Edgar Filing: FEDERAL REALTY INVESTMENT TRUST

As filed with the Securities and Exchange Commission on October 29, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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FEDERAL REALTY INVESTMENT TRUST
(Exact name of registrant as specified in its charter)

Maryland 6798 52-0782497
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of organization) Classification Code Number) Identification Number)

Dawn M. Becker
Vice President, General Counsel and Secretary
Federal Realty Investment Trust
1626 East Jefferson Street 1626 East Jefferson Street
Rockville, Maryland 20852 Rockville, Maryland 20852
(301) 998-8100 (301) 998-8100
(Address, including zip code, and telephone number, including area (Name, address, including zip code, and telephone
code, of registrant's principal executive offices) number, including area code, of agent for service)

With a copy to:
Sylvia M. Mahaffey
Shaw Pittman LLP
2300 N Street, N.W.
Washington, D.C. 20037
(202) 663-8000

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Approximate date the registrant proposes to begin selling securities to the
public: From time to time after the effective date of this registration
statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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CALCULATION OF REGISTRATION FEE

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Proposed Maximum Proposed Maximum
Title of Securities to be Amount Offering Price Per Aggregate Offering Amount of
Registered(1) to be Registered(2) Share(3) Price(3) Registration Fee(4)
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Debt Securities
Common Shares
Preferred Shares
Depositary Shares
Warrants
Rights (5)
TOTAL $500,000,000 -- $500,000,000 $46,000
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(1) Subject to Note (2), this registration statement registers an indeterminate
number of common shares, preferred shares, depositary shares and warrants
to be offered at indeterminate prices and an indeterminate number of common
shares or preferred shares that may be issuable at indeterminate prices
upon the exercise of any warrants or, as the case may be upon the
conversion, redemption or exchange of any convertible, redeemable or
exchangeable securities registered hereunder.
(2) In no event will the aggregate maximum offering price of all securities
registered under this Registration Statement exceed $500,000,000. The
securities registered hereunder may be issued in one or more classes or
series and may be offered and sold separately or in units with other
securities registered hereunder.
(3) The proposed maximum offering price per security has been omitted pursuant
to General Instruction II.D of Form S-3. The Registrant will establish the
proposed maximum offering price per security if and when it offers
securities registered under this Registration Statement.
(4) Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as
amended.
(5) Rights to acquire common shares are attached to, and trade with, the common
shares. Value attributed to the rights, if any, is reflected in the market
price of the common shares. Initially, the rights will be evidenced by
common share certificates.

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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
files a further amendment which specifically states that this registration
statement is to become effective in accordance with Section 8(a) of the
Securities Act or until the registration statement becomes effective on the
date the SEC, acting under Section 8(a), determines.

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The information in this 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 prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

Subject To Completion, Dated October 29, 2002

PROSPECTUS

$500,000,000

[LOGO]

FEDERAL REALTY INVESTMENT TRUST

Debt Securities, Common Shares, Preferred Shares, Depositary Shares and Warrants

We may from time to time offer, in one or more series, separately or
together, the following:

. our debt securities, which may be either senior debt securities or
subordinated debt securities;

. our common shares of beneficial interest (and rights to acquire common
shares that are attached to, or trade with, our common shares);

. our preferred shares of beneficial interest;

. our preferred shares of beneficial interest represented by depositary
receipts; and

. warrants to purchase our common and preferred shares.

The aggregate initial public offering price of the securities that we may
offer through this prospectus will be up to $500,000,000.

We will offer our securities in amounts, at prices and on terms to be
determined at the time we offer such securities. When we sell a particular
series of securities, we prepare a prospectus supplement describing the
offering and the terms of that series of securities.

Please read this prospectus and the applicable supplement carefully before
you invest.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is complete or accurate. Any representation to the contrary is
a criminal offense.

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The date of this prospectus is October , 2002.

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$500,000,000. Our prospectus provides you with a general description of these
securities. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about all of the terms of
that offering. Our prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and the applicable prospectus supplement, together with additional information
described under the heading "Where You Can Find More Information."

References to "we," "us" or "our" refer to Federal Realty Investment Trust
and its directly or indirectly owned subsidiaries, unless the context otherwise
requires. The term "you" refers to a prospective investor.

FORWARD-LOOKING INFORMATION

Before investing in our securities, you should be aware that there are
various risks. Investors should carefully consider, among other factors, the
factors discussed in this prospectus and in any prospectus supplement. This
prospectus contains, and any accompanying prospectus supplement will contain,
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended and the Private Securities Litigation Reform Act of 1995. Also,
documents that we "incorporate by reference" into this prospectus, including
documents that we subsequently file with the SEC, will contain forward-looking
statements. When we refer to forward-looking statements or information,
sometimes we use words such as "may," "will," "could," "should," "plans,"
"intends," "expects," "believes," "estimates," "anticipates" and "continues."
The risk factors in this prospectus describe risks that may affect these
statements but are not all-inclusive, particularly with respect to possible
future events. Many things can happen that can cause actual results to be
different from those we describe. Given these uncertainties, readers are
cautioned not to place undue reliance on these forward-looking statements. We
also make no promise to update any of the forward-looking statements, or to
publicly release the results if we revise any of them.

THE COMPANY

Federal Realty Investment Trust is an equity real estate investment trust
specializing in the ownership, management, development and redevelopment of
high-quality retail and mixed-use properties. As of September 30, 2002, we
owned or had an interest in 113 community and neighborhood shopping centers and
urban retail and mixed use properties comprising approximately 15 million
square feet, and one apartment complex, all in strategic metropolitan markets
across the United States.

We operate in a manner intended to qualify as a real estate investment trust
pursuant to provisions of the Internal Revenue Code. Our offices are located at
1626 East Jefferson Street, Rockville, Maryland 20852. Our telephone number is
(301) 998-8100 or (800) 658-8980. Our website address is www.federalrealty.com.
The information contained in our website is not a part of this prospectus.

USE OF PROCEEDS

Unless otherwise specified in the applicable prospectus supplement, we will
use the net proceeds from the sale of securities for one or more of the
following:

. repayment of debt;

. acquisition of additional properties;

. development of new properties;

. redevelopment of existing properties; and

. working capital and general corporate purposes.

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS

The following table sets forth our historical ratio of earnings to fixed
charges and preferred share dividends for the periods indicated:

For the Six Months
Ended June 30, For the Years Ended December 31,
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2002 2001 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ---- ----

Ratio of earnings to fixed charges....................... 1.2x(1) 1.5x 1.5x 1.5x 1.7x 1.7x 1.7x
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to combined fixed charges and preferred
share dividends........................................ 1.1x(1) 1.4x 1.3x 1.4x 1.5x 1.5x 1.6x
---- ---- ---- ---- ---- ---- ----

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(1) Excluding a one-time $8.5 million restructuring charge incurred in the
first quarter of 2002, for the six months ended June 30, 2002, the ratio of
earnings to fixed charges would have been 1.4x, and the ratio of earnings
to combined fixed charges and preferred share dividends would have been
1.2x.

The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income before gain
(loss) on sale of real estate plus fixed charges. Fixed charges consist of
interest on borrowed funds (including capitalized interest), amortization of
debt discount and expense and the portion of rent expense representing an
interest factor. The ratios of earnings to combined fixed charges and preferred
share dividends were computed by dividing earnings by the sum of fixed charges
and preferred share dividend requirements.

Earnings represent income before gain on real estate and extraordinary items
and fixed charges on capital leases. Fixed charges consist of interest expense
(including interest costs capitalized) and the portion of rent expense
representing an interest factor. Preferred share dividends consist of dividends
paid on our outstanding Series A preferred shares and Series B preferred shares.

DESCRIPTION OF DEBT SECURITIES

We will prepare and distribute a prospectus supplement that describes the
specific terms of the debt securities. In this section of the prospectus, we
describe the general terms we expect all debt securities to have. We also
identify some of the specific terms that will be described in a prospectus
supplement. Although we expect that any debt securities we offer with this
prospectus will have the general terms we describe in this section, our debt
securities may have terms that are different from or inconsistent with the
general terms we describe here. Therefore, you should read the prospectus
supplement carefully.

General Terms of Debt Securities

Unless we say otherwise in a prospectus supplement, debt securities we offer
through this prospectus:

. will be our general, direct and unsecured obligations; and

. may be either senior debt securities or subordinated debt securities.

Senior debt securities will rank equally with all of our other unsecured and
unsubordinated obligations. Subordinated debt securities will be subordinate
and junior in right of payment to all of our present and future senior debt in
the manner we describe in a prospectus supplement.

We may incur additional debt, subject to limitations in the agreements
governing our credit and other debt facilities and other notes we may have
issued.

Unless we say otherwise in a prospectus supplement:

. debt securities we offer through this prospectus will not limit the amount
of other debt that we may incur;

. you will not have any protection if we engage in a highly leveraged
transaction, a restructuring, a transaction involving a change in control,
or a merger or similar transaction that may adversely affect holders of
the debt securities; and

. we will not list the debt securities on any securities exchange.

The Indentures

Any debt securities we offer through this prospectus will be issued under an
indenture between us and Wachovia Bank National Association, as successor to
First Union National Bank, Trustee. We have filed with the SEC two indentures
that are exhibits to the registration statement that includes this prospectus.
The senior indenture describes the general terms of senior debt securities we
may issue. In addition to describing the general terms of subordinated debt
securities that we may issue, the subordinated indenture includes additional
terms describing the subordination provisions of these securities. Each of the
indentures is subject to the Trust Indenture Act of 1939, as amended.

The indentures do not include all the terms of debt securities we may issue
through this prospectus. If we issue debt securities through this prospectus,
our Board of Trustees will establish the additional terms for each series of
debt securities. The additional terms will be either established pursuant to,
and set forth in, a supplemental indenture, or established pursuant to a
resolution of our Board of Trustees and set forth in an officer's certificate.
Each indenture describes the additional terms that may be established and we
summarize the additional terms that may be established under "-- Additional
Terms of Debt Securities," below.

We have summarized the provisions of the senior indenture and the
subordinated indenture below. The summary is not complete. You should read the
indentures for provisions that may be important to you. The extent, if any, to
which the provisions of the base indentures apply to particular debt securities
will be described in the prospectus supplement relating to those securities.
You should read the prospectus supplement for more information regarding any
particular issuance of debt securities.

Additional Terms of Debt Securities

As described above, the terms of a particular series of debt securities we
offer through this prospectus will be established by our Board of Trustees when
we issue the series. We will describe the terms of the series in a prospectus
supplement. Each indenture provides that the terms that may be established
include the following:

. Title. The title of the debt securities offered.

. Amount. Any limit upon the total principal amount of the series of debt
securities offered.

. Maturity. The date or dates on which the principal of and premium, if
any, on the offered debt securities will mature or the method of
determining such date or dates.

. Interest Rate. The rate or rates (which may be fixed or variable) at
which the offered debt securities will bear interest, if any, or the
method of calculating such rate or rates.

. Interest Accrual. The date or dates from which interest will accrue or
the method by which such date or dates will be determined.

. Interest Payment Dates. The date or dates on which interest will be
payable and the record date or dates to determine the persons who will
receive payment.

. Place of Payment. The place or places where principal of, premium, if
any, and interest, on the offered debt securities will be payable or at
which the offered debt securities may be surrendered for registration of
transfer or exchange.

. Optional Redemption. The period or periods within which, the price or
prices at which, the currency or currencies (if other than in U.S.
dollars), including currency unit or units, in which, and the other terms
and conditions upon which, the offered debt securities may be redeemed, in
whole or in part, at our option, if we have that option.

. Mandatory Redemption. The obligation, if any, we have to redeem or
repurchase the offered debt securities pursuant to any sinking fund or
similar provisions or upon the happening of a specified event or at the
option of a holder; and the period or periods within which, the price or
prices at which, the currency or currencies (if other than in U.S.
dollars), including currency unit or units, in which, and the other terms
and conditions upon which, such offered debt securities shall be redeemed
or purchased, in whole or in part.

. Denominations. The denominations in which the offered debt securities are
authorized to be issued.

. Currency. The currency or currency unit in which the offered debt
securities may be denominated and/or the currency or currencies, including
currency unit or units, in which principal of, premium, if any, and
interest, if any, on the offered debt securities will be payable and
whether we or the holders of the offered debt securities may elect to
receive payments in respect of the offered debt securities in a currency
or currency unit other than that in which the offered debt securities are
stated to be payable.

. Indexed Principal. If the amount of principal of, or premium, if any, or
interest on, the offered debt securities may be determined with reference
to an index or pursuant to a formula or other method, the manner in which
such amounts will be determined.

. Payment on Acceleration. If other than the principal amount, the amount
which will be payable upon declaration of the acceleration of the maturity
or the method by which such portion shall be determined.

. Special Rights. Provisions, if any, granting special rights to the
holders of the offered debt securities if certain specified events occur.

. Modifications to Indentures. Any addition to, or modification or deletion
of, any event of default or any of the covenants specified in the
indenture with respect to the offered debt securities.

. Tax "Gross-Up." The circumstances, if any, under which we will pay
additional amounts on the offered debt securities held by non-U.S. persons
for taxes, assessments or similar charges.

. Registered or Bearer Form. Whether the offered debt securities will be
issued in registered or bearer form or both.

. Dates of Certificates. The date as of which any offered debt securities
in bearer form and any temporary global security representing outstanding
securities are dated, if other than the original issuance date of the
offered debt securities.

. Forms. The forms of the securities and interest coupons, if any, of the
series.

. Registrar and Paying Agent. If other than the trustee under the
applicable indenture, the identity of the registrar and any paying agent
for the offered debt securities.

. Defeasance. Any means of defeasance or covenant defeasance that may be
specified for the offered debt securities.

. Global Securities. Whether the offered debt securities are to be issued
in whole or in part in the form of one or more temporary or permanent
global securities and, if so, the identity of the depositary or its
nominee, if any, for the global security or securities and the
circumstances under which beneficial owners of interests in the global
security may exchange those interests for certificated debt securities to
be registered in the names of or to be held by the beneficial owners or
their nominees.

. Documentation. If the offered debt securities may be issued or delivered,
or any installation of principal or interest may be paid, only upon
receipt of certain certificates or other documents or satisfaction of
other conditions in addition to those specified in the applicable
indenture, the form of those certificates, documents or conditions.

. Payees. If other than as provided in the applicable indenture, the person
to whom any interest on any registered security of the series will be
payable and the manner in which, or the person to whom, any interest on
any bearer securities of the series will be payable.

. Definitions. Any definitions for the offered debt securities of that
series that are different from or in addition to the definitions included
in the applicable indenture, including, without limitation, the definition
of "unrestricted subsidiary" to be used for such series.

. Subordination. In the case of the subordinated indenture, the relative
degree to which the offered debt securities shall be senior to or junior
to other debt securities, whether currently outstanding or to be offered
in the future, and to other debt, in right of payment.

. Guarantees. Whether the offered debt securities are guaranteed and, if
so, the identity of the guarantors and the terms of the offered guarantees
(including whether and the extent to which the guarantees are subordinated
to other debt of the guarantors).

. Conversion. The terms, if any, upon which the offered debt securities may
be converted or exchanged into or for our common shares, preferred shares
or other securities or property.

. Restrictions. Any restrictions on the registration, transfer or exchange
of the offered debt securities.

. Other Terms. Any other terms not inconsistent with the terms of the
applicable indenture pertaining to the offered debt securities or which
may be required or advisable under U. S. laws or regulations or advisable,
as we determine, in connection with marketing of securities of the series.

Form of Securities and Related Matters

Registered or Bearer Form. Debt securities may be offered in either
registered or bearer form.

. If the debt securities are in registered form, we may treat the person
named in the register as the owner of the debt securities for all
purposes, including payment, exchange and transfer.

. If we issue debt securities in bearer form, we will issue those debt
securities only to non-U.S. persons and may treat the bearer of the
securities as the owner for all purposes, including payment, exchange and
transfer. If we issue debt securities in bearer form, we will describe
special offering restrictions and material U.S. federal income tax
consequences relating to the offered debt securities in a prospectus
supplement.

Denominations. Unless we say otherwise in a prospectus supplement, we will
issue debt securities in denominations of:

. U.S. $1,000 (or multiples of $1,000) if we issue the debt securities in
registered form; and

. U.S. $5,000 (or multiples of $5,000) if we issue debt securities in bearer
form.

Payment Currencies and Indexed Securities. We may offer debt securities for
which:

. the purchase price is payable in a currency other than U.S. dollars;

. the securities are denominated in a currency other than U.S. dollars; or

. the principal or interest of, or any other amount due on, the offered debt
securities in a currency other than U.S. dollars.

The other currency may be a currency unit composed of various currencies,
such as the European Currency Unit or ECU. Payments on debt securities may also
be based on an index.

Payment, Transfer and Exchange. Unless we say otherwise in a prospectus
supplement, the office for paying principal, interest and other amounts on the
debt securities is Wachovia Bank National Association, 401 S. Tryon Street,
12/th/ Floor, Charlotte, North Carolina 28288. We will notify you of any change
in the office's location. At our option, however, we may make any interest
payments on debt securities issued in registered form by:

. mailing checks to you at the address you specify; or

. wire transfer of immediately available funds to an account you specify.

Unless we say otherwise in a prospectus supplement, we will pay interest to
the person whose name is in the register at the close of business on the
regular record date for such interest.

We will describe in a prospectus supplement how we will pay amounts owing on
bearer securities. We will only pay amounts owing on bearer securities at an
office outside the United States.

Unless we say otherwise in a prospectus supplement, you may transfer or
exchange debt securities issued in registered form at an agency that we
designate. You may transfer or exchange debt securities without service charge,
although we may require you to pay any related tax or other governmental charge.

Global Securities

We may issue debt securities of a series in the form of one or more fully
registered global securities. Each registered global security will:

. be registered in the name of a depositary or a nominee for the depositary;

. be deposited with the depositary or nominee or a custodian therefor; and

. bear a legend regarding the restrictions on exchanges and registration of
transfer and any such other appropriate matters.

Registered global securities may be issued in either registered or bearer
form and in either temporary or permanent form. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of debt securities will be described in a
prospectus supplement.

Certain Covenants

Each indenture contains the following covenants. Any additional material
covenants applicable to any series of debt securities will be set forth in a
prospectus supplement.

Existence. Except as permitted under "Consolidation, Merger or Sale of
Assets," we will do or cause to be done all things necessary to preserve and
keep in full force and effect our corporate existence, rights (charter and
statutory) and franchises; provided, however, we are not required to preserve
any right or franchise if we determine that the preservation of the right or
franchise is no longer desirable in the conduct of our business.

Maintenance of Properties. We will cause all of our material properties
used or useful in the conduct of our business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements of our material properties to be made, all as in
our judgment may be necessary so that the business carried on at, or in
connection with, our material properties may be properly and advantageously
conducted at all times.

Insurance. We will keep all of our insurable properties insured against
loss or damage at least equal to their then full insurable value with insurers
of recognized responsibility and having a rating of at least A-:XII in Best's
Key Rating Guide.

Payment of Taxes and Other Claims. We will pay or discharge or cause to be
paid or discharged, before they shall become delinquent:

. all taxes, assessments and governmental charges levied or imposed upon us
or upon our income, profits or property, and

. all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon our property;

provided, however, that we shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith.

Provision of Financial Information. Whether or not we are subject to
Section 13 or 15(d) of the Exchange Act, we will, within 15 days of each of the
respective dates by which we would have been required to file annual reports,
quarterly reports and other documents with the SEC if we were so subject:

. transmit by mail to all holders of debt securities, as their names and
addresses appear in the register, without cost to such holders, copies of
the annual reports, quarterly reports and other documents that we would
have been required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act if we were subject to Section 13 or 15(d);

. file with the trustee copies of the annual reports, quarterly reports and
other documents that we would have been required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act if we were subject to
Section 13 or 15(d); and

. promptly, upon written request and payment of the reasonable cost of
duplication and delivery, supply copies of those documents to any
prospective holder.

Consolidation, Merger or Sale of Assets

We may consolidate with, or sell, lease or convey all or substantially all
of our assets, or merge with or into any other entity, provided that we satisfy
all of the following conditions:

. either

. we must be the continuing company, or

. the surviving entity must be an entity duly organized and validly
existing under U.S. laws, any state or the District of Columbia, and
the surviving entity must assume, by a supplemental indenture in a
form reasonably satisfactory to the trustee, all obligations under the
applicable debt securities and the related indenture;

. immediately before and immediately after giving effect to such
transactions, no default or event of default under the debt securities
shall have occurred and be continuing; and

. we or the surviving entity has delivered, or caused to be delivered, to
the trustee, in form and substance reasonably satisfactory to the trustee,
an officers' certificate and an opinion of counsel, each to the effect
that each consolidation, merger, transfer, sale, assignment, lease or
other transaction and the supplemental indenture relating to such
transaction comply with the provisions of the applicable indenture and
that all conditions precedent provided for in the indenture relating to
the transaction have been met.

Subordination

Generally. Unless we say otherwise in a prospectus supplement, the payment
of principal, premium, if any, and interest on subordinated debt securities
will be subordinated, or junior, to the prior payment in full of all or any of
our present and future "senior debt." This means that we must pay all present
and future senior debt before we pay amounts due to holders of subordinated
debt securities if we liquidate, dissolve, reorganize or go through a similar
process. After making these payments, we may not have sufficient assets
remaining to pay the amounts due to holders of subordinated debt securities or
equity securities.

Senior debt is defined in the subordinated indenture as the principal of and
interest on, or substantially similar payments to be made by us in respect of,
the following, whether outstanding at the date of execution of the subordinated
indenture or thereafter incurred, created or assumed:

. indebtedness for money borrowed or represented by purchase-money
obligations;

. indebtedness evidenced by notes, debentures, or bonds, or other securities
issued under the provisions of an indenture, fiscal agency agreement or
other instrument;

. our obligations as lessee under leases of property whether made as part of
any sale and leaseback transaction to which we are a party or otherwise;

. indebtedness of partnerships and joint ventures which is included in our
consolidated financial statements;

. indebtedness, obligations and liabilities of others in respect of which we
are liable, contingently or otherwise, for payment or advances of money or
property, or as guarantor, endorser or otherwise, or which we have agreed
to purchase or otherwise acquire; and

. any binding commitment to fund any real estate investment or to fund any
investment in any entity making a real estate investment, in each case
other than

. any such indebtedness, obligation or liability of a type described or
referred to in the bullets above as to which, in the instrument
creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness, obligation or
liability is not superior in right of payment to the subordinated debt
securities or ranks pari passu with the subordinated debt securities;

. any such indebtedness, obligation or liability which is subordinated
to our indebtedness to substantially the same extent as or to a
greater extent than the subordinated debt securities are subordinated
to our indebtedness; and

. the subordinated debt securities.

There are no restrictions in the subordinated indenture upon the creation of
additional senior debt.

Payment Blockage for Payment Defaults. Unless we say otherwise in a
prospectus supplement, if we have defaulted in the payment of any senior debt,
we may not:

. pay any principal, premium, if any, or interest on subordinated debt
securities; or

. purchase, redeem, defease, or otherwise acquire any subordinated debt
securities.

This prohibition will not affect any payment we have already made to defease
debt securities, as described under "-- Defeasance or Covenant Defeasance of
Indentures," below.

We must resume payment on our subordinated debt securities, and make any
payments we have missed, when one of the following has occurred:

. the senior debt has been discharged or paid in full;

. the holders of senior debt have waived payment; or

. the payment default has otherwise been cured or ceased to exist.

Payment Blockage for Non-Payment Defaults. Unless we say otherwise in a
prospectus supplement, we will also be prohibited from paying any amounts or
distributing any assets if:

. we have defaulted on senior debt in a way that does not involve a failure
to pay amounts but accelerates payment; and

. we and the trustee for the subordinated debt securities have received
written notice of this default.

Unless we say otherwise in a prospectus supplement, we will be required to
suspend payments and distributions on our subordinated debt securities starting
when we receive notice of the applicable default. We must resume payments on
our subordinated debt securities, and make any payments we have missed, upon
the earliest of:

. the date that is 179 days after receipt of notice (unless we have
previously been required to pay all amounts owing on the applicable senior
debt);

. the date the default and all other similar defaults as to which notice has
been given shall have been cured, waived or shall have ceased to exist;

. the date the applicable senior debt (and all other senior debt as to which
notice has been given) shall have been discharged or paid in full; and

. the date on which we or the trustee receives written notice from the
representative of holders of senior debt or the holders of at least a
majority of the senior debt terminating the blockage period.

Any number of notices of non-payment defaults may be given, but during any
365-day consecutive period only one blockage period may commence, and the
period may not exceed 179 days. No non-payment default with respect to senior
debt that existed or was continuing on the date a blockage period for our
subordinated debt securities commenced may be made the basis of another
blockage period for those securities whether or not within a period of 365
consecutive days, unless at least 90 consecutive days have elapsed since the
default was cured or waived.

Default Provisions

Events of Default. Unless we say otherwise in a prospectus supplement, each
of the following is an event of default as to any of our senior or subordinated
debt securities:

1. A default in the payment of any interest on any debt security of that
series when it becomes due and payable, if the default continues for a
period of 30 days.

2. A default in the payment of the principal of (or premium, if any, on)
any debt security of that series at its maturity (upon acceleration,
optional or mandatory redemption, required purchase or otherwise).

3. A default in the deposit of any sinking fund payment as required by
the terms of any debt security of that series.

4. A default in the performance, or a breach, of any covenant or
agreement by us under the applicable indenture (other than a default in the
performance, or a breach of a covenant or agreement which is specifically
dealt with in clause (1) through (8) hereof) if such default or breach
continues for a period of 60 days after written notice has been given, by
registered or certified mail:

(a) to us by the trustee; or

(b) to us and the trustee by the holders of at least 25% in
aggregate principal amount of the outstanding debt securities of the
series.

5. The occurrence of one or more defaults under any bond, debenture,
note or other evidence of indebtedness for money borrowed (including
obligations under leases required to be capitalized on the balance sheet of
the lessee under generally accepted accounting principles but not including
any indebtedness or obligations for which recourse is limited to property
purchased) in an aggregate principal amount in excess of $5,000,000 or under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed
(including such leases but not including such indebtedness or obligations
for which recourse is limited to property purchased) in an aggregate
principal amount in excess of $5,000,000, whether such indebtedness now
exists or shall hereafter be created, if the default has resulted in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable or in the acceleration
of such obligations, without such acceleration having been rescinded or
annulled.

6. The entry by a court of competent jurisdiction under any applicable
bankruptcy law that:

(a) is for relief against us or any of our significant subsidiaries
in an involuntary case,

(b) appoints a receiver in respect of us or any of our significant
subsidiaries or for all or substantially all of the property of any of
us; and

and the order or decree remains unstayed and in effect for 90 days.

7. We or any of our significant subsidiaries do any of the following:

(a) commence a voluntary case or proceeding under any applicable
bankruptcy law or any other case or proceeding to be adjudicated
bankrupt or insolvent;

(b) consent to the entry of a decree or order for relief in respect
of us or any of our significant subsidiaries in an involuntary case or
proceeding under any applicable bankruptcy law or to the commencement of
any bankruptcy or insolvency case or proceeding against us or it;

(c) consent to the appointment of a receiver in respect of us or any
of our significant subsidiaries for all or substantially all of our or
its property; or

(d) makes a general assignment for the benefit of our creditors or
the creditors of any of our significant subsidiaries.

8. Any other event of default provided with respect to the debt
securities of that series.

Waiver of Default. Unless we say otherwise in a prospectus supplement,
holders of not less than a majority of the debt securities of a series may
waive any past default except for:

. a payment default; or

. a default on any provision that requires the consent of all holders to
modify.

Acceleration of Payment. Unless we say otherwise in a prospectus
supplement, each indenture provides that if an event of default occurs and
continues, the trustee or the holders of not less than 25% in aggregate
principal amount of the debt securities of the applicable series outstanding
may declare all unpaid principal of, premium, if any, and accrued interest on,
all the debt securities of the applicable series to be due and payable
immediately by a notice given in writing to us (and to the trustee if given by
the holders of the debt securities of the applicable series). The trustee may,
then, at its discretion, proceed to protect and enforce the rights of the
holders of the applicable debt securities by appropriate judicial proceeding.

Waiver of Acceleration. Unless we say otherwise in a prospectus supplement,
each indenture provides that, after a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained by the
trustee, the holders of a majority in aggregate principal amount of the debt
securities, by written notice to us and the trustee, may rescind and annul such
declaration if:

. we have paid, or deposited with the trustee a sum sufficient to pay;

. all overdue interest on all debt securities of the applicable series,

. the principal of and premium, if any, on any debt securities of the
applicable series which have become due other than by such declaration
of acceleration, plus interest thereon at the rate borne by the debt
securities,

. to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the debt securities, and

. all sums paid or advanced by the trustee under the indenture and the
reasonable compensation, expenses, disbursements and advances of the
trustee, its agents and counsel; and

. all events of default, other than the non-payment of principal of the debt
securities which have become due solely by such declaration of
acceleration, have been cured or waived.

Notices of Default. Unless we say otherwise in a prospectus supplement, we
are required to deliver to the trustee, on or before a date not more than 120
days after the end of each fiscal year, a written statement as to compliance
with the indenture, and, in the event of any noncompliance, specifying such
noncompliance, including whether or not any default has occurred. The trustee
is required to give notice to the holders of debt securities within 90 days of
a default under the applicable indenture unless such default shall have been
cured or waived; provided, however, that the trustee may withhold notice to the
holders of any series of debt securities of any default with respect to such
series (except a default in the payment of the principal of, and premium, if
any, or interest on any debt security of such series or in the payment of any
sinking fund installment in respect of any debt security of such series) if the
trustee considers such withholding to be in the interest of the holders.

Limitation on Suits. Each indenture provides that no holders of debt
securities of any series may institute any proceedings, judicial or otherwise,
with respect to the indenture or for any remedy thereunder, except in the case
of the failure of the trustee, for 60 days, to act after it has received a
written request to institute proceedings in respect of an event of default from
the holders of not less than 25% in aggregate principal amount of the debt
securities of the applicable series outstanding, as well as an offer of
indemnity reasonably satisfactory to it. This provision will not prevent,
however, any holder of debt securities from instituting suit for the
enforcement of

payment of the principal of, and premium, if any, and interest on such debt
securities at the respective due dates of the securities.

Obligations of Trustee. Unless we say otherwise in a prospectus supplement,
the trustee is under no obligation to exercise any of the rights or powers
vested in it by the indenture at the request or direction of any of the holders
of the debt securities unless they shall have offered to the trustee security
or indemnity satisfactory to the trustee against the costs, expenses and
liabilities that might be incurred thereby.

The Trust Indenture Act limits the trustee, should it become a creditor of
ours or of any guarantor, from obtaining payment of claims in certain cases or
realizing certain property received by it in respect of those claims, as
security or otherwise. The trustee is permitted to engage in certain other
transactions as long as, if it acquires any conflicting interest and an event
of default occurs, it either cures the conflict or resigns as trustee.

For information regarding the acceleration of a portion of the principal
amount of any original issue discount securities on the occurrence of an event
of default, please read the prospectus supplement relating to the issuance of
those securities.

Defeasance or Covenant Defeasance of Indenture

Unless we say otherwise in a prospectus supplement, we will be able to
discharge our obligations under debt securities at any time by taking the
actions described below. The discharge of all obligations using this process is
known as "defeasance." If we defease debt securities, all obligations under the
series of debt securities that is defeased will be deemed to have been
discharged, except for:

. the rights of holders of outstanding debt securities to receive, solely
from funds deposited for this purpose, payments in respect of the
principal of, premium, if any, and interest on those debt securities when
the payments are due;

. the obligations with respect to the debt securities concerning issuing
temporary debt securities, registration of debt securities, mutilated,
destroyed, lost or stolen debt securities, and the maintenance of an
office or agency for payment and money for security payments held in trust;

. the rights, powers, trusts, duties and immunities of the trustee; and

. the defeasance provisions of the indenture.

We will also be able to free ourselves from certain covenants that are
described in an indenture by taking the actions described below. The discharge
of obligations using this process is known as "covenant defeasance." If we
defease covenants under debt securities, then certain events (not including
non-payment, enforceability of any guarantee, bankruptcy and insolvency events)
described under "-Events of Default" will no longer constitute an event of
default with respect to the debt securities.

Unless we say otherwise in a prospectus supplement, in order to exercise
either defeasance or covenant defeasance as to the outstanding debt securities
of a series:

. we must irrevocably deposit with the trustee, in trust, for the benefit of
the holders of the debt securities of the applicable series, an amount in
(i) currency, currencies or currency unit in which those debt securities
are then specified as payable at maturity, (ii) government securities (as
defined in the applicable indenture) or (iii) any combination thereof, as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the trustee, to pay and discharge the principal of,
premium, if any, and interest on the debt securities of the applicable
series on the stated maturity of such principal or installment of
principal or interest and any mandatory sinking fund payments;

. in the case of defeasance, we will deliver to the trustee an opinion of
counsel confirming that either:

. we have received from, or there has been published by, the Internal
Revenue Service a ruling, or

. since the date we issued the applicable debt securities, there has
been a change in the applicable federal income tax law,

the effect of either being that the holders of the outstanding debt
securities of the applicable series will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not
occurred;

. in the case of covenant defeasance, we will deliver to the trustee an
opinion of counsel to the effect that the holders of the debt securities
of the applicable series will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred;

. no default or event of default shall have occurred and be continuing on
the date of such deposit or insofar as clause 6 or 7 of "-- Default
Provisions -- Events of Default" is concerned, at any time during the
period ending on the 91st day after the date of deposit;

. the defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, the indenture or any other
material agreement or instrument to which we are a party or by which we
are bound;

. we will deliver to the trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent provided for that
relate to either the defeasance or the covenant defeasance, as the case
may be, have been met; and

. we will deliver to the trustee an opinion of counsel to the effect that
either (i) as a result of the deposit pursuant to the first bullet in this
paragraph and the election to defease, registration is not required under
the Investment Company Act of 1940, as amended, with respect to the trust
funds representing the deposit, or (ii) all necessary representations
under the Investment Company Act have been effected.

Modifications and Amendments

Unless we say otherwise in a prospectus supplement, we and the trustee may
modify and amend either indenture with the consent of the holders of a majority
in aggregate principal amount of the outstanding debt securities of all series
affected by the modification or amendment; provided, however, that no
modification or amendment may, without the consent of the holder of each
outstanding debt security of all series affected by the modification or
amendment:

. change the stated maturity of the principal of, or any installment of
interest on, any debt security;

. reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof;

. change the coin or currency in which the principal or premium, if any, of
any debt security or the interest thereon is payable;

. impair the right to institute suit for the enforcement of any such payment
after the stated maturity of the debt security (or in the case of
redemption, on or after the redemption date);

. reduce the percentage in principal amount of outstanding debt securities
of any series for which the consent of the holders is required for any
such supplemental indenture, or for any waiver of compliance with certain
provisions of the indenture or certain defaults; or

. modify any of the provisions that relate to supplemental indentures and
that require the consent of holders, that relate to the waiver of past
defaults, that relate to the waiver of certain covenants, except to
increase the percentage in principal amount of outstanding debt securities
required to take such actions or to provide that certain other provisions
of the indenture cannot be modified or waived without the consent of the
holder of each debt security affected thereby.

Unless we say otherwise in a prospectus supplement, we and the trustee may
modify and amend either indenture without the consent of the holders if the
modification or amendment does only the following:

. evidences the succession of another person to us and the assumption by any
such successor of any covenants under the indenture and in the debt
securities of any series;

. adds to our covenants for the benefit of the holders of all or any series
of debt securities or surrenders any of our rights or powers;

. adds any additional event of default for the benefit of the holders of all
or any series of debt securities;

. secures the debt securities of any series;

. adds or changes any provisions to the extent necessary to provide that
bearer securities may be registrable as to principal, to change or
eliminate any restrictions on the payment of principal of or any premium
or interest on bearer securities, to permit bearer securities to be issued
in exchange for registered securities or bearer of securities of other
authorized denominations, or to permit or facilitate the issuance of
securities in uncertificated form;

. changes or eliminates any provision affecting only debt securities not yet
issued;

. establishes the form or terms of debt securities of any series not yet
issued;

. evidences and provides for successor trustees or adds or changes any
provisions of the indenture to the extent necessary to permit or
facilitate the appointment of a separate trustee or trustees for specific
series of debt securities;

. cures any ambiguity, corrects or supplements any provisions which may be
defective or inconsistent with any other provision, or makes any other
provisions with respect to matters or questions arising under the
indenture which shall not be inconsistent with the provisions of the
indenture; provided, however, that no such modification or amendment may
adversely affect the interest of holders of debt securities of any series
then outstanding in any material respect; or

. supplements any provision of the indenture to such extent as shall be
necessary to permit the facilitation of defeasance and discharge of any
series of debt securities; provided, however, that any such action may not
adversely affect the interest of holders of debt securities of any series
then outstanding in any material respect.

The holders of a majority in aggregate principal amount of the debt
securities of a series outstanding may waive compliance with certain
restrictive covenants and provisions of either indenture with respect to that
series.

Original Issue Discount

We may issue debt securities under either indenture for less than their
stated principal amount. Such securities may be treated as "original issue
discount securities," and they may be subject to special tax consequences. In
addition, some debt securities that are offered and sold at their stated
principal amount may, under certain circumstances, be treated as issued at an
original issue discount for federal income tax purposes. We will describe the
federal income tax consequences and other special consequences applicable to
securities

treated as original issue discount securities in the prospectus supplement
relating to such securities. "Original issue discount security" generally means
any debt security that:

. does not provide for the payment of interest prior to maturity; or

. is issued at a price lower than its face value and provides that upon
redemption or acceleration of its stated maturity an amount less than its
principal amount shall become due and payable.

Notices

Unless we say otherwise in a prospectus supplement, we will send notices to
holders of debt securities by mail to the holder's address as it appears in the
register.

Governing Law

Unless we say otherwise in a prospectus supplement, each indenture and the
debt securities will be governed by the laws of the State of New York.

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

We are a Maryland real estate investment trust. Your rights as a shareholder
are governed by the Code of Maryland, including Title 8 of the Corporations and
Associations Article, our declaration of trust and our bylaws. The following
summary of terms, rights and preferences of the shares of beneficial interest
is not complete. You should read our declaration of trust and bylaws for more
complete information.

Authorized Shares

Our declaration of trust allows us to issue up to 100,000,000 common shares
of beneficial interest, par value $.01 per share, and 15,000,000 preferred
shares of beneficial interest, par value $.01 per share. As of September 30,
2002, we had issued and outstanding 43,300,533 common shares, 4,000,000
preferred shares which were designated as 7.95% Series A Cumulative Redeemable
Preferred Shares and 5,400,000 preferred shares which were designated as 81/2%
Series B Cumulative Redeemable Preferred Shares.

Authority of the Board of Trustees Relating to Authorization and
Classification of Shares. Our declaration of trust allows our Board of
Trustees to take the following actions without approval by you or any other
shareholder:

. classify or reclassify any authorized but unissued common shares or
preferred shares into one or more classes or series of shares of
beneficial interest;

. amend the declaration of trust to change the total number of shares of
beneficial interest authorized; and

. amend the declaration of trust to change the authorized number of shares
of any class or series of shares of beneficial interest.

If there are any laws or stock exchange rules which require us to obtain
shareholder approval in order for us to take these actions, however, we will
contact you and other shareholders to solicit that approval.

We believe that the power of the Board of Trustees to issue additional
shares of beneficial interest will provide us with greater flexibility in
structuring possible future financings and acquisitions and in meeting other
future needs. Although the Board of Trustees does not currently intend to do
so, it has the ability to issue a class or series of beneficial shares that
could have the effect of delaying or preventing a change of our control that
might involve a premium price for holders of our common shares or otherwise be
favorable to them.

Shareholder Liability

Under Maryland law, you will not be personally liable for any obligation of
ours solely because you are a shareholder. Under the declaration of trust, our
shareholders are not personally liable for our debts or obligations and will
not be subject to any personal liability, in tort, contract or otherwise, to
any person in connection with our property or affairs by reason of being a
shareholder.

Notwithstanding these limitations, common law theories of "piercing the
corporate veil" may be used to impose liability on shareholders in certain
instances. Also, to the extent, that we conduct operations in another
jurisdiction where the law of that jurisdiction (i) does not recognize the
limitations of liability afforded by contract, Maryland law or our declaration
of trust, and (ii) does not provide similar limitations of liability applicable
to real estate investment trusts or other trusts, a third party could attempt,
under limited circumstances, to assert a claim against our shareholders based
on the obligations of our company. We believe, based on our current operating
structure and our review of relevant law, that there should not be a material
risk of such liability. We believe that we have taken and we intend to continue
to take such actions as we consider necessary or advisable in order to
minimize, to the extent possible, the risk of this type of liability.

Common Shares

All common shares offered through this prospectus will be duly authorized,
fully paid and nonassessable. As a shareholder, you will be entitled to receive
distributions, or dividends, on the shares you own if the Board of Trustees
authorizes a dividend to the holders of our common shares out of our legally
available assets. However, your right to receive those dividends may be
affected by the preferential rights of any other class or series of
shares of beneficial interest and the provisions of our declaration of trust
regarding restrictions on the transfer of shares of beneficial interest. For
example, you may not receive dividends if no funds are available for
distribution after we pay dividends to holders of preferred shares. You will
also be entitled to receive dividends based on our assets available for
distribution to common shareholders if we liquidate, dissolve or wind up our
operations. The amount you, as a shareholder, would receive in the distribution
would be determined by the amount of your beneficial ownership of us in
comparison with other beneficial owners. Assets will be available for
distribution to shareholders only after we have paid all of our known debts and
liabilities and paid the holders of our Series A preferred shares and our
Series B preferred shares and any other preferred shares we may issue which are
outstanding at that time.

Voting Rights. Each outstanding common share owned by a shareholder
entitles that holder to one vote on all matters submitted to a vote of
shareholders, including the election of trustees. The right to vote is subject
to the provisions of our declaration of trust regarding the restriction of the
transfer of shares of beneficial interest, which we describe under
"-- Restrictions on Ownership and Transfer," below. There is no cumulative
voting in the election of trustees, which means that, under Maryland law and
our bylaws, the holders of a plurality of the outstanding common shares can
elect all of the trustees then standing for election, and the holders of the
remaining shares will not be able to elect any trustees.

As a holder of a common share, you will not have any right to:

. convert your shares into any other security;

. have any funds set aside for future payments;

. require us to repurchase your shares; or

. purchase any of our securities, if other securities are offered for sale,
other than as a member of the general public.

Subject to the terms of our declaration of trust regarding the restrictions
on transfer of shares of beneficial interest, each common share has the same
dividend, distribution, liquidation and other rights as each other common share.

According to the terms of our declaration of trust and bylaws, and Maryland
law, all matters submitted to the shareholders for approval, except for those
matters listed below, are approved if a majority of all the votes cast at a
meeting of shareholders duly called and at which a quorum is present are voted
in favor of approval. The following matters require approval other than by a
majority of all votes cast:

. the election of trustees (which requires a plurality of all the votes cast
at a meeting of our shareholders at which a quorum is present);

. the removal of trustees (which requires the affirmative vote of the
holders of two-thirds of the number of shares outstanding and entitled to
vote on such a matter if the removal is approved or recommended by a vote
of at least two-thirds of the Board of Trustees or the affirmative vote of
the holders of not less than 80% of the number of shares then outstanding
and entitled to vote on such matter if the removal is not approved or
recommended by a vote of at least two-thirds of the Board of Trustees);

. the amendment of our declaration of trust by shareholders (which requires
the affirmative vote of two-thirds of all votes entitled to be cast on the
matter only if the amendment was not approved by a

unanimous vote of the Board of Trustees, but requires the affirmative vote
of only a majority of votes entitled to be cast on the matter if the
amendment was approved by a unanimous vote of the Board of Trustees);

. our termination, winding up of affairs and liquidation (which requires the
affirmative vote of two-thirds of all the votes entitled to be cast on the
matter); and

. our merger or consolidation with another entity or sale of all or
substantially all of our property (which requires the approval of the
Board of Trustees and an affirmative vote of two-thirds of all the votes
entitled to be cast on the matter).

Our declaration of trust permits the trustees to revoke our election to be
taxed as a REIT or to determine that compliance with any restriction or
limitations on ownership and transfers of shares set forth in the declaration
of trust is no longer required in order for us to qualify as a REIT. Our
declaration of trust also permits the trustees to amend the declaration of
trust from time to time, without approval by you or the other shareholders, to:

. qualify as a real estate investment trust under Maryland law or the
Internal Revenue Code; or

. to increase or decrease the authorized aggregate number of shares and
number of authorized shares of any class or series.

In addition, any provision of our bylaws may be adopted, altered or repealed
by the shareholders, at any meeting of shareholders called for that purpose, by
the affirmative vote of holders of not less than 80% of the shares then
outstanding and entitled to vote.

Stock Exchange Listing. The common shares are traded on the New York Stock
Exchange under the trading symbol "FRT."

Transfer Agent and Registrar. The transfer agent and registrar for the
common shares is American Stock Transfer & Trust Company, New York, New York.

Preferred Shares

General. Preferred shares may be offered and sold from time to time, in one
or more series, as authorized by the Board of Trustees. The Board of Trustees
is authorized by Maryland law and our declaration of trust to set for each
series the terms, preferences, conversion or other rights, voting powers,
restrictions, limitations as to distributions, qualifications and terms or
conditions of redemption. The Board of Trustees has the power to set
preferences, powers and rights, voting or other terms of preferred shares that
are senior to, or better than, the rights of holders of common shares or other
classes or series of preferred shares. The offer and sale of preferred shares
could have the effect of delaying or preventing a change of our control that
might involve a premium price for holders of our common shares or otherwise be
favorable to them.

Terms. You should refer to the prospectus supplement relating to the
offering of any preferred shares for specific terms, including the following
terms:

. the title of those preferred shares;

. the number of preferred shares offered and the offering price of those
preferred shares;

. the dividend rate(s), period(s), amounts and/or payment date(s) or
method(s) of calculation of any of those terms that apply to those
preferred shares;

. the date from which dividends on those preferred shares will accumulate,
if applicable;

. the terms and amount of a sinking fund, if any, for the purchase or
redemption of those preferred shares;

. the redemption rights, including conditions, time(s) and the redemption
price(s), if applicable, of those preferred shares;

. the voting rights, if any, of those preferred shares;

. any listing of those preferred shares on any securities exchange;

. the terms and conditions, if applicable, upon which those preferred shares
will be convertible into common shares or any of our other securities,
including the conversion price or rate (or manner of calculation thereof);

. the relative ranking and preference of those preferred shares as to
dividend rights and rights upon liquidation, dissolution or the winding up
of our affairs;

. any limitations on issuance of any series of preferred shares ranking
senior to or on a parity with that series of preferred shares as to
dividend rights and rights upon liquidation, dissolution or the winding up
of our affairs;

. the procedures for any auction and remarketing, if any, for those
preferred shares;

. any other specific terms, preferences, rights, limitations or restrictions
of those preferred shares;

. a discussion of federal income tax consequences applicable to those
preferred shares; and

. any limitations on direct or beneficial ownership and restrictions on
transfer in addition to those described in "-- Restrictions on Ownership
and Transfer," in each case as may be appropriate to preserve our status
as a real estate investment trust.

The terms of any preferred shares we issue through this prospectus will be
set forth in articles supplementary to our declaration of trust. We will file
the articles supplementary as an exhibit to the registration statement that
includes this prospectus, or as an exhibit to a filing with the SEC that is
incorporated by reference into this prospectus. The description of preferred
shares in any prospectus supplement will not describe all of the terms of the
preferred shares in detail. You should read the applicable articles
supplementary for a complete description of all of the terms.

Rank. Unless we say otherwise in a prospectus supplement, the preferred
shares offered through that supplement will, with respect to dividend rights
and rights upon our liquidation, dissolution or winding up, rank:

. senior to all classes or series of our common shares, and to all other
equity securities ranking junior to those preferred shares;

. on a parity with all of our equity securities ranking on a parity with the
preferred shares; and

. junior to all of our equity securities ranking senior to the preferred
shares.

The term "equity securities" does not include convertible debt securities.

Dividends. Subject to any preferential rights of any outstanding shares or
series of shares and to the provisions of our declaration of trust regarding
ownership of shares in excess of the ownership limitation described below under
"-- Restrictions on Ownership and Transfer," our preferred shareholders are
entitled to receive dividends, when and as authorized by our Board of Trustees,
out of legally available funds, and share pro rata based on the number of
preferred shares, common shares and other parity equity securities outstanding.

Redemption. If we provide for a redemption right in a prospectus
supplement, the preferred shares offered through that supplement will be
subject to mandatory redemption or redemption at our option, in whole or in
part, in each case upon the terms, at the times and at the redemption prices
set forth in that supplement.

Liquidation Preference. As to any liquidation preference applicable to
preferred shares offered through this prospectus, the applicable supplement
shall provide that, upon the voluntary or involuntary liquidation, dissolution
or winding up of our affairs, the holders of those preferred shares shall
receive, before any distribution or payment shall be made to the holders of any
other class or series of shares ranking junior to those preferred shares in our
distribution of assets upon any liquidation, dissolution or winding up, and
after payment or provision for payment of our debts and other liabilities, out
of our assets legally available for distribution to

stockholders, liquidating distributions in the amount of any liquidation
preference per share (set forth in the applicable supplement), plus an amount,
if applicable, equal to all distributions accrued and unpaid thereon (not
including any accumulation in respect of unpaid distributions for prior
distribution periods if those preferred shares do not have a cumulative
distribution). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of those preferred shares
will have no right or claim to any of our remaining assets. In the event that,
upon our voluntary or involuntary liquidation, dissolution or winding up, the
legally available assets are insufficient to pay the amount of the liquidating
distributions on all of those outstanding preferred shares and the
corresponding amounts payable on all of our shares of other classes or series
of equity security ranking on a parity with those preferred shares in the
distribution of assets upon liquidation, dissolution or winding up, then the
holders of those preferred shares and all other such classes or series of
equity security shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.

If the liquidating distributions are made in full to all holders of
preferred shares entitled to receive those distributions prior to any other
classes or series of equity security ranking junior to the preferred shares
upon our liquidation, dissolution or winding up, then our remaining assets
shall be distributed among the holders of those junior classes or series of
equity shares, in each case according to their respective rights and
preferences and their respective number of shares.

Voting Rights. Unless otherwise indicated in the applicable supplement,
holders of our preferred shares will not have any voting rights, except as may
be required by applicable law or the rules and regulations of the New York
Stock Exchange.

Conversion Rights. The terms and conditions, if any, upon which any series
of preferred shares is convertible into common shares will be set forth in the
prospectus supplement relating to the offering of those preferred shares. These
terms typically will include:

. the number of common shares into which the preferred shares are
convertible;

. the conversion price or rate (or manner of calculation thereof);

. the conversion period;

. provisions as to whether conversion will be at the option of the holders
of the preferred shares or at our option;

. the events requiring an adjustment of the conversion price; and

. provisions affecting conversion in the event of the redemption of that
series of preferred shares.

Transfer Agent and Registrar. The transfer agent and registrar for the
Series A preferred shares and Series B preferred shares is American Stock
Transfer & Trust Company, New York, New York. We will identify the transfer
agent and registrar for any additional series of preferred shares issued
through this prospectus in a prospectus supplement.

Depositary Shares

General. We may issue receipts for depositary shares, each of which will
represent a fractional interest of a share of a particular series of preferred
shares. We will deposit the preferred shares of any series represented by
depositary shares with a depositary under a deposit agreement. We will identify
the depositary in a prospectus supplement. Subject to the terms of the deposit
agreement, if you own a depositary share, you will be entitled, in proportion
to the fraction of the preferred share represented by your depositary share, to
all the rights and preferences that you would be entitled to if you owned the
preferred share represented by your depositary share directly (including
dividend, voting, redemption, conversion, subscription and liquidation rights).

The depositary shares will be represented by depositary receipts issued
pursuant to the applicable deposit agreement. Immediately following the
issuance and delivery of our preferred shares to the depositary, we will cause
the depositary to issue, on our behalf, the depositary receipts. Upon request,
we will provide you with copies of the applicable form of deposit agreement and
depositary receipt.

Dividends and Other Provisions. If you are a "record holder" (as defined
below) of depositary receipts and we pay a cash dividend or other cash
distribution with respect to the preferred share represented by your depositary
share, the depositary will distribute all cash dividends or other cash
distributions it receives in respect of the preferred shares represented by
your depositary receipts in proportion to the number of depositary shares you
owned on the record date for that dividend or distribution.

If we make a distribution in a form other than cash, the depositary will
distribute the property it receives to you and all other record holders of
depositary receipts in an equitable manner, unless the depositary determines
that it is not feasible to do so. If the depositary decides it cannot feasibly
distribute the property, it may sell the property and distribute the net
proceeds from the sale to you and the other record holders. The amount the
depositary distributes in any of the foregoing cases may be reduced by any
amounts that we or the depositary is required to withhold on account of taxes.

A "record holder" is a person who holds depositary receipts on the record
date for any dividend, distribution or other action. The record date for
depositary shares will be the same as the record date for the preferred shares
represented by those depositary receipts.

Withdrawal of Preferred Shares. If you surrender your depositary receipts,
the depositary will be required to deliver certificates to you evidencing the
number of preferred shares represented by those receipts (but only in whole
shares). If you deliver depositary receipts representing a number of depositary
shares that is greater than the number of whole shares to be withdrawn, the
depositary will deliver to you, at the same time, a new depositary receipt
evidencing the fractional shares.

Redemption of Depositary Shares. If we redeem a series of preferred shares
represented by depositary receipts, the depositary will redeem depositary
shares from the proceeds it receives after redemption of the preferred shares.
The redemption price per depositary share will equal the applicable fraction of
the redemption price per share payable with respect to that series of preferred
shares. If fewer than all the depositary shares are to be redeemed, the
depositary will select shares to be redeemed by lot, pro rata or by any other
equitable method it may determine. After the date fixed for redemption, the
depositary shares called for redemption will no longer be outstanding. All
rights of the holders of those depositary shares will cease, except the right
to receive the redemption price that the holders of the depositary shares were
entitled to receive upon redemption. Payments will be made when holders
surrender their depositary receipts to the depositary.

Voting the Preferred Shares. When the depositary receives notice of any
meeting at which the holders of preferred shares are entitled to vote, the
depositary will mail information contained in the notice to you as a record
holder of the depositary shares relating to the preferred shares. As a record
holder of the depositary shares on the record date (which will be the same date
as the record date for the preferred shares), you will be entitled to instruct
the depositary as to how you would like your votes to be exercised. The
depositary will endeavor, insofar as practicable, to vote the number of
preferred shares represented by your depositary shares in accordance with your
instructions. We will agree to take all reasonable action that the depositary
may deem necessary to enable the depositary to do this. If you do not send
specific instructions the depositary will not vote the preferred shares
represented by your depositary shares.

Liquidation Preference. In the event of our liquidation, dissolution or
winding up, whether voluntary or involuntary, you will be entitled, as a record
holder of depositary shares, to the fraction of the liquidation preference
accorded each applicable preferred share, as has been set forth in a prospectus
supplement.

Conversion of Preferred Shares. Our depositary shares, as such, are not
convertible into common shares or any of our other securities or property.
Nevertheless, if so specified in a prospectus supplement, the depositary
receipts may be surrendered by their holders to the depositary with written
instructions to the depositary to instruct us to cause conversion of the
preferred shares represented by the depositary shares into whole common or
preferred shares, as the case may be. We will agree that, upon receipt of this
type of instructions and any amounts payable, we will convert the depositary
shares using the same procedures as those provided for delivery of preferred
shares to effect such conversion. If the depositary shares are to be converted
in part only, one or more new depositary receipts will be issued for any
depositary shares not to be converted. No fractional common shares will be
issued upon conversion, and if such conversion will result in issuance of a
fractional share, we will pay an amount of cash equal to the value of the
fractional interest based upon the closing price of the common shares on the
last business day prior to the conversion.

Amendment and Termination of the Deposit Agreement. We and the depositary
may amend the form of depositary receipt and any provision of the deposit
agreement at any time. However, any amendment which materially and adversely
alters your rights as a holder of depositary shares will not be effective
unless the holders of at least a majority of the depositary shares then
outstanding approve the amendment. The deposit agreement will only terminate if:

. we redeem all outstanding depositary shares;

. we make a final distribution in respect of the preferred shares to which
the depositary shares and agreement relate, including in connection with
any liquidation, dissolution or winding up and the distribution has been
distributed to the holders of depositary shares; or

. each preferred share to which the depositary shares and agreement relate
shall have been converted into shares of beneficial interest not
represented by depositary shares.

Resignation and Removal of Depositary. The depositary may resign at any
time by delivering a notice to us of its election to do so. Additionally, we
may remove the depositary at any time. Any resignation or removal will take
effect when we appoint a successor depositary and the successor accepts the
appointment. We must appoint a successor depositary within 60 days after
delivery of the notice of resignation or removal. A successor depositary must
be a bank or trust company having its principal office in the U.S. and having a
combined capital and surplus of at least $50 million.

Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will pay charges of the depositary in connection with the
initial deposit of the preferred shares and issuance of depositary receipts,
all withdrawals of preferred shares by owners of the depositary shares and any
redemption of the preferred shares. You will pay other transfer and other
taxes, governmental charges and other charges expressly provided for in the
deposit agreement.

Miscellaneous. The depositary will forward to you all reports and
communications from us that we are required, or otherwise determine, to furnish
to the holders of the preferred shares.

Neither we nor the depositary will be liable under the deposit agreement to
you other than for the depositary's gross negligence, willful misconduct or bad
faith. Neither we nor the depositary will be obligated to prosecute or defend
any legal proceeding in respect of any depositary shares or preferred shares
unless satisfactory indemnity is furnished. We and the depositary may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting preferred shares for deposit, holders of depositary receipts
or other persons believed to be competent and on documents believed to be
genuine.

Restrictions on Ownership and Transfer

Restrictions on ownership and transfer of shares are important to ensure
that we meet certain conditions under the Internal Revenue Code of 1986, as
amended, to qualify as a REIT. For example, the Code contains the following
requirements.

. No more than 50% in value of a REIT's shares may be owned, actually or
constructively (based on attribution rules in the Code), by five or fewer
individuals during the last half of a taxable year or a proportionate part
of a shorter taxable year (the "5/50 Rule"). Under the Code, individuals
include certain tax-exempt entities except that qualified domestic pension
funds are not generally treated as individuals.

. If a REIT, or an owner of 10% or more of a REIT, is treated as owning 10%
or more of a tenant of the REIT's property, the rent received by the REIT
from the tenant will not be "qualifying income" for purposes of the REIT
gross income tests of the Code.

. A REIT's stock or beneficial interests must be owned by 100 or more
persons during at least 335 days of a taxable year of 12 months or during
a proportionate part of a shorter taxable year.

In order to maintain our qualification as a REIT, our declaration of trust,
subject to certain exceptions described below, provides that no person may own,
or be deemed to own by virtue of the attribution provisions of the Code, more
than 9.8% (in value or in number of shares, whichever is more restrictive) of
the outstanding common shares or more than 9.8% in value of our outstanding
capital stock. In this prospectus, the term "ownership limitation" is used to
describe this provision of our declaration of trust.

Any transfer of shares will be null and void, and the intended transferee
will acquire no rights in such shares if the transfer:

. results in any person owning, directly or indirectly, shares in excess of
the ownership limitation;

. results in the shares being owned by fewer than 100 persons (determined
without reference to any rules of attribution);

. results in our being "closely held" (within the meaning of Section 856(h)
of the Code); or

. causes us to own, directly or constructively, 10% or more of the ownership
interests in a tenant of our real property (within the meaning of Section
856(d)(2)(B) of the Code).

Automatic Transfer of Shares to Trust. With certain exceptions described
below, the shares will be designated as "shares-in-trust" and transferred
automatically to a trust if any purported transfer of shares would violate any
of the four restrictions that are listed above and cause the transfer to be
null and void. The transfer to the trust is effective as of the end of the
business day before the purported transfer of such shares. The record holder of
the shares that are designated as shares-in-trust must deliver those shares to
us for registration in the name of the trust. We will designate a trustee who
is not affiliated with us. The beneficiary of the trust will be one or more
charitable organizations named by us.

Any shares-in-trust remain issued and outstanding shares and are entitled to
the same rights and privileges as all other shares of the same class or series.
The trust receives all dividends and distributions on the shares-in-trust and
holds such dividends and distributions in trust for the benefit of the
beneficiary. The trustee votes all shares-in-trust. The trustee may also
designate a permitted transferee of the shares-in-trust. The permitted
transferee must purchase the shares-in-trust for valuable consideration and
acquire the shares-in-trust without resulting in the transfer being null and
void.

The record holder with respect to shares-in-trust must pay the trust any
dividends or distributions received by such record holder that are attributable
to any shares-in-trust if the record date for those shares-in-trust was on or
after the date that such shares became shares-in-trust. Upon sale or other
disposition of the shares-in-trust to a permitted transferee, the record holder
generally will receive from the trustee, the lesser of:

. the price per share, if any, paid by the record holder for the shares; or

. if no amount was paid for such shares (e.g., if such shares were received
through a gift or devise),

. the price per share equal to the market price (which is calculated as
defined in our declaration of trust) on the date the shares were
received, or

. the price per share received by the trustee from the sale of such
shares-in-trust.

Any amounts received by the trustee in excess of the amounts paid to the
record owner will be distributed to the beneficiary. Unless sooner sold to a
permitted transferee, upon our liquidation, dissolution or winding up, the
record owner generally will receive from the trustee its share of the
liquidation proceeds but in no case more than the price per share paid by the
record owner or, in the case of a gift or devise, the market price per share on
the date such shares were received.

The shares-in-trust will be offered for sale to us, or our designee, at a
price per share equal to the lesser of the price per share in the transaction
that created the shares-in-trust (or, in the case of a gift or devise, the
market price per share on the date of such transfer) or the market price per
share on the date that we, or our designee, accepts such offer. We may accept
such offer until the trustee has sold the shares-in-trust as provided above.

Any person who acquires or attempts to acquire shares which would be null
and void under the restrictions described above, or any person who owned common
shares or preferred shares that were transferred to a trust, must both give us
immediate written notice to us of such event and provide us such other
information as requested in order to determine the effect, if any, of such
transfer on our status as a REIT.

If a shareholder owns more than 5% of the outstanding common shares or
preferred shares, then the shareholder must notify us of its share ownership by
January 30 of each year.

The ownership limitation generally does not apply to the acquisition of
shares by an underwriter that participates in a public offering of such shares.
In addition, the Board of Trustees may exempt a person from the ownership
limitation under certain circumstances and conditions. The restrictions on
ownership and transfer described in this section of this prospectus will
continue to apply until the Board of Trustees determines that it is no longer
in our best interests to attempt to qualify, or to continue to qualify, as a
REIT.

The Board of Trustees has agreed to exempt from the ownership limitation
Morgan Stanley Investment Management, Inc., or MSIM. The MSIM exemption, which
was granted on June 6, 2001 and is effective for four years, for itself and on
behalf of its investment advisory clients on whose behalf MSIM owns our common
shares, permits MSIM and its clients, as a group, to own up to 14.9% of our
outstanding common shares.

The ownership limitation could have the effect of delaying, deferring or
preventing a transaction or a change in our control that might involve a
premium price for the common shares or preferred shares or otherwise be in the
best interest of our shareholders. All certificates representing shares will
bear a legend referring to the restrictions described above.

Warrants

Warrants. We may issue warrants for the purchase of common or preferred
shares. If we offer warrants, we will describe the terms in a prospectus
supplement. Warrants may be offered independently, together with other
securities offered by any prospectus supplement, or through a dividend or other
distribution to shareholders and may be attached to or separate from other
securities. Warrants may be issued under a written warrant agreement to be
entered into between us or the holder or beneficial owner, or we could issue
warrants pursuant to a written warrant agreement with a warrant agent specified
in a prospectus supplement. A warrant agent would act solely as our agent in
connection with the warrants of a particular series and would not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of such warrants.

The following are some of the warrant terms that could be described in a
prospectus supplement:

. the title of the warrant;

. the aggregate number of warrants;

. the price or prices at which the warrant will be issued;

. the designation, number and terms of the preferred shares or common shares
that may be purchased on exercise of the warrant;

. the date, if any, on and after which the warrant and the related
securities will be separately transferable;

. the price at which each security purchasable on exercise of the warrant
may be purchased;

. the dates on which the right to purchase the securities purchasable on
exercise of the warrant will begin and end;

. the minimum or maximum number of securities that may be purchased at any
one time;

. any anti-dilution protection;

. information with respect to book-entry procedures, if any;

. a discussion of certain federal income tax considerations; and

. any other warrant terms, including terms relating to transferability,
exchange or exercise of the warrant.

Certain Provisions of Maryland Law and our Declaration of Trust and Bylaws

The following summary of certain provisions of the Maryland General
Corporation Law and our declaration of trust and bylaws is not complete. You
should read the Maryland General Corporation Law and our declaration of trust
and bylaws for more complete information.

The following provisions, together with the ability of the Board of Trustees
to increase the number of authorized shares, in the aggregate or by class, and
to issue preferred shares without further stockholder action, the transfer
restrictions described under "- Restrictions on Ownership and Transfer" and the
supermajority voting rights described under "- Common Shares - Voting Rights,"
may delay or frustrate the removal of incumbent trustees or the completion of
transactions that would be beneficial, in the short term, to our shareholders.
The provisions may also discourage or make more difficult a merger, tender
offer, other business combination or proxy contest, the assumption of control
by a holder of a large block of our securities or the removal of incumbent
management, even if these events would offer our shareholders a premium price
on their securities or otherwise be favorable to the interests of our
shareholders.

Business Combinations. Applicable Maryland law, as set forth in the
Maryland General Corporation Law, prohibits us from entering into "business
combinations" and other corporate transactions, including a merger,
consolidation, share exchange, or, in certain circumstances, an asset transfer
or issuance of equity securities when the combination is between us and an
"interested shareholder" (as defined below) or an affiliate of an "interested
shareholder." An interested shareholder is:

. any person who beneficially owns 10% or more of the voting power of our
shares; or

. any of our affiliates that beneficially owned 10% or more of the voting
power of our shares within two years prior to the applicable date relating
to the transaction.

We may not engage in a business combination with an interested shareholder
or any of its affiliates for five years after the interested shareholder
becomes an interested shareholder. This prohibition does not apply to business
combinations involving us that are exempted by the Board of Trustees before the
interested shareholder becomes an interested shareholder.

We may engage in business combinations with an interested shareholder if at
least five years have passed since the person became an interested shareholder,
but only if the transaction is:

. recommended by our Board of Trustees; and

. approved by at least

. 80% of our outstanding shares entitled to vote; and

. two-thirds of our outstanding shares entitled to vote that are not
held by the interested shareholder.

Shareholder approval will not be required if our common shareholders receive
a minimum price (as defined in the statute) for their shares and our
shareholders receive cash or the same form of consideration as the interested
shareholder paid for its shares.

Control Share Acquisitions. Our bylaws exempt acquisitions of our shares of
beneficial interest by any person from "control share acquisition" requirements
discussed below. With the approval of our Board of Trustees, however, we could
modify or eliminate the exemption in the future. If the exemption were
eliminated, "control share acquisitions" would be subject to the following
provisions.

The Maryland General Corporation Law provides that "control shares" of a
Maryland real estate investment trust acquired in a "control share acquisition"
have no voting rights unless two-thirds of the shareholders (excluding shares
owned by the acquirer and by the officers and trustees who are employees of the
Maryland real estate investment trust) approve their voting rights.

"Control Shares" are shares that, if added to all other shares previously
acquired, would entitle that person to vote, in electing trustees:

. 10% or more but less than one-third of such shares;

. one-third or more but less than a majority of such shares, or

. a majority of the outstanding shares.

Control shares do not include shares the acquiring person is entitled to
vote with shareholder approval. A "control share acquisition" means the
acquisition of control shares, subject to certain exceptions.

If this provision becomes applicable to us, a person who has made or
proposes to make a control share acquisition could, under certain
circumstances, compel our Board of Trustees to call a special meeting of
shareholders to consider the voting rights of the control shares. We could also
present the question at any shareholders' meeting on our own.

If this provision becomes applicable to us, subject to certain conditions
and limitations, we would be able to redeem any or all control shares. If
voting rights for control shares were approved at a shareholders' meeting and
the acquirer were entitled to vote a majority of the shares entitled to vote,
all other shareholders could exercise appraisal rights and exchange their
shares for a fair value as defined by statute.

Rights Plan. On April 13, 1989, we adopted a shareholder rights plan and
declared a dividend distribution of one right for each outstanding common share
to shareholders of record at the close of business on April 24, 1989, with such
rights to expire on April 24, 1999. On March 11, 1999, the expiration date of
the rights plan was extended and certain other amendments to the terms of the
rights plan were adopted. Except as set forth below, each right, when
exercisable, entitles the registered holder to purchase from us a number of
common shares equal in value to two times the purchase price, which is
initially equal to $65.00 per share but is subject to adjustment upon the
occurrence of specified events.

The rights become exercisable upon the earlier to occur of

. a public announcement that, without our prior consent, a person or group
of affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of our common shares; or

. ten days following the commencement of (or a public announcement of an
intention to make) a tender offer or exchange offer that would result in
the beneficial ownership by a person or group of 15% or more of our common
shares.

Initially, the rights will be attached to, and evidenced by, the common
shares certificates representing shares then outstanding, and no separate right
certificates will be distributed. Once the rights become exercisable, separate
certificates evidencing the rights will be mailed to holders of record of our
common shares, and the separate rights certificates alone will evidence the
rights.

In general, the rights will expire on the earliest of

. April 24, 2009;

. consummation of a merger transaction with a person or group who acquired
common shares pursuant to a transaction approved by the Board of Trustees;
or

. redemption by us as described below.

In the event that the rights become exercisable, each holder of a right will
for a 60-day period thereafter have the right to receive upon exercise and
payment of the purchase price (initially set at $65.00 but subject to
adjustment) that number of our common shares (or fractional shares) having a
then-current market value of two times the purchase price, subject to the
availability of a sufficient number of authorized but unissued common shares.
We are be entitled (but not required) to deliver, upon exercise of the right,
in lieu of common shares, shares of equivalent securities.

In the event that, after the first date that the rights become exercisable,
we are involved in a merger or other business combination transaction in which
our common shares are exchanged or changed, or 50% or more of our assets or
earning power are sold (in one transaction or a series of transactions), each
holder of a right (other than the person or group triggering the exercise of
the rights) shall thereafter have the right to receive, upon the exercise
thereof at the then-current purchase price, that number of common shares of the
acquiring company, which at the time of such transaction would have a market
value equal to two times the then-current purchase price of the right.

At any time prior to the earlier to occur of the date the rights become
exercisable or the expiration of the rights, we may redeem the rights in whole,
but not in part, at a price of $0.01 per right, payable in cash or common
shares. Additionally, after the date the rights become exercisable, we may
redeem the then-outstanding rights in whole, but not in part, at a price of
$0.01 per right income provided that the redemption is incidental to a merger
or other business combination transaction or series of transactions involving
us but not involving the person or group triggering the exercise of the rights,
or if the redemption occurs after the expiration of a period during which our
shareholders may acquire common shares through the exercise of the rights and,
at that time, the person or group that triggered the exercise of the rights no
longer has beneficial ownership of 15% or more of our common shares. Upon the
effective date of the redemption of the rights, the right to exercise the
rights will terminate and the only right of the holders of rights will be to
receive the price of $0.01 per right.

Until a right is exercised, the holder thereof, as such, will have no rights
as one of our shareholders, including, without limitation, the right to vote or
to receive dividends.

Duties of Trustees. Under Maryland law, there is a presumption that the act
of a trustee satisfies the required standard of care. An act of a trustee
relating to or affecting an acquisition or a potential acquisition of control
is not subject under Maryland law to a higher duty or greater scrutiny than is
applied to any other act of a trustee. This provision does not impose an
enhanced level of scrutiny when a board implements anti-takeover measures in a
change of control context, and shifts the burden of proof for demonstrating
that the defensive mechanism adopted by a board is reasonable in relation to
the threat posed to the board.

Number of Trustees; Classified Board. The number of trustees may be
increased or decreased pursuant to the bylaws, provided that the total number
of trustees may not be less than three or more than 15. Under Maryland law and
our declaration of trust, trustees, except for holders of preferred shares, are
elected in three classes for staggered, three-year terms.

Removal of Trustees. Under the declaration of trust, and subject to the
rights of any holders of preferred shares, our shareholders may remove a
trustee, with or without cause, at any meeting of shareholders called for that
purpose, either by

. the affirmative vote of the holders of two-thirds of the number of shares
outstanding and entitled to vote on that matter if the removal is approved
or recommended by a vote of at least two-thirds of the Board of Trustees;
or

. the affirmative vote of the holders of not less than 80% of the number of
shares then outstanding and entitled to vote on that matter if the removal
is not approved or recommended by a vote of at least two-thirds of the
Board of Trustees.

Vacancies on the Board of Trustees. The bylaws provide that, subject to
the rights of any holders of preferred shares, any vacancy on the Board of
Trustees, including a vacancy created by an increase in the number of trustees,
may be filled by vote of a majority of the remaining trustees, or, if the
trustees fail to act, at a meeting called for that purpose by the vote of a
majority of the shares entitled to vote on the matter. Each trustee so elected
shall serve for the unexpired term of the trustee he is replacing.

The Series A preferred shares and the Series B preferred shares provide
that, when six consecutive quarterly dividends payable to holders of Series A
preferred shares, Series B preferred shares or any series or class of parity
shares are in arrears, holders of Series A preferred shares and Series B
preferred shares, together with the holders of any series or class of shares
ranking on a parity with the Series A and Series B preferred shares, voting as
a single class regardless of series, will be entitled to elect two additional
trustees to serve on the Board of Trustees. Whenever all dividends in arrears
on the Series A preferred shares, Series B preferred shares and any series or
class of parity shares have been paid or set aside for payment, then these
special voting rights immediately cease (subject to reinstatement under similar
circumstances in the future), and the term of office of the trustees so elected
automatically terminates.

Meetings of Shareholders. Our bylaws provide for an annual meeting of
shareholders, to be held in May after delivery of the annual report to
shareholders, to elect individuals to the Board of Trustees for the class of
trustees then standing for election and transact such other business as may
properly be brought before the meeting. Special meetings of shareholders may be
called by our President or by one-third of the Board of Trustees, and shall be
called at the request in writing of the holders of 25% of all votes entitled to
be cast at the meeting.

Our declaration of trust provides that any action required or permitted to
be taken at a meeting of shareholders may be taken without a meeting, if a
majority of shares entitled to vote on the matter (or such larger
proportion as shall be required to take the action) consent to the action in
writing and the written consents are filed with the records of the meetings of
shareholders.

Advance Notice for Shareholder Nominations and Shareholder New Business
Proposals. Our bylaws require advance written notice for shareholders to
nominate a trustee or bring other business before a meeting of shareholders.
For an annual meeting, to nominate a trustee or bring other business before a
meeting of shareholders, a shareholder must deliver notice to our Secretary not
later than the close of business on the 90/th /day nor earlier than the close
of business on the 120/th/ day prior to the first anniversary of the date of
the proxy statement relating to the preceding year's annual meeting. If the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from the anniversary date, however, notice must be delivered not
earlier than the close of business on the 120/th/ day prior to such annual
meeting and not later than the close of business on the later of the 90/th/ day
prior to the annual meeting or the 10/th/ day following the date on which
public announcement is first made of the annual meeting.

For a special meeting, to nominate a trustee, a shareholder must deliver
notice to our Secretary not earlier that the close of business on the 120/th/
day prior to the special meeting and not later than the close of business on
the later of the 90/th/ day prior to the special meeting or the 10/th/ day
following the date on which public

announcement is first made of the special meeting. Nominations for elections to
the Board of Trustees at a special meeting may be made by shareholders only if
the Board of Trustees has determined that trustees shall be elected at the
special meeting.

The postponement or adjournment of an annual or special meeting to a later
date or time shall not commence any new time periods for the giving of notice
as described above. Our bylaws contain detailed requirements for the contents
of shareholder notices of trustee nominations and new business proposals.

FEDERAL INCOME TAX CONSEQUENCES

The following sections summarize the federal income tax issues that you may
consider relevant. Because this section is a summary, it does not address all
of the tax issues that may be important to you. In addition, this section does
not address the tax issues that may be important to certain types of
shareholders that are subject to special treatment under the federal income tax
laws, such as insurance companies, tax-exempt organizations (except to the
extent discussed in "-- Taxation of Tax -- Exempt U.S. Shareholders" below),
financial institutions and broker-dealers, and non-U.S. individuals and foreign
corporations (except to the extent discussed in "-- Taxation of Non-U.S.
Shareholders" below).

The statements in this section are based on the current federal income tax
laws governing our qualification as a REIT. We cannot assure you that new laws,
interpretations of laws or court decisions, any of which may take effect
retroactively, will not cause any statement in this section to be inaccurate.

We urge you to consult your own tax advisor regarding the specific federal,
state, local, foreign and other tax consequences to you of purchasing, owning
and disposing of our securities, our election to be taxed as a REIT and the
effect of potential changes in applicable tax laws.

Taxation of the Company

We elected to be taxed as a REIT under the federal income tax laws when we
filed our 1962 tax return. We have operated in a manner intended to qualify as
a REIT and we intend to continue to operate in that manner. This section
discusses the laws governing the federal income tax treatment of a REIT and its
shareholders. These laws are highly technical and complex.

In the opinion of our tax counsel, Shaw Pittman LLP, (i) we qualified as a
REIT under Sections 856 through 859 of the Code with respect to our taxable
years ended through December 31, 2001; and (ii) we are organized in conformity
with the requirements for qualification as a REIT under the Code and our
current method of operation will enable us to meet the requirements for
qualification as a REIT for the current taxable year and for future taxable
years, provided that we have operated and continue to operate in accordance
with various assumptions and factual representations made by us concerning our
business, properties and operations. We may not, however, have met or continue
to meet such requirements. You should be aware that opinions of counsel are not
binding on the IRS or any court. Our qualification as a REIT depends on our
ability to meet, on a continuing basis, certain qualification tests set forth
in the federal tax laws. Those qualification tests involve the percentage of
income that we earn from specified sources, the percentage of our assets that
fall within certain categories, the diversity of the ownership of our shares,
and the percentage of our earnings that we distribute. We describe the REIT
qualification tests in more detail below. Shaw Pittman LLP will not monitor our
compliance with the requirements for REIT qualification on an ongoing basis.
Accordingly, no assurance can be given that our actual operating results will
satisfy the qualification tests. For a discussion of the tax treatment of us
and our shareholders if we fail to qualify as a REIT, see "-- Requirements for
REIT Qualification -- Failure to Qualify."

If we qualify as a REIT, we generally will not be subject to federal income
tax on the taxable income that we distribute to our shareholders. The benefit
of that tax treatment is that it avoids the "double taxation" (i.e., at

both the corporate and stockholder levels) that generally results from owning
stock in a corporation. However, we will be subject to federal tax in the
following circumstances:

. we will pay federal income tax on taxable income (including net capital
gain) that we do not distribute to our shareholders during, or within a
specified time period after, the calendar year in which the income is
earned;

. we may be subject to the " alternative minimum tax" on any items of tax
preference that we do not distribute or allocate to our shareholders;

. we will pay income tax at the highest corporate rate on (i) net income
from the sale or other disposition of property acquired through
foreclosure that we hold primarily for sale to customers in the ordinary
course of business and (ii) other non-qualifying income from foreclosure
property;

. we will pay a 100% tax on net income from certain sales or other
dispositions of property (other than foreclosure property) that we hold
primarily for sale to customers in the ordinary course of business
("prohibited transactions");

. if we fail to satisfy the 75% gross income test or the 95% gross income
test (as described below under "-- Requirements for REIT Qualification
-- Income Tests"), and nonetheless continue to qualify as a REIT because
we meet certain other requirements, we will pay a 100% tax on (i) the
gross income attributable to the greater of the amount by which we fail,
respectively, the 75% or 95% gross income test, multiplied by (ii) a
fraction intended to reflect our profitability;

. if we fail to distribute during a calendar year at least the sum of (i)
85% of our REIT ordinary income for such year, (ii) 95% of our REIT
capital gain net income for such year, and (iii) any undistributed taxable
income from prior periods, we will pay a 4% excise tax on the excess of
such required distribution over the amount we actually distributed;

. we may elect to retain and pay income tax on our net long-term capital
gain; or

. if we acquire any asset from a C corporation (i.e., a corporation
generally subject to full corporate-level tax) in a merger or other
transaction in which we acquire a "carryover" basis in the asset (i.e.,
basis determined by reference to the C corporation's basis in the asset
(or another asset)), we will pay tax at the highest regular corporate rate
applicable if we recognize gain on the sale or disposition of such asset
during the 10-year period after we acquire such asset. The amount of gain
on which we will pay tax is the lesser of (i) the amount of gain that we
recognize at the time of the sale or disposition and (ii) the amount of
gain that we would have recognized if we had sold the asset at the time we
acquired the asset.

Requirements for REIT Qualification

In order to qualify as a REIT, we must be a corporation, trust or
association and meet the following requirements:

1. we are managed by one or more trustees or directors;

2. our beneficial ownership is evidenced by transferable shares, or by
transferable certificates of beneficial interest;

3. we would be taxable as a domestic corporation, but for Sections 856
through 860 of the Code;

4. we are neither a financial institution nor an insurance company subject
to certain provisions of the Code;

5. at least 100 persons are beneficial owners of our shares or ownership
certificates;

6. not more than 50% in value of our outstanding shares or ownership
certificates is owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities) during
the last half of any taxable year (the "5/50 Rule");

7. we elect to be a REIT (or have made such election for a previous taxable
year) and satisfy all relevant filing and other administrative
requirements established by the Internal Revenue Service that must be
met to elect and maintain REIT status;

8. we use a calendar year for federal income tax purposes and comply with
the record keeping requirements of the Code and the related Treasury
regulations; and

9. we meet certain other qualification tests, described below, regarding
the nature of our income and assets.

We must meet requirements 1 through 4 during our entire taxable year and
must meet requirement 5 during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than
12 months. If we comply with all the requirements for ascertaining the
ownership of our outstanding shares in a taxable year and have no reason to
know that we violated the 5/50 Rule, we will be deemed to have satisfied the
5/50 Rule for such taxable year. For purposes of determining share ownership
under the 5/50 Rule, an "individual" generally includes a supplemental
unemployment compensation benefits plan, a private foundation, or a portion of
a trust permanently set aside or used exclusively for charitable purposes. An
"individual," however, generally does not include a trust that is a qualified
employee pension or profit sharing trust under Code Section 401(a), and
beneficiaries of such a trust will be treated as holding our shares in
proportion to their actuarial interests in the trust for purposes of the 5/50
Rule.

We believe we have issued sufficient common shares with sufficient diversity
of ownership to satisfy requirements 5 and 6 set forth above. In addition, our
declaration of trust restricts the ownership and transfer of the common shares
so that we should continue to satisfy requirements 5 and 6. The provisions of
our declaration of trust restricting the ownership and transfer of the common
shares are described in "Description of Shares of Beneficial
Ownership-Restrictions on Ownership and Transfer."

We currently have several direct corporate subsidiaries and may have
additional corporate subsidiaries in the future. A corporation that is a
"qualified REIT subsidiary" is not treated as a corporation separate from its
parent REIT. All assets, liabilities, and items of income, deduction, and
credit of a qualified REIT subsidiary are treated as assets, liabilities, and
items of income, deduction, and credit of the REIT. A qualified REIT subsidiary
is a corporation, all of the capital stock of which is owned by the parent
REIT, unless we and the subsidiary have jointly elected to have it treated as a
"taxable REIT subsidiary," in which case it is treated separately from us and
will be subject to federal corporate income taxation. Thus, in applying the
requirements described herein, any qualified REIT subsidiary of ours will be
ignored, and all assets, liabilities, and items of income, deduction, and
credit of such subsidiary will be treated as our assets, liabilities, and items
of income, deduction, and credit. We believe our direct corporate subsidiaries
are qualified REIT subsidiaries, except for those which are taxable REIT
subsidiaries. Accordingly, they are not subject to federal corporate income
taxation, though they may be subject to state and local taxation.

A REIT is treated as owning its proportionate share of the assets of any
partnership in which it is a partner and as earning its allocable share of the
gross income of the partnership for purposes of the applicable REIT
qualification tests. Thus, our proportionate share of the assets, liabilities
and items of income of any partnership (or limited liability company treated as
a partnership) in which we have acquired or will acquire an interest, directly
or indirectly, are treated as our assets and gross income for purposes of
applying the various REIT qualification requirements.

Income Tests. We must satisfy two gross income tests annually to maintain
our qualification as a REIT:

. At least 75% of our gross income (excluding gross income from prohibited
transactions) for each taxable year must consist of defined types of
income that we derive, directly or indirectly, from investments relating
to real property or mortgages on real property or temporary investment
income (the "75% gross income test"). Qualifying income for purposes of
the 75% gross income test includes "rents

from real property," interest on debt secured by mortgages on real
property or on interests in real property, and dividends or other
distributions on and gain from the sale of shares in other REITs; and

. At least 95% of our gross income (excluding gross income from prohibited
transactions) for each taxable year must consist of income that is
qualifying income for purposes of the 75% gross income test, dividends,
other types of interest, gain from the sale or disposition of stock or
securities, or any combination of the foregoing (the "95% gross income
test").

The following paragraphs discuss the specific application of these tests to
us.

Rental Income. Our primary source of income derives from leasing
properties. Rent that we receive from real property that we own and lease to
tenants will qualify as "rents from real property" (which is qualifying income
for purposes of the 75% and 95% gross income tests) only if several conditions
are met under the REIT tax rules:

. The rent must not be based, in whole or in part, on the income or profits
of any person although, generally, rent may be based on a fixed percentage
or percentages of receipts or sales. We have not entered into any lease
based in whole or part on the net income of any person and do not
anticipate entering into such arrangements.

. Except in certain limited circumstances involving taxable REIT
subsidiaries, neither we nor someone who owns 10% or more of our shares
may own 10% or more of a tenant from whom we receive rent. Our ownership
and the ownership of a tenant is determined based on direct, indirect and
constructive ownership. The constructive ownership rules generally provide
that if 10% or more in value of our shares are owned, directly or
indirectly, by or for any person, we are considered as owning the shares
owned, directly or indirectly, by or for such person. The applicable
attribution rules, however, are highly complex and difficult to apply, and
we may inadvertently enter into leases with tenants who, through
application of such rules, will constitute "related party tenants." In
such event, rent paid by the related party tenant will not qualify as
"rents from real property," which may jeopardize our status as a REIT. We
will use our best efforts not to rent any property to a related party
tenant (taking into account the applicable constructive ownership rules),
unless we determine in our discretion that the rent received from such
related party tenant is not material and will not jeopardize our status as
a REIT. We believe that we have not leased property to any related party
tenant, except where we have determined that the rent received from such
related party tenant is not material and will not jeopardize our status as
a REIT.

. In the case of rent from a taxable REIT subsidiary which would, but for
this exception, be considered rent from a related party tenant, the space
leased to the taxable REIT subsidiary must be part of a property at least
90 percent of which is rented to persons other than taxable REIT
subsidiaries and related party tenants, and the amounts of rent paid to us
by the taxable REIT subsidiary must be substantially comparable to the
rents paid by such other persons for comparable space. All space currently
leased to taxable REIT subsidiaries meets these conditions, and we intend
to meet them in the future, unless we determine in our discretion that the
rent received from a taxable REIT subsidiary is not material and will not
jeopardize our status as a REIT.

. The rent attributable to any personal property leased in connection with a
lease of property is no more than 15% of the total rent received under the
lease. In general, we have not leased a significant amount of personal
property under our current leases. If any incidental personal property has
been leased, we believe that rent under each lease from the personal
property would be less than 15% of total rent from that lease. If we lease
personal property in connection with a future lease, we intend to satisfy
the 15% test described above.

. We generally must not operate or manage our property or furnish or render
services to our tenants, other than through an "independent contractor"
who is adequately compensated and from whom we do not derive revenue, or
through a taxable REIT subsidiary. We may provide services directly, if
the services are "usually or customarily rendered" in connection with the
rental of space for occupancy only and are not otherwise considered
"rendered to the occupant." In addition, we may render directly a de
minimis

amount of "non-customary" services to the tenants of a property without
disqualifying the income as "rents from real property," as long as our
income from the services does not exceed 1% of our income from the related
property. We have not provided services to leased properties that have
caused rents to be disqualified as rents from real property, and in the
future, we intend that any services provided will not cause rents to be
disqualified as rents from real property.

Based on the foregoing, we believe that rent from leases should qualify as
"rents from real property" for purposes of the 75% and 95% gross income tests.
However, there can be no complete assurance that the IRS will not assert
successfully a contrary position and, therefore, prevent us from qualifying as
a REIT.

On an ongoing basis, we will use our best efforts not to:

. charge rent for any property that is based in whole or in part on the
income or profits of any person (except by reason of being based on a
percentage of receipts or sales, as described above);

. rent any property to a related party tenant (taking into account the
applicable constructive ownership rules and the exception for taxable REIT
subsidiaries), unless we determine in our discretion that the rent
received from such related party tenant is not material and will not
jeopardize our status as a REIT;

. derive rental income attributable to personal property (other than
personal property leased in connection with the lease of real property,
the amount of which is less than 15% of the total rent received under the
lease); and

. perform services considered to be rendered to the occupant of the property
that generate rents exceeding 1% of all amounts received or accrued during
the taxable year with respect to such property, other than through an
independent contractor from whom we derive no revenue, through a taxable
REIT subsidiary, or if the provision of such services will not jeopardize
our status as a REIT.

Because the Code provisions applicable to REITs are complex, however, we may
fail to meet one or more of the foregoing.

Tax on Income From Property Acquired in Foreclosure. We will be subject to
tax at the maximum corporate rate on any income from foreclosure property
(other than income that would be qualifying income for purposes of the 75%
gross income test), less expenses directly connected to the production of such
income. "Foreclosure property" is any real property (including interests in
real property) and any personal property incident to such real property:

. that is acquired by a REIT at a foreclosure sale, or having otherwise
become the owner or in possession of the property by agreement or process
of law, after a default (or imminent default) on a lease of such property
or on an debt owed to the REIT secured by the property;

. for which the related loan was acquired by the REIT at a time when default
was not imminent or anticipated; and

. for which the REIT makes a proper election to treat the property as
foreclosure property.

A REIT will not be considered to have foreclosed on a property where it
takes control of the property as a mortgagee-in-possession and cannot receive
any profit or sustain any loss except as a creditor of the mortgagor.
Generally, property acquired as described above ceases to be foreclosure
property on the earlier of:

. the last day of the third taxable year following the taxable year in which
the REIT acquired the property (or longer if an extension is granted by
the Secretary of the Treasury);

. the first day on which a lease is entered into with respect to such
property that, by its terms, will give rise to income that does not
qualify under the 75% gross income test or any amount is received or
accrued, directly or indirectly, pursuant to a lease entered into on or
after such day that will give rise to income that does not qualify under
the 75% gross income test;

. the first day on which any construction takes place on such property
(other than completion of a building, or any other improvement, where more
than 10% of the construction of such building or other improvement was
completed before default became imminent); or

. the first day that is more than 90 days after the day on which such
property was acquired by the REIT and the property is used in a trade or
business that is conducted by the REIT (other than through an independent
contractor from whom the REIT itself does not derive or receive any
income).

Tax on Prohibited Transactions. A REIT will incur a 100% tax on net income
derived from any "prohibited transaction." A "prohibited transaction" generally
is a sale or other disposition of property (other than foreclosure property)
that the REIT holds primarily for sale to customers in the ordinary course of a
trade or business. We believe that none of our assets are held for sale to
customers and that a sale of any such asset would not be in the ordinary course
of its business. Whether a REIT holds an asset "primarily for sale to customers
in the ordinary course of a trade or business" depends, however, on the facts
and circumstances in effect from time to time, including those related to a
particular asset. Nevertheless, we will attempt to comply with the terms of
safe-harbor provisions in the Code prescribing when an asset sale will not be
characterized as a prohibited transaction. We may fail to comply with such
safe-harbor provisions or may own property that could be characterized as
property held "primarily for sale to customers in the ordinary course of a
trade or business."

Tax and Deduction Limits on Certain Transactions with Taxable REIT
Subsidiaries. A REIT will incur a 100% tax on certain transactions between a
REIT and a taxable REIT subsidiary to the extent the transactions are not on an
arms-length basis. In addition, under certain circumstances the interest paid
by a taxable REIT subsidiary may not be deductible by the taxable REIT
subsidiary. We believe that none of the transactions we have had with our
taxable REIT subsidiaries will give rise to the 100% tax and that none of our
taxable REIT subsidiaries will be subject to the interest deduction limits.

Relief from Consequences of Failing to Meet Income Tests. If we fail to
satisfy one or both of the 75% and 95% gross income tests for any taxable year,
we nevertheless may qualify as a REIT for such year if we qualify for relief
under certain provisions of the Code. Those relief provisions generally will be
available if our failure to meet such tests is due to reasonable cause and not
due to willful neglect, we attach a schedule of the sources of our income to
our tax return, and any incorrect information on the schedule was not due to
fraud with intent to evade tax. We may not qualify for the relief provisions in
all circumstances. In addition, as discussed above in "-- Taxation of the
Company," even if the relief provisions apply, we would incur a 100% tax on
gross income to the extent we fail the 75% or 95% gross income test (whichever
amount is greater), multiplied by a fraction intended to reflect our
profitability.

Asset Tests. To maintain our qualification as a REIT, we also must satisfy
two asset tests at the close of each quarter of each taxable year:

. At least 75% of the value of our total assets must consist of cash or cash
items (including certain receivables), government securities, "real estate
assets," or qualifying temporary investments (the "75% asset test").

. "Real estate assets" include interests in real property, interests in
mortgages on real property and stock in other REITs. We believe that
the properties qualify as real estate assets.

. "Interests in real property" include an interest in mortgage loans or
land and improvements thereon, such as buildings or other inherently
permanent structures (including items that are structural components
of such buildings or structures), a leasehold of real property, and an
option to acquire real property (or a leasehold of real property).

. Qualifying temporary investments are investments in stock or debt
instruments during the one-year period following our receipt of new
capital that we raise through equity or long-term (at least five-year)
debt offerings.

. For investments not included in the 75% asset test, (A) the value of our
interest in any one issuer's securities (which does not include our equity
ownership of other REITs, any qualified REIT subsidiary, or any taxable
REIT subsidiary) may not exceed 5% of the value of our total assets (the
"5% asset test"), (B) we may not own more than 10% of the voting power or
value of any one issuer's outstanding securities, which does not include
our equity ownership in other REITs, any qualified REIT subsidiary, or any
taxable REIT subsidiary (the "10% asset test"), and (C) the value of our
securities in one or more taxable REIT subsidiaries may not exceed 20% of
the value of our total assets.

We intend to select future investments so as to comply with the asset tests.

If we failed to satisfy the asset tests at the end of a calendar quarter, we
would not lose our REIT status if (i) we satisfied the asset tests at the close
of the preceding calendar quarter and (ii) the discrepancy between the value of
our assets and the asset test requirements arose from changes in the market
values of our assets and was not wholly or partly caused by the acquisition of
one or more non-qualifying assets. If we did not satisfy the condition
described in clause (ii) of the preceding sentence, we still could avoid
disqualification as a REIT by eliminating any discrepancy within 30 days after
the close of the calendar quarter in which the discrepancy arose.

Distribution Requirements. Each taxable year, we must distribute dividends
(other than capital gain dividends and deemed distributions of retained capital
gain) to our shareholders in an aggregate amount at least equal to (1) the sum
of 90% of (A) our "REIT taxable income" (computed without regard to the
dividends paid deduction and our net capital gain) and (B) our net income
(after tax), if any, from foreclosure property, minus (2) certain items of
non-cash income.

We must pay such distributions in the taxable year to which they relate, or
in the following taxable year if we declare the distribution before we timely
file our federal income tax return for such year and pay the distribution on or
before the first regular dividend payment date after such declaration.

We will pay federal income tax on taxable income (including net capital
gain) that we do not distribute to shareholders. Furthermore, we will incur a
4% nondeductible excise tax if we fail to distribute during a calendar year
(or, in the case of distributions with declaration and record dates falling in
the last three months of the calendar year, by the end of January following
such calendar year) at least the sum of (1) 85% of our REIT ordinary income for
such year, (2) 95% of our REIT capital gain income for such year, and (3) any
undistributed taxable income from prior periods. The excise tax is on the
excess of such required distribution over the amounts we actually distributed.
We may elect to retain and pay income tax on the net long-term capital gain we
receive in a taxable year. See "-- Taxation of Taxable U.S. Shareholders." For
purposes of the 4% excise tax, we will be treated as having distributed any
such retained amount. We have made, and we intend to continue to make, timely
distributions sufficient to satisfy the annual distribution requirements.

It is possible that, from time to time, we may experience timing differences
between (1) the actual receipt of income and actual payment of deductible
expenses and (2) the inclusion of that income and deduction of such expenses in
arriving at our REIT taxable income. For example, we may not deduct recognized
capital losses from our REIT taxable income. Further, it is possible that, from
time to time, we may be allocated a share of net capital gain attributable to
the sale of depreciated property that exceeds our allocable share of cash
attributable to that sale. As a result of the foregoing, we may have less cash
than is necessary to distribute all of our taxable income and thereby avoid
corporate income tax and the excise tax imposed on certain undistributed
income. In such a situation, we may need to borrow funds or issue preferred
shares or additional common shares.

Under certain circumstances, we may be able to correct a failure to meet the
distribution requirement for a year by paying deficiency dividends to our
shareholders in a later year. We may include such deficiency dividends in our
deduction for dividends paid for the earlier year. Although we may be able to
avoid income tax on amounts distributed as deficiency dividends, we will be
required to pay interest to the IRS based upon the amount of any deduction we
take for deficiency dividends.

Record Keeping Requirements. We must maintain certain records in order to
qualify as a REIT. In addition, to avoid a monetary penalty, we must request on
an annual basis certain information from our shareholders designed to disclose
the actual ownership of our outstanding stock. We have complied, and we intend
to continue to comply, with such requirements.

Failure to Qualify. If we failed to qualify as a REIT in any taxable year,
and no relief provision applied, we would be subject to federal income tax
(including any applicable alternative minimum tax) on our taxable income at
regular corporate rates. In calculating our taxable income in a year in which
we failed to qualify as a REIT, we would not be able to deduct amounts paid out
to shareholders. In fact, we would not be required to distribute any amounts to
shareholders in such year. In such event, to the extent of our current and
accumulated earnings and profits, all distributions to shareholders would be
taxable as ordinary income. Subject to certain limitations of the Code,
corporate shareholders might be eligible for the dividends received deduction.
Unless we qualified for relief under specific statutory provisions, we also
would be disqualified from taxation as a REIT for the four taxable years
following the year during which we ceased to qualify as a REIT. We cannot
predict whether in all circumstances we would qualify for such statutory relief.

Taxation of Taxable U.S. Shareholders

As long as we qualify as a REIT, a taxable "U.S. shareholder" must take into
account distributions out of our current or accumulated earnings and profits
(and that we do not designate as capital gain dividends or retained long-term
capital gain) as ordinary income. A corporate U.S. shareholder will not qualify
for the dividends received deduction generally available to corporations. As
used herein, the term "U.S. shareholder" means a holder of common shares that
for U.S. federal income tax purposes is

. a citizen or resident of the United States;

. a corporation, partnership, or other entity created or organized in or
under the laws of the United States or of a political subdivision thereof;

. an estate whose income is subject to U.S. federal income taxation
regardless of its source; or

. any trust with respect to which (A) a U.S. court is able to exercise
primary supervision over the administration of such trust and (B) one or
more U.S. persons have the authority to control all substantial decisions
of the trust.

A U.S. shareholder will recognize distributions that we designate as capital
gain dividends as long-term capital gain (to the extent they do not exceed our
actual net capital gain for the taxable year) without regard to the period for
which the U.S. shareholder has held its common shares. Subject to certain
limitations, we will designate our capital gain dividends as either 20% or 25%
rate distributions. A corporate U.S. shareholder, however, may be required to
treat up to 20% of certain capital gain dividends as ordinary income.

We may elect to retain and pay income tax on the net long-term capital gain
that we receive in a taxable year. In that case, a U.S. shareholder would be
taxed on its proportionate share of our undistributed long-term capital gain.
The U.S. shareholder would receive a credit or refund for its proportionate
share of the tax we paid. The U.S. shareholder would increase the basis in its
stock by the amount of its proportionate share of our undistributed long-term
capital gain, minus its share of the tax we paid.

A U.S. shareholder will not incur tax on a distribution to the extent it
exceeds our current and accumulated earnings and profits if such distribution
does not exceed the adjusted basis of the U.S. shareholder's common shares.
Instead, such distribution in excess of earnings and profits will reduce the
adjusted basis of such common shares. To the extent a distribution exceeds both
our current and accumulated earnings and profits and the U.S. shareholder's
adjusted basis in its common shares, the U.S. shareholder will recognize
long-term capital gain (or short-term capital gain if the common shares have
been held for one year or less), assuming the common shares are a capital asset
in the hands of the U.S. shareholder. In addition, if we declare a distribution
in October,

November, or December of any year that is payable to a U.S. shareholder of
record on a specified date in any such month, such distribution shall be
treated as both paid by us and received by the U.S. shareholder on December 31
of such year, provided that we actually pay the distribution during January of
the following calendar year. We will notify U.S. shareholders after the close
of our taxable year as to the portions of the distributions attributable to
that year that constitute ordinary income or capital gain dividends.

Taxation of U.S. Shareholders on the Disposition of the Common Shares. In
general, a U.S. shareholder who is not a dealer in securities must treat any
gain or loss realized upon a taxable disposition of the common shares as
long-term capital gain or loss if the U.S. shareholder has held the common
stock for more than one year and otherwise as short-term capital gain or loss.
However, a U.S. shareholder must treat any loss upon a sale or exchange of
common shares held by such shareholder for six months or less (after applying
certain holding period rules) as a long-term capital loss to the extent of
capital gain dividends and other distributions from us that such U.S.
shareholder treats as long-term capital gain. All or a portion of any loss a
U.S. shareholder realizes upon a taxable disposition of the common shares may
be disallowed if the U.S. shareholder purchases additional common shares within
30 days before or after the disposition.

Capital Gains and Losses. A taxpayer generally must hold a capital asset
for more than one year for gain or loss derived from its sale or exchange to be
treated as long-term capital gain or loss. The highest marginal individual
income tax rate for 2002 and 2003 is 38.6%. The maximum tax rate on long-term
capital gain applicable to non-corporate taxpayers is generally 20% for sales
and exchanges of assets held for more than one year. The maximum tax rate on
long-term capital gain from the sale or exchange of "Section 1250 property"
(i.e., depreciable real property) is 25% to the extent that such gain would
have been treated as ordinary income if the property were "Section 1245
property." With respect to distributions that we designate as capital gain
dividends and any retained capital gain that it is deemed to distribute, we may
designate (subject to certain limits) whether such a distribution is taxable to
our non-corporate shareholders at a 20% or 25% rate. Thus, the tax rate
differential between capital gain and ordinary income for non-corporate
taxpayers may be significant. A U.S. shareholder required to include retained
long-term capital gains in income will be deemed to have paid, in the taxable
year of the inclusion, its proportionate share of the tax paid by us in respect
of such undistributed net capital gains. U.S. shareholders subject to these
rules will be allowed a credit or a refund, as the case may be, for the tax
deemed to have been paid by such shareholders. U.S. shareholders will increase
their basis in their common shares by the difference between the amount of such
includible gains and the tax deemed paid by the U.S. shareholder in respect of
such gains. In addition, the characterization of income as capital gain or
ordinary income may affect the deductibility of capital losses. A non-corporate
taxpayer may deduct capital losses not offset by capital gains against its
ordinary income only up to a maximum annual amount of $3,000. A non-corporate
taxpayer may carry forward unused capital losses indefinitely. A corporate
taxpayer must pay tax on its net capital gain at ordinary corporate rates. A
corporate taxpayer can deduct capital losses only to the extent of capital
gains, with unused losses being carried back three years and forward five years.

Information Reporting Requirements and Backup Withholding. We will report
to our shareholders and to the IRS the amount of distributions we pay during
each calendar year, and the amount of tax we withhold, if any. Under the backup
withholding rules, a shareholder may be subject to backup withholding (at the
rate of 30% for 2002 and 2003) with respect to distributions unless such holder
(1) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (2) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with the applicable requirements of the backup withholding
rules. A shareholder who does not provide us with its correct taxpayer
identification number also may be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the shareholder's
income tax liability. In addition, we may be required to withhold a portion of
capital gain distributions to any shareholders who fail to certify their
non-foreign status to us.

Taxation of Tax-Exempt U.S. Shareholders

Tax-exempt entities, including qualified employee pension and profit sharing
trusts and individual retirement accounts and annuities ("exempt
organizations"), generally are exempt from federal income taxation. However,
they are subject to taxation on their unrelated business taxable income
("UBTI"). While many investments in real estate generate UBTI, the IRS has
issued a published ruling that dividend distributions from a REIT to an exempt
employee pension trust do not constitute UBTI, provided that the exempt
employee pension trust does not otherwise use the shares of the REIT in an
unrelated trade or business of the pension trust. Based on that ruling, amounts
that we distribute to exempt organizations generally should not constitute
UBTI. However, if an exempt organization were to finance its acquisition of
common shares with debt, a portion of the income that they receive from us
would constitute UBTI pursuant to the "debt-financed property" rules.
Furthermore, social clubs, voluntary employee benefit associations,
supplemental unemployment benefit trusts and qualified group legal services
plans that are exempt from taxation under paragraphs (7), (9), (17), and (20),
respectively, of Code Section 501(c) are subject to different UBTI rules, which
generally will require them to characterize distributions that they receive
from us as UBTI. Finally, in certain circumstances, a qualified employee
pension or profit sharing trust that owns more than 10% of our shares is
required to treat a percentage of the dividends that it receives from us as
UBTI (the "UBTI Percentage"). The UBTI Percentage is equal to the gross income
we derive from an unrelated trade or business (determined as if it were a
pension trust) divided by our total gross income for the year in which we pay
the dividends. The UBTI rule applies to a pension trust holding more than 10%
of our shares only if:

. the UBTI Percentage is at least 5%;

. we qualify as a REIT by reason of the modification of the 5/50 Rule that
allows the beneficiaries of the pension trust to be treated as holding our
shares in proportion to their actuarial interests in the pension trust; and

. we are a "pension-held REIT" (i.e., either (1) one pension trust owns more
than 25% of the value of our shares or (2) a group of pension trusts
individually holding more than 10% of the value of our shares collectively
owns more than 50% of the value of our shares).

Tax-exempt entities will be subject to the rules described above, under the
heading "-- Taxation of Taxable U.S. Shareholders" concerning the inclusion of
our designated undistributed net capital gains in the income of our
shareholders. Thus, such entities will, after satisfying filing requirements,
be allowed a credit or refund of the tax deemed paid by such entities in
respect of such includible gains.

Taxation of Non-U.S. Shareholders

The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
shareholders (collectively, "non-U.S. shareholders") are complex. This section
is only a summary of such rules. We urge non-U.S. shareholders to consult their
own tax advisors to determine the impact of federal, state, and local income
tax laws on ownership of common shares, including any reporting requirements.

Ordinary Dividends. A non-U.S. shareholder that receives a distribution
that is not attributable to gain from our sale or exchange of U.S. real
property interests (as defined below) and that we do not designate as a capital
gain dividend or retained capital gain will recognize ordinary income to the
extent that we pay such distribution out of our current or accumulated earnings
and profits. A withholding tax equal to 30% of the gross amount of the
distribution ordinarily will apply to such distribution unless an applicable
tax treaty reduces or eliminates the tax. However, if a distribution is treated
as effectively connected with the non-U.S. shareholder's conduct of a U.S.
trade or business, the non-U.S. shareholder generally will be subject to
federal income tax on the distribution at graduated rates, in the same manner
as U.S. shareholders are taxed with respect to such distributions (and also may
be subject to the 30% branch profits tax in the case of a non-U.S. shareholder
that is a non-U.S. corporation). We plan to withhold U.S. income tax at the
rate of 30% on the gross amount of any such

distribution paid to a non-U.S. shareholder unless (i) a lower treaty rate
applies and the non-U.S. shareholder files IRS Form W-8BEN with us evidencing
eligibility for that reduced rate, (ii) the non-U.S. shareholder files an IRS
Form W-8ECI with us claiming that the distribution is effectively connected
income, or (iii) the non-U.S. shareholder holds shares through a "qualified
intermediary" that has elected to perform any necessary withholding itself.

Return of Capital. A non-U.S. shareholder will not incur tax on a
distribution to the extent it exceeds our current and accumulated earnings and
profits if such distribution does not exceed the adjusted basis of its common
shares. Instead, such distribution in excess of earnings and profits will
reduce the adjusted basis of such common shares. A non-U.S. shareholder will be
subject to tax to the extent a distribution exceeds both our current and
accumulated earnings and profits and the adjusted basis of its common shares,
if the non-U.S. shareholder otherwise would be subject to tax on gain from the
sale or disposition of its common shares, as described below. Because we
generally cannot determine at the time we make a distribution whether or not
the distribution will exceed our current and accumulated earnings and profits,
we normally will withhold tax on the entire amount of any distribution just as
we would withhold on a dividend. However, a non-U.S. shareholder may obtain a
refund of amounts that we withhold if we later determine that a distribution in
fact exceeded our current and accumulated earnings and profits.

Capital Gain Dividends. For any year in which we qualify as a REIT, a
non-U.S. shareholder will incur tax on distributions that are attributable to
gain from our sale or exchange of "U.S. real property interests" under the
provisions of the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"). The term "U.S. real property interests" includes certain interests
in real property and stock in corporations at least 50% of whose assets
consists of interests in real property, but excludes mortgage loans and
mortgage-backed securities. Under FIRPTA, a non-U.S. shareholder is taxed on
distributions attributable to gain from sales of U.S. real property interests
as if such gain were effectively connected with a U.S. business of the non-U.S.
shareholder. A non-U.S. shareholder thus would be taxed on such a distribution
at the normal capital gain rates applicable to U.S. shareholders (subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of a nonresident alien individual). A non-U.S. corporate shareholder not
entitled to treaty relief or exemption also may be subject to the 30% branch
profits tax on distributions subject to FIRPTA. We must withhold 35% of any
distribution that we could designate as a capital gain dividend. However, if we
make a distribution and later designate it as a capital gain dividend, then
(although such distribution may be taxable to a non-U.S. shareholder) it is not
subject to withholding under FIRPTA. Instead, we must make-up the 35% FIRPTA
withholding from distributions made after the designation, until the amount of
distributions withheld at 35% equals the amount of the distribution designated
as a capital gain dividend. A non-U.S. shareholder may receive a credit against
its FIRPTA tax liability for the amount we withhold.

Distributions to a non-U.S. shareholder that we designate at the time of
distribution as capital gain dividends which are not attributable to or treated
as attributable to our disposition of a U.S. real property interest generally
will not be subject to U.S. federal income taxation, except as described below
under "-- Sale of Shares."

Sale of Shares. A non-U.S. shareholder generally will not incur tax under
FIRPTA on gain from the sale of its common shares as long as we are a
"domestically controlled REIT." A "domestically controlled REIT" is a REIT in
which at all times during a specified testing period non-U.S. persons held,
directly or indirectly, less than 50% in value of the stock. We anticipate that
we will continue to be a "domestically controlled REIT." In addition, a
non-U.S. shareholder that owns, actually or constructively, 5% or less of
outstanding common shares at all times during a specified testing period will
not incur tax under FIRPTA if the common shares are "regularly traded" on an
established securities market. If neither of these exceptions were to apply,
the gain on the sale of the common shares would be taxed under FIRPTA, in which
case a non-U.S. shareholder would be taxed in the same manner as U.S.
shareholders with respect to such gain (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals.

A non-U.S. shareholder will incur tax on gain not subject to FIRPTA if (1)
the gain is effectively connected with the non-U.S. shareholder's U.S. trade or
business, in which case the non-U.S. shareholder will be subject to

the same treatment as U.S. shareholders with respect to such gain, or (2) the
non-U.S. shareholder is a nonresident alien individual who was present in the
U.S. for 183 days or more during the taxable year, in which case the non-U.S.
shareholder will incur a 30% tax on his capital gains. Capital gains dividends
not subject to FIRPTA will be subject to similar rules.

Backup Withholding. Backup withholding tax (which generally is withholding
tax, imposed at the rate of 30% in 2002 and 2003, on certain payments to
persons that fail to furnish certain information under the United States
information reporting requirements) and information reporting will generally
not apply to distributions to a non-U.S. shareholder provided that the non-U.S.
shareholder certifies under penalty of perjury that the shareholder is a
non-U.S. shareholder, or otherwise establishes an exemption. As a general
matter, backup withholding and information reporting will not apply to a
payment of the proceeds of a sale of common shares effected at a foreign office
of a foreign broker. Information reporting (but not backup withholding) will
apply, however, to a payment of the proceeds of a sale of common shares by a
foreign office of a broker that:

. is a U.S. person;

. derives 50% or more of its gross income for a specified three-year period
from the conduct of a trade or business in the U.S.;

. is a "controlled foreign corporation" (generally, a foreign corporation
controlled by U.S. shareholders) for U.S. tax purposes; or

. that is a foreign partnership, if at any time during its tax year 50% or
more of its income or capital interest are held by U.S. persons or if it
is engaged in the conduct of a trade or business in the U.S.,

unless the broker has documentary evidence in its records that the holder or
beneficial owner is a non-U.S. shareholder and certain other conditions are
met, or the shareholder otherwise establishes an exemption. Payment of the
proceeds of a sale of common shares effected at a U.S. office of a broker is
subject to both backup withholding and information reporting unless the
shareholder certifies under penalty of perjury that the shareholder is a
non-U.S. shareholder, or otherwise establishes an exemption. Backup withholding
is not an additional tax. A non-U.S. shareholder may obtain a refund of excess
amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the IRS.

Other Tax Consequences

State and Local Taxes. We and/or you may be subject to state and local tax
in various states and localities, including those states and localities in
which we or you transact business, own property or reside. The state and local
tax treatment in such jurisdictions may differ from the federal income tax
treatment described above. Consequently, you should consult your own tax
advisor regarding the effect of state and local tax laws upon an investment in
our securities.

PLAN OF DISTRIBUTION

We may sell securities from time to time in one or more transactions on a
negotiated or competitive bid basis to or through one or more underwriters or
dealers on a firm commitment or best efforts basis, in the over-the-counter
market, on any national securities exchange or automated quotation system on
which the securities may be listed or traded, in privately negotiated
transactions, to or through a market maker, or through any other legally
available means. In addition, the sales will be made at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. We may also sell securities directly to
institutional investors or other purchasers or through agents. We will identify
any underwriter, dealer or agent involved in the offer and sale of securities,
and any applicable commissions, discounts and other items constituting
compensation to such underwriters, dealers or agents, in a prospectus
supplement. Underwriters and agents from time to time may include Brinson
Patrick Securities Corporation.

The methods by which we may distribute securities include:

. a block trade (which may involve crosses) in which the dealer so engaged
will attempt to sell the securities as agent but may position and resell a
portion of the block as principal to facilitate the transaction;

. purchases by a dealer as principal and resale by such dealer for its
account pursuant to this prospectus or any prospectus supplement;

. ordinary broker transactions and transactions in which the broker solicits
purchasers; or

. any other legally available means.

Unless we say otherwise in a prospectus supplement, the obligations of any
underwriters to purchase securities will be subject to certain conditions and
the underwriters will be obligated to purchase all of the applicable securities
if any are purchased. If a dealer is used in a sale, we may sell the securities
to the dealer as principal. The dealer may then resell the securities to the
public at varying prices to be determined by the dealer at the time of resale.

In connection with the sale of securities, underwriters or agents may
receive compensation (in the form of discounts, concessions or commissions)
from us or from purchasers of securities for whom they may act as agents.
Underwriters may sell securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions, that
may be in excess of those customary in the types of transactions involved, from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of securities may be deemed to be underwriters as that term is
defined in the Securities Act, and any discounts or commissions received by
them from us and any profits on the resale of the securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
We will identify any such underwriter or agent, and we will describe any such
compensation we pay, in the related prospectus supplement.

Underwriters, dealers and agents may be entitled, under agreements with us,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.

If we tell you in a prospectus supplement, we will authorize agents and
underwriters to solicit offers by certain specified institutions or other
persons to purchase securities at the public offering price set forth in the
prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Institutions with whom
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but shall in all cases be subject to our
approval. Such contracts will be subject only to those conditions set forth in
the prospectus supplement and the prospectus supplement will set forth the
commission payable for solicitation of such contracts. The obligations of any
purchaser under any such contract will be subject to the condition that the
purchase of the securities shall not be prohibited at the time of delivery
under the laws of the jurisdiction to which the purchaser is subject. The
underwriters and other agents will not have any responsibility in respect of
the validity or performance of such contracts.

The securities may or may not be listed on a national securities exchange or
traded in the over-the-counter market (other than the common shares, the Series
A preferred shares and the Series B preferred shares, each of which are quoted
on The New York Stock Exchange). No assurance can be given as to the liquidity
of the trading market for any such securities.

If underwriters or dealers are used in the sale, until the distribution of
the securities is completed, SEC rules may limit the ability of any such
underwriters and selling group members to bid for and purchase the securities.
As an exception to these rules, representatives of any underwriters are
permitted to engage in certain transactions that stabilize the price of the
securities. Such transactions may consist of bids or purchases for the purpose
of

pegging, fixing or maintaining the price of the securities. If the underwriters
create a short position in the securities in connection with the offerings (in
other words, if they sell more securities than are set forth on the cover page
of the prospectus supplement) the representatives of the underwriters may
reduce that short position by purchasing securities in the open market. The
representatives of the underwriters may also elect to reduce any short position
by exercising all or part of any over-allotment option described in the
prospectus supplement. The representatives of the underwriters may also impose
a penalty bid on certain underwriters and selling group members. This means
that if the representatives purchase securities in the open market to reduce
the underwriters' short position or to stabilize the price of the securities,
they may reclaim the amount of the selling concession from the underwriters and
selling group members who sold those shares as part of the offering. In
general, purchases of a security for the purpose of stabilization or to reduce
a short position could cause the price of the security to be higher than it
might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the securities to the extent that it
discourages resales of the securities. We make no representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the securities. In addition, the representatives
of any underwriters may determine not to engage in such transactions or that
such transactions, once commenced, may be discontinued without notice.

Certain of the underwriters or agents and their associates may engage in
transactions with and perform services for us or our affiliates in the ordinary
course of their respective businesses.

LEGAL MATTERS

Certain legal matters in connection with any offering of securities made by
this prospectus will be passed upon for us by Shaw Pittman LLP, a law
partnership including professional corporations. In addition, the description
of federal income tax consequences contained in this prospectus under "Federal
Income Tax Consequences" is, to the extent that it constitutes matters of law,
summaries of legal matters or legal conclusions, the opinion of Shaw Pittman
LLP.

NOTICE REGARDING ARTHUR ANDERSEN LLP

On June 4, 2002, we announced that we had appointed Grant Thornton LLP as
our independent auditor for fiscal year 2002, replacing Arthur Andersen LLP.

Section 11(a) of the Securities Act of 1933, as amended, provides that if
any part of a registration statement at the time it becomes effective contains
an untrue statement of a material fact or an omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, any person acquiring a security pursuant to the registration
statement (unless it is proved that at the time of the acquisition the person
knew of the untruth or omission) may sue, among others, every accountant who
has consented to be named as having prepared or certified any part of the
registration statement or as having prepared or certified any report or
valuation which is used in connection with the registration statement with
respect to the statement in the registration statement, report or valuation
which purports to have been prepared or certified by the accountant.

Prior to the date of this prospectus, the Arthur Andersen partners who
reviewed our most recent audited financial statements, as of December 31, 2001
and 2000 and for each of the three years in the period ended December 31, 2001
resigned from Arthur Andersen. As a result, after reasonable efforts, we have
been unable to obtain Arthur Andersen's written consent to the incorporation by
reference into this registration statement of its audit reports with respect to
our financial statements.

Under these circumstances, Rule 437a under the Securities Act permits us to
file this registration statement without a written consent from Arthur
Andersen. Accordingly, Arthur Andersen will not be liable to you under Section
11(a) of the Securities Act because it has not consented to being named as an
expert in the registration statement.

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 to the public at the
SEC's website at www.sec.gov. You may also read and copy any document we file
at the SEC's Public Reference Room at:

Public Reference Section
Securities and Exchange Commission
Room 1200
450 Fifth Street, N.W.
Washington, D.C. 20549

Please call the SEC at 1-800-SEC-0330 for further information on the
operating rules and procedures for the public reference room.

The SEC allows us to "incorporate by reference" the information we file with
them, which means we can disclose important information to you by referring you
to those documents. The information we incorporate by reference is an important
part of our prospectus, and all information that we will later file with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below as well as any future filings made with
the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange
Act (Exchange Act File No. 1-07533) from the date of the initial registration
statement and prior to the effectiveness of this registration statement, and
any filings made from the date of this prospectus until we sell all of the
securities under this prospectus.

. Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and
filed on March 22, 2002

. Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002
and filed on August 12, 2002

. Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002
and filed on May 2, 2002

. The description of our common shares contained in the Registration
Statement on Form 8-A/A filed with the SEC on June 6, 2002

. The description of our common share purchase rights contained in the
Registration Statement on Form 8-A/A filed with the SEC on March 11, 1999

. The description of our Series A preferred shares contained in the
Registration Statement on Form 8-A/A filed with the SEC on October 6, 1997
and the Form 8-A filed with the SEC on March 12, 2001

. The description of our Series B preferred shares contained in the
Registration Statement on Form 8-A filed with the SEC on November 26, 2001

. Current Reports on Form 8-K filed with the SEC on September 4, 2002,
August 12, 2002, June 11, 2002, June 5, 2002, April 30, 2002, March 28,
2002, March 12, 2002 and February 12, 2002

Copies of these filings are available at no cost at our website,
www.federalrealty.com. Amendments to these filings will be posted to our
website as soon as reasonably practical after filing with the SEC. In addition,
you may request a copy of these filings and any amendments thereto at no cost,
by writing or telephoning us. Those copies will not include exhibits to those
documents unless the exhibits are specifically incorporated by reference in the
documents or unless you specifically request them. You may also request copies
of any exhibits to the registration statement. Please direct your request to:

Andrew P. Blocher
Vice President, Investor Relations and Capital Markets
Federal Realty Investment Trust
1626 E. Jefferson Street
Rockville, Maryland 20852
(301) 998-8100 OR (301) 658-8980

Our prospectus does not contain all of the information included in the
registration statement. We have omitted certain parts of the registration
statement in accordance with the rules and regulations of the SEC. For further
information, we refer you to the registration statement, including its exhibits
and schedules. Statements contained in our prospectus and any accompanying
prospectus supplement about the provisions or contents of any contract,
agreement or any other document referred to are not necessarily complete.
Please refer to the actual exhibit for a more complete description of the
matters involved. You may get copies of the exhibits by contacting the person
named above.

You should rely only on the information in our prospectus, any prospectus
supplement and the documents that are incorporated by reference. We have not
authorized anyone else to provide you with different information. We are not
offering these securities in any state where the offer is prohibited by law.
You should not assume that the information in this prospectus, any prospectus
supplement or any incorporated document is accurate as of any date other than
the date of the document.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table itemizes the expenses incurred, or to be incurred, by us
in connection with the registration and issuance of the securities being
registered hereunder. As indicated below, all amounts shown are estimates
except for the SEC registration fee.

Registration Fee -- SEC............... $ 46,000
Printing and Engraving Expenses....... 300,000*
Accounting Fees and Expenses.......... 100,000*
Legal Fees and Expenses............... 400,000*
Transfer Agent and Registrar Fees..... 15,000*
Trustees' Fees........................ 15,000*
Rating Agency Fees.................... 400,000*
Miscellaneous (including listing fees) 250,000*
----------
Total.............................. $1,526,000*
==========

--------
* Estimate

Item 15. Indemnification of Trustees and Officers

Our declaration of trust authorizes us, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to:

. any individual who is either our present or former shareholder, trustee or
officer; or

. any individual who, while a trustee and at our request, also serves or has
served as a director, officer, partner, trustee, employee or agent of
another corporation, real estate investment trust, partnership, joint
venture, trust, employee benefit plan or any other enterprise from and
against any claim or liability to which such person may become subject or
which such person may incur by reason of his status.

Our declaration of trust also permits us to indemnify and advance expenses
to any person who served one of our predecessors in any of the capacities
described above and to any of our employees or agents or the employees or
agents of one of our predecessors.

Our bylaws obligate us, to the maximum extent permitted by Maryland law, to
indemnify:

. any trustee, officer or shareholder or any former trustee, officer or
shareholder, including any individual who, while a trustee, officer or
shareholder and at our express request, also serves or has served another
real estate investment trust, corporation, partnership, joint venture,
trust, employee benefit plan or any other enterprise as a director,
officer, shareholder, partner or trustee of such real estate investment
trust, corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, and who has been successful, on the merits or
otherwise, in the defense of a proceeding to which he was made a party by
reason of service in such capacity, against reasonable expenses incurred
by him in connection with the proceeding;

. any trustee or officer or any former trustee or officer against any claim
or liability to which he may become subject by reason of such status
unless it is established that

. his act or omission was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active
and deliberate dishonesty,

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. he actually received an improper personal benefit in money, property
or services, or

. in the case of a criminal proceeding, he had reasonable cause to
believe that his act or omission was unlawful; and

. each shareholder or former shareholder against any claim or liability to
which he may become subject by reason of such status.

In addition, we will, without requiring a preliminary determination of the
ultimate entitlement to indemnification, pay or reimburse, in advance of final
disposition of a proceeding, reasonable expenses incurred by a trustee, officer
or shareholder or former trustee, officer or shareholder made a party to a
proceeding by reason of such status, provided that, in the case of a trustee or
officer, we must have received:

. a written affirmation by the trustee or officer of his good faith belief
that he has met the applicable standard of conduct necessary for
indemnification; and

. a written undertaking by or on his behalf to repay the amount paid or
reimbursed by us if it shall ultimately be determined that the applicable
standard of conduct was not met.

We may, with the approval of our trustees, provide such indemnification or
payment or reimbursement of expenses to any trustee, officer or shareholder or
any former trustee, officer or shareholder who served in such capacity to one
of our predecessors and to any of our employees or agents or an employee or
agent of one of our predecessors. Any indemnification or payment or
reimbursement of the expenses permitted by our bylaws will be furnished in
accordance with the procedures provided for indemnification or payment or
reimbursement of expenses, as the case may be, under Section 2-418 of the
Maryland General Corporation Law, or MGCL, for directors of Maryland
corporations. We may provide to trustees, officers and shareholders such other
and further indemnification or payment or reimbursement of expenses, as the
case may be, to the fullest extent permitted by the MGCL, as in effect from
time to time, for directors of Maryland corporations.

Title 8 of the MGCL permits a Maryland real estate investment trust to
indemnify and advance expenses to its trustees, officers, employees and agents,
and permits a corporation to indemnify its present and former trustees and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that

. the act or omission of the trustee or officer was material to the matter
giving rise to the proceeding; and

. was committed in bad faith, or

. was the result of active and deliberate dishonesty;

. the trustee or officer actually received an improper personal benefit in
money, property or services; or

. in the case of any criminal proceeding, the trustee or officer had
reasonable cause to believe that the act or omission was unlawful.

However, under Title 8, a Maryland real estate investment trust may not
indemnify a trustee or officer in a suit by or in the right of the trust if
such trustee or officer has been adjudged to be liable to the trust.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to trustees, officers or persons controlling us pursuant to
the foregoing provisions, we have been informed that in the opinion of the SEC
such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.

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Item 16. Exhibits

Number Description
------ ------------------------------------------------------------------------------------------------------

1.1* Form of Underwriting or Purchase Agreement for Debt Securities
1.2* Form of Underwriting or Purchase Agreement for Equity Securities
3.1 Declaration of Trust of Federal Realty Investment Trust (previously filed as Exhibit 3.2 to the
Registrant's Current Report on Form 8-K filed with the SEC on May 21, 1999 and incorporated
herein by reference)
3.2 Bylaws of Federal Realty Investment Trust, as amended (previously filed as Exhibit 2 to the
Registrant's Registration Statement on Form 8-A/A filed with the SEC on June 6, 2002 and
incorporated herein by reference)
4.1 Form of Common Share Certificate (previously filed as Exhibit 4(i) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference)
4.2 Articles Supplementary relating to the 8 1/2% Series B Cumulative Redeemable Preferred Shares
(previously filed as Exhibit 4.2 to the Registrant's Registration Statement on Form 8-A filed with the
SEC on November 26, 2001 and incorporated herein by reference)
4.3* Form of Articles Supplementary for Preferred Shares
4.4 Form of 7.95% Series A Cumulative Redeemable Preferred Share Certificate (previously filed as
Exhibit 4(ii) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1999
and incorporated herein by reference)
4.5 Form of 81/2% Series B Cumulative Redeemable Preferred Share Certificate (previously filed as
Exhibit 4 to the Registrant's Registration Statement on Form 8-A filed with the SEC on
November 26, 2001 and incorporated herein by reference)
4.6* Form of Preferred Share Certificate
4.7 Amended and Restated Rights Agreement, dated March 11, 1999, between the Registrant and
American Stock Transfer & Trust Company (previously filed as Exhibit 1 to the Registrant's
Registration Statement on Form 8-A/A filed with the SEC on March 11, 1999 and incorporated
herein by reference)
4.8 Indenture dated September 1, 1998 for Senior Debt Securities (previously filed as Exhibit 4(a) to the
Registrant's Registration Statement on Form S-3 filed with the SEC on September 17, 1998
(File No. 333-63619) and incorporated herein by reference).
4.9 Indenture dated December 13, 1993 for Subordinated Debt Securities (previously filed as
Exhibit 4(b) to the Registrant's Registration Statement on Form S-3 filed with the SEC on
November 12, 1993 (File No. 33-51029) and incorporated herein by reference).
4.10* Form of Warrant Agreement
4.11* Form of Deposit Agreement
5.1** Opinion of Shaw Pittman LLP regarding the validity of the securities being registered
8.1** Opinion of Shaw Pittman LLP regarding certain federal income tax matters
12.1** Statement Regarding Computation of Ratios
23.1** Consent of Shaw Pittman LLP (included as part of Exhibits 5.1 and 8.1)
25.1** Powers of Attorney [included in the signature page hereto]
25.2 Statement of Eligibility of Trustee on Form T-1 (previously filed as Exhibit 25(a) to the Registrant's
Registration Statement on Form S-3 filed with the SEC on September 17, 1998 (File No. 333-63619)
and incorporated herein by reference)

--------
* To be filed by amendment or by Current Report on Form 8-K incorporated
herein by reference.
** Included with this filing.

II-3

Item 17. Undertakings.

(a) The undersigned registrants hereby undertake:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any acts 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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in "Calculation of Registration Fee"
table in the effective registration statement; and

(iii) 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 (a)(1)(i) and (a)(1)(ii) herein 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 SEC by the undersigned registrant(s) pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 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.

(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the registrants pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
respective registrant of expenses incurred or paid by a trustee, officer, or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, such 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 of 1933 and will be governed by the final adjudication of such
issue.

(d) The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the SEC under Section 305(b)(2) of the
Trust Indenture Act.

II-4

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 County of Montgomery, State of Maryland, on October 29,
2002.

FEDERAL REALTY INVESTMENT TRUST

By: /s/ DONALD C. WOOD
-----------------------------
Donald C. Wood
President and Chief
Operating Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
each of Steven J. Guttman, Donald C. Wood, Larry E. Finger and Dawn M. Becker
as his or her attorney-in-fact and agent, with full power of substitution and
resubstitution for him or her in any and all capacities, to sign any or all
amendments or post-effective amendments to this Registration Statement, or any
Registration Statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended,
and to file the same, with exhibits thereto and other documents in connection
therewith or in connection with the registration of the securities under the
Securities Act of 1934, as amended, with the Securities and Exchange
Commission, granting unto such attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary in connection with such matters and hereby ratifying and confirming
all that such attorney-in-fact and agent or his or her substitutes may do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities indicated.

Signature Title Date
--------- ----- ----

/s/ STEVEN J. GUTTMAN Chairman of the Board, Chief October 29, 2002
---------------------- Executive Officer and Trustee
Steven J. Guttman (principal executive officer)

/s/ LARRY E. FINGER Senior Vice President, Chief October 29, 2002
---------------------- Financial Officer and Treasurer
Larry E. Finger (principal financial and
accounting officer)

/s/ DENNIS L. BERMAN Trustee October 29, 2002
----------------------
Dennis L. Berman

/s/ KRISTIN GAMBLE Trustee October 29, 2002
----------------------
Kristin Gamble

/s/ AMY B. LANE Trustee October 29, 2002
----------------------
Amy B. Lane

/s/ WALTER F. LOEB Trustee October 29, 2002
----------------------
Walter F. Loeb

/s/ MARK S. ORDAN Trustee October 29, 2002
----------------------
Mark S. Ordan

/s/ JOSEPH VASSALLUZZO Trustee October 29, 2002
----------------------
Joseph Vassalluzzo

II-5