected financial and operating
data on a historical basis for the Operating Partnership for the respective
periods presented. The information presented gives effect to the Merger, which
occurred on August 9, 1996, as described previously. The historical financial
information should be read in conjunction with the financial statements and
notes thereto incorporated by reference herein.
SIX MONTHS ENDED JUNE
30,(1) YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER UNIT DATA, PORTFOLIO DATA AND
RATIOS.)
OPERATING DATA:
Total revenue................................... $ 487,469 $ 283,204 $ 747,704 $ 553,657 $ 473,676
Income before extraordinary items............... 91,475 47,800 134,663 101,505 60,308
Net Income available to Unit holders............ $ 53,948 $ 43,473 $ 118,448 $ 96,730 $ 42,328
EARNINGS PER UNIT:
Income before extraordinary items............... $ 0.50 $ 0.45 $ 1.02 $ 1.08 $ 0.71
Extraordinary items............................. (0.16) -- (0.03) (0.04) (0.21)
---------- ---------- ---------- ---------- ----------
Net Income...................................... $ .34 $ .45 $ 0.99 $ 1.04 $ 0.50
========== ========== ========== ========== ==========
Distributions per Unit.......................... $ 1.00 $ 0.99 $ 1.63 $ 1.97 $ 1.90
Weighted average Units outstanding.............. 158,261 95,754 120,182 92,666 84,510
BALANCE SHEET DATA (as of end of period):
Cash and cash equivalents....................... $ 44,946 $ 65,556 $ 64,309 $ 62,721 $ 105,139
Total assets.................................... 6,046,434 2,679,076 5,895,910 2,556,436 2,316,860
Mortgages and other indebtedness................ 3,928,662 2,178,539 3,681,984 1,980,759 1,938,091
Limited partners' equity interest............... -- 913,424 -- 908,764 909,306
Partners' equity (deficit)...................... $1,850,790 $ (643,739) $1,945,174 $ (589,126) $ (807,613)
OTHER DATA:
Cash flow provided by (used in):
Operating activities.......................... $ 172,054 $ 90,634 $ 236,464 $ 194,336 $ 128,023
Investing activities.......................... (245,108) (70,010) (199,742) (222,679) (266,772)
Financing activities.......................... 53,691 (17,789) (35,134) (14,075) 133,263
Funds from Operations (FFO)(2).................. $ 181,224 $ 99,212 $ 281,495 $ 197,909 $ 167,761
========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges(3)........... 1.71x 1.54x 1.64x 1.67x 1.43x
PORTFOLIO DATA:
Total EBITDA(4)................................. $ 419,188 $ 231,981 $ 615,322 $ 437,548 $ 386,835
EBITDA after minority interest(4)............... 338,957 184,936 497,215 357,158 307,372
Number of Properties at End of Period........... 186 122 186 122 119
Total GLA at End of Period (thousands of square
feet)......................................... 113,814 62,304 113,280 62,232 58,200
FOR THE FOUR QUARTERS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
OTHER RATIOS:
Ratio of EBITDA after minority interest to Fixed
Charges and Preferred Unit
Distributions(4)(5)........................... 2.06x 2.17x 2.09x 2.18x 2.18x
Ratio of EBITDA after minority interest to
interest expense(4)(6)........................ 2.36x 2.45x 2.37x 2.39x 2.36x
Ratio of Debt to Adjusted Total Assets(7)....... 47.41% 47.88% 45.94% 44.90% 50.64%
Ratio of Secured Debt to Adjusted Total
Assets(8)..................................... 37.76% 41.35% 39.30% 40.72% 45.74%
Ratio of Unencumbered Assets to Unsecured
Debt(9)....................................... 2.51x 3.21x 3.61x 5.92x 3.84x
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(1) The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when tenant occupancy and retail
sales are typically at their highest levels. In addition, shopping malls
achieve most of their temporary tenant rents during the holiday season. As a
result, earnings are generally highest in the fourth quarter of each year.
(2) Funds from Operations ("FFO"), as defined by the National Association of
Real Estate Investment Trusts ("NAREIT"), means combined net income of the
Operating Partnership without giving effect to depreciation and
amortization, gains or losses from extraordinary items, gains or losses on
sales of real estate, gains or losses on investments in marketable
securities and any provision/benefit for income taxes for such period, plus
the allocable portion, based on the Operating Partnership's ownership
interest, of FFO of unconsolidated joint ventures, all determined on a
consistent basis in accordance with generally accepted accounting
principles. Management believes that FFO is an important and widely used
measure of the operating performance of REITs which provides a relevant
basis for comparison among REITs. FFO is presented to assist investors in
analyzing the performance of the Operating Partnership. The Operating
Partnership's method of calculating FFO may be different from the methods
used by other REITs. FFO (i) does not represent cash flows from operations
as defined by generally accepted accounting principles, (ii) should not be
considered as an alternative to net income as a measure of operating
performance or to cash flows from operating, investing and financing
activities and (iii) is not an alternative to cash flows as a measure of
liquidity. In March 1995, NAREIT modified its definition of FFO. The
modified definition provides that amortization of deferred financing costs
and depreciation of nonrental real estate assets are no longer to be added
back to net income in arriving at FFO. The modified definition was adopted
by the Operating Partnership beginning in 1996. Additionally the FFO for
prior periods have been restated to reflect the new definition in order to
make the amounts comparative.
(3) For purposes of computing the Ratio of Earnings to Fixed Charges, earnings
have been calculated by adding Fixed Charges, excluding capitalized
interest, to income (loss) from continuing operations including income from
minority interests which have fixed charges, and including distributed
operating income from unconsolidated joint ventures instead of income from
unconsolidated joint ventures. Fixed Charges consist of interest costs,
whether expensed or capitalized, the interest component of rental expense
and amortization of debt issuance costs.
(4) Total EBITDA represents earnings before interest, taxes, depreciation and
amortization for all properties. EBITDA after minority interest represents
earnings before interest, taxes, depreciation and amortization for all
properties after distribution to the third-party joint venture partners.
EBITDA (i) does not represent cash flow from operations as defined by
generally accepted accounting principles, (ii) should not be considered as
an alternative to net income as a measure of operating performance or to
cash flows from operating, investing and financing activities; and (iii) is
not an alternative to cash flows as a measure of liquidity. Management
believes that in addition to cash flows and net income, EBITDA is a useful
financial performance measurement for assessing the operating performance of
an equity REIT because, together with net income and cash flows, EBITDA
provides investors with an additional basis to evaluate the ability of a
REIT to incur and service debt and to fund acquisitions and other capital
expenditures. To evaluate EBITDA and the trends it depicts, the components
of EBITDA, such as revenues and operating expenses, should be considered.
The Operating Partnership's method of calculating EBITDA may be different
from the methods used by other REITs.
(5) For purposes of computing the ratio of EBITDA after minority interest to
Fixed Charges and Preferred Unit Distributions, Fixed Charges and Preferred
Unit Distributions consist of interest costs, whether expensed or
capitalized and including the Operating Partnership's pro rata share of
joint venture interest expense, the interest component of rental expense and
amortization of debt issuance costs plus any distributions on outstanding
preferred units.
(6) For purposes of computing the ratio of EBITDA after minority interest to
interest expense, EBITDA after minority interest represents earnings before
interest, taxes, depreciation and amortization, for all properties after
distributions to third-party joint venture partners. Interest expense
includes the Operating Partnership's pro rata share of consolidated and
joint venture interest expense and is reduced by amortization of debt
issuance costs.
(7) As specified in the Indenture, Debt consists of indebtedness of the
Operating Partnership and its consolidated subsidiaries, less any portion
attributable to minority interests, plus the Operating Partnership's
allocable portion of indebtedness of unconsolidated joint ventures from
borrowed money, secured indebtedness, reimbursement obligations in
connection with letters of credit and capitalized leases. "Adjusted Total
Assets" as of any date means the sum of (i) the amount determined by
multiplying the sum of the shares of common stock of the Company issued in
the initial public offering of the Company ("IPO") and the units of the
Operating Partnership not held by the Company outstanding on the date of the
IPO, by $22.25 (the "IPO Price"), (ii) the principal amount of the
outstanding consolidated debt of the Company on the date of the IPO, less
any portion applicable to minority interests, (iii) the Operating
Partnership's allocable portion, based on its ownership interest, of
outstanding indebtedness of unconsoli-
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dated joint ventures on the date of the IPO, (iv) the purchase price or cost
of any real estate assets acquired (including the value, at the time of such
acquisition, of any units of the Operating Partnership or shares of common
stock of the Company issued in connection therewith) or developed after the
IPO by the Operating Partnership or any Subsidiary, less any portion
attributable to minority interests, plus the Operating Partnership's
allocable portion, based on its ownership interest, of the purchase price or
cost of any real estate assets acquired or developed after the IPO by any
unconsolidated joint venture, (v) the value of the Merger compiled as the
sum of (a) the purchase price including all related closing costs and (b)
the value of all outstanding indebtedness less any portion attributable to
minority interests, including the Operating Partnership's allocable share,
based on its ownership interest, of outstanding indebtedness of
unconsolidated joint ventures at the Merger date, and (vi) working capital
of the Operating Partnership; subject, however, to reduction by the amount
of the proceeds of any real estate assets disposed of after the IPO by the
Operating Partnership or any Subsidiary, less any portion applicable to
minority interests, and by the Operating Partnership's allocable portion,
based on its ownership interest, of the proceeds of any real estate assets
disposed of after the IPO by unconsolidated joint ventures. As of June 30,
1997, the Operating Partnership's Adjusted Total Assets were $9.1 billion.
See "Description of the Notes -- Certain Covenants."
(8) As specified in the Indenture, Secured Debt consists of the Operating
Partnership's share of consolidated and joint venture Debt secured by a
mortgage or other encumbrance on any property of the Operating Partnership
or any Subsidiary. See "Description of the Notes -- Certain Covenants."
(9) As specified in the Indenture, Unencumbered Assets is equal to Adjusted
Total Assets multiplied by a fraction, the numerator of which is
Unencumbered Annualized EBITDA After Minority Interest and the denominator
of which is Annualized EBITDA After Minority Interest. Unencumbered
Annualized EBITDA means Annualized EBITDA less any portion attributable to
assets serving as collateral for Secured Debt. As specified in the
Indenture, Annualized EBITDA means earnings before interest, taxes,
depreciation and amortization for all Portfolio Properties with other
adjustments as are necessary to exclude the effect of items classified as
extraordinary items in accordance with generally accepted accounting
principles, adjusted to reflect the assumption that (i) any income earned as
a result of any assets having been placed in service since the end of such
period had been earned on an annualized basis, during such period, and (ii)
in the case of an acquisition or disposition by the Operating Partnership,
any Subsidiary or any unconsolidated joint venture in which the Operating
Partnership or any Subsidiary owns an interest, of any assets since the
first day of such period, such acquisition or disposition and any related
repayment of Debt had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition or disposition.
Annualized EBITDA After Minority Interest means Annualized EBITDA after
distributions to third party joint venture partners. Unsecured Debt means
Debt not secured by a mortgage or other encumbrance on any property of the
Operating Partnership or any subsidiary. See "Description of the
Notes -- Certain Covenants."
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SUMMARY OF PORTFOLIO PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
The following table summarizes, as of June 30, 1997, certain information
with respect to the Portfolio Properties, in total and by type of property and
retailer:
GLA TOTAL OWNED % OF % OF OWNED
(SQ. GLA OWNED GLA WHICH IS
TYPE OF PROPERTY(1) FT.) (SQ. FT.) GLA(2) LEASED(3)
- ----------------------------------------------- ------- ----------- ------ ------------
(IN THOUSANDS)
Regional Malls(4)
Mall Store................................... 32,432 32,432 47.8 % 97.2%
Freestanding................................. 1,653 814 1.2 85.0
------- ------ ----- ----
Subtotal.................................. 34,085 33,246 49.0 95.0
------- ------ ----- ----
Anchor....................................... 59,688 19,927 29.4 85.2
------- ------ ----- ----
Total................................ 93,773 53,173 78.3 89.7
======= ====== ===== ====
Community Shopping Centers
Mall Store................................... 3,621 3,540 5.2 94.4
Freestanding................................. 787 293 0.4 88.4
Anchor....................................... 10,908 6,686 9.8 97.1
------- ------ ----- ----
Total................................ 15,316 10,519 15.5 92.4
======= ====== ===== ====
Office Portion of Mixed-Use Properties......... 2,002 2,002 2.9 93.5
Mills-type Properties and Other................ 2,723 2,191 3.2
------- ------ -----
Total................................ 113,814 67,885 100.0
======= ====== =====
- ---------------
(1) All of the GLA and Owned GLA is reported for each Portfolio Property, even
if the Partnerships have less than a 100% ownership interest in the
Portfolio Property.
(2) Indicates the percentage of total Owned GLA represented by each category of
space.
(3) Includes space for which, a lease has been executed, whether or not the
space was then occupied.
(4) Includes three specialty retail centers and retail space at four mixed-use
properties.
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DESCRIPTION OF THE NOTES
The following description of the specific terms of the Notes supplements
the description of the general terms and provisions of Debt Securities set forth
in the accompanying Prospectus under the caption "Description of Debt
Securities."
The Notes constitute a series of debt securities (which are more fully
described in the accompanying Prospectus) to be issued pursuant to an indenture
dated as of November 26, 1996, among the Operating Partnership, SPG, LP, as
guarantor, and The Chase Manhattan Bank, as trustee (the "Trustee"), as
supplemented by a Fifth Supplemental Indenture, dated as of October 27, 1997,
between the Operating Partnership and the Trustee (together, the "Indenture").
The terms of the Notes include those provisions contained in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Notes are subject to all such
terms, and holders of Notes are referred to the Indenture and the Trust
Indenture Act for a statement thereof. SPG, LP will guarantee the due and
punctual payment of the principal of, premium, if any, interest on, and any
other amounts payable with respect to, the Notes, when and as the same shall
become due and payable, whether at a maturity date, on redemption, by
declaration of acceleration or otherwise. See "-- The Guarantee." The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to and qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below.
GENERAL
The Notes will be limited in aggregate principal amount to $150 million.
The Notes will be direct, unsecured obligations of the Operating Partnership and
will rank pari passu with each other and with all other unsecured and
unsubordinated indebtedness of the Operating Partnership from time to time
outstanding. The Notes will be effectively subordinated to (i) the prior claims
of each secured mortgage lender to any specific Portfolio Property which secures
such lender's mortgage and (ii) any claims of creditors of entities wholly or
partly owned, directly or indirectly, by the Operating Partnership. Subject to
certain limitations set forth in the Indenture, and as described under
"-- Certain Covenants -- Limitations on Incurrence of Debt" below, the Indenture
will permit the Operating Partnership to incur additional secured and unsecured
indebtedness. At June 30, 1997, the Operating Partnership had combined unsecured
unsubordinated indebtedness aggregating approximately $875 million.
The Notes will mature on October 27, 2005 (the "Maturity Date"). The Notes
are not subject to any sinking fund provisions. The Notes will be issued only in
fully registered, book-entry form without Coupons, in denominations of $1,000
and integral multiples, thereof, except under the limited circumstances
described below under "Book-Entry System."
Except as described under "-- Certain Covenants -- Limitations on
Incurrence of Debt" below and under "Description of Debt Securities -- Merger,
Consolidation or Sale" in the accompanying Prospectus, the Indenture does not
contain any provisions that would limit the ability of the Operating Partnership
to incur indebtedness or that would afford holders of the Notes protection in
the event of (i) a highly leveraged or similar transaction involving the
Operating Partnership, the Company or the General Partners of the Operating
Partnership, or any affiliate of any such party, (ii) a change of control, or
(iii) a reorganization, restructuring, merger or similar transaction involving
the Operating Partnership that may adversely affect the holders of the Notes. In
addition, subject to the limitations set forth under "Description of Debt
Securities -- Merger, Consolidation or Sale" in the accompanying Prospectus, the
Operating Partnership may, in the future, enter into certain transactions such
as the sale of all or substantially all of its assets or the merger or
consolidation of the Operating Partnership that would increase the amount of the
Operating Partnership's indebtedness or substantially reduce or eliminate the
Operating Partnership's assets, which may have an adverse effect on the
Operating Partnership's ability to service its indebtedness, including the
Notes. It is currently expected that subsequent to the first anniversary of the
date of the Merger, reorganizational transactions will be effected so that the
Operating Partnership will directly own all of the assets and partnership
interests now owned by SPG, LP. However, there can be no assurance that such
reorganizational transactions will be so effected. See "The Operating
Partnership" in the accompanying Prospectus.
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16
PRINCIPAL AND INTEREST
The Notes will bear interest at 6 7/8% per annum from the date of issuance
or from the immediately preceding Interest Payment Date (as defined below) to
which interest has been paid, payable semi-annually in arrears on each October
15 and April 15, commencing April 15, 1998 (each, an "Interest Payment Date"),
and on the Maturity Date, to the persons (the "Holders") in whose names the
applicable Notes are registered in the Security Register applicable to the Notes
at the close of business 15 calendar days prior to such payment date regardless
of whether such day is a Business Day, as defined below (each, a "Regular Record
Date"). Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
The principal of each Note payable on the Maturity Date will be paid
against presentation and surrender of such Note at the corporate trust office of
the Trustee, located initially at 450 West 33rd Street, 15th Floor, New York,
New York 10001, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
If any Interest Payment Date or the Maturity Date falls on a day that is
not a Business Day, the required payment shall be made on the next Business Day
as if it were made on the date such payment was due and no interest shall accrue
on the amount so payable for the period from and after such Interest Payment
Date or the Maturity Date, as the case may be. "Business Day" means any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions in the City of New York are authorized or required by
law, regulation or executive order to close.
CERTAIN COVENANTS
Limitations on Incurrence of Debt. The Operating Partnership will not, and
will not permit any Subsidiary (as defined below) to, incur any Debt (as defined
below), other than intercompany debt (representing Debt to which the only
parties are the Company, the Operating Partnership and any of their Subsidiaries
(but only so long as such Debt is held solely by any of the Company, the
Operating Partnership and any Subsidiary) that is subordinate in right of
payment to the Notes), if, immediately after giving effect to the incurrence of
such additional Debt, the aggregate principal amount of all outstanding Debt
would be greater than 60% of the sum of (i) the Operating Partnership's Adjusted
Total Assets (as defined below) as of the end of the fiscal quarter prior to the
incurrence of such additional Debt and (ii) any increase in Adjusted Total
Assets from the end of such quarter including, without limitation, any pro forma
increase from the application of the proceeds of such additional Debt.
In addition to the foregoing limitation on the incurrence of Debt, the
Operating Partnership will not, and will not permit any Subsidiary to, incur any
Debt secured by any mortgage, lien, pledge, encumbrance or security interest of
any kind upon any of the property of the Operating Partnership or any Subsidiary
("Secured Debt"), whether owned at the date of the Indenture or thereafter
acquired, if, immediately after giving effect to the incurrence of such
additional Secured Debt, the aggregate principal amount of all outstanding
Secured Debt is greater than 55% of the sum of (i) the Operating Partnership's
Adjusted Total Assets as of the end of the fiscal quarter prior to the
incurrence of such additional Secured Debt and (ii) any increase in Adjusted
Total Assets from the end of such quarter including, without limitation, any pro
forma increase from the application of the proceeds of such additional Secured
Debt.
In addition to the foregoing limitations on the incurrence of Debt, the
Operating Partnership will not, and will not permit any Subsidiary to, incur any
Debt if the ratio of Annualized EBITDA After Minority Interest to Interest
Expense (in each case as defined below) for the period consisting of the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Debt is to be incurred shall have been less than 1.75 to 1 on a pro
forma basis after giving effect to the incurrence of such Debt and to the
application of the proceeds therefrom, and calculated on the assumption that (i)
such Debt and any other Debt incurred since the first day of such four-quarter
period had been incurred, and the proceeds therefrom had been applied (to
whatever purposes such proceeds had been applied as of the date of calculation
of such ratio), at the beginning of such period, (ii) any other Debt that has
been repaid or retired since the first day of such four-quarter period had been
repaid or retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility shall be
computed based upon the average
S-16
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daily balance of such Debt during such period), (iii) any income earned as a
result of any assets having been placed in service since the end of such
four-quarter period had been earned, on an annualized basis, during such period,
and (iv) in the case of any acquisition or disposition by the Operating
Partnership, any Subsidiary or any unconsolidated joint venture in which the
Operating Partnership or any Subsidiary owns an interest, of any assets since
the first day of such four-quarter period, including, without limitation, by
merger, stock purchase or sale, or asset purchase or sale, such acquisition or
disposition and any related repayment of Debt had occurred as of the first day
of such period with the appropriate adjustments with respect to such acquisition
or disposition being included in such pro forma calculation.
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Debt, Debt shall be deemed to be "incurred" by the Operating
Partnership, its Subsidiaries and by any unconsolidated joint venture, whenever
the Operating Partnership, any Subsidiary, or any unconsolidated joint venture,
as the case may be, shall create, assume, guarantee or otherwise become liable
in respect thereof.
Maintenance of Unencumbered Assets. The Operating Partnership is required
to maintain Unencumbered Assets (as defined below) of not less than 150% of the
aggregate outstanding principal amount of the Unsecured Debt (as defined below)
of the Operating Partnership.
As used herein:
"Adjusted Total Assets" as of any date means the sum of (i) the amount
determined by multiplying the sum of the shares of common stock of the Company
issued in the initial public offering of the Company ("IPO") and the units of
the Operating Partnership not held by the Company outstanding on the date of the
IPO, by $22.25 (the "IPO Price"), (ii) the principal amount of the outstanding
consolidated debt of the Company on the date of the IPO, less any portion
applicable to minority interests, (iii) the Operating Partnership's allocable
portion, based on its ownership interest, of outstanding indebtedness of
unconsolidated joint ventures on the date of the IPO, (iv) the purchase price or
cost of any real estate assets acquired (including the value, at the time of
such acquisition, of any units of the Operating Partnership or shares of common
stock of the Company issued in connection therewith) or developed after the IPO
by the Operating Partnership or any Subsidiary, less any portion attributable to
minority interests, plus the Operating Partnership's allocable portion, based on
its ownership interest, of the purchase price or cost of any real estate assets
acquired or developed after the IPO by any unconsolidated joint venture, (v) the
value of the Merger compiled as the sum of (a) the purchase price including all
related closing costs and (b) the value of all outstanding indebtedness less any
portion attributable to minority interests, including the Operating
Partnership's allocable share, based on its ownership interest, of outstanding
indebtedness of unconsolidated joint ventures at the Merger date, and (vi)
working capital of the Operating Partnership; subject, however, to reduction by
the amount of the proceeds of any real estate assets disposed of after the IPO
by the Operating Partnership or any Subsidiary, less any portion applicable to
minority interests, and by the Operating Partnership's allocable portion, based
on its ownership interest, of the proceeds of any real estate assets disposed of
after the IPO by unconsolidated joint ventures. As of June 30, 1997, the
Operating Partnership's Adjusted Total Assets were $9.1 billion.
"Annualized EBITDA" means earnings before interest, taxes, depreciation and
amortization for all properties with other adjustments as are necessary to
exclude the effect of items classified as extraordinary items in accordance with
generally accepted accounting principles, adjusted to reflect the assumption
that (i) any income earned as a result of any assets having been placed in
service since the end of such period had been earned, on an annualized basis,
during such period, and (ii) in the case of any acquisition or disposition by
the Operating Partnership, any Subsidiary or any unconsolidated joint venture in
which the Operating Partnership or any Subsidiary owns an interest, of any
assets since the first day of such period, such acquisition or disposition and
any related repayment of Debt had occurred as of the first day of such period
with the appropriate adjustments with respect to such acquisition or
disposition.
"Annualized EBITDA After Minority Interest" means Annualized EBITDA after
distributions to third party joint venture partners.
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"Debt" means any indebtedness of the Operating Partnership and its
Subsidiaries on a consolidated basis, less any portion attributable to minority
interests, plus the Operating Partnership's allocable portion, based on its
ownership interest, of indebtedness of unconsolidated joint ventures, in respect
of (i) borrowed money evidenced by bonds, notes, debentures or similar
instruments, as determined in accordance with generally accepted accounting
principles, (ii) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property owned by the Operating
Partnership or any Subsidiary directly, or indirectly through unconsolidated
joint ventures, as determined in accordance with generally accepted accounting
principles, (iii) reimbursement obligations, contingent or otherwise, in
connection with any letters of credit actually issued or amounts representing
the balance deferred and unpaid of the purchase price of any property, except
any such balance that constitutes an accrued expense or trade payable, and (iv)
any lease of property by the Operating Partnership or any Subsidiary as lessee
which is reflected in the Operating Partnership's consolidated balance sheet as
a capitalized lease or any lease of property by an unconsolidated joint venture
as lessee which is reflected in such joint venture's balance sheet as a
capitalized lease, in each case, in accordance with generally accepted
accounting principles; provided, that Debt also includes, to the extent not
otherwise included, any obligation by the Operating Partnership or any
Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise,
items of indebtedness of another person (other than the Operating Partnership or
any Subsidiary) described in clauses (i) through (iv) above (or, in the case of
any such obligation made jointly with another person, the Operating
Partnership's or Subsidiary's allocable portion of such obligation based on its
ownership interest in the related real estate assets).
"Fixed Charges and Preferred Unit Distributions" consist of interest costs,
whether expensed or capitalized, the interest component of rental expense and
amortization of debt issuance costs, including the Operating Partnership's pro
rata share based on its ownership interest of joint venture interest costs,
whether expensed or capitalized and the interest component of rental expense and
amortization of debt issuance costs, plus any distributions on outstanding
preferred units.
"Interest Expense" includes the Operating Partnership's pro rata share of
joint venture interest expense and is reduced by amortization of debt issuance
costs.
"Subsidiary" means a corporation, partnership, joint venture, limited
liability company or other entity, a majority of the outstanding voting stock,
partnership interests or membership interests, as the case may be, of which is
owned or controlled, directly or indirectly, by the Operating Partnership or by
one or more other Subsidiaries of the Operating Partnership and, for purposes of
this definition, shall include SPG, LP. For the purposes of this definition,
"voting stock" means stock having voting power for the election of directors, or
trustees, as the case may be, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"Unencumbered Annualized EBITDA After Minority Interest" means Annualized
EBITDA after minority interest less any portion thereof attributable to assets
serving as collateral for Secured Debt.
"Unencumbered Assets" as of any date shall be equal to Adjusted Total
Assets as of such date multiplied by a fraction, the numerator of which is
Unencumbered Annualized EBITDA After Minority Interest and the denominator of
which is Annualized EBITDA After Minority Interest. As of June 30, 1997, the
Operating Partnership's Unencumbered Assets were $2.2 billion.
"Unsecured Debt" means Debt which is not secured by any mortgage, lien,
pledge, encumbrance or security interest of any kind.
Reference is made to the section entitled "Description of Debt
Securities -- Certain Covenants" in the accompanying Prospectus for a
description of additional covenants applicable to the Notes. Compliance with the
covenants described herein and such additional covenants with respect to the
Notes generally may not be waived by the Board of Directors of the General
Partners, as general partners of the Operating Partnership, or by the Trustee
unless the Holders of at least a majority in principal amount of all outstanding
Notes consent to such waiver; provided, however, that the defeasance and
covenant defeasance provisions of the Indenture described under "Description of
Debt Securities -- Discharge" and " -- Defeasance and Covenant Defea-
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sance" in the accompanying Prospectus will apply to the Notes and the Guarantee,
including with respect to the covenants described in this Prospectus Supplement.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time at the option of the Operating
Partnership, in whole or from time to time in part, at a redemption price equal
to the sum of (i) the principal amount of the Notes being redeemed plus accrued
interest thereon to the redemption date and (ii) the Make-Whole Amount (as
defined below), if any, with respect to such Notes (the "Redemption Price").
If notice of redemption has been given as provided in the Indenture and
funds for the redemption of any Notes called for redemption shall have been made
available on the redemption date referred to in such notice, such Notes will
cease to bear interest on the date fixed for such redemption specified in such
notice and the only right of the Holders of the Notes from and after the
redemption date will be to receive payment of the Redemption Price upon
surrender of such Notes in accordance with such notice.
Notice of any optional redemption of any Notes will be given to Holders at
their addresses, as shown in the security register for the Notes, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Notes held by such Holder to be redeemed.
If less than all the Notes are to be redeemed at the option of the
Operating Partnership, the Operating Partnership will notify the Trustee at
least 45 days prior to giving notice of redemption (or such shorter period as
may be satisfactory to the Trustee) of the aggregate principal amount of Notes
to be redeemed and their redemption date. The Trustee shall select, in such
manner as it shall deem fair and appropriate, Notes to be redeemed in whole or
in part.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Notes, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of each such dollar if such redemption or
accelerated payment had not been made, determined by discounting, on a
semi-annual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date notice of such
redemption is given or declaration of acceleration is made) from the respective
dates on which such principal and interest would have been payable if such
redemption or accelerated payment had not been made, to the date of redemption
or accelerated payment, over (ii) the aggregate principal amount of the Notes
being redeemed or accelerated.
"Reinvestment Rate" means the yield on treasury securities at a constant
maturity corresponding to the remaining life (as of the date of redemption, and
rounded to the nearest month) to Stated Maturity of the principal being redeemed
(the "Treasury Yield"), plus .25%. For purposes hereof, the Treasury Yield shall
be equal to the arithmetic mean of the yields published in the Statistical
Release under the heading "Week Ending" for "U.S. Government
Securities -- Treasury Constant Maturities" with a maturity equal to such
remaining life; provided, that if no published maturity exactly corresponds to
such remaining life, then the Treasury Yield shall be interpolated or
extrapolated on a straight-line basis from the arithmetic means of the yields
for the next shortest and next longest published maturities, rounding each of
such relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole amount shall be used. If the format or
content of the Statistical Release changes in a manner that precludes
determination of the Treasury Yield in the above manner, then the Treasury Yield
shall be determined in the manner that most closely approximates the above
manner, as reasonably determined by the Operating Partnership.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which reports yields on actively traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at
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the time of any determination under the Indenture, then such other reasonably
comparable index which shall be designated by the Operating Partnership.
THE GUARANTEE
SPG, LP will guarantee (the "Guarantee") the due and punctual payment of
principal of, premium, if any, interest on, and any other amounts payable with
respect to, the Notes, when and as the same shall become due and payable,
whether at a maturity date, on redemption, by declaration of acceleration, or
otherwise, in accordance with the terms of the Notes and the Indenture. Pursuant
to the Indenture, (i) the Trustee may exercise its rights thereunder on behalf
of the Holders and (ii) SPG, LP shall covenant that it shall take no action
which would cause the Operating Partnership to violate any covenant under the
Indenture agreement or any other condition. The Guarantee will terminate upon
the consummation of the reorganizational transactions pursuant to which the
Operating Partnership is expected to own directly all of the assets and
partnership interests then owned by SPG, LP. However, there can be no assurance
that such reorganizational transactions will be so effected. See "The Operating
Partnership" in the accompanying Prospectus. No partner (whether limited or
general) of SPG, LP will have any obligation for any obligations of SPG, LP
under the Guarantee.
In the absence of the Guarantee, Holders of the Notes will have no claims,
with respect to any payments in connection with the Notes, against the assets of
SPG, LP or the assets of any other Subsidiary of the Operating Partnership. Any
such claim that such Holders may make will have to be made indirectly through
the equity interest that the Operating Partnership has in SPG, LP (or other
Subsidiaries), and will thus be structurally subordinated to the claims of
creditors of SPG, LP (or other Subsidiaries). As a result of the Guarantee,
Holders of the Notes, upon exercising their rights with respect to the Guarantee
against SPG, LP, will be considered creditors of SPG, LP and their claims will
rank pari passu with those of unsecured and unsubordinated creditors of SPG, LP
and will not be structurally subordinated to such creditors.
BOOK-ENTRY SYSTEM
The following are summaries of certain rules and operating procedures of
DTC that affect the payment of principal and interest and transfers in the
Global Note. Upon issuance, the Notes will only be issued in the form of a
Global Note which will be deposited with, or on behalf of, DTC and registered in
the name of Cede & Co., as nominee of DTC. Unless and until it is exchanged in
whole or in part for Notes in definitive form under the limited circumstances
described below, a Global Note may not be transferred except as a whole (i) by
DTC to a nominee of DTC, (ii) by a nominee of DTC to DTC or another nominee of
DTC or (iii) by DTC or any such nominee to a successor of DTC or a nominee of
such successor.
Ownership of beneficial interests in a Global Note will be limited to
persons that have accounts with DTC for such Global Note ("participants") or
persons that may hold interests through participants. Upon the issuance of a
Global Note, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with the respective principal amounts of the
Notes represented by such Global Note beneficially owned by such participants.
Ownership of beneficial interests in such Global Notes will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by DTC (with respect to interests of participants) and on the records
of participants (with respect to interests of persons holding through
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may limit or impair the ability to own, transfer or pledge beneficial
interests in the Global Note.
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered the sole owner or Holder
of the Notes represented by such Global Note for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in a Global
Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of such Notes in certificated form and will not be considered the
registered owners or Holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the procedures
of DTC and, if such person is not a participant, on the procedures of
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the participant through which such person owns its interest, to exercise any
rights of a Holder under the Indenture. The Operating Partnership understands
that under existing industry practices, if the Operating Partnership requests
any action of Holders or if an owner of a beneficial interest in a Global Note
desires to give or take any action that a Holder is entitled to give or take
under the Indenture, DTC would authorize the participants holding the relevant
beneficial interests to give or take such action, and such participants would
authorize beneficial owners owning through such participants to give or take
such action or would otherwise act upon the instructions of beneficial owners
holding through them.
Principal and interest payments on interests represented by a Global Note
will be made to DTC or its nominee, as the case may be, as the registered owner
of such Global Note. None of the Operating Partnership, the Trustee or any agent
of the Operating Partnership or agent of the Trustee will have any
responsibility or liability for any aspect of the records relating to or payment
made on account of beneficial ownership interests in the Global Note or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Operating Partnership expects that DTC, upon receipt of any payment of
principal or interest in respect of a Global Note, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in such Global Note as shown on the records of
DTC. The Operating Partnership also expects that payments by participants to
owners of beneficial interests in the Global Notes held through such
participants will be governed by standing customer instructions and customary
practice, as is now the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the responsibility of
such participants.
If DTC is at any time unwilling or unable to continue as depository for the
Notes and the Operating Partnership fails to appoint a successor depository
registered as a clearing agency under the Securities Exchange Act of 1934, as
amended (the "Exchange Act), within 90 days, the Operating Partnership will
issue the Notes in definitive form in exchange for the respective Global Notes.
Any Notes issued in definitive form in exchange for the Global Notes will be
registered in such name or names, and will be issued in denominations of $1,000
and such integral multiples thereof, as DTC shall instruct the Trustee. It is
expected that such instructions will be based upon directions received by DTC
from participants with respect to ownership of beneficial interests in the
Global Notes.
DTC has advised the Operating Partnership of the following information
regarding DTC. DTC is a limited-purpose trust company organized under the
Banking Law of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities of its participants
and to facilitate the clearance and settlement of transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of which (or their representatives) own DTC. Access to the
DTC book-entry system is also available to others, such as banks, brokers and
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters (as defined
herein) in immediately available funds. All payments of principal and interest
in respect of the Notes will be made by the Operating Partnership in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
S-21
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UNDERWRITING
Subject to the terms and conditions contained in the terms agreement and
the related underwriting agreement (the "Underwriting Agreement"), the Operating
Partnership has agreed to sell to each of the Underwriters named below (the
"Underwriters"), and each of the Underwriters has severally agreed to purchase,
the respective principal amount of the Notes set forth below opposite their
respective names. The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Notes if any are
purchased.
PRINCIPAL
UNDERWRITERS AMOUNT
------------------------------------------------------- --------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................. $ 60,000,000
Lehman Brothers Inc.................................... 30,000,000
J.P. Morgan Securities Inc............................. 30,000,000
UBS Securities LLC..................................... 30,000,000
------------
Total..................................... $ 150,000,000
============
The Underwriters have advised the Operating Partnership that they propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of .375% of the principal amount
thereof. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of .25% of the principal amount thereof to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
The Notes are a new issue of securities with no established trading market.
The Operating Partnership does not intend to apply for listing of the Notes on a
national securities exchange. The Operating Partnership has been advised by the
Underwriters that the Underwriters intend to make a market in the Notes as
permitted by applicable laws and regulations, but the Underwriters are not
obligated to do so and may discontinue market-making at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Notes.
Until the distribution of the Notes is completed, rules of the Commission
may limit the ability of the Underwriters and certain selling group members to
bid for and purchase the Notes. As an exemption to these rules, the Underwriters
are permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes.
If the Underwriters create a short position in the Notes in connection with
the Offering, i.e., they sell more Notes than are set forth on the cover page of
this Prospectus Supplement, the Underwriters may reduce that short position by
purchasing Notes in the open market. The Underwriters may also impose a penalty
bid on selling group members. This means that if the Underwriters purchase Notes
in the open market to reduce the Underwriters' short position or to stabilize
the price of the Notes, they may reclaim the amount of the selling concession
from the selling group members who sold those Notes as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Operating Partnership nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Notes.
S-22
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In addition, neither the Operating Partnership nor any of the Underwriters
makes any representation that the Underwriters will engage in such transactions
or that such transactions once commenced, will not be discontinued without
notice.
The Operating Partnership and the Company have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and
certain of the Underwriters have from time to time provided, and may continue to
provide in the future, various investment banking, commercial banking and/or
financial advisory services to the Company, the Operating Partnership and SPG,
LP, for which customary compensation has been, and will be, received. Merrill
Lynch has acted as representative of various underwriters in connection with
public offerings of the Company's Common Stock and Preferred Stock in 1993,
1995, 1996 and 1997 and of the Operating Partnership's Debt Securities in 1996
and 1997. Also, in connection with the Merger, the Company paid Merrill Lynch a
fee of approximately $4 million for financial advisory services provided by
Merrill Lynch. Morgan Guaranty Trust Company of New York, an affiliate of J.P.
Morgan Securities Inc. ("J.P. Morgan"), one of the Underwriters, and Union Bank
of Switzerland, New York Branch, an affiliate of UBS Securities LLC, one of the
Underwriters, are lead agents and lenders under the Operating Partnership's $750
million and $500 million unsecured credit facilities. Also, J.P. Morgan has
acted as lead agent of various agents in connection with public offerings of the
Operating Partnership's MTN program.
LEGAL MATTERS
The legality of the Notes offered hereby and the description of United
States Federal income tax matters contained in this Prospectus Supplement will
be passed upon for the Operating Partnership by Baker & Daniels, Indianapolis,
Indiana. Certain legal matters will be passed upon for the Underwriters by
Rogers & Wells, New York, New York. Baker & Daniels and Rogers & Wells will rely
on (i) the opinions of Piper & Marbury, LLP, Baltimore, Maryland, as to matters
of Maryland law and (ii) the opinions of Vorys, Sater, Seymour and Pease,
Columbus, Ohio, as to matters of Ohio law.
S-23
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PROSPECTUS
Simon DeBartolo Group Logo
$1,000,000,000
SIMON DeBARTOLO GROUP, L.P.
Debt Securities
------------------------
Simon DeBartolo Group, L.P. (the "Operating Partnership") may from time to
time offer in one or more series unsecured non-convertible investment grade debt
securities ("Debt Securities") in an aggregate principal amount of up to $1
billion (or its equivalent in another currency based on the exchange rate at the
time of sale) in amounts, at prices and on terms to be set forth in one or more
supplements to this Prospectus (each a "Prospectus Supplement"). The Operating
Partnership is a subsidiary of Simon DeBartolo Group, Inc. (the "Company") and
is the Company's primary operating partnership. Simon Property Group, L.P., a
Delaware limited partnership and a subsidiary partnership of the Operating
Partnership, will guarantee (the "Guarantee") the due and punctual payment of
the principal of, premium, if any, interest on, and any other amounts payable
with respect to, the Debt Securities, when and as the same shall become due and
payable, whether at a maturity date, on redemption, by declaration of
acceleration or otherwise, and as set forth in the applicable Prospectus
Supplement with respect to such Debt Securities.
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include a specific title, aggregate principal amount,
currency, form (which may be registered or bearer, or certificated or global),
authorized denominations, maturity, rate (or manner of calculation thereof) and
time of payment of interest, terms for redemption at the option of the Operating
Partnership or repayment at the option of the holder, terms for sinking fund
payments, covenants and any initial public offering price.
The applicable Prospectus Supplement will also contain information, where
applicable, concerning material United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Debt Securities
covered by such Prospectus Supplement.
The Debt Securities may be offered directly, through agents designated from
time to time by the Operating Partnership, or to and through underwriters or
dealers. If any agents, dealers or underwriters are involved in the sale of any
of the Debt Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in an accompanying Prospectus
Supplement. See "Plan of Distribution." No Debt Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such series of Debt Securities.
The Debt Securities will be direct, unsecured obligations of the Operating
Partnership and will, unless otherwise described in the applicable Prospectus
Supplement, rank equally with all other unsecured and unsubordinated
indebtedness of the Operating Partnership. On June 30, 1997, the total
outstanding debt of the Operating Partnership, including its pro rata share of
joint venture debt, was approximately $4,296 million, 79.6% of which was secured
debt. Except as otherwise described in the applicable Prospectus Supplement, the
Indenture pursuant to which the Debt Securities are issued does not limit the
amount of other indebtedness of the Operating Partnership including secured
debt.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is October 15, 1997.
25
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
AVAILABLE INFORMATION
The Operating Partnership is a subsidiary of Simon DeBartolo Group, Inc.
(the "Company"). Simon Property Group, L.P. ("SPG, LP") is a subsidiary
partnership of the Operating Partnership. The Company, the Operating Partnership
and SPG, LP are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, file reports, proxy statements (if applicable) and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by the Company, the Operating
Partnership and SPG, LP can be inspected and copied, at the prescribed rates, at
the public reference facilities of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 7 World Trade Center, Suite 1300, New York, New York 10048, and Northwestern
Atrium Center, 500 W. Madison Street, Chicago, Illinois 60661. The Company's
Common Stock is traded on the New York Stock Exchange ("NYSE"). Reports and
other information concerning the Company may be inspected at the principal
office of the NYSE at 20 Broad Street, New York, New York 10005.
The Company, the Operating Partnership and SPG, LP, will provide without
charge to each person to whom a copy of this Prospectus is delivered, upon
written or oral request, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents). Written requests
for such copies should be addressed to National City Center, 115 West Washington
Street, Suite 15 East, Indianapolis, Indiana 46204, Attn: Investor Relations,
telephone number (317) 685-7330.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Operating Partnership and SPG, LP
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Debt Securities and Guarantee offered
hereby. This Prospectus omits certain of the information contained in the
Registration Statement and the exhibits and schedules thereto, in accordance
with the rules and regulations of the Commission. For further information
concerning the Operating Partnership, SPG, LP and the Debt Securities offered
hereby, reference is hereby made to the Registration Statement and the exhibits
and schedules filed therewith, which may be inspected without charge at the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and
copies of which may be obtained from the Commission at prescribed rates. The
Commission maintains a World Wide Web Site (http://www.sec.gov) that contains
such material regarding issuers that file electronically with the Commission.
This Registration Statement has been so filed and may be obtained at such site.
Any statements contained herein concerning the provisions of any document are
not necessarily complete, and, in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Operating Partnership and SPG, LP which have
been filed with the Commission are hereby incorporated by reference in this
Prospectus.
1. The Operating Partnership's Annual Report on Form 10-K for the year
ended December 31, 1996;
2. The Operating Partnership's Quarterly Reports on Form 10-Q for the
calendar quarters ended March 31, 1997 and June 30, 1997;
3. The Operating Partnership's Current Reports on Form 8-K filed May 16,
1997, July 22, 1997 as amended July 23, 1997, August 15, 1997, September 4,
1997, September 10, 1997 and September 15, 1997;
4. SPG, LP's Annual Report on Form 10-K for the year ended December 31,
1996;
5. SPG, LP's Quarterly Reports on Form 10-Q for the calendar quarters ended
March 31, 1997 and June 30, 1997; and
6. SPG, LP's Current Reports on Form 8-K filed on May 16, 1997, July 22,
1997, August 15, 1997 and September 10, 1997.
The Exchange Act filing numbers of the Operating Partnership and SPG, LP
are 333-11491 and 33-98364.
Each document filed by the Operating Partnership and SPG, LP subsequent to
the date of this Prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act and prior to termination of the offering of all Debt Securities to
which this Prospectus relates shall be deemed to be incorporated by reference in
this Prospectus and shall be part hereof from the date of filing of such
document. Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus (in the case of a statement in a previously-filed
document incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of Debt
Securities or in any other subsequently filed document that is also incorporated
or deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus or
any accompanying Prospectus Supplement. Subject to the foregoing, all
information appearing in this Prospectus and each accompanying Prospectus
Supplement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
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THE OPERATING PARTNERSHIP
Simon DeBartolo Group, L.P. (the "Operating Partnership") is a subsidiary
partnership of Simon DeBartolo Group, Inc. (the "Company") and is the primary
operating partnership of the Company. The Company is a self-administered and
self-managed real estate investment trust ("REIT"). Simon Property Group, L.P.
("SPG, LP" and together with the Operating Partnership, the "Partnerships") is a
subsidiary partnership of the Operating Partnership. The Partnerships are
engaged primarily in the ownership, development, management, leasing,
acquisition and expansion of income producing properties, primarily regional
malls and community shopping centers. On August 9, 1996, the Company acquired
the national shopping center business of DeBartolo Realty Corporation ("DRC"),
The Edward J. DeBartolo Corporation and their affiliates as the result of the
merger (the "Merger") of DRC with a subsidiary of the Company. As a result of
the Merger, the Portfolio Properties (as defined below) were expanded by 61
properties and the management resources of the merged entities were combined.
Management believes that the Portfolio Properties, as measured in gross leasable
area ("GLA"), constitute the largest and most geographically diverse portfolio
of any publicly traded REIT in North America and that the Company's market
capitalization is the largest of any publicly traded real estate company in
North America.
SPG, LP continues to hold interests in certain properties and is a party to
various agreements binding on itself and on subsidiary partnerships of which it
is the general partner. These agreements require the continued existence of SPG,
LP. The consents necessary under these agreements to permit the combination of
SPG, LP and the Operating Partnership were not obtained at the time of the
Merger. To date, all of the required consents have been obtained. As a result
thereof, it is currently expected that subsequent to the first anniversary of
the date of the Merger, reorganizational transactions will be effected so that
the Operating Partnership will directly own all of the assets and partnership
interests now owned by SPG, LP. Prior to such proposed reorganizational
transactions, holders of the Debt Securities to be offered hereby will not, as a
result of the Guarantee, be structurally subordinated to holders of unsecured
and unsubordinated indebtedness of SPG, LP, but will rank pari passu with them.
After the proposed reorganizational transactions, holders of the Debt Securities
will remain pari passu with holders of such indebtedness. However, there can be
no assurance that such reorganizational transactions will be so effected.
As of June 30, 1997, the Partnerships, owned or held interests in a
diversified portfolio of 186 income producing properties (the "Portfolio
Properties"), including 114 super-regional and regional malls, 65 community
shopping centers, three specialty retail centers and four mixed-use properties
located in 33 states; the Portfolio Properties contain an aggregate of
approximately 114 million square feet of gross leasable area ("GLA"), of which
approximately 68 million square feet is GLA owned by the Partnerships ("Owned
GLA"); approximately 3,100 different retailers occupy approximately 12,000
stores in the Portfolio Properties; total estimated retail sales at the
Portfolio Properties exceeded $16 billion in 1996; the Partnerships have
interests in six properties under construction in the United States aggregating
approximately four million square feet of GLA, and own land held for future
development. The Partnerships, together with their affiliated management
companies (collectively, the "Management Companies"), manage approximately 130
million square feet of GLA of retail and mixed-use properties.
The Company is a general partner of the Operating Partnership and the sole
general partner of SPG, LP. The other general partner of the Operating
Partnership is SD Property Group, Inc. (the "Managing General Partner"). The
Company owns a 99.9% interest in the Managing General Partner.
As of June 30, 1997, the Operating Partnership and the Management Companies
had approximately 5,700 employees. The Operating Partnership's executive offices
are located at National City Center, 115 West Washington Street, Suite 15 East,
Indianapolis, Indiana 46204, and its telephone number is (317) 636-1600.
4
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USE OF PROCEEDS
Except as otherwise provided in the applicable Prospectus Supplement,
proceeds to the Operating Partnership from the sale of the Debt Securities
offered hereby will be added to the working capital of the Operating Partnership
and will be available for general purposes, which may include the repayment of
indebtedness, the financing of capital commitments and possible future
acquisitions associated with the continued expansion of the Partnerships'
business.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical consolidated ratio of
earnings to fixed charges of the Operating Partnership and its predecessors for
the periods indicated.
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
1.71x 1.54x 1.64x 1.67x 1.43x 3.36x(1) --(1)
- ---------------
(1) Prior to the commencement of business by SPG, LP in December 1993, the
predecessor of SPG, LP maintained a different ownership and equity
structure. The operating properties of the predecessor of SPG, LP
historically generated positive net cash flow. The financial statements of
the predecessor of SPG, LP show net income for the period January 1, 1993
through December 19, 1993, and net losses for the year ended December 31,
1992. The ratio of earnings to fixed charges for the period January 1, 1993
through December 19, 1993 was 1.11x. As a consequence of the net losses for
the year ended December 31, 1992, the computation of the ratio of earnings
to fixed charges for 1992 indicates that earnings were inadequate to cover
fixed charges by approximately $12.8 million.
For purposes of computing the ratio of earnings to fixed charges, earnings
have been calculated by adding fixed charges, excluding capitalized interest, to
income (loss) from continuing operations including income from minority
interests which have fixed charges, and including distributed operating income
from unconsolidated joint ventures instead of income from unconsolidated joint
ventures. Fixed charges consist of interest costs, whether expensed or
capitalized, the interest component of rental expense and amortization of debt
issuance costs.
5
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DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture dated as of November
26, 1996 (the "Indenture"), among the Operating Partnership, SPG, LP, as
guarantor, and The Chase Manhattan Bank, as trustee. The Indenture has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part and is available for inspection at the corporate trust office of the
trustee at 450 West 33rd Street, 15th Floor, New York, New York 10001, or as
described above under "Available Information." The Indenture is subject to, and
governed by, the Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made hereunder or in any Prospectus Supplement relating to the
Indenture and the Debt Securities to be issued thereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture and such Debt Securities. All section references appearing herein are
to sections of the Indenture, and capitalized terms used but not defined herein
shall have the respective meanings set forth in the Indenture.
The Debt Securities to be offered hereby and in any applicable Prospectus
Supplement will be "investment grade" securities, meaning at the time of the
offering of such Debt Securities, at least one nationally recognized statistical
rating organization (as defined in the Exchange Act) has rated such Debt
Securities in one of its generic rating categories which signifies investment
grade (typically the four highest rating categories, within which there may be
subcategories or gradations indicating relative standing, signify investment
grade). An investment grade rating is not a recommendation to buy, sell or hold
securities, is subject to revision or withdrawal at any time by the assigning
entity, and should be evaluated independently of any other rating.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Operating
Partnership and, unless otherwise described in the applicable Prospectus
Supplement, will rank equally with all other unsecured and unsubordinated
indebtedness of the Operating Partnership. No partner (whether limited or
general, including the Company and the Managing General Partner) of the
Operating Partnership has any obligation for payment of principal of (and
premium, if any) and interest, if any, on, or any other amount with respect to,
the Debt Securities (Section 1602). At June 30, 1997, the total outstanding debt
of the Operating Partnership, including its pro rata share of joint venture
debt, was approximately $4,296 million, 79.6% of which was secured debt. Except
as otherwise described in the applicable Prospectus Supplement, the Indenture
does not limit the amount of other indebtedness of the Operating Partnership
that may rank equally with or senior to the Debt Securities. The Debt Securities
may be issued without limit as to aggregate principal amount, in one or more
series, in each case as established from time to time in or pursuant to
authority granted by a resolution of the Board of Directors of the Managing
General Partner, as the managing general partner of the Operating Partnership or
as established in one or more indentures supplemental to the Indenture. All Debt
Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the holders
of the Debt Securities of such series, for issuances of additional Debt
Securities of such series (Section 301).
The Indenture provides that there may be more than one trustee (the
"Trustee") thereunder, each with respect to one or more series of Debt
Securities. Any Trustee under the Indenture may resign or be removed with
respect to one or more series of Debt Securities, and a successor Trustee may be
appointed to act with respect to such series (Section 608). In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a trustee of a trust under the
Indenture separate and apart from the trust administered by any other Trustee
(Section 609), and, except as otherwise indicated herein, any action described
herein to be taken by a Trustee may be taken by each such Trustee with respect
to, and only with respect to, the one or more series of Debt Securities for
which it is Trustee under the Indenture.
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Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount thereof,
the portion of the principal amount thereof payable upon acceleration of
the maturity thereof;
(4) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable;
(5) the rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) the date or dates, or the method for determining such date or
dates, from which any interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment dates,
or the method by which any such record date shall be determined, the
persons to whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day year of twelve
30-day months;
(7) the place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for registration of transfer or exchange and
notices or demands to or upon the Operating Partnership in respect of such
Debt Securities and the Indenture may be served;
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Debt Securities may be
redeemed, in whole or in part, at the option of the Operating Partnership,
if the Operating Partnership is to have such an option;
(9) the obligation, if any, of the Operating Partnership to redeem,
repay or purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the period or
periods within which, the price or prices at which and the terms and
conditions upon which such Debt Securities will be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(10) if other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(11) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency unit
or units or composite currency or currencies) and the manner in which such
amounts shall be determined;
(12) the events of default or covenants of such Debt Securities, to
the extent different from or in addition to those described herein;
(13) whether such Debt Securities will be issued in certificated or
book-entry form;
(14) whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof if other than $5,000, and any integral multiple thereof and the
terms and conditions relating thereto;
(15) the applicability, if any, of the defeasance and covenant
defeasance provisions described herein, or any modification thereof;
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(16) if such Debt Securities are to be issued upon the exercise of
debt warrants, the time, manner and place of such Debt Securities to be
authenticated and delivered;
(17) whether and under what circumstances the Operating Partnership
will pay additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Operating
Partnership will have the option to redeem such Debt Securities in lieu of
making such payment;
(18) with respect to any Debt Securities that provide for optional
redemption or prepayment upon the occurrence of certain events (such as a
change of control of the Operating Partnership), (i) the possible effects
of such provisions on the market price of the Operating Partnership's
securities or in deterring certain mergers, tender offers or other takeover
attempts, and the intention of the Operating Partnership to comply with the
requirements of Rule 14e-1 under the Exchange Act and any other applicable
securities laws in connection with such provisions; (ii) whether the
occurrence of the specified events may give rise to cross-defaults on other
indebtedness such that payment on such Debt Securities may be effectively
subordinated; and (iii) the existence of any limitation on the Operating
Partnership's financial or legal ability to repurchase such Debt Securities
upon the occurrence of such an event (including, if true, the lack of
assurance that such a repurchase can be effected) and the impact, if any,
under the Indenture of such a failure, including whether and under what
circumstances such a failure may constitute an Event of Default; and
(19) any other terms of such Debt Securities.
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon acceleration of the maturity thereof ("Original Issue
Discount Securities"). If material or applicable, special U.S. federal income
tax, accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Except as described under "-- Merger, Consolidation or Sale" below or as
may be set forth in any Prospectus Supplement, the Indenture does not contain
any other provisions that would limit the ability of the Operating Partnership
to incur indebtedness or that would afford holders of the Debt Securities
protection in the event of (i) a highly leveraged or similar transaction
involving the Operating Partnership, the Company or the management of the
Company, or any affiliate of any such party, (ii) a change of control, or (iii)
a reorganization, restructuring, merger or similar transaction involving the
Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "-- Merger,
Consolidation or Sale," the Operating Partnership may, in the future, enter into
certain transactions, such as the sale of all or substantially all of its assets
or the merger or consolidation of the Operating Partnership, that would increase
the amount of the Operating Partnership's indebtedness or substantially reduce
or eliminate the Operating Partnership's assets, which may have an adverse
effect on the Operating Partnership's ability to service its indebtedness,
including the Debt Securities. Reference is made to the applicable Prospectus
Supplement for information with respect to any deletions from, modifications of
or additions to the events of default or covenants that are described below,
including any addition of a covenant or other provision providing event risk or
similar protection.
Reference is made to "-- Certain Covenants" below and to the description of
any additional covenants with respect to a series of Debt Securities in the
applicable Prospectus Supplement. Except as otherwise described in the
applicable Prospectus Supplement, compliance with such covenants generally may
not be waived with respect to a series of Debt Securities unless the Holders of
at least a majority in principal amount of all outstanding Debt Securities of
such series consent to such waiver, except to the extent that the defeasance and
covenant defeasance provisions of the Indenture described under "-- Discharge"
and "-- Defeasance and Covenant Defeasance" below apply to such series of Debt
Securities. See "-- Modification of the Indenture."
Debt Securities may be denominated and payable in a foreign currency or
units of two or more foreign currencies or a composite currency or currencies.
As more fully described in the applicable Prospectus Supplement, awards or
judgments by a court in the United States in connection with a claim with
respect to
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any Debt Securities denominated other than in United States dollars (or a
judgment denominated other than in United States dollars in respect of such
claims) may be converted into United States dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series which are registered securities, other than
registered securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $1,000 and any integral multiple thereof
and the Debt Securities which are bearer securities, other than bearer
securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $5,000 and any integral multiple thereof (Section
302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
in registered form will be payable at the corporate trust office of the Trustee,
initially located at 450 West 33rd Street, 15th Floor, New York, New York 10001,
provided that, at the option of the Operating Partnership, payment of interest
may be made by check mailed to the address of the Person entitled thereto as it
appears in the applicable Security Register or by wire transfer of funds to such
Person at an account maintained within the United States (Sections 301, 307 and
1002).
Unless otherwise specified in the applicable Prospectus Supplement, any
interest not punctually paid or duly provided for on any Interest Payment Date
with respect to a Debt Security in registered form ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the Person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture
(Section 307).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer thereof at the corporate trust office of the Trustee
referred to above. Every Debt Security surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Trustee or the Operating Partnership
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305). If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the Trustee)
initially designated by the Operating Partnership with respect to any series of
Debt Securities, the Operating Partnership may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Operating
Partnership will be required to maintain a transfer agent in each place of
payment for such series. The Operating Partnership may at any time designate
additional transfer agents with respect to any series of Debt Securities
(Section 1002).
Neither the Operating Partnership nor the Trustee shall be required (i) to
issue, register the transfer of or exchange any Debt Security if such Debt
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Debt Securities to be
redeemed and ending at the close of business on (A) if such Debt Securities are
issuable only as Registered Securities, the day of the mailing of the relevant
notice of redemption and (B) if such Debt Securities are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if such Debt Securities are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except, in the case of
any Registered Security to be redeemed in part, the portion thereof not to be
redeemed, or (iii) to exchange any Bearer Security so selected for redemption
except that, to the
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extent provided with respect to such Bearer Security, such Bearer Security may
be exchanged for a Registered Security of that series and of like tenor,
provided that such Registered Security shall be simultaneously surrendered for
redemption, or (iv) to issue, register the transfer of or exchange any Debt
Security which has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
305).
MERGER, CONSOLIDATION OR SALE
The Operating Partnership or the Guarantor may consolidate with, or sell,
lease or convey all or substantially all of its assets to, or merge with or
into, any other entity, provided that (a) the Operating Partnership or the
Guarantor, as the case may be, shall be the continuing entity, or the successor
entity (if other than the Operating Partnership or the Guarantor) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets shall expressly assume payment of the principal of (and
premium, if any) and interest on all the Debt Securities and the due and
punctual performance and observance of all of the covenants and conditions
contained in the Indenture; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Operating Partnership or the Guarantor, such successor entity or any Subsidiary
as a result thereof as having been incurred by the Operating Partnership or the
Guarantor, such successor entity or such Subsidiary at the time of such
transaction, no Event of Default under the Indenture, and no event which, after
notice or the lapse of time, or both, would become such an Event of Default,
shall have occurred and be continuing; and (c) an officer's certificate and
legal opinion covering such conditions shall be delivered to the Trustee
(Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as permitted under "-- Merger, Consolidation or Sale"
above, the Operating Partnership is required to do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (statutory and charter) and franchises; provided, however, that the
Operating Partnership shall not be required to preserve any such right or
franchise if it determines that the loss thereof is not disadvantageous in any
material respect to the Holders of the Debt Securities (Section 1006).
Maintenance of Properties. The Operating Partnership is required to cause
all of its material properties used or useful in the conduct of its business or
the business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and to cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Operating Partnership may be
necessary so that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that the Operating
Partnership and its subsidiaries shall not be prevented from selling or
otherwise disposing for value their respective properties in the ordinary course
of business (Section 1007).
Insurance. The Operating Partnership is required to, and is required to
cause each of its Subsidiaries to, keep all of its insurable properties insured
against loss or damage at least equal to their then full insurable value
(subject to reasonable deductibles determined from time to time by the Operating
Partnership) with financially sound and reputable insurance companies (Section
1008).
Payment of Taxes and Other Claims. The Operating Partnership is required
to pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon its income, profits or property or
that of any Subsidiary, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Operating Partnership or any Subsidiary; provided, however, that the Operating
Partnership shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings (Section
1009).
Provision of Financial Information. The Holders of Debt Securities will be
provided with copies of the annual reports and quarterly reports of the
Operating Partnership. Whether or not the Operating Partnership is
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subject to Section 13 or 15(d) of the Exchange Act and for so long as any Debt
Securities are outstanding, the Operating Partnership will, to the extent
permitted under the Exchange Act, be required to file with the Commission the
annual reports, quarterly reports and other documents which the Operating
Partnership would have been required to file with the Commission pursuant to
such Section 13 or 15(d) (the "Financial Statements") if the Operating
Partnership were so subject, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Operating Partnership would have been required so to file such documents if the
Operating Partnership were so subject. The Operating Partnership will also in
any event (x) within 15 days of each Required Filing Date (i) transmit by mail
to all Holders of Debt Securities, as their names and addresses appear in the
Security Register, without cost to such Holders, copies of the annual reports
and quarterly reports which the Operating Partnership would have been required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if the Operating Partnership were subject to such Sections and (ii) file with
the Trustee copies of the annual reports, quarterly reports and other documents
which the Operating Partnership would have been required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Operating
Partnership were subject to such Sections and (y) if filing such documents by
the Operating Partnership with the Commission is not permitted under the
Exchange Act, promptly upon written request and payment of the reasonable cost
of duplication and delivery, supply copies of such documents to any prospective
Holder (Section 1010).
Additional Covenants. Any additional or different covenants of the
Operating Partnership with respect to any series of Debt Securities will be set
forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (a) default for
30 days in the payment of any installment of interest on any Debt Security of
such series; (b) default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series at its Maturity; (c) default in making any
sinking fund payment as required for any Debt Security of such series; (d)
default in the performance of any other covenant of the Operating Partnership
contained in the Indenture (other than a covenant added to the Indenture solely
for the benefit of a series of Debt Securities issued thereunder other than such
series), such default having continued for 60 days after written notice as
provided in the Indenture; (e) default in the payment of an aggregate principal
amount exceeding $30,000,000 of any recourse indebtedness of the Operating
Partnership, however evidenced, such default having occurred after the
expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such indebtedness
is not discharged or such acceleration is not rescinded or annulled within 10
days after written notice as provided in the Indenture; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Operating Partnership or any Significant Subsidiary
or any of their respective property; and (g) any other Event of Default provided
with respect to a particular series of Debt Securities (Section 501).
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series of the Original Issue Discount
Securities or Indexed Securities, such portion of the principal amount as may be
specified in the terms thereof) of all of the Debt Securities of that series to
be due and payable immediately by written notice thereof to the Operating
Partnership (and to the Trustee if given by the Holders); provided, that in the
case of an Event of Default described under paragraph (f) of the preceding
paragraph, acceleration is automatic. However, at any time after such
acceleration with respect to Debt Securities of such series has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the Holders of not less than a majority in principal amount of
Outstanding Debt Securities of such series may rescind and annul such
acceleration and its consequences if (a) the Operating Partnership shall have
deposited with the Trustee all amounts due otherwise than on account of such
declaration, plus certain fees, expenses, disbursements and advances of the
Trustee and (b) all Events of Default, other than the non-payment of accelerated
principal of the Debt Securities of such series, have been cured or waived as
provided in the Indenture (Section 502). The Indenture also provides that the
Holders of
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not less than a majority in principal amount of the Outstanding Debt Securities
of any series may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (y) in
respect of a covenant or provision contained in the Indenture that cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security affected thereby (Section 513).
The Trustee will be prepared to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; provided, however, that the Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or in the
payment of any sinking fund installment in respect of any Debt Security of such
series) if a trust committee of Responsible Officers of the Trustee consider
such withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of such series, as well as
an offer of indemnity reasonably satisfactory to it (Section 507). This
provision will not prevent, however, any Holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective due
dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request of any Holders of any series of Debt
Securities then Outstanding under the Indenture, unless such Holders shall have
offered to the Trustee thereunder reasonable security or indemnity (Section
602). The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or of exercising any trust or power conferred upon the Trustee with
respect to the Debt Securities of such series. However, the Trustee may refuse
to follow any direction which is in conflict with any law or the Indenture,
which may involve the Trustee in personal liability or which may be unduly
prejudicial to the Holders of Debt Securities of such series not joining therein
(Section 512).
Within 120 days after the close of each fiscal year, each of the Operating
Partnership and the Guarantor must deliver to the Trustee a certificate, signed
by one of several specified officers of the Operating Partnership or the
Guarantor, as the case may be, stating whether or not such officer has knowledge
of any default under the Indenture and, if so, specifying each such default and
the nature and status thereof (Section 1011).
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities which are affected by such
modification or amendment (voting as one class); provided, however, that no such
modification or amendment may, without the consent of the Holder of each such
Debt Security affected thereby: (a) change the Stated Maturity of the principal
of, or premium (if any) or any installment of interest on, any such Debt
Security; (b) reduce the principal amount of, or the rate or amount of interest
on, or any premium payable on redemption of, any such Debt Security, or reduce
the amount of principal of an Original Issue Discount Security that would be due
and payable upon acceleration of the maturity thereof or that would be provable
in bankruptcy, or adversely affect any right of repayment at the option of the
holder of any such Debt Security; (c) change the Place of Payment, or the coin
or currency, for payment of principal of, premium, if any, or interest on any
such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage in principal amount of Outstanding Debt Securities
necessary to modify or amend the Indenture, reduce the percentage of Outstanding
Debt Securities of any series necessary to waive compliance with certain
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provisions thereof or certain defaults and consequences thereunder, or to reduce
the quorum or voting requirements set forth in the Indenture; or (f) modify any
of the foregoing provisions or any of the provisions relating to the waiver of
certain past defaults or certain covenants, except to increase the percentage
required to effect such action or to provide that certain other provisions may
not be modified or waived without the consent of the Holder of each Outstanding
Debt Security affected thereby (Section 902).
The Indenture provides that the Holders of not less than a majority in
principal amount of a series of Outstanding Debt Securities have the right to
waive compliance by the Operating Partnership with certain covenants relating to
such series of Debt Securities in the Indenture (Section 1013).
Modifications and amendments of the Indenture will be permitted to be made
by the Operating Partnership and the Guarantor, and the Trustee without the
consent of any Holder of Debt Securities for any of the following purposes: (i)
to evidence the succession of another Person to the Operating Partnership or the
Guarantor as obligor under the Indenture; (ii) to add to the covenants of the
Operating Partnership or the Guarantor for the benefit of the Holders of all or
any series of Debt Securities or to surrender any right or power conferred upon
the Operating Partnership in the Indenture; (iii) to add Events of Default for
the benefit of the Holders of all or any series of Debt Securities; (iv) to add
or change any provisions of the Indenture to facilitate the issuance of, or to
liberalize certain terms of, Debt Securities in bearer form, to change or
eliminate any restrictions on payment of the principal of or premium or interest
on Debt Securities, to modify the provisions relating to global Debt Securities,
or to permit or facilitate the issuance of Debt Securities in uncertificated
form, provided that such action shall not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect; (v) to
change or eliminate any provisions of the Indenture, provided that any such
change or elimination shall become effective only when there are no Debt
Securities Outstanding of any series created prior thereto which are entitled to
the benefit of such provision or such amendment shall not apply to any then
Outstanding Debt Security; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series; (viii) to provide
for the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee; (ix)
to cure any ambiguity, defect or inconsistency in the Indenture, provided that
such action shall not adversely affect the interests of Holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities, provided that
such action shall not adversely affect the interests of the Holders of the Debt
Securities of any series in any material respect (Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
acceleration of the maturity thereof, (ii) the principal amount of a Debt
Security denominated in a foreign currency that shall be deemed Outstanding
shall be the U.S. dollar equivalent, determined on the issue date for such Debt
Security, of the principal amount (or, in the case of an Original Issue Discount
Security, the U.S. dollar equivalent on the issue date of such Debt Security of
the amount determined as provided in (i) above) of such Debt Security, (iii) the
principal amount of an Indexed Security that shall be deemed Outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to the
Indenture, and (iv) Debt Securities owned by the Operating Partnership or any
other obligor upon the Debt Securities or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded (Section 101).
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series issuable, in whole or in part, as Bearer Securities
(Section 1501). A meeting will be permitted to be called at any time by the
Trustee, and also, upon request, by the Operating Partnership or the Holders of
at least 10% in principal amount of the Outstanding Debt Securities of such
series, in any such case upon notice given as provided in the Indenture (Section
1502). Except for any consent that must be given by the Holder of each Debt
Security affected by certain modifications and amendments of the Indenture, any
resolution presented at
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a meeting or adjourned meeting duly reconvened at which a quorum is present will
be permitted to be adopted by the affirmative vote of the Holders of a majority
in principal amount of the Outstanding Debt Securities of that series; provided,
however, that, except as referred to above, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the Holders of a specified percentage
in principal amount of the Outstanding Debt Securities of a series may be
adopted at a meeting at which a quorum is present by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding Debt
Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
the Indenture will be binding on all Holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or representing a majority in principal amount
of the Outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the Holders of not less than a specified percentage in
principal amount of the Outstanding Debt Securities of a series, then with
respect to such action (and only such action) the Persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities of such series that
vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under the Indenture (Section
1504).
DISCHARGE
The Operating Partnership may discharge certain obligations to Holders of
any series of Debt Securities that have not already been delivered to the
Trustee for cancellation and that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one
year) by irrevocably depositing with the Trustee, in trust, funds in an amount
sufficient to pay the entire indebtedness on such Debt Securities in respect of
principal (and premium, if any) and interest to the date of such deposit (if
such Debt Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be (Section 401).
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Operating Partnership or the Guarantor may elect
either (a) to defease and be discharged from any and all obligations with
respect to such Debt Securities (except for the obligation to pay Additional
Amounts, if any, upon the occurrence of certain events of tax, assessment or
governmental charge with respect to payments on such Debt Securities and the
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency in respect of such Debt Securities and to hold
moneys for payment in trust) ("defeasance") (Section 1402) or (b) to be released
from its obligations with respect to such Debt Securities under Sections 1006 to
1010, inclusive, of the Indenture (including the restrictions described under
"-- Certain Covenants" above) and its obligations with respect to any other
covenant, and any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403), in either case upon the irrevocable deposit by the
Operating Partnership or the Guarantor, as the case may be, with the Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable at
Stated Maturity, or Government Obligations (as defined below),
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or both, applicable to such Debt Securities which through the scheduled payment
of principal and interest in accordance with their terms will provide money in
an amount sufficient to pay the principal of (and premium, if any) and interest
on such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor (Section 1404).
Such a trust will only be permitted to be established if, among other
things, the Operating Partnership or the Guarantor, as the case may be, has
delivered to the Trustee an Opinion of Counsel (as specified in the Indenture)
to the effect that the Holders of such Debt Securities will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to U.S. federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred, and such
Opinion of Counsel, in the case of defeasance, must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the Indenture (Section 1404).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligations or a specific payment of interest on
or principal of any such Government Obligations held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership or the Guarantor, as the case may be, has deposited
funds or Government Obligations to effect defeasance or covenant defeasance with
respect to Debt Securities of any series, (a) the Holder of a Debt Security of
such series is entitled to, and does, elect pursuant to the Indenture or the
terms of such Debt Security to receive payment in a currency, currency unit or
composite currency other than that in which such deposit has been made in
respect of such Debt Security, or (b) a Conversion Event (as defined below)
occurs in respect of the currency, currency unit or composite currency in which
such deposit has been made, the indebtedness represented by such Debt Security
shall be deemed to have been, and will be, fully discharged and satisfied
through the payment of the principal of (and premium, if any) and interest on
such Debt Security as they become due out of the proceeds yielded by converting
the amount so deposited in respect of such Debt Security into a currency,
currency unit or composite currency in which such Debt Security becomes payable
as a result of such election or such Conversion Event based on the applicable
market exchange rate (Section 1405). "Conversion Event" means the cessation of
use of (i) a currency, currency unit or composite currency both by the
government of the country which issued such currency and for the settlement of
transactions by a central bank or other public institutions of or within the
international banking community, (ii) the ECU both within the European Monetary
System and for the settlement of transactions by public institutions of or
within the European Community or (iii) any currency unit (or composite currency)
other than the ECU for the purposes for which it was established (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement, all payments
of principal of (and premium, if any) and interest on any Debt Security that is
payable in a foreign currency that ceases to be used by its government of
issuance shall be made in U.S. dollars.
In the event the Operating Partnership or the Guarantor effects covenant
defeasance with respect to any Debt Securities and such Debt Securities are
declared due and payable because of the occurrence of any Event of Default other
than the Event of Default described in clause (d) under "-- Events of Default,
Notice and Waiver" with respect to Sections 1006 to 1010, inclusive, of the
Indenture (which sections would no
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longer be applicable to such Debt Securities) or described in clause (g) under
"-- Events of Default, Notice and Waiver" with respect to any other covenant as
to which there has been covenant defeasance, the amount in such currency,
currency unit or composite currency in which such Debt Securities are payable,
and Government Obligations on deposit with the Trustee, will be sufficient to
pay amounts due on such Debt Securities at the time of their Stated Maturity but
may not be sufficient to pay amounts due on such Debt Securities at the time of
the acceleration resulting from such Event of Default. However, the Operating
Partnership would remain liable to make payment of such amounts due at the time
of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above with respect to the Debt
Securities of or within a particular series.
THE GUARANTEE
The Indenture provides that SPG, LP will, and as further set forth in
detail in the applicable Prospectus Supplement, guarantee (the "Guarantee") the
due and punctual payment of the principal of, premium, if any, interest on, and
any other amounts payable with respect to, the Debt Securities, when and as the
same shall become due and payable, whether at a maturity date, on redemption, by
declaration of acceleration or otherwise in accordance with the terms of the
Debt Securities and the Indenture (Section 1701). The Indenture provides that
(i) the Trustee may exercise its rights thereunder on behalf of the Holders and
(ii) SPG, LP shall covenant that it shall take no action which would cause the
Operating Partnership to violate any covenant, agreement or any other condition
thereunder (Section 1705). The Guarantee will terminate upon the consummation of
the reorganizational transactions pursuant to which the Operating Partnership is
expected to own directly all of the assets and partnership interest then owned
by SPG, LP (Section 1706). However, there can be no assurance that such
reorganizational transactions will be so effected. See "The Operating
Partnership." No partner (whether limited or general, including the Company) of
SPG, LP will have any obligation for any obligations of SPG, LP under the
Guarantee (Section 1707).
In the absence of the Guarantee, Holders of the Debt Securities will have
no claims, with regards to any payments in connection with the Debt Securities
against the assets of SPG, LP or the assets of any other Subsidiary of the
Operating Partnership. Any such claim that such Holders may make will have to be
made indirectly through the equity interest that the Operating Partnership has
in SPG, LP (or other Subsidiaries), and will thus be structurally subordinated
to the claims of creditors of SPG, LP (or other Subsidiaries). As a result of
the Guarantee, Holders of the Debt Securities, upon exercising their rights with
respect to the Guarantee against SPG, LP, will be considered creditors of SPG,
LP and their claims will rank pari passu with those of unsecured and
unsubordinated creditors of SPG, LP and will not be structurally subordinated to
such creditors.
MISCELLANEOUS
No Conversion Rights. The Debt Securities will not be convertible into or
exchangeable for any capital stock of the Company or equity interest in the
Operating Partnership.
Global Securities. The Debt Securities of a series may be issued in whole
or in part in the form of one or more global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the applicable Prospectus Supplement relating to
such series. Global Securities may be issued in either registered or bearer form
and in either temporary or permanent form. The specific terms of the depositary
arrangement with respect to a series of Debt Securities will be described in the
applicable Prospectus Supplement relating to such series.
PLAN OF DISTRIBUTION
The Operating Partnership may sell the Debt Securities to or through
underwriters, and also may sell the Debt Securities directly to one or more
other purchasers or through agents. The distribution of the Debt Securities may
be effected from time to time in one or more transactions at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices.
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The Prospectus Supplement will set forth terms of the offering of the Debt
Securities, including (i) the name of any underwriters or agents with whom the
Operating Partnership has entered into arrangements with respect to the sale or
issuance of Debt Securities, (ii) the initial public offering or purchase price
of the Debt Securities, (iii) any underwriting discounts, commissions and other
items constituting underwriter's compensation from the Operating Partnership and
any other discounts, concessions or commissions allowed or reallowed or paid by
any underwriters to other dealers, (iv) any commissions paid to any agents and
(v) the net proceeds to the Operating Partnership. In connection with the sale
of Debt Securities, underwriters may receive compensation from the Operating
Partnership or from purchasers of Debt Securities, for whom they may act as
agents, in the form of discounts, concessions or commissions. Underwriters may
sell Debt Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts or commissions
they receive from the Operating Partnership, and any profit on the resale of
Debt Securities they realize, may be deemed to be underwriting discounts and
commissions under the Securities Act.
Under agreements the Operating Partnership may enter into, underwriters,
dealers and agents who participate in the distribution of Debt Securities may be
entitled to indemnification by the Operating Partnership against certain
liabilities, including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Operating Partnership in the
ordinary course of business.
Unless otherwise set forth in the Prospectus Supplement relating to the
issuance of Debt Securities, the obligations of the underwriters to purchase
such Debt Securities will be subject to certain conditions precedent and each of
the underwriters with respect to such Debt Securities will be obligated to
purchase all of the Debt Securities allocated to it if any such Debt Securities
are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
If so indicated in the applicable Prospectus Supplement, the Operating
Partnership will authorize underwriters or other persons acting as the Operating
Partnership's agents to solicit offers by certain institutions to purchase Debt
Securities from the Operating Partnership pursuant to contracts providing for
payment and delivery on a future date. Institutions with which such contracts
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and others,
but in all cases such institutions must be approved by the Operating
Partnership. The obligations of any purchaser under any such contract will be
subject only to the condition that the purchase of the Debt Securities shall not
at any time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect of the validity or performance of such
contracts.
LEGAL MATTERS
The validity of each issue of the Debt Securities will be passed upon for
the Operating Partnership by Baker & Daniels, Indianapolis, Indiana. Baker &
Daniels will also pass upon certain tax matters. Rogers & Wells, New York, New
York, will act as counsel to any underwriters, dealers or agents.
EXPERTS
The audited financial statements and schedules incorporated by reference in
the Registration Statement of which this Prospectus is a part have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
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NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE OPERATING PARTNERSHIP OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS
SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS OR IN THE AFFAIRS
OF THE OPERATING PARTNERSHIP SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PAGE
-----
PROSPECTUS SUPPLEMENT
The Operating Partnership.............. S-3
The Offering........................... S-4
Recent Developments.................... S-6
Use of Proceeds........................ S-9
Capitalization......................... S-10
Selected Financial and Operating
Data................................. S-11
Summary of Portfolio Properties........ S-14
Description of the Notes............... S-15
Underwriting........................... S-22
Legal Matters.......................... S-23
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 3
The Operating Partnership.............. 4
Use of Proceeds........................ 5
Ratio of Earnings to Fixed Charges..... 5
Description of Debt Securities......... 6
Plan of Distribution................... 16
Legal Matters.......................... 17
Experts................................ 17
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LOGO
$150,000,000
6 7/8% NOTES
DUE OCTOBER 27, 2005
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
J.P. MORGAN & CO.
UBS SECURITIES
OCTOBER 22, 1997
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