Edgar Filing: SIZELER PROPERTY INVESTORS INC

As filed with the Securities and Exchange Commission on October 25, 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

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SIZELER PROPERTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)

Maryland 72-1082589
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

2542 Williams Boulevard
Kenner, Louisiana 70062
(504) 471-6200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

SIDNEY W. LASSEN, Chairman
2542 Williams Boulevard
Kenner, Louisiana 70062
(504) 471-6200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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Copies to:

WILLIAM I. SCHAPIRO, Esq.
Jaeckle Fleischmann & Mugel, LLP
800 Fleet Bank Building, Twelve Fountain Plaza
Buffalo, New York 14202
(716) 856-0600

Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement as determined
by market conditions.

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

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

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

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

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

CALCULATION OF REGISTRATION FEE

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Proposed Maximum
Aggregate Amount of
Title of Each Class Offering Price Registration
of Securities to be Registered (1)(2) Fee
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Debt Securities................................
Preferred Stock (3)............................ $100,000,000 $ 25,000 (6)
Common Stock (4)...............................
Warrants (5)...................................
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(1) The aggregate maximum offering price of all securities issued pursuant to
this Registration Statement will not exceed $100 million. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.

(2) The proposed maximum offering price per unit (a) has been omitted pursuant
to Instruction II.D of Form S-3 and (b) will be determined, from time to
time, by the registrant in connection with the issuance by the registrant
of the securities registered hereunder.

(3) Subject to footnote (1), includes such indeterminate number of shares of
preferred stock as may be issued upon conversion of or in exchange for any
debt securities that provide for conversion or exchange into shares of
preferred stock. No separate consideration will be received for the shares
of preferred stock issued upon conversion of or in exchange for debt
securities.

(4) Subject to footnote (1), includes such indeterminate number of shares of
common stock as may be issued upon conversion of or in exchange for any
debt securities or shares of preferred stock that provide for conversion
or exchange into shares of common stock. No separate consideration will be
received for the shares of common stock issued upon conversion of or in
exchange for debt securities or shares of preferred stock.

(5) Warrants may be sold separately or with debt securities, shares of
preferred stock or shares of common stock.

(6) The registration fee has been calculated pursuant to Rule 457(o) and
reflects the offering price rather than the principal amount, of any
securities issued at a discount.

The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933, as amended, or until this
registration statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.

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EXPLANATORY NOTE

This Registration Statement relates to securities which may be offered from
time to time by Sizeler Property Investors, Inc. ("Sizeler"). This
Registration Statement contains a form of basic prospectus (the "Basic
Prospectus") relating to Sizeler which will be used in connection with an
offering of securities by Sizeler. The specific terms of the securities to be
offered will be set forth in a prospectus supplement relating to such
securities (the "Prospectus Supplement"). This Registration Statement also
contains a form of a Preliminary Prospectus Supplement which is not part of
the Basic Prospectus and relates to a proposed offering of preferred stock and
convertible subordinated debentures of the Company.

SUBJECT TO COMPLETION

Dated October 25, 2001

PROSPECTUS SUPPLEMENT
(To Prospectus dated October 25, 2001)

$61,900,000

SIZELER PROPERTY INVESTORS, INC.

9.0% Convertible Subordinated Debentures due July 15, 2009 and/or
10.0% Series B Cumulative Redeemable Preferred Stock

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The debentures and the Series B preferred stock are being offered to the
public in this cash offering.

. Descriptions of the debentures and the Series B preferred stock can be
found under "Summary," "Terms of the Debentures" and "Terms of the
Series B Preferred Stock" in this prospectus supplement.

. Upon completion of the offering, we intend to list the debentures and
the Series B preferred stock on the New York Stock Exchange.

. In connection with our offering of securities, we have retained Cohen &
Steers Capital Advisors, LLC as our placement agent. Cohen & Steers has
no commitment to purchase securities and will act only as an agent in
the obtaining of indications of interest from certain institutions in
various jurisdictions on the securities. Cohen & Steers has made no
commitment as to the amount of securities that will be sold in the
offering. See "Plan of Distribution."

. We expect that the debentures will be ready for delivery in book-entry
form only through The Depository Trust Company, and the Series B
preferred stock in certificated form, on or about , 2002.

Proceeds
Offering Price to
to Public Sizeler
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Per share of Series B preferred stock................. $ 25.00 $
Per $1,000 principal amount of debenture.............. $1,000.00 $
Total................................................. $ $

You are urged to carefully read the "Risk Factors" section beginning on page
S-12 in this prospectus supplement and page 5 of the accompanying prospectus,
where specific risks associated with us and the offering are described, before
you make your investment decision.

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

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October , 2001
The information in this prospectus supplement is not complete and may be
changed. We may not issue these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus supplement is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any jurisdiction when the offer
or sale is not permitted.

TABLE OF CONTENTS

Page
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PROSPECTUS SUPPLEMENT

SUMMARY.................................................................... S-6

THE COMPANY................................................................ S-6
Sizeler Property Investors, Inc.......................................... S-6
Recent Developments...................................................... S-6

THE OFFERING............................................................... S-7
Summary Description of the Debentures.................................... S-7
Summary Description of the Series B Preferred Stock...................... S-8

SUMMARY FINANCIAL INFORMATION.............................................. S-10
Summary Historical Financial Data........................................ S-10
Ratio of Earnings to Fixed Charges....................................... S-11

RISK FACTORS............................................................... S-12
Risks Associated with the Debentures..................................... S-12
Risks Associated with the Series B Preferred Stock....................... S-12

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS............................ S-13

USE OF PROCEEDS............................................................ S-13

RATIO OF EARNINGS TO FIXED CHARGES......................................... S-13

CAPITALIZATION............................................................. S-14

SELECTED FINANCIAL DATA.................................................... S-15

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS...................... S-17

ABOUT SIZELER PROPERTY INVESTORS, INC...................................... S-22

TERMS OF THE DEBENTURES.................................................... S-22

TERMS OF THE SERIES B PREFERRED STOCK...................................... S-26
Maturity................................................................. S-26
Rank..................................................................... S-26
Dividends................................................................ S-26
Liquidation Preference................................................... S-28
Redemption............................................................... S-28
Procedures for Redemption................................................ S-28
Voting Rights............................................................ S-29
Conversion............................................................... S-30
Restrictions on Ownership and Transfer................................... S-31
Transfer and Dividend Paying Agent....................................... S-31

DESCRIPTION OF CAPITAL STOCK............................................... S-31

BOOK-ENTRY; DELIVERY AND FORM.............................................. S-31
General.................................................................. S-31
Definitive Registered Debentures......................................... S-32
Description of Book-Entry System......................................... S-33
Payments on the Global Debentures........................................ S-33
Redemption of Global Debentures.......................................... S-34
Transfers................................................................ S-34
Action by Owners of Book-Entry Interests................................. S-34

S-2

Page
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Reports.................................................................. S-35
Notices.................................................................. S-35
Business Day............................................................. S-35
Action by Book-Entry Depositary.......................................... S-35
Resignation of Book-Entry Depositary..................................... S-35
Expenses of Book-Entry Depositary........................................ S-35
Amendment and Termination of the Deposit Agreement....................... S-36
Information Concerning DTC, Euroclear and Clearstream.................... S-36
Global Clearance and Settlement Under Book-Entry System.................. S-37

MATERIAL UNITED STATES FEDERAL TAX CONSEQUENCES............................ S-37

PLAN OF DISTRIBUTION....................................................... S-38

LEGAL MATTERS.............................................................. S-38

EXPERTS.................................................................... S-38

PROSPECTUS

ABOUT THIS PROSPECTUS...................................................... 4

WHERE YOU CAN FIND MORE INFORMATION........................................ 4

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 4

ABOUT SIZELER PROPERTY INVESTORS, INC...................................... 5

RISK FACTORS............................................................... 5
Real Estate Industry Risks............................................... 5
Risks Associated with our Properties..................................... 6
Financing Risks.......................................................... 7
Other Risks.............................................................. 7

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS............................ 8

USE OF PROCEEDS............................................................ 8

RATIO OF EARNINGS TO FIXED CHARGES......................................... 9

DESCRIPTION OF DEBT SECURITIES............................................. 9
General.................................................................. 9
Denomination, Interest, Registration and Transfer........................ 11
Merger, Consolidation or Sale............................................ 12
Certain Covenants........................................................ 13
Events of Default, Notice and Waiver..................................... 13
Modification of the Indentures........................................... 15
Conversion Rights........................................................ 16
Redemption of Securities................................................. 16
Subordination............................................................ 16
Subrogation.............................................................. 16
Global Securities........................................................ 16

DESCRIPTION OF CAPITAL STOCK............................................... 17
General.................................................................. 17

DESCRIPTION OF COMMON STOCK................................................ 17
Shareholder Rights Plan.................................................. 17

S-3

Page
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DESCRIPTION OF PREFERRED STOCK............................................. 18

DESCRIPTION OF WARRANTS.................................................... 19
Exercise of Warrants..................................................... 20
Amendments and Supplements to Warrant Agreement.......................... 20
Common Stock Warrant Adjustments......................................... 20

CERTAIN PROVISIONS OF MARYLAND LAW AND OUR CHARTER AND BY-LAWS............. 21
The Board of Directors................................................... 21
Business Combinations.................................................... 21
Control Share Acquisitions............................................... 22
Advance Notice of Director Nominations and New Business.................. 23

MATERIAL UNITED STATES FEDERAL TAX CONSEQUENCES............................ 23
Introductory Notes....................................................... 23
Taxation of the Company.................................................. 23
Requirements for Qualification........................................... 24
Qualified REIT Subsidiaries.............................................. 25
Taxable REIT Subsidiaries................................................ 25
Income Tests............................................................. 26
Asset Tests.............................................................. 27
Annual Distribution Requirements......................................... 27
Failure to Qualify....................................................... 28
Taxation of Stockholders................................................. 28
Backup Withholding Tax and Information Reporting......................... 32
Taxation of Domestic Debenture Holders................................... 33
Taxation of Non-U.S. Debenture Holders................................... 35

PLAN OF DISTRIBUTION....................................................... 36

LEGAL MATTERS.............................................................. 37

EXPERTS.................................................................... 37

S-4

This document is in two parts. The first part is this prospectus
supplement, which describes the terms of the offering of debentures and Series
B preferred stock and also adds to and updates information contained in the
accompanying prospectus and the documents incorporated by reference into the
prospectus. The second part is the accompanying prospectus, which gives more
general information, some of which may not apply to the debentures and Series
B preferred stock. To the extent there is a conflict between the information
contained in this prospectus supplement, on the one hand, and the information
contained in the accompanying prospectus or any document incorporated by
reference, on the other hand, the information in this prospectus supplement
will control.

You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with information that is different
from that contained or incorporated by reference in this prospectus supplement
or the accompanying prospectus. We are offering to sell the debentures and the
Series B Preferred Stock only where offers and sales are permitted. The
information contained in or incorporated by reference in this prospectus
supplement and the accompanying prospectus is accurate only as of the date of
this prospectus supplement and the date of the prospectus, respectively,
regardless of the time of delivery of this prospectus supplement or of any
sale of the debentures and Series B preferred stock.

S-5

SUMMARY

This summary highlights information from this prospectus supplement. It may
not contain all of the information that is important to you in deciding whether
to invest in us. To understand this offering fully, you should read the entire
prospectus supplement and prospectus carefully, including the risk factors and
financial statements, as well as the documents we have filed with the
Securities and Exchange Commission which are incorporated by reference.

THE COMPANY

Sizeler Property Investors, Inc.

We are a self-administered and self-managed equity real estate investment
trust that acquires, develops, owns and operates income-producing retail
shopping centers and apartment properties in the southeastern region of the
United States. We are a self-administered REIT in that we provide our own
investment and administrative services internally through our own employees. We
are also self-managed as we internally provide, through a wholly-owned
subsidiary, the management, leasing and development services that our
properties require through our own employees. Our investment objective is to
acquire and develop high-quality properties at attractive initial yields with
potential for future growth in cash flows. As of June 30, 2001, our existing
portfolio contained 16 retail shopping centers (one of which, Camelot Shopping
Center, was sold in July 2001) with approximately 2.7 million square feet of
gross leasable area and 14 apartment properties containing approximately 3,400
units. During the six-month period ended June 30, 2001, our retail and
apartment properties were, on average, approximately 92% and 98% leased,
respectively. Our principal executive offices are located at 2542 Williams
Boulevard, Kenner, Louisiana 70062. Our telephone number is (504) 471-6200.

Recent Developments

Concurrently with this public offering, we are engaging in an exchange offer
pursuant to which the Company will exchange 9.0% convertible subordinated
debentures due July 15, 2009 and/or 10.0% Series B preferred stock for valid
tenders made by holders of 8% convertible subordinated debentures due July 15,
2003. New debentures will be offered for old debentures of equal principal
amount and 40 shares of Series B preferred stock will be offered for each
$1,000 principal amount of old debentures. If holders of old debentures choose
to validly tender, in the aggregate, more than $32,327,000 in principal amount
of old debentures in exchange for new debentures, we will exchange the new
debentures for old debentures on a pro rata basis.

The primary purpose of this public offering is to refinance any old
debentures that remain outstanding after the exchange offer. Amounts of
debentures and Series B preferred stock purchased and sold pursuant to this
public offering will depend on how many holders of old debentures choose to
participate in the exchange offer and their choice of consideration. The total
amount of debentures and Series B preferred stock to be offered in this
offering and in the exchange offer will, in no event, be greater than
$61,900,000 in aggregate amount of securities.

S-6

THE OFFERING

Issuer...................... Sizeler Property Investors, Inc.

Securities offered.......... Up to $61.9 million in aggregate principal amount
of 9.0% convertible subordinated debentures due
July 15, 2009 (if the maximum aggregate principal
amount of new debentures are issued) and up to
2,476,000 shares of 10.0% Series B cumulative
redeemable preferred stock (if the maximum amount
of Series B preferred stock is issued).

Use of proceeds............. We intend to use the proceeds from this offering
to redeem or purchase outstanding 8% convertible
subordinated debentures due July 15, 2003 that
are not retired in the exchange offer. See "Use
of Proceeds" and "The Company--Recent
Developments."

No established markets...... Although we intend to apply to list the
debentures and the Series B preferred stock on
the New York Stock Exchange, we cannot assure you
that any active trading markets in the debentures
or the Series B preferred stock will develop.

Summary Description of the Debentures

9.0% Convertible Subordinated Debentures due July 15, 2009.

Debentures offered.......... Up to $61.9 million in aggregate principal amount
available in the offering.

Maturity.................... July 15, 2009.

Offering price.............. $1,000 per $1,000 principal amount of debenture.

Ranking..................... The debentures will rank in right of payment
behind our senior indebtedness and all of our
other existing and future senior debt, but equal
with our 8% convertible subordinated debentures
due July 15, 2003 currently outstanding and any
future subordinated debentures issued by us. The
debentures will be unsecured. The debentures will
rank senior to the Series B preferred stock.

Interest payments........... Interest payments will be made on the debentures
semi-annually on July 15th and January 15th of
each year. The first interest payment will be
prorated from the date of issue.

Conversion.................. The debentures are convertible at any time prior
to maturity, unless previously redeemed, into our
common stock at a price of $11.00 per share,
subject to adjustments.

Optional redemption......... We may redeem the debentures at any time after
, in whole or in part, for 100% of
their principal amount plus accrued and unpaid
interest, if any, up to the date of redemption,
on at least 30 days' prior written notice by
mail.

S-7

Covenants................... The debentures will include limitations on our
ability, and certain of our subsidiaries'
ability, to:

. pay dividends on stock or repurchase stock
after an event of default has occurred and is
continuing or would exist immediately after;

. merge, consolidate or transfer all or
substantially all of our assets unless the
successor entity expressly assumes all
obligations under the indenture governing the
debentures.

Events of default........... The following are events of default under the
indenture governing the debentures:

. our failure to pay principal at maturity when
such failure continues for five business
days;

. our failure to pay interest when due and such
failure continues for 30 days;

. our failure to comply with any other covenant
for 60 days after written notice; or

. certain events of bankruptcy, insolvency or
reorganization.

Listing..................... We intend to apply to list the debentures on the
New York Stock Exchange.

Summary Description of the Series B Preferred Stock

10.0% Series B Cumulative Redeemable Preferred Stock.

Preferred stock offered..... Up to 2,476,000 shares of 10.0% Series B
cumulative redeemable preferred stock, par value
$0.0001 per share.

Offering price.............. $25.00 per share.

Ranking..................... The Series B preferred stock, with respect to
dividend rights and rights upon liquidation, will
rank: (i) senior to our common stock and our
Series A preferred stock, (ii) equal with all
other classes of our preferred stock, and (iii)
junior to the debentures to be issued in this
offering, our currently outstanding 8%
convertible subordinated debentures due July 15,
2003, any other indebtedness of ours or our
subsidiaries and any other shares of our stock
ranking senior.

From time to time we may issue additional shares
of Series B preferred stock for any corporate
purpose. The additional shares may be sold for
cash, exchanged for our outstanding securities,
or for real property or other assets that we
desire to acquire. All such additional shares of
Series B preferred stock will rank equally with
the shares of Series B preferred stock issued in
this offering.

Liquidation preference...... Upon any voluntary or involuntary liquidation,
dissolution or winding up of us, before any
payment to the holders of common stock, the
holders of the preferred stock shall be entitled
to receive a liquidation preference of $25.00 per
share, plus an amount equal to all accrued and
unpaid dividends (whether or not earned or
declared) to the date of final distribution to
such holders.

S-8

Dividends................... $0.625 per share paid quarterly in arrears in
cash on the 15th day of February, May, August and
November of each year (equivalent to $2.50 per
share annually or 10% of the liquidation
preference of $25.00 per share). Such dividends
will be cumulative from the issue date, whether
or not the dividends are declared or paid in any
period. The dividend record date will be not less
than 10 days prior to the payment date nor more
than 60 days prior to the payment date each
quarter and will be publicly announced each
quarter by us. We anticipate that the record date
will be approximately two weeks prior to the
payment date. So long as the shares of Series B
preferred stock are outstanding, no dividends
will be declared and paid on our common stock
unless all dividends accrued and unpaid on the
shares of Series B preferred stock have been paid
in full.

Optional redemption......... We may redeem the shares of Series B preferred
stock at a price equal to the liquidation
preference at any time following the fifth
anniversary of the issue date. In addition, we
will pay accrued and unpaid dividends, if any, up
to the date of the redemption.

Mandatory redemption........ None.

Covenants................... The shares of Series B preferred stock will
include limitations on our ability to:

. authorize, create or increase the authorized
or issued amount of any class of capital
stock ranking senior to the Series B
preferred stock; and

. amend, alter or repeal the provisions of our
Charter, including the Articles Supplementary
establishing the Series B preferred stock, so
as to materially and adversely affect any
right, preference or privilege of the shares
of Series B preferred stock.

Conversion.................. The shares of Series B preferred stock will not
be convertible into our common stock or any of
our other securities.

Voting for directors........ If six quarterly dividends (whether or not
consecutive) on the shares of Series B preferred
stock are in arrears, whether or not declared,
the number of directors constituting our Board of
Directors will be increased by two and the
holders of the shares of Series B preferred stock
(including any other classes or series of
preferred stock holding similar voting rights)
will be entitled to elect the two additional
directors to serve on the Board of Directors.

Listing..................... We intend to apply to list the Series B preferred
stock on the New York Stock Exchange.

For additional information regarding the terms of the debentures and the
Series B preferred stock, see "Terms of the Debentures" and "Terms of the
Series B Preferred Stock" beginning on pages S-22 and S-26, respectively.

Your investment in the debentures and Series B preferred stock will involve
certain risks. For a discussion of some of these risks, please see "Risk
Factors," beginning on page S-12 of this prospectus supplement and page 5 of
the accompanying prospectus, before deciding whether an investment in the
debentures and Series B preferred stock is suitable for you.

S-9

SUMMARY FINANCIAL INFORMATION

Summary Historical Financial Data

We have derived the summary historical financial data as of and for each of
the five years ended December 31, 2000, 1999, 1998, 1997 and 1996 from our
audited consolidated financial statements. The summary historical financial
data as of and for the six months ended June 30, 2000 and 2001 have been
derived from our unaudited consolidated financial statements. The summary
historical data below should be read in conjunction with "Selected Financial
Data," and our consolidated financial statements and related notes incorporated
by reference in the accompanying prospectus.

Six Months Ended Years Ended December 31,
------------------ ------------------------------------------------
June 30, June 30,
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
In thousands except per share, units and percentages

Operating Data:
Total revenue.......... $ 26,232 $ 25,197 $ 51,441 $ 49,969 $ 47,791 $ 46,443 $ 44,456
Property operating
expenses.............. 10,130 9,314 19,442 18,971 17,905 17,139 16,317
-------- -------- -------- -------- -------- -------- --------
Net operating income
(NOI) (2)............. 16,102 15,883 31,999 30,998 29,886 29,304 28,139
Depreciation and
amortization.......... 5,665 5,547 11,173 10,845 10,145 9,621 9,119
Interest expense....... 7,839 7,806 15,850 15,018 14,554 14,608 14,542
General and
administrative
expense............... 1,239 1,413 2,648 2,788 2,431 2,520 2,194
-------- -------- -------- -------- -------- -------- --------
Earnings from
operations before
extraordinary
items................. 1,359 1,117 2,328 2,347 2,756 2,555 2,284
Extraordinary item--
early extinguishment
of debt (4)........... -- -- -- -- -- -- (449)
-------- -------- -------- -------- -------- -------- --------
Net earnings
attributable to shares
of common stock--basic
and diluted (1)....... $ 1,359 $ 1,117 $ 2,328 $ 2,347 $ 2,756 $ 2,555 $ 1,835
======== ======== ======== ======== ======== ======== ========
Common stock cash
distributions paid.... $ 3,757 $ 3,558 $ 7,234 $ 6,938 $ 7,330 $ 7,413 $ 7,425

Balance Sheet Data:
Real estate owned, at
cost.................. $351,957 $344,518 $348,759 $338,389 $328,477 $310,312 $303,476
Total assets........... 282,181 285,475 285,417 284,943 284,935 275,485 277,604
Mortgage notes
payable............... 112,080 110,130 113,163 84,712 89,869 90,615 68,080
Unsecured notes payable
to banks.............. 34,061 39,411 35,716 59,988 49,178 32,342 52,639
Unsecured convertible
subordinated
debentures............ 61,878 61,878 61,878 61,878 62,878 62,878 62,878
Shareholders' equity... $ 66,393 $ 68,694 $ 67,119 $ 70,953 $ 76,217 $ 84,527 $ 89,367

Other Data:
Funds from operations
attributable to shares
of common stock (1)... $ 6,702 $ 6,374 $ 12,907 $ 12,603 $ 12,284 $ 11,509 $ 10,771
Net operating income
(2)................... $ 16,102 $ 15,883 $ 31,999 $ 30,998 $ 29,886 $ 29,304 $ 28,139
Weighted average shares
of common stock
outstanding........... 8,155 7,905 7,950 7,888 8,331 8,423 8,433

Cash Flows:
Net cash provided by
operating activities.. $ 6,335 $ 4,586 $ 14,010 $ 13,193 $ 12,456 $ 12,945 $ 13,504
Net cash used in
investing activities.. (3,208) (6,248) (10,496) (9,925) (16,966) (6,757) (7,476)
Net cash provided by
(used in) financing
activities............ (4,374) 995 (2,955) (3,081) 4,532 (5,528) (6,834)

Multi-family segment:
Gross investment....... $137,950 $135,605 $136,870 $134,092 $129,510 $113,446 $109,236
Total units............ 3,398 3,398 3,398 3,397 3,341 3,157 3,157
Percent leased......... 98% 97% 97% 96% 96% 97% 98%
Operating revenue...... $ 11,879 $ 11,349 $ 22,944 $ 21,902 $ 20,341 $ 19,872 $ 19,070
Operating expenses..... $ 4,748 $ 4,567 $ 9,397 $ 8,943 $ 8,140 $ 7,751 $ 7,488
Net operating income
(2)................... $ 7,131 $ 6,782 $ 13,547 $ 12,959 $ 12,201 $ 12,121 $ 11,582
Percent of total NOI... 44% 43% 42% 42% 41% 41% 41%

S-10

Six Months Ended Years Ended December 31,
----------------- --------------------------------------------
June 30, June 30,
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
In thousands except per share, units and percentages

Retail segment:
Gross investment (3)... $214,920 $209,829 $212,805 $205,214 $199,880 $197,770 $195,188
Total square footage... 2,662 2,729 2,680 2,720 2,668 2,668 2,667
Percent leased......... 92% 92% 92% 95% 95% 95% 92%
Operating revenue...... $ 14,273 $ 13,784 $ 28,353 $ 27,831 $ 27,308 $ 26,432 $ 25,255
Operating expenses..... $ 5,350 $ 4,695 $ 9,958 $ 9,815 $ 9,629 $ 9,105 $ 8,703
Net operating income
(2)................... $ 8,923 $ 9,089 $ 18,395 $ 18,016 $ 17,679 $ 17,327 $ 16,552
Percent of total NOI... 56% 57% 58% 58% 59% 59% 59%

--------
(1) Funds from operations has been an industry-wide standard used to measure
operating performance of a REIT since its adoption by the National
Association of Real Estate Investment Trusts in 1991. In October 1999
NAREIT revised the definition of funds from operations. The revision had no
effect on our calculation of funds from operations. We calculate funds from
operations as net income, excluding gains or losses from sales of property
and those items defined as extraordinary under accounting principles
generally accepted in the United States of America (GAAP), plus
depreciation on real estate assets, and after adjustments for
unconsolidated partnerships to reflect funds from operations on the same
basis. Funds from operations should not be considered as an alternative to
net earnings or any other GAAP measurement of performance or as an
alternative to cash flow from operating, investing or financing activities
as a measure of liquidity. The funds from operations measure presented by
us, while consistent with NAREIT's definition, will not be comparable to
similarly titled measure of other REITs that do not compute funds from
operations in a manner consistent with ours.
(2) Net operating income is based on the operating revenues and expenses
directly associated with the operations of the real estate properties
(excluding corporate general and administrative expenses, depreciation and
interest expense).
(3) Includes our investment in an unconsolidated real estate entity.
(4) In 1996, the Company recorded an extraordinary charge related to the early
extinguishment of debt.

Ratio of Earnings to Fixed Charges

Our ratio of earnings to fixed charges for the years ended December 31,
2000, 1999, 1998, 1997 and 1996 was 1.11, 1.14, 1.16, 1.17 and 1.15,
respectively. For each of the six months ended June 30, 2001 and 2000, our
ratio of earnings to fixed charges was 1.15 and 1.12, respectively. For
purposes of computing these ratios, earnings have been calculated by adding
fixed charges, excluding capitalized interest, to pre-tax income from
continuing operations. Fixed charges consist of interest costs, whether
expensed or capitalized, the estimated interest component of rental expenses
and amortization of debt issuance costs. There were no shares of preferred
stock outstanding for any of the periods shown above. Accordingly, the ratio of
earnings to combined fixed charges and preferred stock dividends are identical
to the ratio of earnings to fixed charges. See "Ratio of Earnings to Fixed
Charges."

Ratio of EBITDA to Fixed Charges. Our ratio of EBITDA to fixed charges for
the years ended December 31, 2000, 1999, 1998, 1997 and 1996 was 1.78, 1.84,
1.83, 1.82 and 1.73, respectively. For each of the six months ended June 30,
2001 and 2000, our ratio of EBITDA to fixed charges was 1.84 and 1.80,
respectively. See "Ratio of Earnings to Fixed Charges." "EBITDA," as used here,
is earnings before interest expense, income taxes, depreciation and
amortization. We have included information concerning EBITDA because we believe
that EBITDA is generally accepted as providing useful information regarding a
company's ability to service and/or incur debt. EBITDA should not be considered
in isolation as a substitute for net income, cash flows or other consolidated
or cash flow data prepared in accordance with accounting principles generally
accepted in the United States or as a measure of a company's profitability or
liquidity. While EBITDA is frequently used as a measure of operations and
ability to meet debt service requirements, it is not necessarily comparable to
similarly titled captions of other companies due to differences in methods of
calculation.

S-11

RISK FACTORS

Before you decide to invest in the debentures or the Series B preferred
stock, you should consider carefully the risks described below and in the
accompanying prospectus under the heading "Risk Factors" beginning on page 5,
together with the information provided in the other parts of this prospectus
supplement and the accompanying prospectus. From time to time, we may make
forward-looking statements (within the meaning of Section 27A of the
Securities Act and Section 21F of the Exchange Act) in documents filed under
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, press releases or other public statements. If we make forward-
looking statements, we assume no obligation to update forward-looking
statements. Stockholders should not place undue reliance on forward-looking
statements as they involve numerous risks and uncertainties that could cause
actual results to differ materially from the results stated or implied in the
forward-looking statements. In addition to specific factors that may be
disclosed simultaneously with any forward-looking statement, some of the
factors related to us and our businesses that could cause actual results to
differ materially from a forward-looking statement are set forth below.

Risks Associated with the Debentures

The debentures will rank in right of payment behind our senior debt, both
existing and incurred in the future. If we default on our senior debt, we may
not be able to fulfill our obligations under the debentures. We may not pay
any principal, or any other amounts owing on, or purchase, redeem or otherwise
retire the debentures, if principal or interest on our senior debt is not paid
when due. In addition, the owners of our senior debt will be entitled to
receive payment of all amounts due to them before the owners of the debentures
upon any payment or distribution of our assets to our creditors upon our
bankruptcy or liquidation or other insolvency or reorganization proceedings.
The terms of the debentures, our Charter and our Bylaws do not limit the
amount of senior indebtedness that we may incur.

We may not be able to repay or refinance the debentures when they become
due for payment. We can give no assurance that we will have the cash resources
required to meet our obligations to repay the debentures when they are due.
Our ability to service our indebtedness following this exchange offer,
including our payment obligations under the debentures and other financial
obligations, will depend upon our future operating performance, which in turn
is subject to market conditions and other factors, including factors beyond
our control.

Risks Associated with the Series B Preferred Stock

The market value of the Series B preferred stock could be substantially
affected by general market conditions, including changes in interest rates,
government regulatory action and changes in tax laws. An increase in market
interest rates may lead purchasers of the Series B preferred stock to require
a higher annual dividend yield on the Series B preferred stock as a percentage
of the purchase price, which could adversely affect the market price of the
Series B preferred stock. Moreover, numerous other factors, such as government
regulatory action and changes in tax laws could have a significant impact on
the future market price of the Series B preferred stock or other securities.

S-12

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements with respect to our financial
condition, results of operations and business and on the expected impact of
this exchange offer on our financial performance. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions as they relate to us or our management, are intended to identify
forward-looking statements. These forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties,
including those described under "Risk Factors" in this prospectus supplement,
that could cause actual results to differ materially from the results
contemplated by the forward-looking statements. The safe harbor for forward-
looking statements provided for in the Private Securities Litigation Reform
Act of 1995 does not apply to statements made in connection with this
offering.

In evaluating whether to invest in this offering, you should carefully
consider the discussion of risks and uncertainties in the section entitled
"Risk Factors" on page S-12 of this prospectus supplement and on pages 5 to 8
of the accompanying prospectus.

USE OF PROCEEDS

We intend to use the net proceeds from this offering, estimated to be
approximately $ after deducting estimated offering expenses of
$ , to redeem or purchase outstanding 8% convertible subordinated
debentures due July 15, 2003 that are not retired in the exchange offer.

RATIO OF EARNINGS TO FIXED CHARGES

Our ratio of earnings to fixed charges for the years ended December 31,
2000, 1999, 1998, 1997 and 1996 was 1.11, 1.14, 1.16, 1.17 and 1.15,
respectively. For each of the six months ended June 30, 2001 and 2000, our
ratio of earnings to fixed charges was 1.15 and 1.12, respectively. For
purposes of computing these ratios, earnings have been calculated by adding
fixed charges, excluding capitalized interest, to pre-tax income from
continuing operations. Fixed charges consist of interest costs, whether
expensed or capitalized, the estimated interest component of rental expenses
and amortization of debt issuance costs. There were no shares of preferred
stock outstanding for any of the periods shown above. Accordingly, the ratio
of earnings to combined fixed charges and preferred stock dividends are
identical to the ratio of earnings to fixed charges.

Ratio of EBITDA to Fixed Charges. Our ratio of EBITDA to fixed charges for
the years ended December 31, 2000, 1999, 1998, 1997 and 1996 was 1.78, 1.84,
1.83, 1.82 and 1.73, respectively. For each of the six months ended June 30,
2001 and 2000, our ratio of EBITDA to fixed charges was 1.84 and 1.80,
respectively. "EBITDA," as used here, is earnings before interest expense,
income taxes, depreciation and amortization. We have included information
concerning EBITDA because we believe that EBITDA is generally accepted as
providing useful information regarding a company's ability to service and/or
incur debt. EBITDA should not be considered in isolation as a substitute for
net income, cash flows or other consolidated or cash flow data prepared in
accordance with accounting principles generally accepted in the United States
or as a measure of a company's profitability or liquidity. While EBITDA is
frequently used as a measure of operations and ability to meet debt service
requirements, it is not necessarily comparable to similarly titled captions of
other companies due to differences in methods of calculation.

S-13

CAPITALIZATION

Concurrently with this public offering described in this prospectus
supplement, we are engaging in an exchange offer pursuant to which we will
exchange 9.0% convertible subordinated debentures due July 15, 2009 and/or
10.0% Series B preferred stock for our outstanding 8% convertible subordinated
debentures due July 15, 2003. To the extent that not all of the old debentures
are tendered pursuant to the exchange offer or the principal amount of old
debentures that we are able to accept in the exchange offer is limited by
proration, we are concurrently engaged in this public offering for cash of new
debentures and Series B preferred stock, the net proceeds of which we will use
to redeem or purchase any old debentures that remain outstanding after the
completion of the exchange offer. The result of these transactions will be
that the old debentures will be refinanced by the issuance of all new
debentures, all Series B preferred stock or a combination of new debentures
and Series B preferred stock, but the exact amount of new debentures, if any,
and Series B preferred stock, if any, issued will depend upon a number of
factors, including the principal amount of old debentures tendered in the
exchange offer, the election of holders of old debentures who participate in
the exchange offer, and whether all new debentures and all shares of Series B
preferred stock or a combination of new debentures and Series B preferred
stock are sold in the public offering. Accordingly, we are unable to predict
whether the old debentures will be refinanced by the issuance of all new
debentures, all Series B preferred stock, or a combination of new debentures
and Series B preferred stock. Moreover, depending on market conditions and our
need for capital, we may issue new debentures, Series B preferred stock, or a
combination that exceeds the principal amount of the old debentures. The
following table sets forth our capitalization as of June 30, 2001 (i) on a
historical basis and (ii) on a pro forma basis assuming that $32,327,000
principal amount of the old debentures are refinanced by the issuance of
$32,327,000 principal amount of new debentures. You should read this
information in conjunction with our consolidated financial information and
accompanying notes, which are incorporated by reference into the accompanying
prospectus.

As of June 30, 2001
(unaudited)
-------------------
Pro
Historical Forma
---------- --------
(in thousands)

Indebtedness
Notes payable........................................... $ 34,061 $ 34,061
Mortgage indebtedness................................... 112,080 112,080
Convertible subordinated debentures..................... 61,878 61,878
Shareholders' Equity
Series A preferred stock, 40,000 shares authorized, none
issued................................................. -- --
Series B preferred stock, liquidation preference $25 per
share, 2,476,000 shares authorized, none issued........ -- --
Common stock, par value $0.0001 per share, 51,484,000
shares authorized, 8,262,000 shares issued and
outstanding............................................ 1 1
Excess stock, par value $0.0001 per share, 16,000,000
shares authorized, none issued........................... -- --
Additional paid-in capital.............................. 120,980 120,980
Cumulative net income................................... 41,076 41,076
Cumulative distributions paid........................... (95,664) (95,664)
-------- --------
Total Shareholders' Equity............................ 66,393 66,393
-------- --------
Total capitalization.................................. $274,412 $274,412
======== ========

S-14

SELECTED FINANCIAL DATA

The following table sets forth our selected historical consolidated
financial and operating data as of and for each of the periods indicated. The
consolidated financial data as of and for each of the five years ended
December 31, 2000 was derived from our audited financial statements. The
consolidated financial data as of and for the six months ended June 30, 2001
and 2000 was derived from our unaudited financial statements. The selected
financial data should be read in conjunction with our consolidated financial
statements and related notes incorporated by reference in the accompanying
prospectus.

Operations Summary:
Total revenue.......... $ 26,232 $ 25,197 $ 51,441 $ 49,969 $ 47,791 $ 46,443 $ 44,456
Property operating
expenses.............. 10,130 9,314 19,442 18,971 17,905 17,139 16,317
-------- -------- -------- -------- -------- -------- --------
Net operating income
(NOI) (4)............. 16,102 15,883 31,999 30,998 29,886 29,304 28,139
Depreciation and
amortization.......... 5,665 5,547 11,173 10,845 10,145 9,621 9,119
Interest expense....... 7,839 7,806 15,850 15,018 14,554 14,608 14,542
General and
administrative
expense............... 1,239 1,413 2,648 2,788 2,431 2,520 2,194
-------- -------- -------- -------- -------- -------- --------
Earnings from
operations before
extraordinary
items................. 1,359 1,117 2,328 2,347 2,756 2,555 2,284
Extraordinary item--
early extinguishment
of debt (6)........... -- -- -- -- -- -- (449)
-------- -------- -------- -------- -------- -------- --------
Net earnings
attributable to shares
of common stock--basic
and diluted (1)....... $ 1,359 $ 1,117 $ 2,328 $ 2,347 $ 2,756 $ 2,555 $ 1,835
======== ======== ======== ======== ======== ======== ========
Common stock cash
distributions paid.... $ 3,757 $ 3,558 $ 7,234 $ 6,938 $ 7,330 $ 7,413 $ 7,425

Per Share Data:
Net earnings
attributable to shares
of common stock--basic
and diluted (1)....... $ 0.17 $ 0.14 $ 0.29 $ 0.30 $ 0.33 $ 0.30 $ 0.22
Common stock cash
distributions paid.... $ 0.46 $ 0.45 $ 0.91 $ 0.88 $ 0.88 $ 0.88 $ 0.88
Weighted average shares
of common stock
outstanding--basic and
diluted (1)........... 8,155 7,905 7,950 7,888 8,331 8,423 8,433

Financial Position:
Real estate owned, at
cost.................. $351,957 $344,518 $348,759 $338,389 $328,477 $310,312 $303,476
Investment in
unconsolidated real
estate entity......... 914 916 916 917 913 904 948
Total assets........... 282,181 285,475 285,417 284,943 284,935 275,485 277,604
Mortgage notes
payable............... 112,080 110,130 113,163 84,712 89,869 90,615 68,080
Unsecured notes payable
to banks.............. 34,061 39,411 35,716 59,988 49,178 32,342 52,639
Unsecured convertible
subordinated
debentures............ 61,878 61,878 61,878 61,878 62,878 62,878 62,878
Total liabilities...... 215,788 216,781 218,298 213,990 208,718 190,958 188,237
Shareholders' equity... $ 66,393 $ 68,694 $ 67,119 $ 70,953 $ 76,217 $ 84,527 $ 89,367
Number of shares of
common stock
outstanding........... 8,262 7,942 8,063 7,909 7,990 8,425 8,422
Other Data:
Computation of Funds
from Operations: (2)
Net earnings
attributable to shares
of common stock--
basic................. $ 1,359 $ 1,117 $ 2,328 $ 2,347 $ 2,756 $ 2,555 $ 1,835
Adjustments:
Depreciation on real
estate investments.... 5,343 5,257 10,579 10,256 9,528 8,954 8,487
Extraordinary item--
early extinguishment
of debt............... -- -- -- -- -- -- 449
-------- -------- -------- -------- -------- -------- --------
Funds from operations
attributable to shares
of common stock--
basic................. 6,702 6,374 12,907 12,603 12,284 11,509 10,771
Interest on convertible
subordinated
debentures............ 2,475 2,475 4,950 5,017 5,030 5,030 5,030
Amortization of debt
issuance cost......... 122 122 244 248 248 248 248
-------- -------- -------- -------- -------- -------- --------
Funds from operations
attributable to shares
of common stock--
diluted............... $ 9,299 $ 8,971 $ 18,101 $ 17,868 $ 17,562 $ 16,787 $ 16,049
======== ======== ======== ======== ======== ======== ========
Weighted average shares
of common stock
outstanding--diluted.. 12,992 12,742 12,787 12,725 13,168 13,260 13,269

S-15

Multi-family segment:
Gross investment....... $137,950 $135,605 $136,870 $134,092 $129,510 $113,446 $109,236
Total units............ 3,398 3,398 3,398 3,397 3,341 3,157 3,157
Percent leased (3)..... 98% 97% 97% 96% 96% 97% 98%
Operating revenue...... $ 11,879 $ 11,349 $ 22,944 $ 21,902 $ 20,341 $ 19,872 $ 19,070
Operating expenses..... $ 4,748 $ 4,567 $ 9,397 $ 8,943 $ 8,140 $ 7,751 $ 7,488
Net operating income
(4)................... $ 7,131 $ 6,782 $ 13,547 $ 12,959 $ 12,201 $ 12,121 $ 11,582
Percent of total NOI... 44% 43% 42% 42% 41% 41% 41%

Retail segment:
Gross investment (5)... $214,920 $209,829 $212,805 $205,214 $199,880 $197,770 $195,188
Total square footage... 2,662 2,729 2,680 2,720 2,668 2,668 2,667
Percent leased (3)..... 92% 92% 92% 95% 95% 95% 92%
Operating revenue...... $ 14,273 $ 13,784 $ 28,353 $ 27,831 $ 27,308 $ 26,432 $ 25,255
Operating expenses..... $ 5,350 $ 4,695 $ 9,958 $ 9,815 $ 9,629 $ 9,105 $ 8,703
Net operating income
(4)................... $ 8,923 $ 9,089 $ 18,395 $ 18,016 $ 17,679 $ 17,327 $ 16,552
Percent of total NOI... 56% 57% 58% 58% 59% 59% 59%

--------
(1) Basic EPS is computed by dividing income available to common stockholders
by the weighted average number of shares of common stock outstanding for
the period. Diluted EPS reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock
that then shared in our earnings. For the six month period ended June 30,
2001 there were options to purchase shares of common stock with exercise
prices less than the average market price, however, the effect of the
inclusion in the calculation of EPS is immaterial. For all other periods
presented, the options to purchase shares of common stock were excluded in
the computation of diluted EPS because the options' exercise prices were
greater than the average market prices of common stock. Our outstanding
debentures are also excluded from the computation for all periods
presented due to their anti-dilutive effect. Accordingly, there is no
effect on net income in the calculation of diluted EPS for the periods
presented.
(2) Funds from operations has been an industry-wide standard used to measure
operating performance of a REIT since its adoption by the National
Association of Real Estate Investment Trusts in 1991. In October 1999
NAREIT revised the definition of funds from operations. The revision had
no effect on our calculation of funds from operations. We calculate funds
from operations as net income, excluding gains or losses from sales of
property and those items defined as extraordinary under accounting
principles generally accepted in the United States of America (GAAP), plus
depreciation on real estate assets, and after adjustments for
unconsolidated partnerships to reflect funds from operations on the same
basis. Funds from operations should not be considered as an alternative to
net earnings or any other GAAP measurement of performance or as an
alternative to cash flow from operating, investing or financing activities
as a measure of liquidity. The funds from operations measure presented by
us, while consistent with NAREIT's definition, will not be comparable to
similarly titled measure of other REITs that do not compute funds from
operations in a manner consistent with ours.
(3) Represents the average percent leased for the respective period.
(4) Includes the operating revenues and operating expenses directly related to
the operations of the real estate properties, exclusive of corporate
general and administrative expenses, depreciation and interest.
(5) Includes our investment in an unconsolidated real estate entity.
(6) In 1996, we recorded an extraordinary charge related to the early
extinguishment of debt.

S-16

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

We have set out our unaudited pro forma consolidated financial statements
on the following pages.

The unaudited pro forma consolidated balance sheet as of June 30, 2001 was
prepared on the basis that the exchange offer as described below, had occurred
on June 30, 2001. The unaudited pro forma combined consolidated statements of
operations for the six months ended June 30, 2001 and for the year ended
December 31, 2000 have been prepared on the basis that the exchange offer as
described below had occurred on January 1, 2000.

You should read this information in conjunction with our consolidated
financial information and the accompanying notes and Management's Discussion
and Analysis of Financial Condition and Results of Operations, which are
included in our Annual Report on Form 10-K for the year ended December 31,
2000 incorporated by reference into the accompanying prospectus. The unaudited
pro forma consolidated financial data does not purport to represent what our
results of operations would actually have been if the exchange offer occurred
on the dates specified, or purport to project our results of operations for
any future period or date. The pro forma adjustments are based on available
information and certain adjustments that our management believes are
reasonable. In the opinion of our management, all adjustments have been made
that are necessary to present fairly the unaudited pro forma consolidated
data. We can give you no assurances that the transactions referred to in the
assumptions will take place or, if they do take place, that they will take
place on the terms specified in the assumptions.

Concurrently with this public offering described in this prospectus
supplement, we are engaging in an exchange offer pursuant to which we will
exchange 9.0% convertible subordinated debentures due July 15, 2009 and/or
10.0% Series B preferred stock for our outstanding 8% convertible subordinated
debentures due July 15, 2003. To the extent that not all of the old debentures
are tendered pursuant to the exchange offer or the principal amount of old
debentures that we are able to accept in the exchange offer is limited by
proration, we are concurrently engaged in this public offering for cash of new
debentures and Series B preferred stock, the net proceeds of which we will use
to redeem or purchase any old debentures that remain outstanding after the
completion of the exchange offer. The result of these transactions will be
that the old debentures will be refinanced by the issuance of all new
debentures, all Series B preferred stock or a combination of new debentures
and Series B preferred stock, but the exact amount of new debentures, if any,
and Series B preferred stock, if any, issued will depend upon a number of
factors, including the principal amount of old debentures tendered in the
exchange offer, the election of holders of old debentures who participate in
the exchange offer, and whether all new debentures and all shares of Series B
preferred stock or a combination of new debentures and Series B preferred
stock are sold in the public offering. Accordingly, we are unable to predict
whether the old debentures will be refinanced by the issuance of all new
debentures, all Series B preferred stock, or a combination of new debentures
and Series B preferred stock. Moreover, depending on market conditions and our
need for capital, we may issue new debentures, Series B preferred stock, or a
combination that exceeds the principal amount of the old debentures. For
purposes of the preparation of the following pro forma financial statements,
we have made the following assumptions:

. $32,327,000 principal amount of the old debentures are refinanced by
the issuance of $32,327,000 principal amount of new debentures (the
maximum principal amount of new debentures that may be issued in the
exchange offer);

. interest eliminated on the retirement of the old debentures will be
$2,586,000 per annum;

. interest expense on the new debentures will be approximately $2,909,000
per annum; and

. reduction in amortization of deferred issuance costs of $22,000 per
annum.

S-17

SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

Adjustments
June 30, for the
2001 Transaction Pro Forma
------------ ----------- ------------
ASSETS

Real estate investments:
Land................................ $ 53,471,000 $ 53,471,000
Buildings and improvements.......... 217,339,000 217,339,000
------------ ------------
270,810,000 270,810,000
Cash, cash equivalents and receivables
and other assets (A)................. 11,371,000 11,371,000
------------ ------------
Total Assets...................... $282,181,000 $282,181,000
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Mortgage notes payable................ $112,080,000 $112,080,000
Notes payable, accounts payable and
other liabilities.................... 41,830,000 41,830,000
------------ ------------
153,910,000 153,910,000
Convertible subordinated debentures
(A).................................. 61,878,000 61,878,000
------------ ------------
Total Liabilities................. 215,788,000 215,788,000

SHAREHOLDERS' EQUITY
Series A preferred stock, 40,000
shares authorized, none issued....... -- --
Series B preferred stock, liquidation
preference $25 per share, 2,476,000
shares authorized, none issued (A)... -- --
Common stock, par value $0.0001 per
share, 51,484,000 shares authorized,
8,262,000 shares issued and
outstanding.......................... 1,000 1,000
Excess stock, par value $0.0001 per
share, 16,000,000 shares authorized,
none issued.......................... -- --
Additional paid-in capital............ 120,980,000 120,980,000
Cumulative net income (A)............. 41,076,000 41,076,000
Cumulative distributions paid......... (95,664,000) (95,664,000)
------------ ------------
Total Shareholders' Equity........ 66,393,000 66,393,000
------------ ------------
Total Liabilities and
Shareholders' Equity............. $282,181,000 $282,181,000
============ ============

S-18

SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Six Months Adjustments
Ended for the
June 30, 2001 Transaction Pro Forma
------------- ----------- -----------

OPERATING REVENUE
Rents and other income............. $26,232,000 $26,232,000

OPERATING EXPENSES
Management & leasing fees.......... 1,361,000 1,361,000
Utilities.......................... 1,169,000 1,169,000
Real estate taxes.................. 1,976,000 1,976,000
Administrative expenses............ 1,239,000 1,239,000
Operations & maintenance........... 3,865,000 3,865,000
Other operating expenses........... 1,759,000 1,759,000
Depreciation and amortization...... 5,665,000 5,665,000
----------- -----------
Total Operating Expenses............. 17,034,000 17,034,000
----------- -----------
INCOME FROM OPERATIONS............... 9,198,000 9,198,000
Interest expense..................... 7,839,000 $151,000 (B) 7,990,000
=========== ===========
NET INCOME........................... $ 1,359,000 $ 1,208,000
=========== ===========
BASIC AND DILUTED EARNINGS PER
SHARE............................... $ 0.17 $ 0.15
=========== ===========
Weighted average shares of common
stock outstanding................... 8,155,000 8,155,000
=========== ===========

S-19

SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Adjustments
Year Ended for the
December 31, 2000 Transaction Pro Forma
----------------- ----------- -----------

OPERATING REVENUE
Rents and other income......... $51,441,000 $51,441,000

OPERATING EXPENSES
Management & leasing fees...... 2,613,000 2,613,000
Utilities...................... 2,246,000 2,246,000
Real estate taxes.............. 3,933,000 3,933,000
Administrative expenses........ 2,648,000 2,648,000
Operations & maintenance....... 7,689,000 7,689,000
Other operating expenses....... 2,961,000 2,961,000
Depreciation and amortization.. 11,173,000 11,173,000
----------- -----------
Total Operating Expenses......... 33,263,000 33,263,000
----------- -----------
INCOME FROM OPERATIONS........... 18,178,000 18,178,000

Interest expense................. 15,850,000 $301,000 (B) 16,151,000
----------- -----------
NET INCOME....................... $ 2,328,000 $ 2,027,000
=========== ===========
BASIC AND DILUTED EARNINGS PER
SHARE........................... $ 0.29 $ 0.25
=========== ===========
Weighted average shares of common
stock outstanding............... 7,950,000 7,950,000
=========== ===========

S-20

Notes to Unaudited Pro Forma Financial Data

(A) At June 30, 2001, the Company had approximately $500,000 of unamortized
deferred financing costs remaining on its balance sheet associated with
the old debentures. If the Company issues $32,327,000 of new debentures
and at least 340,000 shares of Series B preferred stock in the exchange
offer, the Company would record $500,000 as an extraordinary item for the
write-off of unamortized debt costs. This charge is a non-cash item, is
non-recurring, and will not affect reported funds from operations.
(B) Represents the net increase of interest expense resulting from the
exchange of the old debentures for new debentures.
(C) We and real estate industry analysts utilize the concept of funds from
operations ("FFO") as an important analytical measure of a real estate
investment trust's financial performance, with FFO being defined by us
and the National Association of Real Estate Investment Trusts ("NAREIT")
as net income, excluding gains or losses from sales of property and those
items defined as extraordinary under accounting principles generally
accepted in the United States of America ("GAAP"), plus depreciation on
real estate assets, and after adjustments for unconsolidated partnerships
to reflect funds from operations on the same basis. Our management
believes the following additional adjustments are relevant to evaluating
our future operating performance. The following additional adjustments
that eliminate the impact of certain items, are based on estimates and
assumptions made and believed by us to be reasonable and are inherently
uncertain and subject to change. The supplemental adjustments do not
comply with the regulations published by the Securities and Exchange
Commission relating to the presentation of pro forma financial data. The
following calculations should not be viewed as indicative of actual or
future results. Pro forma FFO was calculated as follows:

Year Ended Weighted
December 31, Average
2000 Shares
------------ ---------

Basic FFO as reported............................... $12,907,000 7,950,000
Additional interest expense......................... (301,000) --
----------- ---------
Pro forma FFO available to shares of common stock... $12,606,000 7,950,000
=========== =========

(D) If we issue $32,327,000 of new debentures in the exchange offer, any
additional exchanges of old debentures would be for Series B preferred
stock. For each $5,000,000 of preferred stock we exchange for old
debentures, the effect on our June 30, 2001 balance sheet will be that
convertible subordinated debentures will be decreased by $5,000,000,
total liabilities will be decreased by $5,000,000, Series B preferred
stock will be increased by $5,000,000, and total shareholders equity will
be increased by $5,000,000. Similarly, the effect of the assumed issuance
of $5,000,000 of Series B preferred stock on our pro forma results of
operations for the six months ended June 30, 2001 would be to decrease
interest expense by $200,000, to increase pro forma net income by
$200,000, to decrease net income available to common stockholders by
$50,000 or less than $0.01 per share; and the effect of the assumed
issuance of $5,000,000 of Series B preferred stock on the Company's pro
forma results of operations for the year ended December 31, 2000 would be
to decrease interest expense by $400,000, to increase pro forma net
income by $400,000, to decrease net income available to common
stockholders by $100,000 or $0.01 per share.

(E) The pro forma financial statements above assume the issuance of
$32,327,000 of new debentures. If the exchange offer results in a lesser
amount of new debentures being issued, there will be no effect on our pro
forma balance sheet, except for a greater amount of old debentures
remaining outstanding. Similarly, the effect of the assumed issuance of
$5,000,000 less of new debentures on our pro forma results of operations
for the six months ended June 30, 2001 would be to decrease interest
expense by $25,000, to increase pro forma net income by $25,000, to
increase net income available to common stockholders by $25,000 or less
than $0.01 per share; and the effect of the assumed issuance of
$5,000,000 less of new debentures on the Company's pro forma results of
operations for the year ended December 31, 2000 would be to decrease
interest expense by $50,000, to increase pro forma net income by $50,000,
to increase net income available to common stockholders by $50,000 or
less than $0.01 per share.

S-21

ABOUT SIZELER PROPERTY INVESTORS, INC.

We are a self-administered and self-managed equity real estate investment
trust that acquires, develops, owns and operates income-producing retail
shopping centers and apartment properties in the southeastern region of the
United States. Our investment objective is to acquire and develop high-quality
properties at attractive initial yields with potential for future growth in
cash flows. As of June 30, 2001, our existing portfolio contained 16 retail
shopping centers (one of which, Camelot Shopping Center, was sold in July
2001) with approximately 2.7 million square feet of gross leasable area and 14
apartment properties containing approximately 3,400 units. During the six
month period ended June 30, 2001, our retail and apartment properties were, on
average, approximately 92% and 98% leased, respectively. Our principal
executive offices are located at 2542 Williams Boulevard, Kenner, Louisiana
70062. Our telephone number is (504) 471-6200.

TERMS OF THE DEBENTURES

The following is a summary of the terms of the debentures that we propose
to issue in this offering. The debentures will be issued under an Indenture
(the "Indenture") between us and Chase Manhattan Trust Company, National
Association (the "Trustee").

The terms of the debentures include those stated in the debentures and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). A copy of the form of the
Indenture is filed as an exhibit to the Registration Statement of which the
accompanying prospectus is a part and are incorporated herein by reference.
The following is a summary of certain provisions of the Indenture and does not
purport to be complete and is qualified in its entirety by reference to the
detailed provisions of the Indenture, including the definitions of certain
terms therein to which reference is hereby made for a complete statement of
such provisions. Wherever particular articles, sections of the Indenture or
terms defined therein are referred to herein, such provisions or definitions
are incorporated herein by reference. All section references are to the
Indenture unless otherwise indicated. We urge you to read the Indenture in its
entirety. You may obtain a copy of the Indenture from us. See "Where You Can
Find More Information" in the accompanying prospectus.

General. The debentures are unsecured general obligations of ours, subject
to the rights of holders of our Senior Indebtedness. The debentures mature on
July 15, 2009. The debentures are limited to $61,900,000 aggregate principal
amount. The debentures bear interest semiannually on January 15 and July 15 of
each year and at the rate of 9% per annum. We will pay interest on the
debentures to the persons who are registered holders of debentures at the
close of business on the January 1 or July 1 preceding the interest payment
date (Paragraphs 1 and 2 of the debentures). We may pay principal and interest
by check and may mail an interest check to a holder's registered address.
Holders must surrender debentures to a Paying Agent to collect final principal
payments (Section 2.04). The first payment of interest on the debentures will
be made on January 15, 2002 to registered holders as of January 1, 2002.

The debentures will be in registered form without coupons in denominations
of $1,000 and multiples of $1,000 (Section 2.02). A holder may transfer or
exchange debentures in accordance with the Indenture. No service charge will
be made for any registration of transfer, exchange or conversion of
debentures, except for any tax or other governmental charges that may be
imposed in connection therewith. The Registrar need not transfer or exchange
any debentures selected for redemption. Also, in the event of a partial
redemption, it need not transfer or exchange any debentures for a period of 15
days before selecting debentures to be redeemed (Section 2.06). The Indenture
does not contain any provisions requiring us to repurchase the debentures at
the option of the holders thereof in the event of a leveraged buyout,
recapitalization or similar restructuring of the Company, even though our
credit worthiness and the market value of the debentures may decline
significantly as a result of such transaction. The Indenture does not protect
holders of the debentures against any decline in credit quality, whether
resulting from any such transaction or from any other cause. The registered
holder of a debenture may be treated as its owner for all purposes.

S-22

Chase Manhattan Trust Company, National Association acts as Paying Agent,
Registrar and Conversion Agent for the debentures. We may change any Paying
Agent, Registrar, Conversion Agent or co-registrar without notice and may act
in any such capacity ourselves (Section 2.03).

Conversion. The holders of the debentures are entitled at any time prior to
maturity, subject to prior redemption, to convert the debentures or portions
thereof (which are $1,000 or multiples thereof) into shares of common stock at
the conversion price of $11.00 per share (subject to adjustments described
below) (Section 11.01). No payment or adjustment will be made for accrued
interest on a converted debenture subsequent to conversion. If any debenture
not called for redemption is converted between a record date for the payment
of interest and the next succeeding interest payment date, such debenture must
be accompanied by funds equal to the interest payable to the registered holder
on such interest payment date on the principal amount so converted (Section
11.03). We will not issue fractional interests in shares of common stock upon
conversion of debentures and, instead will deliver a check for the fractional
share based upon the market value of the common stock on the last trading day
prior to the conversion date (Section 11.08). If the debentures are called for
redemption, conversion rights will expire at the close of business on the
redemption date, unless we default in payment due upon such redemption
(Section 11.01).

To protect our status as a REIT, a holder may not convert any debenture,
and such debenture will not be convertible by any holder, if as a result of
such conversion any Person would then be deemed to beneficially own, directly
or indirectly, 9.9% or more (in value or in number, whichever is more
restrictive) of our shares of equity stock.

The conversion price is subject to adjustments, as set forth in the
Indentures, in certain events, including the payment of dividends or
distributions on our Capital Stock (Section 1.01) in shares of common stock;
subdivisions or combinations of the common stock into a greater or smaller
number of shares; reclassification of the shares of common stock resulting in
an issuance of any shares of Capital Stock; distribution of rights or warrants
to substantially all holders of common stock entitling them to purchase common
stock at less than the then current price at that time; and the distribution
to substantially all holders of common stock of our assets or evidences of our
indebtedness, excluding certain cash dividends and distributions. No
adjustment in the conversion price need be made unless such adjustment would
require a change of at least 1% in the conversion price; however, any
adjustment that would otherwise be required to be made will be carried forward
and taken into account in any subsequent adjustment. A conversion price
adjustment made according to the provisions of the debentures (or the absence
of provision for such an adjustment) might result in a constructive
distribution to the holders of debentures or holders of shares that would be
subject to taxation as a dividend. We may, at our option, make such reductions
in the conversion price, in addition to those set forth above, as our Board of
Directors deems advisable to avoid or diminish any income tax to holders of
shares of common stock resulting from any dividend or distribution of equity
securities (or rights to acquire equity securities) or from any event treated
as such for income tax purposes or for any other reason. The Board of
Directors will also have the power to resolve any ambiguity or correct any
error in the provisions relating to the adjustment of the conversion price of
the debentures and its actions in so doing will be final and conclusive
(Section 11.04).

If we combine or merge with, or sell or transfer substantially all of our
assets to, another unaffiliated corporation or trust, the holders of the
debentures then outstanding will be entitled thereafter to convert such
debentures into the kind and amount of shares of capital stock, other
securities, cash or other assets that they would have owned immediately after
such event had such debentures been converted before the effective date of the
transaction (Section 11.10).

Subordination of Debentures. The indebtedness evidenced by the debentures
will be subordinated and junior in right of payment to the extent set forth in
the Indenture to the prior payment in full of amounts then due on all Senior
Indebtedness (as defined). No payment will be made by us on account of
principal of (or premium, if any) or interest on the debentures or on account
of the purchase or other acquisition of debentures, if there has occurred and
is continuing a default with respect to any Senior Indebtedness permitting the
holders to accelerate the maturity thereof, or with respect to the payment of
any Senior Indebtedness and such default will be the

S-23

subject of a judicial proceeding or we have received notice of such default
from any holder of Senior Indebtedness, unless and until such default or event
of default has been cured or waived or has ceased to exist. By reason of these
provisions, in the event of default on any Senior Indebtedness, whether now
outstanding or hereafter issued, payments of principal of (and premium, if
any) and interest on the debentures may not be permitted to be made until such
Senior Indebtedness is paid in full, or the event of default on such Senior
Indebtedness is cured or waived (Section 10.02).

Upon any acceleration of the principal of the debentures or any
distribution of our assets upon any receivership, dissolution, winding-up,
liquidation, reorganization, or similar proceedings, whether voluntary or
involuntary, or in bankruptcy or insolvency, all amounts due or to become due
upon all Senior Indebtedness must be paid in full before the holders of the
debentures or the Trustee are entitled to receive or retain any assets so
distributed in respect of the debentures (Section 10.02). By reason of this
provision, in the event of insolvency, holders of the debentures may recover
less, ratably, than holders of Senior Indebtedness.

"Senior Indebtedness" is defined to mean the principal, premium, if any,
unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to us whether or not a
claim for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of Indebtedness (as defined) of us for money
borrowed, whether any such Indebtedness exists as of the date of the Indenture
or is created, incurred, assumed or guaranteed after such date. The terms of
the debentures do not limit the amount of Senior Indebtedness that we may
incur (Section 1.01).

"Indebtedness" with respect to any Person is defined to mean:

(i) any debt (a) for money borrowed, or (b) evidenced by a bond, note,
debenture, or similar instrument (including purchase money obligations)
given in connection with the acquisition of any business, property or
assets, whether by purchase, merger, consolidation or otherwise, but shall
not include any account payable or other obligation created or assumed by a
Person in the ordinary course of business in connection with the obtaining
of materials or services, or (c) which is a direct or indirect obligation
which arises as a result of banker's acceptances or bank letters of credit
issued to secure obligations of such Person, or to secure the payment of
revenue bonds issued for the benefit of such Person, whether contingent or
otherwise;

(ii) any debt of others described in the preceding clause (i) which such
Person has guaranteed or for which it is otherwise liable;

(iii) the obligation of such Person as lessee under any lease of
property which is reflected on such Person's balance sheet as a capitalized
lease; and

(iv) any deferral, amendment, renewal, extension, supplement or
refunding of any liability of the kind described in any of the preceding
clauses (i), (ii) and (iii);

provided, however, that, in computing the "Indebtedness" of any Person, there
will be excluded any particular indebtedness if, upon or prior to the maturity
thereof, there has been deposited with a depository in trust money (or
evidence of indebtedness if permitted by the instrument creating such
indebtedness) in the necessary amount to pay, redeem or satisfy such
indebtedness as it becomes due, and the amount so deposited will not be
included in any computation of the assets of such Person (Section 1.01).

Optional Redemption. The debentures are subject to redemption, as a whole
or in part, at any time or from time to time commencing , at our
option on at least 30 days' prior notice by mail at a redemption price equal
to 100% of the principal amount thereof, plus interest accrued to the date of
redemption. The debentures will not be redeemable prior to the above indicated
date; provided, however, the debentures will be subject to redemption, in
whole or in part, at any time for certain reasons intended to protect our
status as a REIT, at our option on at least 30 days' prior notice by mail at a
redemption price equal to 100% of the principal amount, plus interest accrued
to the date of redemption (Section 3.01). We may exercise our redemption
powers solely with respect to the securities of the security holder or holders
which pose a threat to our REIT status and

S-24

only to the extent deemed necessary by our Board of Directors to preserve such
status. We may at any time buy debentures on the open market or through
negotiated transactions at prices which may be greater or less than the
optional redemption price listed above (Paragraph 5 of the Debentures).

Dividends, Distributions, and Acquisitions of Common Stock. We will not (i)
declare or pay any dividend, or make any distribution on our common stock to
our stockholders (other than dividends or distributions payable in our common
stock) or (ii) purchase, redeem, or otherwise acquire or retire for value any
of our common stock, or any warrants, rights, or options to purchase or
acquire any shares of our common stock (other than the debentures or any other
convertible indebtedness of ours that is neither secured nor subordinated to
the debentures), if at the time of such action an Event of Default has
occurred and is continuing or would exist immediately after such action. The
foregoing, however, will not prevent (i) the payment of any dividend within 60
days after the date of declaration when the payment would have complied with
the foregoing provision on the date of declaration; or (ii) the retirement of
any of our shares of common stock by exchange for, or out of the proceeds of
the substantially concurrent sale of, other shares of our common stock
(Section 4.06).

Merger or Consolidation. We may not consolidate with, or merge into, or
transfer or lease all or substantially all of our assets to another Person
unless such Person is a company or trust; such Person assumes by supplemental
indenture all our obligations under the debentures and the Indenture; and,
immediately after the transaction no Default or Event of Default exists.

Defaults and Remedies. An Event of Default is (i) default in the payment of
interest on the debentures when due and payable, which continues for 30 days;
(ii) default in the payment of principal of (and premium, if any) on the
debentures when due, at maturity, upon redemption or otherwise, which
continues for five business days; (iii) failure to perform any other covenant
of ours contained in the Indenture or the debentures which continues for 90
days after written notice to us as provided in the Indenture; (iv) default
under any bond, debenture, note or other Indebtedness of ours or under any
mortgage, indenture or other instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness of ours, whether any
such Indebtedness exists as of the date of the Indentures or is thereafter
created, if (a) either (x) such event of default results from the failure to
pay any such Indebtedness at maturity or (y) as a result of such event of
default, the maturity of such Indebtedness has been accelerated prior to its
expressed maturity and such acceleration shall not be rescinded or annulled or
the accelerated amount paid within ten days after notice to us of such
acceleration, or such Indebtedness having been discharged, and (b) the
principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay principal or
interest thereon, or the maturity of which has been so accelerated, aggregates
$1,000,000 or more; and (v) certain events of bankruptcy, insolvency or
reorganization relating to us (Section 6.01). If an Event of Default occurs
and is continuing, the Trustee or the holders of a majority in aggregate
principal amount of the outstanding debentures may declare the debentures
immediately due and payable (Section 6.02).

Within 90 days after the occurrence of any Default or Event of Default, the
Trustee will give to the holders of debentures notice of all Defaults or
Events of Default known to it, but the Trustee will be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of such holders, except in the case of a
default in the payment of the principal of (or premium, if any) or interest on
any of the debentures (Section 7.05). Holders of a majority in aggregate
principal amount of the outstanding debentures may direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee (Section 6.05). The
right of a holder to institute a proceeding with respect to the Indenture is
subject to certain conditions precedent including notice and indemnity to the
Trustee, but the holder has an absolute right to receipt of principal of (and
premium, if any) and interest on such holder's debenture on or after the
respective due dates expressed in the debentures, and to institute suit for
the enforcement of any such payments (Section 6.06).

The holders of a majority in aggregate principal amount of the outstanding
debentures may on behalf of the holders of all debentures waive certain past
defaults, except a default in payment of the principal of (or premium, if any)
or interest on any debentures or in respect of certain provisions to the
Indenture which cannot be modified

S-25

or amended without the consent of the holder of each outstanding debenture
affected thereby (Section 9.02). We will be required to furnish to the Trustee
annually a statement of certain officers of ours stating whether or not they
know of any Default or Events of Default and, if they have knowledge of a
Default or Event of Default, a description of the efforts to remedy the same
(Section 4.05).

Modification of the Indenture. We and the Trustee may amend the Indenture
or the debentures with the written consent of the holders of 66 2/3% in
principal amount of the outstanding debentures. However, without the consent
of each holder of debentures affected, an amendment may not: (i) reduce the
amount of debentures whose holders must consent to an amendment; (ii) reduce
the rate or change the time of payment of interest on any debenture; (iii)
reduce the principal of or change the fixed maturity of any debenture; (iv)
make any debenture payable in money other than that stated in the debenture;
(v) change the provisions of the Indentures regarding the right of a majority
of the holders of debentures to waive defaults under the Indenture or impair
the right of any holder of debentures to institute suit for the enforcement of
any payment of principal and interest on the debentures on and after their
respective due dates; or (vi) make any change that adversely affects the right
to convert any debenture (Section 9.02).

TERMS OF THE SERIES B PREFERRED STOCK

The following summary of the terms and provisions of the Series B preferred
stock does not purport to be complete and is qualified in its entirety by
reference to the pertinent sections of the Charter, including the Articles
Supplementary to the Charter creating the Series B preferred stock (the
"Articles Supplementary"), each of which is available from us.

Maturity

The Series B preferred stock has no stated maturity and will not be subject
to any sinking fund or mandatory redemption.

Rank

The Series B preferred stock will, with respect to dividend rights and
rights upon our liquidation, dissolution or winding up, rank (i) senior to all
classes or series of our common stock, our Series A preferred stock and to all
equity securities ranking junior to the Series B preferred stock with respect
to dividend rights or rights upon our liquidation, dissolution or winding up;
(ii) on a parity with all equity securities issued by us the terms of which
specifically provide that such equity securities rank on a parity with the
Series B preferred stock with respect to dividend rights or rights upon our
liquidation, dissolution or winding up; and (iii) junior to all equity
securities issued by us the terms of which specifically provide that such
equity securities rank prior or senior to the Series B preferred stock as to
the payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, as well as all our existing and future
indebtedness. The term "equity securities" does not include convertible debt
securities, which will rank senior to the Series B preferred stock prior to
conversion.

Dividends

Holders of shares of the Series B preferred stock are entitled to receive,
when, as and if declared by the Board of Directors, out of funds legally
available for the payment of dividends, preferential cumulative preferential
cash dividends at the rate of 10% per annum of the liquidation preference per
share (equivalent to a fixed annual amount of $2.50 per share).

Dividends on the Series B preferred stock will be cumulative from the date
of original issue and will be payable quarterly in arrears on the fifteenth
day of February, May, August and November of each year, or, if not a business
day, the next succeeding business day (each, a "Dividend Payment Date").
Dividends will be payable to holders of record as they appear in our stock
records at the close of business on the applicable record date,

S-26

which shall be the last business day of January, April, July and October,
respectively, or on such other date designated by the Board of Directors for
the payment of dividends that is not more than 30 nor less than 10 days prior
to the applicable Dividend Payment Date (each, a "Dividend Record Date"). The
first Dividend Record Date for determination of stockholders entitled to
receive dividends on the Series B preferred stock is expected to be January
31, 2002.

No dividends on shares of Series B preferred stock will be declared by the
Board of Directors or paid or set apart for payment by us at such time as the
terms and provisions of any agreement of ours, including any agreement
relating to our indebtedness, prohibits such declaration, payment or setting
apart for payment or provides that such declaration, payment or setting apart
for payment would constitute a breach thereof or a default thereunder, or if
such declaration or payment shall be restricted or prohibited by law.

Notwithstanding the foregoing, dividends on the Series B preferred stock
will accrue whether or not we have earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared. Accrued but unpaid dividends on the Series B preferred
stock will not bear interest and holders of the shares of Series B preferred
stock will not be entitled to any distributions in excess of full cumulative
distributions described above.

If for any taxable year, we elect to designate as "capital gain dividends"
(as defined in Section 857 of the Internal Revenue Code of 1986, as amended
(the "Code"), with respect to any transaction that occurred while any shares
of Series B preferred stock are outstanding, any portion (the "Capital Gains
Amount") of the dividends (as determined for federal income tax purposes) paid
or made available for the year to holders of all classes of stock (the "Total
Dividends"), then the portion of the Capital Gains Amount that will be
allocable to the holders of shares of Series B preferred stock will be the
amount that the total dividends (as determined for federal income tax
purposes) paid or made available to the holders of shares of the Series B
preferred stock for the year bears to the Total Dividends.

Except as set forth in the next sentence, no dividends will be declared or
paid or set apart for payment on any capital stock of ours (including Series A
preferred stock, if any) or any other series of preferred stock ranking, as to
dividends, on a parity with or junior to the Series B preferred stock (other
than a dividend in shares of our common stock or in shares of any other class
of stock ranking junior to the Series B preferred stock as to dividends and
upon liquidation) for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for such payment on the Series B preferred
stock for all past dividend periods and the then current dividend period. When
dividends are not paid in full (or a sum sufficient for such full payment is
not so set apart) upon the Series B preferred stock and the shares of any
other series of preferred stock ranking on a parity as to dividends with the
Series B preferred stock, all dividends declared upon the Series B preferred
stock and any other series of preferred stock ranking on a parity as to
dividends with the Series B preferred stock will be declared pro rata so that
the amount of dividends declared per share of Series B preferred stock and
such other series of preferred stock will in all cases bear to each other the
same ratio that accrued dividends per share on the Series B preferred stock
and such other series of preferred stock (which will not include any accrual
in respect of unpaid dividends for prior dividend periods if such preferred
stock does not have a cumulative dividend) bear to each other.

Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series B preferred stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for payment for all past dividend periods and
the then current dividend period, no dividends (other than in shares of common
stock or other shares of capital stock ranking junior to the Series B
preferred stock as to dividends and upon liquidation) will be declared or paid
or set aside for payment nor will any other distribution be declared or made
upon the common stock or any other capital stock of ours, such as the Series A
preferred stock, ranking junior to or on a parity with the Series B preferred
stock as to dividends or upon liquidation, nor will any shares of common
stock, or any other shares of capital stock of ours ranking junior to or on a
parity with the Series B preferred stock as to dividends or upon liquidation,
be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for

S-27

the redemption of any such shares) by us (except by conversion into or
exchange for other capital stock of ours ranking junior to the Series B
preferred stock as to dividends and upon liquidation or redemptions for the
purpose of preserving our qualification as a REIT). Holders of shares of the
Series B preferred stock will not be entitled to any dividend, whether payable
in cash, property or stock, in excess of full cumulative dividends on the
Series B preferred stock as provided above. Any dividend payment made on
shares of the Series B preferred stock will first be credited against the
earliest accrued but unpaid dividend due with respect to such shares which
remains payable.

Liquidation Preference

Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, the holders of shares of Series B preferred stock
are entitled to be paid out of our assets legally available for distribution
to our stockholders the liquidation preference of $25.00 per share, plus an
amount equal to any accrued and unpaid dividends to the date of payment, but
without interest, before any distribution of assets is made to holders of
shares of common stock or any other class or series of capital stock of ours
that ranks junior to the Series B preferred stock as to liquidation rights.
Holders of Series B preferred stock will be entitled to written notice of any
event triggering the right to receive such liquidation preference. After
payment of the full amount of the liquidation preference, plus any accrued and
unpaid dividends to which they are entitled, the holders of Series B preferred
stock will have no right or claim to any of our remaining assets. Our
consolidation or merger with or into any other trust or entity or the
consolidation or merger of any other corporation with or into us, or the sale,
lease or consolidation, conveyance of all or substantially all of our property
or business, will not be deemed to constitute a liquidation, dissolution or
winding up of the Company.

Redemption

Other than in the event a stockholder acquires shares in excess of the
ownership limitation as described under "--Restrictions on Ownership and
Transfer", the Series B preferred stock is not redeemable prior to the fifth
anniversary of the issue date. However, in order to ensure that we will
continue to meet the stock ownership requirements for qualification as a REIT,
the Series B preferred stock will be subject to provisions in the Charter
pursuant to which any class of our equity stock owned by a stockholder in
excess of the ownership limitation will be transferred to a trust and the
stockholder will have the right to receive certain compensation for such
shares of stock. See "--Restrictions on Ownership and Transfer." On and after
the fifth anniversary of the issue date, we, at our option upon not less than
30 nor more than 60 days' written notice, may redeem shares of the Series B
preferred stock, in whole or in part, at any time or from time to time, for
cash at a redemption price of $25.00 per share, plus all accrued and unpaid
dividends thereon to the date fixed for redemption, without interest.

Procedures for Redemption

Holders of shares Series B preferred stock to be redeemed will surrender
such shares of Series B preferred stock at the place designated in such notice
and will be entitled to the redemption price and any accrued and unpaid
dividends payable upon such redemption following such surrender. If notice of
redemption of any shares of Series B preferred stock has been given and if the
funds necessary for such redemption have been set aside by us in trust for the
benefit of the holders of any shares of Series B preferred stock so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such shares of Series B preferred stock, such shares of Series B
preferred stock will no longer be deemed outstanding and all rights of the
holders of such shares will terminate, except the right to receive the
redemption price. If less than all of the outstanding shares of Series B
preferred stock are to be redeemed, the shares of Series B preferred stock to
be redeemed will be selected pro rata (as nearly as may be practicable without
creating fractional shares) or by any other equitable method determined by the
us. Our ability to redeem the shares of Series B preferred stock is subject to
the limitations on distributions in the Maryland General Corporation Law.

Unless full cumulative dividends on all shares of Series B preferred stock
will have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for

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payment for all past dividend periods and the then current dividend period, no
shares of Series B preferred stock will be redeemed unless all outstanding
shares of Series B preferred stock are simultaneously redeemed and we will not
purchase or otherwise acquire directly or indirectly any shares of Series B
preferred stock (except by exchange for our capital stock ranking junior to
the shares of Series B preferred stock as to dividends and upon liquidation);
provided, however, that the foregoing will not prevent our redemption of
shares of stock in order to ensure that we continue to meet the requirements
for qualification as a REIT, or the purchase or acquisition of shares of
Series B preferred stock pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding shares of Series B preferred stock.
So long as no dividends are in arrears, we will be entitled at any time and
from time to time to repurchase shares of Series B preferred stock in open-
market transactions duly authorized by the Board of Directors and effected in
compliance with applicable laws or private negotiations.

Notice of redemption will be given by publication in a newspaper of general
circulation in the City of New York, such publication to be made once a week
for two successive weeks commencing not less than 30 nor more than 60 days
prior to the redemption date. We will mail a similar notice, postage prepaid,
not less than 30 nor more than 60 days prior to the redemption date, addressed
to the respective holders of record of the shares of Series B preferred stock
to be redeemed at their respective addresses as they appear on our stock
transfer records. No failure to give such notice or any defect therein or in
the mailing thereof will affect the validity of the proceedings for the
redemption of any shares of Series B preferred stock except as to the holder
to whom notice was defective or not given. Each notice shall state: (i) the
redemption date; (ii) the redemption price; (iii) the number of shares of
Series B preferred stock to be redeemed; (iv) the place or places where shares
of the Series B preferred stock are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date. If less than all of the shares of
Series B preferred stock held by any holder is to be redeemed, the notice
mailed to such holder will also specify the number of shares of Series B
preferred stock held by such holder to be redeemed.

Immediately prior to any redemption of shares of Series B preferred stock,
we will pay, in cash, any accumulated and unpaid dividends through the
redemption date, unless a redemption date falls after a Dividend Record Date
and prior to the corresponding Dividend Payment Date, in which case each
holder of shares of Series B preferred stock at the close of business on such
Dividend Record Date will be entitled to the dividend payable on such shares
on the corresponding Dividend Payment Date notwithstanding the redemption of
such shares before such Dividend Payment Date.

The shares of Series B preferred stock have no stated maturity and will not
be subject to any sinking fund or mandatory redemption. However, in order to
ensure that we continue to meet the requirements for qualification as a REIT,
Series B preferred stock acquired by a stockholder in excess of the ownership
limitation will automatically be transferred to a trust and the stockholder
will have the right to receive certain compensation for such stock from us.

Voting Rights

Holders of the shares of Series B preferred stock will not have any voting
rights, except as set forth below or as otherwise from time to time required
by law.

Whenever dividends on any shares of Series B preferred stock or Parity
Preferred stock (as defined below) are in arrears for six or more quarters
(whether consecutive or not) (a "Preferred Dividend Default"), the holders of
such shares of Series B preferred stock (voting separately as a voting group
with all other series of preferred stock ranking on a parity with the Series B
preferred stock as to dividends or upon liquidation upon which like voting
rights have been conferred and are exercisable ("Parity Preferred stock"))
will be entitled to vote separately as a voting group for the election of a
total of two additional directors to serve on our Board of Directors (the
"Preferred Stock Directors") at a special meeting called on the written
request of the holders entitled to cast at least a majority of all the votes
entitled to be cast at the meeting (unless such request is received less than
90 days before the date fixed for the next annual or special meeting of
stockholders) or at the next

S-29

annual meeting of stockholders, and at each subsequent annual meeting until
all dividends accumulated on such shares of Series B preferred stock for the
past dividend periods and the dividend for the then current dividend period
have been fully paid or declared and a sum sufficient for the payment thereof
set aside for payment. A quorum for any such meeting will exist if at least a
majority of the outstanding shares are represented in person or by proxy at
such meeting. Such Preferred Stock Directors will be elected upon the
affirmative vote of a plurality of the shares of Series B preferred stock and
such Parity Preferred stock present and voting in person or by proxy at a duly
called and held meeting at which a quorum is present. If and when all
accumulated dividends and the dividend for the then current dividend period on
the shares of Series B preferred stock have been paid in full or set aside for
payment in full, the holders thereof will be divested of the foregoing voting
rights (subject to revesting whenever dividends on any shares of Series B
preferred stock are in arrears for six or more quarters (whether consecutive
or not)) and, if all accumulated dividends and the dividend for the then
current dividend period have been paid in full or declared and set aside for
payment in full on all series of Parity Preferred stock, the term of office of
each Preferred Stock Director so elected will terminate. In the event the term
of a Preferred Director terminates, the right of the holders of Series B
preferred stock to elect Preferred Stock Directors until another Preferred
Dividend Default will exist. The Preferred Stock Directors will each be
entitled to one vote per director on any matter.

So long as any shares of Series B preferred stock remain outstanding, we
will not without the affirmative vote or consent of the holders of at least
two-thirds of the shares of the Series B preferred stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting (voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any class or series of capital stock ranking senior to the
shares of Series B preferred stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up or
reclassify any of our authorized capital stock into such shares, or create,
authorize, or issue any obligation or security convertible into or evidencing
the right to purchase any such shares; or (ii) amend, alter or repeal the
provisions of our Charter, including the Articles Supplementary, whether by
merger, consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the
shares of Series B preferred stock or the holders thereof provided, however,
with respect to the occurrence of any Event set forth in (ii) above, so long
as the shares of Series B preferred stock remain outstanding with the terms
thereof materially unchanged, taking into account that upon the occurrence of
an Event we may not be the surviving entity, the occurrence of any such Event
will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting power of holders of the shares of Series B
preferred stock and provided further that (a) any increase in the amount of
the authorized preferred stock or the creation or issuance of any other series
of preferred stock; or (b) any increase in the amount of authorized shares of
such series, in each case ranking on a parity with or junior to the shares of
Series B preferred stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, will not
be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.

In addition to the above, under Maryland law and the Articles
Supplementary, the holders of shares of Series B preferred stock will be
entitled to vote as a separate voting group to approve a dividend payable in
shares of Series B preferred stock to the holders of another class of our
stock or to approve a dividend payable in shares of our stock other than
shares of Series B preferred stock to the holders of shares of Series B
preferred stock.

The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required will
be effected, all outstanding shares of Series B preferred stock have been
redeemed or called for redemption upon proper notice and sufficient funds have
been deposited in trust to effect such redemption.

Conversion

The shares of Series B preferred stock are not convertible into or
exchangeable for any other property or securities of ours, except that the
shares of Series B preferred stock may be exchanged for shares of excess stock
in order to ensure that we remain qualified as a REIT for federal income tax
purposes. See "--Restrictions on Ownership and Transfer" below.

S-30

Restrictions on Ownership and Transfer

For us to qualify as a REIT under the Code, certain restrictions apply to
the ownership of our capital stock. Because the Board of Directors believes it
is essential for us to continue to qualify as a REIT, the Charter restricts
the ownership, acquisition and transfer of our capital stock, including shares
of Series B preferred stock.

Our Charter provides that if, at any time when we are qualified as a REIT,
a transfer of any of our capital stock (including common stock or Series B
preferred stock), would result in (i) any person acquiring directly or
indirectly beneficial ownership of 9.9% or more of the total outstanding
equity stock of all classes (in value or in number, whichever is more
restrictive); (ii) our outstanding capital stock being constructively or
beneficially owned by fewer than 100 persons; or (iii) our being "closely
held" within the meaning of Section 856 of the Code, then at our sole option:
(A) any proposed transfer will be void from the beginning and will not be
recognized by us; (B) we will have the right to redeem the shares proposed to
be transferred; and (C) the shares proposed to be transferred will be
automatically converted into and exchanged for shares of a separate class of
stock, excess stock, having no dividend or voting rights. Holders of excess
stock do have certain rights in the event of our liquidation, dissolution or
winding up. The Charter further provides that the excess stock will be held by
us as trustee for the person or persons to whom the shares are ultimately
transferred, until such time as the shares are re-transferred to a person or
persons in whose hands the shares would not be excess stock and certain price-
related restrictions are satisfied.

Transfer and Dividend Paying Agent

The Bank of New York will act as the transfer and dividend payment agent in
respect of the shares of Series B preferred stock.

DESCRIPTION OF CAPITAL STOCK

Please see the summary description of certain terms and provisions of our
capital stock included in the accompanying prospectus under the heading
"Description of Capital Stock." You should refer to our Charter and Bylaws for
the complete provisions thereof.

BOOK-ENTRY; DELIVERY AND FORM

General

The debentures will be represented initially by one or more global
debentures in bearer form without interest coupons. We will issue the global
debentures in denominations equal to the outstanding principal amount of the
debentures that they represent.

On the closing date of this exchange offer, we will deposit the global
debentures with DTC as the book-entry depositary. We will make this deposit
pursuant to the terms of the debenture deposit agreement, to be dated the
closing date of this exchange offer, between the book-entry depositary and us,
for the limited purposes set forth in the deposit agreement.

The book-entry depositary will issue a certificateless interest for each
global debenture to DTC. The certificateless interest for each global
debenture will represent a 100% interest in the underlying global debenture.
The book-entry depositary will record the interest in its books and records in
the name of Cede & Co., as a nominee of DTC. The records that DTC, with
respect to its participants, and its participants maintain in book-entry form
will show the beneficial interests in the global debentures. Any transfer of
the global debentures will only be effected through these records. In this
prospectus, we refer to the beneficial interests in the global debentures as
"book-entry interests."

All interests in the global debentures will be subject to the procedures
and requirements of DTC.

S-31

Definitive Registered Debentures

Under the terms of the deposit agreement and the Indenture, you, as an
owner of book-entry interests in the global debentures, will receive
definitive registered debentures only if any of the three following events
occurs:

. DTC notifies us or the book-entry depositary in writing that it, or its
respective nominee, is unwilling or unable to continue to act as a
depositary registered under the Securities Exchange Act of 1934 and we
do not appoint a successor depositary registered as a clearing agency
under the Securities Exchange Act of 1934 within 90 days.

. At any time if we determine that the global debentures, in whole but
not in part, should be exchanged for definitive registered debentures,
but only if, such exchange is required by any applicable law, any event
beyond our control, or payments of interest on any global debenture,
depositary interest or book-entry interest are, or would become,
subject to any deduction or withholding for taxes.

. The book-entry depositary is at any time unwilling or unable to
continue as book-entry depositary and we do not appoint a successor
book-entry depositary within 90 days.

In addition to those circumstances, during the continuance of an event of
default, you, as a holder of book entry interests, will be entitled to request
and receive definitive registered debentures. We will issue the definitive
registered debentures to you, and register them in your name, or as you
direct, only if we receive a request in writing by the book-entry depositary,
based upon the instructions of DTC.

In the event that definitive registered debentures are issued, and if
required by applicable law, we will appoint Chase Manhattan Trust Company,
National Association, or another suitable person, as an independent transfer
agent for the new debentures.

In no event will we issue definitive securities in bearer form. Any
definitive registered debentures we issue will be fully registered in
denominations of $1,000 in principal amount, and integral multiples of $1,000.
The trustee will register the definitive registered debentures in the name or
names that DTC will instruct the trustee to use, through the book-entry
depositary. We expect that DTC will base its instructions on directions it
receives from participants, including Euroclear and Clearstream, reflecting
the beneficial ownership of book-entry interests. To the extent permitted by
law, we, the trustee and any paying agent will be entitled to treat the person
in whose name any definitive registered debenture is registered as the
absolute owner of the debenture.

While any global debenture for the debentures is outstanding, you may
exchange any definitive registered debenture you may have for a corresponding
book-entry interest in the global debenture by surrendering your definitive
registered debentures to the book-entry depositary and providing the
certificates and opinions that the Indenture requires. The book-entry
depositary will make the appropriate adjustments to the global debenture
underlying that book-entry interest to reflect any issue or surrender of
definitive registered debentures. The Indenture contains provisions relating
to the maintenance by a registrar of registers reflecting ownership of
definitive registered debentures, if any, and other provisions customary for a
registered debt security. We will pay principal and interest on each
definitive registered debenture to the holder appearing on the applicable
register at his or her address at the close of business on the record date.

If a mutilated definitive registered debenture is surrendered to the
registrar or if the holder of a debenture claims that such debenture has been
lost, destroyed or wrongfully taken, we will issue and the trustee will
authenticate a replacement debenture if the holder satisfies any reasonable
requirements of the trustees, the registrar or us. If required by the trustee,
the registrar or us such holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of us, the registrar and the trustee, to
protect us, the trustee and any agent from any loss which any of them may
suffer if the debenture is replaced. We may charge such holder for reasonable,
out-of-pocket expenses in replacing a debenture, including reasonable fees and
expenses of counsel.

S-32

Description of Book-Entry System

When the book-entry depositary receives the global debentures, it will
issue the certificateless interest for each of the global debentures to DTC
representing a 100% interest in the respective underlying global debenture.
The book-entry depositary will issue the certificateless interest by recording
the interest in its books and records in the name of Cede & Co., as a nominee
of DTC. Ownership of book-entry interests will be limited to persons who have
accounts with DTC, including Euroclear and Clearstream, or persons who have
accounts through organizations that are participants. When the book-entry
depositary issues such interests in the global debentures to DTC, DTC will
credit, on its internal book-entry registration and transfer system, its
participants' accounts with the respective interests owned by each
participant. Ownership of book-entry interests will be shown on, and the
transfer of such ownership will be effected only through, records maintained
by DTC or its nominee with respect to interests of participants and the
records of participants with respect to interests of indirect participants. No
beneficial owner of an interest in the global debentures will be able to
transfer that interest except in accordance with DTC's procedures, in addition
to those provided for under the Indenture with respect to the global
debentures.

The laws of some countries and some states in the United States may require
that some purchasers of securities take physical delivery of the securities in
definitive form. These limits and laws may impair the ability to own, transfer
or pledge the book-entry interests in the global debentures.

So long as DTC, or its nominee, is the holder of the global debentures, the
book-entry depositary or its nominee, as the case may be, will be considered
the sole holder of the global debentures for all purposes under the Indenture
and the debentures. Except as we mentioned earlier in this section,
participants or indirect participants will not:

. Be entitled to have debentures or book-entry interests registered in
their names;

. Receive or be entitled to receive physical delivery, of debentures or
book-entry interests in definitive bearer or registered form; or

. Be considered the owners or holders of the debentures or book-entry
interests under the Indenture.

Accordingly, each person owning a book-entry interest must rely on the
procedures of the book-entry depositary and DTC to exercise any rights and
remedies of a holder under the Indenture. If a person is an indirect
participant in DTC, it must also rely on the procedures of the participant in
DTC, through which that person owns its interest. If we issue any definitive
debentures to participants or indirect participants, we will issue them in
registered form, as described above. Unless and until book-entry interests are
exchanged for definitive registered debentures, the certificateless interest
that DTC holds may not be transferred except as a whole between DTC or
nominees of DTC, between nominees of DTC by DTC, or any such nominee to a
successor of DTC or a successor of such nominee.

Payments on the Global Debentures

We will make any payments we owe in respect of the global debentures
through one or more paying agents to the book-entry depositary as the holder
of the global debentures. The paying agent will be appointed under the
Indenture, and initially the paying agent will be the trustee for the
debentures. Payment by us to the holder of the relevant debentures will
validly discharge the relevant payment obligation in respect of those
debentures for all purposes. All amounts payable under the debentures will be
payable in United States dollars. Upon receipt of any payment amounts in
respect of the global debentures, the book-entry depositary will pay those
amounts to DTC or its nominee in proportion to their interests, as shown on
the book-entry depositary's records.

We expect that when DTC or its nominee receives any payment made in respect
of the global debentures, it will credit its participants' accounts with those
payments in amounts proportionate to the participants' respective interest in
the principal amount of that global debenture as shown on the records of DTC
or its nominee. We expect that payments by participants to owners of book-
entry interests held through those participants will be

S-33

governed by standing customer instructions and customary practices, as is now
the case with the securities held for the account of customers in bearer form
or registered in street name, and will be the responsibility of such
participants.

Neither we, the trustee, the book-entry depositary, nor any paying agent
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of book-entry interests or for
maintaining, supervising or reviewing all records relating to such book-entry
interests or beneficial ownership interests.

Investors may be subject to foreign exchange risks as to payments of
principal and interest that may have important economic and tax consequences
to them.

Redemption of Global Debentures

In the event that we redeem any global debenture, or any portion of it, the
book-entry depositary will, through DTC, redeem, from the amount it receives
in respect of the redemption of that global debenture, an equal amount of the
book-entry interests in that global debenture. The redemption price payable in
connection with the redemption of the book-entry interest will be equal to the
amount the book-entry depositary receives in connection with the redemption of
the global debenture, or any portion of it. We understand that under existing
DTC practices, if fewer than all of the global debentures are to be redeemed
at any time, DTC will credit debenture participants' accounts on a
proportionate basis or by lot or on such other basis as DTC deems fair and
appropriate. However, no beneficial interests of less than $1,000 in principal
amount at maturity may be redeemed in part.

Transfers

Chase Manhattan Trust Company, National Association has agreed, pursuant to
the deposit agreement, that the global debentures will not be transferred
except to the successor to the book-entry depositary.

All transfers of book-entry interests between participants in DTC will be
effected by DTC pursuant to customary procedures established by DTC and its
participants.

Action by Owners of Book-Entry Interests

As soon as practicable after the book-entry depositary receives notice of
any solicitation of consents or request for a waiver of other action by the
holders of debentures, or of any offer to purchase the debentures upon a
change of control, the book-entry depositary will mail to DTC a notice
containing:

. the information contained in the notice the book-entry depositary
received;

. a statement that at the close of business on a specified record date
DTC will be entitled to instruct the book-entry depositary as to the
consent, waiver or other action, if any, pertaining to those
debentures; and

. a statement as to the manner in which those instructions may be given.

In addition, the book-entry depositary will forward to DTC all materials
pertaining to any such solicitation, request, offer or other action. Upon the
written request of DTC, the book-entry depositary will take all reasonable
steps regarding the requested consent, waiver, offer or other action in
respect of the debentures in accordance with any instructions set forth in the
request. DTC may grant proxies or otherwise authorize DTC participants or
indirect participants to provide such instructions to the book-entry
depositary so that it may exercise any rights of a holder or take any other
actions which a holder is entitled to take under the Indenture.

Under its usual procedures, DTC would mail an omnibus proxy to us and the
book-entry depositary assigning Euroclear's and Clearstream's consenting or
voting rights to those DTC participants to whose accounts

S-34

such book-entry interests are credited on a record date. It would mail the
omnibus proxy as soon as possible after that record date. The book-entry
depositary will not exercise any discretion in granting consents or waivers or
taking any other action relating to the Indenture.

We understand that DTC will take any action that a holder of debentures is
permitted to take, including the presentation of debentures for exchange as
described above, only:

. At the direction of one or more participants to whose account the DTC
interests in the global debentures are credited; and

. In respect of the portion of the aggregate principal amount of
debentures as to which the participant or participants has or have
given direction.

Reports

The book-entry depositary will immediately send to DTC a copy of any
notices, reports and other communications received relating to us, the
debentures or the book-entry interests.

Notices

So long as the debentures are listed on the New York Stock Exchange or
other national exchange, all notices to holders of the debentures, including
any notices with respect to the redemption of all or a portion of the
debentures by us or notices with respect to the redemption of all or a portion
of the debentures by us or notices with respect to this exchange offer, will
be given by publication in a daily newspaper in New York City or appropriate
city.

Business Day

If the day for any payment of principal, premium, if any, or interest is
not a business day in the location of each payment agent, that payment will be
made on the next following day that is a business day in each location.

Action by Book-Entry Depositary

If a default occurs with respect to the debentures, or in connection with
any other right of the holder of a global debenture under the Indenture, and
if the DTC so requests in writing, the book-entry depositary will take any
action as will be requested in that notice. The book-entry depositary must be
offered reasonable security or indemnity, against the costs, expenses and
liabilities that might be incurred by it in compliance with such request by
the owners of book-entry interests.

Resignation of Book-Entry Depositary

The book-entry depositary may resign at any time as book-entry depositary
by written notice to us and DTC. This resignation would become effective upon
the appointment of a successor book-entry depositary, in which case the global
debentures will be delivered to that successor. If we have not appointed a
successor within 90 days, the book-entry depositary may request that we issue
definitive registered debentures as described earlier in this section.

If at any time DTC is unwilling or unable to continue as a depositary for
the book-entry interests and we do not appoint a successor depositary within
90 days, DTC may request that we issue definitive registered debentures in
exchange for the book-entry interests.

Expenses of Book-Entry Depositary

We have agreed to indemnify the book-entry depositary against certain
liabilities incurred by it and pay the charges of the book-entry depositary as
agreed between us and the book-entry depositary.

S-35

Amendment and Termination of the Deposit Agreement

We and the book-entry depositary may amend the deposit agreement without
notice to or consent of DTC or any owner of a book-entry interest to:

. cure any ambiguity, defect or inconsistency, so long as such amendment
or supplement does not adversely affect the rights of DTC or any holder
of book-entry interests;

. evidence the succession of another person to us, when a similar
amendment with respect to the Indenture is being executed, and the
assumption by any such successor of our covenants in the Indenture;

. evidence or provide for a successor book-entry depositary;

. make any amendment, change or supplement that does not adversely affect
DTC or any owner of book-entry interests;

. add to our covenants or the covenants of the book-entry depositary;

. add a guarantor when a guarantor is made a party, to the Indenture
pursuant to the Indenture; or

. comply with the United States federal securities laws.

Except as provided in the relevant deposit agreement, no amendment that
adversely affects DTC, and no amendment that adversely affects the holders of
book-entry interests may be made without the consent of a majority of the
aggregate principal amount of book-entry interests outstanding in respect of
the debentures. Upon the issuance of definitive registered debentures in
exchange for book-entry interests constituting the entire principal amount of
debentures, the deposit agreement will terminate. The deposit agreement may be
terminated upon the resignation of the book-entry depositary if we do not
appoint a successor within 90 days as described earlier in this section.

Information Concerning DTC, Euroclear and Clearstream

We understand as follows with respect to DTC, Euroclear and Clearstream:

DTC is:

. a limited purpose trust company organized under the New York Banking
Law;

. a banking organization within the meaning of the New York Banking Law;

. a member of the Federal Reserve System;

. a clearing corporation within the meaning of the New York Uniform
Commercial Code; and

. a clearing agency registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934.

DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of transactions among its participants in those
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC participants include securities brokers and dealers,
including the initial purchasers, banks, trust companies, clearing
corporations and certain other organizations, some of whom own DTC. Access to
the DTC book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.

Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of an owner of
a book-entry interest to pledge its interest to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of its
interest, may be limited by the lack of a definitive certificate for such
interest. The laws of some states require that some persons take physical

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delivery of securities in definitive form. Consequently, the ability to
transfer book-entry interests to those persons may be limited. In addition,
beneficial owners of book-entry interests through the DTC system will receive
distributions attributable to the global debentures only through DTC
participants.

Euroclear and Clearstream hold securities for participating organizations
and facilitate the clearance and settlement of securities transactions between
their respective participants through electronic book-entry changes in
accounts of such participants. Euroclear and Clearstream provide to their
participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. As participants in DTC, Euroclear and Clearstream
provide an interface between non-U.S. investors and the United States
securities markets. Euroclear and Clearstream participants are financial
institutions such as underwriters, securities brokers and dealers, banks,
trust companies and certain other organizations. Indirect access to Euroclear
or Clearstream is also available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodian relationship with a
Euroclear or Clearstream participant, either directly or indirectly.

Global Clearance and Settlement Under Book-Entry System

Initial settlement. Initial settlement for the new debentures will be made
in United States dollars.

Book-entry interests owned through DTC, other than through accounts at
Euroclear or Clearstream, will follow the settlement applicable to United
States corporate debt obligations. The securities custody accounts of
investors will be credited with their holdings against payment in same-day
funds on the settlement date.

Book-entry interests owned through Euroclear or Clearstream accounts will
follow the settlement procedures applicable to conventional eurobonds in
registered form. Book-entry interests will be credited to the securities
custody accounts of Euroclear and Clearstream holders on the business day
following the settlement date against payment for value on the settlement
date.

Secondary market trading. The book-entry interests will trade in DTC's
Same-Day Funds Settlement System, and secondary market trading activity in
such book-entry interests will therefore settle in same-day funds.

Since the purchaser determines the place of delivery, it is important to
establish at the time of trading of any book-entry interests where both the
purchaser's and seller's accounts are located to ensure that settlement can be
made on the desired value date.

MATERIAL UNITED STATES FEDERAL TAX CONSEQUENCES

A summary of the material Federal income tax considerations of the
ownership and disposition of the debentures, Series B preferred stock and
common stock is contained in the accompanying prospectus under the heading
"Material United States Federal Tax Consequences" and all prospective
investors should read this material in its entirety. The discussion is based
on current law. The discussion is not exhaustive of all possible tax
considerations and does not give a detailed discussion of any state, local, or
foreign tax considerations. It also does not discuss all of the aspects of
Federal income taxation that may be relevant to a prospective debenture holder
or stockholder in light of his or her particular circumstances or to certain
types of stockholders or debenture holders (including insurance companies,
tax-exempt entities, financial institutions or broker-dealers, foreign
corporations and persons who are not citizens or residents of the United
States) who are subject to special treatment under the Federal income tax
laws.

EACH PERSON CONSIDERING INVESTING IN EITHER DEBENTURES OR SERIES B
PREFERRED STOCK IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE ACQUISITION,
OWNERSHIP AND SALE OF SECURITIES IN AN ENTITY ELECTING TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST,

S-37

INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES OF
SUCH ACQUISITION, OWNERSHIP, SALE, AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.

PLAN OF DISTRIBUTION

We will sell the debentures and Series B preferred stock offered hereby in
a public offering for cash. It is anticipated that Cohen & Steers Capital
Advisors, LLC will obtain indications of interest from potential institutional
investors in various jurisdictions in connection with the sale of the
debentures and Series B preferred stock offered hereby. Cohen & Steers has no
commitment to take or purchase any of the securities in this offering and will
act only as an agent in the institutional sales of the securities, where
permitted by applicable state securities laws. Cohen & Steers will be paid a
fee in the amount of approximately 3% of the aggregate amount of debentures
and Series B preferred stock sold in this offering to such institutional
investors.

In addition, we have agreed to indemnify Cohen & Steers against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments Cohen & Steers may be required to make in respect
thereof.

In the ordinary course of business, Cohen & Steers and/or its affiliates
have engaged and may in the future engage in financial advisory, investment
banking and other transactions with us for which customary compensation has
been, and will be, received.

LEGAL MATTERS

The legality of the securities and certain other legal matters have been
passed upon for us by Jaeckle Fleischmann & Mugel, LLP, Buffalo, New York.

S-38

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not issue these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
Dated: October 25, 2001

Prospectus

$100,000,000

SIZELER PROPERTY INVESTORS, INC.

DEBT SECURITIES, COMMON STOCK, PREFERRED STOCK, WARRANTS

We may use this prospectus to offer and sell securities from time to time.
The types of securities we may sell include:

. senior debt securities;

. subordinated debt securities;

. shares of common stock;

. shares of preferred stock; or

. warrants to purchase debt securities, preferred stock or common stock.

We will provide the specific terms of these securities in supplements to this
prospectus in connection with each offering. These terms may include:

In the case of any securities:
In the case of debt securities:
In the case of preferred stock:
In the case of warrants:
. offering . interest . dividends . the
price; rate; rights; types of
. size of . maturity; . liquidation securities
offering; . ranking; preferences; that may
. underwriting . redemption be
discounts; provisions; acquired
. redemption upon
provisions; exercise;
. limitations and . conversion
on . additional privileges;
direct covenants. and . expiration
or . voting date;
beneficial and other . exercise
ownership; rights. price;
and and
. restrictions . terms of
on exercisability.
transfer.

The securities offered will contain other significant terms and conditions.
Please read this prospectus and the applicable prospectus supplement carefully
before you invest.

An investment in securities involves a high degree of risk. See "Risk
Factors" beginning on page 5 of this prospectus for a discussion of risk
factors that you should consider in connection with an investment in the
securities.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

------------

The date of this prospectus is October , 2001