FORM S-3/A
As
filed with the Securities and Exchange Commission on May
22, 2009.
Registration No. 333-155698
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ASSOCIATED ESTATES REALTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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Ohio
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34-1747603 |
(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.) |
1 AEC Parkway
Richmond Heights, Ohio 44143-1467
(216) 261-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrants Principal Executive Offices)
Jeffrey I. Friedman
Chairman of the Board, President and Chief Executive Officer
Associated Estates Realty Corporation
1 AEC Parkway
Richmond Heights, Ohio 44143-1467
(216) 261-5000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
With a copy to:
Albert T. Adams, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
(216) 621-0200
Approximate date of commencement of proposed sale to the public: As soon as practicable 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. o
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, please check the following box. þ
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. o
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. o
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the
following box. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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The registrant hereby amends this registration statement on such date or dates as may be necessary
to delay its effective date until the registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
The information contained in this preliminary prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the Securities and
Exchange Commission is effective. This preliminary prospectus shall not constitute an offer to
sell nor the solicitation of an offer to buy nor shall there be any sale of these securities in any
State in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such State.
Subject
to Completion, dated May 22, 2009
Prospectus
5,000,000 Common Shares
ASSOCIATED ESTATES REALTY CORPORATION
Amended and Restated Dividend Reinvestment and Stock Purchase Plan
Our Amended and Restated Dividend Reinvestment and Stock Purchase Plan, referred to herein as
the Plan, applies to our common shares, referred to herein as Shares. Anyone who joins or
participates in the Plan will be considered a Participant.
The Plan is open to our existing shareholders, our employees, the residents of our apartment
communities and anyone who desires to purchase Shares. The Shares trade on the New York Stock
Exchange and the Nasdaq Global Market under the symbol AEC.
The Plan offers a convenient way to invest in Shares. If you currently are participating in
the Plan or are an Associated Estates shareholder at the time you enroll in the Plan, your
purchases of Shares under the Plan will be free of brokerage fees, commissions or service charges.
If you are not a shareholder or an employee at the time you enroll in the Plan, you must pay a fee
of $50 in connection with your first purchase of Shares under the Plan; thereafter, your purchases
of Shares under the Plan will be free of brokerage fees, commissions or service charges. You can
purchase Shares by check or money order, or by scheduling automatic payments, subject to certain
investment limits. This type of investment is called a direct purchase. If you are an employee
who is not a shareholder and you desire to enroll in the Plan, you should contact our Investor
Relations Department prior to enrolling if you intend to purchase Shares by check or money order.
You also may use the dividends on Shares you own to purchase additional Shares. This process is
known as dividend reinvestment. You will receive account statements that show your investments
and account balance under the Plan.
Investing in our Shares involves risks. See Risk Factors beginning on page 1 of this
prospectus and the documents we file with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, incorporated by reference in this prospectus, to read about
factors you should consider before buying our Shares.
If you are already participating in the Plan, no action is required to continue participating.
To join the Plan or make investment elections, you must complete an Authorization Form (attached
at the back of this prospectus) and send it to the Plans administrator, at the address shown on
the Authorization Form. If you own Shares that are registered and held in the name of someone
else, such as a brokerage or securities firm, those Shares can become subject to the Plan in one of
two ways. Either the registered holder can join the Plan on your behalf, or you can have those
Shares re-registered in your name.
The Plan is set forth and explained in question-and-answer format below. You should read this
prospectus carefully and keep it for future reference.
This prospectus is not an offer to sell Shares and it is not soliciting an offer to buy Shares
in any state where the offer or sale is not permitted. Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2009.
PLAN SERVICE FEES
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Enrollment of New Investors
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pg. 1 (Direct Purchase) |
Dividend Reinvestment
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no fee |
Purchase of Shares
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no fee |
Gift or Transfer of Shares
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no fee |
Withdrawal from the Plan
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no fee |
Routine Account Statements
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no fee |
Duplicate Account Statements
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no fee |
Sales of Shares Through the Plan
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pg. 13 |
EX-23.1 |
TABLE OF CONTENTS
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8 |
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9 |
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12 |
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14 |
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16 |
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17 |
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17 |
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18 |
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19 |
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20 |
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20 |
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21 |
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21 |
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21 |
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21 |
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21 |
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FORMS (3) |
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Authorization Form |
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Bank Withdrawal Form |
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Waiver Request Form |
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EX-5 OPINION OF BAKER & HOSTETLER |
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EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS |
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You should rely only on the information that is provided in, or is incorporated by reference
into, this prospectus. We have not authorized anyone to provide you with different or additional
information. We are not offering to sell the Shares, and are not soliciting any purchase of them,
in any jurisdiction where such actions would not be permitted. The effective date of the
information in this prospectus, or in any prospectus supplement, is or will be shown on the cover.
You should not assume that such information is accurate as of any other date.
SUMMARY
The following summary of the Plan may omit certain information that may be important to you.
You should carefully read the entire text of the Plan contained in this prospectus before you
decide to participate in the Plan. Unless otherwise indicated or unless the context otherwise
requires, all references in this prospectus to we, us or our mean Associated Estates Realty
Corporation and its consolidated subsidiaries, and references to Associated Estates refer to
Associated Estates Realty Corporation, including its consolidated subsidiaries.
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Company:
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We are a fully-integrated,
self-administered and self-managed real
estate investment trust, or REIT,
focused primarily on the ownership,
operation, management, acquisition and
disposition of apartment communities.
Our headquarters are located at 1 AEC
Parkway, Richmond Heights, Ohio 44143
and our telephone number is (216)
261-5000. |
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Enrollment:
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If you are currently participating in
the Plan, no action is required to
continue participating. If you are not
currently participating in the Plan,
you can join the Plan by submitting a
completed Authorization Form (attached
at the back of this prospectus).
Please see questions 8 and 9 for more
detailed information. |
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Direct Purchase:
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If you currently are participating in
the Plan or are a shareholder at the
time you enroll in the Plan, you can
buy additional Shares without paying
fees. If you are not a shareholder or
our employee at the time you enroll in
the Plan, you must pay a $50 fee in
connection with your first purchase of
Shares under the Plan; thereafter, you
can buy additional Shares without
paying fees. If you are an employee
who is not a shareholder and you desire
to enroll in the Plan, you should
contact our Investor Relations
Department prior to enrolling if you
intend to purchase Shares by check or
money order. Employees and other
persons subject to our Insider Trading
Policy who desire to purchase and sell
Shares under the Plan are permitted to
do so only in accordance with that
policy. You can invest a minimum of
$100 and up to a maximum of $5,000 in
any one month. Under certain
circumstances, we may approve a written
request to waive the $5,000 per month
maximum amount. Please see questions
14, 17 and 18 for more detailed
information. |
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Reinvestment of Dividends:
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You can reinvest your cash dividends on
all or a portion of the Shares you hold
in certificated form. All dividends on
Shares purchased under or deposited in
the Plan will be reinvested. You will
be able to purchase additional Shares
by reinvesting your dividends, without
paying fees. Please see question 19
for more detailed information. |
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Source of Shares:
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The administrator of the Plan will
purchase Shares directly from us
(either treasury shares or newly-issued
common shares), in the open market or
in privately negotiated transactions
with third parties. Please see
question 23 for more detailed
information. |
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Purchase Price: |
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If the administrator purchases Shares directly from us,
the purchase price for the Shares will be the higher of
the Prior Day Average or the Prior 10-Day Average on
the New York Stock Exchange. Please see question 25 for
more detailed information. |
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The purchase price for Shares purchased by the
administrator in the open market or in privately
negotiated transactions with third parties will equal the
weighted average price paid for such Shares on the
relevant investment date, excluding any brokerage
commission. Please see question 25 for more detailed
information. |
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Tracking Your Investment:
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You will receive from the administrator
statements of the transactions made in
your Plan account. These statements
will provide you with details of the
transactions and will indicate the
Share balance in your Plan account.
Please see question 34 for more
detailed information. |
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Administration:
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National City Bank, now a part of
PNC Financial Services Group, Inc., initially will serve
as the administrator of the Plan. You
should send all correspondence with the
administrator to: |
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National City Bank |
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Reinvestment Services |
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P.O. Box 94946 |
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Cleveland, Ohio 44101-4946 |
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You may call the administrator at (800) 622-6757. Please see question 4 for
more detailed information. |
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RISK FACTORS
You should carefully consider the risks described below and the documents we file with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, incorporated by
reference herein before making an investment decision in our company. The risks and uncertainties
described below are not the only ones facing our company and there may be additional risks that we
do not presently know of or that we currently consider immaterial. All of these risks could
adversely affect our business, financial condition, results of operations and cash flows. As a
result, our ability to pay dividends on, and the market price of, our equity securities may be
adversely affected if any of such risks are realized.
We are subject to risks inherent in the ownership of real estate. We own and manage multifamily
apartment communities that are subject to varying degrees of risk generally incident to the
ownership of real estate. Our financial condition, the value of our properties and our ability to
make distributions to our shareholders will be dependent upon our ability to operate our properties
in a manner sufficient to generate income in excess of operating expenses and debt service charges,
which may be affected by the following risks, some of which are discussed in more detail below:
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changes in the economic climate in the markets in which we own and manage properties,
including interest rates, our ability to consummate the sale of properties pursuant to our
current plan, the overall level of economic activity, the availability of consumer credit
and mortgage financing, unemployment rates and other factors; |
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the ability to refinance debt on favorable terms at maturity; |
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the ability to defease or prepay debt pursuant to our current plan; |
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risks of a lessening of demand for the multifamily units that we own or manage; |
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competition from other available multifamily units and changes in market rental rates; |
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increases in property and liability insurance costs; |
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unanticipated increases in real estate taxes and other operating expenses; |
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weather conditions that adversely affect operating expenses; |
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expenditures that cannot be anticipated such as utility rate and usage increases,
unanticipated repairs and real estate tax valuation reassessments or millage rate
increases; |
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inability to control operating expenses or achieve increases in revenue; |
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the results of litigation filed or to be filed against us; |
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changes in tax legislation; |
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risks of personal injury claims and property damage related to mold claims because of
diminished insurance coverage; |
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catastrophic property damage losses that are not covered by our insurance; |
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the ability to acquire properties at prices consistent with our investment criteria; |
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risks associated with property acquisitions such as environmental liabilities, among
others; |
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changes in or termination of contracts relating to third party management and advisory
business; and |
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risks related to the perception of residents and prospective residents as to the
attractiveness, convenience and safety of our properties or the neighborhoods in which they
are located. |
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We are dependent on rental income from our multifamily apartment communities. If we are unable to
attract and retain residents or if our residents are unable to pay their rental obligations, our
financial condition and funds available for distribution to our shareholders may be adversely
affected.
Our multifamily apartment communities are subject to competition. Our apartment communities are
located in developed areas that include other apartment communities and compete with other housing
alternatives, such as
condominiums, single and multifamily rental homes and owner occupied single and multifamily homes.
In certain markets, such as Florida, failed condominium conversions or properties originally
developed as condominiums are reverting to apartment rentals, creating increasing competition in
those markets. Such competition may affect our ability to attract and retain residents and to
increase or maintain rental rates.
The properties we own are concentrated in Ohio, Michigan, Georgia, Florida, Indiana, Virginia,
Maryland, and Pennsylvania. As of December 31, 2008, approximately 32%, 23%, 14%, 10%, 7%, 6%, 5%
and 3% of the units in properties we own were located in Ohio, Michigan, Georgia, Florida, Indiana,
Virginia, Maryland, and Pennsylvania, respectively. Our performance, therefore, is linked to
economic conditions and the market for available rental housing in the sub-markets in which we
operate. The decline in the market for apartment housing in the various sub-markets in Ohio,
Michigan, where 55% of our units are located, or to a lesser extent the sub-markets in the other
states, may adversely affect our financial condition, results of operations and ability to make
distributions to our shareholders.
Our insurance may not be adequate to cover certain risks. There are certain types of risks,
generally of a catastrophic nature, such as earthquakes, floods, windstorms, acts of war and
terrorist attacks that may be uninsurable, are not economically insurable, or are not fully covered
by insurance. Moreover, certain risks, such as mold and environmental exposures, generally are not
covered by our insurance. Other risks are subject to various limits, sublimits, deductibles and
self insurance retentions, which help to control insurance costs, but which may result in increased
exposures to uninsured loss. Any such uninsured loss could have a material adverse effect on our
business, financial condition and results of operations.
Debt
financing could adversely affect our performance. Thirty-two
of our forty-nine properties are
encumbered by project specific, non-recourse, and except for five properties,
non-cross-collateralized mortgage debt. There is a risk that these properties may not have
sufficient cash flow from operations to pay required principal and interest. We may not be able to
refinance these loans at an amount equal to the loan balance and the terms of any refinancing may
not be as favorable as the terms of existing indebtedness. If we are unable to make required
payments on indebtedness that is secured by a mortgage, the property securing the mortgage may be
foreclosed with a consequent loss of income and value to us.
Real estate investments are generally illiquid, and we may not be able to sell our properties when
it is economically or strategically advantageous to do so. Real estate investments generally
cannot be sold quickly, and our ability to sell properties may be affected by market conditions.
We may not be able to further diversify or vary our portfolio in accordance with our strategies or
in response to economic or other conditions. In addition, provisions of the Internal Revenue Code,
as amended (the Code) limit the ability of a REIT to sell its properties in some situations when
it may be economically advantageous to do so, thereby potentially adversely affecting our ability
to make distributions to our shareholders.
Our access to corporate public bond markets is limited. Substantially all of our current debt is
either secured or bank debt under our revolving credit facility because of our limited access to
corporate public bond markets.
Litigation may result in unfavorable outcomes. Like many real estate operators, we are frequently
involved in lawsuits involving premises liability claims, housing discrimination claims and alleged
violations of landlord-tenant laws, which may give rise to class action litigation or governmental
investigations. Any material litigation not covered by insurance, such as a class action, could
result in substantial costs being incurred.
Our financial results may be adversely impacted if we are unable to sell properties and employ the
proceeds in accordance with our strategic plan. Our ability to pay down debt, reduce our interest
costs, and acquire properties is impacted by our ability to sell the properties we have selected
for disposition at the prices and within the deadlines established for each respective property.
Moreover, if we are unable to acquire properties at prices consistent with our investment criteria,
we may reduce or discontinue property sales.
The costs of complying with laws and regulations could adversely affect our cash flow. Our
properties must comply with Title III of the Americans with Disabilities Act (the ADA) to the
extent that they are public accommodations or commercial facilities as defined in the ADA. The
ADA does not consider apartment communities to be public accommodations or commercial facilities,
except for portions of such communities that are open to the public. In addition, the Fair Housing
Amendments Act of 1988 (the FHAA) requires apartment
communities first occupied after March 13, 1990, to be accessible to the handicapped. Other laws
also require apartment communities to be handicap accessible. Noncompliance with these laws could
result in the imposition of fines or an award of damages to private litigants. We have been
subject to lawsuits alleging violations of handicap design laws in connection with certain of our
developments.
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Under various federal, state and local laws, an owner or operator of real estate may be liable for
the costs of removal or remediation of certain hazardous or toxic substances on, under or in the
property. This liability may be imposed without regard to whether the owner or operator knew of,
or was responsible for, the presence of the substances. Other law imposes on owners and operators
certain requirements regarding conditions and activities that may affect human health or the
environment. Failure to comply with applicable requirements could complicate our ability to lease
or sell an affected property and could subject us to monetary penalties, costs required to achieve
compliance and potential liability to third parties. We are not aware of any material
noncompliance, liability or claim relating to hazardous or toxic substances or other environmental
matters in connection with any of our properties. Nonetheless, it is possible that material
environmental contamination or conditions exist, or could arise in the future in the apartment
communities or on the land upon which they are located.
We are subject to risks associated with development, acquisition and expansion of multifamily
apartment communities. Development projects, acquisitions and expansions of apartment communities
are subject to a number of risks, including:
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availability of acceptable financing; |
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competition with other entities for investment opportunities; |
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failure by our properties to achieve anticipated operating results; |
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construction costs of a property exceeding original estimates; |
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delays in construction; and |
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expenditure of funds on, and the devotion of management time to, transactions that may
not come to fruition. |
We impose stock ownership limitations. With certain limited exceptions, our Second Amended and
Restated Articles of Incorporation, as amended and supplemented to date, prohibit the ownership of
more than 4.0% of the outstanding common shares and more than 9.8% of the shares of any series of
any class of our preferred shares by any person, unless we grant a waiver. Absent such a waiver,
any shares owned in excess of such ownership limit are subject to repurchase by us and to other
consequences as set forth in our Amended and Restated Articles of Incorporation. All shares of
stock issued by the Company are subject to the following restrictions, whether such shares are in
certificated or uncertificated form:
The Common Shares represented by this certificate are subject to restrictions on transfer for
the purpose of preserving the Corporations status as a Real Estate Investment Trust under the
Internal Revenue Code of 1986, as amended. Subject to certain provisions of the Corporations
Amended and Restated Articles of Incorporation, no Person may Beneficially Own Common Shares in
excess of 4.0% of the outstanding Common Shares of the Corporation (unless such Person is an
Existing Holder) and no Person (other than an Existing Holder who Constructively Owns in excess
of 9.8% of the Common Shares immediately following the consummation of the Initial Public
Offering) may Constructively Own Common Shares in excess of 9.8% of the outstanding Common
Shares of the Corporation. Any Person who attempts to Beneficially Own or Constructively Own
Common Shares in excess of the above limitations must immediately notify the Corporation. All
capitalized terms in this legend have the meanings defined in the Corporations Amended and
Restated Articles of Incorporation, a copy of which, including the restrictions of transfer,
will be sent without charge to each shareholder who so requests. If the restrictions on
transfer are violated, certain of the Common Shares represented may be subject to repurchase by
the Corporation on the terms and conditions set forth in the Corporations Amended and Restated
Articles of Incorporation.
We also have a shareholders rights plan, which may be triggered if any person or group becomes the
beneficial owner of, or announces an offer to acquire 15.0% or more of our common shares. We are
domiciled in the State of Ohio, where various state statutes place certain restrictions on takeover
activity. These restrictions are likely to have the effect of precluding acquisition of control of
us without our consent even if a change in control is in the interests of shareholders. All shares
of stock issued by the Company include the following reference to such shareholders rights
agreement whether such shares are in certificated or uncertificated form:
This certificate also evidences and entitles the holder hereof to certain Rights as set forth
in an Amended and Restated Shareholder Rights Agreement between Associated Estates Realty
Corporation, an Ohio corporation (the Company), and National City Bank, a national banking
association, as rights agent (the Rights Agent), dated as of December 30, 2008 (as amended,
supplemented or otherwise modified from time to time, the Rights Agreement), the terms of
which are incorporated by reference herein and a copy of which is on file at the principal
offices of the Company and the stock transfer administration office of the Rights Agent. The
Company will mail a copy of the Rights Agreement without charge to the holder of this
certificate within five days after the receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, the Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Company may redeem the
Rights at a redemption price of $0.01 per Right, subject to adjustment, under the terms of the
Rights Agreement. Under certain circumstances, Rights issued to or held by Acquiring Persons or
by any Affiliates or Associates thereof (as defined in the Rights Agreement), and any subsequent
holder of such Rights, may become null and void. The Rights are not exercisable, and are void
so long as held, by a holder in any jurisdiction where the requisite qualification to the
issuance to such holder, or the exercise by such holder, of the Rights in such jurisdiction has
not been obtained.
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We may fail to qualify as a REIT and our shareholders may incur tax liability as a result.
Commencing with our taxable year ending December 31, 1993, we have operated in a manner so as to
permit us to qualify as a REIT under the Code, and we intend to continue to operate in such a
manner. Although we believe that we will continue to operate as a REIT, no assurance can be given
that we will remain qualified as a REIT. If we were to fail to qualify as a REIT in any taxable
year, we would not be allowed a deduction for distributions to our shareholders in computing our
taxable income and would be subject to federal income tax (including any applicable alternative
minimum tax) on our taxable income at regular corporate rates. Unless we are entitled to relief
under certain Code provisions, we also would be disqualified from treatment as a REIT for the four
taxable years following the year during which REIT qualification was lost. As a result, the cash
available for distribution to our shareholders could be reduced or eliminated for each of the years
involved.
We are subject to control by our directors and officers. Our directors and executive officers and
some members of their respective families owned approximately 15.0% of our outstanding common
shares as of December 31, 2008. Accordingly, those persons have substantial influence over us and
the outcome of matters submitted to our shareholders for approval.
We depend on our key personnel. Our success depends to a significant degree upon the continued
contribution of key members of our management team, who may be difficult to replace. The loss of
services of these executives could have a material adverse effect on us. There can be no assurance
that the services of such personnel will continue to be available to us. Our Chairman of the
Board, President and Chief Executive Officer, Mr. Jeffrey I. Friedman, is a party to an employment
agreement with us. Other than Mr. Friedman, the Company does not have employment agreements with
key personnel. We do not hold key-man life insurance on any of our key personnel.
THE COMPANY
We are a fully-integrated, self-administered and self-managed real estate investment trust, or
REIT, focused primarily on the ownership, operation, management, acquisition and disposition of
apartment communities. As of March 31, 2009, our portfolio
consisted of 52 apartment
communities containing 13,192 units primarily located in the Midwest, Mid-Atlantic and Southeast. We operate
as a REIT for federal income tax purposes and own two taxable REIT subsidiaries that provide
management and other services to us and to third parties.
As
of March 31, 2009, our portfolio consisted of: (i) 49 apartment communities containing
12,576 units in eight states that are wholly owned, either directly or indirectly through
subsidiaries; (ii) three
apartment communities that we manage for third party owners consisting of 616 units and ancillary
commercial facilities; and (iii) a 186-unit apartment community and a commercial property containing
approximately 145,000 square feet that we asset manage for
a government sponsored pension fund.
Our headquarters are located at 1 AEC Parkway, Richmond Heights, Ohio 44143 and our telephone
number is (216) 261-5000.
The foregoing information concerning us does not purport to be comprehensive. For additional
information concerning our business and affairs, including capital requirements and external
financing plans, pending legal and regulatory proceedings and descriptions of certain laws and
regulations to which we may be subject, please refer to the documents incorporated by reference
into this prospectus.
- 6 -
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data is derived from our audited consolidated
financial statements for the five years ended December 31, 2008 and reflects the following
revisions to retrospectively incorporate the adoption of new accounting standards that were
effective on January 1, 2009:
|
|
Our computations of basic and diluted earnings per share reflect the retrospective
application of Financial Accounting Standards Board Staff Position FSP EITF 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities, which was effective for us on January 1, 2009. This FSP clarifies that certain
nonvested share based payment awards containing nonforfeitable dividend rights are
participating securities and are therefore required to be included in the computations of
basic and diluted earnings per share. This FSP requires retrospective application to all
periods presented. As a result, Net income (loss) attributable to AERC applicable to common
shares and the computation of Earnings per common share Basic and Diluted have been
adjusted for such participating securities. |
|
|
In December 2007, the Financial Accounting Standards Board (FASB) issued Statement No.
160, Noncontrolling Interests in Consolidated Financial Statements an Amendment of ARB No.
51 (SFAS 160), which establishes and expands accounting and reporting standards for
minority interests in a subsidiary and the deconsolidation of a subsidiary. SFAS 160 requires
income or loss to be allocated to noncontrolling interest after the determination of net
income in arriving at net income attributable to AERC. SFAS 160 was effective January 1,
2009, and requires retrospective application. The revision to the selected consolidated
financial data did not result in a change in the classification or measurement of our
noncontrolling interest on our consolidated balance sheets, nor did it result in a change in the
net income (loss) attributable to AERC. The change in the definition of net income (loss)
required by SFAS 160 below related to the retrospective application of SFAS 160 was considered
immaterial to all periods presented. |
The data should be read in conjunction with our consolidated financial statements, related
notes and other financial information incorporated by reference herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(In thousands except per share amounts) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenue |
|
$ |
132,089 |
|
|
$ |
117,705 |
|
|
$ |
106,597 |
|
|
$ |
98,745 |
|
|
$ |
91,846 |
|
Management and service operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees, reimbursements and other |
|
|
1,784 |
|
|
|
10,990 |
|
|
|
11,689 |
|
|
|
11,723 |
|
|
|
13,400 |
|
Painting services |
|
|
1,010 |
|
|
|
2,218 |
|
|
|
1,078 |
|
|
|
1,094 |
|
|
|
6,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
134,883 |
|
|
|
130,913 |
|
|
|
119,364 |
|
|
|
111,562 |
|
|
|
111,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
(109,499 |
) |
|
|
(107,249 |
) |
|
|
(98,691 |
) |
|
|
(92,699 |
) |
|
|
(89,701 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
135 |
|
|
|
430 |
|
|
|
652 |
|
|
|
602 |
|
|
|
297 |
|
Interest expense |
|
|
(36,489 |
) |
|
|
(40,131 |
) |
|
|
(46,808 |
) |
|
|
(35,274 |
) |
|
|
(32,067 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before gain on disposition of investment,
equity in net income (loss) of joint ventures, and income
from discontinued operations |
|
|
(10,970 |
) |
|
|
(16,037 |
) |
|
|
(25,483 |
) |
|
|
(15,809 |
) |
|
|
(10,078 |
) |
Gain on disposition of investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150 |
|
|
|
|
|
Equity in net income (loss) of joint ventures |
|
|
1,502 |
|
|
|
(258 |
) |
|
|
(462 |
) |
|
|
(644 |
) |
|
|
(923 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations |
|
|
(9,468 |
) |
|
|
(16,295 |
) |
|
|
(25,945 |
) |
|
|
(16,303 |
) |
|
|
(11,001 |
) |
Income from discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(1,054 |
) |
|
|
5,649 |
|
|
|
(1,066 |
) |
|
|
4,036 |
|
|
|
4,706 |
|
Gain on disposition of properties |
|
|
45,202 |
|
|
|
20,864 |
|
|
|
54,093 |
|
|
|
48,536 |
|
|
|
9,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
|
44,148 |
|
|
|
26,513 |
|
|
|
53,027 |
|
|
|
52,572 |
|
|
|
14,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
34,680 |
|
|
|
10,218 |
|
|
|
27,082 |
|
|
|
36,269 |
|
|
|
3,387 |
|
Net loss attributable to noncontrolling redeemable interest |
|
|
(53 |
) |
|
|
(53 |
) |
|
|
(61 |
) |
|
|
(63 |
) |
|
|
(63 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AERC |
|
|
34,627 |
|
|
|
10,165 |
|
|
|
27,021 |
|
|
|
36,206 |
|
|
|
3,324 |
|
Preferred share dividends |
|
|
(4,655 |
) |
|
|
(4,924 |
) |
|
|
(5,046 |
) |
|
|
(5,130 |
) |
|
|
(5,805 |
) |
Original issuance costs related to
repurchase/redemption of preferred shares |
|
|
(143 |
) |
|
|
(58 |
) |
|
|
|
|
|
|
(2,163 |
) |
|
|
|
|
Discount/(premium) on preferred share repurchase |
|
|
2,289 |
|
|
|
(114 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Allocation to participating securities |
|
|
(730 |
) |
|
|
(338 |
) |
|
|
(770 |
) |
|
|
(623 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AERC
applicable to common shares |
|
$ |
31,388 |
|
|
$ |
4,731 |
|
|
$ |
21,205 |
|
|
$ |
28,290 |
|
|
$ |
(2,481 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share Basic and Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations attributable
to AERC applicable to common shares |
|
$ |
(0.74 |
) |
|
$ |
(1.27 |
) |
|
$ |
(1.82 |
) |
|
$ |
(1.23 |
) |
|
$ |
(0.87 |
) |
Income from discontinued operations |
|
|
2.67 |
|
|
|
1.55 |
|
|
|
3.07 |
|
|
|
2.71 |
|
|
|
0.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AERC
applicable to common shares |
|
$ |
1.93 |
|
|
$ |
0.28 |
|
|
$ |
1.25 |
|
|
$ |
1.48 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
16,262 |
|
|
|
16,871 |
|
|
|
17,023 |
|
|
|
19,162 |
|
|
|
19,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
0.68 |
|
|
$ |
0.68 |
|
|
$ |
0.68 |
|
|
$ |
0.68 |
|
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 7 -
THE PLAN
The Plan is set forth in its entirety below. You should keep this prospectus for future
reference, and read it carefully before participating in the Plan.
Purpose
1. What Is the Purpose of the Plan?
The primary purpose of the Plan is to provide you with a convenient and economical way to
invest in Associated Estates, either by making a direct purchase of Shares or by reinvesting
dividends on your Shares. A
secondary purpose of the Plan is to provide us another way to raise additional capital for a
variety of corporate purposes.
Advantages and Possible Disadvantages
2. What Are the Advantages of the Plan?
Advantages of the Plan include the following:
|
|
|
No Brokerage Fees
or Commissions for Shareholders |
|
If you currently are participating in the Plan or are a shareholder
or employee at the time you enroll in the Plan, you will not pay any
brokerage fees, commissions or service charges when you purchase
Shares under the Plan. |
|
|
|
Automatic Purchase
and Reinvestment
|
|
In addition to purchasing Shares by check or money order, you can
purchase Shares automatically through: |
|
|
|
Scheduled bank withdrawals; |
|
|
|
|
Employee payroll deduction (if you are our employee); or |
|
|
|
|
Full or partial dividend reinvestment. |
|
|
|
Account Statements
|
|
You will receive account statements that show your investments under
the Plan and help simplify your record-keeping. |
3. What Are the Possible Disadvantages of the Plan?
You also should consider the possible disadvantages of the Plan. First, the price of the
Shares may fluctuate between the date of your investment election and the date when Shares are
purchased for your account. Such fluctuations may change the number of Shares you receive. When
you make a direct purchase of Shares, including as a result of a payroll deduction, your payment
will be held without interest until the purchase occurs.
Second, your investment elections, and any changes to or cancellations of your investment
elections, must be received by the administrator within certain time limits. If these time limits
are not met, a significant delay may occur before your investment elections can be implemented.
Please see the answer to question 12 for further details.
Third, dividends on your Shares will represent income to you for federal income tax purposes,
whether those dividends are reinvested or not. If you receive your dividends in cash, the cash
payment will enable you to pay the taxes owed on those dividends. By reinvesting dividends,
however, you will reduce the cash that is available for such tax payments. Furthermore,
participating in the Plan will increase the number of Shares you own and the total amount of your
dividends. Thus, participating in the Plan will increase the income you must report for federal
income tax purposes. Please see the answer to question 41 and your tax advisor for further
details.
Administration
4. Who Administers the Plan?
The
administrator of the Plan is National City Bank, now a part of PNC
Financial Services Group, Inc. The administrator also serves as our
corporate transfer agent, registrar, dividend disbursing agent, and distribution agent. As
distribution agent, National City Bank will deliver all prospectuses for the Plan and will serve as
our broker-dealer or our state securities agent, as necessary. The address and telephone number of
the Plan administrator and the distribution agent are as follows:
National City Bank
Reinvestment Services
P.O. Box 94946
Cleveland, Ohio 44101-4946
Telephone: 800-622-6757
- 8 -
If you would like an additional copy of this prospectus at any time, please contact National
City Bank. We reserve the right to change the administrator or distribution agent for the Plan at
any time, with or without notice to Participants.
5. What Are the Responsibilities of the Administrator?
The administrator is responsible for each of the following actions under the Plan:
|
|
|
establishing and maintaining your personal account; |
|
|
|
|
processing your investment elections; |
|
|
|
|
collecting your payments, including automatic bank withdrawals; |
|
|
|
|
purchasing Shares for your account; |
|
|
|
|
reinvesting dividends on your Shares; |
|
|
|
|
sending you account statements and investment forms (such as Authorization Forms); |
|
|
|
|
sending you year-end tax statements on Form 1099; |
|
|
|
|
at your request, selling Shares in your account; and |
|
|
|
|
answering your general questions about the administration of the Plan. |
The administrator may perform its services under the Plan by engaging other companies as its
nominees or agents.
Eligibility
6. Who Is Eligible to Participate in the Plan?
Except as described below, the Plan is generally open to all of our current shareholders and
employees, to all residents of our apartment communities and to anyone who wants to invest in the
Shares. Participants can be individuals, trusts, retirement plans, corporations or other entities.
7. Who Is Not Eligible to Participate in the Plan?
The Plan is not intended for those individuals or investors who are not purchasing Shares for
investment purposes or whose actions may distort, destabilize or manipulate the price or trading
volume of the Shares. In addition, we cannot allow any actions that would terminate, or would
create a risk of terminating, our status as a REIT for federal income tax purposes. Due to the
variety of improper actions, we reserve the right to deny, modify, suspend or terminate
participation in the Plan by anyone for any reason, if we determine, in our sole judgment, that
doing so would be in the best interests of Associated Estates, the Plan or our shareholders.
The Plan may be unavailable to people who reside in certain jurisdictions. If you reside in a
jurisdiction where the Shares offered under the Plan, or the persons involved in the offering, are
not registered under applicable securities laws or do not qualify for an exemption from
registration, you will not be eligible to participate in the Plan.
Participation
8. How Does an Eligible Investor Participate in the Plan?
Participation in the Plan is voluntary. If you are already participating in the Plan, you
will remain a Participant and the Plan (as amended and restated herein) will apply to you without
any action on your part. If you are not already participating in the Plan, to join you must
complete an Authorization Form and return it to the administrator. A copy of the Authorization
Form is included at the back of this prospectus. You also may request
- 9 -
an Authorization Form from the administrator. You may withdraw from the Plan at any time, as
explained in the answer to question 40.
9. How Does an Eligible Investor Join the Plan if His or Her Shares Are Held in the Name of a
Brokerage or Securities Firm?
If you beneficially own Shares that are registered in the name of a brokerage or securities
firm or other nominee, your Shares are not subject to the Plan.
Shares you own beneficially, but not of record, can become subject to the Plan in one of two
ways. Either the record holder (the brokerage or securities firm or other nominee) must join the
Plan on your behalf, or you must have those Shares re-registered in your name. You should ask the
record holder about any fees that it may charge for re-registering the Shares. We reserve the
right to deny participation in the Plan to any record holder who insists on terms or conditions
that, in our sole judgment, would cause us to incur an excessive cost or burden or would be
inconsistent with the purposes of the Plan.
If the record holder joins the Plan on your behalf, the record holder must comply with the
Plan in all respects. As a result, you generally would have no direct involvement with the Plan or
the administrator, and would need to communicate with the record holder instead.
To simplify this description of the Plan, most of the remaining answers will be written from
your perspective, as a Participant in your own name. Please keep in mind, however, that references
below to you and your may also refer to any record holder acting on your behalf.
10. What Investment Elections Are Available Under the Plan?
As discussed in further detail below, you can purchase Shares in two separate ways:
|
|
|
Direct Purchase
|
|
You may purchase Shares by check or money order or
by automatic withdrawal from your bank account. If
you are a shareholder at the time of such purchase,
you will not incur fees or commissions in connection
with the purchase. If you are not a shareholder or
our employee, you will incur a fee of $50 at the
time of your first purchase of Shares. If you are
an employee who is not a shareholder and you desire
to enroll in the Plan, you should contact our
Investor Relations Department prior to enrolling if
you intend to purchase Shares by check or money
order. Employees and other persons subject to our
Insider Trading Policy who desire to purchase and
sell Shares under the Plan are permitted to do so
only in accordance with that policy. |
|
|
|
|
|
Our employees may purchase Shares through automatic
payroll deduction. |
|
|
|
|
|
Direct purchases are subject to a minimum purchase
of $100, and a maximum purchase of $5,000, per month
(unless you receive a waiver of the maximum amount,
as discussed below in the answer to question 18). |
|
|
|
Dividend Reinvestment
|
|
You may purchase additional Shares by automatically
reinvesting the dividends that are paid on the
Shares you already own. |
|
|
|
|
|
You may reinvest the dividends on all of your
current certificated Shares and all future Shares
you may receive. |
|
|
|
|
|
You may also limit dividend reinvestment to some of
your current certificated Shares and all additional
Shares received from reinvestment. |
- 10 -
|
|
|
|
|
Dividend reinvestment is not subject to any special
minimum or maximum dollar amount. |
11. When Do Investment Elections Take Effect?
All investment elections under the Plan take effect on periodic Investment Dates. The
Investment Dates generally occur as follows:
|
|
|
Direct Purchase
|
|
1st day of each month* |
|
|
|
Dividend Reinvestment
|
|
Quarterly on the 1st day of February, May, August and November* |
|
|
|
* |
|
If the indicated date falls on a weekend or holiday, the Investment Date will occur on the
next trading day for the Shares. |
We intend to have the Investment Date coincide with our dividend payment dates. If we adjust
our dividend schedule in the future, we may adjust our Investment Date schedule accordingly.
12. When Must Investment Elections, and Any Changes or Cancellations, Be Received?
Your investment election, and any changes to or cancellations of your investment election,
must be processed by the administrator and are subject to the following time limits:
Direct Purchase: The administrator must receive your investment election instructions (and
payment for Shares to be purchased) at least three business days before the next monthly Investment
Date if you want your instructions to take effect on that Investment Date.
Dividend Reinvestment: The administrator must receive your investment election instructions
before the dividend record date for the next quarterly Investment Date if you want your
instructions to take effect on that Investment Date. The record date usually occurs 15 calendar
days before the quarterly Investment Date.
Late instructions will not take effect on the next Investment Date. Instead, late
instructions will be implemented on a future Investment Date, which will be the earliest possible
Investment Date that is appropriate for the type of investment you are making. Any payment you
have included with a late instruction will be held by the administrator for no more than 35 days,
without interest, until it can be used to purchase Shares on a future Investment Date. If within
35 days a payment is not used to purchase Shares, the payment will be returned to you, without
interest.
We reserve the right to waive the time limits described above on a case-by-case basis, in our
sole discretion. Requests for waivers must be in writing and generally will be denied in the
absence of extraordinary circumstances.
13. How Does a Participant Change or Cancel an Investment Election Under the Plan?
To change or cancel your investment election under the Plan, you must complete an
Authorization Form with your new election and return the Authorization Form to the administrator.
Prior elections for automatic actions, such as bank withdrawal or dividend reinvestment, will
remain in effect unless they are specifically changed or canceled on your new Authorization Form.
Your new election will take effect in accordance with the rules that apply to all investment
elections.
- 11 -
Direct Purchase
14. How Are Direct Purchases of Shares Made?
You can make a direct purchase of Shares by indicating your method of payment on an
Authorization Form and sending that Form to the administrator, along with any necessary attachments
(such as your check or money order). A copy of the Authorization Form is attached at the back of
this prospectus. You also may request an Authorization Form from the administrator. The payment
elections are as follows:
|
|
|
Check or Money Order |
|
The check or money order should be made
payable to: National City Bank. |
|
|
|
|
|
Please allow sufficient time for your check to
clear your bank to avoid any delay in
processing your purchase election. |
|
|
|
Automatic Bank Withdrawal
|
|
Withdrawals from your bank account will be
made monthly in the amount you specify, on or
about the 20th day of the month preceding the
next Investment Date. If you make this
election, you must also complete a Bank
Withdrawal Form (attached at the back of this
prospectus) and return it to the
administrator, along with a voided check for
your bank account. |
|
|
|
Automatic Payroll Deduction |
|
Automatic payroll deductions may be authorized
by our employees. Deductions will be made
bi-weekly in the amount you specify, but that
amount may not be less than $50. These
deductions will be made from the net pay that
remains after all taxes and related amounts
have been withheld. |
Payments must be denominated in United States dollars. Please do not send cash. Checks drawn
on foreign banks (which must be denominated in United States dollars) may be subject to collection
fees, which must be collected before the checks can be accepted by the administrator as payment.
When you make a direct purchase, including as a result of a payroll deduction, your payment will be
held without interest until the purchase occurs.
15. How Long Will Automatic Payment Elections Remain in Effect?
An automatic payment election, which may involve either bank withdrawal or payroll deduction,
will remain in effect until you change or cancel it. You do not need to repeat the same election
to maintain it. This feature allows you to make automatic investments in the Shares, without
having to write additional checks or complete new Authorization Forms.
16. How Does a Participant Cancel an Automatic Payment Election?
If you have elected to make direct purchases based on automatic withdrawal from your bank
account or automatic payroll deduction, you can cancel your election by choosing that option on a
new Authorization Form, and returning the Form to the administrator. Your cancellation will take
effect in accordance with the time limits described in the answer to question 12.
17. Do Any Investment Limits Apply to a Direct Purchase of Shares?
When you make a direct purchase of Shares, your payment must satisfy the following limits on
each Investment Date:
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Minimum Direct Purchase Per Month |
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$ |
100 |
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Maximum Direct Purchase Per Month |
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$ |
5,000 |
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If your payment exceeds the maximum direct purchase limit, the administrator will invest the
maximum direct purchase amount and return the excess portion of your payment, without interest. If
your payment is less than the minimum direct purchase amount, the administrator will return your
payment, without interest.
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18. Will Associated Estates Waive the Maximum Direct Purchase Limit in Certain Cases?
We reserve the right to waive the maximum direct purchase limit and to accept payments above
that limit, in our sole discretion. Any waiver granted by us will be limited to the occasion on
which it occurred and will not be construed as a waiver on any future occasion.
To request a waiver, you must complete a Waiver Request Form (attached at the back of this
prospectus) and send it to us care of the administrator. We will notify both you and the
administrator of our decision.
We may decline the portion of your payment above the maximum direct purchase limit either in
whole or in part. If payment has been included with your Waiver Request Form, the administrator
will promptly return the declined portion to you, without interest. Our decision to decline
payment in excess of the maximum direct purchase limit will depend on any Threshold Price that we
may establish from time to time, as discussed below in the answer to question 26.
Dividend Reinvestment
19. What Are the Dividend Reinvestment Options?
You may reinvest the dividends on your Shares by selecting one of the available options on the
Authorization Form and sending that Form to the administrator. Your options are explained below:
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Full Dividend Reinvestment
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If you elect full dividend
reinvestment, the dividends on all
of your current and future Shares
participating in the Plan (including
any fractional Shares) will be
reinvested for the purchase of
additional Shares. |
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Partial Dividend Reinvestment
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If you elect partial dividend
reinvestment, you must specify a
whole number of certificated Shares
to start the dividend reinvestment
process. Dividends on that number
of Shares will be reinvested, on the
next available Investment Date, for
the purchase of additional Shares.
Afterward, while your election
remains in effect, dividends will be
reinvested on that same number of
Shares, and on all additional Shares
you have received from your
election. |
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Cancel Dividend Reinvestment
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You may cancel dividend reinvestment
at any time. Once the cancellation
takes effect, you will receive
dividend payments by check. |
If your election regarding dividend reinvestment is unclear (for example, if you fail to
provide required information or make more than one election on the same Authorization Form), we
will assume that you do not want to reinvest any dividends.
Dividend reinvestment is not subject to any special minimum or maximum dollar amount.
20. How Long Does an Election for Dividend Reinvestment Remain in Effect?
Once you make an election for dividend reinvestment, your election will remain in effect until
you change or cancel it. You do not need to repeat the same election to maintain it. This feature
allows you to make automatic investments in the Shares on each applicable Investment Date, without
having to complete new Authorization Forms.
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Costs
21. Do Fees or Commissions Apply When Shares Are Purchased Under the Plan?
Once you are a shareholder, you will not pay any brokerage fees, commissions or service
charges when you purchase Shares under the Plan, regardless of whether you do so by direct purchase
or dividend reinvestment. If you are not a shareholder or our employee at the time you enroll in
the Plan, you will incur a $50 fee in connection with your first purchase of Shares under the Plan.
If you are an employee who is not a shareholder and you desire to enroll in the Plan, you should
contact our Investor Relations Department prior to enrolling if you intend to purchase Shares by
check or money order.
22. What Actions Will Result in Fees or Commissions Under the Plan?
If you instruct the administrator to sell your Shares, the administrator will require the
services of a broker-dealer and you will be charged a sales commission. Please see the answer to
question 30 for further details.
Source and Pricing of Shares
23. What Is the Source of the Shares Purchased Under the Plan?
The administrator will use all dividends reinvested through the Plan and all cash from direct
purchases to buy Shares directly from us, on the open market, in privately negotiated transactions
with third parties, or a combination of the foregoing sources, at our discretion. Shares purchased
directly from us will consist of authorized but unissued Shares (or Shares we hold in treasury).
As to purchases of Shares that the administrator makes under the Plan, the administrator, or a
broker that the administrator selects, will determine:
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the exact timing of open market purchases; |
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the number of Shares, if any, that the administrator purchases on any one day or at
any time of that day; |
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the prices for the Shares that the administrator pays; |
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the markets on which the administrator makes such purchases; and |
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the persons (including brokers and dealers) from or through which the administrator
makes such purchases. |
All Shares under the Plan will be adjusted to reflect any stock split, stock dividend or stock
rights transaction that occurs with respect to the Shares.
24. When Purchases Occur Under the Plan, How Is the Number of Purchased Shares Determined?
When you purchase Shares under the Plan, either by direct purchase or dividend reinvestment,
the number of Shares you receive is computed as follows:
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Your Payments + Your
Reinvested Dividends Price Per Share |
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A fractional number of Shares, rounded to three decimal places, will be issued to the extent
necessary.
- 14 -
25. How Are Share Prices Determined?
If the administrator purchases Shares directly from us, a simple formula is used to determine
the price for each Share purchased under the Plan on a particular Investment Date. The price is
determined by comparing the Prior Day Average and the Prior 10-Day Average, and then taking the
higher amount.
The Prior Day Average is the average of the high and low selling prices on the New York Stock
Exchange for the Shares on the last trading day before the applicable Investment Date. In general,
the Prior 10-Day Average is the average of the selling prices on the New York Stock Exchange at
closing (not the daily highs or lows) on the 10 trading days prior to the applicable Investment
Date. However, the Prior 10-Day Average is subject to a cap that equals 105% of the Prior Day
Average.
If the administrator purchases Shares in the open market or in privately negotiated
transactions, the price for each Share will equal the weighted average purchase price paid by the
administrator for such Shares, excluding any brokerage commission, computed up to three decimal
places, if necessary. The administrator will purchase such Shares as soon as is practical on or
after an Investment Date.
The high and low selling prices for the Shares currently appear in a number of publications.
The high and low selling prices will be based on a daily report received by the administrator from
Reuters.
26. Is the General Pricing Formula Subject to Other Changes?
We reserve the right to establish a Threshold Price from time to time for direct purchases
of Shares that exceed the maximum direct purchase limit. Such purchases will not be permitted
unless we grant a waiver of the maximum direct purchase limit, as discussed above in the answer to
question 18. If we establish a Threshold Price, we will base it on our review of current market
conditions and other relevant factors. To confirm the existence or amount of a Threshold Price,
please contact the administrator.
A Threshold Price would affect the calculations made under the general pricing formula
discussed above. Specifically, in calculating the Prior 10-Day Average, a daily selling price
would be excluded from the calculation if it is less than the Threshold Price.
If daily selling prices are excluded in calculating the Prior 10-Day Average because the
selling prices are less than the Threshold Price, we would decline a portion of your payment above
the maximum direct purchase limit in proportion to the number of days excluded from the
calculation. The example below explains this process:
Example. Suppose you want to purchase Shares by making a direct payment of $12,000 in one
month, and that you request a waiver to do so. This amount is $7,000 more than the maximum direct
purchase limit. Next, assume that we grant the request in your particular case, and that we have a
Threshold Price which causes three of the 10 daily selling prices to be excluded from the Prior
10-Day Average. In this situation, we would decline 30% (or 3/10) of the $7,000 excess portion, or
$2,100. As a result, we would accept payment from you in the total amount of $9,900.
Even if we establish a Threshold Price, it will not affect dividend reinvestments or direct
purchases that satisfy the maximum direct purchase limit. Those investments will continue to be
based on the general pricing formula, as discussed above.
27. Who Determines the Share Prices and Amounts?
We deliver pricing information for the Shares to be purchased from us and any Threshold Price
to the administrator. Price determinations are binding as long as they are made in good faith.
The administrator will determine the price of Shares purchased on the open market or in negotiated
transactions. The administrator computes the number of Shares that you purchase under the Plan,
and credits those Shares to your account.
- 15 -
Sales and Transfers of Shares
28. How Does A Participant Sell Shares Through the Plan?
You may sell some or all of your Shares through the Plan by delivering written selling
instructions to the administrator. There is no minimum quantity requirement for such sales.
29. How Are the Date of Sale and the Sales Price Determined?
When you sell Shares through the Plan, the administrator will arrange for the sale as soon as
reasonably possible at prevailing market conditions. Typically, sales are made weekly. You cannot
specify either the date of sale or the sales price. Please note that market conditions, and the
sales price for your Shares, could change between the date of your written selling instructions and
the date of sale.
The Shares you are selling may be combined with the Shares of other sellers, and then sold as
a group on a particular date. To compute your gross sale proceeds in that situation, the total
number of Shares you sold will be multiplied by the average sales price for all Shares in the
group.
30. Does a Sales Commission Apply When Shares Are Sold Through the Plan?
To comply with your selling instructions, the administrator will use the services of a
registered broker-dealer, which may be an affiliate of the administrator. As a result, you will be
charged a sales commission when you sell your Shares through the Plan. If your Shares are sold as
part of a group, the sales commission for the group will be allocated on a pro rata basis to you
and the other sellers.
31. How Are Selling Instructions Related to Automatic Purchase or Reinvestment?
Your selling instructions will not stop an automatic action from occurring on the upcoming
Investment Date unless your selling instructions are received by the administrator within the time
limits described in the answer to question 12. If you are selling all of your Shares and your
selling instructions are received by the administrator before the applicable time limit, your
instructions will be treated as a complete cancellation of your investment election and as a notice
of your withdrawal from the Plan.
A partial sale of Shares will not affect an automatic direct purchase and will affect dividend
reinvestment in one of two ways. First, any prior election of full dividend reinvestment will
continue to apply to all of your remaining Shares and future Shares. Second, any prior election of
partial dividend reinvestment will be given effect to the extent possible.
32. How Can Shares Be Transferred Under the Plan?
You may transfer ownership of all or part of the Shares held in your Plan account through
gift, private sale or otherwise by mailing to the administrator a properly executed stock
assignment with medallion signature guaranty, along with a letter with specific instructions
regarding the transfer. You also must mail to the administrator an Authorization Form and a Form
W-9 (Certification of Taxpayer Identification Number) completed by the person to whom you are
transferring your Shares.
You also may transfer ownership of all or part of the Shares held in your Plan account into
the account of another person within the Plan. To complete such a transfer, you must mail to the
administrator a letter with specific instructions regarding the transfer and an Authorization Form
completed by the person to whom you are transferring your Shares.
You may not pledge any Shares credited to your Plan account. Any such pledge will be void.
If you wish to pledge your Shares, you first must withdraw those Shares from the Plan.
If you own Shares outside of the Plan, you are not permitted to transfer those Shares to your
Plan account except in connection with your enrollment in the Plan.
- 16 -
33. Does a Sale or Transfer of Shares Have Any Effect on Remaining Shares?
Selling or transferring Shares through the Plan will have no effect on any other Shares that
you keep in the Plan.
Account Statements and Shareholder Matters
34. Do Participants Receive Account Statements Under the Plan?
The administrator will send you an account statement following any activity in your account
under the Plan. If a brokerage or securities firm has joined the Plan on your behalf, you may
receive an account statement from that firm rather than an account statement from the
administrator. You should contact the brokerage or securities firm about its policies in this
regard.
You should keep all of your account statements for your tax records. Each account statement
will show, among other things, the following information:
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total number of Shares in your account before and after the Investment Date; |
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pricing information for all Shares purchased; |
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amount of any payments and number of Shares purchased directly; |
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amount of dividends reinvested and number of Shares purchased as a result; |
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number of Shares sold and related selling price and commission; and |
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a list of any current automatic elections, including Shares subject to reinvestment. |
35. Do Participants Receive General Shareholder Information?
If you have purchased Shares under the Plan, you will be one of our shareholders and you will
receive the same information that is delivered to all of our shareholders. As a result, you will
receive our annual report, proxy statements for voting on various corporate matters, and other
information about shareholder meetings. You may elect to receive this information electronically.
36. Where Will Account Statements and Other Information Be Sent?
Account statements and other information will be sent to the mailing address you indicate on
your Authorization Form. If a brokerage or securities firm has joined the Plan on your behalf,
that firm will be responsible for forwarding any proxy materials and shareholder communications to
you, in accordance with its policies.
37. How Are Shares Under the Plan Voted on Shareholder Matters?
When a matter is submitted for shareholder approval, we will send the record holder a proxy
card. You may use the proxy card to vote on the matter, based on all of your Shares under the Plan
(including any fractional Shares). If you do not return a signed proxy card, your Shares will not
be voted. If your proxy card is signed and returned, but does not indicate your voting preference,
your Shares will be voted in accordance with the recommendations of our management.
Certificates for Shares
38. Do Participants Receive Certificates for Shares Purchased Under the Plan?
Certificates will not be issued automatically for the Shares you purchase under the Plan.
Instead, the number of Shares you own will be recorded by the administrator and held by the Plan in
your name. We have adopted this approach for three practical reasons. First, the number of Shares
you own could increase on each
- 17 -
Investment Date, so any certificates would quickly be out of date. Second, this approach
protects against any loss, theft or destruction of tangible certificates. Third, this approach
reduces the total cost of the Plan, which in turn allows us to offer other services through the
Plan without charge.
39. Are Certificates Available by Request?
You may obtain a certificate for your Shares by delivering a written request to the
administrator. We do not recommend this practice for the reasons explained above. Please note
that one request for a certificate does not mean that you will receive additional certificates as
you continue to purchase Shares under the Plan. You must specifically request each certificate you
want.
Furthermore, the administrator will not issue a certificate that describes a fractional Share.
Therefore, if your total number of Shares includes a fractional portion and you request a
certificate, your request will be treated as an instruction to sell that fractional portion. The
sale will occur as described above. You will then receive a certificate for the remaining whole
number of your Shares.
Withdrawal from the Plan
40. How Does a Participant Withdraw from the Plan?
You may withdraw from the Plan by making that election on a your monthly statement, and
returning that statement to the administrator. Your withdrawal will be treated as a cancellation
of all prior investment elections. Your withdrawal will take effect in accordance with the time
limits described in the answer to question 12. If a direct purchase is canceled by your
withdrawal, the administrator will promptly return your payment in full, without interest.
You do not need to sell any of your Shares to withdraw from the Plan. Upon your withdrawal
from the Plan, the administrator will issue to you a Share certificate for any whole Shares in your
account. The administrator will convert to cash any fractional shares held in your account at the
time of withdrawal at the then current market price of the Shares. If you continue to hold Shares
after you withdraw from the Plan, dividends that are paid on future dividend payment dates will be
sent to you by check.
As an alternative to receiving a Share certificate, upon your withdrawal from the Plan you may
request in writing that the administrator sell all or a portion of the Shares (both whole and
fractional) in your account. If you instruct the administrator only to sell a portion of your
Shares, then you must instruct the administrator to issue you certificates for the remaining
shares. The administrator will mail you a check for the proceeds of such sale, less applicable
brokerage commissions, service charges and taxes.
In addition, you may withdraw automatically by selling all of your Shares or transferring them
to another account.
Tax Information
41. What Are the Tax Consequences of Participating in the Plan?
The tax consequences of participating in the Plan will vary, depending on the tax
classification of the Participant. For example, the tax laws that apply to individuals are
significantly different from those that apply to retirement plans or business entities. The
discussion below will focus on the federal income tax consequences to individuals.
We are a REIT for federal income tax purposes. In general, distributions with respect to your
Shares are treated as follows: (i) first, as dividends to the extent that we have earnings and
profits; (ii) second, as a return of shareholder capital to the extent of your tax basis as a
shareholder; and (iii) third, as gain from the sale or exchange of your Shares.
All dividends that are paid on your Shares will represent income to you for federal income tax
purposes, even if those dividends are reinvested and used to purchase additional Shares. If you
receive your dividends in cash, the cash payment will enable you to pay the taxes owed on those
dividends. By reinvesting dividends, however, you
- 18 -
will reduce the cash that is available for such tax payments. Furthermore, participating in
the Plan will increase the number of Shares you own and the total amount of your dividends. Thus,
your participation in the Plan will increase the income you must report for federal income tax
purposes. When you purchase Shares under the Plan, you will have an initial tax basis in the
Shares equal to the purchase price for those Shares. If you sell some or all of your Shares
through the Plan, the difference between the sales price and your tax basis will be treated as a
capital gain (or loss). Your amount realized on the sale of your Shares will be decreased by the
amount of any sales commissions you are required to pay, which will decrease your capital gain (or
increase your capital loss). Capital gain or loss will be classified as short-term or long-term
depending on the length of time you held the Shares that were sold. The holding period for Shares
purchased under the Plan generally will begin on the day following the date of purchase.
The tax treatment of the Plan does not depend on a ruling from the Internal Revenue Service.
We have not requested, and do not expect to request, any such tax ruling.
Federal income tax laws are complex and subject to change. The tax information in this
prospectus is general in nature. It does not address all potentially relevant tax matters, does
not constitute tax advice and may not apply to your tax situation. We encourage you to consult a
personal tax advisor for further information.
42. Do Participants Receive Any Tax Statements or Forms?
After the end of each calendar year, the administrator will send you an IRS Form 1099-DIV with
respect to any dividends that were paid on your Shares during such year. The administrator also
will send you an IRS Form 1099-B with respect to any sales of your Shares through the Plan. The
information on these forms must be reported to the Internal Revenue Service.
43. Are Any Taxes Withheld Under the Plan?
If you are subject to backup withholding for federal income tax purposes, the administrator
must withhold certain amounts from dividends on your Shares and from any proceeds that may exist
upon a sale of your Shares. In general, backup withholding applies to you if (i) you fail to
provide your taxpayer identification number for your account under the Plan, (ii) the Internal
Revenue Service notifies us that you provided an incorrect taxpayer identification number, (iii)
the IRS notifies us to start backup withholding, or (iv) you fail to certify, in connection with
your account under the Plan, that you are not subject to backup withholding.
Any backup withholding would reduce your dividends, the number of Shares you would receive
from dividend reinvestment, and any net proceeds from selling your Shares. Depending on your
particular tax situation, any amounts withheld for backup withholding may constitute a credit on
your federal income tax return.
General Matters
44. How Long Will the Plan Continue to Exist?
While we hope to continue the Plan indefinitely, we reserve the right to suspend or terminate
the Plan at any time and for any reason. We also reserve the right to amend the Plan, in our sole
discretion, at any time. We will notify you of any suspension, termination or amendment. Upon any
termination of the Plan, you will receive certificates for whole Shares held in your account and a
check for the cash value of any fractional share held in your account.
45. Can the Terms of the Plan Be Waived or Modified?
We reserve the right to waive or modify particular terms of the Plan at any time, as we deem
necessary or appropriate. We have no obligation to waive or modify any aspect of the Plan. Any
waiver will be limited to the occasion on which it occurs, and will not be construed as a waiver on
any other occasion.
- 19 -
46. Can a Participant Have More Than One Account Under the Plan?
It is possible to become the beneficial owner of more than one account under the Plan. This
could occur, for example, if you become a Participant in your own name and also arrange for a
brokerage or securities firm to join the Plan on your behalf.
For purposes of the limitations discussed in question 17, we may aggregate all direct
purchases for Plan participants with more than one account using the same social security or
taxpayer identification number. If you are unable to supply a social security or taxpayer
identification number, we may limit your participation to only one Plan account.
We may aggregate all Plan accounts that we believe, in our sole discretion, to be under common
control or management or to have common ultimate beneficial ownership. Unless we have determined
that dividend reinvestment and direct purchases for each such account would be consistent with the
purposes of the Plan, we will have the right to aggregate all such accounts and to return, without
interest, any amounts in excess of the investment limitations applicable to a single account
received in respect of all such accounts.
47. Does the Plan Limit the Duties or Liabilities of Associated Estates or the Administrator?
The duties, obligations and responsibilities of Associated Estates and the administrator, and
the agents and nominees of each, are limited to those that are set forth expressly in the Plan or
are required by law. To the maximum extent permitted by law, Associated Estates and the
administrator (and the agents and nominees of each) shall have no liability for any acts that they
take, or do not take, in good faith in connection with the Plan.
48. Does the Plan Alter the Investment Risks or Benefits Associated with the Shares?
The Plan does not alter the investment risks or benefits associated with the Shares. In this
regard, an investment in the Shares under the Plan is no different than any other investment in the
Shares. The value of the Shares may fluctuate over time. You will bear any risk of loss, realize
any potential for gain, and report any taxable income with respect to the Shares.
49. What Law Governs the Plan?
The laws of the State of Ohio (excluding its rules on choice of law) will govern the Plan, its
terms and conditions, and all matters that may arise directly or indirectly in connection with the
Plan.
USE OF PROCEEDS
We expect to use the proceeds from our sales of newly-issued Shares or treasury Shares under
the Plan to enhance our properties, satisfy our financing obligations and other expenses, acquire
multifamily apartment communities, increase our working capital and fund various corporate
operations. The amount of such proceeds will depend on factors beyond our control, including
market conditions and the level of participation in the Plan. Therefore, we have no basis for
estimating either the number of Shares that may be sold under the Plan or the proceeds from such
sales. We will not receive proceeds if the administrator purchases Shares in the open market or in
privately negotiated transactions with third parties.
PLAN OF DISTRIBUTION
We plan to distribute all Shares issued under the Plan without using an underwriter, broker or
dealer. We reserve the right, however, to engage brokers, dealers or agents in our sole discretion
and will pay any brokerage fees, commissions or service charges incurred in connection with the
purchase of Shares in the open market. If you are a shareholder or our employee at the time you
enroll in the Plan, you will not pay any brokerage fees, commissions or service charges to purchase
Shares under the Plan, regardless of whether you do so by direct purchase or dividend reinvestment.
If you instruct the administrator to sell your Shares, the administrator will require the services
of a broker-dealer and you will be charged a sales commission.
- 20 -
EXPERTS
The financial statements
and managements assessment of the effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal Control over Financial Reporting)
incorporated in this prospectus by reference to the Annual Report on Form 10-K of Associated
Estates Realty Corporation for the year ended December 31, 2008, have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the Shares offered hereby and certain federal income tax matters have been passed upon by Baker & Hostetler LLP,
Cleveland, Ohio. Albert T. Adams, a director of Associated Estates, is a partner of Baker &
Hostetler LLP.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. We intend such forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. You can identify forward-looking statements by the use of
forward-looking words, such as expects, projects, believes, plans, anticipates,
estimates, may, will or intends or the negative of those words or similar words.
Forward-looking statements involve inherent risks and uncertainties regarding events, conditions
and financial trends that may affect our future plans of operation, business strategy, results of
operations and financial position. For a discussion of factors that could cause actual results to
differ from those contemplated in the forward-looking statements, please see the discussion under
Risk Factors contained in this prospectus and in other information contained in our publicly
available filings with the Securities and Exchange Commission, or the SEC, including our Annual
Report on Form 10-K for the year ended December 31, 2008 and other reports we file under the
Securities Exchange Act of 1934. We do not undertake any responsibility to update any of these
factors or to announce publicly any revisions to forward-looking statements, whether as a result of
new information, future events or otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the
SEC. Our SEC filings are available on the Internet at the SECs web site at http://www.sec.gov.
You may also read and copy any document we file at the SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the
public reference room and its copy charges. You may also inspect our SEC reports and other
information at the New York Stock Exchange, 20 Broad Street, New York, New York 10005. We also
maintain a website at http://www.aecrealty.com . Please note that all references to
http://www.aecrealty.com in this prospectus are inactive textual references only and that
the information contained on our website is not incorporated by reference into this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Information that we have previously filed with the SEC can be incorporated by reference into
this prospectus. The process of incorporation by reference allows us to disclose important
information to you without duplicating that information in this prospectus. The information we
incorporate by reference is considered a part of this prospectus. The information in this
prospectus, including any information that we incorporate by reference, will be updated and
superseded automatically by our filings with the SEC after the date of this prospectus. We are
incorporating by reference the documents listed below:
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Our Annual Report on Form 10-K for the year ended
December 31, 2008; |
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(b) |
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Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2009; |
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(c) |
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Our Current Report on Form 8-K filed with the
SEC on January 14, 2009; and |
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(d) |
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The description of our common shares contained in our Registration
Statement on Form 8-A dated October 14, 1993. |
We are also incorporating by reference any filings we make with the SEC pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus
and prior to our sale of all of the Shares covered by this prospectus.
We will furnish without charge to each person (including any beneficial owner) to whom a
prospectus is delivered, upon written or oral request, a copy of any or all of the foregoing
documents incorporated herein by reference (other than certain exhibits). Requests for such
documents should be made to:
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Mail:
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Associated Estates Realty Corporation |
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Attention: Investor Relations |
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1 AEC Parkway |
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Richmond Heights, Ohio 44143 |
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Telephone:
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216-261-5000 |
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Website:
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http://www.aecrealty.com |
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(select Contact Us option) |
- 22 -
AUTHORIZATION FORM
ASSOCIATED ESTATES REALTY CORPORATION
AMENDED AND RESTATED DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
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SEND TO ADMINISTRATOR:
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National City Bank |
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Reinvestment Services |
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P.O. Box 94946 |
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Cleveland, Ohio 44101-4946 |
I hereby authorize and instruct the administrator (named above) to implement my elections to
purchase Common Shares (Shares) of Associated Estates Realty Corporation (Associated Estates)
under its Amended and Restated Dividend Reinvestment and Stock Purchase Plan. I understand that
participation in the Plan is voluntary and that:
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Elections under the Plan will take effect on Investment Dates (as defined in the Plan). |
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Payments (if any) will be held, without interest, until the next appropriate Investment Date. |
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The Plan and all of its rules will apply to the account holders (and any representatives) named below. |
DIRECT PURCHASE OPTION (minimum $100, maximum $5,000, per month):
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o
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Check / Money Order Attached:
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$
(Payable to National City Bank) |
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Automatic Bank Withdrawal (monthly): |
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(Attach Bank Withdrawal Form) |
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Automatic Payroll Deduction (bi-weekly, minimum $50): |
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(Associated Estates Employees Only) |
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Cancel Automatic Purchase (if previously elected). |
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DIVIDEND REINVESTMENT OPTION (automatic quarterly purchase of Shares in lieu of cash dividends):
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Full Dividend Reinvestment. Reinvest Dividends on all current and future Shares. |
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Partial Dividend Reinvestment. Reinvest Dividends on ________ certificated Shares (whole number) (As new Shares are received
from this election, all dividends on them will be reinvested as well). |
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Cancel Dividend Reinvestment (if previously elected). |
PLEASE PRINT OR TYPE
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(Indicate Type of Account) |
___ Individual |
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___ Joint |
___ Corporation |
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___ Partnership |
___ LLC |
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___ Trust |
___ IRA |
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___ Benefit plan |
___ Other (specify |
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Full Name of Account Holder (First MI Last) |
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SSN or Tax ID
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Full Name of Account Holder (First MI Last) |
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SSN or Tax ID
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Address
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City
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State
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Signatures |
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(for holder)
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(date)
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(for joint holder)
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(date) |
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Title/Authority (if signing as representative): |
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BANK WITHDRAWAL FORM
ASSOCIATED ESTATES REALTY CORPORATION
AMENDED AND RESTATED DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
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SEND TO ADMINISTRATOR:
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National City Bank |
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Reinvestment Services |
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P.O. Box 94946 |
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Cleveland, Ohio 44101-4946 |
I hereby authorize and instruct the administrator (named above) to purchase Common Shares
(Shares) of Associated Estates Realty Corporation (Associated Estates) under its Amended and
Restated Dividend Reinvestment and Stock Purchase Plan by making automatic withdrawals from the
account specified below (my Account).
The amount and frequency of such withdrawals are shown on my Authorization Form for the Plan.
I acknowledge and agree that the bank or financial institution named below will have no liability
for honoring any request made by the administrator in accordance with the Plan for a withdrawal of
funds from my Account.
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Name of Bank: |
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Address of Bank: |
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City
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Account Number: |
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Bank ABA Number: |
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(enter 9-digit number, also called a routing number,
usually shown in lower left corner of check, before
account number) |
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PLEASE PRINT OR TYPE:
Name/ID must match existing
Authorization Form. Signature
required for each holder.
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Full Name of Account Holder (First MI Last) |
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SSN or Tax ID
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Full Name of Account Holder (First MI Last) |
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SSN or Tax ID
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Signatures |
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(for holder)
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(date)
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(for joint holder)
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(date) |
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Title/Authority (if signing as representative): |
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ATTACH VOID CHECK HERE
(For Bank Account Specified Above)
WAIVER REQUEST FORM
ASSOCIATED ESTATES REALTY CORPORATION
AMENDED AND RESTATED DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
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SEND TO:
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Associated Estates Realty Corporation |
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c/o National City Bank |
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Reinvestment Services |
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P.O. Box 94946 |
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Cleveland, Ohio 44101-4946 |
WAIVER. I hereby request that Associated Estates Realty Corporation (Associated Estates) waive
the maximum amount that can be invested under its Amended and Restated Dividend Reinvestment and
Stock Purchase Plan on a single Investment Date (as defined therein).
AMOUNT. I hereby request permission to purchase the following amount of common shares of
Associated Estates under the Plan on the next available Investment Date:
$ (must exceed $5,000)
REPRESENTATIONS. I hereby represent, warrant and agree as follows:
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Associated Estates, in its sole
discretion, may accept or reject this
waiver request. Any waiver granted by
Associated Estates will be limited to
this occasion and will not be construed
as a waiver on any future occasion. |
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I am making this purchase for
investment purposes only, with no view
toward distribution or resale. By
investing the amount shown above, I am
not attempting (a) to distort,
destabilize or manipulate the price or
trading volume of the Shares or (b) to
adversely affect Associated Estates or
its shareholders in any way. I do not
believe, and do not have any reason to
believe, that my investment of such
amount, if permitted, would result in
any such distortion, destabilization,
manipulation or adverse affect. |
PLEASE PRINT OR TYPE:
Name/ID must match existing
Authorization Form. Signature
required for each holder.
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Full Name of Account Holder (First MI Last) |
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SSN or Tax ID
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Full Name of Account Holder (First MI Last) |
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SSN or Tax ID
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Signatures |
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(for holder)
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(date)
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(for joint holder)
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(date) |
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Title/Authority (if signing as representative): |
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
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Amount |
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Filing feeSecurities and Exchange Commission |
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$ |
0 |
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*Listing on New York Stock Exchange |
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5,000 |
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*Printing and engraving |
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5,000 |
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*Services of counsel |
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10,000 |
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*Services of independent public accountants |
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5,000 |
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*Miscellaneous |
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5,000 |
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Total |
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$ |
30,000 |
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Item 15. Indemnification of Officers and Directors
The Ohio Revised Code (the Ohio Code) authorizes Ohio corporations to indemnify officers and
directors from liability if the officer or director acted in good faith and in a manner reasonably
believed by the officer or director to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal actions, if the officer or director had no reason to
believe his action was unlawful. In the case of an action by or on behalf of a corporation,
indemnification may not be made (i) if the person seeking indemnification is adjudged liable for
negligence or misconduct, unless the court in which such action was brought determines such person
is fairly and reasonably entitled to indemnification, or (ii) if liability asserted against such
person concerns certain unlawful distributions. The indemnification provisions of the Ohio Code
require indemnification if a director or officer has been successful on the merits or otherwise in
defense of any action, suit or proceeding that he was a party to by reason of the fact that he is
or was a director or officer of the corporation. The indemnification authorized under Ohio law is
not exclusive and is in addition to any other rights granted to officers and directors under the
articles of incorporation or code of regulations of the corporation or any agreement between
officers and directors and the corporation. A corporation may purchase and maintain insurance or
furnish similar protection on behalf of any officer or director against any liability asserted
against him and incurred by him in his capacity, or arising out of the status, as an officer or
director, whether or not the corporation would have the power to indemnify him against such
liability under the Ohio Code.
Associated Estates Code of Regulations provides for the indemnification of directors and
officers of Associated Estates to the maximum extent permitted by Ohio law as authorized by the
Board of Directors of Associated Estates and for the advancement of expenses incurred in connection
with the defense of any action, suit or proceeding that he was a party to by reason of the fact
that he is or was a director or officer of Associated Estates upon the receipt of an undertaking to
repay such amount unless it is ultimately determined that the director or officer is entitled to
indemnification. Associated Estates maintains a directors and officers insurance policy which
insures the directors and officers of Associated Estates from claims arising out of an alleged
wrongful act by such persons in their respective capacities as directors and officers of Associated
Estates, subject to certain exceptions. Associated Estates has entered into indemnification
agreements with its directors and officers which provide for indemnification to the fullest extent
permitted under Ohio law.
II-1
Item 16. Exhibits
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Filed herewith or |
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incorporated herein by |
Number |
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Title |
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reference |
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3.1
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Amendment to Second Amended and Restated Articles of
Incorporation
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Exhibit 3.1 to Form 8-K
filed December 8, 2004. |
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3.2
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Second Amended and Restated Articles of Incorporation
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Exhibit 3.2 to Form 10-Q filed July 31, 2007. |
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3.3
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Amended and Restated Code of Regulations of the Company
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Exhibit 3.3 to Form 10-Q
filed August 1, 2006. |
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4.3
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Specimen Stock Certificate
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Exhibit 3.1 to Form S-11
filed September 2, 1993
(File No. 33-68276 as
amended). |
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4.4
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Amended and Restated Shareholders Rights Agreement dated December 30, 2008 |
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Exhibit 4.1 to Form 8-K
filed December 30, 2008. |
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4.5
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Form of Indemnification Agreement
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Exhibit 4.2 to Form S-11
filed September 2, 1993
(File No. 33-68276 as
amended). |
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5
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Opinion of Baker & Hostetler LLP, as to validity of the
offered securities.
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Previously filed. |
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8
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Opinion of Baker & Hostetler
LLP, as to tax matters.
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Previously filed. |
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23.1
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Consent of PricewaterhouseCoopers LLP
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Exhibit 23.1 filed
herewith. |
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23.3
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Consent of Baker & Hostetler LLP
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Previously filed. |
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24
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Powers of Attorney
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Previously filed. |
Item 17. Undertakings
(a)
The undersigned registrant hereby undertakes:
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(1) |
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To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: |
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(i) |
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To include any prospectus required by Section 10(a)(3) of the
Securities Act; |
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(ii) |
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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 the 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 Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the Calculation of Registration
Fee table in the effective Registration Statement; and |
II-2
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(iii) |
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To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; |
provided, however, that paragraphs (i) and (ii) above do not apply if the information required to
be included in a post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act)
that are incorporated by reference in the Registration Statement.
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(2) |
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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 therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. |
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(3) |
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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. |
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(4) |
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That, for the purpose of determining liability under the Securities Act to any purchaser: |
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(i) |
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Each prospectus filed by the registrant 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 |
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(ii) |
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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 the 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; and
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(5) |
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That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any
purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a
primary offering of securities of the undersigned registrant 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
registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such
purchaser:
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(i) |
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Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
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(ii) |
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Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
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(iii) |
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The portion of any other free writing prospectus relating to the offering containing material
information about the undersigned registrant or its securities provided by or on behalf of the undersigned
registrant; and
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(iv) |
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Any other communication that is an offer in the offering made by the undersigned registrant to
the purchaser.
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(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act, each filing of the registrants annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers, and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that, in the opinion of the Securities
and Exchange Commission, 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 registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant 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 registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
[Signature Page Follows]
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the 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 Richmond Heights, State of Ohio, on
May 22, 2009.
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ASSOCIATED ESTATES REALTY CORPORATION |
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By: |
/s/ Jeffrey I. Friedman |
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Jeffrey I. Friedman, Chairman of the Board,
President and Chief Executive Officer |
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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 May 22, 2009.
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Name |
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Title |
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/s/ Jeffrey I. Friedman |
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Chairman of the Board, President and Chief
Executive Officer (principal executive officer) |
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/s/ Lou Fatica |
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Vice President, Treasurer and Chief Financial Officer
(principal financial officer and principal accounting officer) |
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Albert T. Adams
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Director |
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Director |
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Director |
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Director |
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Director |
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* |
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Director |
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*By: /s/ Lou Fatica
Lou Fatica, attorney in fact |
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II-4
EXHIBIT INDEX
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Filed herewith or |
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incorporated herein by |
Number |
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Title |
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reference |
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3.1
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Amendment to Second Amended and Restated Articles of
Incorporation
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Exhibit 3.1 to Form 8-K
filed December 8, 2004. |
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3.2
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Second Amended and Restated Articles of Incorporation
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Exhibit 3.2 to Form 10-Q filed July 31, 2007. |
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3.3
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Amended and Restated Code of Regulations of the Company
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Exhibit 3.3 to Form 10-Q
filed August 1, 2006. |
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4.3
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Specimen Stock Certificate
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Exhibit 3.1 to Form S-11
filed September 2, 1993
(File No. 33-68276 as
amended). |
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4.4
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Amended and Restated Shareholders Rights Agreement dated December 30, 2008 |
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Exhibit 4.1 to Form 8-K
filed December 30, 2008. |
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4.5
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Form of Indemnification Agreement
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Exhibit 4.2 to Form S-11
filed September 2, 1993
(File No. 33-68276 as
amended). |
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5
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Opinion of Baker & Hostetler LLP, as to validity of the
offered securities.
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Previously filed. |
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8
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Opinion of Baker & Hostetler
LLP, as to tax matters.
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Previously filed. |
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23.1
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Consent of PricewaterhouseCoopers LLP
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Exhibit 23.1 filed
herewith. |
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23.3
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Consent of Baker & Hostetler LLP
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Previously filed. |
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24
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Powers of Attorney
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Previously filed. |
II-5