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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>UNITED
        STATES</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
        AND EXCHANGE COMMISSION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Washington,
        D.C. 20549</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>FORM
        8-K</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
        REPORT</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
        to Section 13 or 15(d) of </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
        Securities Exchange Act of 1934</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
        of
        Report (Date of earliest event reported)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>December&#160;16,
        2005</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman">Capital
                  Automotive REIT</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
                  name of registrant as specified in its
                  charter)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="top" width="30%">&#160;</td>
              <td valign="top" width="30%">&#160;</td>
              <td valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" colspan="3" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="30%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><strong><font size="2">Maryland</font></strong>&#160;</div>
              </td>
              <td valign="top" width="30%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><strong><font size="2">000-23733</font></strong>&#160;</div>
              </td>
              <td valign="top" width="30%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><strong><font size="2">54-1870224</font></strong>&#160;</div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                  or other jurisdiction</font></div>
              </td>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission</font></div>
              </td>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                  Employer</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
                  incorporation)</font></div>
              </td>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">File
                  Number)</font></div>
              </td>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identification
                  No.)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="top" width="60%">&#160;</td>
              <td valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="60%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>8270
                  Greensboro Dr., Suite 950, McLean, Virginia</strong></font></div>
              </td>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>22102</strong></font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="60%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
                  of principal executive offices)</font></div>
              </td>
              <td valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Zip
                  Code)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant&#8217;s
        telephone number, including area code (</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>703)
        288-3075</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="top" width="90%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="BORDER-BOTTOM: #000000 thin solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
                  name or former address, if changed since last
                  report.)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
        the
        appropriate box below if the Form 8-K filing is intended to simultaneously
        satisfy the filing obligation of the registrant under any of the following
        provisions (see General Instruction A.2. below):</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font></font>Written
        communications pursuant
        to Rule 425 under the Securities Act (17 CFR 230.425)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font></font>Soliciting
        material pursuant to
        Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font></font>Pre-commencement
        communications
        pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
        240.14d-2(b))</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font></font>Pre-commencement
        communications
        pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
        240.13e-4(c))</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div style="WIDTH: 100%" align="left">
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Introductory
        Note</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        December 16, 2005 (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Closing</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;
        or the
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Closing
        Date</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        Capital Automotive REIT, a Maryland real estate investment trust (the
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        completed the mergers pursuant to the Agreement and Plan of Merger, dated
        as of
        September 2, 2005 (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Merger
        Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        among
        the Company, Capital Automotive L.P. (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Partnership</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        Flag
        Fund V LLC, a Delaware limited liability company (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Parent</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        and
        affiliate of certain funds advised by DRA Advisors LLC (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>DRA</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        CA
        Acquisition REIT, a Maryland real estate investment trust (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Merger
        Sub</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        and
        CALP Merger LP, a Delaware limited partnership (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Merger
        Partnership</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;).
        Pursuant to the terms of the Merger Agreement, Parent acquired the Company
        and
        its subsidiaries through the mergers of Merger Sub with and into the Company
        with the Company continuing as the surviving REIT (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>REIT
        Merger</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        and
        Merger Partnership with and into the Partnership with the Partnership continuing
        as the surviving partnership (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Partnership
        Merger</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,&#8221;
        and
        together with the REIT Merger, the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Mergers</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;).
        Under
        the terms of the Merger Agreement, holders of each issued and outstanding
        common
        share of beneficial interest of the Company, par value $0.01 per share (each
        such share, a &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Company
        Common Share</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        received $38.75 in cash, without interest, for each Company Common Share
        held.
        In addition, holders of each issued and outstanding common unit of limited
        partnership interest in the Partnership (each such unit, an &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>OP
        Unit</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        at
        their election, either (i) received $38.75 in cash, without interest, for
        each
        OP Unit held, or (ii) exchanged all or a portion of such holder&#8217;s existing OP
        Units for membership interests in OP LP LLC, a Delaware limited liability
        company and affiliate of Parent, which owns as its sole asset, as of the
        consummation of the Partnership Merger, OP Units of the Partnership.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        issued and outstanding 7.5% Series&#160;A Cumulative Redeemable Preferred
        Shares, par value $0.01 per share, and 8% Series&#160;B Cumulative Redeemable
        Preferred Shares, par value $0.01 per share, of the Company (collectively,
        the
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Preferred
        Shares</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        remain
        issued and outstanding as Preferred Shares of the Company as the surviving
        REIT.
        The Company will continue to pay the required quarterly dividends on the
        Preferred Shares. The Company may delist all of the Preferred Shares from
        the
        Nasdaq National Market following the Closing and does not plan to seek to
        list
        the Preferred Shares on another trading market. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Company has proposed to consummate a forward merger on or about December
        30,
        2005 in which the Company will be merged into a Delaware limited liability
        company. In such restructuring, all of the Company&#8217;s outstanding Preferred
        Shares will be converted into Series A and Series B preferred units of the
        new
        Delaware limited liability company with their rights, preferences, restrictions,
        qualifications, limitations, terms and conditions materially
        unchanged.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
          the restructuring of the Company into a Delaware limited liability company,
          in
          early January 2006, the Company&#8217;s successor expects to commence a cash tender
          offer for any and all of its then outstanding Series A and Series B preferred
          units at a price of $25.00 per unit.</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        1.01 Entry into a Material Definitive Agreement. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Senior
        Secured Credit Facility</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Overview</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        the
        Closing Date, in connection with the consummation of the Mergers, Merger
        Sub and
        Merger Partnership entered into a senior secured credit agreement with Lehman
        Commercial Paper Inc., as administrative agent, Lehman Brothers Inc., as
        arranger, and Banc of America Securities LLC, JPMorgan Chase Bank, N.A.,
        Wachovia Bank, National Association and Wells Fargo Bank, National Association,
        as co-syndication agents. Upon the effectiveness of the Mergers, by operation
        of
        law and as contemplated in the senior secured credit agreement, the Company
        and
        the Partnership succeeded to the rights and obligations, respectively, of
        Merger
        Sub and Merger Partnership under the senior secured credit
        agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Partnership is the borrower under the senior secured credit agreement and
        the
        credit facilities provided thereunder. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        senior secured credit agreement provides for committed senior secured credit
        facilities totaling $2.2 billion (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Committed
        Facilities</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        consisting of:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 18pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
                  $1.950 billion five year term loan facility
                  and</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 18pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
                  $250 million four year revolving credit
                  facility.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        full
        amount of these Committed Facilities was available upon Closing. The full
        amount
        of the committed term loan facility was funded on the Closing Date. The proceeds
        of such term loans were used to finance the Mergers, repay certain outstanding
        borrowed indebtedness of the Company and the Partnership and pay certain
        of the
        costs and expenses of the Mergers and of the credit facilities contemplated
        by
        the senior secured credit agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        addition to these Committed Facilities, the senior secured credit agreement
        provides for a currently uncommitted incremental term loan facility in an
        amount
        not to exceed $350 million. Such additional term loans are not presently
        committed but may be made in the future when and if requested by the Partnership
        upon the agreement of one or more financial institutions (either members
        of the
        existing lending syndicate or new lenders) to make such additional term
        loans.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        revolving credit facility includes a $25 million letter of credit subfacility
        for the issuance of standby letters of credit and a $50 million subfacility
        for
        revolving credit loans to be made on same-day notice referred to as the
&#8220;swingline&#8221; facility. As of the Closing Date, no amounts were drawn under the
        credit facility.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Interest
        Rate and Fees</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Borrowings
        under both the term loan facilities and the revolving credit facility bear
        interest at rates equal to an applicable margin plus a base rate consisting
        of
        (at the election and option of the Partnership) either (a) a LIBOR rate
        determined by reference to the costs of funds for deposits in dollars for
        the
        interest period relevant to such borrowing (which may be a one month, two
        month,
        three month or six month period) adjusted for certain reserve requirements
        established by the Federal Reserve or (b) the greater of (i) the prime rate
        reported by the British Banking Association Telerate or (ii) the federal
        funds
        rate plus &#189; of 1%. The initial applicable margin for borrowings accruing
        interest at a rate based on LIBOR is 1.75% and for borrowings accruing interest
        based on the prime rate/federal funds rate is 0.75%. These applicable margins
        may be increased (up to a maximum of 2.00% for LIBOR-based borrowings and
        1.00%
        for prime rate/federal funds rate borrowings) or decreased (down to a minimum
        of
        1.50% for LIBOR-based borrowings and 0.50% for prime rate/federal funds rate
        borrowings) depending on the total leverage ratio of the Company, the
        Partnership and their consolidated subsidiaries and businesses from time
        to
        time. The first adjustment to the applicable margin will occur after the
        end of
        the second fiscal quarter of the Partnership in 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Other
        Significant Provisions</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
        is
        no required amortization of either the term loan facility or the revolving
        credit facility prior to their respective maturities, at which time payment
        in
        full will be due and payable. The term loan facility will mature on the fifth
        anniversary of the Closing Date and the revolving credit facility will mature
        on
        the fourth anniversary of the Closing Date.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        senior secured credit agreement requires the Company to make mandatory
        prepayments of the loans under certain circumstances and allows the Company
        to
        make voluntary prepayments, in each case, subject to the payment of certain
        premiums during the first three years after the Closing Date, subject to
        certain
        exceptions, and the payment of breakage costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
        obligations of the Partnership as the borrower under the senior secured credit
        agreement are fully and unconditionally guaranteed by the Company and the
        Partnership&#8217;s and Company&#8217;s wholly-owned subsidiaries, subject to certain
        exceptions. All of the obligations of the Partnership, the Company and their
        respective guarantor subsidiaries under the senior secured credit agreement
        are
        and will be secured by substantially all of their now owned or hereafter
        acquired assets, subject to certain exceptions.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        senior secured credit agreement contains a number of affirmative and negative
        covenants and events of default customary for transactions of this
        nature.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Series
        C</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Preferred
        Limited Partnership Units</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>General</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        the
        Closing Date, in connection with the Mergers, the Partnership issued and
        sold
        1.5 million preferred limited partnership units in the Partnership (the
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Series
        C Preferred Units</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        to an
        assignee (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Purchaser</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        of The
        Prudential Insurance Company of America (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Prudential</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        pursuant to a Purchase Agreement among the Company, the Partnership and
        Prudential (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Purchase
        Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;).
        The
        Purchaser paid $150 million as consideration for such Series C Preferred
        Units.
        In addition, if any preferred equity of the Partnership that was existing
        immediately before the Closing (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Existing
        PE</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        and
        was not retired at Closing is retired or repurchased by the Partnership at
        any
        time prior to April 30, 2006, then upon not less than thirty (30) calendar
        days&#8217;
        written notice to the holders of the Series C Preferred Units, such holders
        will
        purchase additional Series C Preferred Units sufficient to replace such retired
        or repurchased Existing PE up to an aggregate amount invested in Series C
        Preferred Units of $315 million.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">2</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cumulative
        Preferred Return</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Series C Preferred Units issued at Closing and any Series C Preferred Units
        issued after Closing up until March 31, 2006 will accrue a cumulative preferred
        return at an annual rate (compounded monthly) equal to (i) 7.0% for the period
        from the date that any such Series C Preferred Units were purchased until
        the
        first (1</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of such date, (ii) 7.5% for the period from the first (1</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the date that such Series C Preferred Units were purchased
        until
        the fifth (5</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing, (iii) 8.5% for the period from the fifth
        (5</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing until the seventh (7</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing, and (iv) from and after the seventh (7</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing the greater of (x) 12% and (y) the then yield
        on
        10-year U.S. Treasury securities plus 6.5%. In addition to the foregoing,
        on the
        first (1</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the date that any such Series C Preferred Units were purchased,
        the Partnership will pay to the Series C Preferred Unit holders a fee in
        an
        amount that, when added to the preferred return otherwise accruing on such
        Series C Preferred Units, would be sufficient to provide the Series C Preferred
        Unit holders with an aggregate return of 7.5% per annum, compounded monthly,
        for
        the period from the date that such Series C Preferred Units were purchased
        until
        the first (1</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of such date. The Series C Preferred Units purchased after March
        31,
        2006 up until April 30, 2006 in connection with the retirement or redemption
        of
        Existing PE will earn a preferred return determined in accordance with the
        procedures for determination of the preferred return accruing on Additional
        Units, as defined and described in the next paragraph immediately
        below.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Additional
        Issuance of Preferred Limited Partnership Interests </em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
        the
        Partnership (a) retires any Existing PE after April 30, 2006, or (b) from
        time
        to time wishes to directly or indirectly acquire an asset and the amount
        of
        fixed and variable rate debt of the Company, whether secured or unsecured
        (excluding trade payables and short term trade debt in immaterial amounts
        incurred in the ordinary course of business) (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Debt</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        that
        would be required for it to acquire such asset would cause such Debt to exceed
        65% of the purchase price for such asset, then the Series C Preferred Unit
        holders shall have the option, but not the obligation, to purchase additional
        Series C Preferred Units (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Additional
        Units</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        the
        proceeds of which would be applied toward the purchase price of such Existing
        PE
        or asset, in such amount as would cause the</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        aggregate amount of Debt and preferred equity incurred or issued by the
        Partnership in connection with any asset acquisition (including all Additional
        Units to be issued in connection with such acquisition)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        to not
        exceed 75% of the purchase price for such asset. Additional Units will earn
        a
        preferred return equal to (i) during the period commencing on the date such
        Additional Units are purchased until the fifth (5</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing, an annual rate (compounded monthly) equal to
        the
        greater of (x) 3.10% over the yield on 10-year U.S. Treasury securities as
        of
        the date that is five (5) business days prior to the date that such Additional
        Units are purchased and (y) 7.5%, (ii) during the period from and after the
        fifth (5</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing until the seventh (7</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing, an annual rate equal to the preferred return
        rate
        accruing on such Additional Units immediately prior to the fifth (5</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>plus</u></em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        1.0%,
        and (iii) from and after the seventh (7</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        anniversary of the Closing, an annual rate (compounded and adjusted monthly)
        equal to the greater of (x) 12% and (y) the yield on 10-year U.S. Treasury
        securities plus 6.5%. All Additional Units will be otherwise treated the
        same as
        the Series C Preferred Units issued at the Closing. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Monetary
        Defaults by the </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Partnership
        or any of its Subsidiaries</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        addition to the foregoing, upon the occurrence of any monetary default by
        the
        Partnership (or its subsidiary) in connection with any Debt and/or contractual
        arrangement entered into by the Partnership (or its subsidiary) which is
        not
        cured within the applicable cure period (if any) under such contractual
        arrangement, which default may result in the loss of any assets of the
        Partnership (by foreclosure or otherwise) or have any other material adverse
        effect on the Partnership or its business operations, the Series C Preferred
        Unit holders may cure such defaults, and all sums expended by the Series
        C
        Preferred Unit holders in connection with such cure will be treated as capital
        contributions to the Partnership (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Default
        Contributions</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;).
        All
        Default Contributions made by the Series C Preferred Unit holders will accrue
        a
        cumulative preferred return (compounded monthly) at an annual rate equal
        to the
        greater of (x) 12% and (y) 5% over the Prime Rate published in The Wall Street
        Journal.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Series
        C Preferred Manager</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
        single
        Series C Preferred Unit holder (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Series
        C Manager</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        will
        be authorized to make certain decisions and take certain actions on behalf
        of
        the other Series C Preferred Unit Holders, including the right to approve
        certain major decisions of the Partnership and assume management and dispose
        of
        the assets of the Partnership upon the occurrence of certain events.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Covenants</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        amendment to the Partnership&#8217;s limited partnership agreement setting forth the
        rights and preferences of the Series C Preferred Units contains
        provisions:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">limiting
                  and/or requiring redemptions of the Series C Preferred Units;
                  </font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">limiting
                  transfers of interests in the
                  Partnership;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
                  the transfer of management of the Partnership to the Series C Manager
                  upon
                  the occurrence of certain events;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
                  the Series C Manager to force the sale of the Partnership&#8217;s assets upon
                  the occurrence of certain events;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">limiting
                  the Partnership&#8217;s ability to incur debt;
                  and</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">limiting
                  the Partnership&#8217;s ability to make distributions to its common equity
                  holders.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Subordination</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Series C Preferred Unit holders have subordinated their right to distributions
        and proceeds of any assets of the Partnership to the rights of the holders
        of
        certain senior Debt of the Partnership pursuant to a Subordination Agreement
        among the Company, the Partnership, the Purchaser and Lehman Commercial Paper
        Inc.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>3.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Amendments
        to Partnership Agreement</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the Merger Agreement, the Partnership Agreement was amended by a Seventh
        Amendment thereto to account for the issuance of (i) a number of common units
        of
        limited partnership interest of the Partnership (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Common
        Units</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        to
        Thomas D. Eckert, David S. Kay, John M. Weaver and Jay Ferriero, as more
        fully
        described in Section 5 herein, (ii) an aggregate of 1,000 performance units
        to
        Messrs. Eckert, Kay, Weaver and Ferriero, (iii) a number of Common Units
        and
        preferred units of limited partnership interest of the Partnership to the
        Company, as more fully described in Section 5 herein, and (iv) Common Units
        to
        OP LP LLC, as more fully described in Section 5 herein. Messrs. Eckert, Kay,
        Weaver and Ferriero paid an aggregate of $3,000,000 for their Common Units
        ($38.75 per Common Unit). Upon certain conditions, the holders of the
        performance units of the Partnership will be entitled to receive a preferred
        return of 10% after the other holders of Common Units have received their
        contribution plus an IRR (as defined in the Seventh Amendment to the Partnership
        Agreement) of 17% and a preferred return of 20% after the other holders of
        Common Units have received their contribution plus an IRR of 19%. Such rights
        of
        these holders of performance units are subject to certain tag-along rights
        and
        rights of first refusal.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the Purchase Agreement and the terms and conditions of the Eighth Amendment
        to the Partnership Agreement, PREI will be admitted as a limited partner
        to the
        Partnership and has the option, but not the obligation to acquire Additional
        PE.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>4.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Employment
        Agreements</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        connection with the Merger Agreement, the Partnership and Thomas D. Eckert,
        David S. Kay, John M. Weaver, Jay M. Ferriero and Lisa M. Clements (each,
        an
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Executive</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        have
        entered into employment agreements with the Partnership providing terms of
        employment with the Partnership for the three-year period (and in the case
        of
        Ms. Clements for the one-year period) following the Closing Date. The employment
        agreements with Messrs.&#160;Eckert, Kay, Weaver, Ferriero, and
        Ms.&#160;Clements provide for initial base salaries of $640,000, $412,000,
        $276,000, $412,000 and $230,000, respectively, and the opportunity for each
        Executive to earn annual bonus compensation based upon certain performance
        criteria set forth in each Executive&#8217;s employment agreement of up to an annual
        target amount of $660,000, $360,000, $300,000, $390,000 and $180,000,
        respectively. Each of the Executives will also receive a long term incentive
        award payable in the case of Messrs.&#160;Eckert, Kay, Weaver and Ferriero
        in
        equal quarterly installments (based on a maximum of 12&#160;installments)
        on the
        last day of each quarter in which they are employed by the Partnership pursuant
        to their new three-year employment agreements and in the case of
        Ms.&#160;Clements in equal quarterly installments (based on a maximum of
        4&#160;installments) on the last day of each quarter in which she is employed
        by
        the Partnership pursuant to her new one-year employment agreement. These
        long
        term incentive awards are intended to substitute for the equity component
        of the
        Executives&#8217; compensation under their prior employment agreements with the
        Company. The maximum aggregate amount of the long term incentive award payable
        to each of Messrs. Eckert, Kay, Weaver and Ferriero and Ms.&#160;Clements
        under
        his or her new employment agreement (assuming he or she remains employed
        by the
        Partnership for the full term of his or her employment agreement) is $5,760,000,
        $2,520,000, $2,160,000, $2,880,000 and $300,000, respectively. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">4</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Executives&#8217; employment agreements contain terms substantially similar to those
        of their prior employment agreements with respect to, among other things,
        the
        termination rights of the Partnership and the Executives, health benefits,
        confidentiality obligations as well as non-competition and non-solicitation
        restrictions on the Executives during their employment and for a two-year
        period
        after termination of employment. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        January 1, 2006, the Executives&#8217; employment agreements will be assigned by the
        Partnership to CARS Real Estate Investment Services Inc., a Delaware corporation
        and wholly-owned subsidiary of the Partnership (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Manager</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
        on
        substantially similar terms. The Manager was formed to manage the affairs
        of the
        Company and its subsidiaries and has the authority to act, under the direction
        of the Company&#8217;s board of trustees (currently the same trustees as those of the
        Company) and through its duly appointed officers (Thomas D. Eckert, President
        and Chief Executive Officer, David S. Kay, Senior Vice President, Chief
        Financial Officer and Treasurer, John M. Weaver, Senior Vice President,
        Secretary &amp; General Counsel, Jay M. Ferriero, Senior Vice President and
        Director of Acquisitions, and Lisa M. Clements, Vice President and Chief
        Accounting Officer), on behalf of the Company itself, on behalf of the Company
        as general partner of the Partnership and on behalf of any corporate subsidiary
        of the Company.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>5.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>6.75%
        Monthly Income Notes</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        April
        15, 2004, the Company issued $125 million aggregate principal amount of its
        6.75% monthly income notes pursuant to that certain First Supplemental Trust
        Indenture dated April 15, 2005 between the Company and Wells Fargo Bank,
        National Association. On November 2, 2005, the Company commenced a tender
        offer
        and consent solicitation in which it solicited the tender of all such monthly
        income notes and the waiver of certain covenants contained in such notes.
        The
        tender offer, following extensions, terminated on the Closing Date. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$120,921,575</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        aggregate principal amount of its 6.75% monthly income notes were tendered
        as of
        the Closing Date with $4,078,425 aggregate principal amount of notes remaining
        outstanding.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        the
        Closing Date, the Fifth Supplemental Indenture entered into among the Company,
        the Partnership and Wells Fargo Bank, National Association, dated as of December
        9, 2005 became effective. The supplemental indenture amends the indenture
        under
        which the notes were issued to eliminate substantially all of the restrictive
        covenants relating to the notes. These amendments are binding on all
        non-tendering holders and affect the notes that remain outstanding.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>6.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>6%
        Convertible Notes</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        May
        12, 2004, the Company issued $110 million aggregate principal amount of its
        6%
        convertible notes due May 15, 2024 pursuant to that certain Second Supplemental
        Trust Indenture dated May 12, 2004 between the Company and Wells Fargo Bank,
        National Association.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        the
        Closing Date, the Company, the Partnership and Wells Fargo Bank, National
        Association entered into a Sixth Supplemental Indenture confirming certain
        rights of the holders of the notes upon conversion of the notes following
        the
        Mergers.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        1.02 Termination of a Material Definitive Agreement. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Employment
        Agreements</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        employment agreements existing at the time of the Mergers between the
        Partnership and each of the Executives have been terminated and replaced
        by the
        employment agreements between the Partnership and each of the Executives,
        as
        more fully described in Item 1.01 above.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Revolving
        Credit and Term Loan Agreement</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        August
        20, 2004 and as amended on May 10, 2005, the Company and the Partnership
        entered
        into a certain revolving credit and term loan agreement with JPMorgan Chase
        Bank
        (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>JPM</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        under
        which JPM provided (i) a term loan facility in an aggregate of $150 million,
        (ii) a revolving credit facility in an initial aggregate amount of up to
        $250
        million with the option to increase the aggregate amount to $350 million,
        (iii)
        letters of credit, (iv) swing loans and (v) competitive borrowings ((i) -
        (v)
        collectively, the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>JPM
        Loan</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;).
        In
        connection with the Mergers and pursuant to notice given to JPM, the Company
        paid all amounts outstanding under the JPM Loan as of the Closing
        Date.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>3.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>5.46%
        Guaranteed Senior Notes</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        February 24, 2005, the Company and the Partnership entered into a note purchase
        agreement with certain purchasers under which the Company issued $175 million
        aggregate principal amount of its 5.46% guaranteed senior notes. In connection
        with the Mergers and pursuant to a consent and waiver of notice received
        from
        each purchaser, the Company prepaid all amounts due under the 5.46% guaranteed
        senior notes, including a make-whole premium.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>4.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Equity
        Incentive Plans</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By
        operation of the REIT Merger, the Company&#8217;s Second Amended and Restated 1998
        Equity Incentive Plan (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Company
        Share Option Plan&#8221;</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
        and
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Company&#8217;s
        Phantom Share Purchase Program</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Phantom
        Plan</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        terminated </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">pursuant
        to the terms of the Merger Agreement</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
        The
        Company Share Option Plan provided options (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Company
        Share Options</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        to
        purchase Company Common Shares, direct grants or sales of Company Common
        Shares,
        restricted shares (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Restricted
        Shares</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        or
        phantom shares (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Phantom
        Shares</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        to
        eligible Trustees, employees and consultants.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the terms of the Merger Agreement</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        and in
        connection with the REIT Merger, each Company Share Option, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">whether
        or not then vested or exercisable and regardless of the exercise price or
        purchase price, as the case may be, thereof, was cancelled in exchange for
        the
        holder&#8217;s right to receive</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        a single
        lump sum cash payment </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">from
        the
        Company </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">equal
        to
        the product of (x) the number</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        of
        Company Common Shares subject to such Company Share Option immediately prior
        to
        cancellation, whether or not vested or exercisable, and (y) the excess, if
        any,
        of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$38.75
        </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">over
        the
        exercise price or purchase price per share of such Company Share Option.
        If the
        exercise price or purchase price per share of any such Company Share Option
        was
        equal to or greater than </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$38.75</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
        such
        Company Share Option was cancelled without any cash payment being made in
        respect thereof. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the terms of the Merger Agreement, each Restricted Share, Phantom Share
        and
        Restricted Share deferred under a Restricted Share Deferral Agreement
        (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Deferred
        Restricted Shares</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        was
        also made fully vested, non-forfeitable and payable to each participant in
        full,
        and all Company Common Shares which the Company had the option of issuing
        in
        settlement of the Phantom Shares was considered outstanding for all purposes
        of
        the REIT Merger, including </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        right
        to receive an amount in cash equal to $38.75 per common share of beneficial
        interest, par value $0.01 per share</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">6</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
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        </div>
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      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>5.
        </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Deferred
        Compensation and Stock Plan for Trustees</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By
        operation of the REIT Merger</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
        the
        Company&#8217;s Deferred Compensation and Stock Plan for Trustees (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Trustees
        Deferred Compensation Plan</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        terminated pursuant to the terms of the Merger Agreement</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
        </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the terms of the Merger Agreement and in connection with the REIT Merger,
        each phantom share (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Fee
        Shares</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
        under
        the Trustees Deferred Compensation Plan was made fully vested, non-forfeitable
        and payable to each participant in full, and all Company Common Shares which
        the
        Company had the option of issuing in settlement of the Fee Shares was considered
        outstanding for all purposes of Merger, including </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        right
        to receive an amount in cash equal to $38.75 per common share of beneficial
        interest, par value $0.01 per share.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        2.01 Creation of a Direct Financial Obligation or an Obligation under an
        Off-Balance Sheet Arrangement of a Registrant. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        description of the senior secured credit agreement described in Item 1.01.
&#8220;1.
        Senior Secured Credit Facility&#8221; is incorporated herein by
        reference.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
        Standard; Transfer of Listing. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        connection with the Closing, the Company notified The NASDAQ Stock Market
        on the
        Closing Date that each Company Common Share (other than those owned by Parent)
        was canceled and automatically converted into the right to receive $38.75
        in
        cash, without interest, and requested that the Company Common Shares be removed
        from quotation on the Nasdaq National Market.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        3.03 Material Modification to the Rights of Security Holders.
</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        description of the supplemental indentures described in Item 1.01. &#8220;5. 5.75%
        Monthly Income Notes&#8221; and &#8220;6. 6% Convertible Notes&#8221; is incorporated herein by
        reference.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        5.01 Changes in Control of Registrant. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        the
        Closing Date, pursuant to the terms of the Merger Agreement, Parent completed
        the acquisition of the Company and the Partnership through the REIT Merger
        and
        Partnership Merger. The Company and the Partnership were the surviving entities
        in the Mergers. As a result of the REIT Merger, the Company&#8217;s voting shares are
        100% owned by Parent. Parent is owned indirectly by funds advised by DRA.
        As a
        result of the Partnership Merger, the Partnership&#8217;s voting units are owned by
        each of the Company (approximately 83% of the OP Units), OP LP LLC
        (approximately 17% of the OP Units), and Messrs. Eckert, Kay, Weaver and
        Ferriero (in the aggregate, less than 1% of the OP Units).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        aggregate purchase price paid for all of the Company Common Shares, Company
        Share Options, Restricted Shares, Phantom Shares, Deferred Restricted Shares
        and
        OP Units exchanged for cash in the Mergers was approximately $2,013,272,331
        </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">billion.
        There was also an additional approximately $103,788,000 </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">million
        in related fees and expenses paid in connection with the Mergers and the
        financing arrangements described in Item 1.01 above. The aggregate purchase
        price and related fees and expenses were funded by the new credit facilities
        described in Item 1.01 above, as well as by equity financing from affiliated
        funds advised by DRA. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
        copy of
        the press release issued by the Company on the Closing Date announcing the
        completed acquisition by DRA of the Company is attached as an exhibit hereto
        and
        is incorporated herein by reference. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        5.02 Departure of Directors or Principal Officers; Election of Directors;
        Appointment of Principal Officers. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Trustees/Directors</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        connection with the Mergers, each of Thomas D. Eckert, Craig L. Fuller, Paul
        M.
        Higbee, William E. Hoglund, David B. Kay, R. Michael McCullough, John J.
        Pohanka, Robert M. Rosenthal, and Vincent A. Sheehy voluntarily resigned
        from
        the board of trustees of the Company and as a member of any governing body
        of
        all subsidiaries of the Company on the Closing Date. In addition, each of
        John
        M. Weaver and Thomas D. Eckert voluntarily resigned from the board of directors
        of each of the corporate subsidiaries of the Company. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
        such resignations, the following persons were elected to the Company&#8217;s board of
        trustees: Francis X. Tansey, President and Chief Executive Officer of DRA,
        David
        Luski, Vice President and Chief Operating Officer of DRA, Paul McEvoy, Senior
        Managing Director of DRA, Andrew E. Peltz, a Managing Director of DRA, Brian
        Summers, a Managing Director of DRA, and Jean Marie Apruzzese, a Managing
        Director of DRA. In addition, the same such six individuals were elected
        as
        directors to the boards of directors of each of the corporate subsidiaries
        of
        the Company.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">7</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Principal
        Officers</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        connection with the Mergers, the following principal officers resigned effective
        as of the Closing Date: (i) Thomas D. Eckert resigned as President and Chief
        Executive Officer of the Company, (ii) John M. Weaver resigned as Senior
        Vice
        President, General Counsel and Secretary, (iii) David S. Kay resigned as
        Senior
        Vice President, Chief Financial Officer and Treasurer, (iv) Jay Ferriero
        resigned as Senior Vice President and Director of Acquisitions, and (v) Lisa
        M.
        Clements resigned as Vice President and Chief Accounting Officer. In addition,
        each such individual resigned from all other offices he or she held with
        any of
        the subsidiaries of the Company. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
        such resignations, six new officers were appointed as principal officers
        of the
        Company and any subsidiaries of the Company which employed officers in the
        following capacities: Francis X. Tansey, President; David Luski, Executive
        Vice
        President and Secretary; Paul McEvoy, Senior Vice President and Assistant
        Secretary; Andrew E. Peltz, Vice President and Assistant Secretary; Brian
        Summers, Vice President and Treasurer; and Jean Marie Apruzzese, Vice President
        and Assistant Secretary. &#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        5.03 Amendment to Articles of Incorporation or Bylaws; Change in Fiscal
        Year</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        the
        Closing Date and immediately following the closing of the Mergers, the bylaws
        of
        the Company were amended to reduce the minimum number of members of the board
        of
        trustees from seven to six.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        9.01 Financial Statements and Exhibits. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
        Exhibits </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="3%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="left" valign="bottom" width="74%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="74%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                  Release, dated December 16, 2005, of Capital Automotive REIT announcing
                  the completed acquisition by DRA Advisors LLC of Capital Automotive
                  REIT.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">8</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
          <div style="WIDTH: 100%" align="left">
          </div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURE</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned hereunto
        duly authorized.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="right" valign="top" width="45%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CAPITAL
                  AUTOMOTIVE REIT</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="45%">&#160;</td>
              <td valign="top" width="45%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="45%">&#160;</td>
              <td align="left" valign="top" width="45%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
                  December 22, 2005</font></div>
              </td>
              <td align="left" valign="top" width="45%" style="BORDER-BOTTOM: #ffffff thin solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
                  </font><u><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Paul
                  McEvoy</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></u></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="45%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name:
                  Paul McEvoy</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="45%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:
                  Senior Vice President</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="45%">&#160;</td>
              <td align="left" valign="top" width="45%">&#160;</td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
          <div style="WIDTH: 100%" align="left">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>EXHIBIT
        INDEX</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="middle" width="8%">&#160;</td>
              <td align="left" valign="bottom" width="4%">&#160;</td>
              <td align="left" valign="middle" width="66%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Exhibit&#160;No.</u></strong></font></div>
              </td>
              <td align="left" valign="bottom" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="66%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description</u></strong></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td align="left" valign="bottom" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="66%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                  Release, dated December 16, 2005, of Capital Automotive REIT announcing
                  the completed acquisition by DRA Advisors LLC of Capital Automotive
                  REIT.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">10</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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{"company-data": {"conformed-name": "CAPITAL AUTOMOTIVE REIT", "cik": "0001049316", "assigned-sic": "6798", "irs-number": "541870224", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-32072", "film-number": "051283074"}, "business-address": {"street1": "8270 GREENSBORO DR STE 950", "city": "MCLEAN", "state": "VA", "zip": "22102", "phone": "7032883075"}, "mail-address": {"street1": "8270 GREENSOBORO DR STE 950", "city": "MCLEAN", "state": "VA", "zip": "22102"}}
Unassociated Document
UNITED
        STATES
SECURITIES
        AND EXCHANGE COMMISSION
Washington,
        D.C. 20549
FORM
        8-K
CURRENT
        REPORT
Pursuant
        to Section 13 or 15(d) of
The
        Securities Exchange Act of 1934
Date
        of
        Report (Date of earliest event reported)
December 16,
        2005
Capital
                  Automotive REIT
(Exact
                  name of registrant as specified in its
                  charter)
Maryland
000-23733
54-1870224
(State
                  or other jurisdiction
(Commission
(IRS
                  Employer
of
                  incorporation)
File
                  Number)
Identification
                  No.)
8270
                  Greensboro Dr., Suite 950, McLean, Virginia
22102
(Address
                  of principal executive offices)
(Zip
                  Code)
Registrant's
        telephone number, including area code (
703)
        288-3075
(Former
                  name or former address, if changed since last
                  report.)
Check
        the
        appropriate box below if the Form 8-K filing is intended to simultaneously
        satisfy the filing obligation of the registrant under any of the following
        provisions (see General Instruction A.2. below):
o
Written
        communications pursuant
        to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
        material pursuant to
        Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
        communications
        pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
        240.14d-2(b))
o
Pre-commencement
        communications
        pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
        240.13e-4(c))
Introductory
        Note
On
        December 16, 2005 (the "
Closing
"
        or the
"
Closing
        Date
"),
        Capital Automotive REIT, a Maryland real estate investment trust (the
"
Company
"),
        completed the mergers pursuant to the Agreement and Plan of Merger, dated
        as of
        September 2, 2005 (the "
Merger
        Agreement
"),
        among
        the Company, Capital Automotive L.P. (the "
Partnership
"),
        Flag
        Fund V LLC, a Delaware limited liability company ("
Parent
")
        and
        affiliate of certain funds advised by DRA Advisors LLC ("
DRA
"),
        CA
        Acquisition REIT, a Maryland real estate investment trust ("
Merger
        Sub
"),
        and
        CALP Merger LP, a Delaware limited partnership ("
Merger
        Partnership
").
        Pursuant to the terms of the Merger Agreement, Parent acquired the Company
        and
        its subsidiaries through the mergers of Merger Sub with and into the Company
        with the Company continuing as the surviving REIT (the "
REIT
        Merger
"),
        and
        Merger Partnership with and into the Partnership with the Partnership continuing
        as the surviving partnership (the "
Partnership
        Merger
,"
        and
        together with the REIT Merger, the "
Mergers
").
        Under
        the terms of the Merger Agreement, holders of each issued and outstanding
        common
        share of beneficial interest of the Company, par value $0.01 per share (each
        such share, a "
Company
        Common Share
"),
        received $38.75 in cash, without interest, for each Company Common Share
        held.
        In addition, holders of each issued and outstanding common unit of limited
        partnership interest in the Partnership (each such unit, an "
OP
        Unit
"),
        at
        their election, either (i) received $38.75 in cash, without interest, for
        each
        OP Unit held, or (ii) exchanged all or a portion of such holder's existing OP
        Units for membership interests in OP LP LLC, a Delaware limited liability
        company and affiliate of Parent, which owns as its sole asset, as of the
        consummation of the Partnership Merger, OP Units of the Partnership.
The
        issued and outstanding 7.5% Series A Cumulative Redeemable Preferred
        Shares, par value $0.01 per share, and 8% Series B Cumulative Redeemable
        Preferred Shares, par value $0.01 per share, of the Company (collectively,
        the
"
Preferred
        Shares
")
        remain
        issued and outstanding as Preferred Shares of the Company as the surviving
        REIT.
        The Company will continue to pay the required quarterly dividends on the
        Preferred Shares. The Company may delist all of the Preferred Shares from
        the
        Nasdaq National Market following the Closing and does not plan to seek to
        list
        the Preferred Shares on another trading market.
The
        Company has proposed to consummate a forward merger on or about December
        30,
        2005 in which the Company will be merged into a Delaware limited liability
        company. In such restructuring, all of the Company's outstanding Preferred
        Shares will be converted into Series A and Series B preferred units of the
        new
        Delaware limited liability company with their rights, preferences, restrictions,
        qualifications, limitations, terms and conditions materially
        unchanged.
Following
          the restructuring of the Company into a Delaware limited liability company,
          in
          early January 2006, the Company's successor expects to commence a cash tender
          offer for any and all of its then outstanding Series A and Series B preferred
          units at a price of $25.00 per unit.
Item
        1.01 Entry into a Material Definitive Agreement.
1.
Senior
        Secured Credit Facility
Overview
On
        the
        Closing Date, in connection with the consummation of the Mergers, Merger
        Sub and
        Merger Partnership entered into a senior secured credit agreement with Lehman
        Commercial Paper Inc., as administrative agent, Lehman Brothers Inc., as
        arranger, and Banc of America Securities LLC, JPMorgan Chase Bank, N.A.,
        Wachovia Bank, National Association and Wells Fargo Bank, National Association,
        as co-syndication agents. Upon the effectiveness of the Mergers, by operation
        of
        law and as contemplated in the senior secured credit agreement, the Company
        and
        the Partnership succeeded to the rights and obligations, respectively, of
        Merger
        Sub and Merger Partnership under the senior secured credit
        agreement.
The
        Partnership is the borrower under the senior secured credit agreement and
        the
        credit facilities provided thereunder.
The
        senior secured credit agreement provides for committed senior secured credit
        facilities totaling $2.2 billion ("
Committed
        Facilities
")
        consisting of:
·
a
                  $1.950 billion five year term loan facility
                  and
·
a
                  $250 million four year revolving credit
                  facility.
1
The
        full
        amount of these Committed Facilities was available upon Closing. The full
        amount
        of the committed term loan facility was funded on the Closing Date. The proceeds
        of such term loans were used to finance the Mergers, repay certain outstanding
        borrowed indebtedness of the Company and the Partnership and pay certain
        of the
        costs and expenses of the Mergers and of the credit facilities contemplated
        by
        the senior secured credit agreement.
In
        addition to these Committed Facilities, the senior secured credit agreement
        provides for a currently uncommitted incremental term loan facility in an
        amount
        not to exceed $350 million. Such additional term loans are not presently
        committed but may be made in the future when and if requested by the Partnership
        upon the agreement of one or more financial institutions (either members
        of the
        existing lending syndicate or new lenders) to make such additional term
        loans.
The
        revolving credit facility includes a $25 million letter of credit subfacility
        for the issuance of standby letters of credit and a $50 million subfacility
        for
        revolving credit loans to be made on same-day notice referred to as the
"swingline" facility. As of the Closing Date, no amounts were drawn under the
        credit facility.
Interest
        Rate and Fees
Borrowings
        under both the term loan facilities and the revolving credit facility bear
        interest at rates equal to an applicable margin plus a base rate consisting
        of
        (at the election and option of the Partnership) either (a) a LIBOR rate
        determined by reference to the costs of funds for deposits in dollars for
        the
        interest period relevant to such borrowing (which may be a one month, two
        month,
        three month or six month period) adjusted for certain reserve requirements
        established by the Federal Reserve or (b) the greater of (i) the prime rate
        reported by the British Banking Association Telerate or (ii) the federal
        funds
        rate plus ½ of 1%. The initial applicable margin for borrowings accruing
        interest at a rate based on LIBOR is 1.75% and for borrowings accruing interest
        based on the prime rate/federal funds rate is 0.75%. These applicable margins
        may be increased (up to a maximum of 2.00% for LIBOR-based borrowings and
        1.00%
        for prime rate/federal funds rate borrowings) or decreased (down to a minimum
        of
        1.50% for LIBOR-based borrowings and 0.50% for prime rate/federal funds rate
        borrowings) depending on the total leverage ratio of the Company, the
        Partnership and their consolidated subsidiaries and businesses from time
        to
        time. The first adjustment to the applicable margin will occur after the
        end of
        the second fiscal quarter of the Partnership in 2006.
Other
        Significant Provisions
There
        is
        no required amortization of either the term loan facility or the revolving
        credit facility prior to their respective maturities, at which time payment
        in
        full will be due and payable. The term loan facility will mature on the fifth
        anniversary of the Closing Date and the revolving credit facility will mature
        on
        the fourth anniversary of the Closing Date.
The
        senior secured credit agreement requires the Company to make mandatory
        prepayments of the loans under certain circumstances and allows the Company
        to
        make voluntary prepayments, in each case, subject to the payment of certain
        premiums during the first three years after the Closing Date, subject to
        certain
        exceptions, and the payment of breakage costs.
All
        obligations of the Partnership as the borrower under the senior secured credit
        agreement are fully and unconditionally guaranteed by the Company and the
        Partnership's and Company's wholly-owned subsidiaries, subject to certain
        exceptions. All of the obligations of the Partnership, the Company and their
        respective guarantor subsidiaries under the senior secured credit agreement
        are
        and will be secured by substantially all of their now owned or hereafter
        acquired assets, subject to certain exceptions.
The
        senior secured credit agreement contains a number of affirmative and negative
        covenants and events of default customary for transactions of this
        nature.
2.
Series
        C
Preferred
        Limited Partnership Units
General
On
        the
        Closing Date, in connection with the Mergers, the Partnership issued and
        sold
        1.5 million preferred limited partnership units in the Partnership (the
"
Series
        C Preferred Units
")
        to an
        assignee (the "
Purchaser
")
        of The
        Prudential Insurance Company of America ("
Prudential
")
        pursuant to a Purchase Agreement among the Company, the Partnership and
        Prudential (the "
Purchase
        Agreement
").
        The
        Purchaser paid $150 million as consideration for such Series C Preferred
        Units.
        In addition, if any preferred equity of the Partnership that was existing
        immediately before the Closing ("
Existing
        PE
")
        and
        was not retired at Closing is retired or repurchased by the Partnership at
        any
        time prior to April 30, 2006, then upon not less than thirty (30) calendar
        days'
        written notice to the holders of the Series C Preferred Units, such holders
        will
        purchase additional Series C Preferred Units sufficient to replace such retired
        or repurchased Existing PE up to an aggregate amount invested in Series C
        Preferred Units of $315 million.
2
Cumulative
        Preferred Return
The
        Series C Preferred Units issued at Closing and any Series C Preferred Units
        issued after Closing up until March 31, 2006 will accrue a cumulative preferred
        return at an annual rate (compounded monthly) equal to (i) 7.0% for the period
        from the date that any such Series C Preferred Units were purchased until
        the
        first (1
st
)
        anniversary of such date, (ii) 7.5% for the period from the first (1
st
)
        anniversary of the date that such Series C Preferred Units were purchased
        until
        the fifth (5
th
)
        anniversary of the Closing, (iii) 8.5% for the period from the fifth
        (5
th
)
        anniversary of the Closing until the seventh (7
th
)
        anniversary of the Closing, and (iv) from and after the seventh (7
th
)
        anniversary of the Closing the greater of (x) 12% and (y) the then yield
        on
        10-year U.S. Treasury securities plus 6.5%. In addition to the foregoing,
        on the
        first (1
st
)
        anniversary of the date that any such Series C Preferred Units were purchased,
        the Partnership will pay to the Series C Preferred Unit holders a fee in
        an
        amount that, when added to the preferred return otherwise accruing on such
        Series C Preferred Units, would be sufficient to provide the Series C Preferred
        Unit holders with an aggregate return of 7.5% per annum, compounded monthly,
        for
        the period from the date that such Series C Preferred Units were purchased
        until
        the first (1
st
)
        anniversary of such date. The Series C Preferred Units purchased after March
        31,
        2006 up until April 30, 2006 in connection with the retirement or redemption
        of
        Existing PE will earn a preferred return determined in accordance with the
        procedures for determination of the preferred return accruing on Additional
        Units, as defined and described in the next paragraph immediately
        below.
Additional
        Issuance of Preferred Limited Partnership Interests
If
        the
        Partnership (a) retires any Existing PE after April 30, 2006, or (b) from
        time
        to time wishes to directly or indirectly acquire an asset and the amount
        of
        fixed and variable rate debt of the Company, whether secured or unsecured
        (excluding trade payables and short term trade debt in immaterial amounts
        incurred in the ordinary course of business) ("
Debt
")
        that
        would be required for it to acquire such asset would cause such Debt to exceed
        65% of the purchase price for such asset, then the Series C Preferred Unit
        holders shall have the option, but not the obligation, to purchase additional
        Series C Preferred Units ("
Additional
        Units
"),
        the
        proceeds of which would be applied toward the purchase price of such Existing
        PE
        or asset, in such amount as would cause the
aggregate amount of Debt and preferred equity incurred or issued by the
        Partnership in connection with any asset acquisition (including all Additional
        Units to be issued in connection with such acquisition)
to not
        exceed 75% of the purchase price for such asset. Additional Units will earn
        a
        preferred return equal to (i) during the period commencing on the date such
        Additional Units are purchased until the fifth (5
th
)
        anniversary of the Closing, an annual rate (compounded monthly) equal to
        the
        greater of (x) 3.10% over the yield on 10-year U.S. Treasury securities as
        of
        the date that is five (5) business days prior to the date that such Additional
        Units are purchased and (y) 7.5%, (ii) during the period from and after the
        fifth (5
th
)
        anniversary of the Closing until the seventh (7
th
)
        anniversary of the Closing, an annual rate equal to the preferred return
        rate
        accruing on such Additional Units immediately prior to the fifth (5
th
)
        anniversary of the Closing
plus
1.0%,
        and (iii) from and after the seventh (7
th
)
        anniversary of the Closing, an annual rate (compounded and adjusted monthly)
        equal to the greater of (x) 12% and (y) the yield on 10-year U.S. Treasury
        securities plus 6.5%. All Additional Units will be otherwise treated the
        same as
        the Series C Preferred Units issued at the Closing.
Monetary
        Defaults by the
Partnership
        or any of its Subsidiaries
In
        addition to the foregoing, upon the occurrence of any monetary default by
        the
        Partnership (or its subsidiary) in connection with any Debt and/or contractual
        arrangement entered into by the Partnership (or its subsidiary) which is
        not
        cured within the applicable cure period (if any) under such contractual
        arrangement, which default may result in the loss of any assets of the
        Partnership (by foreclosure or otherwise) or have any other material adverse
        effect on the Partnership or its business operations, the Series C Preferred
        Unit holders may cure such defaults, and all sums expended by the Series
        C
        Preferred Unit holders in connection with such cure will be treated as capital
        contributions to the Partnership ("
Default
        Contributions
").
        All
        Default Contributions made by the Series C Preferred Unit holders will accrue
        a
        cumulative preferred return (compounded monthly) at an annual rate equal
        to the
        greater of (x) 12% and (y) 5% over the Prime Rate published in The Wall Street
        Journal.
3
Series
        C Preferred Manager
A
        single
        Series C Preferred Unit holder (the "
Series
        C Manager
")
        will
        be authorized to make certain decisions and take certain actions on behalf
        of
        the other Series C Preferred Unit Holders, including the right to approve
        certain major decisions of the Partnership and assume management and dispose
        of
        the assets of the Partnership upon the occurrence of certain events.
Covenants
The
        amendment to the Partnership's limited partnership agreement setting forth the
        rights and preferences of the Series C Preferred Units contains
        provisions:
·
limiting
                  and/or requiring redemptions of the Series C Preferred Units;
·
limiting
                  transfers of interests in the
                  Partnership;
·
for
                  the transfer of management of the Partnership to the Series C Manager
                  upon
                  the occurrence of certain events;
·
for
                  the Series C Manager to force the sale of the Partnership's assets upon
                  the occurrence of certain events;
·
limiting
                  the Partnership's ability to incur debt;
                  and
·
limiting
                  the Partnership's ability to make distributions to its common equity
                  holders.
Subordination
The
        Series C Preferred Unit holders have subordinated their right to distributions
        and proceeds of any assets of the Partnership to the rights of the holders
        of
        certain senior Debt of the Partnership pursuant to a Subordination Agreement
        among the Company, the Partnership, the Purchaser and Lehman Commercial Paper
        Inc.
3.
Amendments
        to Partnership Agreement
Pursuant
        to the Merger Agreement, the Partnership Agreement was amended by a Seventh
        Amendment thereto to account for the issuance of (i) a number of common units
        of
        limited partnership interest of the Partnership ("
Common
        Units
")
        to
        Thomas D. Eckert, David S. Kay, John M. Weaver and Jay Ferriero, as more
        fully
        described in Section 5 herein, (ii) an aggregate of 1,000 performance units
        to
        Messrs. Eckert, Kay, Weaver and Ferriero, (iii) a number of Common Units
        and
        preferred units of limited partnership interest of the Partnership to the
        Company, as more fully described in Section 5 herein, and (iv) Common Units
        to
        OP LP LLC, as more fully described in Section 5 herein. Messrs. Eckert, Kay,
        Weaver and Ferriero paid an aggregate of $3,000,000 for their Common Units
        ($38.75 per Common Unit). Upon certain conditions, the holders of the
        performance units of the Partnership will be entitled to receive a preferred
        return of 10% after the other holders of Common Units have received their
        contribution plus an IRR (as defined in the Seventh Amendment to the Partnership
        Agreement) of 17% and a preferred return of 20% after the other holders of
        Common Units have received their contribution plus an IRR of 19%. Such rights
        of
        these holders of performance units are subject to certain tag-along rights
        and
        rights of first refusal.
Pursuant
        to the Purchase Agreement and the terms and conditions of the Eighth Amendment
        to the Partnership Agreement, PREI will be admitted as a limited partner
        to the
        Partnership and has the option, but not the obligation to acquire Additional
        PE.
4.
Employment
        Agreements
In
        connection with the Merger Agreement, the Partnership and Thomas D. Eckert,
        David S. Kay, John M. Weaver, Jay M. Ferriero and Lisa M. Clements (each,
        an
"
Executive
")
        have
        entered into employment agreements with the Partnership providing terms of
        employment with the Partnership for the three-year period (and in the case
        of
        Ms. Clements for the one-year period) following the Closing Date. The employment
        agreements with Messrs. Eckert, Kay, Weaver, Ferriero, and
        Ms. Clements provide for initial base salaries of $640,000, $412,000,
        $276,000, $412,000 and $230,000, respectively, and the opportunity for each
        Executive to earn annual bonus compensation based upon certain performance
        criteria set forth in each Executive's employment agreement of up to an annual
        target amount of $660,000, $360,000, $300,000, $390,000 and $180,000,
        respectively. Each of the Executives will also receive a long term incentive
        award payable in the case of Messrs. Eckert, Kay, Weaver and Ferriero
        in
        equal quarterly installments (based on a maximum of 12 installments)
        on the
        last day of each quarter in which they are employed by the Partnership pursuant
        to their new three-year employment agreements and in the case of
        Ms. Clements in equal quarterly installments (based on a maximum of
        4 installments) on the last day of each quarter in which she is employed
        by
        the Partnership pursuant to her new one-year employment agreement. These
        long
        term incentive awards are intended to substitute for the equity component
        of the
        Executives' compensation under their prior employment agreements with the
        Company. The maximum aggregate amount of the long term incentive award payable
        to each of Messrs. Eckert, Kay, Weaver and Ferriero and Ms. Clements
        under
        his or her new employment agreement (assuming he or she remains employed
        by the
        Partnership for the full term of his or her employment agreement) is $5,760,000,
        $2,520,000, $2,160,000, $2,880,000 and $300,000, respectively.
4
The
        Executives' employment agreements contain terms substantially similar to those
        of their prior employment agreements with respect to, among other things,
        the
        termination rights of the Partnership and the Executives, health benefits,
        confidentiality obligations as well as non-competition and non-solicitation
        restrictions on the Executives during their employment and for a two-year
        period
        after termination of employment.
On
        January 1, 2006, the Executives' employment agreements will be assigned by the
        Partnership to CARS Real Estate Investment Services Inc., a Delaware corporation
        and wholly-owned subsidiary of the Partnership (the "
Manager
"),
        on
        substantially similar terms. The Manager was formed to manage the affairs
        of the
        Company and its subsidiaries and has the authority to act, under the direction
        of the Company's board of trustees (currently the same trustees as those of the
        Company) and through its duly appointed officers (Thomas D. Eckert, President
        and Chief Executive Officer, David S. Kay, Senior Vice President, Chief
        Financial Officer and Treasurer, John M. Weaver, Senior Vice President,
        Secretary & General Counsel, Jay M. Ferriero, Senior Vice President and
        Director of Acquisitions, and Lisa M. Clements, Vice President and Chief
        Accounting Officer), on behalf of the Company itself, on behalf of the Company
        as general partner of the Partnership and on behalf of any corporate subsidiary
        of the Company.
5.
6.75%
        Monthly Income Notes
On
        April
        15, 2004, the Company issued $125 million aggregate principal amount of its
        6.75% monthly income notes pursuant to that certain First Supplemental Trust
        Indenture dated April 15, 2005 between the Company and Wells Fargo Bank,
        National Association. On November 2, 2005, the Company commenced a tender
        offer
        and consent solicitation in which it solicited the tender of all such monthly
        income notes and the waiver of certain covenants contained in such notes.
        The
        tender offer, following extensions, terminated on the Closing Date.
$120,921,575
aggregate principal amount of its 6.75% monthly income notes were tendered
        as of
        the Closing Date with $4,078,425 aggregate principal amount of notes remaining
        outstanding.
On
        the
        Closing Date, the Fifth Supplemental Indenture entered into among the Company,
        the Partnership and Wells Fargo Bank, National Association, dated as of December
        9, 2005 became effective. The supplemental indenture amends the indenture
        under
        which the notes were issued to eliminate substantially all of the restrictive
        covenants relating to the notes. These amendments are binding on all
        non-tendering holders and affect the notes that remain outstanding.
6.
6%
        Convertible Notes
On
        May
        12, 2004, the Company issued $110 million aggregate principal amount of its
        6%
        convertible notes due May 15, 2024 pursuant to that certain Second Supplemental
        Trust Indenture dated May 12, 2004 between the Company and Wells Fargo Bank,
        National Association.
On
        the
        Closing Date, the Company, the Partnership and Wells Fargo Bank, National
        Association entered into a Sixth Supplemental Indenture confirming certain
        rights of the holders of the notes upon conversion of the notes following
        the
        Mergers.
5
Item
        1.02 Termination of a Material Definitive Agreement.
1.
Employment
        Agreements
The
        employment agreements existing at the time of the Mergers between the
        Partnership and each of the Executives have been terminated and replaced
        by the
        employment agreements between the Partnership and each of the Executives,
        as
        more fully described in Item 1.01 above.
2.
Revolving
        Credit and Term Loan Agreement
On
        August
        20, 2004 and as amended on May 10, 2005, the Company and the Partnership
        entered
        into a certain revolving credit and term loan agreement with JPMorgan Chase
        Bank
        ("
JPM
")
        under
        which JPM provided (i) a term loan facility in an aggregate of $150 million,
        (ii) a revolving credit facility in an initial aggregate amount of up to
        $250
        million with the option to increase the aggregate amount to $350 million,
        (iii)
        letters of credit, (iv) swing loans and (v) competitive borrowings ((i) -
        (v)
        collectively, the "
JPM
        Loan
").
        In
        connection with the Mergers and pursuant to notice given to JPM, the Company
        paid all amounts outstanding under the JPM Loan as of the Closing
        Date.
3.
5.46%
        Guaranteed Senior Notes
On
        February 24, 2005, the Company and the Partnership entered into a note purchase
        agreement with certain purchasers under which the Company issued $175 million
        aggregate principal amount of its 5.46% guaranteed senior notes. In connection
        with the Mergers and pursuant to a consent and waiver of notice received
        from
        each purchaser, the Company prepaid all amounts due under the 5.46% guaranteed
        senior notes, including a make-whole premium.
4.
Equity
        Incentive Plans
By
        operation of the REIT Merger, the Company's Second Amended and Restated 1998
        Equity Incentive Plan (the "
Company
        Share Option Plan"
)
        and
Company's
        Phantom Share Purchase Program
("
Phantom
        Plan
")
        terminated
pursuant
        to the terms of the Merger Agreement
.
        The
        Company Share Option Plan provided options ("
Company
        Share Options
")
        to
        purchase Company Common Shares, direct grants or sales of Company Common
        Shares,
        restricted shares ("
Restricted
        Shares
")
        or
        phantom shares ("
Phantom
        Shares
")
        to
        eligible Trustees, employees and consultants.
Pursuant
        to the terms of the Merger Agreement
and in
        connection with the REIT Merger, each Company Share Option,
whether
        or not then vested or exercisable and regardless of the exercise price or
        purchase price, as the case may be, thereof, was cancelled in exchange for
        the
        holder's right to receive
a single
        lump sum cash payment
from
        the
        Company
equal
        to
        the product of (x) the number
of
        Company Common Shares subject to such Company Share Option immediately prior
        to
        cancellation, whether or not vested or exercisable, and (y) the excess, if
        any,
        of
$38.75
over
        the
        exercise price or purchase price per share of such Company Share Option.
        If the
        exercise price or purchase price per share of any such Company Share Option
        was
        equal to or greater than
$38.75
,
        such
        Company Share Option was cancelled without any cash payment being made in
        respect thereof.
Pursuant
        to the terms of the Merger Agreement, each Restricted Share, Phantom Share
        and
        Restricted Share deferred under a Restricted Share Deferral Agreement
        ("
Deferred
        Restricted Shares
")
        was
        also made fully vested, non-forfeitable and payable to each participant in
        full,
        and all Company Common Shares which the Company had the option of issuing
        in
        settlement of the Phantom Shares was considered outstanding for all purposes
        of
        the REIT Merger, including
the
        right
        to receive an amount in cash equal to $38.75 per common share of beneficial
        interest, par value $0.01 per share
.
6
5.
Deferred
        Compensation and Stock Plan for Trustees
By
        operation of the REIT Merger
,
        the
        Company's Deferred Compensation and Stock Plan for Trustees (the "
Trustees
        Deferred Compensation Plan
")
        terminated pursuant to the terms of the Merger Agreement
.
Pursuant
        to the terms of the Merger Agreement and in connection with the REIT Merger,
        each phantom share (the "
Fee
        Shares
")
        under
        the Trustees Deferred Compensation Plan was made fully vested, non-forfeitable
        and payable to each participant in full, and all Company Common Shares which
        the
        Company had the option of issuing in settlement of the Fee Shares was considered
        outstanding for all purposes of Merger, including
the
        right
        to receive an amount in cash equal to $38.75 per common share of beneficial
        interest, par value $0.01 per share.
Item
        2.01 Creation of a Direct Financial Obligation or an Obligation under an
        Off-Balance Sheet Arrangement of a Registrant.
The
        description of the senior secured credit agreement described in Item 1.01.
"1.
        Senior Secured Credit Facility" is incorporated herein by
        reference.
Item
        3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
        Standard; Transfer of Listing.
In
        connection with the Closing, the Company notified The NASDAQ Stock Market
        on the
        Closing Date that each Company Common Share (other than those owned by Parent)
        was canceled and automatically converted into the right to receive $38.75
        in
        cash, without interest, and requested that the Company Common Shares be removed
        from quotation on the Nasdaq National Market.
Item
        3.03 Material Modification to the Rights of Security Holders.
The
        description of the supplemental indentures described in Item 1.01. "5. 5.75%
        Monthly Income Notes" and "6. 6% Convertible Notes" is incorporated herein by
        reference.
Item
        5.01 Changes in Control of Registrant.
On
        the
        Closing Date, pursuant to the terms of the Merger Agreement, Parent completed
        the acquisition of the Company and the Partnership through the REIT Merger
        and
        Partnership Merger. The Company and the Partnership were the surviving entities
        in the Mergers. As a result of the REIT Merger, the Company's voting shares are
        100% owned by Parent. Parent is owned indirectly by funds advised by DRA.
        As a
        result of the Partnership Merger, the Partnership's voting units are owned by
        each of the Company (approximately 83% of the OP Units), OP LP LLC
        (approximately 17% of the OP Units), and Messrs. Eckert, Kay, Weaver and
        Ferriero (in the aggregate, less than 1% of the OP Units).
The
        aggregate purchase price paid for all of the Company Common Shares, Company
        Share Options, Restricted Shares, Phantom Shares, Deferred Restricted Shares
        and
        OP Units exchanged for cash in the Mergers was approximately $2,013,272,331
billion.
        There was also an additional approximately $103,788,000
million
        in related fees and expenses paid in connection with the Mergers and the
        financing arrangements described in Item 1.01 above. The aggregate purchase
        price and related fees and expenses were funded by the new credit facilities
        described in Item 1.01 above, as well as by equity financing from affiliated
        funds advised by DRA.
A
        copy of
        the press release issued by the Company on the Closing Date announcing the
        completed acquisition by DRA of the Company is attached as an exhibit hereto
        and
        is incorporated herein by reference.
Item
        5.02 Departure of Directors or Principal Officers; Election of Directors;
        Appointment of Principal Officers.
Trustees/Directors
In
        connection with the Mergers, each of Thomas D. Eckert, Craig L. Fuller, Paul
        M.
        Higbee, William E. Hoglund, David B. Kay, R. Michael McCullough, John J.
        Pohanka, Robert M. Rosenthal, and Vincent A. Sheehy voluntarily resigned
        from
        the board of trustees of the Company and as a member of any governing body
        of
        all subsidiaries of the Company on the Closing Date. In addition, each of
        John
        M. Weaver and Thomas D. Eckert voluntarily resigned from the board of directors
        of each of the corporate subsidiaries of the Company.
Following
        such resignations, the following persons were elected to the Company's board of
        trustees: Francis X. Tansey, President and Chief Executive Officer of DRA,
        David
        Luski, Vice President and Chief Operating Officer of DRA, Paul McEvoy, Senior
        Managing Director of DRA, Andrew E. Peltz, a Managing Director of DRA, Brian
        Summers, a Managing Director of DRA, and Jean Marie Apruzzese, a Managing
        Director of DRA. In addition, the same such six individuals were elected
        as
        directors to the boards of directors of each of the corporate subsidiaries
        of
        the Company.
7
Principal
        Officers
In
        connection with the Mergers, the following principal officers resigned effective
        as of the Closing Date: (i) Thomas D. Eckert resigned as President and Chief
        Executive Officer of the Company, (ii) John M. Weaver resigned as Senior
        Vice
        President, General Counsel and Secretary, (iii) David S. Kay resigned as
        Senior
        Vice President, Chief Financial Officer and Treasurer, (iv) Jay Ferriero
        resigned as Senior Vice President and Director of Acquisitions, and (v) Lisa
        M.
        Clements resigned as Vice President and Chief Accounting Officer. In addition,
        each such individual resigned from all other offices he or she held with
        any of
        the subsidiaries of the Company.
Following
        such resignations, six new officers were appointed as principal officers
        of the
        Company and any subsidiaries of the Company which employed officers in the
        following capacities: Francis X. Tansey, President; David Luski, Executive
        Vice
        President and Secretary; Paul McEvoy, Senior Vice President and Assistant
        Secretary; Andrew E. Peltz, Vice President and Assistant Secretary; Brian
        Summers, Vice President and Treasurer; and Jean Marie Apruzzese, Vice President
        and Assistant Secretary.
Item
        5.03 Amendment to Articles of Incorporation or Bylaws; Change in Fiscal
        Year
On
        the
        Closing Date and immediately following the closing of the Mergers, the bylaws
        of
        the Company were amended to reduce the minimum number of members of the board
        of
        trustees from seven to six.
Item
        9.01 Financial Statements and Exhibits.
(c)
        Exhibits
99.1
Press
                  Release, dated December 16, 2005, of Capital Automotive REIT announcing
                  the completed acquisition by DRA Advisors LLC of Capital Automotive
                  REIT.
8
SIGNATURE
Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned hereunto
        duly authorized.
CAPITAL
                  AUTOMOTIVE REIT
Date:
                  December 22, 2005
By:
/s/
Paul
                  McEvoy
Name:
                  Paul McEvoy
Title:
                  Senior Vice President
9
EXHIBIT
        INDEX
Exhibit No.
Description
99.1
Press
                  Release, dated December 16, 2005, of Capital Automotive REIT announcing
                  the completed acquisition by DRA Advisors LLC of Capital Automotive
                  REIT.
10