UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

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): February 28, 2005

ARCHSTONE-SMITH OPERATING TRUST

(Registrant’s Telephone Number, including Area Code): (303) 708-5959

N/A
(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))

 

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

      On February 28, 2005, Archstone-Smith Trust, a Maryland real estate investment trust (the “Trust”), Archstone-Smith Operating Trust, a Maryland real estate investment trust (the “Operating Trust”), R&B Realty Group, a California limited partnership (“R&B”), and the identified property partnerships (“Property Partnerships”) entered into a master agreement (the “Master Agreement”) providing for the acquisition, directly or indirectly, by the Operating Trust of up to 30 apartment communities owned, directly or indirectly, by the Property Partnerships and, except as set forth in the following paragraph, the management of those properties.

      Pursuant to the Master Agreement, we will enter into a master lease agreement with R&B with respect to 15 of the 30 apartment communities. R&B will continue to manage these 15 apartment communities for a period of up to seven years. Under the expected terms of each master lease agreement, the Operating Trust will receive a specified contractual base rent payment from R&B, which will be adjusted annually by the percentage change in the average same-store net operating income growth for other properties we own in the same sub-market as the property subject to the master lease.

      Subject to extension in accordance with the terms of the Master Agreement, we will have until April 30, 2005 (the “Due Diligence Period”) to complete confirmatory on-site physical and environmental due diligence, lease audits and other due diligence review. During this period, we may terminate the Master Agreement with respect to any or all of the properties in accordance with the terms specified in the Master Agreement. In addition, the Master Agreement is subject to various closing conditions. The acquisition of each property is also subject to the requisite approval of the investors in the related Property Partnership. The acquisition of all of the properties need not close on the same day.

      If we acquire all 30 properties, the aggregate value of the acquisition will be approximately $1.4 billion. The Operating Trust expects to pay for this acquisition, net of assumed debt, with cash, issuance of debt, proceeds from asset sales and units of the Operating Trust. The Property Partnerships must notify us of the aggregate dollar value of the units each wishes to receive by the expiration of the Due Diligence Period, subject to extension in accordance with the Master Agreement. The value of a unit will be determined based on the average of the high price and low price of a Trust common share for the ten trading days ending on the date that is five trading days immediately preceding the date of the first closing on the acquisition of a property. In no event will the value of a common share be less than $32.98 or greater than $35.98.

      The closing of each acquisition will occur sixty days following the end of the due diligence period, subject to extension in accordance with the terms of the Master Agreement. Also at the closing, if applicable to any specific property acquisition, we expect to also enter into a contribution agreement, registration rights agreement and tax agreement. The closing of the transactions will occur in several stages, a majority of which are expected to close late in the second quarter of 2005, subject to completion of our due diligence review and customary closing conditions.

      The foregoing description is qualified in its entirety by reference to the text of the Master Agreement, a copy of which is filed as exhibit 2.1 to this Current Report on Form 8-K, and the form of Master Lease, a copy of which is filed as exhibit 10.1 to this Current Report on Form 8-K.

      In addition to historical information, this Current Report on Form 8-K contains forward-looking information under the federal securities laws. These statements are based on current expectations, estimates and projections about the industry and markets in which we operate, management’s beliefs and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. While we believe that the assumptions underlying the forward-looking statements are reasonable, such statements are necessarily subject to uncertainties and may involve certain risks, many of which are difficult to predict and beyond the control of management. As a result, forward looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Actual results may differ materially from what is expressed or forecasted in this Current Report on Form 8-K. See “Item .1 Business — Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2004 for certain factors which could affect our future performance.

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements of Businesses Acquired.

Not applicable.

(b) Pro Forma Financial Information.

Not applicable.

(c) Exhibits.

 

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Trust has duly caused this report to be filed on its behalf by the undersigned thereunto duly authorized.

	ARCHSTONE-SMITH OPERATING TRUST
	By:	/s/ Thomas S. Reif
Dated: March 4, 2005		Name:	Thomas S. Reif
		Title:	Group Vice President and Assistant General Counsel