As filed with the Securities and Exchange Commission on February 20, 2024
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VENTAS, INC.
and
VENTAS REALTY, LIMITED PARTNERSHIP
(Exact Name of Registrants as Specified in Its Charter)
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Delaware
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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61-1055020
61-1324573
(I.R.S. Employer
Identification Number)
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353 N. Clark Street, Suite 3300
Chicago, Illinois 60654
(877) 483-6827
(Address, including zip code, and telephone number,
including area code, of registrants’ principal executive offices)
Carey S. Roberts, Esq.
Executive Vice President, General Counsel and
Ethics and Compliance Officer
Ventas, Inc.
353 N. Clark Street, Suite 3300
Chicago, Illinois 60654
(877) 483-6827
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
Richard D. Truesdell, Jr., Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☒
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the Registrant (Ventas, Inc.) is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the Registrant (Ventas Realty, Limited Partnership) is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☐
Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
PROSPECTUS
Ventas, Inc.
Common Stock, Preferred Stock, Depositary Shares, Warrants and
Debt Securities
Ventas Realty, Limited Partnership
Debt Securities
Guarantees of Debt Securities of Ventas, Inc.
by Ventas Realty, Limited Partnership
Guarantees of Debt Securities of Ventas Realty, Limited Partnership
by Ventas, Inc.
Ventas, Inc. may offer and sell, from time to time, in one or more offerings, common stock, preferred stock, depositary shares, warrants and debt securities. These securities may be offered and sold separately, together or as units with other securities described herein. These debt securities may be fully and unconditionally guaranteed by Ventas Realty, Limited Partnership, as described herein or in a prospectus supplement. These debt securities and any such guarantees may be senior or subordinated.
Ventas Realty, Limited Partnership may offer and sell, from time to time, in one or more offerings, debt securities. These debt securities may be offered and sold separately, together or as units with other securities described herein. These debt securities may be fully and unconditionally guaranteed by Ventas, Inc., as described herein or in a prospectus supplement. These debt securities and any such guarantees may be senior or subordinated.
The securities described herein may be issued in one or more series or issuances. We will provide the specific terms of any offering (including the securities being offered and their offering prices) in supplements to this prospectus. Because Ventas, Inc. is organized and conducts its operations so as to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, the specific terms of any securities may include limitations on actual or constructive ownership and restrictions on transfer of the securities, in each case as may be appropriate to preserve Ventas, Inc.’s status as a REIT. You should carefully read this prospectus and the applicable prospectus supplement before making an investment decision. See “Risk Factors” on page 4 of this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated by reference into this prospectus, for a discussion of matters that you should consider before investing in these securities.
The common stock of Ventas, Inc. is listed on the New York Stock Exchange under the symbol “VTR.” The closing price of our common stock on the New York Stock Exchange was $43.76 per share on February 16, 2024. None of the other securities offered hereby are currently listed on a national securities exchange.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is February 20, 2024.
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration process. Under this shelf process, the securities described in this prospectus may be sold in one or more offerings. This prospectus provides you with a description of the securities that we may offer. Each time that we sell the securities described in this prospectus, we may provide a prospectus supplement, which may add, update or change information contained in or incorporated by reference into this prospectus. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. If there is any inconsistency between the information in or incorporated by reference into this prospectus and the applicable prospectus supplement or free writing prospectus, you should rely on the prospectus supplement or free writing prospectus, as applicable. Before purchasing any securities, you should read this prospectus and any accompanying prospectus supplement (and any applicable free writing prospectuses), together with the additional information described under the heading “Where You Can Find More Information and Incorporation by Reference.”
We have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus, in a prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities offered hereby are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented herein does not extend to you. You should assume that the information included and incorporated by reference herein, any accompanying prospectus supplement and any applicable free writing prospectus, as well as the information we have previously filed with the SEC, is accurate only as of the date of the document containing such information, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates. Statements contained or deemed to be incorporated by reference in this prospectus or any accompanying prospectus supplement as to the contents of any contract or other document are not necessarily complete, and in each instance we refer you to the copy of the contract or other document filed as an exhibit to a document incorporated or deemed to be incorporated by reference in this prospectus or any such prospectus supplement, each such statement being qualified in all respects by such reference.
You should not consider any information in this prospectus or any accompanying prospectus supplement to be investment, legal or tax advice. You should consult your own counsel, accountants and other advisers for legal, tax, business, financial and related advice regarding the purchase of any of the securities offered by this prospectus.
Unless otherwise indicated or except where the context otherwise requires:
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references herein to “Ventas,” “we,” “us,” “our” and other similar terms mean Ventas, Inc., together with its consolidated subsidiaries; and
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references herein to “Ventas Realty” mean Ventas Realty, Limited Partnership.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents incorporated by reference herein include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are subject to risks and uncertainties, including those identified in the documents that are or will be incorporated by reference in this prospectus and any accompanying prospectus supplement, which could cause actual results to differ materially from such statements. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “assume,” “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “opportunity,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof. The forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. We caution you that any risk factors described in any prospectus supplement or in any document incorporated by reference herein or therein are not exclusive. There may also be other risks we are unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance, including those made in the “Risk Factors” section of the documents that are or will be incorporated by reference in this prospectus and any accompanying prospectus supplement.
Information concerning important factors that could cause actual events or results to be materially different from the forward-looking statements can be found in the “Risk Factors” section of the documents that are or will be incorporated by reference in this prospectus and any accompanying prospectus supplement. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, it is not possible to foresee or identify all factors that could have a material and negative impact on our future performance. The forward-looking statements contained or incorporated by reference in this prospectus or any accompanying prospectus supplement are made on the basis of management’s assumptions and analyses, as of the time the statements are made, in light of their experience and perception of historical conditions, expected future developments and other factors believed to be appropriate under the circumstances.
ABOUT THE REGISTRANTS
The following highlights information about the registrants and our business included elsewhere or incorporated by reference in this prospectus. It is not complete and does not contain all of the information that you should consider before making an investment decision. You should carefully read this prospectus, any applicable prospectus supplement and the information incorporated by reference herein and therein.
Ventas
Ventas, Inc., an S&P 500 company, is a real estate investment trust (“REIT”) focused on delivering strong, sustainable shareholder returns by enabling exceptional environments that benefit a large and growing aging population. We hold a portfolio that includes senior housing communities, outpatient medical buildings, research centers, hospitals and healthcare facilities located in North America and the United Kingdom. As of December 31, 2023, we owned or had investments in approximately 1,400 properties (including properties classified as held for sale). Our company is headquartered in Chicago, Illinois with additional corporate offices in Louisville, Kentucky and New York, New York.
We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 1999. Provided we qualify for taxation as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that is currently distributed to our stockholders. In order to maintain our qualification as a REIT, we must satisfy a number of highly technical requirements, which impact how we invest in, operate or manage our assets.
We primarily invest in our portfolio of real estate assets through wholly-owned subsidiaries and other co-investment entities. We operate through three reportable business segments: senior housing operating portfolio, which we also refer to as “SHOP,” outpatient medical and research portfolio, which was formerly known as office operations, and triple-net leased properties. Non-segment assets consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments and miscellaneous accounts receivable as well as investments in unconsolidated entities. In addition, from time to time, we make secured and unsecured loans and other investments relating to real estate or operators. Our chief operating decision maker evaluates performance of the combined properties in each operating segment and determines how to allocate resources to these segments, in significant part, based on net operating income (“NOI”) and related measures for each segment.
We also have investments in unconsolidated entities, including through our third-party institutional capital management business, Ventas Investment Management (“VIM”). Through VIM, we partner with third-party institutional investors to invest in real estate through various joint ventures and other co-investment vehicles where we are the sponsor or general partner, including our open-ended investment vehicle, the Ventas Life Science & Healthcare Real Estate Fund.
We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of (1) generating reliable and growing cash flows, (2) maintaining a portfolio of high-quality assets that are unified in serving the large and growing aging population and (3) preserving our financial strength, flexibility and liquidity.
Our ability to access capital in a timely and cost-effective manner is critical to the success of our business strategy because it affects our ability to satisfy existing obligations, including the repayment of maturing indebtedness, and to make future investments. Factors such as general market conditions, interest rates, credit ratings on our securities, expectations of our potential future earnings and cash distributions, and the trading price of our common stock impact our access to and cost of external capital. For that reason, we generally attempt to match the long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt.
Our principal executive offices are located at 353 North Clark Street, Suite 3300, Chicago, Illinois 60654, and our telephone number is (877) 483-6827. We maintain a website at www.ventasreit.com. Information on our website is not incorporated by reference herein and our web address is included herein as an inactive textual reference only.
Ventas Realty
Ventas Realty is a wholly owned direct subsidiary of Ventas, Inc. and a limited partnership organized under the laws of the State of Delaware.
RISK FACTORS
Our business, operations and financial condition are subject to various risks. Before you invest in our securities, you should carefully read and consider:
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the risks described in our Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated by reference herein; and
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any risks described in any subsequent Quarterly Report on Form 10-Q, Current Report on Form 8-K or other filings we make with the SEC or in the prospectus supplements relating to specific offerings of securities.
USE OF PROCEEDS
Unless otherwise described in a prospectus supplement, we intend to use the net proceeds from the sale of any securities under this prospectus for working capital and other general corporate purposes, which may include funding future acquisitions and investments and repayment of existing indebtedness, or any other general corporate purposes we may deem necessary or advisable. Until we apply the proceeds from a sale of securities to their intended purposes, we may invest such proceeds in short-term investments, including repurchase agreements, some or all of which may not have an investment-grade rating.
DESCRIPTION OF VENTAS, INC. COMMON STOCK
This section describes the general terms and provisions of the common stock of Ventas, Inc. The prospectus supplement relating to any offering of common stock, or other securities convertible into or exchangeable or exercisable for common stock, will describe more specific terms of the offering of common stock or other securities, including the number of shares offered, the initial offering price, and market price and dividend information.
The summary set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the Amended and Restated Certificate of Incorporation, as amended, of Ventas, Inc. (the “Certificate of Incorporation”), and the Sixth Amended and Restated By-Laws, as amended, of Ventas, Inc. (the “Bylaws”), each of which is filed or incorporated by reference as an exhibit to the registration statement of which this prospectus is a part and incorporated by reference herein. You should read the Certificate of Incorporation and Bylaws for additional information before you purchase any shares of Ventas, Inc. common stock.
General
The Certificate of Incorporation authorizes Ventas, Inc. to issue up to 600,000,000 shares of its common stock, par value $0.25 per share. As of February 7, 2024, 402,461,579 shares of Ventas, Inc. common stock were issued and outstanding. The common stock of Ventas, Inc. is listed on the New York Stock Exchange under the symbol “VTR.”
All shares of common stock offered hereby, when issued, will be duly authorized, fully paid and nonassessable. Subject to the preferential rights of any other shares of capital stock and to certain provisions of the Certificate of Incorporation, holders of shares of Ventas, Inc. common stock are entitled to receive distributions if, as and when authorized and declared by Ventas, Inc.’s Board of Directors (the “Ventas Board”) out of assets legally available therefor and to share ratably in our assets legally available for distribution to stockholders in the event of our liquidation, dissolution or winding-up after payment of, or adequate provision for, all of our known debts and liabilities. We currently expect to continue to make quarterly distributions, and from time to time we may make additional distributions.
Holders of shares of Ventas, Inc. common stock are entitled to one vote per share on all matters on which the holders of common stock are entitled to vote. Holders of shares of Ventas, Inc. common stock have no conversion, sinking fund, redemption or preemptive rights. Subject to certain provisions of the Certificate of Incorporation, shares of Ventas, Inc. common stock have equal distribution, liquidation and other rights.
Restrictions on Ownership and Transfer
Ventas, Inc.’s Certificate of Incorporation contains restrictions on the ownership and transfer of its common stock to enable Ventas, Inc. to preserve its REIT status. Ventas Inc.’s Certificate of Incorporation provides certain specified remedies if a transfer would violate one of the ownership limitations. In particular, if a person acquires beneficial or constructive ownership in excess of the ownership limit (currently, 9.0% in number or value, of the outstanding shares of Ventas, Inc. common stock) or in violation of certain other limitations set forth in the Certificate of Incorporation, then the shares that are beneficially or constructively owned in excess of the relevant limitation are considered to be “excess shares.” Excess shares are automatically deemed transferred to a trust for the benefit of a charitable institution or other qualifying organization selected by the Ventas Board. The trust is entitled to all dividends with respect to the excess shares and the trustee may exercise all voting power over the excess shares. Ventas, Inc. has the right to buy the excess shares for a purchase price equal to the lesser of (1) the price per share in the transaction that created the excess shares, or (2) the market price on the date Ventas, Inc. buys the shares, and Ventas, Inc. may defer payment of the purchase price for up to five years. If Ventas, Inc. does not purchase the excess shares, the trustee of the trust is required to transfer the excess shares at the direction of the Ventas Board. The owner of the excess shares is entitled to receive the lesser of the proceeds from the sale of the excess shares or the original purchase price for such excess shares, and any additional amounts are payable to the beneficiary of the trust. Ventas Inc.’s Certificate of Incorporation also provides that a transfer of shares of common stock that would otherwise result in ownership, under the applicable attribution rules of the Code, of shares
in excess of the ownership limit, would cause Ventas, Inc.’s shares to be beneficially owned by fewer than 100 persons, or would result in Ventas, Inc. being “closely held” (within the meaning of Section 856(h) of the Code), will be void and the purported transferee will acquire no rights in the shares.
Under Ventas, Inc.’s Certificate of Incorporation, the Ventas Board may, in its sole and absolute discretion, exempt a person from the 9.0% ownership limit applicable to common stock, if such stockholder provides information and makes representations to the Ventas Board that are satisfactory to the Ventas Board, in its sole and absolute discretion, to establish that such person’s ownership in excess of the ownership limit would not jeopardize Ventas, Inc.’s qualification as a REIT. Any such waiver is and would be conditioned on the person’s ownership not violating the other ownership limitations or otherwise creating the possibility of REIT qualification concerns for Ventas, Inc. and its subsidiaries. The Ventas Board may require an opinion of counsel or the Internal Revenue Service (“IRS”) ruling satisfactory to the Ventas Board and may impose such other conditions or restrictions as it deems appropriate prior to granting any waiver to the 9.0% limit.
These restrictions on the ownership and transfer of our common stock could delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.
Certain Anti-Takeover Provisions in the Certificate of Incorporation and Bylaws
Some of the provisions in the Certificate of Incorporation and Bylaws, in addition to the matters discussed above under “— Restrictions on Ownership and Transfer,” could make it more difficult for a third party to acquire, or may discourage a third party from acquiring, control of us. These provisions include, among others:
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Provisions in the Certificate of Incorporation and Bylaws permitting the Ventas Board to make, amend or repeal the Certificate of Incorporation and Bylaws;
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Provisions in the Certificate of Incorporation permitting the Ventas Board to issue preferred stock in series and to fix the rights and preferences of the series, including, among other things, whether and to what extent the shares of any series will have voting rights and the extent of the preferences of the shares of any series with respect to dividends and other matters;
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A provision in the Bylaws granting only to the Ventas Board or the Chairman of the Ventas Board the right to call special meetings of stockholders;
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Provisions in the Certificate of Incorporation and Bylaws allowing the Ventas Board to fill vacancies on the Board;
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A provision in the Bylaws requiring advance notice for our stockholders to nominate candidates for election to the Ventas Board or to propose business to be considered by our stockholders at a meeting of our stockholders;
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A provision in the Certificate of Incorporation requiring that excess shares are automatically deemed transferred to a trust for the benefit of a charitable institution or other qualifying organization selected by the Ventas Board.
In addition, Ventas, Inc. is subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”). Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the person became an interested stockholder, unless the business combination or the transaction in which the stockholder became an interested stockholder is approved in a prescribed manner. A “business combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within the prior three years owned, between 15% and 85% of the corporation’s voting stock.
DESCRIPTION OF VENTAS, INC. PREFERRED STOCK
This section describes the general terms and provisions of the preferred stock of Ventas, Inc. The prospectus supplement relating to any offering of preferred stock, or other securities convertible into or exchangeable or exercisable for preferred stock, will describe more specific terms of the preferred stock being offered, including the designation of the series, the number of shares offered, the initial offering price and any voting, dividend and liquidation preference rights, and any general terms described in this section that will not apply to those shares of preferred stock.
The summary set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the Certificate of Incorporation and the certificate of designation relating to the applicable series of preferred stock that we will file with the SEC, each of which is or will be filed or incorporated by reference as an exhibit to the registration statement of which this prospectus is a part and incorporated by reference herein. You should read the Certificate of Incorporation and such certificate of designation for additional information before you buy any shares of Ventas, Inc. preferred stock.
General
The Certificate of Incorporation authorizes Ventas, Inc. to issue up to 10,000,000 shares of preferred stock, par value $1.00 per share. As of February 7, 2024, no shares of Ventas, Inc. preferred stock were issued or outstanding.
The Ventas Board has authority, without the approval of stockholders, to issue preferred stock in one or more series having the powers, preferences and other rights as it may determine from time to time. Any shares of Ventas, Inc. preferred stock that Ventas, Inc. offers and sells under this prospectus will have the rights described in this section unless the applicable prospectus supplement provides otherwise. You should read the prospectus supplement relating to the particular series of preferred stock being offered for the specific terms of the series, including some or all of the following:
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the description of the shares of preferred stock;
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the number of shares of preferred stock offered;
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the voting rights, if any, of the holders of the shares of preferred stock;
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the offering price of the shares of preferred stock;
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the distribution rate on the shares of preferred stock, when distributions will be paid, or the method of determining the distribution rate if it is based on a formula or not otherwise fixed;
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the date from which distributions on the shares of preferred stock shall accumulate;
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the provision, if any, for auctioning or remarketing of the shares of preferred stock;
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the provision, if any, for redemption of, or a sinking fund with respect to, the shares of preferred stock;
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the liquidation preference per share of preferred stock;
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any listing of the shares of preferred stock on a securities exchange;
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whether the shares of preferred stock will be convertible or exchangeable and, if so, the security into which they are convertible or exchangeable and the terms and conditions of conversion or exchange, including the conversion price or exchange rate or the manner of determining it;
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whether interests in the shares of preferred stock will be represented by depositary shares as more fully described below under “Description of Ventas, Inc. Depositary Shares;”
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the U.S. federal income tax consequences of owning the shares of preferred stock;
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the relative ranking and preferences of the shares of preferred stock as to distribution and liquidation rights;
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any limitations on issuance of any shares of preferred stock ranking senior to or on a parity with the series of preferred stock being offered as to distribution and liquidation rights;
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any limitations on direct or beneficial ownership and restrictions on transfer of the shares of preferred stock, in each case as may be appropriate to preserve our status as a REIT; and
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any other terms of the preferred stock.
As described under “Description of Ventas, Inc. Depositary Shares,” Ventas, Inc. may, at its option, elect to offer depositary shares evidenced by depositary receipts. If Ventas, Inc. elects to so offer, each depositary receipt will represent a fractional interest in a share of the particular series of preferred stock issued and deposited with a depositary. The applicable prospectus supplement will specify that fractional interest.
Ranking
Unless the Ventas Board otherwise determines and we so specify in the applicable prospectus supplement, we expect that any shares of Ventas, Inc. preferred stock will, with respect to distribution rights and rights upon liquidation or dissolution, rank senior to all shares of Ventas, Inc. common stock.
Dividends
Holders of shares of Ventas, Inc. preferred stock of each series will be entitled to receive dividends at the rates and on the dates shown in the applicable prospectus supplement if, as and when authorized and declared by the Ventas Board out of assets legally available therefor. Ventas, Inc. will pay each dividend to holders of record as they appear on its share transfer books on the record dates fixed by the Ventas Board. In the case of shares of preferred stock represented by depositary receipts, the records of the depositary referred to under “Description of Ventas, Inc. Depositary Shares” will determine the persons to whom dividends are payable.
Dividends on any series of Ventas, Inc. preferred stock may be cumulative or noncumulative, as provided in the applicable prospectus supplement. We refer to each particular series, for ease of reference, as the applicable series. Cumulative dividends will be cumulative from and after the date shown in the applicable prospectus supplement. If the Ventas Board fails to authorize a dividend on any applicable series that is noncumulative, the holders will have no right to receive, and Ventas, Inc. will have no obligation to pay, a dividend in respect of the applicable dividend period, whether or not dividends on that series are declared payable in the future.
If the applicable series is entitled to a cumulative dividend, Ventas, Inc. may not declare, or pay or set aside for payment, a dividend on any other series of preferred stock ranking, as to dividends, on a parity with or junior to the applicable series, unless it declares, and either pays or sets aside for payment, full cumulative dividends on the applicable series for all past dividend periods. If the applicable series does not have a cumulative dividend, Ventas, Inc. must declare, and pay or set aside for payment, full dividends for the then current dividend period only. When dividends are not paid, or set aside for payment, in full on any applicable series and the shares of any other series ranking on a parity as to dividends with the applicable series, Ventas, Inc. must declare, and pay or set aside for payment, all dividends upon the applicable series and any other parity series proportionately, in accordance with accrued and unpaid dividends of the several series. For these purposes, accrued and unpaid dividends do not include unpaid dividend periods on noncumulative shares of preferred stock. No interest will be payable in respect of any dividend payment that may be in arrears.
Except as provided in the immediately preceding paragraph, unless Ventas, Inc. declares, and pays or sets aside for payment, full cumulative dividends for all past dividend periods on any applicable series entitled to a cumulative dividend, it may not declare, or pay or set aside for payment, any dividends on common stock or any other equity securities ranking junior to or on a parity with the applicable series as to dividends or upon liquidation. The foregoing restriction does not apply to dividends paid in common stock or other equity securities ranking junior to the applicable series as to dividends and upon liquidation. If the applicable series does not have cumulative dividends, Ventas, Inc. must declare, and pay or set aside for payment, only the dividend for the then current period before declaring dividends on shares of common stock or junior or parity securities. In addition, under the circumstances in which Ventas, Inc. could not declare a dividend, it may not redeem, purchase or otherwise acquire for any consideration any shares of common stock or other
parity or junior equity securities, except upon conversion into or exchange for shares of common stock or other junior equity securities. Ventas, Inc. may, however, make purchases and redemptions otherwise prohibited pursuant to certain redemptions or pro rata offers to purchase the outstanding shares of the applicable series and any other parity series of preferred stock.
Ventas, Inc. will credit any dividend payment made on an applicable series first against the earliest accrued but unpaid dividend due with respect to the series.
Redemption
Ventas, Inc. may have the right or may be required to redeem the applicable series, as a whole or in part, in each case upon the terms, if any, and at the times and at the redemption prices shown in the applicable prospectus supplement.
If the applicable series is subject to mandatory redemption, we will specify in the applicable prospectus supplement the number of shares Ventas, Inc. is required to redeem, when the redemption starts, the redemption price, and any other terms and conditions affecting the redemption. The redemption price will include all accrued and unpaid dividends, except in the case of noncumulative preferred stock. The redemption price may be payable in cash or other property, as specified in the applicable prospectus supplement. If the redemption price for the applicable series is payable only from the net proceeds of an issuance of capital stock, the terms of the applicable series may provide that, if no shares of capital stock shall have been issued or to the extent the net proceeds from any such issuance are insufficient to pay in full the aggregate redemption price then due, the shares of preferred stock will automatically and mandatorily be converted into shares of capital stock pursuant to conversion provisions specified in the applicable prospectus supplement.
Liquidation Preference
The applicable prospectus supplement will describe the liquidation preference of the applicable series. Upon our voluntary or involuntary liquidation, before any distribution may be made to the holders of shares of Ventas, Inc. common stock or any other shares of capital stock ranking junior to the applicable series in the distribution of assets upon liquidation, the holders of that series will be entitled to receive, out of assets legally available therefor, liquidating distributions in the amount of the liquidation preference, plus an amount equal to all accrued and unpaid distributions. If the applicable series does not have a cumulative dividend, accrued and unpaid dividends include only the then current dividend period. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of shares of the applicable series will have no right or claim to any of Ventas, Inc.’s remaining assets, and Ventas, Inc.’s remaining assets will be distributed among the holders of any other shares of capital stock ranking junior to the applicable series upon liquidation, according to their rights and preferences.
If, upon any voluntary or involuntary liquidation, Ventas, Inc.’s available assets are insufficient to pay the amount of the liquidating distributions on all outstanding shares of any series and the corresponding amounts payable on all shares of capital stock ranking on a parity in the distribution of assets with that series, then the holders of that series and all other equally ranking shares of capital stock will share ratably in the distribution in proportion to the full liquidating distributions to which they would otherwise be entitled.
Voting Rights
Holders of shares of the applicable series will not have any voting rights, except as otherwise from time to time required by law or as specified in the applicable prospectus supplement.
As more fully described under “Description of Ventas, Inc. Depositary Shares” below, if Ventas, Inc. elects to issue depositary shares, each representing a fraction of a share of a series of preferred stock, each depositary will in effect be entitled to a fraction of a vote per depositary share.
Conversion Rights
We will describe in the applicable prospectus supplement the terms and conditions, if any, upon which you may, or Ventas, Inc. may require you to, convert shares of the applicable series into shares of common stock or any other class or series of shares of capital stock. The terms will include the number of shares of
common stock or other securities into which the shares of the applicable series are convertible, the conversion price (or the manner of determining it), the conversion period, provisions as to whether conversion will be at the option of the holders of the series or at Ventas, Inc.’s option, the events requiring an adjustment of the conversion price, and provisions affecting conversion upon the redemption of shares of the applicable series.
Our Exchange Rights
We will describe in the applicable prospectus supplement the terms and conditions, if any, upon which Ventas, Inc. may require you to exchange shares of the applicable series for debt securities. If an exchange is required, you will receive debt securities with a principal amount equal to the liquidation preference of the applicable series. The other terms and provisions of the debt securities will not be materially less favorable to you than those of the series of preferred stock being exchanged.
Restrictions on Ownership and Transfer
Ventas, Inc.’s Certificate of Incorporation contains restrictions on the ownership and transfer of its preferred stock to enable Ventas, Inc. to preserve its REIT status. Ventas Inc.’s Certificate of Incorporation provides certain specified remedies if a transfer would violate one of the ownership limitations. In particular, if a person acquires beneficial or constructive ownership in excess of the ownership limit (currently, 9.9% in number or value, of the outstanding shares of Ventas, Inc. preferred stock) or in violation of certain other limitations set forth in the Certificate of Incorporation, then the shares that are beneficially or constructively owned in excess of the relevant limitation are considered to be “excess shares.” Excess shares are automatically deemed transferred to a trust for the benefit of a charitable institution or other qualifying organization selected by the Ventas Board. The trust is entitled to all dividends with respect to the excess shares and the trustee may exercise all voting power over the excess shares. Ventas, Inc. has the right to buy the excess shares for a purchase price equal to the lesser of (1) the price per share in the transaction that created the excess shares, or (2) the market price on the date Ventas, Inc. buys the shares, and Ventas, Inc. may defer payment of the purchase price for up to five years. If Ventas, Inc. does not purchase the excess shares, the trustee of the trust is required to transfer the excess shares at the direction of the Ventas Board. The owner of the excess shares is entitled to receive the lesser of the proceeds from the sale of the excess shares or the original purchase price for such excess shares, and any additional amounts are payable to the beneficiary of the trust. Ventas Inc.’s Certificate of Incorporation also provides that a transfer of shares of preferred stock that would otherwise result in ownership, under the applicable attribution rules of the Code, of shares in excess of the ownership limit, would cause Ventas, Inc.’s shares to be beneficially owned by fewer than 100 persons, or would result in Ventas, Inc. being “closely held” (within the meaning of Section 856(h) of the Code), will be void and the purported transferee will acquire no rights in the shares.
Under Ventas, Inc.’s Certificate of Incorporation, the Ventas Board may, in its sole and absolute discretion, exempt a person from the 9.9% ownership limit applicable to preferred stock, if such stockholder provides information and makes representations to the Ventas Board that are satisfactory to the Ventas Board, in its sole and absolute discretion, to establish that such person’s ownership in excess of the ownership limit would not jeopardize Ventas, Inc.’s qualification as a REIT. Any such waiver granted by the Ventas Board to such person would be conditioned on the person’s ownership not violating the other ownership limitations or otherwise creating the possibility of REIT qualification concerns for Ventas, Inc. and its subsidiaries. The Ventas Board may require an opinion of counsel or IRS ruling satisfactory to the Ventas Board and may impose such other conditions or restrictions as it deems appropriate prior to granting any waiver to the 9.9% limit.
DESCRIPTION OF VENTAS, INC. DEPOSITARY SHARES
This section describes the general terms and provisions of shares of preferred stock of Ventas, Inc. represented by depositary shares. The prospectus supplement relating to an offering of depositary shares will describe more specific terms of the depositary shares being offered, including the number of shares offered, the initial offering price and the powers, preferences and other rights of the underlying preferred stock and any general terms outlined in this section that will not apply to those depositary shares.
The summary set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the applicable deposit agreement (including the depositary receipt), the form of which is or will be filed or incorporated by reference as an exhibit to the registration statement of which this prospectus is a part and incorporated by reference herein. You should read the form of deposit agreement (including the depositary receipt) for additional information before you buy any Ventas, Inc. depositary shares.
General
Ventas, Inc. may, at its option, elect to offer fractional interests in shares of preferred stock, rather than shares of preferred stock. If Ventas, Inc. exercises this option, it will appoint a depositary to issue depositary receipts representing those fractional interests. Shares of preferred stock of each series represented by depositary shares will be deposited under a separate deposit agreement between Ventas, Inc. and the depositary. The applicable prospectus supplement will provide the name and address of the depositary. Subject to the terms of the applicable deposit agreement, each owner of depositary shares will be entitled to all of the dividend, voting, conversion, redemption, liquidation and other rights and preferences of the shares of preferred stock represented by those depositary shares.
Depositary receipts issued pursuant to the applicable deposit agreement will evidence ownership of depositary shares. Upon surrender of depositary receipts at the office of the depositary, and upon payment of the charges provided in and subject to the terms of the deposit agreement, a holder of depositary shares will be entitled to receive the shares of Ventas, Inc. preferred stock underlying the surrendered depositary receipts.
Dividends and Other Distributions
The depositary will be required to distribute all dividends and other cash distributions received in respect of the applicable shares of preferred stock to the record holders of depositary receipts evidencing the related depositary shares in proportion to the number of depositary receipts owned by the holders. Fractions will be rounded down to the nearest whole cent.
If the distribution is other than in cash, the depositary will be required to distribute property received by it to the record holders of depositary receipts entitled thereto, unless the depositary determines that it is not feasible to make the distribution. In that case, the depositary may, with Ventas, Inc.’s approval, sell the property and distribute the net proceeds from the sale to the holders of depositary shares.
Depositary shares that represent shares of preferred stock that have been converted or exchanged will not be entitled to distributions. The deposit agreement will also contain provisions relating to the manner in which any subscription or similar rights we offer to holders of shares of preferred stock will be made available to holders of depositary shares. All distributions will be subject to obligations of holders to file proofs, certificates and other information and to pay certain charges and expenses to the depositary.
Withdrawal of Shares of Preferred Stock
You may receive the number of whole shares of the applicable series of preferred stock and any money or other property represented by your depositary receipts after surrendering your depositary receipts at the corporate trust office of the depositary. Partial shares of preferred stock will not be issued. If the number of depositary shares that you surrender exceeds the number of depositary shares that represent the number of whole shares of preferred stock that you wish to withdraw, then the depositary will deliver to you at the same time a new depositary receipt evidencing the excess number of depositary shares. Once you have withdrawn your shares of preferred stock, you will not be entitled to re-deposit those shares of preferred stock under
the deposit agreement in order to receive depositary shares. We do not expect that there will be any public trading market for withdrawn shares of preferred stock.
Redemption of Depositary Shares
If Ventas, Inc. redeems shares of the applicable series of preferred stock underlying the depositary shares, the depositary will redeem the depositary shares from the proceeds it receives. The redemption price per depositary share will be equal to the applicable fraction of the redemption price per share payable with respect to the applicable series of preferred stock, and the redemption date for depositary shares will be the same as that of the preferred stock. If Ventas, Inc. has elected to redeem less than all of the depositary shares, the depositary will select the depositary shares for redemption by lot or pro rata as the depositary may determine.
After the date fixed for redemption, the depositary shares called for redemption will no longer be deemed outstanding. All rights of the holders of the depositary shares and the related depositary receipts will cease at that time, except the right to receive the money or other property to which the holders of depositary shares were entitled upon redemption. Receipt of the money or other property is subject to surrender to the depositary of the depositary receipts evidencing the redeemed depositary shares.
Voting of the Underlying Shares of Preferred Stock
Upon receipt of notice of any meeting at which the holders of the applicable series of preferred stock are entitled to vote, a depositary will be required to mail the information contained in the notice of meeting to the record holders of the depositary shares representing such preferred stock. Each record holder of depositary shares on the record date will be entitled to instruct the depositary as to how to vote the shares of preferred stock represented by the holder’s depositary shares. The record date for the depositary shares will be the same as the record date for the preferred stock. The depositary will vote the shares of preferred stock represented by your depositary shares as you instruct. Ventas, Inc. will agree to take all reasonable action that the depositary deems necessary in order to enable it to vote the preferred stock in that manner. If you do not instruct the depositary how to vote, the depositary will abstain from voting the shares of preferred stock represented by your depositary shares. The depositary will not be responsible for any failure to carry out any voting instruction, or for the manner or effect of any vote, as long as its action or inaction is in good faith and does not result from its negligence or willful misconduct.
Liquidation Preference
Upon Ventas, Inc.’s voluntary or involuntary liquidation, each holder of depositary shares will be entitled to the fraction of the liquidation preference accorded each share of Ventas, Inc. preferred stock represented by the depositary shares, as described in the applicable prospectus supplement.
Conversion or Exchange of Shares of Preferred Stock
The depositary shares will not themselves be convertible into or exchangeable for shares of Ventas, Inc.’s common stock or preferred stock or any other securities or property. Nevertheless, if so specified in the applicable prospectus supplement, the depositary receipts may be surrendered by holders to the applicable depositary with written instructions for the depositary to instruct Ventas, Inc. to cause the conversion of the preferred stock represented by the depositary shares. Similarly, if so specified in the applicable prospectus supplement, Ventas, Inc. may require you to surrender all of your depositary receipts to the applicable depositary upon requiring the conversion or exchange of the preferred stock represented by the depositary shares into debt securities. Ventas, Inc. will agree that, upon receipt of the instruction and any amounts payable in connection with the conversion or exchange, it will cause the conversion or exchange using the same procedures as those provided for delivery of shares of preferred stock to effect the conversion or exchange. If you convert less than all of your depositary shares, the depositary will issue you a new depositary receipt for any unconverted depositary shares.
Amendment and Termination of a Deposit Agreement
Ventas, Inc. and the applicable depositary are permitted to amend the provisions of depositary receipts and any deposit agreement. However, the holders of at least a majority of the applicable depositary shares
then outstanding must approve any amendment that adds or increases fees or charges or prejudices an important right of holders. Every holder of an outstanding depositary receipt at the time any amendment becomes effective, by continuing to hold the receipt, will be bound by the applicable deposit agreement, as amended.
Any deposit agreement may be terminated by Ventas, Inc. upon not less than 30 days’ prior written notice to the applicable depositary if (1) the termination is necessary to preserve our status as a REIT or (2) holders of depositary shares representing a majority of each series of preferred stock affected by the termination consent to the termination. If either event occurs, the depositary will be required to deliver or make available to each holder of depositary receipts, upon surrender of the depositary receipts held by the holder, the number of whole or fractional shares of preferred stock that are represented by the depositary shares evidenced by the depositary receipts, together with any other property held by the depositary with respect to the depositary receipts. In addition, a deposit agreement will automatically terminate if:
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all depositary shares have been redeemed;
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there shall have been a final distribution in respect of the applicable series of preferred stock in connection with a liquidation of Ventas, Inc. and the distribution has been made to the holders of depositary receipts evidencing the depositary shares underlying the Ventas, Inc. preferred stock; or
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each share of the applicable series of preferred stock has been converted or exchanged into securities not represented by depositary shares.
Charges of a Depositary
We will pay all transfer and other taxes and governmental charges arising solely from the existence of a deposit agreement. In addition, we will pay the fees and expenses of the depositary in connection with the initial deposit of the preferred stock and any redemption of preferred stock. However, holders of depositary receipts will pay any transfer or other governmental charges and the fees and expenses of the depositary for any duties the holders request to be performed that are outside those expressly provided for in the applicable deposit agreement.
Resignation and Removal of Depositary
A depositary may resign at any time by delivering to Ventas, Inc. notice of its election to do so. In addition, Ventas, Inc. may at any time remove a depositary. Any resignation or removal will take effect when Ventas, Inc. appoints a successor depositary and it accepts the appointment. Ventas, Inc. must appoint a successor depositary within 60 days after delivery of a notice of resignation or removal. A depositary must be a bank or trust company having its principal office in the United States that has a combined capital and surplus of at least $50 million.
Miscellaneous
A depositary will be required to forward to holders of depositary receipts any reports and communications it receives from Ventas, Inc. with respect to the related shares of preferred stock. Holders of depository receipts will be able to inspect the transfer books of the depository and the list of holders of receipts upon reasonable notice.
Neither Ventas, Inc. nor the depositary will be liable if the depositary is prevented from or delayed in performing its obligations under a deposit agreement by law or any circumstances beyond its control. Ventas, Inc.’s obligations and those of the depositary under a deposit agreement will be limited to performing duties in good faith and without gross negligence or willful misconduct. Neither Ventas, Inc. nor the depositary will be obligated to prosecute or defend any legal proceeding in respect of any depositary receipts, depositary shares or related shares of preferred stock unless satisfactory indemnity is furnished. Ventas, Inc. and each depositary will be permitted to rely on written advice of counsel or accountants, on information provided by persons presenting shares of preferred stock for deposit, by holders of depositary receipts, or by other persons believed in good faith to be competent to give the information, and on documents believed in good faith to be genuine and signed by a proper party.
If a depositary receives conflicting claims, requests or instructions from any holder of depositary receipts, on the one hand, and Ventas, Inc., on the other hand, the depositary will be entitled to act on the claims, requests or instructions received from us.
DESCRIPTION OF VENTAS, INC. WARRANTS
This section describes the general terms and provisions of warrants of Ventas, Inc. The prospectus supplement relating to an offering of the warrants will describe more specific terms of the warrants being offered, including the number of warrants offered, the initial offering price and the terms of the underlying securities and any general terms outlined in this section that will not apply to those warrants.
The summary set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the applicable warrant agreement (including the warrant certificate), the form of which is or will be filed or incorporated by reference as an exhibit to the registration statement of which this prospectus is a part and incorporated by reference herein. You should read the form of warrant agreement (including the warrant certificate) for additional information before you buy any Ventas, Inc. warrants.
General
Ventas, Inc. may issue, together with any other securities being offered or separately, warrants entitling the holder to purchase from or sell to Ventas, Inc., or to receive from Ventas, Inc., the cash value of the right to purchase or sell, debt securities, preferred stock, depositary shares or common stock. Ventas, Inc. will enter into a warrant agreement governing the issuance of the warrants with a warrant agent, who will act solely as its agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.
The applicable prospectus supplement will describe the terms of each series of warrants being offered, including some or all of the following:
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the offering price of the warrants;
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the number of warrants offered;
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the securities underlying the warrants;
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the exercise price of the warrants, the procedures for exercise and the circumstances, if any, that will cause the warrants to be automatically exercised;
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the date on which the warrants will expire;
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the U.S. federal income tax consequences of owning the warrants;
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the rights, if any, that Ventas, Inc. has to redeem the warrants;
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the name of the warrant agent; and
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any other terms of the warrants.
Warrants may be exercised at the appropriate office of the warrant agent or any other office indicated in the applicable prospectus supplement. Before the exercise of warrants, holders will not have any of the rights of holders of the securities underlying the warrants and will not be entitled to payments made to holders of those securities.
Ventas, Inc. and the applicable warrant agent may amend or supplement the warrant agreement without the consent of the affected holders of warrants to effect changes that are not inconsistent with the provisions of the warrants and that do not adversely affect the interests of the holders of the warrants. However, any amendment that materially and adversely alters the rights of the holders of warrants will not be effective unless the holders of at least a majority of the applicable series of warrants then outstanding approve the amendment. Every holder of an outstanding warrant at the time any amendment becomes effective, by continuing to hold the warrant, will be bound by the applicable warrant agreement, as amended. The applicable prospectus supplement may provide that certain provisions of the warrants, including the securities for which they may be exercisable, the exercise price and the expiration date, may not be altered without the consent of the holder of each warrant.
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt securities of Ventas Realty and the debt securities of Ventas, Inc. For purposes hereof, references to the issuer means either Ventas Realty or Ventas, Inc., as applicable. The prospectus supplement relating to any offering of debt securities will describe more specific terms of the debt securities being offered, including the designation of the series, the aggregate principal amount being offered, the initial offering price, the interest rate and any redemption, purchase or conversion rights and any general terms described in this section that will not apply to those debt securities.
The summary set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the applicable base indenture referred to below and the supplemental indenture (including the form of debt security) relating to the applicable series of debt securities, the form or a copy of each of which is or will be filed or incorporated by reference as an exhibit to the registration statement of which this prospectus is a part and incorporated by reference herein. You should read the applicable base indenture and supplemental indenture (including the applicable form of debt security) for additional information before you buy any debt securities of the issuer.
General
The debt securities will be direct unsecured general obligations of the issuer and may include debentures, notes, bonds or other evidences of indebtedness. The debt securities may be senior or subordinated and will be issued under one or more indentures among the issuer and the guarantor, if any, named therein, and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as the initial trustee, which we refer to herein as base indentures. The base indentures do not limit the aggregate principal amount of debt securities that may be issued thereunder.
Senior debt securities will be issued under a base senior indenture, dated February 23, 2018, by and among Ventas Realty, Ventas, Inc., the guarantors named therein and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee, which is filed as an exhibit to the registration statement of which this prospectus is a part. The terms of each series of debt securities will be established pursuant to a supplemental indenture or a resolution duly adopted by the Ventas Board or a duly authorized committee thereof. Subordinated debt securities will be issued under a subordinated indenture, a form of which is filed as an exhibit to the registration statement of which this prospectus is a part, in one or more series established pursuant to a supplemental indenture or a resolution duly adopted by the Ventas Board or a duly authorized committee thereof. In this prospectus, we refer to the senior indenture and the subordinated indenture (together with each applicable supplemental indenture or resolution establishing the applicable series of debt securities), collectively, as the indentures. The indentures will be subject to and governed by the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).
Each indenture provides that there may be more than one trustee with respect to one or more series of debt securities under that indenture. Any trustee under an indenture may resign or be removed with respect to one or more series of debt securities issued under that indenture, and a successor trustee may be appointed to act with respect to such series.
If two or more persons are acting as trustee with respect to different series of debt securities issued under the same indenture, each of the trustees will be a trustee of a trust under that indenture separate and apart from the trust administered by any other trustee. In that case, except as otherwise indicated in this prospectus, any action described in this prospectus to be taken by the trustee may be taken by a trustee only with respect to the one or more series of debt securities for which it is trustee.
The applicable prospectus supplement will describe the specific terms of each series of debt securities being offered, including some or all of the following:
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the title of the debt securities;
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the issuer of the debt securities;
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any limit on the aggregate principal amount of the debt securities;
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the purchase price of the debt securities, expressed as a percentage of the principal amount;
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the date or dates on which the principal of and any premium on the debt securities will be payable or the method for determining the date or dates;
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if the debt securities will bear interest, the interest rate or rates or the method by which the rate or rates will be determined;
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if the debt securities will bear interest, the date or dates from which any interest will accrue, the interest payment dates on which any interest will be payable, the record dates for those interest payment dates and the basis upon which interest will be calculated if other than that of a 360-day year of twelve 30-day months;
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the place or places where payments on the debt securities will be made and the debt securities may be surrendered for registration of transfer or exchange;
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if the issuer will have the option to redeem all or any portion of the debt securities, the terms and conditions upon which the debt securities may be redeemed;
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the terms and conditions of any sinking fund or any similar provisions obligating the issuer or permitting a holder to require the issuer to redeem or purchase all or any portion of the debt securities prior to final maturity;
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the currency or currencies in which the debt securities are denominated and payable if other than U.S. dollars and the manner of determining the equivalent of those amounts in U.S. dollars;
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whether the amount of any payments on the debt securities may be determined with reference to an index, formula or other method and the manner in which such amounts are to be determined;
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any additions or changes to the events of default in the applicable base indenture;
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the portion of the principal of the debt securities payable upon acceleration of maturity, if other than the entire principal amount;
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any additions or changes with respect to the other covenants in the applicable base indenture;
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the terms and conditions, if any, upon which the debt securities may be convertible into common stock;
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whether the debt securities will be issued in certificated or book-entry form and, if the latter, the securities depositary;
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whether the debt securities will be issued in denominations other than $1,000 and any integral multiple of $1,000;
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the applicability of the defeasance and covenant defeasance provisions of the applicable base indenture;
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the guarantor, if any, who will guarantee the debt securities and the methods for determining, and releasing, such guarantor, if any;
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the trustee for that series of debt securities, if other than U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association) (or successors thereto);
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the U.S. federal income tax consequences of owning the debt securities; and
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any other terms of the debt securities consistent with the provisions of the applicable base indenture.
Debt securities may be issued as original issue discount securities to be offered and sold at a substantial discount from their stated principal amount. Special U.S. federal income tax, accounting and other considerations applicable to original issue discount securities may be described in the applicable prospectus supplement.
Unless otherwise provided with respect to a series of debt securities, the debt securities will be issued only in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000.
Ranking
Each series of senior debt securities will constitute senior indebtedness and will rank equally with each other series of senior debt securities and other senior indebtedness and senior to all subordinated indebtedness, including, but not limited to, all subordinated debt securities. Each series of subordinated debt securities will constitute subordinated indebtedness and will rank equally with each other series of subordinated debt securities but subordinate to all senior indebtedness.
Payments on the subordinated debt securities will be subordinated to the senior indebtedness of the issuer and the guarantor, if any, described under “Guarantees” below, whether outstanding on the date of the subordinated indenture or incurred after that date. As of December 31, 2023, we had $9.3 billion of outstanding senior indebtedness (excluding unamortized fair value adjustment and unamortized discounts). The prospectus supplement relating to each issuance of subordinated debt securities will specify the aggregate amount of our outstanding indebtedness as of the most recent practicable date that would rank senior to the subordinated debt securities.
If any of the following events occur, the holders of senior indebtedness must receive payment of the full amount due on the senior indebtedness, or that payment must be duly provided for, before the issuer may make payments on the subordinated debt securities:
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any distribution of our assets upon our liquidation, reorganization or other similar transaction except for a distribution in connection with a merger or other transaction complying with the covenant described below under “— Merger Covenant”;
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the occurrence and continuation of a payment default on any senior indebtedness; or
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a declaration of the principal of any series of subordinated debt securities, or, in the case of original issue discount securities, the portion of the principal amount specified under their terms, as due and payable, that has not been rescinded and annulled.
However, if the event is the acceleration of any series of subordinated debt securities, only the holders of senior indebtedness outstanding at the time of the acceleration of those subordinated debt securities, or, in the case of original issue discount securities, that portion of the principal amount specified under their terms, must receive payment of the full amount due on that senior indebtedness, or such payment must be duly provided for, before the issuer makes payments on the subordinated debt securities.
As a result of the subordination provisions, some of our general creditors, including holders of senior indebtedness, may recover more, ratably, than the holders of the subordinated debt securities in the event of insolvency.
For purposes of the subordinated indenture, “senior indebtedness” of the issuer and any guarantor means the following indebtedness and obligations:
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the principal of and premium, if any, and unpaid interest on indebtedness for money borrowed;
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purchase money and similar obligations;
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obligations under capital leases;
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guarantees, assumptions or purchase commitments relating to, or other transactions as a result of which the issuer or the guarantor, if any, are responsible for the payment of, the indebtedness of others;
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renewals, extensions and refundings of the foregoing indebtedness;
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interest or obligations in respect of the foregoing indebtedness accruing after the commencement of any insolvency or bankruptcy proceedings; and
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obligations associated with derivative products.
However, indebtedness and obligations do not constitute senior indebtedness if the instrument by which the issuer or the guarantor becomes obligated for that indebtedness or those obligations expressly provides that indebtedness or those obligations are junior in right of payment to any other indebtedness or obligations of the issuer or the guarantor, as applicable.
Guarantees
If the applicable prospectus supplement relating to a series of debt securities provides that those debt securities will have the benefit of a guarantee by Ventas, Inc. or Ventas Realty, then the debt securities will be fully and unconditionally guaranteed by Ventas, Inc. or Ventas Realty, as applicable. In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor subsidiaries of the issuer, the non-guarantor subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the issuer. The guarantees will be general obligations of each guarantor. If a series of debt securities is so guaranteed, a supplemental indenture to the applicable base indenture will be executed by each guarantor. Ventas, Inc. is the guarantor under the indentures governing all of Ventas Realty’s existing senior notes.
The obligations of each guarantor under its guarantee will be limited as necessary to prevent that guarantee from constituting a fraudulent conveyance under applicable law. A guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge into another company, other than an issuer or another guarantor, unless the person acquiring the property in any such sale or disposition or the person formed by or surviving any such consolidation or merger assumes all of the obligations of that guarantor pursuant to a supplemental indenture satisfactory to the applicable trustee, and only if immediately after giving effect to the transaction, no default or event of default would exist. The terms of any guarantee and the conditions upon which a guarantor may be released from its obligations under that guarantee will be set forth in the applicable prospectus supplement.
Certificated Debt Securities
Except as otherwise provided in the applicable prospectus supplement, debt securities will not be issued in certificated form. If, however, debt securities are to be issued in certificated form, no service charge will be made for any transfer or exchange of any of those debt securities, but the issuer may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith.
Book-Entry Debt Securities
The debt securities of a series may be issued in whole or in part in the form of one or more fully registered global securities that will be deposited with the depositary identified in the applicable prospectus supplement, which will keep a computerized record of its participants (for example, brokers) whose clients have purchased the debt securities. Each participant will then keep a record of its clients who purchased the debt securities. Unless a global security is exchanged in whole or in part for debt securities in certificated form, it may not be transferred. However, transfers of the whole security between the depositary for that global security and its nominees or their respective successors are permitted.
Unless otherwise provided in the applicable prospectus supplement, The Depository Trust Company, New York, New York (“DTC”) will act as depositary for each series of global securities, and DTC will register the global securities in the name of its nominee, Cede & Co. Beneficial interests in global securities will be shown on, and transfers of global securities will be effected only through, records maintained by DTC and its participants.
DTC has provided the following information to us. DTC, the world’s largest securities depository, is a:
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limited purpose trust company organized under the New York Banking Law;
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“banking organization” within the meaning of the New York Banking Law;
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member of the Federal Reserve System;
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“clearing corporation” within the meaning of the New York Uniform Commercial Code; and
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“clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds and provides asset servicing for U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments that its direct participants deposit with DTC. DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between direct participants’
accounts. This eliminates the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. DTC has a Standard & Poor’s rating of AA+. The rules applicable to DTC and its direct and indirect participants are on file with the SEC.
Principal and interest payments on global securities registered in the name of DTC’s nominee will be made in immediately available funds to DTC’s nominee as the registered owner of the global securities. The issuer and the trustee will treat DTC’s nominee as the owner of the global securities for all other purposes as well. Accordingly, the issuer, the trustee and any paying agent will have no direct responsibility or liability to pay amounts due on the global securities to owners of beneficial interests in the global securities. DTC’s practice is to credit direct participants’ accounts upon receipt of any payment of principal or interest on the payment date in accordance with their respective holdings of beneficial interests in the global securities as shown on DTC’s records. Payments by direct and indirect participants to owners of beneficial interests in the global securities will be governed by standing instructions and customary practices. These payments will be the responsibility of the direct and indirect participants and not of DTC, the trustee or the issuer, subject to any statutory or regulatory requirements as may be in effect from time to time.
Debt securities represented by a global security will be exchangeable for debt securities in definitive form of like amount and terms in authorized denominations only if:
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DTC notifies us that it is unwilling or unable to continue as depositary;
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DTC ceases to be a registered clearing agency and a successor depositary is not appointed by us within 120 days; or
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we determine not to require all of the debt securities of a series to be represented by a global security and notify the applicable trustee of our decision.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy thereof.
Certain Indenture Provisions
Merger Covenant
Pursuant to the terms of each indenture, Ventas, Inc. may not, directly or indirectly: (1) consolidate or merge with or into another person or entity, or (2) sell, assign, transfer, convey, lease (other than to an unaffiliated operator in the ordinary course of business) or otherwise dispose of all or substantially all of the properties or assets of Ventas, Inc. and its subsidiaries taken as a whole, in one or more related transactions, to another person or entity, unless:
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either (a) Ventas, Inc. is the surviving corporation or (b) the person or entity formed by or surviving any such consolidation or merger (if other than Ventas, Inc.) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia;
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the person or entity formed by or surviving any such consolidation or merger (if other than Ventas, Inc.) or the person or entity to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all of Ventas, Inc.’s obligations under the applicable debt securities and the applicable indenture pursuant to agreements reasonably satisfactory to the trustee; and
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immediately after such transaction, on a pro forma basis giving effect to such transaction or series of transactions (and treating any obligation of Ventas, Inc. or any subsidiary incurred in connection
with or as a result of such transaction or series of transactions as having been incurred at the time of such transaction), no default or event of default exists under the applicable indenture.
Upon any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of all or substantially all of the properties or assets of Ventas, Inc. in accordance with the foregoing provisions, the successor person or entity formed by such consolidation or into which Ventas, Inc. is merged or to which such sale, assignment, transfer, conveyance, lease or other disposition is made, will succeed to, and be substituted for, and may exercise every right and power of, Ventas, Inc. under the applicable indenture with the same effect as if such successor initially had been named as Ventas, Inc. therein. When a successor assumes all the obligations of its predecessor under the applicable indenture and the applicable debt securities following a consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of all or substantially all of the assets of the predecessor in accordance with the foregoing provisions, the predecessor will be released from those obligations.
The foregoing restrictions will not apply to: (1) a sale, assignment, transfer, conveyance or other disposition of assets between or among Ventas, Inc. and its subsidiaries; (2) a sale or transfer of assets from a guarantor to the issuer; or (3) the consolidation or merger of a guarantor with or into the issuer.
Events of Default, Notice and Waiver
Each indenture provides that the following are events of default with respect to any series of debt securities issued thereunder, unless the applicable prospectus supplement states otherwise:
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default by Ventas, Inc. or its subsidiaries for 30 days in the payment of any interest on any debt security of that series;
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default by Ventas, Inc. or its subsidiaries in the payment of the principal or premium, if any, on any debt security of that series when due and payable;
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default by Ventas, Inc. or its subsidiaries in the making of any sinking fund payment required for any debt security of that series when due;
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breach by Ventas, Inc. or its subsidiaries of any other term of that indenture for 60 days after receipt of notice of default stating they are in breach (either the applicable trustee or the holders of more than 25% in aggregate principal amount of the applicable debt securities of that series then outstanding may send the notice);
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default under any other indebtedness of Ventas, Inc. or its subsidiaries in an aggregate principal amount exceeding $100.0 million after any applicable grace period, which default results in the acceleration of the maturity of such indebtedness and where that indebtedness is not discharged or that acceleration is not rescinded or annulled within ten days after receipt of written notice specifying the default (either the applicable trustee or the holders of more than 25% in aggregate principal amount of the applicable debt securities of that series then outstanding may send the notice);
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certain events of bankruptcy, insolvency or reorganization of Ventas, Inc. or its significant subsidiaries;
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the cessation of any guarantee of the debt securities of that series to be in full force and effect or the disaffirmance or denial by any guarantor of its obligations with respect to any guarantee of the debt securities; and
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any other event of default provided with respect to the debt securities of that series and described in the applicable prospectus supplement.
The applicable trustee will be required to give notice to the holders of the applicable debt securities within 90 days after a default under the applicable indenture unless the default has been cured or waived. The applicable trustee may withhold notice to the holders of the applicable debt securities of any default, except a default in the payment of the principal of, premium or additional amounts, if any, or interest on the applicable debt securities, if specified responsible officers of the applicable trustee in good faith determine that withholding the notice is in the interest of the holders.
If an event of default with respect to the applicable debt securities has occurred and has not been cured, either the applicable trustee or the holders of at least 25% in principal amount of the applicable debt securities then outstanding may declare the entire principal amount of the applicable debt securities to be due and immediately payable by written notice to Ventas, Inc., the issuer and the applicable trustee. If an event of default occurs because of certain events in bankruptcy, insolvency or reorganization, the principal amount of all outstanding debt securities will be automatically accelerated, without any action by the applicable trustee or any holder. At any time after the applicable trustee or the holders have accelerated the applicable debt securities, but before a judgment or decree for payment of the money due has been obtained, the holders of at least a majority in principal amount of the applicable debt securities then outstanding may, under certain circumstances, rescind and annul such acceleration.
Holders of a majority in principal amount of outstanding debt securities of any series may, subject to some limitations, waive any past default with respect to that series and the consequences of the default (including without limitation waivers obtained in connection with the purchase of, or tender offer or exchange offer for, such debt securities). The prospectus supplement relating to any series of debt securities that are original issue discount securities will describe the particular provisions relating to acceleration of a portion of the principal amount of those original issue discount securities upon the occurrence and continuation of an event of default.
Except in cases of default, where a trustee has some special duties, the applicable trustee is not required to take any action under the applicable indenture at the request of any holders of applicable debt securities unless such holders offer the applicable trustee satisfactory protection from expenses and liability. We refer to this as an “indemnity.” If reasonable indemnity is provided, the holders of a majority in principal amount of the applicable debt securities then outstanding may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the applicable trustee. These majority holders may also direct the applicable trustee in performing any other action under the applicable indenture, subject to certain limitations.
Before a holder bypasses the applicable trustee and brings its own lawsuit or other formal legal action or takes other steps to enforce its rights or protect its interests relating to the applicable debt securities, the following must occur:
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the holder must give the applicable trustee written notice that an event of default with respect to the applicable debt securities has occurred and remains uncured;
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the holders of at least a majority in principal amount of all applicable debt securities outstanding must make a written request that the applicable trustee take action because of the default, and must offer reasonable indemnity to the applicable trustee against the cost and other liabilities of taking that action;
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the applicable trustee must have not taken action for 60 days after receipt of the notice and offer of indemnity; and
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the holders of at least a majority in principal amount of all applicable debt securities outstanding must not have given the applicable trustee a direction inconsistent with such request within such 60-day period.
However, a holder is entitled at any time to bring a lawsuit for the payment of money due on any debt security after its due date.
Within 120 days after the end of each fiscal year, Ventas, Inc. and the guarantor, if any, will furnish to the applicable trustee a written statement by certain of Ventas, Inc.’s officers certifying that, to their knowledge, Ventas, Inc. is in compliance with the applicable indenture and the applicable debt securities, or otherwise specifying any default.
Modification of the Indentures
Except as provided in the next two succeeding paragraphs, each indenture and/or the applicable debt securities may be amended or supplemented with the written consent of the holders of at least a majority in principal amount of the debt securities then outstanding issued under the applicable indenture affected by
such amendment or supplement, voting as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, such debt securities), and any existing default, event of default (other than a default or event of default with respect to the payment of the principal of, or premium or additional amounts, if any, or interest on, the applicable debt securities, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of the applicable indenture or the applicable debt securities may be waived with the consent of the holders of a majority in principal amount of the debt securities then outstanding issued under the applicable indenture affected thereby, voting as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the applicable debt securities).
Without the consent of each holder affected, an amendment or waiver may not (with respect to any debt securities held by a non-consenting holder):
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reduce the principal amount of debt securities whose holders must consent to an amendment, supplement or waiver;
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reduce the principal amount, or change the fixed maturity, of any debt security, reduce the rate of, or change the time for payment of, interest or any premium on any debt security or alter the provisions with respect to the redemption thereof (excluding, for the avoidance of doubt, the number of days before a redemption date that a notice of redemption must be mailed to holders of such debt securities, which may be amended with the written consent of the holders of at least a majority in aggregate principal amount of the debt securities then outstanding);
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reduce the rate of or change the time for payment of interest on any debt security, the payment of any sinking fund or analogous obligation, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity of such security;
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reduce the amount of principal of an original issue discount security that would be due and payable upon declaration of acceleration of its maturity;
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waive a default or event of default in the payment of principal of, or interest or premium, or additional amounts, if any, on the debt securities (except a rescission of acceleration of the debt securities by the holders of at least a majority in aggregate principal amount of the debt securities then outstanding and a waiver of the payment default that resulted from such acceleration);
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make a debt security payable in a currency, currencies or currency unit(s) other than the currency stated in such debt security;
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make any change in the provisions of the applicable indenture relating to waivers of past defaults or the rights of holders of debt securities to receive payments of principal of, or interest or premium, or additional amounts, if any, on such debt securities;
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release any guarantor from any of its obligations under its guarantee of the debt securities or the applicable indenture except in accordance with the terms of such indenture;
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impair the rights of holders of the debt securities to convert their securities, if convertible, upon the terms established pursuant to or in accordance with the provisions of the applicable indenture;
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waive a redemption payment with respect to any debt security; or
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make any change in the amendment and waiver provisions set forth above.
Any such consent need only approve the substance, rather than the particular form, of the proposed amendment.
Notwithstanding the preceding, without the consent of any holder of debt securities, the indentures and the applicable debt securities issued thereunder may be amended or supplemented to:
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cure any ambiguity, defect or inconsistency;
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provide for uncertificated debt securities in addition to or in place of certificated debt securities;
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provide for the assumption of the obligations of the issuer to holders of debt securities in the case of a merger or consolidation or sale of all or substantially all of the assets of the issuer;
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add to the covenants of the issuer for the benefit of the holders of all or any series of debt securities (and if such covenants are to be for the benefit of less than all series of debt securities, stating that such covenants are expressly being included solely for the benefit of the debt securities of that series);
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add any additional events of default for the benefit of the holders of all or any series of debt securities (and if such events of default are to be for the benefit of less than all series of debt securities, stating that such events of default are expressly being included solely for the benefit of the debt securities of that series); provided, however, that in respect of any such additional events of default, such supplemental indenture may provide for a particular period of grace after default (which may be shorter or longer than that allowed in the case of other defaults), may provide for an immediate enforcement upon such default, may limit the remedies available to the trustee upon such default or may limit the right of the holders of a majority in aggregate principal amount of that or those series of debt securities to which such additional events of default apply to waive such default;
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add to, change or eliminate any of the provisions of an indenture, so long as any such addition not otherwise permitted under the applicable indenture shall (i) neither apply to any securities of any series created prior to the execution of such amendment or supplement and entitled to the benefit of such provision nor modify the rights of the holders of any such security with respect to the benefit of such provision or (ii) become effective only when there is no such security outstanding;
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establish the form or terms of debt securities of any series as permitted by the applicable indenture, including the provisions and procedures relating to debt securities convertible into Ventas, Inc. common stock;
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evidence and provide for the acceptance of appointment under the applicable indenture by a successor trustee with respect to the debt securities of one or more series and to add to or change any of the provisions of the applicable indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one trustee;
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evidence the succession of another entity to Ventas, Inc. and the assumption by the successor of the covenants of Ventas, Inc. contained in the applicable indenture;
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supplement any of the provisions of the applicable indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of debt securities pursuant thereto, provided that any such action will not adversely affect the interests of the holders of debt securities of that series or any other series of debt securities in any material respect;
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add additional guarantees with respect to the applicable debt securities;
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secure the applicable debt securities;
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make any other change that would provide any additional rights or benefits to the holders of debt securities or that does not adversely affect the legal rights under the applicable indenture of any such holder;
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comply with requirements of the SEC in order to effect or maintain the qualification of the applicable indenture under the Trust Indenture Act;
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with respect to any series of debt securities, to conform the text of such series of debt securities or the indenture applicable thereto to any provision of the “Description of the Notes,” “Description of Notes” or “Description of Debt Securities” sections of the offering memorandum, prospectus supplement or other like offering document relating to the initial offering of such series of debt securities, to the extent that such provision was intended to be a verbatim recitation of a provision of such series of debt securities or the indenture applicable thereto; or
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to provide for the issuance of additional debt securities as permitted by the applicable indenture.
Defeasance and Covenant Defeasance
When the issuer establishes a series of debt securities, it may provide that the debt securities of that series are subject to the defeasance and discharge provisions of the applicable indenture. If those provisions are made applicable, the issuer may elect either:
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to defease and, together with the guarantor (if any), be legally released from, subject to some limitations, all of their respective obligations with respect to the debt securities of that series; or
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to be released from the obligations to comply with specified covenants and eliminate certain events of default relating to the debt securities of that series as described in the applicable prospectus supplement.
To effect defeasance or covenant defeasance, the issuer must irrevocably deposit in trust with the applicable trustee an amount in any combination of funds or government obligations, which, through the payment of principal and interest in accordance with their terms, will provide money sufficient to make payments on the debt securities of that series and any mandatory sinking fund or analogous payments on the debt securities of that series.
Upon such defeasance, the issuer will not be released from obligations:
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to pay additional amounts, if any, on the debt securities of that series upon the occurrence of some events;
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to register the transfer or exchange of the debt securities of that series;
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to replace some of the debt securities of that series;
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to maintain an office relating to the debt securities of that series; or
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to hold moneys for payment in trust.
To establish such a trust, the issuer must, among other things, deliver to the applicable trustee an opinion of counsel to the effect that the holders of the debt securities of that series:
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will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the defeasance or covenant defeasance; and
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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 the defeasance or covenant defeasance had not occurred. In the case of defeasance, the opinion of counsel must be based upon a ruling of the IRS or a change in applicable U.S. federal income tax law occurring after the date of the applicable indenture.
Government obligations generally mean securities which are:
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direct obligations of the U.S. or of the government that issued the foreign currency in which the applicable debt securities are payable, in each case, where the issuer has pledged its full faith and credit to pay the obligations; or
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obligations of an agency or instrumentality of the U.S. or of the government that issued the foreign currency in which the applicable debt securities are payable, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the U.S. or that other government.
In any case, the issuer of government obligations cannot have the option to call or redeem the obligations. In addition, government obligations include, subject to certain qualifications, a depository receipt issued by a bank or trust company as custodian with respect to any government obligation or a specific payment of interest on or principal of any such government obligation held by the custodian for the account of a depository receipt holder.
If the issuer effects covenant defeasance with respect to the debt securities of any series, the amount on deposit with the applicable trustee will be sufficient to pay amounts due on the debt securities of that series at the time of their stated maturity. However, the debt securities of that series may become due and payable prior to their stated maturity if there is an event of default with respect to a covenant from which the issuer has not been released. In that event, the amount on deposit may not be sufficient to pay all amounts due on the debt securities of that series at the time of the acceleration and the holders of those debt securities will be required to look to the issuer and the guarantor, if any, for repayment of any shortfall.
The applicable prospectus supplement may further describe the provisions, if any, permitting defeasance or covenant defeasance, including any modifications to the provisions described above.
Convertible Debt Securities
Unless otherwise provided in the applicable prospectus supplement, the following provisions will apply to debt securities of Ventas, Inc. that will be convertible into shares of Ventas, Inc. common stock.
Each holder of unredeemed convertible debt securities may, at any time during the period specified in the applicable prospectus supplement, convert those convertible debt securities into shares of Ventas, Inc. common stock. The conversion price or rate for each $1,000 principal amount of convertible debt securities will be specified in the applicable prospectus supplement. The holder of a convertible debt security may convert only a portion of the convertible debt security that is $1,000 principal amount or any integral multiple of $1,000. In the case of convertible debt securities called for redemption, conversion rights will expire at the close of business on the date fixed for the redemption. However, in the case of repayment at the option of the applicable holder, conversion rights will terminate upon receipt of written notice of the holder’s exercise of that option.
The conversion price or rate may be subject to adjustment in certain events, as specified in the applicable indenture, including:
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the issuance of shares of Ventas, Inc. common stock as a dividend on the common stock;
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subdivisions and combinations of Ventas, Inc. common stock;
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the issuance to all holders of Ventas, Inc. common stock of rights or warrants entitling such holders for a period not exceeding 45 days to subscribe for or purchase shares of common stock at a price per share less than its then current per share market price; and
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the distribution to all holders of Ventas, Inc. common stock of (i) shares of Ventas, Inc. capital stock, other than common stock, (ii) evidence of Ventas, Inc. indebtedness or assets excluding cash dividends or distributions paid from its retained earnings or (iii) subscription rights or warrants other than those referred to above.
However, Ventas, Inc. will not be required to make any adjustment of the conversion price or rate of less than 1%. Fractional shares of common stock will not be issued upon conversion. In lieu of fractional shares, Ventas, Inc. will pay a cash adjustment. Unless otherwise specified in the applicable prospectus supplement, debt securities surrendered for conversion between any record date for an interest payment and the related interest payment date must be accompanied by payment of an amount in cash equal to the interest payment on the surrendered debt security. However, that payment does not have to accompany debt securities surrendered for conversion if those debt securities have been called for redemption during that period. Furthermore, upon conversion of any original issue discount security, the fixed number of shares of common stock into which such original issue discount security is convertible will first be applied to the portion attributable to the accrued original issue discount relating to the period from the date of issuance to the date of conversion of the original issue discount security, and, second, to the portion attributable to the balance of the principal amount of such debt securities.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain material U.S. federal income tax considerations regarding our election to be taxed as a REIT and the acquisition, ownership and disposition of our capital stock or debt securities. Supplemental U.S. federal income tax considerations relevant to holders of the securities offered by this prospectus (including warrants, preferred stock and depositary shares) may be provided in the prospectus supplement that relates to those securities. For purposes of this discussion, references to “we,” “our” and “us” mean only Ventas, Inc. and do not include any of its subsidiaries, except as otherwise indicated. This summary is for general information only and is not tax advice. The information in this summary is based on:
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the Code;
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current, temporary and proposed Treasury regulations promulgated under the Code (the “Treasury Regulations”);
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the legislative history of the Code;
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administrative interpretations and practices of the IRS; and
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court decisions;
in each case, as of the date of this prospectus. In addition, the administrative interpretations and practices of the IRS include its practices and policies as expressed in private letter rulings that are not binding on the IRS except with respect to the particular taxpayers who requested and received those rulings. The sections of the Code and the corresponding Treasury Regulations that relate to qualification and taxation as a REIT are highly technical and complex. The following discussion sets forth certain material aspects of the sections of the Code that govern the U.S. federal income tax treatment of a REIT and its stockholders. This summary is qualified in its entirety by the applicable Code provisions, Treasury Regulations promulgated under the Code, and administrative and judicial interpretations thereof. Potential tax reforms may result in significant changes to the rules governing U.S. federal income taxation. New legislation, Treasury Regulations, administrative interpretations and practices and/or court decisions may significantly and adversely affect our ability to qualify as a REIT, the U.S. federal income tax consequences of such qualification, or the U.S. federal income tax consequences of an investment in us, including those described in this discussion. Moreover, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. Any such changes could apply retroactively to transactions preceding the date of the change. We have not requested, and do not plan to request, any rulings from the IRS that we qualify as a REIT, and the statements in this prospectus are not binding on the IRS or any court. Thus, we can provide no assurance that the tax considerations contained in this discussion will not be challenged by the IRS or will be sustained by a court if challenged by the IRS. This summary does not discuss any state, local or non-U.S. tax consequences, or any tax consequences arising under any U.S. federal tax laws other than U.S. federal income tax laws, associated with the acquisition, ownership or disposition of our capital stock or debt securities, or our election to be taxed as a REIT.
You are urged to consult your tax advisor regarding the tax consequences to you of:
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the acquisition, ownership and disposition of our capital stock or debt securities, including the U.S. federal, state, local, non-U.S. and other tax consequences;
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our election to be taxed as a REIT for U.S. federal income tax purposes; and
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potential changes in applicable tax laws.
Taxation of Our Company
General. We have elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year ended December 31, 1999. We believe that we have been organized and have operated in a manner that has allowed us to qualify for taxation as a REIT under the Code commencing with such taxable year, and we intend to continue to be organized and operate in this manner. However, qualification and taxation as a REIT depend upon our ability to meet the various qualification tests imposed
under the Code, including through actual operating results, asset composition, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that we have been organized and have operated, or will continue to be organized and operate, in a manner so as to qualify or remain qualified as a REIT. See “— Failure to Qualify” for potential tax consequences if we fail to qualify as a REIT.
Hogan Lovells US LLP has acted as our tax counsel in connection with this prospectus. Hogan Lovells US LLP has rendered an opinion to us, as of the date of this prospectus, to the effect that, commencing with our taxable year ended December 31, 2017, we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and our proposed method of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Code. It must be emphasized that this opinion was based on various assumptions and representations as to factual matters, including representations made by us in a factual certificate provided by one or more of our officers. In addition, this opinion was based upon our factual representations set forth in this prospectus. Moreover, our qualification and taxation as a REIT depend upon our ability to meet the various qualification tests imposed under the Code, which are discussed below, including through actual operating results, asset composition, distribution levels and diversity of stock ownership, the results of which have not been and will not be reviewed by Hogan Lovells US LLP. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year have satisfied or will satisfy those requirements. Further, the anticipated U.S. federal income tax treatment described herein may be changed, perhaps retroactively, by legislative, administrative or judicial action at any time. Hogan Lovells US LLP has no obligation to update its opinion subsequent to the date of such opinion.
Provided we qualify for taxation as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that is currently distributed to our stockholders. This treatment substantially eliminates the “double taxation” that ordinarily results from investment in a C corporation. A C corporation is a corporation that generally is required to pay tax at the corporate level. Double taxation means taxation once at the corporate level when income is earned and once again at the stockholder level when the income is distributed. We will, however, be required to pay U.S. federal income tax as follows:
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First, we will be required to pay regular U.S. federal corporate income tax on any undistributed REIT taxable income, including undistributed capital gain.
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Second, if we have (1) net income from the sale or other disposition of “foreclosure property” held primarily for sale to customers in the ordinary course of business or (2) other nonqualifying income from foreclosure property, we will be required to pay regular U.S. federal corporate income tax on this income. To the extent that income from foreclosure property is otherwise qualifying income for purposes of the 75% gross income test, this tax is not applicable. Subject to certain other requirements, foreclosure property generally is defined as property we acquired through foreclosure or after a default on a loan secured by the property or a lease of the property. See “— Foreclosure Property.”
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Third, we will be required to pay a 100% tax on any net income from prohibited transactions. Prohibited transactions are, in general, sales or other taxable dispositions of property, other than foreclosure property, held as inventory or primarily for sale to customers in the ordinary course of business.
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Fourth, if we fail to satisfy the 75% gross income test or the 95% gross income test, as described below, but have otherwise maintained our qualification as a REIT because certain other requirements are met, we will be required to pay a tax equal to (1) the greater of (A) the amount by which we fail to satisfy the 75% gross income test and (B) the amount by which we fail to satisfy the 95% gross income test, multiplied by (2) a fraction intended to reflect our profitability.
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Fifth, if we fail to satisfy any of the asset tests (other than a de minimis failure of the 5% or 10% asset test), as described below, due to reasonable cause and not due to willful neglect, and we nonetheless maintain our REIT qualification because of specified cure provisions, we will be required to pay a tax equal to the greater of $50,000 or the U.S. federal corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail such test.
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Sixth, if we fail to satisfy any provision of the Code that would result in our failure to qualify as a REIT (other than a violation of the gross income tests or certain violations of the asset tests, as
described below) and the violation is due to reasonable cause and not due to willful neglect, we may retain our REIT qualification but we will be required to pay a penalty of $50,000 for each such failure.
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Seventh, we will be required to pay a 4% excise tax to the extent we fail to distribute during each calendar year at least the sum of (1) 85% of our ordinary income for the year, (2) 95% of our capital gain net income for the year, and (3) any undistributed taxable income from prior periods.
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Eighth, if we acquire any asset from a corporation that is or has been a C corporation in a transaction in which our tax basis in the asset is less than the fair market value of the asset, in each case determined as of the date on which we acquired the asset, and we subsequently recognize gain on the disposition of the asset during the five-year period beginning on the date on which we acquired the asset, then we generally will be required to pay regular U.S. federal corporate income tax on this gain to the extent of the excess of (1) the fair market value of the asset over (2) our adjusted tax basis in the asset, in each case determined as of the date on which we acquired the asset. The results described in this paragraph with respect to the recognition of gain assume that the C corporation will refrain from making an election to receive different treatment under applicable Treasury Regulations on its tax return for the year in which we acquire the asset from the C corporation. Under applicable Treasury Regulations, any gain from the sale of property we acquired in an exchange under Section 1031 (a like-kind exchange) or Section 1033 (an involuntary conversion) of the Code generally is excluded from the application of this built-in gains tax.
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Ninth, our subsidiaries that are C corporations and are not qualified REIT subsidiaries, including our “taxable REIT subsidiaries” described below, generally will be required to pay regular U.S. federal corporate income tax on their earnings.
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Tenth, we will be required to pay a 100% tax on any “redetermined rents,” “redetermined deductions,” “excess interest” or “redetermined TRS service income,” as described below under “— Penalty Tax.” In general, redetermined rents are rents from real property that are overstated as a result of services furnished to any of our tenants by a taxable REIT subsidiary of ours. Redetermined deductions and excess interest generally represent amounts that are deducted by a taxable REIT subsidiary of ours for amounts paid to us that are in excess of the amounts that would have been deducted based on arm’s-length negotiations. Redetermined TRS service income generally represents income of a taxable REIT subsidiary that is understated as a result of services provided to us or on our behalf.
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Eleventh, we may elect to retain and pay income tax on our net capital gain. In that case, a stockholder would include its proportionate share of our undistributed capital gain (to the extent we make a timely designation of such gain to the stockholder) in its income, would be deemed to have paid the tax that we paid on such gain, and would be allowed a credit for its proportionate share of the tax deemed to have been paid, and an adjustment would be made to increase the tax basis of the stockholder in our capital stock.
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Twelfth, if we fail to comply with the requirement to send annual letters to our stockholders holding at least a certain percentage of our stock, as determined under applicable Treasury Regulations, requesting information regarding the actual ownership of our stock, and the failure is not due to reasonable cause or is due to willful neglect, we will be subject to a $25,000 penalty, or if the failure is intentional, a $50,000 penalty.
We and our subsidiaries may be subject to a variety of taxes other than U.S. federal income tax, including payroll taxes and state and local income, property and other taxes on our assets and operations.
From time to time, we may own properties in other countries, which may impose taxes on our operations within their jurisdictions. To the extent possible, we will structure our activities to minimize our non-U.S. tax liability. However, there can be no assurance that we will be able to eliminate our non-U.S. tax liability or reduce it to a specified level. Furthermore, as a REIT, both we and our stockholders will derive little or no benefit from foreign tax credits arising from those non-U.S. taxes.
Requirements for Qualification as a REIT. The Code defines a REIT as a corporation, trust or association:
(1)
that is managed by one or more trustees or directors;
(2)
that issues transferable shares or transferable certificates to evidence its beneficial ownership;
(3)
that would be taxable as a domestic corporation, but for Sections 856 through 860 of the Code;
(4)
that is not a financial institution or an insurance company within the meaning of certain provisions of the Code;
(5)
that is beneficially owned by 100 or more persons;
(6)
not more than 50% in value of the outstanding stock of which is owned, actually or constructively, by five or fewer individuals, including certain specified entities, during the last half of each taxable year; and
(7)
that meets other tests, described below, regarding the nature of its income and assets and the amount of its distributions.
The Code provides that conditions (1) to (4), inclusive, must be met during the entire taxable year and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Conditions (5) and (6) do not apply until after the first taxable year for which an election is made to be taxed as a REIT. For purposes of condition (6), the term “individual” includes a supplemental unemployment compensation benefit plan, a private foundation or a portion of a trust permanently set aside or used exclusively for charitable purposes, but generally does not include a qualified pension plan or profit sharing trust.
We believe that we have been organized and have operated in a manner that has allowed us, and will continue to allow us, to satisfy conditions (1) through (7), inclusive, during the relevant time periods. In addition, our Certificate of Incorporation provides for restrictions regarding ownership and transfer of our shares that are intended to assist us in continuing to satisfy the share ownership requirements described in conditions (5) and (6) above. A description of the share ownership and transfer restrictions relating to our capital stock is contained in the discussion in this prospectus under the headings “Description of Ventas, Inc. Common Stock — Restrictions on Ownership and Transfer” and “Description of Ventas, Inc. Preferred Stock — Restrictions on Ownership and Transfer.” These restrictions, however, do not ensure that we have previously satisfied, and may not ensure that we will, in all cases, be able to continue to satisfy, the share ownership requirements described in conditions (5) and (6) above. If we fail to satisfy these share ownership requirements, then except as provided in the next sentence, our status as a REIT will terminate. If, however, we comply with the rules contained in applicable Treasury Regulations that require us to ascertain the actual ownership of our shares and we do not know, or would not have known through the exercise of reasonable diligence, that we failed to meet the requirement described in condition (6) above, we will be treated as having met this requirement. See “— Failure to Qualify.”
In addition, we may not maintain our status as a REIT unless our taxable year is the calendar year. We have and will continue to have a calendar taxable year.
Ownership of Interests in Partnerships, Limited Liability Companies and Qualified REIT Subsidiaries. In the case of a REIT that is a partner in a partnership (for purposes of this discussion, references to “partnership” include a limited liability company treated as a partnership for U.S. federal income tax purposes, and references to “partner” include a member in such a limited liability company), Treasury Regulations provide that the REIT will be deemed to own its proportionate share of the assets of the partnership based on its interest in partnership capital, subject to special rules relating to the 10% asset test described below. Also, the REIT will be deemed to be entitled to its proportionate share of the income of that entity. The assets and gross income of the partnership retain the same character in the hands of the REIT for purposes of Section 856 of the Code, including satisfying the gross income tests and the asset tests. Thus, our pro rata share of the assets and items of income of any partnership or disregarded entity for U.S. federal income tax purposes in which we directly or indirectly own an interest is treated as our assets and items of income for purposes of applying the requirements described in this discussion, including the gross income and asset tests described below. A brief summary of the rules governing the U.S. federal income taxation of partnerships is set forth below in “— Tax Aspects of the Subsidiary Partnerships and the Limited Liability Companies.”
We generally have control of most of the subsidiary partnerships in which we own an interest and intend to operate them in a manner consistent with the requirements for our qualification as a REIT. We may from time to time be a limited partner or non-managing member in some of our partnerships. If a partnership in which we own an interest takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership could take an action which could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or take other corrective action on a timely basis. In such a case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.
We may from time to time own and operate certain properties through wholly owned subsidiaries that we intend to be treated as “qualified REIT subsidiaries” under the Code. A corporation (or other entity treated as a corporation for U.S. federal income tax purposes) will qualify as our qualified REIT subsidiary if we own 100% of the corporation’s outstanding stock and do not elect with the subsidiary to treat it as a “taxable REIT subsidiary,” as described below. A qualified REIT subsidiary is not treated as a separate corporation, and all assets, liabilities and items of income, gain, loss, deduction and credit of a qualified REIT subsidiary are treated as assets, liabilities and items of income, gain, loss, deduction and credit of the parent REIT for all purposes under the Code, including all REIT qualification tests. Thus, in applying the U.S. federal income tax requirements described in this discussion, any qualified REIT subsidiaries we own are ignored, and all assets, liabilities and items of income, gain, loss, deduction and credit of such corporations are treated as our assets, liabilities and items of income, gain, loss, deduction and credit. A qualified REIT subsidiary is not subject to U.S. federal income tax, and our ownership of the stock of a qualified REIT subsidiary will not violate the restrictions on ownership of securities, as described below under “— Asset Tests.”
Ownership of Interests in Taxable REIT Subsidiaries. We currently own an interest in a number of taxable REIT subsidiaries and may acquire securities in additional taxable REIT subsidiaries in the future. A taxable REIT subsidiary is a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) other than a REIT in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a taxable REIT subsidiary. If a taxable REIT subsidiary owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a taxable REIT subsidiary. Other than some activities relating to lodging and health care properties, a taxable REIT subsidiary may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. A taxable REIT subsidiary is subject to U.S. federal income tax as a regular C corporation. A REIT is not treated as holding the assets of a taxable REIT subsidiary or as receiving any income that the taxable REIT subsidiary earns. Rather, the stock issued by the taxable REIT subsidiary is an asset in the hands of the REIT, and the REIT generally recognizes as income the dividends, if any, that it receives from the taxable REIT subsidiary. A REIT’s ownership of securities of a taxable REIT subsidiary is not subject to the 5% or 10% asset test described below. See “— Asset Tests.” Taxpayers are subject to a limitation on their ability to deduct net business interest generally equal to 30% of adjusted taxable income, subject to certain exceptions.
Ownership of Interests in Subsidiary REITs. We own and may acquire direct or indirect interests in one or more entities that have elected or will elect to be taxed as REITs under the Code (each, a “Subsidiary REIT”). A Subsidiary REIT is subject to the various REIT qualification requirements and other limitations described herein that are applicable to us. If a Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to U.S. federal income tax (including any applicable corporate minimum tax) and (ii) the Subsidiary REIT’s failure to qualify could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus could impair our ability to qualify as a REIT unless we could avail ourselves of certain relief provisions.
Income Tests. We must satisfy two gross income requirements annually to maintain our qualification as a REIT. First, in each taxable year we must derive directly or indirectly at least 75% of our gross income (excluding gross income from prohibited transactions, certain hedging transactions and certain foreign currency gains) from investments relating to real property or mortgages on real property, including “rents from real property,” dividends from other REITs and, in certain circumstances, interest, or certain types of temporary investments. Second, in each taxable year we must derive at least 95% of our gross income
(excluding gross income from prohibited transactions, certain hedging transactions, and certain foreign currency gains) from the real property investments described above or dividends, interest and gain from the sale or disposition of stock or securities, or from any combination of the foregoing. For these purposes, the term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of all or some of the amount depends in any way on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely by reason of being based on a fixed percentage or percentages of receipts or sales.
Rents we receive from a tenant will qualify as “rents from real property” for the purpose of satisfying the gross income requirements for a REIT described above only if all of the following conditions are met:
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The amount of rent is not based in whole or in part on the income or profits of any person. However, an amount we receive or accrue generally will not be excluded from the term “rents from real property” solely because it is based on a fixed percentage or percentages of receipts or sales or if it is based on the net income of a tenant which derives substantially all of its income with respect to such property from subleasing of substantially all of such property, to the extent that the rents paid by the subtenants would qualify as rents from real property if Ventas earned such amounts directly;
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Neither we nor an actual or constructive owner of 10% or more of our capital stock actually or constructively owns 10% or more of the interests in the assets or net profits of a non-corporate tenant, or, if the tenant is a corporation, 10% or more of the total combined voting power of all classes of stock entitled to vote or 10% or more of the total value of all classes of stock of the tenant. Rents we receive from such a tenant that is a taxable REIT subsidiary of ours, however, will not be excluded from the definition of “rents from real property” as a result of this condition if at least 90% of the space at the property to which the rents relate is leased to third parties, and the rents paid by the taxable REIT subsidiary are substantially comparable to rents paid by our other tenants for comparable space. Whether rents paid by a taxable REIT subsidiary are substantially comparable to rents paid by other tenants is determined at the time the lease with the taxable REIT subsidiary is entered into, extended, and modified, if such modification increases the rents due under such lease. Notwithstanding the foregoing, however, if a lease with a “controlled taxable REIT subsidiary” is modified and such modification results in an increase in the rents payable by such taxable REIT subsidiary, any such increase will not qualify as “rents from real property.” For purposes of this rule, a “controlled taxable REIT subsidiary” is a taxable REIT subsidiary in which the parent REIT owns stock possessing more than 50% of the voting power or more than 50% of the total value of the outstanding stock of such taxable REIT subsidiary;
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Rent attributable to personal property, leased in connection with a lease of real property, is not greater than 15% of the total rent received under the lease. If this condition is not met, then the portion of the rent attributable to personal property will not qualify as “rents from real property.” To the extent that rent attributable to personal property, leased in connection with a lease of real property, exceeds 15% of the total rent received under the lease, we may transfer a portion of such personal property to a taxable REIT subsidiary; and
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We generally may not operate or manage the property or furnish or render services to our tenants, subject to a 1% de minimis exception and except as provided below. We may, however, perform services that are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not otherwise considered “rendered to the occupant” of the property. Examples of these services include the provision of light, heat, or other utilities, trash removal and general maintenance of common areas. In addition, we may employ an independent contractor from whom we derive no revenue to provide customary services to our tenants, or a taxable REIT subsidiary (which may be wholly or partially owned by us) to provide both customary and non-customary services to our tenants without causing the rent we receive from those tenants to fail to qualify as “rents from real property.” With respect to a significant number of our independent living communities that are not “qualified health care properties” (see discussion below), we engage or will engage our taxable REIT subsidiary to provide services to tenants of the properties.
A substantial portion of our rental income is derived from leases of health care properties to our taxable REIT subsidiaries. In order for the rent payable under each of these leases to constitute “rents from real property,” each lease must be respected as a true lease for U.S. federal income tax purposes and must
not be treated as a service contract, joint venture, or some other type of arrangement. We believe that each such lease is a true lease for U.S. federal income tax purposes. However, this determination is inherently a question of fact, and we cannot assure you that the IRS will not successfully assert a contrary position. If any lease is not respected as a true lease, part or all of the payments that we receive as rent from our taxable REIT subsidiary with respect to such lease may not be considered rent or may not otherwise satisfy the various requirements for qualification as “rents from real property.” In that case, we may not be able to satisfy either the 75% or 95% gross income test and, as a result, could fail to qualify as a REIT.
Also, our taxable REIT subsidiaries may not operate or manage a health care property or provide rights to any brand name under which any health care property is operated. However, rents we receive from a lease of a health care property to our taxable REIT subsidiary will constitute “rents from real property” if the following conditions are satisfied:
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First, the health care property must be a “qualified health care property.” A qualified health care property is any real property (including interests therein), and any personal property incident to such real property, which is (or is necessary or incidental to the use of) a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients and which is operated by a provider of such services which is eligible for participation in Medicare with respect to such facility; and
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Second, the health care property must be managed by an “eligible independent contractor.” An eligible independent contractor is an independent contractor that, at the time the management contract is entered into, is actively engaged in the trade or business of operating qualified health care properties for any person not related to us or any of our taxable REIT subsidiaries. For this purpose, an independent contractor means any person (i) that does not own (taking into account relevant attribution rules) more than 35% of our capital stock, and (ii) with respect to which no person or group owning directly or indirectly (taking into account relevant attribution rules) 35% or more of our capital stock owns 35% or more directly or indirectly (taking into account relevant attribution rules) of the ownership interest.
We believe each health care property that we lease to our taxable REIT subsidiaries pursuant to the RIDEA exception to related party rent is a qualified health care property, and each health care property manager engaged by our taxable REIT subsidiaries to manage each health care property is an eligible independent contractor. The determination of what is or is not a qualified health care property is complex and, particularly with respect to unlicensed properties, may be dependent on the day-to-day operations and other arrangements in place at those properties. We believe that we have appropriately determined which of our properties are or are not properly characterized as qualified health care properties and have obtained a private letter ruling from the IRS confirming our determination with respect to certain properties. We have structured the applicable leases and related arrangements in a manner that we believe will allow us to comply with the applicable requirements. Furthermore, while we will monitor the activities of the eligible independent contractors to maximize the value of our health care property investments, neither we nor our taxable REIT subsidiary lessees will directly or indirectly operate or manage our health care properties. Thus, we believe that the rents we derive from our taxable REIT subsidiaries with respect to the leases of our qualified health care properties will qualify as “rents from real property.”
We generally do not intend to take actions we believe will cause us to fail to satisfy the rental conditions described above. However, we may intentionally fail to satisfy some of these conditions to the extent we determine, based on the advice of our tax counsel, that the failure will not jeopardize our tax status as a REIT. In addition, with respect to the limitation on the rental of personal property, we generally have not obtained appraisals of the real property and personal property leased to tenants. Accordingly, there can be no assurance that the IRS will not disagree with our determinations of value.
From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase these items, and futures and forward contracts. Income from a hedging transaction, including gain from the sale or disposition of such a transaction, that is clearly identified as a hedging transaction as specified in the Code will not constitute gross income under, and thus will be exempt from, the 75% and
95% gross income tests. The term “hedging transaction,” as used above, generally means (A) any transaction we enter into in the normal course of our business primarily to manage risk of (1) interest rate changes or fluctuations with respect to borrowings made or to be made by us to acquire or carry real estate assets, or (2) currency fluctuations with respect to an item of qualifying income under the 75% or 95% gross income test or any property which generates such income and (B) new transactions entered into to hedge the income or loss from prior hedging transactions, where the property or indebtedness which was the subject of the prior hedging transaction was extinguished or disposed of. To the extent that we do not properly identify such transactions as hedges or we hedge with other types of financial instruments, the income from those transactions is not likely to be treated as qualifying income for purposes of the gross income tests. We intend to structure any hedging transactions in a manner that does not jeopardize our status as a REIT.
We have investments in several entities located outside the United States and from time to time may invest in additional entities or properties located outside the United States, through a taxable REIT subsidiary or otherwise. These acquisitions could cause us to incur foreign currency gains or losses. Any foreign currency gains, to the extent attributable to specified items of qualifying income or gain, or specified qualifying assets, however, generally will not constitute gross income for purposes of the 75% and 95% gross income tests, and therefore will be excluded from these tests.
To the extent our taxable REIT subsidiaries pay dividends or interest, our allocable share of such dividend or interest income will qualify under the 95%, but not the 75%, gross income test (except that our allocable share of such interest would also qualify under the 75% gross income test to the extent the interest is paid on a loan that is adequately secured by real property).
We will monitor the amount of the dividend and other income from our taxable REIT subsidiaries and will take actions intended to keep this income, and any other nonqualifying income, within the limitations of the gross income tests. Although we expect these actions will be sufficient to prevent a violation of the gross income tests, we cannot guarantee that such actions will in all cases prevent such a violation.
If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may nevertheless qualify as a REIT for the year if we are entitled to relief under certain provisions of the Code. We generally may make use of the relief provisions if:
•
following our identification of the failure to meet the 75% or 95% gross income tests for any taxable year, we file a schedule with the IRS setting forth each item of our gross income for purposes of the 75% or 95% gross income tests for such taxable year in accordance with Treasury Regulations to be issued; and
•
our failure to meet these tests was due to reasonable cause and not due to willful neglect.
It is not possible, however, to state whether in all circumstances we would be entitled to the benefit of these relief provisions. For example, if we fail to satisfy the gross income tests because nonqualifying income that we intentionally accrue or receive exceeds the limits on nonqualifying income, the IRS could conclude that our failure to satisfy the tests was not due to reasonable cause. If these relief provisions do not apply to a particular set of circumstances, we will not qualify as a REIT. See “— Failure to Qualify” below. As discussed above in “— General,” even if these relief provisions apply, and we retain our status as a REIT, a tax would be imposed with respect to our nonqualifying income. We may not always be able to comply with the gross income tests for REIT qualification despite periodic monitoring of our income.
Prohibited Transaction Income. Any gain that we realize on the sale of property (other than any foreclosure property) held as inventory or otherwise held primarily for sale to customers in the ordinary course of business, including any gain realized by our qualified REIT subsidiaries and our share of any gain realized by any of our subsidiary partnerships, will be treated as income from a prohibited transaction that is subject to a 100% penalty tax, unless certain safe harbor exceptions apply. This prohibited transaction income may also adversely affect our ability to satisfy the gross income tests for qualification as a REIT. Under existing law, whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. We intend to hold our properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing and owning our properties and to make occasional sales of the properties as are consistent with our investment objectives. We do not intend, and do
not intend to permit any of our subsidiary partnerships in which we own an interest, to enter into any sales that are prohibited transactions. However, the IRS may successfully contend that some or all of the sales made by us or the subsidiary partnerships are prohibited transactions. We would be required to pay the 100% penalty tax on our allocable share of the gains resulting from any such sales. The 100% penalty tax will not apply to gains from the sale of assets that are held through a taxable REIT subsidiary, but such income will be subject to regular U.S. federal corporate income tax.
Penalty Tax. Any redetermined rents, redetermined deductions, excess interest or redetermined TRS service income we generate will be subject to a 100% penalty tax. In general, redetermined rents are rents from real property that are overstated as a result of any services furnished to any of our tenants by a taxable REIT subsidiary of ours, redetermined deductions and excess interest represent any amounts that are deducted by a taxable REIT subsidiary of ours for amounts paid to us that are in excess of the amounts that would have been deducted based on arm’s-length negotiations, and redetermined TRS service income is income of a taxable REIT subsidiary that is understated as a result of services provided to us or on our behalf. Rents we receive will not constitute redetermined rents if they qualify for certain safe harbor provisions contained in the Code.
We do not believe we have been, and do not expect to be, subject to this penalty tax, although any rental or service arrangements we enter into from time to time may not satisfy the safe-harbor provisions described above. These determinations are inherently factual, and the IRS has broad discretion to assert that amounts paid between related parties should be reallocated to clearly reflect their respective incomes. If the IRS successfully made such an assertion, we would be required to pay a 100% penalty tax on any overstated rents paid to us, or any excess deductions or understated income of our taxable REIT subsidiaries.
Asset Tests. At the close of each calendar quarter of our taxable year, we must also satisfy certain tests relating to the nature and diversification of our assets. First, at least 75% of the value of our total assets must be represented by real estate assets, cash, cash items and U.S. government securities. For purposes of this test, the term “real estate assets” generally means real property (including interests in real property and interests in mortgages on real property or on both real property and, to a limited extent, personal property), shares (or transferable certificates of beneficial interest) in other REITs, any stock or debt instrument attributable to the investment of the proceeds of a stock offering or a public offering of debt with a term of at least five years (but only for the one-year period beginning on the date the REIT receives such proceeds), debt instruments of publicly offered REITs, and personal property leased in connection with a lease of real property for which the rent attributable to personal property is not greater than 15% of the total rent received under the lease.
Second, not more than 25% of the value of our total assets may be represented by securities (including securities of taxable REIT subsidiaries), other than those securities includable in the 75% asset test.
Third, of the investments included in the 25% asset class, and except for certain investments in other REITs, our qualified REIT subsidiaries and taxable REIT subsidiaries, the value of any one issuer’s securities may not exceed 5% of the value of our total assets, and we may not own more than 10% of the total vote or value of the outstanding securities of any one issuer. Certain types of securities we may own are disregarded as securities solely for purposes of the 10% value test, including, but not limited to, securities satisfying the “straight debt” safe harbor, securities issued by a partnership that itself would satisfy the 75% income test if it were a REIT, any loan to an individual or an estate, any obligation to pay rents from real property and any security issued by a REIT. In addition, solely for purposes of the 10% value test, the determination of our interest in the assets of a partnership in which we own an interest will be based on our proportionate interest in any securities issued by the partnership, excluding for this purpose certain securities described in the Code. From time to time we may own securities (including debt securities) of issuers that do not qualify as a REIT, a qualified REIT subsidiary or a taxable REIT subsidiary. We intend that our ownership of any such securities will be structured in a manner that allows us to comply with the asset tests described above.
Fourth, not more than 20% of the value of our total assets may be represented by the securities of one or more taxable REIT subsidiaries. We currently own the stock of certain corporations that have elected, together with us, to be treated as our taxable REIT subsidiaries, and we may acquire securities in additional taxable REIT subsidiaries in the future. So long as each of these companies qualifies as a taxable REIT subsidiary of ours, we will not be subject to the 5% asset test, the 10% voting securities limitation or the 10%
value limitation with respect to our ownership of the securities of such companies. We believe that the aggregate value of our taxable REIT subsidiaries has not exceeded, and in the future will not exceed, 20% of the aggregate value of our gross assets. We generally do not obtain independent appraisals to support these conclusions. In addition, there can be no assurance that the IRS will not disagree with our determinations of value.
Fifth, not more than 25% of the value of our total assets may be represented by debt instruments of publicly offered REITs to the extent those debt instruments would not be real estate assets but for the inclusion of debt instruments of publicly offered REITs in the meaning of real estate assets, as described above (e.g., a debt instrument issued by a publicly offered REIT that is not secured by a mortgage on real property).
The asset tests must be satisfied at the close of each calendar quarter of our taxable year in which we (directly or through our qualified REIT subsidiaries or partnerships) acquire securities in the applicable issuer, and also at the close of each calendar quarter in which we increase our ownership of securities of such issuer (including as a result of an increase in our interest in any partnership that owns such securities). For example, our indirect ownership of securities of each issuer may increase as a result of our capital contributions to, or the redemption of other partners’ or members’ interests in, a partnership in which we have an ownership interest. Also, after initially meeting the asset tests at the close of any quarter, we will not lose our status as a REIT for failure to satisfy the asset tests at the end of a later quarter solely by reason of changes in asset values. If we fail to satisfy an asset test because we acquire securities or other property during a quarter (including as a result of an increase in our interest in any partnership), we may cure this failure by disposing of sufficient nonqualifying assets within 30 days after the close of that quarter. We believe that we have maintained, and we intend to maintain, adequate records of the value of our assets to ensure compliance with the asset tests. If we fail to cure any noncompliance with the asset tests within the 30-day cure period, we would cease to qualify as a REIT unless we are eligible for certain relief provisions discussed below.
Certain relief provisions may be available to us if we discover a failure to satisfy the asset tests described above after the 30-day cure period. Under these provisions, we will be deemed to have met the 5% and 10% asset tests if the value of our nonqualifying assets (i) does not exceed the lesser of (a) 1% of the total value of our assets at the end of the applicable quarter or (b) $10,000,000, and (ii) we dispose of the nonqualifying assets or otherwise satisfy such tests within (a) six months after the last day of the quarter in which the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury Regulations to be issued. For violations of any of the asset tests due to reasonable cause and not due to willful neglect and that are, in the case of the 5% and 10% asset tests, in excess of the de minimis exception described above, we may avoid disqualification as a REIT after the 30-day cure period by taking steps including (i) the disposition of sufficient nonqualifying assets, or the taking of other actions, which allow us to meet the asset tests within (a) six months after the last day of the quarter in which the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury Regulations to be issued, (ii) paying a tax equal to the greater of (a) $50,000 or (b) the U.S. federal corporate income tax rate multiplied by the net income generated by the nonqualifying assets, and (iii) disclosing certain information to the IRS.
Although we believe we have satisfied the asset tests described above and plan to take steps to ensure that we satisfy such tests for any quarter with respect to which retesting is to occur, there can be no assurance that we will always be successful, or will not require a reduction in our overall interest in an issuer (including in a taxable REIT subsidiary). If we fail to cure any noncompliance with the asset tests in a timely manner, and the relief provisions described above are not available, we would cease to qualify as a REIT.
Annual Distribution Requirements. To maintain our qualification as a REIT, we are required to distribute dividends, other than capital gain dividends, to our stockholders in an amount at least equal to the sum of:
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90% of our REIT taxable income; and
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90% of our after-tax net income, if any, from foreclosure property; minus
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the excess of the sum of certain items of non-cash income over 5% of our REIT taxable income.
For these purposes, our REIT taxable income is computed without regard to the dividends paid deduction and our net capital gain. In addition, for purposes of this test, non-cash income generally means income attributable to leveled stepped rents, original issue discount, cancellation of indebtedness, or a like-kind exchange that is later determined to be taxable.
In addition, our REIT taxable income will be reduced by any taxes we are required to pay on any gain we recognize from the disposition of any asset we acquired from a corporation that is or has been a C corporation in a transaction in which our tax basis in the asset is less than the fair market value of the asset, in each case determined as of the date on which we acquired the asset, within the five-year period following our acquisition of such asset, as described above under “— General.”
Generally, a taxpayer’s deduction for net business interest expense will generally be limited to 30% of its taxable income, as adjusted for certain items of income, gain, deduction or loss. Any business interest deduction that is disallowed due to this limitation may be carried forward to future taxable years, subject to special rules applicable to partnerships. If we or any of our subsidiary partnerships are subject to this interest expense limitation, our REIT taxable income for a taxable year may be increased. Taxpayers that conduct certain real estate businesses may elect not to have this interest expense limitation apply to them, provided that they use an alternative depreciation system to depreciate certain property. We believe that we or any of the subsidiary partnerships that are subject to this interest expense limitation will be eligible to make this election. If such election is made, although we or such subsidiary partnership, as applicable, would not be subject to the interest expense limitation described above, depreciation deductions may be reduced and, as a result, our REIT taxable income for a taxable year may be increased.
We generally must pay, or be treated as paying, the distributions described above in the taxable year to which they relate. At our election, a distribution will be treated as paid in a taxable year if it is declared before we timely file our tax return for such year and paid on or before the first regular dividend payment after such declaration, provided such payment is made during the 12-month period following the close of such year. These distributions are treated as received by our stockholders in the year in which they are paid. This is so even though these distributions relate to the prior year for purposes of the 90% distribution requirement. In order to be taken into account for purposes of our distribution requirement, except as provided below, the amount distributed must not be preferential — i.e., every stockholder of the class of stock to which a distribution is made must be treated the same as every other stockholder of that class, and no class of stock may be treated other than according to its dividend rights as a class. This preferential dividend limitation will not apply to distributions made by us, provided we qualify as a “publicly offered REIT.” We believe that we are, and expect we will continue to be, a “publicly offered REIT.” However, Subsidiary REITs we may own from time to time may not be treated as publicly offered REITs. To the extent that we do not distribute all of our net capital gain, or distribute at least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will be required to pay regular U.S. federal corporate income tax on the undistributed amount. We believe that we have made, and we intend to continue to make, timely distributions sufficient to satisfy these annual distribution requirements and to minimize our corporate tax obligations.
We expect that our REIT taxable income will be less than our cash flow because of depreciation and other non-cash charges included in computing REIT taxable income. Accordingly, we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the distribution requirements described above. However, from time to time, we may not have sufficient cash or other liquid assets to meet these distribution requirements due to timing differences between the actual receipt of income and actual payment of deductible expenses, and the inclusion of income and deduction of expenses in determining our taxable income. In addition, we may decide to retain our cash, rather than distribute it, in order to repay debt or for other reasons. If these timing differences occur, we may borrow funds to pay dividends or pay dividends in the form of taxable stock distributions in order to meet the distribution requirements, while preserving our cash.
Under some circumstances, we may be able to rectify an inadvertent failure to meet the 90% distribution requirement for a year by paying “deficiency dividends” to our stockholders in a later year, which may be included in our deduction for dividends paid for the earlier year. In that case, we may be able to avoid being taxed on amounts distributed as deficiency dividends, subject to the 4% excise tax described below. However, we will be required to pay interest to the IRS based upon the amount of any deduction claimed for deficiency dividends. While the payment of a deficiency dividend will apply to a prior year for purposes
of our REIT distribution requirements, it will be treated as an additional distribution to our stockholders in the year such dividend is paid.
Furthermore, we will be required to pay a 4% excise tax to the extent we fail to distribute during each calendar year at least the sum of 85% of our ordinary income for such year, 95% of our capital gain net income for the year and any undistributed taxable income from prior periods. Any ordinary income and net capital gain on which U.S. federal corporate income tax is imposed for any year is treated as an amount distributed during that year for purposes of calculating this excise tax.
For purposes of the 90% distribution requirement and the 4% excise tax described above, dividends declared during the last three months of the taxable year, payable to stockholders of record on a specified date during such period and paid during January of the following year, will be treated as paid by us and received by our stockholders on December 31 of the year in which they are declared.
We have net operating loss carryforwards that we may use (subject to certain limitations) to reduce our annual distribution requirements.
Like-Kind Exchanges. We may dispose of real property that is not held primarily for sale in transactions intended to qualify as like-kind exchanges under the Code. Such like-kind exchanges are intended to result in the deferral of gain for U.S. federal income tax purposes. The failure of any such transaction to qualify as a like-kind exchange could require us to pay U.S. federal income tax, possibly including the 100% prohibited transaction tax, or deficiency dividends, depending on the facts and circumstances surrounding the particular transaction.
Tax Liabilities and Attributes Inherited in Connection with Acquisitions. From time to time, we may acquire other corporations or entities and, in connection with such acquisitions, we may succeed to the historical tax attributes and liabilities of such entities. For example, if we acquire a C corporation and subsequently dispose of its assets within five years of the acquisition, we could be required to pay the built-in gain tax described above under “— General.” In addition, in order to qualify as a REIT, at the end of any taxable year, we must not have any earnings and profits accumulated in a non-REIT year. As a result, if we acquire a C corporation, we must distribute the corporation’s earnings and profits accumulated prior to the acquisition before the end of the taxable year in which we acquire the corporation. We also could be required to pay the acquired entity’s unpaid taxes even though such liabilities arose prior to the time we acquired the entity.
Moreover, we may from time to time acquire other REITs through a merger or acquisition. If any such REIT failed to qualify as a REIT for any of its taxable years, such REIT would be liable for (and we, as the surviving corporation in the merger or acquisition, would be obligated to pay) regular U.S. federal corporate income tax on its taxable income for such taxable years. In addition, if such REIT was a C corporation at the time of the merger or acquisition, the tax consequences described in the preceding paragraph generally would apply. If such REIT failed to qualify as a REIT for any of its taxable years, but qualified as a REIT at the time of such merger or acquisition, and we acquired such REIT’s assets in a transaction in which our tax basis in the assets of such REIT is determined, in whole or in part, by reference to such REIT’s tax basis in such assets, we generally would be subject to tax on the built-in gain on each asset of such REIT as described above if we were to dispose of the asset in a taxable transaction during the five-year period following such REIT’s requalification as a REIT, subject to certain exceptions. Moreover, even if such REIT qualified as a REIT at all relevant times, we would similarly be liable for other unpaid taxes (if any) of such REIT (such as the 100% tax on gains from any sales treated as “prohibited transactions” as described above under “— Prohibited Transaction Income”).
Furthermore, after our acquisition of another corporation or entity, the asset and income tests will apply to all of our assets, including the assets we acquire from such corporation or entity, and to all of our income, including the income derived from the assets we acquire from such corporation or entity. As a result, the nature of the assets that we acquire from such corporation or entity and the income we derive from those assets may have an effect on our tax status as a REIT.
Foreclosure Property. The foreclosure property rules permit us (by our election) to foreclose or repossess properties without being disqualified as a REIT as a result of receiving income that does not qualify under the gross income tests. However, in such a case, we would be subject to the U.S. federal corporate
income tax on the net non-qualifying income from “foreclosure property,” and the after-tax amount would increase the dividends we would be required to distribute to stockholders. See “— Annual Distribution Requirements.” This corporate tax would not apply to income that qualifies under the REIT 75% income test.
Foreclosure property treatment (other than for qualified health care property) is available for an initial period of three years and may, in certain circumstances, be extended for an additional three years. Foreclosure property treatment for qualified health care property is available for an initial period of two years and may, in certain circumstances, be extended for an additional four years. However, foreclosure property treatment will end on the first day on which we enter into a lease of the applicable property that will give rise to income that does not qualify under the REIT 75% income test, but will not end if the lease will give rise only to qualifying income under such test. Foreclosure property treatment also will end if any construction takes place on the property (other than completion of a building or other improvement that was more than 10% complete before default became imminent).
Failure to Qualify. If we discover a violation of a provision of the Code that would result in our failure to qualify as a REIT, certain specified cure provisions may be available to us. Except with respect to violations of the gross income tests and asset tests (for which the cure provisions are described above), and provided the violation is due to reasonable cause and not due to willful neglect, these cure provisions generally impose a $50,000 penalty for each violation in lieu of a loss of REIT status. If we fail to satisfy the requirements for taxation as a REIT in any taxable year, and the relief provisions do not apply, we will be required to pay regular U.S. federal corporate income tax, including any applicable corporate minimum tax on our taxable income. Distributions to stockholders in any year in which we fail to qualify as a REIT will not be deductible by us. As a result, we anticipate that our failure to qualify as a REIT would reduce the cash available for distribution by us to our stockholders. In addition, if we fail to qualify as a REIT, we will not be required to distribute any amounts to our stockholders, and all distributions to stockholders will be taxable as regular corporate dividends to the extent of our current and accumulated earnings and profits. In such event, corporate stockholders may be eligible for the dividends-received deduction. In addition, non-corporate stockholders, including individuals, may be eligible for the preferential tax rates on qualified dividend income. Non-corporate stockholders, including individuals, generally may deduct up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning before January 1, 2026 for purposes of determining their U.S. federal income tax (but not for purposes of the 3.8% Medicare tax), subject to certain holding period requirements and other limitations. If we fail to qualify as a REIT, such stockholders may not claim this deduction with respect to dividends paid by us. Unless entitled to relief under specific statutory provisions, we would also be ineligible to elect to be treated as a REIT for the four taxable years following the year for which we lose our qualification. It is not possible to state whether in all circumstances we would be entitled to this statutory relief.
Tax Aspects of the Subsidiary Partnerships and the Limited Liability Companies
General. From time to time, we may own, directly or indirectly, interests in various partnerships and limited liability companies. We expect these will be treated as partnerships or disregarded entities for U.S. federal income tax purposes. In general, entities that are treated as partnerships or disregarded entities for U.S. federal income tax purposes are “pass-through” entities which are not required to pay U.S. federal income tax. Rather, partners of such partnerships are allocated their shares of the items of income, gain, loss, deduction and credit of the partnership, and are potentially required to pay tax on this income, without regard to whether they receive a distribution from the partnership. We will include in our income our share of these partnership items for purposes of the various gross income tests, the computation of our REIT taxable income, and the REIT distribution requirements. Moreover, for purposes of the asset tests, we will include our pro rata share of assets held by these partnerships, based on our capital interests in each such entity. See “— Taxation of Our Company — Ownership of Interests in Partnerships, Limited Liability Companies and Qualified REIT Subsidiaries.” A disregarded entity is not treated as a separate entity for U.S. federal income tax purposes, and all assets, liabilities and items of income, gain, loss, deduction and credit of a disregarded entity are treated as assets, liabilities and items of income, gain, loss, deduction and credit of its parent that is not a disregarded entity for all purposes under the Code, including all REIT qualification tests.
Entity Classification. Our interests in the subsidiary partnerships and limited liability companies involve special tax considerations, including the possibility that the IRS might challenge the status of these entities as partnerships or disregarded entities for U.S. federal income tax purposes. For example, an entity that would otherwise be treated as a partnership for U.S. federal income tax purposes may nonetheless be taxable as a corporation if it is a “publicly traded partnership” and certain other requirements are met. A partnership would be treated as a publicly traded partnership if its interests are traded on an established securities market or are readily tradable on a secondary market or a substantial equivalent thereof, within the meaning of applicable Treasury Regulations. We do not anticipate that any subsidiary partnership will be treated as a publicly traded partnership that is taxable as a corporation. However, if any such entity were treated as a corporation, it would be required to pay an entity-level tax on its income. In this situation, the character of our assets and items of gross income would change and could prevent us from satisfying the REIT asset tests and possibly the REIT income tests. See “— Taxation of Our Company — Asset Tests” and “— Income Tests.” This, in turn, could prevent us from qualifying as a REIT. See “— Taxation of Our Company — Failure to Qualify” for a discussion of the effect of our failure to meet these tests. In addition, a change in the tax status of a subsidiary treated as a partnership or disregarded entity to a corporation might be treated as a taxable event. If so, we might incur a tax liability without any related cash payment. We believe that each of the partnerships and limited liability companies are and will continue to be treated as partnerships or disregarded entities for U.S. federal income tax purposes.
Allocations of Items of Income, Gain, Loss and Deduction. A partnership agreement (or, in the case of a limited liability company treated as a partnership for U.S. federal income tax purposes, the limited liability company agreement) generally will determine the allocation of income and loss among partners. These allocations, however, will be disregarded for tax purposes if they do not comply with the provisions of Section 704(b) of the Code and the Treasury Regulations thereunder. Generally, Section 704(b) of the Code and the Treasury Regulations thereunder require that partnership allocations respect the economic arrangement of the partners. If an allocation of partnership income or loss does not comply with the requirements of Section 704(b) of the Code and the Treasury Regulations thereunder, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership. This reallocation will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. We intend that the allocations of taxable income and loss in each of the partnerships in which we own an interest from time to time comply with the requirements of Section 704(b) of the Code and the Treasury Regulations thereunder.
Tax Allocations with Respect to the Properties. Under Section 704(c) of the Code, items of income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner so that the contributing partner is charged with the unrealized gain or benefits from the unrealized loss associated with the property at the time of the contribution. The amount of the unrealized gain or unrealized loss generally is equal to the difference between the fair market value or book value and the adjusted tax basis of the contributed property at the time of contribution (this difference is referred to as a book-tax difference), as adjusted from time to time. These allocations are solely for U.S. federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners. Some of the partnerships in which we own an interest were formed by way of contributions of appreciated property. The relevant partnership and/or limited liability company agreements require that allocations be made in a manner consistent with Section 704(c) of the Code. Under Section 704(c) of the Code we could be allocated less depreciation or more gain on sale with respect to a contributed property than the amounts that would have been allocated to us if we had instead acquired the contributed property with an initial tax basis equal to its fair market value. Such allocations might adversely affect our ability to comply with the REIT distribution requirements. See “— Taxation of Our Company — Requirements for Qualification as a REIT” and “— Annual Distribution Requirements.”
Any property acquired by a subsidiary partnership in a taxable transaction will initially have a tax basis equal to its fair market value, and Section 704(c) of the Code generally will not apply.
Partnership Audit Rules. Under the rules applicable to U.S. federal income tax audits of partnerships, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto are assessed
and collected, at the partnership level. It is possible that these rules could result in partnerships in which we directly or indirectly invest being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as a direct or indirect partner of these partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though we, as a REIT, may not otherwise have been required to pay additional corporate-level taxes as a result of the related audit adjustment. Investors are urged to consult their tax advisors with respect to these changes and their potential impact on their investment in our capital stock.
Material U.S. Federal Income Tax Consequences to Holders of Our Capital Stock and Debt Securities
The following discussion is a summary of the material U.S. federal income tax consequences to you of acquiring, owning and disposing of our capital stock or debt securities. This discussion is limited to holders who hold our capital stock or debt securities as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the alternative minimum tax. In addition, except where specifically noted, it does not address consequences relevant to holders subject to special rules, including, without limitation:
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U.S. expatriates and former citizens or long-term residents of the United States;
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persons subject to the alternative minimum tax;
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U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
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persons holding our capital stock or debt securities as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
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banks, insurance companies, and other financial institutions;
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REITs or regulated investment companies;
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brokers, dealers or traders in securities;
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“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
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S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
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tax-exempt organizations or governmental organizations;
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persons subject to special tax accounting rules as a result of any item of gross income with respect to our capital stock or debt securities being taken into account in an “applicable financial statement” (as defined in the Code);
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persons deemed to sell our capital stock or debt securities under the constructive sale provisions of the Code; and
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persons who hold or receive our capital stock pursuant to the exercise of any employee stock option or otherwise as compensation.
THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED AS TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR CAPITAL STOCK OR DEBT SECURITIES ARISING UNDER OTHER U.S. FEDERAL TAX LAWS (INCLUDING ESTATE AND GIFT TAX LAWS), UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
For purposes of this discussion, a “U.S. holder” is a beneficial owner of our capital stock or debt securities that, for U.S. federal income tax purposes, is or is treated as:
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an individual who is a citizen or resident of the United States;
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a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal income tax regardless of its source; or
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a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
For purposes of this discussion, a “non-U.S. holder” is any beneficial owner of our capital stock or debt securities that is neither a U.S. holder nor an entity treated as a partnership for U.S. federal income tax purposes.
If an entity treated as a partnership for U.S. federal income tax purposes holds our capital stock or debt securities, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding our capital stock or debt securities and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
Taxation of Taxable U.S. Holders of Our Capital Stock
Distributions Generally. Distributions out of our current or accumulated earnings and profits will be treated as dividends and, other than with respect to capital gain dividends and certain amounts which have previously been subject to corporate level tax, as discussed below, will be taxable to our taxable U.S. holders as ordinary income when actually or constructively received. See “— Tax Rates” below. As long as we qualify as a REIT, these distributions will not be eligible for the dividends-received deduction in the case of U.S. holders that are corporations or, except to the extent described in “— Tax Rates” below, the preferential rates on qualified dividend income applicable to non-corporate U.S. holders, including individuals. In addition, non-corporate U.S. holders, including individuals, generally may deduct 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income for taxable years beginning before January 1, 2026. See “— Tax Rates” below. For purposes of determining whether distributions to holders of our capital stock are out of our current or accumulated earnings and profits, our earnings and profits will be allocated first to our outstanding preferred stock, if any, and then to our outstanding common stock.
To the extent that we make distributions on our capital stock in excess of our current and accumulated earnings and profits allocable to such stock, these distributions will be treated first as a tax-free return of capital to a U.S. holder to the extent of the U.S. holder’s adjusted tax basis in such shares of stock. This treatment will reduce the U.S. holder’s adjusted tax basis in such shares of stock by such amount, but not below zero. Distributions in excess of our current and accumulated earnings and profits and in excess of a U.S. holder’s adjusted tax basis in its shares will be taxable as capital gain. Such gain will be taxable as long-term capital gain if the shares have been held for more than one year. Dividends we declare in October, November, or December of any year and which are payable to a holder of record on a specified date in any of these months will be treated as both paid by us and received by the holder on December 31 of that year, provided we actually pay the dividend on or before January 31 of the following year. U.S. holders may not include in their own income tax returns any of our net operating losses or capital losses.
U.S. holders that receive taxable stock distributions, including distributions partially payable in our common stock and partially payable in cash, would be required to include the full amount of the distribution (i.e., the cash and the stock portion) as a dividend (subject to limited exceptions) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes, as described above. The amount of any distribution payable in our common stock generally is equal to the amount of cash that could have been received instead of the common stock. Depending on the circumstances of a U.S. holder, the tax on the distribution may exceed the amount of the distribution received in cash, in which case such U.S. holder would have to pay the tax using cash from other sources. If a U.S. holder sells the common stock it received in connection with a taxable stock distribution in order to pay this tax and the proceeds of such sale are less than the amount required to be included in income with respect to the stock portion of the distribution, such U.S. holder could have a capital loss with respect to the stock sale that could not be used
to offset such income. A U.S. holder that receives common stock pursuant to such distribution generally has a tax basis in such common stock equal to the amount of cash that could have been received instead of such common stock as described above, and has a holding period in such common stock that begins on the day immediately following the payment date for the distribution.
Capital Gain Dividends. Dividends that we properly designate as capital gain dividends will be taxable to our taxable U.S. holders as a gain from the sale or disposition of a capital asset held for more than one year, to the extent that such gain does not exceed our actual net capital gain for the taxable year and may not exceed our dividends paid for the taxable year, including dividends paid the following year that are treated as paid in the current year. U.S. holders that are corporations may, however, be required to treat up to 20% of certain capital gain dividends as ordinary income. If we properly designate any portion of a dividend as a capital gain dividend, then, except as otherwise required by law, we presently intend to allocate a portion of the total capital gain dividends paid or made available to holders of all classes of our capital stock for the year to the holders of each class of our capital stock in proportion to the amount that our total dividends, as determined for U.S. federal income tax purposes, paid or made available to the holders of each such class of our capital stock for the year bears to the total dividends, as determined for U.S. federal income tax purposes, paid or made available to holders of all classes of our capital stock for the year. In addition, except as otherwise required by law, we will make a similar allocation with respect to any undistributed long-term capital gains which are to be included in our stockholders’ long-term capital gains, based on the allocation of the capital gain amount which would have resulted if those undistributed long-term capital gains had been distributed as “capital gain dividends” by us to our stockholders.
Retention of Net Capital Gains. We may elect to retain, rather than distribute as a capital gain dividend, all or a portion of our net capital gains. If we make this election, we would pay tax on our retained net capital gains. In addition, to the extent we so elect, our earnings and profits (determined for U.S. federal income tax purposes) would be adjusted accordingly, and a U.S. holder generally would:
•
include its pro rata share of our undistributed capital gain in computing its long-term capital gains in its U.S. federal income tax return for its taxable year in which the last day of our taxable year falls, subject to certain limitations as to the amount that is includable;
•
be deemed to have paid its share of the capital gains tax imposed on us on the designated amounts included in the U.S. holder’s income as long-term capital gain;
•
receive a credit or refund for the amount of tax deemed paid by it;
•
increase the adjusted tax basis of its capital stock by the difference between the amount of includable gains and the tax deemed to have been paid by it; and
•
in the case of a U.S. holder that is a corporation, appropriately adjust its earnings and profits for the retained capital gains in accordance with Treasury Regulations to be promulgated by the IRS.
Passive Activity Losses and Investment Interest Limitations. Distributions we make and gain arising from the sale or exchange of our capital stock by a U.S. holder will not be treated as passive activity income. As a result, U.S. holders generally will not be able to apply any “passive losses” against this income or gain. A U.S. holder generally may elect to treat capital gain dividends, capital gains from the disposition of our capital stock and income designated as qualified dividend income, as described in “— Tax Rates” below, as investment income for purposes of computing the investment interest limitation, but in such case, the holder will be taxed at ordinary income rates on such amount. Other distributions made by us, to the extent they do not constitute a return of capital, generally will be treated as investment income for purposes of computing the investment interest limitation.
Dispositions of Our Capital Stock. Except as described below under “— Taxation of Taxable U.S. Holders of Our Capital Stock — Redemption or Repurchase by Us,” if a U.S. holder sells or disposes of shares of our capital stock, it will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale or other disposition and the holder’s adjusted tax basis in the shares. This gain or loss, except as provided below, will be long-term capital gain or loss if the holder has held such capital stock for more than one year. However, if a U.S. holder recognizes a loss upon the sale or other disposition of capital stock that it has held for six months or less, after applying certain holding period rules, the loss recognized will be
treated as a long-term capital loss to the extent the U.S. holder received distributions from us which were required to be treated as long-term capital gains.
Redemption or Repurchase by Us. A redemption or repurchase of shares of our capital stock will be treated under Section 302 of the Code as a distribution (and taxable as a dividend to the extent of our current and accumulated earnings and profits as described above under “— Distributions Generally”) unless the redemption or repurchase satisfies one of the tests set forth in Section 302(b) of the Code and is therefore treated as a sale or exchange of the redeemed or repurchased shares. The redemption or repurchase generally will be treated as a sale or exchange if it:
•
is “substantially disproportionate” with respect to the U.S. holder,
•
results in a “complete redemption” of the U.S. holder’s stock interest in us, or
•
is “not essentially equivalent to a dividend” with respect to the U.S. holder,
all within the meaning of Section 302(b) of the Code.
In determining whether any of these tests has been met, shares of our capital stock, including common stock and other equity interests in us, considered to be owned by the U.S. holder by reason of certain constructive ownership rules set forth in the Code, as well as shares of our capital stock actually owned by the U.S. holder, generally must be taken into account. Because the determination as to whether any of the alternative tests of Section 302(b) of the Code will be satisfied with respect to the U.S. holder depends upon the facts and circumstances at the time that the determination must be made, U.S. holders are advised to consult their tax advisors to determine such tax treatment.
If a redemption or repurchase of shares of our capital stock is treated as a distribution, the amount of the distribution will be measured by the amount of cash and the fair market value of any property received. See “— Distributions Generally.” A U.S. holder’s adjusted tax basis in the redeemed or repurchased shares generally will be transferred to the holder’s remaining shares of our capital stock, if any. If a U.S. holder owns no other shares of our capital stock, under certain circumstances, such basis may be transferred to a related person or it may be lost entirely. Prospective investors should consult their tax advisors regarding the U.S. federal income tax consequences of a redemption or repurchase of our capital stock.
If a redemption or repurchase of shares of our capital stock is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described under “— Dispositions of Our Capital Stock.”
Tax Rates. The maximum tax rate for non-corporate taxpayers for (1) long-term capital gains, including certain “capital gain dividends,” generally is 20% (although depending on the characteristics of the assets which produced these gains and on designations which we may make, certain capital gain dividends may be taxed at a 25% rate) and (2) “qualified dividend income” generally is 20%. In general, dividends payable by REITs are not eligible for the reduced tax rate on qualified dividend income, except to the extent that certain holding period requirements have been met and the REIT’s dividends are attributable to dividends received from taxable corporations (such as its taxable REIT subsidiaries) or to income that was subject to tax at the corporate/REIT level (for example, if the REIT distributed taxable income that it retained and paid tax on in the prior taxable year). Capital gain dividends will only be eligible for the rates described above to the extent that they are properly designated by the REIT as “capital gain dividends.” U.S. holders that are corporations may be required to treat up to 20% of some capital gain dividends as ordinary income. In addition, non-corporate U.S. holders, including individuals, generally may deduct up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning before January 1, 2026 for purposes of determining their U.S. federal income tax (but not for purposes of the 3.8% Medicare tax), subject to certain holding period requirements and other limitations.
Taxation of Tax-Exempt Holders of Our Capital Stock
Dividend income from us and gain arising upon a sale of shares of our capital stock generally should not be unrelated business taxable income (“UBTI”) to a tax-exempt holder, except as described below. This income or gain will be UBTI, however, to the extent a tax-exempt holder holds its shares as “debt-financed
property” within the meaning of the Code. Generally, “debt-financed property” is property the acquisition or holding of which was financed through a borrowing by the tax-exempt holder.
For tax-exempt holders that are social clubs, voluntary employee benefit associations or supplemental unemployment benefit trusts exempt from U.S. federal income taxation under Sections 501(c)(7), (c)(9) or (c)(17) of the Code, respectively, income from an investment in our shares will constitute UBTI unless the organization is able to properly claim a deduction for amounts set aside or placed in reserve for specific purposes so as to offset the income generated by its investment in our shares. These prospective investors should consult their tax advisors concerning these “set aside” and reserve requirements.
Notwithstanding the above, however, a portion of the dividends paid by a “pension-held REIT” may be treated as UBTI as to certain trusts that hold more than 10%, by value, of the interests in the REIT. A REIT will not be a “pension-held REIT” if it is able to satisfy the “not closely held” requirement without relying on the “look-through” exception with respect to certain trusts or if such REIT is not “predominantly held” by “qualified trusts.” As a result of restrictions on ownership and transfer of our stock contained in our Certificate of Incorporation, we do not expect to be classified as a “pension-held REIT,” and as a result, the tax treatment described above should be inapplicable to our holders. However, because our common stock is (and, we anticipate, will continue to be) publicly traded, we cannot guarantee that this will always be the case.
Taxation of Non-U.S. Holders of Our Capital Stock
The following discussion addresses the rules governing U.S. federal income taxation of the acquisition, ownership and disposition of our capital stock by non-U.S. holders. These rules are complex, and no attempt is made herein to provide more than a brief summary of such rules. Accordingly, the discussion does not address all aspects of U.S. federal income taxation and does not address other federal, state, local or non-U.S. tax consequences that may be relevant to a non-U.S. holder in light of its particular circumstances. We urge non-U.S. holders to consult their tax advisors to determine the impact of U.S. federal, state, local and non-U.S. income and other tax laws and any applicable tax treaty on the acquisition, ownership and disposition of shares of our capital stock, including any reporting requirements.
Distributions Generally. Distributions (including any taxable stock distributions) that are neither attributable to gains from sales or exchanges by us of United States real property interests (“USRPIs”) nor designated by us as capital gain dividends (except as described below) will be treated as dividends of ordinary income to the extent that they are made out of our current or accumulated earnings and profits. Such distributions ordinarily will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are treated as effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such dividends are attributable). Under certain income tax treaties, however, lower withholding rates generally applicable to dividends do not apply to dividends from a REIT. Certain certification and disclosure requirements must be satisfied for a non-U.S. holder to be exempt from withholding under the effectively connected income exemption. Dividends that are treated as effectively connected with a U.S. trade or business generally will not be subject to withholding but will be subject to U.S. federal income tax on a net basis at the regular rates, in the same manner as dividends paid to U.S. holders are subject to U.S. federal income tax. Any such dividends received by a non-U.S. holder that is a corporation may also be subject to an additional branch profits tax at a 30% rate (applicable after deducting U.S. federal income taxes paid on such effectively connected income) or such lower rate as may be specified by an applicable income tax treaty.
Except as otherwise provided below, we expect to withhold U.S. federal income tax at the rate of 30% on any distributions made to a non-U.S. holder unless:
(1)
a lower income tax treaty rate applies and the non-U.S. holder furnishes an IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) evidencing eligibility for that reduced income tax treaty rate; or
(2)
the non-U.S. holder furnishes an IRS Form W-8ECI (or other applicable documentation) claiming that the distribution is income effectively connected with the non-U.S. holder’s trade or business.
Distributions in excess of our current and accumulated earnings and profits will not be taxable to a non-U.S. holder to the extent that such distributions do not exceed the adjusted tax basis of the holder’s capital stock, but rather will reduce the adjusted tax basis of such stock. To the extent that such distributions exceed the non-U.S. holder’s adjusted tax basis in such capital stock, they generally will give rise to gain from the sale or exchange of such stock, the tax treatment of which is described below. However, such excess distributions may be treated as dividend income for certain non-U.S. holders. For withholding purposes, we expect to treat all distributions as made out of our current or accumulated earnings and profits. However, amounts withheld may be refundable if it is subsequently determined that the distribution was, in fact, in excess of our current and accumulated earnings and profits, provided that certain conditions are met.
Capital Gain Dividends and Distributions Attributable to a Sale or Exchange of United States Real Property Interests. Distributions to a non-U.S. holder that we properly designate as capital gain dividends, other than those arising from the disposition of a USRPI, generally should not be subject to U.S. federal income taxation, unless:
(1)
the investment in our capital stock is treated as effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such dividends are attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to a branch profits tax of up to 30%, as discussed above; or
(2)
the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to U.S. federal income tax at a rate of 30% on the non-U.S. holder’s capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of such non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
Pursuant to the Foreign Investment in Real Property Tax Act, which is referred to as “FIRPTA,” distributions to a non-U.S. holder that are attributable to gain from sales or exchanges by us of USRPIs, whether or not designated as capital gain dividends, will cause the non-U.S. holder to be treated as recognizing such gain as income effectively connected with a U.S. trade or business. Non-U.S. holders generally would be taxed at the regular rates applicable to U.S. holders, subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. We also will be required to withhold and to remit to the IRS 21% of any distribution to non-U.S. holders attributable to gain from sales or exchanges by us of USRPIs. Distributions subject to FIRPTA may also be subject to a 30% branch profits tax in the hands of a non-U.S. holder that is a corporation. The amount withheld is creditable against the non-U.S. holder’s U.S. federal income tax liability. However, any distribution with respect to any class of stock that is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market located in the United States is not subject to FIRPTA, and therefore, not subject to the 21% U.S. withholding tax described above, if the non-U.S. holder did not own more than 10% of such class of stock at any time during the one-year period ending on the date of the distribution. Instead, such distributions generally will be treated as ordinary dividend distributions and subject to withholding in the manner described above with respect to ordinary dividends. In addition, distributions to certain non-U.S. publicly traded stockholders that meet certain record-keeping and other requirements (“qualified stockholders”) are exempt from FIRPTA, except to the extent owners of such qualified stockholders that are not also qualified stockholders own, actually or constructively, more than 10% of our capital stock. Furthermore, distributions to “qualified foreign pension funds” or entities all of the interests of which are held by “qualified foreign pension funds” are exempt from FIRPTA. Non-U.S. holders should consult their tax advisors regarding the application of these rules.
Retention of Net Capital Gains. Although the law is not clear on the matter, it appears that amounts we designate as retained net capital gains in respect of our capital stock should be treated with respect to non-U.S. holders as actual distributions of capital gain dividends. Under this approach, the non-U.S. holders may be able to offset as a credit against their U.S. federal income tax liability their proportionate share of the tax paid by us on such retained net capital gains and to receive from the IRS a refund to the extent their
proportionate share of such tax paid by us exceeds their actual U.S. federal income tax liability. If we were to designate any portion of our net capital gain as retained net capital gain, non-U.S. holders should consult their tax advisors regarding the taxation of such retained net capital gain.
Sale of Our Capital Stock. Except as described below under “— Redemption or Repurchase by Us,” gain realized by a non-U.S. holder upon the sale, exchange or other taxable disposition of our capital stock generally will not be subject to U.S. federal income tax unless such stock constitutes a USRPI. In general, stock of a domestic corporation that constitutes a “United States real property holding corporation,” or USRPHC, will constitute a USRPI. We believe that we are a USRPHC. Our capital stock will not, however, constitute a USRPI so long as we are a “domestically controlled qualified investment entity.” A “domestically controlled qualified investment entity” includes a REIT in which at all times during a five-year testing period less than 50% in value of its stock is held directly or indirectly by non-United States persons, subject to certain rules. For purposes of determining whether a REIT is a “domestically controlled qualified investment entity,” a person who at all applicable times holds less than 5% of a class of stock that is “regularly traded” is treated as a United States person unless the REIT has actual knowledge that such person is not a United States person. We believe, but cannot guarantee, that we are a “domestically controlled qualified investment entity.” Because our common stock is (and, we anticipate, will continue to be) publicly traded, no assurance can be given that we will continue to be a “domestically controlled qualified investment entity.”
Even if we do not qualify as a “domestically controlled qualified investment entity” at the time a non-U.S. holder sells our capital stock, gain realized from the sale or other taxable disposition by a non-U.S. holder of such capital stock would not be subject to U.S. federal income tax under FIRPTA as a sale of a USRPI if:
(1)
such class of capital stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market such as the New York Stock Exchange; and
(2)
such non-U.S. holder owned, actually and constructively, 10% or less of such class of capital stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the non-U.S. holder’s holding period.
In addition, dispositions of our capital stock by qualified stockholders are exempt from FIRPTA, except to the extent owners of such qualified stockholders that are not also qualified stockholders own, actually or constructively, more than 10% of our capital stock. Furthermore, dispositions of our capital stock by “qualified foreign pension funds” or entities all of the interests of which are held by “qualified foreign pension funds” are exempt from FIRPTA. Non-U.S. holders should consult their tax advisors regarding the application of these rules.
Notwithstanding the foregoing, gain from the sale, exchange or other taxable disposition of our capital stock not otherwise subject to FIRPTA will be taxable to a non-U.S. holder if either (a) the investment in our capital stock is treated as effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such gain is attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty) on such gain, as adjusted for certain items, or (b) the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to a 30% tax on the non-U.S. holder’s capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses. In addition, even if we are a domestically controlled qualified investment entity, upon disposition of our capital stock, a non-U.S. holder may be treated as having gain from the sale or other taxable disposition of a USRPI if the non-U.S. holder (1) disposes of such stock within a 30-day period preceding the ex-dividend date of a distribution, any portion of which, but for the disposition, would have been treated as gain from the sale or exchange of a USRPI and (2) acquires, or enters into a contract or option to acquire, or is deemed to acquire, other shares
of that stock during the 61-day period beginning with the first day of the 30-day period described in clause (1), unless such class of stock is “regularly traded” and the non-U.S. holder did not own more than 10% of such class of stock at any time during the one-year period ending on the date of the distribution described in clause (1).
If gain on the sale, exchange or other taxable disposition of our capital stock were subject to taxation under FIRPTA, the non-U.S. holder would be required to file a U.S. federal income tax return and would be subject to regular U.S. federal income tax with respect to such gain in the same manner as a taxable U.S. holder (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals). In addition, if the sale, exchange or other taxable disposition of our capital stock were subject to taxation under FIRPTA, and if shares of the applicable class of our capital stock were not “regularly traded” on an established securities market, the purchaser of such capital stock generally would be required to withhold and remit to the IRS 15% of the purchase price.
Redemption or Repurchase by Us. A redemption or repurchase of shares of our capital stock will be treated under Section 302 of the Code as a distribution (and taxable as a dividend to the extent of our current and accumulated earnings and profits) unless the redemption or repurchase satisfies one of the tests set forth in Section 302(b) of the Code and is therefore treated as a sale or exchange of the redeemed or repurchased shares. See “— Taxation of Taxable U.S. Holders of Our Capital Stock — Redemption or Repurchase by Us.” Qualified stockholders and their owners may be subject to different rules, and should consult their tax advisors regarding the application of such rules. If the redemption or repurchase of shares is treated as a distribution, the amount of the distribution will be measured by the amount of cash and the fair market value of any property received. See “— Taxation of Non-U.S. Holders of Our Capital Stock — Distributions Generally” above. If the redemption or repurchase of shares is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described above under “— Sale of Our Capital Stock.”
Taxation of Holders of Our Debt Securities
The following summary describes the material U.S. federal income tax consequences of acquiring, owning and disposing of our debt securities. This discussion assumes the debt securities will be issued with less than a statutory de minimis amount of original issue discount for U.S. federal income tax purposes. In addition, this discussion is limited to persons purchasing the debt securities for cash at original issue and at their original “issue price” within the meaning of Section 1273 of the Code (i.e., the first price at which a substantial amount of the debt securities is sold to the public for cash).
U.S. Holders
Payments of Interest. Interest on a debt security generally will be taxable to a U.S. holder as ordinary income at the time such interest is received or accrued, in accordance with such U.S. holder’s method of accounting for U.S. federal income tax purposes.
Sale or Other Taxable Disposition. A U.S. holder will recognize gain or loss on the sale, exchange, redemption, retirement or other taxable disposition of a debt security. The amount of such gain or loss generally will be equal to the difference between the amount received for the debt security in cash or other property valued at fair market value (less amounts attributable to any accrued but unpaid interest, which will be taxable as interest to the extent not previously included in income) and the U.S. holder’s adjusted tax basis in the debt security. A U.S. holder’s adjusted tax basis in a debt security generally will be equal to the amount the U.S. holder paid for the debt security. Any gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the U.S. holder has held the debt security for more than one year at the time of such sale or other taxable disposition. Otherwise, such gain or loss will be short-term capital gain or loss. Long-term capital gains recognized by certain non-corporate U.S. holders, including individuals, generally will be taxable at reduced rates. The deductibility of capital losses is subject to limitations.
Non-U.S. Holders
Payments of Interest. Interest paid on a debt security to a non-U.S. holder that is not effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States generally will not be subject to U.S. federal income tax or withholding, provided that:
•
the non-U.S. holder does not, actually or constructively, own 10% or more of the total combined voting power of all classes of our voting stock;
•
the non-U.S. holder is not a controlled foreign corporation related to us through actual or constructive stock ownership; and
•
either (1) the non-U.S. holder certifies in a statement provided to the applicable withholding agent under penalties of perjury that it is not a United States person and provides its name and address; (2) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds the debt security on behalf of the non-U.S. holder certifies to the applicable withholding agent under penalties of perjury that it, or the financial institution between it and the non-U.S. holder, has received from the non-U.S. holder a statement under penalties of perjury that such holder is not a United States person and provides the applicable withholding agent with a copy of such statement; or (3) the non-U.S. holder holds its debt security directly through a “qualified intermediary” (within the meaning of the applicable Treasury Regulations) and certain conditions are satisfied.
If a non-U.S. holder does not satisfy the requirements above, such non-U.S. holder will be subject to withholding tax of 30%, subject to a reduction in or an exemption from withholding on such interest as a result of an applicable tax treaty. To claim such entitlement, the non-U.S. holder must provide the applicable withholding agent with a properly executed IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) claiming a reduction in or exemption from withholding tax under the benefit of an income tax treaty between the United States and the country in which the non-U.S. holder resides or is established.
If interest paid to a non-U.S. holder is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such interest is attributable), the non-U.S. holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the non-U.S. holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that interest paid on a debt security is not subject to withholding tax because it is effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States.
Any such effectively connected interest generally will be subject to U.S. federal income tax at the regular rates. A non-U.S. holder that is a corporation may also be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected interest, as adjusted for certain items.
The certifications described above must be provided to the applicable withholding agent prior to the payment of interest and must be updated periodically. Non-U.S. holders that do not timely provide the applicable withholding agent with the required certification, but that qualify for a reduced rate under an applicable income tax treaty, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.
Sale or Other Taxable Disposition. A non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the sale, exchange, redemption, retirement or other taxable disposition of a debt security (such amount excludes any amount allocable to accrued and unpaid interest, which generally will be treated as interest and may be subject to the rules discussed above in “— Taxation of Holders of Our Debt Securities — Non-U.S. Holders — Payments of Interest”) unless:
•
the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such gain is attributable); or
•
the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met.
Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates. A non-U.S. holder that is a corporation also may be subject to a branch
profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.
A non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on gain realized upon the sale or other taxable disposition of a debt security, which may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
Non-U.S. holders should consult their tax advisors regarding any applicable income tax treaties that may provide for different rules.
Information Reporting and Backup Withholding
U.S. Holders. A U.S. holder may be subject to information reporting and backup withholding when such holder receives payments on our capital stock or debt securities or proceeds from the sale or other taxable disposition of such stock or debt securities (including a redemption or retirement of a debt security). Certain U.S. holders are exempt from backup withholding, including corporations and certain tax-exempt organizations. A U.S. holder will be subject to backup withholding if such holder is not otherwise exempt and:
•
the holder fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number;
•
the holder furnishes an incorrect taxpayer identification number;
•
the applicable withholding agent is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or
•
the holder fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS. U.S. holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
Non-U.S. Holders. Payments of dividends on our capital stock or interest on our debt securities generally will not be subject to backup withholding, provided the applicable withholding agent does not have actual knowledge or reason to know the holder is a United States person and the holder either certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any distributions on our capital stock or interest on our debt securities paid to the non-U.S. holder, regardless of whether such distributions constitute a dividend or whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of such stock or debt securities (including a retirement or redemption of a debt security) within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such holder is a United States person, or the holder otherwise establishes an exemption. Proceeds of a disposition of such stock or debt securities conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.
Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or is established.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Medicare Contribution Tax on Unearned Income
Certain U.S. holders that are individuals, estates or trusts are required to pay an additional 3.8% tax on, among other things, dividends on stock, interest on debt obligations, and capital gains from the sale or other disposition of stock or debt obligations, subject to certain limitations. U.S. holders should consult their tax advisors regarding the effect, if any, of these rules on their ownership and disposition of our capital stock or debt securities.
Additional Withholding Tax on Payments Made to Foreign Accounts
Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such sections commonly referred to as the Foreign Account Tax Compliance Act (“FATCA”)) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on our capital stock, interest on our debt securities or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of our capital stock or debt securities, in each case paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our capital stock or interest on our debt securities. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of stock or debt securities on or after January 1, 2019, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued. Because we may not know the extent to which a distribution is a dividend for U.S. federal income tax purposes at the time it is made, for purposes of these withholding rules we may treat the entire distribution as a dividend.
Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our capital stock or debt securities.
Other Tax Consequences
State, local and non-U.S. income tax laws may differ substantially from the corresponding U.S. federal income tax laws, and this discussion does not purport to describe any aspect of the tax laws of any state, local or non-U.S. jurisdiction, or any U.S. federal tax other than income tax. You should consult your tax advisor regarding the effect of state, local and non-U.S. tax laws with respect to our tax treatment as a REIT and on an investment in our capital stock or debt securities.
PLAN OF DISTRIBUTION
We may sell the offered securities in and outside the United States (1) through underwriters or dealers, (2) directly to purchasers, including to a limited number of institutional purchasers, to a single purchaser or to our affiliates and stockholders, (3) through agents or (4) through a combination of any of these methods. The prospectus supplement relating to any offering will set forth the following information:
•
the terms of the offering;
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the names of any underwriters, dealers or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price or initial public offering price of the securities;
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the net proceeds from the sale of the securities;
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any delayed delivery arrangements;
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any underwriting discounts, commissions and other items constituting underwriters’ compensation;
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any discounts or concessions allowed or reallowed or paid to dealers; and
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any commissions paid to agents.
Sale through Underwriters or Dealers
If any securities are offered through underwriters, the underwriters will acquire the securities for their own account and may resell them from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may offer and sell securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. Unless otherwise provided in the applicable prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to certain conditions, and the underwriters will be obligated to purchase all of the offered securities if they purchase any of them. In connection with the sale of securities, underwriters may be deemed to have received compensation from us in the form of underwriting discounts or commissions and dealers may receive compensation from the underwriters in the form of discounts or concessions. The underwriters may change from time to time any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
In order to facilitate the offering of securities, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the securities. Specifically, the underwriters may overallot in connection with the offering, creating a short position in the securities for their account. In addition, to cover overallotments or to stabilize the price of the securities, the underwriters may bid for, and purchase, securities in the open market. Finally, an underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the securities in the offering if the syndicate repurchases previously distributed securities in transactions to cover syndicate short positions, in stabilization transactions, or otherwise. Any of these activities may stabilize or maintain the market price of the offered securities above independent market levels. The underwriters are not required to engage in these activities and may discontinue any of these activities at any time.
Some or all of the securities that we offer through this prospectus may be new issues of securities with no established trading market. Any underwriters to whom we sell securities for public offering and sale may make a market in those securities, but they will not be obligated to do so and they may discontinue any market making at any time without notice. Accordingly, we cannot assure you of the liquidity of, or continued trading markets for, any securities offered pursuant to this prospectus.
If any securities are offered through dealers, we will sell the securities to them as principals. They may then resell those securities to the public at varying prices determined by the dealers at the time of resale.
Direct Sales and Sales through Agents
We may sell the securities directly to purchasers. If the securities are sold directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with
respect to any sale of those securities, we will describe the terms of any such sales in the applicable prospectus supplement. We may also sell the securities through agents designated from time to time. Sales may be made by means of ordinary brokers’ transactions on the New York Stock Exchange at market prices, in block transactions and such other transactions as agreed by us and any agent. In the applicable prospectus supplement, we will name any agent involved in the offer or sale of the offered securities and we will describe any commissions payable to the agent. Unless otherwise provided in the applicable prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
Remarketing Arrangements
Offered securities may also be offered and sold, if we so indicate in the applicable prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as principals for their own accounts or as our agents. Any remarketing firm will be identified and the terms of its agreements, if any, with us and its compensation will be described in the applicable prospectus supplement. Remarketing firms may be deemed to be underwriters of the offered securities under the Securities Act.
Delayed Delivery Contracts
If we so indicate in the applicable prospectus supplement, we may authorize agents, underwriters or dealers to solicit offers by certain institutions to purchase securities from us pursuant to contracts providing for payment and delivery on a specified future date. The applicable prospectus supplement will describe the conditions to those contracts and the commission payable for solicitation of those contracts.
General Information
We may have agreements with the agents, dealers, underwriters and remarketing firms to indemnify them against certain civil liabilities, including liabilities under the Securities Act, or to contribute with respect to payments that the agents, dealers or underwriters may be required to make. Agents, dealers, underwriters and remarketing firms may be customers of, engage in transactions with or perform services for us in the ordinary course of their businesses.
VALIDITY OF THE OFFERED SECURITIES
Davis Polk & Wardwell LLP will issue an opinion for Ventas and Ventas Realty regarding the legality of certain of the offered securities. Hogan Lovells US LLP has issued an opinion to us regarding certain tax matters described herein under “Certain U.S. Federal Income Tax Considerations.” Any underwriters, dealers or agents will be advised about other issues relating to any offering by their own legal counsel that will be named in the applicable prospectus supplement.
EXPERTS
Our consolidated financial statements and schedules as of December 31, 2023 and 2022 and for each of the years in the three-year period ended December 31, 2023 and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2023 have been incorporated by reference herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION AND INCORPORATION BY REFERENCE
We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding us. Ventas, Inc. is a publicly held corporation and its common stock is traded on the New York Stock Exchange under the symbol “VTR.” Information about us is also available on our website at www.ventasreit.com. Information on our website is not incorporated by reference herein and our web address is included herein as an inactive textual reference only.
We are incorporating by reference in this prospectus certain information that we file with the SEC. This means that we can disclose important information to you by referring you to other documents that we file with the SEC. The information incorporated by reference is an important part of this prospectus, and information that we subsequently file with the SEC will automatically update and supersede this information. We are incorporating by reference herein the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof until all of the securities offered hereby are sold:
•
•
•
the description of our common stock set forth in our Registration Statement on Form 8-A (File No. 001-10989), filed with the SEC on January 23, 1992, as amended by the description of our common stock contained in Exhibit 4.28 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and as amended by any subsequent amendment or report filed for the purpose of updating the description.
We do not incorporate by reference any information under Items 2.02 or 7.01 of any Current Report on Form 8-K, including the related exhibits, or in any document or other information that is deemed to have been “furnished” to and not “filed” with the SEC. You may request a copy of these filings at no cost, by writing or telephoning us at the following address:
Ventas, Inc.
Attention: Corporate Secretary
353 North Clark Street, Suite 3300
Chicago, Illinois 60654
(877) 483-6827
No separate financial statements of Ventas Realty have been included herein. It is not expected that Ventas Realty will file reports, proxy statements or other information under the Exchange Act with the SEC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14.
Other Expenses of Issuance and Distribution
Set forth below is an estimate (except in the case of the registration fee) of the amount of fees and expenses to be incurred in connection with the issuance and distribution of the offered securities, other than underwriting discounts and commissions.
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SEC registration fee
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$ |
(1)
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Blue Sky fees and expenses
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(2)
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Legal fees and expenses
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(2)
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Accounting fees and expenses
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(2)
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Printing and engraving
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(2)
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Rating agencies fees
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(2)
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Trustee fees (including counsel fees)
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(2)
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Miscellaneous fees and expenses
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(2)
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Total
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$ |
(2)
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(1)
Pursuant to Rules 456(b) and 457(r) under the Securities Act of 1933, as amended, the SEC registration fee will be paid at the time of any particular offering of securities under the registration statement and is therefore not currently determinable.
(2)
These fees are calculated based on the securities offered and the number of issuances and accordingly cannot be estimated at this time.
Item 15.
Indemnification of Directors and Officers
Ventas, Inc.
Section 145 of the Delaware General Corporation Law (the “DGCL”) empowers Ventas, Inc. (“Ventas”) to, and Article VII of the Amended and Restated Certificate of Incorporation, as amended, of Ventas, Inc. (the “Certificate”), provides that Ventas will, indemnify any person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), because he or she is or was a director or officer of Ventas, or is or was serving at the request of Ventas as a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise, against all expenses, liabilities and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by him or her in connection with such Proceeding. Ventas may provide by action of its Board of Directors (the “Ventas Board”) through agreement, resolution or by a provision in the Sixth Amended and Restated By-Laws, as amended, of Ventas, Inc. (the “Bylaws”), indemnification of its employees and agents with substantially the same scope and effect as the indemnification provided in Article VII of the Certificate.
Expenses incurred by such a person in his or her capacity as a director or officer of Ventas (and not in any other capacity in which service was or is rendered by such person while a director or officer) in defending a Proceeding may be paid by Ventas in advance of the final disposition of such Proceeding as authorized by the Ventas Board in a specific case upon receipt of an undertaking by or on behalf of that person to repay such amounts, unless it is ultimately determined that such person is entitled to be indemnified by Ventas as authorized by the DGCL. Expenses incurred by a person in any capacity other than as one a director or officer of Ventas may be paid in advance of the final disposition of a Proceeding on such terms and conditions, if any, as the Ventas Board deems appropriate.
Pursuant to Section 102(b)(7) of the DGCL, the Certificate eliminates certain liability of Ventas’ directors for breach of their fiduciary duty of care. Article VI of the Certificate provides that neither Ventas
nor its stockholders may recover monetary damages from directors of Ventas for breach of the duty of care in the performance of their duties as directors of Ventas. Article VI does not, however, eliminate the liability of Ventas’ directors (i) for a breach of the director’s duty of loyalty, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (relating to unlawful distributions) or (iv) for any improper personal benefit.
The indemnification provided for by Article VII of the Certificate is a contract right and continues as to persons who cease to be directors, officers, employees or agents and inures to the benefit of the heirs, executors and administrators of such persons. No amendment to the Certificate or repeal of any article thereof increases the liability of any of its directors or officers for acts or omissions of such persons occurring prior to such amendment or repeal.
The right to indemnification conferred by Article VII of the Certificate is not exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to actions taken in his or her official capacity and in any other capacity while holding such office.
Ventas may purchase and maintain insurance on behalf of any person who is or was one of its directors, officers, employees or agents, or is or was serving at its request as a director, trustee, officer, partner, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him or her and incurred by him or her in such capacity or arising out of his or her status as such, whether or not Ventas would have the power or be obligated to indemnify him or her against such liability under the provisions of Article VII of the Certificate or the DGCL.
Ventas currently has in effect directors’ and officers’ liability insurance policies. These policies cover any negligent act, error or omission of a director or officer, subject to certain exclusions and limitations.
Ventas Realty, Limited Partnership
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act provides that, subject to such standards and restrictions in its partnership agreement, if any, a limited partnership may, and shall have the power to, indemnify and hold harmless any partner or other person from and against any and all claims and demands whatsoever.
Section 9.5 of the First Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of Ventas Realty, Limited Partnership (“Ventas Realty”) provides that Ventas Realty will indemnify and hold its officers, employees, agents and representatives, its general partner, and each of the trustees, officers, employees, agents, and representatives of its general partner harmless from any loss or damage, including without limitation reasonable legal fees and court costs, incurred by it or any of them by reason of anything it or any of them may do or refrain from doing for and on behalf of Ventas Realty or in connection with Ventas Realty’s business or affairs; provided, however, that Ventas Realty will not be required to indemnify any of its officers, employees, agents and representatives, its general partner or any of the trustees, officers, employees, agents, and representatives of its general partner for any loss or damage which such person might incur as a result of fraud, willful misconduct or gross negligence committed by any such person in the performance of their duties under the Partnership Agreement. Ventas Realty’s indemnification obligations under the Partnership Agreement continue and are unaffected in respect of any other person which or who shall not have committed such fraud, willful misconduct or gross negligence. The indemnification provision under the Partnership Agreement does not relieve the general partner of its proportionate share of the obligations of Ventas Realty in its capacity as a partner thereof.
Section 9.5 of the Partnership Agreement also provides that Ventas Realty’s general partner will be entitled to reimbursement from Ventas Realty for any amounts the general partner pays in satisfaction of indemnification obligations owed by the general partner to its present or former trustees, officers, employees, agents or representatives or its predecessors, or other persons indemnified by such general partner, as provided for in or pursuant to the organizational documents of the general partner or otherwise.
The right to indemnification set forth in Section 9.5 of the Partnership Agreement is in addition to any rights to which the person or entity seeking indemnification may otherwise be entitled and inures to the benefit of the successors and assigns of any such person or entity.
None of Ventas Realty’s partners are personally liable with respect to any claim for indemnification pursuant to Section 9.5 of the Partnership Agreement and such claims will be satisfied solely out of assets of Ventas Realty.
Section 9.4 of the Partnership Agreement provides that Ventas Realty’s general partner will not be liable or accountable, in damages or otherwise, to Ventas Realty or to any of its partners for any error of judgment or for any mistakes of fact or law or for anything which it may do or refrain from doing hereafter in connection with the business and affairs of Ventas Realty except (i) in the case of fraud, willful misconduct (such as an intentional breach of fiduciary duty or an intentional breach of the Partnership Agreement) or gross negligence, and (ii) for other breaches of the Partnership Agreement.
Section 9.4 of the Partnership Agreement provides that Ventas Realty’s general partner shall not have any personal liability for the return of any limited partner’s capital.
Officers and directors of Ventas Realty are covered under the same liability insurance policies described under “— Ventas, Inc.” above.
Item 16.
Exhibits
(a)
Exhibits
A list of exhibits filed with this registration statement is set forth on the Exhibit Index and is incorporated by reference herein.
Exhibit Index
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Exhibit
No.
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Description
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1.1
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Form of Underwriting Agreement (for Ventas, Inc. common stock).*
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1.2
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Form of Underwriting Agreement (for Ventas, Inc. preferred stock).*
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1.3
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Form of Underwriting Agreement (for Ventas, Inc. depositary shares).*
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1.4
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Form of Underwriting Agreement (for Ventas, Inc. warrants).*
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1.5
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Form of Underwriting Agreement (for debt securities).*
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3.1
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Amended and Restated Certificate of Incorporation of Ventas, Inc., as amended (incorporated herein by reference to Exhibit 3.1 to Ventas, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011).
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3.2
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3.3
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First Amended and Restated Agreement of Limited Partnership of Ventas Realty, Limited Partnership (incorporated herein by reference to Exhibit 3.5 to Ventas, Inc.’s Registration Statement on Form S-4, Registration No. 333-89312, as amended).
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4.1
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4.2
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Form of Certificate of Designation for Ventas, Inc. preferred stock (together with form of preferred stock certificate).*
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4.3
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Form of Deposit Agreement, including form of Ventas, Inc. Depositary Receipt for Ventas, Inc. Depositary Shares (incorporated herein by reference to Exhibit 4.22 to Ventas, Inc.’s Registration Statement on Form S-3, Registration No. 333-90756, as amended).
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4.4
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Form of Warrant Agreement, including form of Ventas, Inc. warrant.*
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4.5
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Indenture, dated February 23, 2018, among Ventas Realty, Limited Partnership, Ventas, Inc., the Guarantors named therein and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as Trustee (incorporated herein by reference to Exhibit 4.1 to Ventas, Inc.’s Current Report on Form 8-K filed on February 23, 2018).
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*
To be filed by amendment or incorporated by reference in connection with the offering of any securities, as appropriate.
Item 17.
Undertakings
(a)
The undersigned Registrants hereby undertake:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Filing Fee Tables” in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
provided, however, that subparagraphs (i), (ii) and (iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the Registrants pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser:
(i)
Each prospectus filed by the Registrants pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5)
That, for the purpose of determining liability of the Registrants under the Securities Act to any purchaser in the initial distribution of the securities:
The undersigned Registrants undertake that in a primary offering of securities of the undersigned Registrants pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrants will be sellers to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned Registrants relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrants or used or referred to by the undersigned Registrants;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrants or their securities provided by or on behalf of the undersigned Registrants; and
(iv)
Any other communication that is an offer in the offering made by the undersigned Registrants to the purchaser.
(b)
The undersigned Registrants hereby undertake that, for the purposes of determining any liability under the Securities Act, each filing of the annual reports of Ventas, Inc. pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act) that are incorporated by reference in this registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c)
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrants pursuant to the provisions described under Item 15 of this registration statement, or otherwise, the Registrants have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it or them is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on the 20th day of February, 2024.
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VENTAS, INC.
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By:
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/s/ DEBRA A. CAFARO
Name: Debra A. Cafaro
Title: Chairman and Chief Executive Officer
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The undersigned officers and directors of Ventas, Inc. hereby severally constitute and appoint Debra A. Cafaro, Carey S. Roberts and Kevin M. Bohl, and each of them, attorneys-in-fact for the undersigned, in any and all capacities, with the power of substitution, to sign any amendments to this registration statement (including post-effective amendments), and to file the same with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all interests and purposes as they might or could do in person, hereby ratifying and confirming all that each said attorney-in-fact, or their substitute or substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated on the 20th day of February, 2024.
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Signature
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Title
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/s/ DEBRA A. CAFARO
Debra A. Cafaro
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Chairman and Chief Executive Officer (Principal Executive Officer)
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/s/ ROBERT F. PROBST
Robert F. Probst
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Executive Vice President and Chief Financial Officer (Principal Financial Officer)
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/s/ GREGORY R. LIEBBE
Gregory R. Liebbe
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Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
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/s/ MELODY C. BARNES
Melody C. Barnes
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Director
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/s/ MICHAEL J. EMBLER
Michael J. Embler
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Director
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/s/ MATTHEW J. LUSTIG
Matthew J. Lustig
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Director
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Signature
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Title
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/s/ ROXANNE M. MARTINO
Roxanne M. Martino
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Director
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/s/ MARGUERITE M. NADER
Marguerite M. Nader
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Director
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/s/ SEAN P. NOLAN
Sean P. Nolan
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Director
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/s/ WALTER C. RAKOWICH
Walter C. Rakowich
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Director
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/s/ SUMIT ROY
Sumit Roy
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Director
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/s/ JAMES D. SHELTON
James D. Shelton
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Director
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/s/ MAURICE S. SMITH
Maurice S. Smith
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Director
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on the 20th day of February, 2024.
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VENTAS REALTY, LIMITED PARTNERSHIP
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By: VENTAS, INC., its General Partner
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By:
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/s/ DEBRA A. CAFARO
Name: Debra A. Cafaro
Title: Chairman and Chief Executive Officer
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The undersigned officers and directors of Ventas, Inc., general partner of Ventas Realty, Limited Partnership, hereby severally constitute and appoint Debra A. Cafaro, Carey S. Roberts and Kevin M. Bohl, and each of them, attorneys-in-fact for the undersigned, in any and all capacities, with the power of substitution, to sign any amendments to this registration statement (including post-effective amendments), and to file the same with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all interests and purposes as they might or could do in person, hereby ratifying and confirming all that each said attorney-in-fact, or their substitute or substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated on the 20th day of February, 2024.
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Signature
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Title
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/s/ DEBRA A. CAFARO
Debra A. Cafaro
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Chairman and Chief Executive Officer (Principal Executive Officer) of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ ROBERT F. PROBST
Robert F. Probst
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Executive Vice President and Chief Financial Officer (Principal Financial Officer) of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ GREGORY R. LIEBBE
Gregory R. Liebbe
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Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer) of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ MELODY C. BARNES
Melody C. Barnes
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ MICHAEL J. EMBLER
Michael J. Embler
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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Signature
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Title
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/s/ MATTHEW J. LUSTIG
Matthew J. Lustig
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ ROXANNE M. MARTINO
Roxanne M. Martino
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ MARGUERITE M. NADER
Marguerite M. Nader
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ SEAN P. NOLAN
Sean P. Nolan
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ WALTER C. RAKOWICH
Walter C. Rakowich
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ SUMIT ROY
Sumit Roy
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ JAMES D. SHELTON
James D. Shelton
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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/s/ MAURICE S. SMITH
Maurice S. Smith
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Director of Ventas, Inc., general partner of Ventas Realty, Limited Partnership
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Exhibits 5.1 and 23.1
 |
Davis
Polk & Wardwell llp
450 Lexington Avenue
New York, NY 10017
davispolk.com |
February 20, 2024
Ventas, Inc.
353 N. Clark Street, Suite 3300
Chicago, Illinois 60654 |
Ladies and Gentlemen:
Ventas, Inc., a Delaware corporation (the “Company”),
and Ventas Realty, Limited Partnership, a Delaware limited partnership (the “Partnership”), are filing with the Securities
and Exchange Commission a Registration Statement on Form S-3 (the “Registration Statement”) for the purpose of
registering under the Securities Act of 1933, as amended (the “Securities Act”), (i) shares of common stock, par
value $0.25 per share (the “Common Stock”) of the Company; (ii) shares of preferred stock, par value $1.00 per
share (the “Preferred Stock”) of the Company; (iii) the Company’s senior debt securities (the “Company
Senior Debt Securities”), which may be issued pursuant to a senior debt indenture, dated February 23, 2018, among the Company,
the Partnership, the guarantors named therein and U.S. Bank Trust Company National Association (as successor in interest to U.S. Bank
National Association), as trustee (the “Trustee”) (the “Senior Debt Indenture”), and the Company’s
subordinated debt securities (the “Company Subordinated Debt Securities” and, together with the Company Senior Debt
Securities, the “Company Debt Securities”), which may be issued pursuant to a subordinated debt indenture which may
be entered into among the Company, the Partnership, the guarantors named therein and the Trustee (the “Subordinated Debt Indenture,”
and together with the Senior Debt Indenture, the “Indentures”); (iv) warrants of the Company (the “Warrants”),
which may be issued under one or more warrant agreements (each, a “Warrant Agreement”) to be entered into between the
Company and a warrant agent (the “Warrant Agent”), (v) depositary shares representing fractional interests in
shares or multiple shares of the Preferred Stock (the “Depositary Shares”), which may be issued under one or more preferred
stock depositary agreements (each, a “Deposit Agreement”) to be entered into between the Company and a preferred stock
depositary (the “Depositary”); (vi) the Partnership’s senior debt securities (the “Partnership
Senior Debt Securities”), which may be issued pursuant to the Senior Debt Indenture, and the Partnership’s subordinated
debt securities (the “Partnership Subordinated Debt Securities” and, together with the Partnership Senior Debt Securities,
the “Partnership Debt Securities”; the Company Debt Securities and the Partnership Debt Securities, collectively, the
“Debt Securities”), which may be issued pursuant to the Subordinated Indenture; (vii) guarantees of the Partnership
Debt Securities by the Company (the “Company Guarantees”), to be issued under the Indentures; and (viii) guarantees
of the Company Debt Securities by the Partnership (the “Partnership Guarantees” and, together with the Company Guarantees,
the “Guarantees”), to be issued under the Indentures.
We, as your counsel, have examined originals or copies of such documents,
corporate records, certificates of public officials and other instruments as we have deemed necessary or advisable for the purpose of
rendering this opinion.
 |
Ventas, Inc. |
|
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In rendering the opinions expressed herein, we have, without independent
inquiry or investigation, assumed that (i) all documents submitted to us as originals are authentic and complete, (ii) all documents
submitted to us as copies conform to authentic, complete originals, (iii) all documents filed as exhibits to the Registration Statement
that have not been executed will conform to the forms thereof, (iv) all signatures on all documents that we reviewed are genuine,
(v) all natural persons executing documents had and have the legal capacity to do so, (vi) all statements in certificates of
public officials and officers of the Company and the Partnership that we reviewed were and are accurate and (vii) all representations
made by the Company and the Partnership as to matters of fact in the documents that we reviewed were and are accurate.
Based upon the foregoing, and subject to the additional assumptions
and qualifications set forth below, we advise you that, in our opinion:
| 1. | When the necessary corporate action on the part of the Company has been taken to authorize the issuance and sale of such shares of
Common Stock proposed to be sold by the Company, and when such shares of Common Stock are issued and delivered in accordance with the
applicable underwriting or other agreement against payment therefor (in excess of par value thereof) or upon conversion or exercise of
any security offered under the Registration Statement (the “Offered Security”), in accordance with the terms of such
Offered Security or the instrument governing such Offered Security providing for such conversion or exercise as approved by the Board
of Directors of the Company, for the consideration approved by such Board of Directors (which consideration is not less than the par value
of the Common Stock), such shares of Common Stock will be validly issued, fully-paid and non-assessable. |
| 2. | Upon designation of the relative rights, preferences and limitations of any series of Preferred Stock by the Board of Directors of
the Company and the proper filing with the Secretary of State of the State of Delaware of a Certificate of Designation relating to such
series of Preferred Stock, all necessary corporate action on the part of the Company will have been taken to authorize the issuance and
sale of such series of Preferred Stock proposed to be sold by the Company, and when such shares of Preferred Stock are issued and delivered
in accordance with the applicable underwriting or other agreement against payment therefor (in excess of par value thereof), such shares
of Preferred Stock will be validly issued, fully paid and non-assessable. |
| 3. | Assuming the Indentures and any supplemental indenture to be entered into in connection with the issuance of any Debt Securities have
been duly authorized, executed and delivered by the Trustee, the Company, the Partnership and, if applicable, the guarantors therein;
the specific terms of a particular series of Debt Securities and the related Guarantees have been duly authorized and established in accordance
with the Indentures; and such Debt Securities and the related Guarantees have been duly authorized, executed, authenticated, issued and
delivered in accordance with the Indentures and the applicable underwriting or other agreement against payment therefor, such Debt Securities
will constitute valid and binding obligations of the Company and the Partnership, and each of the related Guarantees will constitute valid
and binding obligations of the Company and the Partnership, respectively, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles
of general applicability, provided that we express no opinion as to (x) (i) the effect of fraudulent conveyance, fraudulent
transfer or similar provision of applicable law on the conclusions expressed above or (ii) any provision of the Indentures that purports
to avoid the effect of fraudulent conveyance, fraudulent transfer or similar provision of applicable law by limiting the amount of any
Partnership Guarantees or (y) the validity, legally binding effect or enforceability of any provision that permits holders to collect
any portion of stated principal amount upon acceleration of the Debt Securities to the extent determined to constitute unearned interest. |
|
Ventas, Inc. |
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| 4. | When the Warrant Agreement to be entered into in connection with the issuance of any Warrants has been duly authorized, executed and
delivered by the Warrant Agent and the Company; the specific terms of the Warrants have been duly authorized and established in accordance
with the Warrant Agreement; and such Warrants have been duly authorized, executed, issued and delivered in accordance with the Warrant
Agreement and the applicable underwriting or other agreement against payment therefor, such Warrants will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability. |
| 5. | When the Deposit Agreement to be entered into in connection with the issuance of any Depositary Shares has been duly authorized, executed
and delivered by the Depositary and the Company; the specific terms of the Depositary Shares have been duly authorized and established
in accordance with the Deposit Agreement; and such Depositary Shares have been duly authorized, executed, issued and delivered in
accordance with the Deposit Agreement and the applicable underwriting or other agreement against payment therefor, such Depositary Shares
will constitute legal and valid interests in the corresponding shares of Preferred Stock, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability. |
In connection with the opinions expressed above, we have assumed that,
at or prior to the time of the delivery of any such security, (i) the Board of Directors of the Company and the general partner of
the Partnership, as the case may be, shall have duly established the terms of such security and duly authorized the issuance and sale
of such security and such authorization shall not have been modified or rescinded; (ii) the Registration Statement shall have become
effective and such effectiveness shall not have been terminated or rescinded; (iii) the Indentures, the Debt Securities, the Warrant
Agreement, the Guarantees and the Deposit Agreement are each valid, binding and enforceable agreements of each party thereto (other than
as expressly covered above in respect of the Company and the Partnership); and (iv) there shall not have occurred any change in law
affecting the validity or enforceability of such security. We have also assumed that (i) the terms of any security whose terms are
established subsequent to the date hereof and the issuance, execution, delivery and performance by the Company or the Partnership of any
such security (a) require no action by or in respect of, or filing with, any governmental body, agency or official and (b) do
not contravene, or constitute a default under, any provision of applicable law or public policy or regulation or any judgment, injunction,
order or decree or any agreement or other instrument binding upon the Company or the Partnership and (ii) any Warrant Agreement will
be governed by the laws of the State of New York.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and further consent to the reference to our name under the caption “Validity of the Offered
Securities” in the prospectus, which is a part of the Registration Statement. In giving this consent, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
/s/ Davis Polk & Wardwell LLP
Exhibits 8.1 and 23.2
 |
Hogan Lovells US LLP
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004
T +1 202 637 5600
F +1 202 637 5910
www.hoganlovells.com |
February 20, 2024
Ventas, Inc.
353 N. Clark Street, Suite 3300
Chicago, Illinois 60654
Ladies and Gentlemen:
This firm has acted as special tax counsel to
Ventas, Inc., a Delaware corporation (the "Company"), and Ventas Realty, Limited Partnership, a Delaware limited
partnership (the “Partnership”), in connection with its registration statement on Form S-3 (the “Registration
Statement”), filed with the Securities and Exchange Commission relating to the registration under the Securities Act of 1933,
as amended (the “Securities Act”), of (i) shares of common stock, par value $0.25 per share (the “Common
Stock”) of the Company; (ii) shares of preferred stock, par value $1.00 per share (the “Preferred Stock”)
of the Company; (iii) the Company’s senior debt securities (the “Company Senior Debt Securities”), which
may be issued pursuant to a senior debt indenture, dated February 23, 2018, among the Company, the Partnership, the guarantors named
therein and U.S. Bank Trust Company National Association (as successor in interest to U.S. Bank National Association), as trustee (the
“Trustee”) (the “Senior Debt Indenture”), and the Company’s subordinated debt securities (the
“Company Subordinated Debt Securities” and, together with the Company Senior Debt Securities, the “Company
Debt Securities”), which may be issued pursuant to a subordinated debt indenture which may be entered into among the Company,
the Partnership, the guarantors named therein and the Trustee (the “Subordinated Debt Indenture,” and together with
the Senior Debt Indenture, the “Indentures”); (iv) warrants of the Company (the “Warrants”),
which may be issued under one or more warrant agreements (each, a “Warrant Agreement”) to be entered into between the
Company and a warrant agent (the “Warrant Agent”), (v) depositary shares representing fractional interests in
shares or multiple shares of the Preferred Stock (the “Depositary Shares”), which may be issued under one or more preferred
stock depositary agreements (each, a “Deposit Agreement”) to be entered into between the Company and a preferred stock
depositary (the “Depositary”); (vi) the Partnership’s senior debt securities (the “Partnership
Senior Debt Securities”), which may be issued pursuant to the Senior Debt Indenture, and the Partnership’s subordinated
debt securities (the “Partnership Subordinated Debt Securities” and, together with the Partnership Senior Debt Securities,
the “Partnership Debt Securities”; the Company Debt Securities and the Partnership Debt Securities, collectively, the
“Debt Securities”), which may be issued pursuant to the Subordinated Indenture; (vii) guarantees of the Partnership
Debt Securities by the Company (the “Company Guarantees”), to be issued under the Indentures; and (viii) guarantees
of the Company Debt Securities by the Partnership (the “Partnership Guarantees” and, together with the Company Guarantees,
the “Guarantees”), to be issued under the Indentures.
Bases for Opinions
The opinions set forth in this letter are based
on relevant current provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”), the Treasury
Regulations promulgated thereunder (including proposed and temporary Treasury Regulations), and interpretations of the foregoing as expressed
in court decisions, applicable legislative history, and the administrative rulings and practices of the United States Internal Revenue
Service (the “IRS”), including its practices and policies in issuing private letter rulings, which are not binding
on the IRS except with respect to a taxpayer that receives such a ruling, all as of the date hereof. These provisions and interpretations
are subject to change by the IRS, Congress and the courts (as applicable), which may or may not be retroactive in effect and which might
result in material modifications of our opinions. Our opinions do not foreclose the possibility of a contrary determination by the IRS
or a court of competent jurisdiction, or of a contrary position taken by the IRS or the United States Treasury Department in regulations
or rulings issued in the future. In this regard, an opinion of counsel with respect to an issue represents counsel’s best professional
judgment with respect to the outcome on the merits with respect to such issue, if such issue were to be litigated, but an opinion is not
binding on the IRS or the courts, and is not a guarantee that the IRS will not assert a contrary position with respect to such issue or
that a court will not sustain such a position asserted by the IRS.
In rendering these opinions, we have examined
such statutes, regulations, records, agreements, certificates and other documents as we have considered necessary or appropriate as a
basis for the opinions, including, but not limited to, (1) the Registration Statement; (2) the discussion under the caption
"Certain U.S. Federal Income Tax Considerations" in the Registration Statement (the "Tax Disclosure"); and
(3) certain organizational documents of the Company and its subsidiaries (those documents referred to in clauses (1) through
(3), the "Reviewed Documents").
The opinions set forth in this letter are premised
on, among other things, the written representations of the Company contained in a letter to us (including all exhibits and attachments
thereto), dated as of the date hereof (the "Representation Letter"). Although we have discussed the Representation Letter
and the Reviewed Documents with executives and employees of the Company, we have not made an independent investigation or audit of the
facts set forth in the Reviewed Documents and the Representation Letter. We consequently have relied upon the Representation Letter and
Reviewed Documents and, with your consent, we have assumed the following:
| 1. | that (A) all of the representations and statements as to factual matters set forth in the Reviewed
Documents and the Representation Letter are true, correct, and complete as of the date hereof, (B) any representation or statement
in the Reviewed Documents and the Representation Letter made as a belief or made “to the knowledge of” or similarly qualified
is true, correct, and complete in all material respects as of the date hereof, without such qualification, (C) any representation
or statement in the Reviewed Documents and the Representation Letter as to the Company’s intent is assumed to be carried out in
accordance with such intent, (D) each agreement described in the Reviewed Documents is valid and binding in accordance with its terms
(and has not been supplemented or amended in writing or otherwise), and, (E) each of the obligations of the parties to the Reviewed
Documents, and their subsidiaries, as described in the Reviewed Documents, has been or will be performed or satisfied in accordance with
its terms (and no covenants or conditions described therein and affecting this opinion letter have been or will be waived or modified); |
| 2. | the genuineness of all signatures, the proper execution of all documents, the authenticity of all documents
submitted to us as originals, the conformity to originals of documents submitted to us as copies, and the authenticity of the originals
from which any copies were made; |
| 3. | that any documents as to which we have reviewed only a form were or will be duly executed without material
changes from the form reviewed by us; and |
| 4. | that from and after the date of this letter, the Company will comply with its representation contained
in the Representation Letter that the Company will utilize all appropriate “savings provisions” (including the provisions
of Sections 856(c)(6), 856(c)(7), and 856(g) of the Code, and the provision included in Section 856(c)(4) of the Code (flush
language) allowing for the disposal of assets within 30 days after the close of a calendar quarter, and all available deficiency dividend
procedures) available to the Company under the Code in order to correct any violations of the applicable real estate investment trust
(“REIT”) qualification requirements by the Company to the full extent the remedies under such provisions are available
(the “Savings Provisions”). |
Any material variation or difference in the facts
from those set forth in the documents that we have reviewed and upon which we have relied (including, in particular, the Reviewed Documents
and the Representation Letter) may adversely affect the conclusions stated herein.
Opinions
Based upon and subject to the assumptions and
qualifications set forth herein, including, without limitation, the discussion below, we are of the opinion that:
| (1) | the Company has been organized and operated in conformity with the requirements for qualification and
taxation as a REIT under the Code for the taxable year ended December 31, 2017, through and including the taxable year ended December 31,
2023, and the Company's current organization and current and proposed method of operation will enable it to continue to meet the requirements
for qualification and taxation as a REIT under the Code for its current and future taxable years; and |
| (2) | the portions of the discussion in the Tax Disclosure that describe applicable provisions of U.S. federal
income tax law are correct in all material respects as of the date hereof. |
We acknowledge in delivering our opinions above
that qualification as a REIT for any taxable year of the Company specified in paragraph (1) above, requires the Company to have qualified
as a REIT for the four taxable years preceding such taxable year, even if a tax deficiency could no longer be assessed for any of those
four taxable years. Qualification and taxation as a REIT under the Code depends upon the ability of the Company to meet on an ongoing
basis (through actual quarterly and annual operating results, distribution levels, diversity of share ownership and otherwise) the various
qualification tests imposed under the Code, and upon the Company utilizing any and all appropriate Savings Provisions. Our opinions do
not foreclose the possibility that the Company may have to utilize one or more of the Savings Provisions in order to maintain its REIT
qualification, which could require the Company to pay an excise or penalty tax (which could be significant in amount). We have not undertaken
to review the Company’s compliance with the REIT requirements on a continuing basis and we cannot give any assurance that the Company’s
income, assets, distributions, and diversity of share ownership will satisfy the requirements for qualification and taxation as a REIT
for any given taxable year.
This opinion letter addresses only the specific
U.S. federal income tax matters set forth above and does not address any other federal, state, local or foreign legal or tax issues.
This opinion letter has been prepared for your
use in connection with the filing of the Registration Statement and speaks as of the date hereof. This opinion letter may not be relied
on, reproduced, or filed for any other purpose without the prior written consent of this firm. We hereby consent to the filing of this
opinion letter as Exhibit 8.1 to the Registration Statement and to the reference to Hogan Lovells US LLP under the headings “Certain
U.S. Federal Income Tax Considerations” and “Validity of the Offered Securities” in the Registration Statement. In giving
this consent, however, we do not admit thereby that we are an “expert” within the meaning of the Securities Act of 1933, as
amended. This opinion letter may not be distributed, quoted in whole or in part or otherwise reproduced in any document, or filed with
any governmental agency without our express written consent.
Very truly yours,
/s/ HOGAN LOVELLS US LLP
Exhibit 23.3
Consent of Independent Registered Public Accounting
Firm
We consent to the use of our reports dated February 15, 2024,
with respect to the consolidated balance sheets of Ventas, Inc. and subsidiaries as of December 31, 2023 and 2022, and the related
consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31,
2023, and the related notes and financial statement schedules III and IV, and the effectiveness of internal control over financial reporting
as of December 31, 2023, incorporated herein by reference and to the reference to our firm under the heading “Experts”
in the prospectus.
/s/ KPMG LLP
Chicago, IL
February 20, 2024
Exhibit 25.1
securities
and exchange commission
Washington, D.C. 20549
FORM T-1
Statement
of Eligibility Under
The
Trust Indenture Act of 1939 of a
Corporation
Designated to Act as Trustee
Check if an Application to Determine Eligibility
of
a Trustee Pursuant to Section 305(b)(2) ¨
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
91-1821036
I.R.S. Employer Identification No.
|
800 Nicollet Mall
Minneapolis, Minnesota |
55402 |
| (Address of principal executive offices) |
(Zip Code) |
Daniel Boyers
U.S. Bank Trust Company, National Association
425 Walnut Street
Cincinnati, OH 45202
(513) 632-2077
(Name, address and telephone number of agent for
service)
Ventas, Inc.
Ventas Realty, Limited Partnership
(Issuer with respect to the Securities)
|
Delaware
Delaware |
61-1055020
61-1324573 |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
353 N. Clark Street, Suite 3300
Chicago, IL |
60654 |
| (Address of Principal Executive Offices) |
(Zip Code) |
Debt Securities
(Title of the Indenture
Securities)
FORM T-1
Item 1. GENERAL INFORMATION.
Furnish the following information as to the Trustee.
| a) | Name and address of each examining or supervising authority to which it is subject. |
Comptroller of the Currency
Washington, D.C.
| b) | Whether it is authorized to
exercise corporate trust powers. |
Yes
Item 2. AFFILIATIONS WITH THE
OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation.
None
| Items 3-15 | Items 3-15 are not applicable because to the best of the
Trustee's knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee. |
| Item 16. | LIST OF EXHIBITS: List below all exhibits filed as
a part of this statement of eligibility and qualification. |
| 1. | A copy of the Articles of Association of the Trustee, attached
as Exhibit 1. |
| 2. | A copy of the certificate of authority of the Trustee to
commence business, attached as Exhibit 2. |
| 3. | A copy of the authorization of the Trustee to exercise corporate
trust powers, included as Exhibit 2. |
| 4. | A copy of the existing bylaws of the Trustee, attached as Exhibit 4. |
| 5. | A copy of each Indenture referred to in Item 4. Not applicable. |
| 6. | The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6. |
| 7. | Report of Condition of the Trustee as of September 30, 2023, published pursuant to law or the requirements of its supervising
or examining authority, attached as Exhibit 7. |
SIGNATURE
Pursuant to the requirements
of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association organized and existing under the laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Cincinnati,
State of Ohio on the 20th of February, 2024.
| |
By: |
/s/ Daniel Boyers |
| |
|
Daniel Boyers |
| |
|
Vice President |
Exhibit 1
ARTICLES OF ASSOCIATION
OF
U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
For the purpose of organizing an association (the
“Association”) to perform any lawful activities of national banks, the undersigned enter into the following Articles of Association:
FIRST. The
title of this Association shall be U. S. Bank Trust Company, National Association.
SECOND. The
main office of the Association shall be in the city of Portland, county of Multnomah, state of Oregon. The business of the Association
will be limited to fiduciary powers and the support of activities incidental to the exercise of those powers. The Association may not
expand or alter its business beyond that stated in this article without the prior approval of the Comptroller of the Currency.
THIRD. The board of directors of the Association
shall consist of not less than five nor more than twenty-five persons, the exact number to be fixed and determined from time to time by
resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting
thereof. Each director shall own common or preferred stock of the Association or of a holding company owning the Association, with an
aggregate par, fair market, or equity value of not less than $1,000, as of either (i) the date of purchase, (ii) the date the
person became a director, or (iii) the date of that person's most recent election to the board of directors, whichever is more recent.
Any combination of common or preferred stock of the Association or holding company may be used.
Any vacancy in the board of directors may be filled
by action of a majority of the remaining directors between meetings of shareholders. The board of directors may increase the number of
directors up to the maximum permitted by law. Terms of directors, including directors selected to fill vacancies, shall expire at the
next regular meeting of shareholders at which directors are elected, unless the directors resign or are removed from office. Despite the
expiration of a director's term, the director shall continue to serve until his or her successor is elected and qualified or until there
is a decrease in the number of directors and his or her position is eliminated.
Honorary or advisory members of the board of directors,
without voting power or power of final decision in matters concerning the business of the Association, may be appointed by resolution
of a majority of the full board of directors, or by resolution of shareholders at any annual or special meeting. Honorary or advisory
directors shall not be counted to determined the number of directors of the Association or the presence of a quorum in connection with
any board action, and shall not be required to own qualifying shares.
FOURTH. There shall be an annual
meeting of the shareholders to elect directors and transact whatever other business may be brought before the meeting. It shall be
held at the main office or any other convenient place the board of directors may designate, on the day of each year specified
therefor in the Bylaws, or if that day falls on a legal holiday in the state in which the Association is located, on the next
following banking day. If no election is held on the day fixed or in
the event of a legal holiday on the following banking day, an election may be held on any subsequent day within 60 days of the day
fixed, to be designated by the board of directors, or, if the
directors fail to fix the day, by shareholders representing two-thirds of the shares issued and outstanding. In all cases, at least
10 days’ advance notice of the meeting shall be given to the shareholders by first-class mail.
In all elections of directors, the number of votes
each common shareholder may cast will be determined by multiplying the number of shares he or she owns by the number of directors to be
elected. Those votes may be cumulated and cast for a single candidate or may be distributed among two or more candidates in the manner
selected by the shareholder. On all other questions, each common shareholder shall be entitled to one vote for each share of stock held
by him or her.
A director may
resign at any time by delivering written notice to the board of directors, its chairperson, or to the Association, which resignation shall
be effective when the notice is delivered unless the notice specifies a later effective date.
A director may be removed by the shareholders
at a meeting called to remove him or her, when notice of the meeting stating that the purpose or one of the purposes is to remove him
or her is provided, if there is a failure to fulfill one of the affirmative
requirements for qualification, or for cause; provided, however, that a director may not be removed if
the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital
stock of the Association shall be 1,000,000 shares of common stock of the par value of ten dollars ($10) each; but said capital stock
may be increased or decreased from time to time, according to the provisions of the laws of the United States. The Association shall have
only one class of capital stock.
No holder of shares of the capital stock of any
class of the Association shall have any preemptive or preferential right of subscription to any shares of any class of stock of the Association,
whether now or hereafter authorized, or to any obligations convertible into stock of the Association, issued, or sold, nor any right of
subscription to any thereof other than such, if any, as the board of directors, in its discretion, may from time to time determine and
at such price as the board of directors may from time to time fix.
Transfers of the Association's stock are subject
to the prior written approval of a federal depository institution regulatory agency. If
no other agency approval is required, the approval of the Comptroller of the Currency must be obtained prior to any such transfers.
Unless otherwise specified in the Articles
of Association or required by law, (1) all matters requiring shareholder action, including amendments to the Articles of
Association must be approved by shareholders owning a majority voting interest in the outstanding voting stock, and (2) each
shareholder shall be entitled to one vote per share.
Unless otherwise specified in the Articles of
Association or required by law, all shares of voting stock shall be voted together as a class, on any matters requiring shareholder approval.
Unless otherwise provided in the Bylaws, the record
date for determining shareholders entitled to notice of and to vote at any meeting is the close of business on the day before the first
notice is mailed or otherwise sent to the shareholders, provided that in no event may a record date be more than 70 days before the meeting.
The Association,
at any time and from time to time, may authorize and issue debt obligations, whether subordinated, without the approval of the shareholders.
Obligations classified as debt, whether subordinated, which may be issued by the Association without the approval of shareholders, do
not carry voting rights on any issue, including an increase or decrease in the aggregate number of the securities, or the exchange or
reclassification of all or part of securities into securities of another class or series.
SIXTH. The board of directors shall appoint
one of its members president of this Association and one of its members chairperson of the board and shall have the power to appoint one
or more vice presidents, a secretary who shall keep minutes of the directors' and shareholders' meetings and be responsible for authenticating
the records of the Association, and such other officers and employees as may be required to transact the business of this Association.
A duly appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors in accordance
with the Bylaws.
The board of directors shall have the power to:
| (1) | Define the duties of the officers, employees, and agents of the Association. |
| (2) | Delegate the performance of its duties, but not the responsibility for its duties, to the officers, employees,
and agents of the Association. |
| (3) | Fix the compensation and enter employment contracts with its officers and employees upon reasonable terms
and conditions consistent with applicable law. |
| (4) | Dismiss officers and employees. |
| (5) | Require bonds from officers and employees and to fix the penalty thereof. |
| (6) | Ratify written policies authorized by the Association's management or committees of the board. |
| (7) | Regulate the manner any increase or decrease of the capital of the Association shall be made; provided
that nothing herein shall restrict the power of shareholders to increase or decrease the capital of the Association in accordance with
law, and nothing shall raise or lower from two-thirds the percentage required for shareholder approval to increase or reduce the capital. |
| (8) | Manage and administer the business and affairs of the Association. |
| (9) | Adopt initial Bylaws, not inconsistent with law or the Articles of Association, for managing the business and regulating the affairs
of the Association. |
| (10) | Amend or repeal Bylaws, except to the extent that the Articles of Association reserve this power in whole or in part to the shareholders. |
| (12) | Generally perform all acts that are legal for a board of directors to perform. |
SEVENTH. The board of directors shall have
the power to change the location of the main office to any authorized branch within the limits of the city of Portland, Oregon, without
the approval of the shareholders, or with a vote of shareholders owning two-thirds of the stock of the Association for a location outside
such limits and upon receipt of a certificate of approval from the Comptroller of the Currency, to any other location within or outside
the limits of the city of Portland, Oregon, but not more than thirty miles beyond such limits. The board of directors shall have the power
to establish or change the location of any office or offices of the Association to any other location permitted under applicable law,
without approval of shareholders, subject to approval by the Comptroller of the Currency.
EIGHTH. The
corporate existence of this Association shall continue until termination according to the laws of the United States.
NINTH. The board of directors of the Association,
or any shareholder owning, in the aggregate, not less than 25 percent of the stock of the Association, may call a special meeting of shareholders
at any time. Unless otherwise provided by the Bylaws or the laws of the United States, or waived by shareholders, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed
at least 10, and no more than 60, days prior to the date of the meeting to each shareholder of record at his/her address as shown upon
the books of the Association. Unless otherwise provided by the Bylaws, any action requiring approval of shareholders must be effected
at a duly called annual or special meeting.
TENTH. These Articles of Association may
be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of
the Association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by the vote of the holders
of such greater amount; provided, that the scope of the Association's activities and services may not be expanded without the prior written
approval of the Comptroller of the Currency. The Association's board of directors may propose one or more amendments to the Articles of
Association for submission to the shareholders.
In witness whereof, we have hereunto set our hands
this 11th of June, 1997.
Exhibit 2
Exhibit 4
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION
AMENDED AND RESTATED BYLAWS
ARTICLE I
Meetings of Shareholders
Section 1.1. Annual
Meeting. The annual meeting of the shareholders, for the election of directors and the transaction of any other proper business, shall
be held at a time and place as the Chairman or President may designate. Notice of such meeting shall be given not less than ten (10) days
or more than sixty (60) days prior to the date thereof, to each shareholder of the Association, unless the Office of the Comptroller of
the Currency (the “OCC”) determines that an emergency circumstance exists. In accordance with applicable law, the sole shareholder
of the Association is permitted to waive notice of the meeting. If, for any reason, an election of directors is not made on the designated
day, the election shall be held on some subsequent day, as soon thereafter as practicable, with prior notice thereof. Failure to hold
an annual meeting as required by these Bylaws shall not affect the validity of any corporate action or work a forfeiture or dissolution
of the Association.
Section 1.2. Special
Meetings. Except as otherwise specially provided by law, special meetings of the shareholders may be called for any purpose, at any
time by a majority of the board of directors (the “Board”), or by any shareholder or group of shareholders owning at least
ten percent of the outstanding stock.
Every such special meeting, unless otherwise provided
by law, shall be called upon not less than ten (10) days nor more than sixty (60) days prior notice stating the purpose of the meeting.
Section 1.3. Nominations
for Directors. Nominations for election to the Board may be made by the Board or by any shareholder.
Section 1.4. Proxies.
Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting
and any adjournments of such meeting and shall be filed with the records of the meeting.
Section 1.5. Record
Date. The record date for determining shareholders entitled to notice and to vote at any meeting will be thirty days before the date
of such meeting, unless otherwise determined by the Board.
Section 1.6. Quorum
and Voting. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders, unless otherwise provided by law, but less than a quorum may adjourn any meeting, from time to time, and
the meeting may be held as adjourned without further notice. A majority of the votes cast shall decide every question or matter
submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Association.
Section 1.7. Inspectors.
The Board may, and in the event of its failure so to do, the Chairman of the Board may appoint Inspectors of Election who shall determine
the presence of quorum, the validity of proxies, and the results of all elections and all other matters voted upon by shareholders at
all annual and special meetings of shareholders.
Section 1.8. Waiver
and Consent. The shareholders may act without notice or a meeting by a unanimous written consent by all shareholders.
Section 1.9. Remote
Meetings. The Board shall have the right to determine that a shareholder meeting not be held at a place, but instead be held solely
by means of remote communication in the manner and to the extent permitted by the General Corporation Law of the State of Delaware.
ARTICLE II
Directors
Section 2.1. Board
of Directors. The Board shall have the power to manage and administer the business and affairs of the Association. Except as expressly
limited by law, all corporate powers of the Association shall be vested in and may be exercised by the Board.
Section 2.2. Term
of Office. The directors of this Association shall hold office for one year and until their successors are duly elected and qualified,
or until their earlier resignation or removal.
Section 2.3. Powers.
In addition to the foregoing, the Board shall have and may exercise all of the powers granted to or conferred upon it by the Articles
of Association, the Bylaws and by law.
Section 2.4. Number.
As provided in the Articles of Association, the Board of this Association shall consist of no less than five nor more than
twenty-five members, unless the OCC has exempted the Association from the twenty-five- member limit. The Board shall consist of a
number of members to be fixed and determined from time to time by resolution of the Board or the shareholders at any meeting
thereof, in accordance with the Articles of Association. Between meetings of the shareholders held for the purpose of electing
directors, the Board by a majority vote of the full Board may increase the size of the Board but not to more than a total of
twenty-five directors, and fill any vacancy so created in the Board; provided that the Board may increase the number of directors
only by up to two directors, when the number of directors last elected by shareholders was fifteen or fewer, and by up to four
directors, when the number of directors last elected by shareholders was sixteen or more. Each director shall own a qualifying
equity interest in the Association or a company that has control of the Association in each case as required by applicable law. Each
director shall own such qualifying equity interest in his or her own right and meet any minimum threshold ownership required by
applicable law.
Section 2.5. Organization
Meeting. The newly elected Board shall meet for the purpose of organizing the new Board and electing and appointing such officers
of the Association as may be appropriate. Such meeting shall be held on the day of the election or as soon thereafter as practicable,
and, in any event, within thirty days thereafter, at such time and place as the Chairman or President may designate. If, at the time fixed
for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting until a quorum is obtained.
Section 2.6. Regular
Meetings. The regular meetings of the Board shall be held, without notice, as the Chairman or President may designate and deem suitable.
Section 2.7. Special
Meetings. Special meetings of the Board may be called at any time, at any place and for any purpose by the Chairman of the Board or
the President of the Association, or upon the request of a majority of the entire Board. Notice of every special meeting of the Board
shall be given to the directors at their usual places of business, or at such other addresses as shall have been furnished by them for
the purpose. Such notice shall be given at least twelve hours (three hours if meeting is to be conducted by conference telephone) before
the meeting by telephone or by being personally delivered, mailed, or electronically delivered. Such notice need not include a statement
of the business to be transacted at, or the purpose of, any such meeting.
Section 2.8. Quorum
and Necessary Vote. A majority of the directors shall constitute a quorum at any meeting of the Board, except when otherwise provided
by law; but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held as adjourned without further notice.
Unless otherwise provided by law or the Articles or Bylaws of this Association, once a quorum is established, any act by a majority of
those directors present and voting shall be the act of the Board.
Section 2.9. Written
Consent. Except as otherwise required by applicable laws and regulations, the Board may act without a meeting by a unanimous written
consent by all directors, to be filed with the Secretary of the Association as part of the corporate records.
Section 2.10. Remote
Meetings. Members of the Board, or of any committee thereof, may participate in a meeting of such Board or committee by means of conference
telephone, video or similar communications equipment by means of which all persons participating in the meeting can hear each other and
such participation shall constitute presence in person at such meeting.
Section 2.11. Vacancies.
When any vacancy occurs among the directors, the remaining members of the Board may appoint a director to fill such vacancy at any regular
meeting of the Board, or at a special meeting called for that purpose.
ARTICLE III
Committees
Section 3.1. Advisory
Board of Directors. The Board may appoint persons, who need not be directors, to serve as advisory directors on an advisory board
of directors established with respect to the business affairs of either this Association alone or the business affairs of a group of affiliated
organizations of which this Association is one. Advisory directors shall have such powers and duties as may be determined by the Board,
provided, that the Board's responsibility for the business and affairs of this Association shall in no respect be delegated or diminished.
Section 3.2. Trust
Audit Committee. At least once during each calendar year, the Association shall arrange for a suitable audit (by internal or external
auditors) of all significant fiduciary activities under the direction of its trust audit committee, a function that will be fulfilled
by the Audit Committee of the financial holding company that is the ultimate parent of this Association. The Association shall note the
results of the audit (including significant actions taken as a result of the audit) in the minutes of the Board. In lieu of annual audits,
the Association may adopt a continuous audit system in accordance with 12 C.F.R. § 9.9(b).
The Audit Committee of the financial holding company
that is the ultimate parent of this Association, fulfilling the function of the trust audit committee:
(1) Must
not include any officers of the Association or an affiliate who participate significantly in the administration of the Association’s
fiduciary activities; and
(2) Must
consist of a majority of members who are not also members of any committee to which the Board has delegated power to manage and control
the fiduciary activities of the Association.
Section 3.3. Executive
Committee. The Board may appoint an Executive Committee which shall consist of at least three directors and which shall have, and
may exercise, to the extent permitted by applicable law, all the powers of the Board between meetings of the Board or otherwise when the
Board is not meeting.
Section 3.4. Trust
Management Committee. The Board of this Association shall appoint a Trust Management Committee to provide oversight of the fiduciary
activities of the Association. The Trust Management Committee shall determine policies governing fiduciary activities. The Trust Management
Committee or such sub-committees, officers or others as may be duly designated by the Trust Management Committee shall oversee the processes
related to fiduciary activities to assure conformity with fiduciary policies it establishes, including ratifying the acceptance and the
closing out or relinquishment of all trusts. The Trust Management Committee will provide regular reports of its activities to the Board.
Section 3.5. Other
Committees. The Board may appoint, from time to time, committees of one or more persons who need not be directors, for such purposes
and with such powers as the Board may determine; however, the Board will not delegate to any committee any powers or responsibilities
that it is prohibited from delegating under any law or regulation. In addition, either the Chairman or the President may appoint, from
time to time, committees of one or more officers, employees, agents or other persons, for such purposes and with such powers as either
the Chairman or the President deems appropriate and proper. Whether appointed by the Board, the Chairman, or the President, any such committee
shall at all times be subject to the direction and control of the Board.
Section 3.6. Meetings,
Minutes and Rules. An advisory board of directors and/or committee shall meet as necessary in consideration of the purpose of
the advisory board of directors or committee, and shall maintain minutes in sufficient detail to indicate actions taken or
recommendations made; unless required by the members, discussions, votes or other specific details need not be reported. An advisory
board of directors or a committee may, in consideration of its purpose, adopt its own rules for the exercise of any of its
functions or authority.
ARTICLE IV
Officers
Section 4.1. Chairman
of the Board. The Board may appoint one of its members to be Chairman of the Board to serve at the pleasure of the Board. The Chairman
shall supervise the carrying out of the policies adopted or approved by the Board; shall have general executive powers, as well as the
specific powers conferred by these Bylaws; and shall also have and may exercise such powers and duties as from time to time may be conferred
upon or assigned by the Board.
Section 4.2. President.
The Board may appoint one of its members to be President of the Association. In the absence of the Chairman, the President shall preside
at any meeting of the Board. The President shall have general executive powers, and shall have and may exercise any and all other powers
and duties pertaining by law, regulation or practice, to the office of President, or imposed by these Bylaws. The President shall also
have and may exercise such powers and duties as from time to time may be conferred or assigned by the Board.
Section 4.3. Vice
President. The Board may appoint one or more Vice Presidents who shall have such powers and duties as may be assigned by the Board
and to perform the duties of the President on those occasions when the President is absent, including presiding at any meeting of the
Board in the absence of both the Chairman and President.
Section 4.4. Secretary.
The Board shall appoint a Secretary, or other designated officer who shall be Secretary of the Board and of the Association, and shall
keep accurate minutes of all meetings. The Secretary shall attend to the giving of all notices required by these Bylaws to be given; shall
be custodian of the corporate seal, records, documents and papers of the Association; shall provide for the keeping of proper records
of all transactions of the Association; shall, upon request, authenticate any records of the Association; shall have and may exercise
any and all other powers and duties pertaining by law, regulation or practice, to the Secretary, or imposed by these Bylaws; and shall
also perform such other duties as may be assigned from time to time by the Board. The Board may appoint one or more Assistant Secretaries
with such powers and duties as the Board, the President or the Secretary shall from time to time determine.
Section 4.5. Other
Officers. The Board may appoint, and may authorize the Chairman, the President or any other officer to appoint, any officer as
from time to time may appear to the Board, the Chairman, the President or such other officer to be required or desirable to transact
the business of the Association. Such officers shall exercise such powers and perform such duties as pertain to their several
offices, or as may be conferred upon or assigned to them by these Bylaws, the Board, the Chairman, the President or such other
authorized officer. Any person may hold two offices.
Section 4.6. Tenure
of Office. The Chairman or the President and all other officers shall hold office until their respective successors are elected and
qualified or until their earlier death, resignation, retirement, disqualification or removal from office, subject to the right of the
Board or authorized officer to discharge any officer at any time.
ARTICLE V
Stock
Section 5.1. The Board
may authorize the issuance of stock either in certificated or in uncertificated form. Certificates for shares of stock shall be in such
form as the Board may from time to time prescribe. If the Board issues certificated stock, the certificate shall be signed by the President,
Secretary or any other such officer as the Board so determines. Shares of stock shall be transferable on the books of the Association,
and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to such person's shares, succeed to all rights of the prior holder of such shares. Each certificate of stock shall
recite on its face that the stock represented thereby is transferable only upon the books of the Association properly endorsed. The Board
may impose conditions upon the transfer of the stock reasonably calculated to simplify the work of the Association for stock transfers,
voting at shareholder meetings, and related matters, and to protect it against fraudulent transfers.
ARTICLE VI
Corporate Seal
Section 6.1. The Association
shall have no corporate seal; provided, however, that if the use of a seal is required by, or is otherwise convenient or advisable pursuant
to, the laws or regulations of any jurisdiction, the following seal may be used, and the Chairman, the President, the Secretary and any
Assistant Secretary shall have the authority to affix such seal:
ARTICLE VII
Miscellaneous Provisions
Section 7.1. Execution
of Instruments. All agreements, checks, drafts, orders, indentures, notes, mortgages, deeds, conveyances, transfers, endorsements,
assignments, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits,
bonds, undertakings, guarantees, proxies and other instruments or documents may be signed, countersigned, executed, acknowledged, endorsed,
verified, delivered or accepted on behalf of the Association, whether in a fiduciary capacity or otherwise, by any officer of the Association,
or such employee or agent as may be designated from time to time by the Board by resolution, or by the Chairman or the President by written
instrument, which resolution or instrument shall be certified as in effect by the Secretary or an Assistant Secretary of the Association.
The provisions of this section are supplementary to any other provision of the Articles of Association or Bylaws.
Section 7.2. Records.
The Articles of Association, the Bylaws as revised or amended from time to time and the proceedings of all meetings of the shareholders,
the Board, and standing committees of the Board, shall be recorded in appropriate minute books provided for the purpose. The minutes of
each meeting shall be signed by the Secretary, or other officer appointed to act as Secretary of the meeting.
Section 7.3. Trust
Files. There shall be maintained in the Association files all fiduciary records necessary to assure that its fiduciary responsibilities
have been properly undertaken and discharged.
Section 7.4. Trust
Investments. Funds held in a fiduciary capacity shall be invested according to the instrument establishing the fiduciary relationship
and according to law. Where such instrument does not specify the character and class of investments to be made and does not vest in the
Association a discretion in the matter, funds held pursuant to such instrument shall be invested in investments in which corporate fiduciaries
may invest under law.
Section 7.5. Notice.
Whenever notice is required by the Articles of Association, the Bylaws or law, such notice shall be by mail, postage prepaid, e- mail,
in person, or by any other means by which such notice can reasonably be expected to be received, using the address of the person to receive
such notice, or such other personal data, as may appear on the records of the Association.
Except where specified otherwise in these Bylaws,
prior notice shall be proper if given not more than 30 days nor less than 10 days prior to the event for which notice is given.
ARTICLE VIII
Indemnification
Section 8.1. The Association
shall indemnify such persons for such liabilities in such manner under such circumstances and to such extent as permitted by Section 145
of the Delaware General Corporation Law, as now enacted or hereafter amended. The Board may authorize the purchase and maintenance of
insurance and/or the execution of individual agreements for the purpose of such indemnification, and the Association shall advance all
reasonable costs and expenses (including attorneys’ fees) incurred in defending any action, suit or proceeding to all persons entitled
to indemnification under this Section 8.1. Such insurance shall be consistent with the requirements of 12 C.F.R. § 7.2014 and
shall exclude coverage of liability for a formal order assessing civil money penalties against an institution-affiliated party, as defined
at 12 U.S.C. § 1813(u).
Section 8.2.
Notwithstanding Section 8.1, however, (a) any indemnification payments to an institution-affiliated party, as defined at
12 U.S.C. § 1813(u), for an administrative proceeding or civil action initiated by a federal banking agency, shall be
reasonable and consistent with the requirements of 12 U.S.C. § 1828(k) and the implementing regulations thereunder; and
(b) any indemnification payments and advancement of costs and expenses to an institution-affiliated party, as defined at 12
U.S.C. § 1813(u), in cases involving an administrative proceeding or civil action not initiated by a federal banking agency,
shall be in accordance with Delaware General Corporation Law and consistent with safe and sound banking practices.
ARTICLE IX
Bylaws: Interpretation and Amendment
Section 9.1. These Bylaws
shall be interpreted in accordance with and subject to appropriate provisions of law, and may be added to, altered, amended, or repealed,
at any regular or special meeting of the Board.
Section 9.2. A copy of
the Bylaws and all amendments shall at all times be kept in a convenient place at the principal office of the Association, and shall be
open for inspection to all shareholders during Association hours.
ARTICLE X
Miscellaneous Provisions
Section 10.1. Fiscal
Year. The fiscal year of the Association shall begin on the first day of January in each year and shall end on the thirty-first
day of December following.
Section 10.2. Governing
Law. This Association designates the Delaware General Corporation Law, as amended from time to time, as the governing law for its
corporate governance procedures, to the extent not inconsistent with Federal banking statutes and regulations or bank safety and soundness.
***
(February 8, 2021)
Exhibit 6
CONSENT
In accordance with Section 321(b) of
the Trust Indenture Act of 1939, the undersigned, U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION hereby consents that reports of examination
of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: February 20, 2024
| |
By: |
/s/ Daniel Boyers |
| |
|
Daniel Boyers |
| |
|
Vice President |
Exhibit 7
U.S. Bank Trust Company, National Association
Statement of Financial Condition
as of 12/31/2023
($000’s)
| |
|
12/31/2023 |
|
| Assets |
|
|
|
| Cash and
Balances Due From Depository Institutions |
|
$ |
1,171,838 |
|
| Securities |
|
|
4,441 |
|
| Federal Funds |
|
|
0 |
|
| Loans & Lease Financing Receivables |
|
|
0 |
|
| Fixed Assets |
|
|
1,409 |
|
| Intangible Assets |
|
|
578,492 |
|
| Other Assets |
|
|
218,268 |
|
| Total Assets |
|
$ |
1,974,448 |
|
| |
|
|
|
|
| Liabilities |
|
|
|
|
| Deposits |
|
$ |
0 |
|
| Fed Funds |
|
|
0 |
|
| Treasury Demand Notes |
|
|
0 |
|
| Trading Liabilities |
|
|
0 |
|
| Other Borrowed Money |
|
|
0 |
|
| Acceptances |
|
|
0 |
|
| Subordinated Notes and Debentures |
|
|
0 |
|
| Other Liabilities |
|
|
255,900 |
|
| Total Liabilities |
|
$ |
255,900 |
|
| |
|
|
|
|
| Equity |
|
|
|
|
| Common and Preferred Stock |
|
|
200 |
|
| Surplus |
|
|
1,171,635 |
|
| Undivided Profits |
|
|
546,713 |
|
| Minority Interest in Subsidiaries |
|
|
0 |
|
| Total Equity Capital |
|
$ |
1,718,548 |
|
| |
|
|
|
|
| Total Liabilities and Equity Capital |
|
$ |
1,974,448 |
|
Exhibit 25.2
securities
and exchange commission
Washington, D.C. 20549
FORM T-1
Statement
of Eligibility Under
The
Trust Indenture Act of 1939 of a
Corporation
Designated to Act as Trustee
Check if an Application to Determine Eligibility
of
a Trustee Pursuant to Section 305(b)(2) ¨
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
91-1821036
I.R.S. Employer Identification No.
|
800 Nicollet Mall
Minneapolis, Minnesota |
55402 |
| (Address of principal executive offices) |
(Zip Code) |
Daniel Boyers
U.S. Bank Trust Company, National Association
425 Walnut Street
Cincinnati, OH 45202
(513) 632-2077
(Name, address and telephone number of agent for
service)
Ventas, Inc.
Ventas Realty, Limited Partnership
(Issuer with respect to the Securities)
|
Delaware
Delaware |
61-1055020
61-1324573 |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
353 N. Clark Street, Suite 3300
Chicago, IL |
60654 |
| (Address of Principal Executive Offices) |
(Zip Code) |
Subordinated Debt Securities
(Title of the Indenture
Securities)
FORM T-1
Item 1. GENERAL INFORMATION.
Furnish the following information as to the Trustee.
| a) | Name and address of each examining or supervising authority to which it is subject. |
Comptroller of the Currency
Washington, D.C.
| b) | Whether it is authorized
to exercise corporate trust powers. |
Yes
Item 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such affiliation.
None
| Items 3-15 | Items 3-15 are not applicable because to the best of the
Trustee's knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee. |
Item 16. LIST OF EXHIBITS:
List below all exhibits filed as a part of this statement of eligibility and qualification.
| 1. | A copy of the Articles of Association of the Trustee, attached
as Exhibit 1. |
| 2. | A copy of the certificate of authority of the Trustee to
commence business, attached as Exhibit 2. |
| 3. | A copy of the authorization of the Trustee to exercise corporate
trust powers, included as Exhibit 2. |
| 4. | A copy of the existing bylaws of the Trustee, attached as Exhibit 4. |
| 5. | A copy of each Indenture referred to in Item 4. Not applicable. |
| 6. | The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6. |
| 7. | Report of Condition of the Trustee as of September 30, 2023, published pursuant to law or the requirements of its supervising
or examining authority, attached as Exhibit 7. |
SIGNATURE
Pursuant to the requirements
of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association organized and existing under the laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Cincinnati,
State of Ohio on the 20th of February, 2024.
| |
By: |
/s/ Daniel Boyers |
| |
|
Daniel Boyers |
| |
|
Vice President |
Exhibit 1
ARTICLES OF ASSOCIATION
OF
U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
For the purpose of organizing an association (the
“Association”) to perform any lawful activities of national banks, the undersigned enter into the following Articles of Association:
FIRST. The
title of this Association shall be U. S. Bank Trust Company, National Association.
SECOND. The
main office of the Association shall be in the city of Portland, county of Multnomah, state of Oregon. The business of the Association
will be limited to fiduciary powers and the support of activities incidental to the exercise of those powers. The Association may not
expand or alter its business beyond that stated in this article without the prior approval of the Comptroller of the Currency.
THIRD. The board of directors of the Association
shall consist of not less than five nor more than twenty-five persons, the exact number to be fixed and determined from time to time by
resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting
thereof. Each director shall own common or preferred stock of the Association or of a holding company owning the Association, with an
aggregate par, fair market, or equity value of not less than $1,000, as of either (i) the date of purchase, (ii) the date the
person became a director, or (iii) the date of that person's most recent election to the board of directors, whichever is more recent.
Any combination of common or preferred stock of the Association or holding company may be used.
Any vacancy in the board of directors may be filled
by action of a majority of the remaining directors between meetings of shareholders. The board of directors may increase the number of
directors up to the maximum permitted by law. Terms of directors, including directors selected to fill vacancies, shall expire at the
next regular meeting of shareholders at which directors are elected, unless the directors resign or are removed from office. Despite the
expiration of a director's term, the director shall continue to serve until his or her successor is elected and qualified or until there
is a decrease in the number of directors and his or her position is eliminated.
Honorary or advisory members of the board of directors,
without voting power or power of final decision in matters concerning the business of the Association, may be appointed by resolution
of a majority of the full board of directors, or by resolution of shareholders at any annual or special meeting. Honorary or advisory
directors shall not be counted to determined the number of directors of the Association or the presence of a quorum in connection with
any board action, and shall not be required to own qualifying shares.
FOURTH. There shall be an annual meeting
of the shareholders to elect directors and transact whatever other business may be brought before the meeting. It shall be held at the
main office or any other convenient place the board of directors may designate, on the day of each year specified therefor in the Bylaws,
or if that day falls on a legal holiday in the state in which the Association is located, on the next following
banking day. If no election is held on the day fixed or in the event of
a legal holiday on the following banking day, an election may be held on any subsequent day within 60 days of the day fixed, to be designated
by the board of directors, or, if the directors fail to fix the day, by
shareholders representing two-thirds of the shares issued and outstanding. In all cases, at least 10 days’ advance notice of the
meeting shall be given to the shareholders by first-class mail.
In all elections of directors, the number of votes
each common shareholder may cast will be determined by multiplying the number of shares he or she owns by the number of directors to be
elected. Those votes may be cumulated and cast for a single candidate or may be distributed among two or more candidates in the manner
selected by the shareholder. On all other questions, each common shareholder shall be entitled to one vote for each share of stock held
by him or her.
A director may
resign at any time by delivering written notice to the board of directors, its chairperson, or to the Association, which resignation shall
be effective when the notice is delivered unless the notice specifies a later effective date.
A director may be removed by the shareholders
at a meeting called to remove him or her, when notice of the meeting stating that the purpose or one of the purposes is to remove him
or her is provided, if there is a failure to fulfill one of the affirmative
requirements for qualification, or for cause; provided, however, that a director may not be removed if
the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital
stock of the Association shall be 1,000,000 shares of common stock of the par value of ten dollars ($10) each; but said capital stock
may be increased or decreased from time to time, according to the provisions of the laws of the United States. The Association shall have
only one class of capital stock.
No holder of shares of the capital stock of any
class of the Association shall have any preemptive or preferential right of subscription to any shares of any class of stock of the Association,
whether now or hereafter authorized, or to any obligations convertible into stock of the Association, issued, or sold, nor any right of
subscription to any thereof other than such, if any, as the board of directors, in its discretion, may from time to time determine and
at such price as the board of directors may from time to time fix.
Transfers of the Association's stock are subject
to the prior written approval of a federal depository institution regulatory agency. If
no other agency approval is required, the approval of the Comptroller of the Currency must be obtained prior to any such transfers.
Unless otherwise specified in the Articles
of Association or required by law, (1) all matters requiring shareholder action, including amendments to the Articles of
Association must be approved by shareholders owning a majority voting interest in the outstanding voting stock, and (2) each
shareholder shall be entitled to one vote per share.
Unless otherwise specified in the Articles of
Association or required by law, all shares of voting stock shall be voted together as a class, on any matters requiring shareholder approval.
Unless otherwise provided in the Bylaws, the record
date for determining shareholders entitled to notice of and to vote at any meeting is the close of business on the day before the first
notice is mailed or otherwise sent to the shareholders, provided that in no event may a record date be more than 70 days before the meeting.
The Association,
at any time and from time to time, may authorize and issue debt obligations, whether subordinated, without the approval of the shareholders.
Obligations classified as debt, whether subordinated, which may be issued by the Association without the approval of shareholders, do
not carry voting rights on any issue, including an increase or decrease in the aggregate number of the securities, or the exchange or
reclassification of all or part of securities into securities of another class or series.
SIXTH. The board of directors shall appoint
one of its members president of this Association and one of its members chairperson of the board and shall have the power to appoint one
or more vice presidents, a secretary who shall keep minutes of the directors' and shareholders' meetings and be responsible for authenticating
the records of the Association, and such other officers and employees as may be required to transact the business of this Association.
A duly appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors in accordance
with the Bylaws.
The board of directors shall have the power to:
| (1) | Define the duties of the officers, employees, and agents of the Association. |
| (2) | Delegate the performance of its duties, but not the responsibility for its duties, to the officers, employees,
and agents of the Association. |
| (3) | Fix the compensation and enter employment contracts with its officers and employees upon reasonable terms
and conditions consistent with applicable law. |
| (4) | Dismiss officers and employees. |
| (5) | Require bonds from officers and employees and to fix the penalty thereof. |
| (6) | Ratify written policies authorized by the Association's management or committees of the board. |
| (7) | Regulate the manner any increase or decrease of the capital of the Association shall be made; provided
that nothing herein shall restrict the power of shareholders to increase or decrease the capital of the Association in accordance with
law, and nothing shall raise or lower from two-thirds the percentage required for shareholder approval to increase or reduce the capital. |
| (8) | Manage and administer the business and affairs of the Association. |
| (9) | Adopt initial Bylaws, not inconsistent with law or the Articles of Association, for managing the business and regulating the affairs
of the Association. |
| (10) | Amend or repeal Bylaws, except to the extent that the Articles of Association reserve this power in whole or in part to the shareholders. |
| (12) | Generally perform all acts that are legal for a board of directors to perform. |
SEVENTH. The board of directors shall have
the power to change the location of the main office to any authorized branch within the limits of the city of Portland, Oregon, without
the approval of the shareholders, or with a vote of shareholders owning two-thirds of the stock of the Association for a location outside
such limits and upon receipt of a certificate of approval from the Comptroller of the Currency, to any other location within or outside
the limits of the city of Portland, Oregon, but not more than thirty miles beyond such limits. The board of directors shall have the power
to establish or change the location of any office or offices of the Association to any other location permitted under applicable law,
without approval of shareholders, subject to approval by the Comptroller of the Currency.
EIGHTH. The
corporate existence of this Association shall continue until termination according to the laws of the United States.
NINTH. The board of directors of the Association,
or any shareholder owning, in the aggregate, not less than 25 percent of the stock of the Association, may call a special meeting of shareholders
at any time. Unless otherwise provided by the Bylaws or the laws of the United States, or waived by shareholders, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed
at least 10, and no more than 60, days prior to the date of the meeting to each shareholder of record at his/her address as shown upon
the books of the Association. Unless otherwise provided by the Bylaws, any action requiring approval of shareholders must be effected
at a duly called annual or special meeting.
TENTH. These Articles of Association may
be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of
the Association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by the vote of the holders
of such greater amount; provided, that the scope of the Association's activities and services may not be expanded without the prior written
approval of the Comptroller of the Currency. The Association's board of directors may propose one or more amendments to the Articles of
Association for submission to the shareholders.
In witness whereof, we have hereunto set our hands
this 11th of June, 1997.
Exhibit 2
Exhibit 4
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION
AMENDED AND RESTATED BYLAWS
ARTICLE I
Meetings of Shareholders
Section 1.1. Annual
Meeting. The annual meeting of the shareholders, for the election of directors and the transaction of any other proper business, shall
be held at a time and place as the Chairman or President may designate. Notice of such meeting shall be given not less than ten (10) days
or more than sixty (60) days prior to the date thereof, to each shareholder of the Association, unless the Office of the Comptroller of
the Currency (the “OCC”) determines that an emergency circumstance exists. In accordance with applicable law, the sole shareholder
of the Association is permitted to waive notice of the meeting. If, for any reason, an election of directors is not made on the designated
day, the election shall be held on some subsequent day, as soon thereafter as practicable, with prior notice thereof. Failure to hold
an annual meeting as required by these Bylaws shall not affect the validity of any corporate action or work a forfeiture or dissolution
of the Association.
Section 1.2. Special
Meetings. Except as otherwise specially provided by law, special meetings of the shareholders may be called for any purpose, at any
time by a majority of the board of directors (the “Board”), or by any shareholder or group of shareholders owning at least
ten percent of the outstanding stock.
Every such special meeting, unless otherwise provided
by law, shall be called upon not less than ten (10) days nor more than sixty (60) days prior notice stating the purpose of the meeting.
Section 1.3. Nominations
for Directors. Nominations for election to the Board may be made by the Board or by any shareholder.
Section 1.4. Proxies.
Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting
and any adjournments of such meeting and shall be filed with the records of the meeting.
Section 1.5. Record
Date. The record date for determining shareholders entitled to notice and to vote at any meeting will be thirty days before the date
of such meeting, unless otherwise determined by the Board.
Section 1.6. Quorum
and Voting. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting
of shareholders, unless otherwise provided by law, but less than a quorum may adjourn any meeting, from time to time, and the meeting
may be held as adjourned without further notice. A majority of the votes cast shall decide every question or matter submitted to the
shareholders at any meeting, unless otherwise provided by law or by the Articles of Association.
Section 1.7. Inspectors.
The Board may, and in the event of its failure so to do, the Chairman of the Board may appoint Inspectors of Election who shall determine
the presence of quorum, the validity of proxies, and the results of all elections and all other matters voted upon by shareholders at
all annual and special meetings of shareholders.
Section 1.8. Waiver
and Consent. The shareholders may act without notice or a meeting by a unanimous written consent by all shareholders.
Section 1.9. Remote
Meetings. The Board shall have the right to determine that a shareholder meeting not be held at a place, but instead be held solely
by means of remote communication in the manner and to the extent permitted by the General Corporation Law of the State of Delaware.
ARTICLE II
Directors
Section 2.1. Board
of Directors. The Board shall have the power to manage and administer the business and affairs of the Association. Except as expressly
limited by law, all corporate powers of the Association shall be vested in and may be exercised by the Board.
Section 2.2. Term
of Office. The directors of this Association shall hold office for one year and until their successors are duly elected and qualified,
or until their earlier resignation or removal.
Section 2.3. Powers.
In addition to the foregoing, the Board shall have and may exercise all of the powers granted to or conferred upon it by the Articles
of Association, the Bylaws and by law.
Section 2.4. Number.
As provided in the Articles of Association, the Board of this Association shall consist of no less than five nor more than
twenty-five members, unless the OCC has exempted the Association from the twenty-five- member limit. The Board shall consist of a
number of members to be fixed and determined from time to time by resolution of the Board or the shareholders at any meeting
thereof, in accordance with the Articles of Association. Between meetings of the shareholders held for the purpose of electing
directors, the Board by a majority vote of the full Board may increase the size of the Board but not to more than a total of
twenty-five directors, and fill any vacancy so created in the Board; provided that the Board may increase the number of directors
only by up to two directors, when the number of directors last elected by shareholders was fifteen or fewer, and by up to four
directors, when the number of directors last elected by shareholders was sixteen or more. Each director shall own a qualifying
equity interest in the Association or a company that has control of the Association in each case as required by applicable law. Each
director shall own such qualifying equity interest in his or her own right and meet any minimum threshold ownership required by
applicable law.
Section 2.5. Organization
Meeting. The newly elected Board shall meet for the purpose of organizing the new Board and electing and appointing such officers
of the Association as may be appropriate. Such meeting shall be held on the day of the election or as soon thereafter as practicable,
and, in any event, within thirty days thereafter, at such time and place as the Chairman or President may designate. If, at the time fixed
for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting until a quorum is obtained.
Section 2.6. Regular
Meetings. The regular meetings of the Board shall be held, without notice, as the Chairman or President may designate and deem suitable.
Section 2.7. Special
Meetings. Special meetings of the Board may be called at any time, at any place and for any purpose by the Chairman of the Board or
the President of the Association, or upon the request of a majority of the entire Board. Notice of every special meeting of the Board
shall be given to the directors at their usual places of business, or at such other addresses as shall have been furnished by them for
the purpose. Such notice shall be given at least twelve hours (three hours if meeting is to be conducted by conference telephone) before
the meeting by telephone or by being personally delivered, mailed, or electronically delivered. Such notice need not include a statement
of the business to be transacted at, or the purpose of, any such meeting.
Section 2.8. Quorum
and Necessary Vote. A majority of the directors shall constitute a quorum at any meeting of the Board, except when otherwise provided
by law; but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held as adjourned without further notice.
Unless otherwise provided by law or the Articles or Bylaws of this Association, once a quorum is established, any act by a majority of
those directors present and voting shall be the act of the Board.
Section 2.9. Written
Consent. Except as otherwise required by applicable laws and regulations, the Board may act without a meeting by a unanimous written
consent by all directors, to be filed with the Secretary of the Association as part of the corporate records.
Section 2.10. Remote
Meetings. Members of the Board, or of any committee thereof, may participate in a meeting of such Board or committee by means of conference
telephone, video or similar communications equipment by means of which all persons participating in the meeting can hear each other and
such participation shall constitute presence in person at such meeting.
Section 2.11. Vacancies.
When any vacancy occurs among the directors, the remaining members of the Board may appoint a director to fill such vacancy at any regular
meeting of the Board, or at a special meeting called for that purpose.
ARTICLE III
Committees
Section 3.1. Advisory
Board of Directors. The Board may appoint persons, who need not be directors, to serve as advisory directors on an advisory board
of directors established with respect to the business affairs of either this Association alone or the business affairs of a group of affiliated
organizations of which this Association is one. Advisory directors shall have such powers and duties as may be determined by the Board,
provided, that the Board's responsibility for the business and affairs of this Association shall in no respect be delegated or diminished.
Section 3.2. Trust
Audit Committee. At least once during each calendar year, the Association shall arrange for a suitable audit (by internal or external
auditors) of all significant fiduciary activities under the direction of its trust audit committee, a function that will be fulfilled
by the Audit Committee of the financial holding company that is the ultimate parent of this Association. The Association shall note the
results of the audit (including significant actions taken as a result of the audit) in the minutes of the Board. In lieu of annual audits,
the Association may adopt a continuous audit system in accordance with 12 C.F.R. § 9.9(b).
The Audit Committee of the financial holding company
that is the ultimate parent of this Association, fulfilling the function of the trust audit committee:
(1) Must
not include any officers of the Association or an affiliate who participate significantly in the administration of the Association’s
fiduciary activities; and
(2) Must
consist of a majority of members who are not also members of any committee to which the Board has delegated power to manage and
control the fiduciary activities of the Association.
Section 3.3. Executive
Committee. The Board may appoint an Executive Committee which shall consist of at least three directors and which shall have, and
may exercise, to the extent permitted by applicable law, all the powers of the Board between meetings of the Board or otherwise when the
Board is not meeting.
Section 3.4. Trust
Management Committee. The Board of this Association shall appoint a Trust Management Committee to provide oversight of the fiduciary
activities of the Association. The Trust Management Committee shall determine policies governing fiduciary activities. The Trust Management
Committee or such sub-committees, officers or others as may be duly designated by the Trust Management Committee shall oversee the processes
related to fiduciary activities to assure conformity with fiduciary policies it establishes, including ratifying the acceptance and the
closing out or relinquishment of all trusts. The Trust Management Committee will provide regular reports of its activities to the Board.
Section 3.5. Other
Committees. The Board may appoint, from time to time, committees of one or more persons who need not be directors, for such purposes
and with such powers as the Board may determine; however, the Board will not delegate to any committee any powers or responsibilities
that it is prohibited from delegating under any law or regulation. In addition, either the Chairman or the President may appoint, from
time to time, committees of one or more officers, employees, agents or other persons, for such purposes and with such powers as either
the Chairman or the President deems appropriate and proper. Whether appointed by the Board, the Chairman, or the President, any such committee
shall at all times be subject to the direction and control of the Board.
Section 3.6. Meetings,
Minutes and Rules. An advisory board of directors and/or committee shall meet as necessary in consideration of the purpose of
the advisory board of directors or committee, and shall maintain minutes in sufficient detail to indicate actions taken or
recommendations made; unless required by the members, discussions, votes or other specific details need not be reported. An advisory
board of directors or a committee may, in consideration of its purpose, adopt its own rules for the exercise of any of its
functions or authority.
ARTICLE IV
Officers
Section 4.1. Chairman
of the Board. The Board may appoint one of its members to be Chairman of the Board to serve at the pleasure of the Board. The Chairman
shall supervise the carrying out of the policies adopted or approved by the Board; shall have general executive powers, as well as the
specific powers conferred by these Bylaws; and shall also have and may exercise such powers and duties as from time to time may be conferred
upon or assigned by the Board.
Section 4.2. President.
The Board may appoint one of its members to be President of the Association. In the absence of the Chairman, the President shall preside
at any meeting of the Board. The President shall have general executive powers, and shall have and may exercise any and all other powers
and duties pertaining by law, regulation or practice, to the office of President, or imposed by these Bylaws. The President shall also
have and may exercise such powers and duties as from time to time may be conferred or assigned by the Board.
Section 4.3. Vice
President. The Board may appoint one or more Vice Presidents who shall have such powers and duties as may be assigned by the Board
and to perform the duties of the President on those occasions when the President is absent, including presiding at any meeting of the
Board in the absence of both the Chairman and President.
Section 4.4. Secretary.
The Board shall appoint a Secretary, or other designated officer who shall be Secretary of the Board and of the Association, and shall
keep accurate minutes of all meetings. The Secretary shall attend to the giving of all notices required by these Bylaws to be given; shall
be custodian of the corporate seal, records, documents and papers of the Association; shall provide for the keeping of proper records
of all transactions of the Association; shall, upon request, authenticate any records of the Association; shall have and may exercise
any and all other powers and duties pertaining by law, regulation or practice, to the Secretary, or imposed by these Bylaws; and shall
also perform such other duties as may be assigned from time to time by the Board. The Board may appoint one or more Assistant Secretaries
with such powers and duties as the Board, the President or the Secretary shall from time to time determine.
Section 4.5. Other
Officers. The Board may appoint, and may authorize the Chairman, the President or any other officer to appoint, any officer as
from time to time may appear to the Board, the Chairman, the President or such other officer to be required or desirable to transact
the business of the Association. Such officers shall exercise such powers and perform such duties as pertain to their several
offices, or as may be conferred upon or assigned to them by these Bylaws, the Board, the Chairman, the President or such other
authorized officer. Any person may hold two offices.
Section 4.6. Tenure
of Office. The Chairman or the President and all other officers shall hold office until their respective successors are elected and
qualified or until their earlier death, resignation, retirement, disqualification or removal from office, subject to the right of the
Board or authorized officer to discharge any officer at any time.
ARTICLE V
Stock
Section 5.1. The Board
may authorize the issuance of stock either in certificated or in uncertificated form. Certificates for shares of stock shall be in such
form as the Board may from time to time prescribe. If the Board issues certificated stock, the certificate shall be signed by the President,
Secretary or any other such officer as the Board so determines. Shares of stock shall be transferable on the books of the Association,
and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to such person's shares, succeed to all rights of the prior holder of such shares. Each certificate of stock shall
recite on its face that the stock represented thereby is transferable only upon the books of the Association properly endorsed. The Board
may impose conditions upon the transfer of the stock reasonably calculated to simplify the work of the Association for stock transfers,
voting at shareholder meetings, and related matters, and to protect it against fraudulent transfers.
ARTICLE VI
Corporate Seal
Section 6.1. The Association
shall have no corporate seal; provided, however, that if the use of a seal is required by, or is otherwise convenient or advisable pursuant
to, the laws or regulations of any jurisdiction, the following seal may be used, and the Chairman, the President, the Secretary and any
Assistant Secretary shall have the authority to affix such seal:
ARTICLE VII
Miscellaneous Provisions
Section 7.1. Execution
of Instruments. All agreements, checks, drafts, orders, indentures, notes, mortgages, deeds, conveyances, transfers, endorsements,
assignments, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits,
bonds, undertakings, guarantees, proxies and other instruments or documents may be signed, countersigned, executed, acknowledged, endorsed,
verified, delivered or accepted on behalf of the Association, whether in a fiduciary capacity or otherwise, by any officer of the Association,
or such employee or agent as may be designated from time to time by the Board by resolution, or by the Chairman or the President by written
instrument, which resolution or instrument shall be certified as in effect by the Secretary or an Assistant Secretary of the Association.
The provisions of this section are supplementary to any other provision of the Articles of Association or Bylaws.
Section 7.2. Records.
The Articles of Association, the Bylaws as revised or amended from time to time and the proceedings of all meetings of the shareholders,
the Board, and standing committees of the Board, shall be recorded in appropriate minute books provided for the purpose. The minutes of
each meeting shall be signed by the Secretary, or other officer appointed to act as Secretary of the meeting.
Section 7.3. Trust
Files. There shall be maintained in the Association files all fiduciary records necessary to assure that its fiduciary responsibilities
have been properly undertaken and discharged.
Section 7.4. Trust
Investments. Funds held in a fiduciary capacity shall be invested according to the instrument establishing the fiduciary relationship
and according to law. Where such instrument does not specify the character and class of investments to be made and does not vest in the
Association a discretion in the matter, funds held pursuant to such instrument shall be invested in investments in which corporate fiduciaries
may invest under law.
Section 7.5. Notice.
Whenever notice is required by the Articles of Association, the Bylaws or law, such notice shall be by mail, postage prepaid, e- mail,
in person, or by any other means by which such notice can reasonably be expected to be received, using the address of the person to receive
such notice, or such other personal data, as may appear on the records of the Association.
Except where specified otherwise in these Bylaws,
prior notice shall be proper if given not more than 30 days nor less than 10 days prior to the event for which notice is given.
ARTICLE VIII
Indemnification
Section 8.1. The
Association shall indemnify such persons for such liabilities in such manner under such circumstances and to such extent as
permitted by Section 145 of the Delaware General Corporation Law, as now enacted or hereafter amended. The Board may authorize
the purchase and maintenance of insurance and/or the execution of individual agreements for the purpose of such indemnification, and
the Association shall advance all reasonable costs and expenses (including attorneys’ fees) incurred in defending any action,
suit or proceeding to all persons entitled to indemnification under this Section 8.1. Such insurance shall be consistent with
the requirements of 12 C.F.R. § 7.2014 and shall exclude coverage of liability for a formal order assessing civil money
penalties against an institution-affiliated party, as defined at 12 U.S.C. § 1813(u).
Section 8.2.
Notwithstanding Section 8.1, however, (a) any indemnification payments to an institution-affiliated party, as defined at
12 U.S.C. § 1813(u), for an administrative proceeding or civil action initiated by a federal banking agency, shall be
reasonable and consistent with the requirements of 12 U.S.C. § 1828(k) and the implementing regulations thereunder; and
(b) any indemnification payments and advancement of costs and expenses to an institution-affiliated party, as defined at 12
U.S.C. § 1813(u), in cases involving an administrative proceeding or civil action not initiated by a federal banking agency,
shall be in accordance with Delaware General Corporation Law and consistent with safe and sound banking practices.
ARTICLE IX
Bylaws: Interpretation and Amendment
Section 9.1. These Bylaws
shall be interpreted in accordance with and subject to appropriate provisions of law, and may be added to, altered, amended, or repealed,
at any regular or special meeting of the Board.
Section 9.2. A copy of
the Bylaws and all amendments shall at all times be kept in a convenient place at the principal office of the Association, and shall be
open for inspection to all shareholders during Association hours.
ARTICLE X
Miscellaneous Provisions
Section 10.1. Fiscal
Year. The fiscal year of the Association shall begin on the first day of January in each year and shall end on the thirty-first
day of December following.
Section 10.2. Governing
Law. This Association designates the Delaware General Corporation Law, as amended from time to time, as the governing law for its
corporate governance procedures, to the extent not inconsistent with Federal banking statutes and regulations or bank safety and soundness.
***
(February 8, 2021)
Exhibit 6
CONSENT
In accordance with Section 321(b) of
the Trust Indenture Act of 1939, the undersigned, U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION hereby consents that reports of examination
of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: February 20, 2024
| |
By: |
/s/ Daniel Boyers |
| |
|
Daniel Boyers |
| |
|
Vice President |
Exhibit 7
U.S. Bank Trust Company, National Association
Statement of Financial Condition
as of 12/31/2023
($000’s)
| |
|
12/31/2023 |
|
| Assets |
|
|
|
|
| Cash and
Balances Due From Depository Institutions |
|
$ |
1,171,838 |
|
| Securities |
|
|
4,441 |
|
| Federal Funds |
|
|
0 |
|
| Loans & Lease Financing Receivables |
|
|
0 |
|
| Fixed Assets |
|
|
1,409 |
|
| Intangible Assets |
|
|
578,492 |
|
| Other Assets |
|
|
218,268 |
|
| Total Assets |
|
$ |
1,974,448 |
|
| |
|
|
|
|
| Liabilities |
|
|
|
|
| Deposits |
|
$ |
0 |
|
| Fed Funds |
|
|
0 |
|
| Treasury Demand Notes |
|
|
0 |
|
| Trading Liabilities |
|
|
0 |
|
| Other Borrowed Money |
|
|
0 |
|
| Acceptances |
|
|
0 |
|
| Subordinated Notes and Debentures |
|
|
0 |
|
| Other Liabilities |
|
|
255,900 |
|
| Total Liabilities |
|
$ |
255,900 |
|
| |
|
|
|
|
| Equity |
|
|
|
|
| Common and Preferred Stock |
|
|
200 |
|
| Surplus |
|
|
1,171,635 |
|
| Undivided Profits |
|
|
546,713 |
|
| Minority Interest in Subsidiaries |
|
|
0 |
|
| Total Equity Capital |
|
$ |
1,718,548 |
|
| |
|
|
|
|
| Total Liabilities and Equity Capital |
|
$ |
1,974,448 |
|
