SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
WASHINGTON REAL ESTATE INVESTMENT TRUST
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
WASHINGTON REAL ESTATE INVESTMENT TRUST
10400 Connecticut Avenue
Kensington, Maryland 20895
May 5, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
the Washington Real Estate Investment Trust to be held on Wednesday, June 24,
1998. The formal Notice of the meeting and a Proxy Statement describing the
proposals to be voted upon are enclosed.
From time-to-time over the last 38 years your Trustees have recommended and
you have approved amendments to our Declaration of Trust. These were necessary
to remain both competitive and prepared for the future. A recent review of our
Declaration of Trust leads us to recommend additional modifications.
THE AMENDMENTS ARE INTENDED TO BRING THE DECLARATION OF TRUST UP TO DATE IN
TERMS OF AUTHORITY AND FLEXIBILITY TO ALLOW THE TRUST TO MORE EFFECTIVELY
COMPETE WITH OTHER REITS AND INVESTORS IN TODAY'S MARKETPLACE. THE BOARD OF
TRUSTEES BELIEVES THAT THESE AMENDMENTS WILL BE OF SUBSTANTIAL BENEFIT TO THE
TRUST AND RECOMMENDS YOUR APPROVAL OF THE SAME.
Please read the Proxy Statement, then complete, sign and return your proxy
card in the enclosed envelope. REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR
VOTE IS IMPORTANT. THIS IS PARTICULARLY IMPORTANT THIS YEAR AS SOME OF THE
MATTERS TO BE VOTED UPON REQUIRE THE APPROVAL OF 70% OF THE SHAREHOLDERS. Should
you have any questions, please contact Mr. Larry E. Finger at 1-800-565-WRIT
(9748).
Sincerely,
/s/ Arthur A. Birney
_______________________
Arthur A. Birney
Chairman of the Board
WASHINGTON REAL ESTATE INVESTMENT TRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of the Shareholders (the "Annual Meeting") of the
Washington Real Estate Investment Trust (the "Trust") will be held at the Hyatt
Regency Hotel, One Bethesda Metro Center, Bethesda, Maryland on Wednesday, June
24, 1998 at 11:00 a.m., for the following purposes:
1. To elect three Trustees;
2. To approve amendments to the Declaration of Trust to authorize the
issuance of Preferred Shares;
3. To approve an amendment to the Declaration of Trust to authorize
the Trustees to adopt future changes to the Declaration of Trust to
preserve REIT status;
4. To approve amendments to the Declaration of Trust to modify certain
investment policies;
5. To approve an amendment to the Declaration of Trust to revise the
super-majority voting provision; and
6. To transact such other business as may properly come before the
meeting.
The Trustees have fixed the close of business on April 16, 1998 as the
record date for shares entitled to vote at the Annual Meeting.
The Annual Report of the Trust, Proxy Statement and a Proxy Card are
enclosed with this Notice.
You are requested, if you cannot be present at the meeting, to sign and
return the Proxy Card in the enclosed business reply envelope promptly.
/s/ Benjamin H. Dorsey
_______________________
Benjamin H. Dorsey
Secretary
May 5, 1998
WASHINGTON REAL ESTATE INVESTMENT TRUST
10400 Connecticut Avenue
Kensington, Maryland 20895
PROXY STATEMENT
This Proxy Statement is furnished by the Trust's Board of Trustees (the
"Board") in connection with its solicitation of proxies for use at the Annual
Meeting of Shareholders on June 24, 1998 and at any and all adjournments
thereof. Mailing of this Proxy Statement will commence on or about May 5, 1998.
All proxies will be voted in accordance with the instructions contained therein,
and if no choice is specified, the proxies will be voted in favor of the
proposals set forth in the Notice of Annual Meeting. Abstentions and broker
non-votes (proxies that do not indicate that brokers or nominees have received
instructions from the beneficial owner of shares) are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulating the total number of votes cast on
proposals presented to shareholders, whereas broker non-votes are not counted
for purposes of determining the total number of votes cast. A Proxy on the
enclosed form may be revoked by the shareholder at any time prior to its
exercise at the Annual Meeting by submitting, to the Secretary of the Trust, a
duly executed Proxy bearing a later date or by attending the Annual Meeting and
orally withdrawing the Proxy.
The voting securities of the Trust consist of shares of beneficial
interest, $0.01 par value ("Shares"), of which 35,683,987 Shares were issued and
outstanding at the close of business on March 31, 1998. So far as is known to
the Trust, no person holds of record or beneficially as much as 5% of the
outstanding Shares. The Trust has no other class of voting security. Each Share
outstanding on April 16, 1998, will be entitled to one vote. Shareholders do not
have cumulative voting rights.
I.
THE BOARD OF TRUSTEES AND MANAGEMENT
THE BOARD OF TRUSTEES
The Board consists of seven Trustees divided into two classes of two
Trustees each and one class of three Trustees. The terms of the Trustees
continue until the Annual Meetings to be held in 1998, 1999 and 2000,
respectively, and until their respective successors are elected and qualified.
At each Annual Meeting, two or three Trustees are elected, subject to the
limitations described below, for a term of three years to succeed those Trustees
whose terms expire at such Annual Meeting. The Trust's By-Laws provide that no
Trustee shall be nominated or elected as a Trustee after such person's 72nd
birthday. The By-Laws further provide that any Trustee who is first elected a
Trustee after December 19, 1995 shall tender his resignation as a Trustee on his
72nd birthday.
The Board held 16 meetings in 1997. The Nominating Committee, consisting of
Messrs. Birney, Cronin, Derrick and Osnos, makes recommendations to the Board
for nomination of Trustees. The Nominating Committee met once in 1997 for the
purpose of nominating a successor Trustee to Mr. Dorsey. Mr. Dorsey, in
accordance with the Trust's By-Laws, retires this year. The Trustees will
consider recommendations for nominations for Trustee received from shareholders
provided that the shareholder submits such recommendation in writing before
December 24, 1998 accompanied by a written statement setting forth the reasons
the Trust would benefit from the election of such nominee. The Audit Committee,
consisting of Messrs. Cafritz, Derrick and Osnos, meets at least quarterly with
the President and Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer, together and/or individually, to review operating results
and other matters. The Audit Committee reviews management's independent public
accountant selection and makes recommendations to the Board based on that
review. The Committee also questions management and the Trust's independent
public accountants on the application of accounting and reporting standards to
the Trust and makes recommendations to the Board regarding dividend
declarations. The Audit Committee met four times in 1997. A Compensation
Committee, composed of Messrs. Cronin, Snyder and Cafritz, is responsible for
making recommendations to the Board with respect to compensation decisions. The
Compensation Committee met twice during 1997. See "Report on Executive
Compensation" below. All members of the Board attended more than 75% of the
total number of meetings held during 1997.
The six non-officer Trustees of the Trust, Messrs. Birney, Cafritz,
Derrick, Dorsey, Osnos and Snyder, were compensated in the form of fees. During
1997, each such Trustee received fees of $33,000 for 1997. Mr. Birney, who
served as Chairman of the Board, and Mr. Dorsey who served as Secretary of the
Trust, received additional remuneration for such services of $9,500 and $24,000,
respectively. During 1997, the Trust utilized the legal services of the law firm
of Arent Fox Kintner Plotkin & Kahn, of which Trustee David M. Osnos is a senior
partner. The amount of fees paid to Arent Fox did not exceed 5% of that firm's
1997 gross revenues or 5% of the Trust's 1997 gross revenues.
Effective January 1, 1998, the Trustee compensation structure was revised
in accordance with the recommendations contained in the 1997 Board of Trustees
and Executive Compensation Review prepared by an independent consultant. The
revised structure is intended to promote strong links between Trustee
contributions and overall Trust performance, reward performance that directly
supports the achievement of the Trust's business objectives and attract and
retain the critical Trustee technical and management talent necessary for the
Trust's success. Effective January 1, 1998, the six non-officer Trustees of the
Trust receive an annual retainer of $15,000 plus a $1,000 per meeting fee for
attending Board and committee meetings. In addition, each non-officer Trustee
will receive an annual grant of 2,000 Share options and 400 unrestricted Shares.
The Chairman of the Board will receive additional remuneration for such services
of $9,500.
The following table sets forth the names and certain biographical
information concerning each of the current Trustees.
SERVED AS TERM
NAME PRINCIPAL OCCUPATION(*) TRUSTEE SINCE AGE EXPIRES
- --------------------------- ------------------------------------------------------ ------------- --- -------
Edmund B. Cronin, Jr. President and Chief Executive Officer 1994 61 1998
Benjamin H. Dorsey Secretary of the Trust; Retired General Counsel 1960 74 1998
David M. Osnos Senior partner, Arent, Fox, Kintner, Plotkin & Kahn, 1987 66 1998
PLLC (legal counsel to the Trust);Director, VSE
Corporation (engineering); Director, EastGroup
Properties (real estate investment trust)
William N. Cafritz President, William Cafritz Development Corp. (real 1984 72 1999
estate development)
Stanley P. Snyder Chairman, Snyder-Cohn-Collyer-Hamilton & Associates, 1968 63 1999
P.C., formerly Snyder, Kamerow & Associates, P.C.
(Certified Public Accountants)
Arthur A. Birney Managing Partner and Chief Executive Officer, 1961 70 2000
Washington Brick & Terra Cotta Co. (Real Estate
Holding and Development Company); Managing Partner,
Queenstown Harbor Golf Links LP
John M. Derrick, Jr. Chairman/CEO -- Potomac Electric Power Company 1997 58 2000
- ---------------
(*) Each person has held the indicated position for more than the past five
years except Messrs. Cronin, Derrick and Dorsey.
Mr. Edmund B. Cronin, Jr. has 37 years of real estate investment,
development, operations and finance experience in the Mid-Atlantic region. From
1977 to 1993, he served as Chairman and Chief Executive Officer of Smithy
Braedon, a full service commercial real estate firm providing leasing, sales,
asset management, finance, consulting, advisory and development services. From
1976 until joining the Trust in June 1994, Mr. Cronin was Chief Executive
Officer of H.G. Smithy Company, a real estate management and advisory service
holding company.
Mr. John M. Derrick, Jr. is Chairman/CEO of the Potomac Electric Power
Company (PEPCO). He joined PEPCO in 1961 and has held his current position since
October 1997. Mr. Derrick belongs to the Institute of
2
Electrical and Electronic Engineers, the National Society of Professional
Engineers, the Washington Society of Engineers, the Edison Electric Institute,
and the Greater Washington Board of Trade.
Mr. Benjamin H. Dorsey was the Trust's General Counsel from 1960 until his
retirement on December 31, 1995. Mr. Dorsey serves as a Trustee until the
expiration of his term on June 24, 1998.
OTHER EXECUTIVE OFFICERS
The following table contains information regarding other executive officers
of the Trust. Such officers are elected annually by the Board and serve at the
Board's discretion.
NAME AGE POSITION
- ----------------------------------------------- --- -------------------------------------------------------
Larry E. Finger................................ 45 Senior Vice President -- Chief Financial Officer
George F. McKenzie............................. 42 Senior Vice President -- Real Estate
Mary Beth Avedesian............................ 38 Vice President -- Real Estate
Brian J. Fitzgerald............................ 36 Vice President -- Leasing
Laura M. Franklin.............................. 37 Vice President -- Chief Accounting Officer, Asst. Secy.
Kenneth C. Reed................................ 45 Vice President -- Property Management
Thomas L. Regnell.............................. 41 Vice President -- Acquisitions
Mr. Larry E. Finger, an attorney and CPA, joined the Trust in December 1993
and was elected Senior Vice President, Chief Financial Officer in June 1995.
From 1978 to 1991, Mr. Finger served with Savage/Fogarty Companies, Inc., a real
estate investment, management and development company based in Alexandria,
Virginia, most recently as Chief Operating Officer. During 1992 and 1993, Mr.
Finger created and operated a multi-restaurant delivery business.
Mr. George F. McKenzie joined the Trust in September of 1996 and was
elected Senior Vice President -- Real Estate in December 1997. From 1985 to
1996, Mr. McKenzie served with the Prudential Realty Group, a subsidiary of
Prudential Insurance Company of America, most recently as Vice President,
Investment & Sales. Prior assignments included real estate finance originations
and asset management in the Mid-Atlantic region.
Ms. Mary Beth Avedesian joined the Trust as Vice President -- Real Estate
in March 1995. From 1993-1995, Ms. Avedesian was an Assistant Vice President for
Towle Financial Services, responsible for acquisition due diligence and asset
management.
Mr. Brian J. Fitzgerald joined the Trust in January of 1996 as Vice
President -- Leasing. From 1984 to 1993, Mr. Fitzgerald served as a commercial
leasing broker with Smithy Braedon Company, in Northern Virginia. In 1993, he
became a Vice President of H. G. Smithy Company, with responsibilities for
managing all agency leasing activities. From the date of the merger of H. G.
Smithy Commercial Management Group with Cushman & Wakefield of Washington, D.C.,
Inc. in June of 1994 until joining the Trust, Mr. Fitzgerald managed
institutional agency leasing activities at Cushman & Wakefield, Inc. of
Washington, D.C.
Ms. Laura M. Franklin, a CPA, joined the Trust in 1993 as Assistant Vice
President -- Finance, and is currently Vice President and Chief Accounting
Officer as well as Assistant Secretary to the Trust. From 1984 to 1993, Ms.
Franklin served with the public accounting firm of Reznick, Fedder and
Silverman, P.C. specializing in audit and tax services for real estate clients.
Mr. Kenneth C. Reed joined the Trust as Vice President -- Property
Management in June of 1995. Mr. Reed has served as President of CSN Management
Corp. since 1988 and continues to serve as CSN President. CSN manages only WRIT
properties.
Mr. Thomas L. Regnell joined the Trust as Vice President -- Acquisitions in
January of 1995. From 1992 through 1994, Mr. Regnell served as an Investment
(Acquisitions) Officer with Federal Realty Investment Trust in Bethesda,
Maryland. Previously, Mr. Regnell was a Vice President with Spaulding & Slye
Company, a real estate development, brokerage and management company.
There are no family relationships between any Trustee or executive officer.
3
OWNERSHIP OF SHARES BY TRUSTEES AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning all Shares
beneficially owned as of April 16, 1998, by each Trustee, by the nominee for
Trustee, by each of the "Named Officers" (as defined in "Executive Compensation"
below) and by all Trustees and Executive Officers as a group. Unless otherwise
indicated, the voting and investment powers for the Shares listed are held
solely by the named holder.
PERCENTAGE
NAME SHARES OWNED OF TOTAL
- ---------------------------------------------------------------- ------------ ----------
Arthur A. Birney................................................ 76,889(1) 0.22%
William N. Cafritz.............................................. 19,349 0.05%
Edmund B. Cronin, Jr............................................ 92,367(2) 0.26%
John M. Derrick, Jr............................................. 800 0.00%
Benjamin H. Dorsey.............................................. 78,522(1)(2) 0.22%
Larry E. Finger................................................. 24,017(2) 0.07%
Brian J. Fitzgerald............................................. 4,029(2) 0.01%
George F. McKenzie.............................................. 763 0.00%
John P. McDaniel................................................ -- 0.00%
David M. Osnos.................................................. 900 0.00%
Thomas L. Regnell............................................... 12,040(2) 0.03%
Stanley P. Snyder............................................... 5,062 0.01%
All Trustees and Executive Officers as a group (14 persons)..... 358,527(2) 1.00%
- ---------------
(1) Includes shares held in a trust.
(2) Includes shares subject to options exercisable within 60 days, as follows:
Mr. Cronin, 49,171; Mr. Dorsey, 23,376; Mr. Finger, 20,825; Mr. Fitzgerald,
8,329; Mr. Regnell, 11,465; and all Trustees and Executive Officers as a
group, 147,156.
II.
ELECTION OF TRUSTEES
Messrs. Cronin, McDaniel and Osnos stand for election as Trustees at the
Annual Meeting, to serve for three years. It is intended that the proxies given
to the persons named in the accompanying Proxy (unless otherwise indicated on
such Proxy) will be voted for the election of Messrs. Cronin, McDaniel and
Osnos. Mr. Cronin currently serves as President and Chief Executive Officer and
Trustee. Mr. Osnos currently serves as a Trustee.
Mr. John P. McDaniel is Chief Executive Officer of the Medlantic Healthcare
Group, a multi-institutional, not-for-profit health care organization serving
Washington, D.C., Maryland, Virginia and the mid-Atlantic region. Mr. McDaniel's
tenure began at Medlantic's inception in 1982 when he became CEO of the
Washington Hospital Center. From that base, he formed the Medlantic Healthcare
Group which has become, in cooperation with other institutions, one of the
region's most comprehensive health care delivery systems. During his career in
the industry, Mr. McDaniel has held a number of executive positions including
serving as President and Chief Executive Officer of Washington Hospital Center
Corporation, President of Maryland Health Care System, Inc., and President of
Lutheran Hospital of Maryland, Inc. Mr. McDaniel is a past chairman and
currently a member of the Executive Committee of the Greater Washington Board of
Trade, is also a Trustee and member of the Executive Committee of the Federal
City Council, and a member of the Board of the Directors of Lutheran
Brotherhood, a financial services company. He is a member of the Maryland State
Racing Commission, is a Fellow of the American College of Healthcare Executives
and chairs the Washington-area Business Coalition.
If a nominee becomes unable or unwilling to stand for election for any
reason not presently known or contemplated, the persons named in the enclosed
Proxy will have discretionary authority to vote pursuant to the Proxy for a
substitute nominee nominated by the Board. The election of Trustees requires the
affirmative vote of the holders of a majority of the shares voting at the Annual
Meeting either in person or by proxy.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE
ELECTION OF EDMUND B. CRONIN, JR., JOHN P. MCDANIEL AND DAVID M. OSNOS.
4
III.
AMENDMENTS TO THE DECLARATION OF TRUST TO AUTHORIZE PREFERRED SHARES
The Board has declared advisable and recommends to the shareholders
amendments (the "Preferred Shares Amendment") to the Trust's Declaration of
Trust (i) to make available for issuance Preferred Shares with such
designations, preferences, rights and limitations as are approved, from time to
time, by the Board and (ii) to make certain conforming amendments to the terms
of the Shares (the "Preferred Shares Amendment"). The full text of Sections 4.1,
5.8, 5.10, 7.3, 7.5, 8.1, 8.4, 9.1, 10.1 and 10.2 of the Declaration of Trust as
they will be amended if the Preferred Shares Amendment is approved by
shareholders is set forth as Exhibit A to this Proxy Statement.
PURPOSE AND EFFECT
The Declaration of Trust currently authorizes only the Shares which are
Common Shares. The principal purpose and effect of the Preferred Shares
Amendment would be to provide the Board with additional flexibility in the
management of the Trust's capitalization. Preferred Shares could be used by the
Trust, instead of Common Shares, in connection with (i) raising of capital, (ii)
future acquisitions and (iii) other business purposes. Current market conditions
offer an opportunity for real estate investment trusts to issue preferred shares
at favorable rates and with favorable terms. The ability to issue Shares with
preferential distribution, liquidation or other rights could be particularly
important in connection with efforts to raise additional capital. A substantial
number of real estate investment trusts have the authority to issue preferred
shares, and a significant number of these real estate investment trusts have
issued preferred shares. The Trustees and management of the Trust believe that
the Preferred Shares Amendment would provide the Trust with an authority now
common among real estate investment trusts and important for the Trust to be
competitive with other real estate investment trusts in financing its
operations.
TERMS
The Preferred Shares Amendment would grant the Board broad discretion with
respect to designating the terms of each series of Preferred Shares prior to its
issuance. The following is a brief description of the terms, rights and
preferences which the Board will be entitled to designate with respect to the
Preferred Shares.
NUMBER. The Trust initially would be authorized to issue up to 500,000
Preferred Shares, par value $.01 per share. As authorized by Maryland law and
currently provided in the Declaration of Trust, the Board has the authority to
increase the number of Common Shares authorized for issuance without further
shareholder approval. The Preferred Shares amendment would authorize the Board
to increase the number of Preferred Shares authorized for issuance without
further shareholder approval. The Preferred Shares Amendment also would
authorize the Board to decrease the number of authorized shares without further
shareholder approval.
ISSUABLE IN SERIES. The Preferred Shares may be issued in series
established from time to time by the Board. The Board may fix for each series
(i) the number of shares included in the series, (ii) the rate and other terms
of the dividend, (iii) the amount payable in the event of liquidation, (iv) the
voting powers, if any, (v) the terms, if any, on which the shares may be
converted, (vi) the redemption price, if any, and other redemption terms, (vii)
sinking fund provisions, if any, for the redemption of the shares and (viii)
other rights and restrictions.
DIVIDENDS. The holders of each series of Preferred Shares will be entitled
to receive, when and as declared by the Board, out of funds legally available
therefor, dividends at the time and at the rates fixed by the Board. A series
may be entitled to cumulative dividends and/or to participate in dividends paid
on the Common Shares. All accrued and unpaid dividends on Preferred Shares must
be paid in full or a sum sufficient for such payment must be set aside for such
payment before dividends are declared or paid on Common Shares.
REDEMPTION. Subject to the terms of the Trust's outstanding debt, any
series of Preferred Shares may be redeemable by the Trust, at the option of the
Trust or at the option of the holder, upon such terms as may be designated by
the Board. The amount payable upon redemption will be fixed by the Board. The
Board may designate that a series may be redeemed, in whole or in part, or that
one series may be redeemed, in whole or in part, without redeeming another
series.
5
LIQUIDATION. In the unlikely event of the liquidation of the Trust, the
holders of each series of then outstanding Preferred Shares will be entitled to
receive, prior to any distribution to holders of Common Shares, an amount fixed
by the Board, which may include accrued but unpaid dividends.
SINKING FUND. Subject to the terms of the Trust's outstanding debt, the
Board may establish a sinking or other fund for the redemption or purchase of
Preferred Shares.
CONVERSION. The Board may establish terms and conditions upon which any
Preferred Shares may be converted into Common Shares or any other security
issuable by the Trust.
VOTING POWERS. The Board may establish the voting powers for each series of
Preferred Shares subject to proposed Section 4.1(f) of the Declaration of Trust,
which limits the voting rights of any series of Preferred Shares that may be
authorized. Pursuant to Section 4.1(f), the voting rights of Preferred Shares
are limited to, among other things, (i) the right to approve any transaction
resulting in the issuance by the Trust of any class or series of Preferred
Shares ranking senior to such Preferred Shares, (ii) the right to approve any
amendment to the Declaration of Trust if such amendment would materially and
adversely alter the rights, preferences or privileges of such Preferred Shares,
(iii) the right to approve certain mergers in which the Trust is not the
surviving entity, and (iv) the right to elect up to two additional Trustees
following the Trust's failure to pay required dividends on such Preferred Shares
for a specified number of quarterly periods. Any such additional Trustees
generally would serve during the period the Trust remained in default plus a
limited period following the cure of such default, all as to be specified in the
terms of articles supplementary establishing the terms of a particular class or
series of Preferred Shares. The full text of proposed Section 4.1(f) is set
forth in Exhibit A to this Proxy Statement.
AMENDMENTS TO COMMON SHARES
Because the Declaration of Trust currently authorizes only Common Shares,
certain modifications must be made to the Declaration of Trust, in addition to
those described above, to distinguish the rights of the holders of Common Shares
and the holders of Preferred Shares.
As stated above, the Board currently is authorized to increase the number
of Common Shares authorized for issuance without further shareholder approval.
In order to conform the terms of the Preferred Shares and the Common Shares, the
Preferred Shares Amendment also would authorize the Board (i) to decrease the
number of authorized Common Shares and (ii) to classify unissued Common Shares
into one or more classes or series of shares without further shareholder
approval.
Section 5.8 of the Declaration of Trust currently imposes limitations on
the ownership of more than 10 percent of the Trust's outstanding shares. The
Preferred Shares Amendment would amend this Section to make clear that this
limitation applies to all shares in the aggregate, computed on the basis of the
value of such shares. The Section also provides for the repurchase of shares in
order to enforce such limitations. The Preferred Shares Amendment would further
amend this Section to make clear that any Preferred Shares subject to repurchase
pursuant to this limitation would be redeemed (i) at cost or at the last sale
price of a share as of the date immediately preceding the day on which the
demand for repurchase is mailed, whichever price is higher or (ii) at such other
amount as is set forth in the terms of such class or series of shares so called
for repurchase.
Currently, the Declaration of Trust grants certain voting powers to the
holders of the Trust's "shares." As stated above, Preferred Shares may be issued
with limited voting rights and may have no voting rights except as may be
required by law. In order to distinguish the voting rights of the Common Shares
and the Preferred Shares, it is proposed as part of the Preferred Shares
Amendment that Section 7.3 of the Declaration of Trust be amended and restated
to specify that subject to Section 4.1(f) (described above) the shareholders
shall be entitled to vote on (i) the election or removal of Trustees, (ii) the
amendment of the Declaration of Trust, (iii) the termination of the Trust, (iv)
any merger of the Trust and (v) any other matter on which, by law, the
shareholders are required to vote.
Section 8.1 of the Declaration of Trust specifies the minimum and maximum
number of Trustees. The Preferred Shares Amendment would amend this Section to
provide that no less than three nor more than seven Trustees shall be elected by
the holders of the Common Shares. The Preferred Shares Amendment would also
6
permit the election of up to two Trustees (but in no event a majority of the
Trustees) by the holders of Preferred Shares following a failure to pay required
dividends on such Preferred Shares for a specified number of quarterly periods.
This provision would authorize such additional Trustees during the period the
Trust remained in default plus a limited period following the cure of such
default, but the provision would only be implemented by the Board in connection
with the adoption of articles supplementary establishing the terms of a
particular class or series of Preferred Shares.
Section 8.4 of the Declaration of Trust provides for the filling of
vacancies on the Board by the remaining Trustees. The Preferred Shares Amendment
would amend this Section to provide that a vacancy among the Trustees elected by
the holders of the Common Shares would be filled by the remaining Trustees
elected by the holders of the Common Shares and that a vacancy among the
Trustees elected by the holders of the Preferred Shares would be filled by the
remaining Trustee elected by the holders of the Preferred Shares.
Section 10.1 of the Declaration of Trust specifies the vote required to
amend the Declaration of Trust. The Preferred Shares Amendment would amend this
Section to provide that any amendment of the Declaration of Trust would require
the vote of the Common Shares and any class of Preferred Shares entitled to vote
thereon, voting as separate classes.
Section 10.2 of the Declaration of Trust provides for the removal of
Trustees. The Preferred Shares Amendment would amend this Section to provide
that a Trustee elected by the holders of the Common Shares may only be removed
by a vote of the holders of the Common Shares and that a Trustee elected by the
holders of the Preferred Shares may only be removed by a vote of the holders of
the Preferred Shares. As stated above, Trustees elected by the holder of
Preferred Shares would only serve during the period the Trust remained in
default on the payment of dividends on the Preferred Shares plus a limited
period following the cure of such default.
Several other Sections of the Declaration of Trust would be amended by the
Preferred Shares Amendment to acknowledge that the Trust may have multiple
classes or series of shares outstanding, including classes or series of
Preferred Shares and to refer to particular classes or series of Preferred
Shares for their terms.
The Declaration of Trust currently includes numerous references to
"shares." The Preferred Shares Amendment would make clear that all references in
the Declaration of Trust to "shares" include both Common Shares and Preferred
Shares.
OTHER EFFECTS
The Board is not aware of any current effort by any person to accumulate
Shares or obtain control of the Trust, and the Preferred Shares Amendment is not
designed to impede the acquisition of the Trust. Indeed, the Preferred Shares
Amendment, by limiting the potential voting rights of Preferred Shares, is
intended to avoid the possibility that the issuance of Preferred Shares would
have an anti-takeover effect.
The Board has no current intention to adopt a "shareholder rights plan"
(which, if adopted, could have an anti-takeover effect), but the Board could
adopt such a plan without the Preferred Shares Amendment or without utilizing
the Preferred Shares. The Board will not, without shareholder approval, utilize
the availability of Preferred Shares to implement such a plan.
The Preferred Shares may be issued upon the Board's approval, without any
further vote of the shareholders. The Declaration of Trust does not provide for
any preemptive rights upon the issuance of Preferred Shares.
APPROVAL
Approval of the Preferred Shares Amendment requires the vote of holders of
70 percent of the outstanding shares entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE PREFERRED SHARES AMENDMENT.
7
IV.
AMENDMENT TO THE DECLARATION OF TRUST TO
AUTHORIZE AMENDMENTS TO PRESERVE REIT STATUS
The Board has declared advisable and recommends to the shareholders an
amendment to the Trust's Declaration of Trust (the "REIT Amendment") to
authorize the Board to amend the Declaration of Trust from time to time, by a
vote of two-thirds of the Trustees, in any manner necessary to enable the Trust
to continue to qualify as a real estate investment trust ("REIT") under the
Internal Revenue Code (the "Code") or under Title 8 of the Maryland Business
Corporation Law, which governs the organization of a REIT under Maryland law
(the "Maryland Law").
PURPOSE AND EFFECT
The Trust has elected to be taxed as a REIT under the Code. A REIT which
meets certain qualifications is relieved of federal income taxes on ordinary
income and capital gains distributed to shareholders. The Trustees believe that
it is in the best interest of the shareholders for the Trust to preserve its
status as a REIT. The REIT Amendment is intended to permit the Board to respond
rapidly in the future to any changes in the Code or the Maryland Law which would
require an amendment to the Declaration of Trust in order to preserve the
Trust's status as a REIT. The REIT Amendment would enable the Trustees to adopt
any amendment to the Declaration of Trust necessary under the Code or the
Maryland Law to preserve the Trust's status as a REIT without the necessity of
calling a meeting of the shareholders or obtaining a vote of the shareholders.
The Trust is not currently aware of any amendment required to be made to the
Declaration of Trust in order to preserve the status of the Trust as a REIT.
APPROVAL
Approval of the REIT Amendment requires the vote of holders of 70 percent
of the outstanding shares entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE REIT AMENDMENT.
V.
AMENDMENTS TO DECLARATION OF TRUST
TO MODIFY CERTAIN INVESTMENT POLICIES
The Board has declared advisable and recommends to the shareholders
amendments to the Trust's Declaration of Trust to modify certain investment
policies set forth in Article 14 of the Declaration of Trust (the "Investment
Policy Amendments").
PURPOSE AND EFFECT
Article 14 of the Declaration of Trust sets forth certain investment
policies of the Trust. The Trustees believe that certain of these policies have
become out of date and otherwise impose unnecessary limitations on the operation
of the Trust. The investment policies are proposed to be modified as set forth
in this section.
Section 14.3 of the Declaration of Trust provides that
The Trust may, on a temporary basis, invest in United States government
obligations, state or municipal obligations, mortgages, commercial
paper, or similar investments, as a means of providing for contingencies
and future purchases. Such investments will not be in amounts that
would, in the opinion of counsel for the Trust, disqualify the Trust for
treatment as a "real estate investment trust" under the Internal Revenue
Code and Regulations thereunder.
The Trustees believe that the specification that such investments be "on a
temporary basis" is ambiguous and unnecessary. The Trust may from time to time
hold funds in investments of the sort described in Section
8
14.3, such as pending the application of proceeds from an offering of securities
or pending the reinvestment of the proceeds from the sale of a property.
Depending upon real estate market conditions, money market conditions, the terms
of the Trust's borrowings and other money management issues, the Trust may
choose to retain funds in such investments for an extended period. The Trustees
believe that the Trust should be permitted to hold such investments for such
period as is in the best interest of the Trust without particular requirements
as to the Trust's intention with respect to the time that such investments would
be held. Further, the Trust may choose, from time to time, to invest a modest
portion of the Trust's funds in notes secured by mortgages on real property. The
Trustees believe that the Trust also should be permitted to hold such an
investment for such period as they believe will provide the greatest benefit to
the Trust and without artificial time limitations. Further, the Trustees
understand that the current provision of the Declaration of Trust that such
investments be held on a "temporary basis" is not required by the Code or by the
Maryland Law. Accordingly, the Trustees have approved an amendment to Section
14.3 to delete the phrase "on a temporary basis."
Section 14.6 of the Declaration of Trust provides, among other things, that
the Trust may not (i) "invest in securities of other issuers for the purpose of
exercising control or in securities of or interests in any person primarily
engaged in real estate activities, except where the purpose is to acquire the
underlying properties of said issuer or persons," (ii) "make unsecured loans to
other persons," or (iii) "enter into any advisory contract for a period of more
than one year."
The Trustees understand that these limitations also are not required by the
Code or by the Maryland Law and believe that they impose unnecessary limitations
on the operation of the Trust. Although the Trustees are not currently
contemplating entering into any transaction prohibited by the existing terms of
Section 14.6 and anticipate that the ability to enter into any such transactions
would be used sparingly, they believe that it could be desirable for the Trust
in certain circumstances to enter into any one of these currently prohibited
transactions. For example, it may be prudent for the Trust to make an unsecured
loan in connection with hiring a new officer and advancing moving or relocation
expenses. Also, although the Trustees have no plans whatsoever to hire any
third-party advisor with respect to the Trust's investments, it might be in the
Trust's interest to enter into long-term advisory arrangements with respect to
discrete matters such as environmental consulting. Finally, though also an
unlikely event, the prohibition on making investments for the purpose of
exercising control could interfere with the Trust's ability to make
acquisitions, including the acquisition of another real estate investment trust.
The Trustees are aware that certain investments could be inconsistent with the
Trust's status as a real estate investment trust under the Code, and the
Trustees do not intend to make any investments which would disqualify the Trust
for treatment as a real estate investment trust under the Code.
Accordingly, the Trustees have approved amendments to Section 14.6 to
delete (i) clause 6 (pertaining to making investments for the purpose of
exercising control), (ii) clause 7 (pertaining to making unsecured loans) and
(iii) clause 8 (pertaining to entering into advisory contracts for a period of
more than one year).
APPROVAL
Approval of the Investment Policy Amendments requires the vote of holders
of a majority of the outstanding shares entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE INVESTMENT POLICY AMENDMENTS.
VI.
AMENDMENT TO DECLARATION OF TRUST
TO REVISE SUPER-MAJORITY VOTING PROVISION
The Board has declared advisable and recommends to the shareholders an
amendment to the Trust's Declaration of Trust to revise the super-majority
voting provision set forth in the last sentence of Section 10.1 of the
Declaration of Trust (the "Super-Majority Amendment").
9
PURPOSE AND EFFECT
The last sentence of Section 10.1 of the Declaration of Trust specifies
that the affirmative vote of the holders of 70 percent or more of the
outstanding shares of the Trust entitled to vote generally in the election of
Trustees shall be required to amend or repeal Section 5.8 (restricting the
ownership of more than ten percent of the Trust's shares), Section 5.10
(restricting the ownership of the shares of the Trust and of certain "sister
corporations"), Section 8.1 (establishing the size of the Board and providing
for the filling of vacancies on the Board), Section 8.2 (providing for the
staggered election of the Trustees), Section 10.1 (concerning the amendment of
the Declaration of Trust) or Article 15 of the Declaration of Trust (concerning
special voting requirements in connection with certain acquisition
transactions).
In proposing the Preferred Shares Amendment, the Trustees noted that the 70
percent vote required by the last sentence of Section 10.1 currently applies to
any amendment of Section 10.1, rather than just an amendment to the last
sentence of Section 10.1. Accordingly, in order to adopt the amendments to
Section 10.1 necessary to specify the voting power of any Preferred Shares the
Trust may issue, a 70 percent vote is required. Because the first sentence of
Section 10.1 only requires a majority vote in order to amend most provisions of
the Declaration of Trust or to terminate the Trust, there is no purpose to be
served by requiring a 70 percent vote to amend these provisions.
The Trustees believe that the requirement to obtain the vote of the holders
of 70 percent or more of the shareholders is very burdensome, requiring
extraordinary efforts and imposing unusual expenses in order to obtain the
requisite vote. The Trustees believe that this requirement should be reserved
only for provisions important to the protection of the Trust and should not be
utilized in connection with provisions which might require modification from
time to time. Because the Trust is already required to obtain a 70 percent vote
in connection with the Preferred Shares Amendment, the Trustees believes that
this is an opportune time to make this technical correction to the terms of
Section 10.1 of the Declaration of Trust.
Accordingly, the Trustees have approved an amendment to the last sentence
of Section 10.1 specifying that the 70 percent vote requirement only applies to
the amendment of the last sentence of Section 10.1 and not to the rest of
Section 10.1. The 70 percent vote required to amend Sections 5.8, 5.10, 8.1, 8.2
and Article 15 is retained and is not affected by the Super-Majority Amendment.
APPROVAL
Approval of the Super-Majority Amendment requires the vote of holders of 70
percent of the outstanding shares entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE SUPER-MAJORITY AMENDMENT.
10
VII.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows the compensation awarded, earned or
paid during the past three years to the Trust's Chief Executive Officer and each
of the Trust's four other most highly compensated executive officers (the "Named
Officers") whose compensation exceeded $100,000 for the period(s) indicated.
SUMMARY COMPENSATION TABLE
ANNUAL CASH
COMPENSATION LONG-TERM COMPENSATION
-------------------- ------------------------------
SALARY BONUS SHARES OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) GRANTED(#)(1) GRANTED(#)(2)
- ---------------------------------------------------- ----- -------- -------- ------------- -------------
Edmund B. Cronin, Jr., Trustee, 1997 $395,000 $162,989 3,121 61,000
President and Chief Executive Officer 1996 $360,000 $ 84,933 26,650
1995 $295,000 20,171
Larry E. Finger, Senior Vice President and Chief 1997 $210,000 $ 86,652 1,291 25,224
Financial Officer 1996 $200,000 $ 47,185 14,806
1995 $150,000 6,838
George F. McKenzie, Senior Vice President -- Real 1997 $120,000 $ 49,516 285 11,582
Estate 1996 $ 32,135
Thomas L. Regnell, Vice President -- Acquisitions 1997 $130,000 $ 53,642 12,547
1996 $125,000 285 9,254
1995 $107,914
Brian J. Fitzgerald, Vice President -- Leasing 1997 $ 88,500 $ 66,689 237 10,406
1996 $ 84,743 $ 11,352 5,776
- ---------------
(1) Represents Share Grants awarded on December 16, 1997. Share Grants vest 20%
per year on the anniversary of the award date.
(2) All options reflected in the table were granted under the Washington Real
Estate Investment Trust 1991 Stock Option Plan, as amended (the "Stock
Option Plan"), except 13,333 of Mr. Cronin's 1995 options, which were
granted as non-qualified options pursuant to his Employment Agreement.
OPTION GRANTS TABLE
The following table shows the specified information with respect to options
granted to the Named Officers in 1997.
1997 OPTION GRANTS TABLE
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF SHARE
NUMBER OF PERCENTAGE PRICE APPRECIATION
SECURITIES OF TOTAL FULL 10-YEAR
UNDERLYING OPTIONS OPTION TERM
OPTIONS GRANTED TO EXERCISE EXPIRATION ------------------------
NAME GRANTED(1) EMPLOYEES PRICE DATE 5% 10%
- ----------------------------------- ---------- ---------- ------- ---------- ---------- ----------
Edmund B. Cronin, Jr. ............. 61,000 33.3% $16.125 12/16/2007 $ 618,596 $1,567,645
Larry E. Finger.................... 25,224 13.8% $16.125 12/16/2007 $ 255,795 $ 648,234
George F. McKenzie................. 11,582 6.3% $16.125 12/16/2007 $ 127,238 $ 322,447
Thomas L. Regnell.................. 12,547 6.8% $16.125 12/16/2007 $ 117,452 $ 297,647
Brian J. Fitzgerald................ 10,406 5.7% $16.125 12/16/2007 $ 105,526 $ 267,425
- ---------------
(1) Options become exercisable 50% after one year and 100% after two years.
54,799 of Mr. Cronin's options, 19,023 of Mr. Finger's options, 5,381 of Mr.
McKenzie's options, 6,346 of Mr. Regnell's and 4,205 of Mr. Fitzgerald's
options were granted as non-qualified stock options. See "VIII. Report on
Executive Compensation Program."
The dollar amounts under the 5% and 10% columns in the table above are the
result of calculations required by the SEC's rules and therefore are not
intended to forecast possible future appreciation in the price of the
11
Shares, which would benefit all shareholders. For example, in order for the
Named Officers to realize the potential values set forth in the 5% and 10%
columns in the table above, the price per Share of the Shares would have to be
approximately $26-1/4 and $41-13/16, respectively, as of the expiration date of
the option. Actual gains, if any, on option exercises and Share holdings are
dependent on the future performance of the Shares and overall stock market
conditions.
AGGREGATED OPTION EXERCISES AND OPTION VALUE TABLE
The following table shows information concerning the exercise of options
during 1997 by each of the Named Officers and the year-end value of unexercised
options.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN
OPTIONS AT DECEMBER 31, THE MONEY OPTIONS AT
SHARES 1997 DECEMBER 31, 1997
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- -------- ----------- ------------- ----------- -------------
Edmund B. Cronin, Jr.............. -- -- 49,171 9,290 $53,151 $38,125
Larry E. Finger................... -- -- 20,825 32,627 $24,818 $15,765
Thomas L. Regnell................. -- -- 11,465 17,174 $24,818 $ 7,842
George F. McKenzie................ -- -- -- 11,582 $ -- $ 7,239
Brian J. Fitzgerald............... -- -- 8,329 13,495 $ -- $ 6,504
PENSION PLAN
The Trust has a non-contributory defined benefit pension plan (the "Pension
Plan") that covers all employees who met certain requirements regarding age and
years of service before December 31, 1995. The Pension Plan was amended on
December 12, 1995 to fix benefits, participation and years of service accruals
as of December 31, 1995.
The following table is illustrative of various annual payments that would
be made pursuant to the Pension Plan and the Supplemental Benefit Plan (as
defined below) upon retirement on an individual's 65th birthday, assuming the
indicated five-year average remuneration and years of service.
PENSION PLAN TABLE
YEARS OF SERVICE
---------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------------------------------------- --------- --------- --------- --------- ---------
$125,000............................................. $ 34,440 $ 45,920 $ 57,400 $ 68,880 $ 71,176
150,000............................................. 41,565 55,420 69,275 83,130 85,901
175,000............................................. 48,690 64,920 81,150 97,380 100,626
200,000............................................. 55,815 74,420 93,025 111,630 115,351
225,000............................................. 62,940 83,920 104,900 125,880 130,076
250,000............................................. 70,065 93,420 116,775 140,130 144,801
300,000............................................. 84,315 112,420 140,525 168,630 174,251
400,000............................................. 112,815 150,420 188,025 225,630 233,151
450,000............................................. 127,065 169,420 211,775 254,130 262,601
500,000............................................. 141,315 188,420 235,525 282,630 292,051
The Pension Plan provides for retirement upon the participant's 65th
birthday, disability or attainment of age 50 with 10 or more years of service at
an actuarially reduced benefit. The Pension Plan provides both retirement
benefits and death benefits prior to retirement. Retirement benefits are based
on the participant's average salary during the five years of employment which
produces the highest average. Accrued pension benefits are fully vested after
six years of employment. Death benefits are based on the projected monthly
pension benefit.
12
VIII.
REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
The Board determined executive compensation for 1997. A Compensation
Committee (the "Compensation Committee") composed of Messrs. Cronin, Cafritz and
Snyder was responsible for making recommendations to the Board with respect to
1997 compensation decisions. Mr. Cronin, the Trust's Chief Executive Officer,
was not involved in the consideration or vote concerning his own compensation.
EXECUTIVE COMPENSATION PRINCIPLES
The Trust's Executive Compensation Program is based on guiding principles
designed to align executive compensation with Trust values and objectives,
business strategy, management initiatives and business financial performance. In
applying these principles, the Compensation Committee, based upon the
recommendations contained in the 1997 Board of Trustees and Executive
Compensation Review prepared by an independent consultant, has established a
program designed to:
(Bullet) Attract and retain key executives critical to the long-term
success of the Trust.
(Bullet) Reward executives for long-term strategic management and the
enhancement of shareholder value.
(Bullet) Support a performance-oriented environment that rewards
performance based upon exceeding Trust operating performance
goals.
EXECUTIVE COMPENSATION PROGRAM
For 1997, the Board, upon recommendation of the Compensation Committee,
adopted an Incentive Compensation Plan (the "Plan") based upon the
recommendations contained in the 1997 Board of Trustees and Executive
Compensation Review prepared by an independent consultant to align executive
compensation with Shareholder interests through salaries, cash bonuses, Share
grants and option grants tied to pre-set objective performance goals.
Under the Plan, salaries for the Trust's executive officers were set based
upon (i) a review of the compensation paid to similarly situated executive
officers employed by companies comprising the EREIT Index; (ii) the independent
consultant report described above; and (iii) a subjective evaluation of each
executive officer's performance throughout the year. See "Executive
Compensation -- Performance Graph" for additional discussion regarding the EREIT
Index.
Cash bonuses would be paid only if the Trust's Funds From Operations
("FFO") per share grew by at least 5%. If this minimum threshold was achieved, a
bonus pool would be created as follows: 10% of the first 7% of the growth in FFO
per Share times the average shares outstanding for the year, plus 20% of the
growth in FFO per Share in excess of 7% times the average shares outstanding for
the year, would go into the bonus pool. Executive officers of the Trust and
selected senior and middle management share the bonus pool pro-rata based on
their salaries.
Long-term incentives are provided through the Stock Option and Share Grant
Plans. Vice Presidents receive option grants with a value equal to 22.5% (36%
for the Chief Executive Officer and 28% for the Senior Vice Presidents) of their
annual salary plus projected annual bonus ("Cash Compensation"). The option
value is based upon the Black Scholes model calculation. This value is divided
into 22.5% of the individual's Cash Compensation (36% for the Chief Executive
Officer and 28% for the Senior Vice Presidents), and the resulting number is the
number of Shares subject to the grant of an option for such year.
Notwithstanding the forgoing, the number of options which may be granted to any
individual is limited to 100,000 in any one year. Certain members of middle
management are also eligible to receive Share grants under the Share Option
Plan. Executive officers are also eligible to receive Share grants through the
Share Grant Plan. Under the Share Grant Plan, Vice Presidents receive an award
of Shares with a market value of 2.5% of the individual's Cash Compensation (9%
for the Chief
13
Executive Officer and 7% for Senior Vice Presidents) at the date of the award.
Shares granted under the Share Grant Plan vest 20% per year over years and are
restricted from transfer for 5 years from the date of grant.
The Board believes that compensation paid to the Trust's executive officers
is comparable to that paid by the companies comprising the EREIT Index.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Cronin's 1997 compensation consisted of his salary, bonus, Share grants
and options based upon the Executive Compensation Program described above. Mr.
Cronin's salary was determined by the Board (excluding Mr. Cronin) after a
recommendation by the Compensation Committee (excluding Mr. Cronin) and was
based upon (i) a review of the compensation paid to chief executive officers
employed by companies comprising EREIT Index, (ii) the independent consultant
report described above; and (iii) a subjective evaluation of Mr. Cronin's
performance throughout the year. As described above under the Plan, specific
performance goals were not established for Mr. Cronin during 1997 as relates to
salary but, as described above, were established for bonus, Share grant and
option purposes. In general, the EREIT Index comparison and the subjective
evaluation were weighted equally by the Board when making the decision to set
Mr. Cronin's 1997 salary at $395,000. Compensation paid to Mr. Cronin is
comparable to compensation paid to the chief executive officers of the companies
comprising the EREIT Index.
THE BOARD OF TRUSTEES
Arthur A. Birney
William N. Cafritz
Edmund B. Cronin, Jr.
John M. Derrick, Jr.
Benjamin H. Dorsey
David M. Osnos
Stanley P. Snyder
14
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total shareholder
return on the Shares with the cumulative total return of companies making up the
Standard & Poor's 500 Stock Index as provided by Standard & Poor's Corporation
and the Equity Real Estate Investment Trust Index (excluding Health Care REITs)
(the "EREIT Index") as provided by the National Association of Real Estate
Investment Trusts. The EREIT Index is a compilation of 176 companies as of
December 31, 1997 which qualify as real estate investment trusts and own real
property and/or equity interests in real property and has been weighted
according to each individual company's stock market capitalization. The EREIT
Index companies are traded on the New York and American Stock Exchanges and on
the Nasdaq National Market. The graph assumes an initial investment of $100 on
December 31, 1992 and the reinvestment of all dividends paid thereafter with
respect to such $100 investment.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE-PLOT POINTS BELOW]
$300
$250
$200
$150
$100
$50 1992 1993 1994 1995 1996 1997
1992 1993 1994 1995 1996 1997
----- ----- ----- ----- ----- -----
WRIT.............................................................. $100 $106 $88 $91 $107 $109
EREIT............................................................. 100 120 123 142 192 231
S&P............................................................... 100 110 111 153 188 251
IX.
OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP served as the Trust's independent public
accountants for 1997. The Board has appointed Arthur Andersen LLP as the Trust's
independent public accountants for 1998. Representatives of Arthur Andersen LLP
are expected to attend the Annual Meeting, will be provided with an opportunity
to make a statement, should they desire to do so, and will be available to
respond to appropriate questions from the shareholders.
15
SECURITIES REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Trustees and certain officers to file reports of changes in stock ownership with
the SEC and with the American Stock Exchange, with copies to the Trust. Based
solely on a review of such copies, the Trust believes that all such filing
requirements have been met for the year ended December 31, 1997.
EXPENSES AND ADMINISTRATION
The cost of this solicitation of proxies will be borne by the Trust. In
addition to the use of the mails, some of the officers and regular employees of
the Trust may solicit proxies by telephone or telecopier, will request brokerage
houses and other custodians, nominees and fiduciaries to forward soliciting
material to the beneficial owners of Shares held of record by such persons and
may also verify the accuracy of marked proxies by contacting record and
beneficial owners of Shares. The Trust will reimburse such persons for expenses
incurred in forwarding such soliciting material. In addition, the Trust has
engaged the firm of McKenzie Partners to assist in the solicitation of proxies.
Pursuant to this engagement, the Trust will pay McKenzie Partners a fee not to
exceed $12,500, will reimburse their reasonable out of pocket expenses and
indemnify them against certain liabilities under the securities laws.
1999 ANNUAL MEETING
Shareholders may present proposals to be considered for inclusion in the
Proxy Statement relating to the 1999 Annual Meeting, provided they are received
by the Trust no later than December 24, 1998 and are in compliance with
applicable laws and SEC regulations.
/s/ Benjamin H. Dorsey
_______________________
Benjamin H. Dorsey
SECRETARY
May 5, 1998.
16
EXHIBIT A
PROPOSED AMENDMENTS TO THE DECLARATION OF TRUST
WITH RESPECT TO PREFERRED SHARES
All proposed additions to current Sections are marked in bold text and
underlined. The proposed additions to Section 10.1 also include the proposed
changes with respect to (i) authorizing the Trustees to make amendments to the
Declaration of Trust to preserve the Trust's status as a real estate investment
trust and (ii) revising the super-majority voting provision.
Section 4.1 is proposed to be entirely restated to read as follows:
Section 4.1 The beneficial interest of the Trust shall be divided into
shares of beneficial interest (the "shares"). The Trust has authority to issue
100,000,000 common shares of beneficial interest, par value $.01 per share
("Common Shares"), and 500,000 preferred shares of beneficial interest, par
value $.01 per share ("Preferred Shares").
(a) Common Shares. Subject to the provisions of Article 5, each Common
Share shall entitle the holder thereof to one vote on each matter upon
which holders of Common Shares are entitled to vote. The Board of Trustees
may reclassify any unissued Common Shares from time to time in one or more
classes or series of shares.
(b) Preferred Shares. The Board of Trustees may classify any unissued
Preferred Shares and reclassify any previously classified but unissued
Preferred Shares of any series from time to time, in one or more series of
shares.
(c) Classified or Reclassified Shares. Prior to issuance of classified
or reclassified shares of any class or series, the Board of Trustees by
resolution shall (i) designate that class or series to distinguish it from
all other classes and series of shares; (ii) specify the number of shares
to be included in the class or series; (iii) set, subject to the provisions
of this Article 4, Article 5 and the express terms of any class or series
of shares outstanding at the time, the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms and conditions of redemption for
each class or series; and (iv) cause the Trust to file articles
supplementary with the State Department of Assessments and Taxation of
Maryland (the "SDAT"). Any of the terms of any class or series of shares
set pursuant to clause (iii) of this Section 4.1(c) may be made dependent
upon facts ascertainable outside the Declaration of Trust (including the
occurrence of any event, including a determination or action by the Trust
or any other person or body) and may vary among holders thereof, provided
that the manner in which such facts or variations shall operate upon the
terms of such class or series of shares is clearly and expressly set forth
in the articles supplementary filed with the SDAT.
(d) Authorization by Board of Share Issuance. The Board of Trustees
may authorize the issuance from time to time of shares of any class or
series, whether now or hereafter authorized, or securities or rights
convertible into shares of any class or series, whether now or hereafter
authorized, for such consideration (whether in cash, property, past or
future services, obligation for future payment or otherwise) as the Board
of Trustees may deem advisable (or without consideration in the case of a
share split or share dividend), subject to such restrictions or
limitations, if any, as may be set forth in the Declaration of Trust or the
Bylaws of the Trust.
(e) Dividends and Distributions. The Board of Trustees may from time
to time authorize and declare to shareholders such dividends or
distributions, in cash or other assets of the Trust or in securities of the
Trust or from any other source as the Board of Trustees in its discretion
shall determine. The Board of Trustees shall endeavor to declare and pay
such dividends and distributions as shall be necessary for the Trust to
qualify as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"); however, shareholders shall have no right
to any dividend or distribution unless and until authorized and declared by
the Board. The exercise of the powers and rights of the Board of Trustees
pursuant to this Section 4.1(e) shall be subject to the provisions of any
class or series of shares at the time outstanding.
17
Notwithstanding any other provision in the Declaration of Trust, no
determination shall be made by the Board of Trustees nor shall any
transaction be entered into by the Trust which would cause any shares or
other beneficial interest in the Trust not to constitute "transferable
shares" or "transferable certificates of beneficial interest" under Section
856(a)(2) of the Code or which would cause any distribution to constitute a
preferential dividend as described in Section 562(c) of the Code.
(f) VOTING RIGHTS OF PREFERRED SHARES. NOTWITHSTANDING ANY OTHER
PROVISION OF THE DECLARATION OF TRUST, NO DESIGNATION PURSUANT TO SECTION
4.1(c) SHALL SPECIFY THAT A CLASS OR SERIES OF PREFERRED SHARES SHALL HAVE
VOTING RIGHTS GREATER THAN (i) THE RIGHT TO ELECT A SPECIFIED NUMBER OF
TRUSTEES, CONSTITUTING LESS THAN A MAJORITY OF THE TRUSTEES, FOLLOWING THE
TRUST'S FAILURE TO PAY REQUIRED DIVIDENDS ON SUCH PREFERRED SHARES FOR A
SPECIFIED NUMBER OF QUARTERLY PERIODS, AND TO REMOVE SUCH TRUSTEES, (ii)
THE RIGHT TO APPROVE ANY TRANSACTION RESULTING IN THE ISSUANCE BY THE TRUST
OF ANY CLASS OR SERIES OF PREFERRED SHARES RANKING SENIOR TO SUCH PREFERRED
SHARES WITH RESPECT TO THE PAYMENT OF DIVIDENDS OR DISTRIBUTIONS OR THE
DISTRIBUTION OF ASSETS ON LIQUIDATION, (iii) THE RIGHT TO APPROVE ANY
AMENDMENT TO THE DECLARATION OF TRUST, INCLUDING ARTICLES SUPPLEMENTARY, IF
SUCH AMENDMENT WOULD MATERIALLY AND ADVERSELY ALTER THE RIGHTS, PREFERENCES
OR PRIVILEGES OF SUCH PREFERRED SHARES, (iv) THE RIGHT TO APPROVE ANY
MERGER IN WHICH THE TRUST IS NOT THE SURVIVING ENTITY, UNLESS THE TERMS OF
SUCH MERGER PROVIDE THAT (A) THE HOLDERS OF SUCH PREFERRED SHARES SHALL
RECEIVE EQUITY SECURITIES OF THE SURVIVING ENTITY WITH PREFERENCES, RIGHTS
AND PRIVILEGES SUBSTANTIALLY EQUIVALENT TO THE PREFERENCES, RIGHTS AND
PRIVILEGES OF SUCH PREFERRED SHARES ("NEW PREFERRED SHARES") AND (B) UPON
THE COMPLETION OF SUCH MERGER THERE SHALL NOT BE OUTSTANDING EQUITY
SECURITIES OF THE SURVIVING ENTITY RANKING AS TO DISTRIBUTION RIGHTS AND
LIQUIDATION PREFERENCES SENIOR TO SUCH NEW PREFERRED SHARES (OTHER THAN
SECURITIES ISSUED FOR SECURITIES OF THE TRUST OUTSTANDING PRIOR TO SUCH
MERGER WHICH WERE SENIOR AS TO DISTRIBUTION RIGHTS AND LIQUIDATION
PREFERENCES TO SUCH PREFERRED SHARES), (v) THE RIGHT TO VOTE ON THE
TERMINATION OF THE TRUST AND (vi) SUCH OTHER VOTING RIGHTS AS ARE EXPRESSLY
REQUIRED BY LAW.
(g) Declaration and Bylaws. All shareholders are subject to the
provisions of the Declaration of Trust and the Bylaws of the Trust.
(h) Divisions and Combinations of Shares. Subject to an express
provision to the contrary in the terms of any class or series of beneficial
interest hereafter authorized, the Board of Trustees shall have the power
to divide or combine the outstanding shares of any class or series of
beneficial interest, without a vote of shareholders.
(i) Increase in Shares. The Board of Trustees may amend the
Declaration of Trust from time to time to increase or decrease the
aggregate number of shares or the number of shares of any class that the
Trust has authority to issue, without a vote of shareholders.
(j) References to Shares and Shareholders. The words "shares" and
"shareholders" wherever used in this Declaration of Trust, except where the
context otherwise requires, shall refer to both the Common Shares and the
Preferred Shares and to the holders of shares of both classes,
respectively.
Section 5.8 is proposed to be amended to read as follows:
Section 5.8. If any person, corporation, partnership, trust or any other
legal entity is or becomes at any time the beneficial owner, directly or
indirectly, of more than ten percent (10%) IN VALUE of the outstanding shares,
or if the tax status of the Trust under Public Law 86-779 or any other tax
statute or regulation is or can be endangered by the purchase or retention of
shares by any person, corporation, partnership, trust or any other legal entity,
the Trustees may, in their sole 23 discretion, refuse to sell, transfer or
deliver shares to such person or entity, or, may repurchase any or all shares
held by such person or entity (i) at cost or at the last sale price of a share
as of the date immediately preceding the day on which the demand for repurchase
is mailed, whichever price is higher or (ii) AT SUCH OTHER AMOUNT AS IS SET
FORTH IN THE TERMS OF SUCH CLASS OR SERIES OF SHARES SO CALLED FOR REPURCHASE.
After the mailing of the demand for repurchase, the shares may be cancelled upon
the records of the Trust by the order of the Trustees and the Trust shall pay
promptly for such shares as above determined.
18
Section 5.10 is proposed to be amended to read as follows:
Section 5.10. If the Trustees shall at any time and in good faith be of the
opinion that direct or indirect ownership of shares of this Trust has or may
become concentrated to an extent which would cause any rent to be paid to this
Trust by a "sister corporation," if one existed, to fail to qualify or be
disqualified as rent from real property by virtue of Section 856(d)(2)(B) of the
Code, or similar provisions of successor statutes, pertaining to the
qualification of this Trust as a real estate investment trust, trustees shall
have the power (1) by lot or other means deemed equitable by them to call for
purchase from any shareholder of this Trust such number of shares as shall be
sufficient in the opinion of the Trustees to maintain or bring the direct or
indirect ownership of shares of this Trust into conformity with the requirements
of said Section 856(d)(2)(B) pertaining to this Trust, and (2) to refuse to
register the transfer of shares to any person whose acquisition of such shares
would, in the opinion of the Trustees, result in this Trust being unable to
conform to the requirements of said Section 856(d)(2)(B). For purposes of this
Section, the term "sister corporation" means a corporation, the shares of which
are owned by exactly or substantially the same persons and in exactly or
substantially the same numbers as are the shares of this Trust. This Section
shall apply even if a "sister corporation" does not exist (1) at the time the
Trustees determine that the ownership of shares of this Trust has or may become
so concentrated, or (2) at the time the Trustees call shares for purchase or
refuse to register the transfer of shares.
The purchase price for the shares purchased pursuant hereto shall be equal
to (i) the fair market value of such shares as reflected in the closing price
for such shares on the principal stock exchange on which such shares are listed
or, if such shares are not listed, then the last bid for the shares, as of the
close of business on the date fixed by the Trustees for such purchase or, if no
such quotation is available, as shall be determined in good faith by the
Trustees OR (II) SUCH OTHER AMOUNT AS IS SET FORTH IN THE TERMS OF SUCH CLASS OR
SERIES OF SHARES SO CALLED FOR PURCHASE. From and after the date fixed for
purchase by the Trustees, the holder of any shares so called for purchase shall
cease to be entitled to dividends, voting rights and other benefits with respect
to such shares, except the right to payment of the purchase price fixed as
aforesaid.
In order to further assure that ownership of the shares does not become so
concentrated, any transfer of shares that would prevent amounts received by this
Trust from a "sister corporation," if one existed, from qualifying as "rents
from real property" as defined in Section 856(d) of the Code, by virtue of the
application of Section 856(d)(2)(B) of the Code, shall be void ab initio and the
intended transferee of such shares shall be deemed never to have had an interest
therein. If the 24 foregoing provision is determined to be void or invalid by
virtue of any legal decision, statute, rule or regulation, then the transferee
of such shares shall be deemed to have acted as agent on behalf of this Trust in
acquiring such shares and to hold such shares on behalf of this Trust. For
purposes of determining whether this Trust is in compliance with Section
856(d)(2)(B), Section 856(d)(5) of the Code, or similar provisions of successor
statutes shall be applied. The shareholders of this Trust shall, upon demand,
disclose to the Trustees in writing such information with respect to their
direct and indirect ownership of the shares of this Trust as the Trustees deem
necessary to determine whether this Trust satisfies the provisions of Section
856(a)(5) and (6) and Section 856(d) of the Code or the regulations thereunder
as the same shall from time to time be amended, or to comply with the
requirements of any other taxing authority.
Section 7.3 is proposed to be entirely restated to read as follows:
SECTION 7.3. SUBJECT TO SECTION 4.1(f) AND THE PROVISIONS OF ANY CLASS OR
SERIES OF SHARES THEN OUTSTANDING, THE SHAREHOLDERS SHALL BE ENTITLED TO VOTE
ONLY ON THE FOLLOWING MATTERS: (a) ELECTION OR REMOVAL OF TRUSTEES AS PROVIDED
IN SECTIONS 8.1 OR 10.2; (b) AMENDMENT OF THIS DECLARATION OF TRUST AS PROVIDED
IN SECTION 10.1; (c) TERMINATION OF THE TRUST AS PROVIDED IN SECTION 10.1; (d)
ANY MERGER AND (e) ANY OTHER MATTER ON WHICH, BY LAW, THE HOLDERS OF THE SHARES
ARE REQUIRED TO VOTE. EXCEPT WITH RESPECT TO THE FOREGOING MATTERS, NO ACTION
TAKEN BY THE SHAREHOLDERS AT ANY MEETING SHALL IN ANY WAY BIND THE TRUSTEES.
Section 7.5 is proposed to be amended to read as follows:
Section 7.5. Except as expressly set forth herein OR AS EXPRESSLY PROVIDED
BY ANY CLASS OR SERIES OF SHARES THEN OUTSTANDING, any matter requiring a vote
of shareholders shall be approved by a vote of the holders of a majority of
shares OF EACH CLASS OR SERIES ENTITLED TO VOTE THEREON VOTING AS SEPARATE
CLASSES OR SERIES. At any
19
meeting of the shareholders, any shareholder of shares entitled to vote thereat
may vote by proxy. Only shareholders of record of such shares shall be entitled
to vote and each full share shall be entitled to one vote UNLESS OTHERWISE
EXPRESSLY PROVIDED BY ANY CLASS OR SERIES OF SHARES THEN OUTSTANDING. Fractional
shares shall not be entitled to any vote UNLESS OTHERWISE EXPRESSLY PROVIDED BY
ANY CLASS OR SERIES OF SHARES THEN OUTSTANDING. When any such share is held
jointly by several persons, any one of them may vote at any meeting in person or
by proxy in respect of such share, but if more than one of them shall be present
at such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such share. If the holder of any such share is a minor or a person of
unsound mind, and subject to guardianship or to the legal control of any other
person as regards the charge or management of such share, he may vote by his
guardian or such other person appointed or having such control, and such vote
may be given in person or by proxy.
The first sentence of Section 8.1 is proposed to be amended to read as follows:
Section 8.1. The number of Trustees shall not be less than three (3) nor
more than seven (7), AND SUCH TRUSTEES SHALL BE ELECTED BY THE HOLDERS OF THE
COMMON SHARES. FURTHER, THE HOLDERS OF PREFERRED SHARES MAY HAVE THE RIGHT TO
ELECT SUCH NUMBER OF ADDITIONAL TRUSTEES, UP TO TWO (2), BUT CONSTITUTING LESS
THAN A MAJORITY OF THE TRUSTEES, FOLLOWING THE TRUST'S FAILURE TO PAY REQUIRED
DIVIDENDS ON SUCH PREFERRED SHARES FOR A SPECIFIED NUMBER OF QUARTERLY PERIODS,
THE OTHER TERMS OF SUCH RIGHT, INCLUDING THE TERM OF OFFICE OF ANY SUCH
ADDITIONAL TRUSTEES, TO BE AS PROVIDED BY THE ARTICLES SUPPLEMENTARY
ESTABLISHING ANY SUCH CLASS OR SERIES OF PREFERRED SHARES.
The first sentence of Section 8.4 is proposed to be amended to read as follows:
Section 8.4. In case a vacancy in the number of Trustees shall occur
through death, resignation, or removal (unless the vacancy occurring through
removal has already been filled by the shareholders acting pursuant to the
provisions of Section 10.2 hereof), the remaining Trustees or Trustee OF SUCH
CLASS (IE., THE TRUSTEES ELECTED BY THE HOLDERS OF COMMON SHARES OR THE HOLDERS
OF PREFERRED SHARES, RESPECTIVELY) may fill such vacancy by appointing by an
instrument in writing signed by a majority of SUCH Trustees such person as they
or he in their absolute discretion shall see fit, but no such appointment shall
become effective unless and until the person so appointed shall have delivered
to the President of the Trust an instrument in writing, signed by such person
acknowledging and agreeing to be bound by this Declaration of Trust.
Section 9.1 is proposed to be amended to read as follows:
Section 9.1. The Trustees shall from time to time distribute ratably among
the shareholders OF ANY CLASS OR SERIES OF SHARES such proportions of the net
profits, surplus (including paid-in surplus), capital, or assets held by the
Trustees as they may deem proper and such distribution may be made in cash or
property (including without limitation any type of obligations of the Trust or
any assets thereof); and the Trustees may distribute ratably among the
shareholders OF ANY CLASS OR SERIES OF SHARES additional shares issuable
hereunder in such manner and on such terms as the Trustees may deem proper; but
the amount of all distributions and the time of declaration and payment thereof
shall be wholly in the discretion of the Trustees (OR AS PROVIDED BY ANY CLASS
OR SERIES OF SHARES THEN OUTSTANDING), as shall also the determination of what
constitutes net profits or surplus, and such distributions may be made even
though the paid-in capital of this Trust at the time of any distribution exceeds
the net assets of the Trust based either on the market value (as determined by
the Trustees under Section 2.16 of Article 2 hereinabove) or the book value; and
such distribution may be among the shareholders of record at such other date
(not more than twenty (20) days prior to payment of such distribution) as the
Trustees shall determine.
Section 10.1 is proposed to be amended to read as follows:
Section 10.1. The provisions of this Declaration of Trust may be amended by
a vote of the holders of a majority of shares OF EACH CLASS OR SERIES ENTITLED
TO VOTE THEREON, VOTING AS SEPARATE CLASSES OR SERIES, OR BY A VOTE OF
TWO-THIRDS OF THE TRUSTEES IN ANY MANNER NECESSARY TO ENABLE THE TRUST TO
CONTINUE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST UNDER THE CODE OR TITLE 8
OF THE CORPORATION AND ASSOCIATIONS ARTICLE OF THE
20
ANNOTATED CODE OF MARYLAND. The Trust may be terminated by the vote of the
Trustees with the approval of the holders of a majority of shares OF EACH CLASS
OR SERIES ENTITLED TO VOTE THEREON, VOTING AS SEPARATE CLASSES OR SERIES.
Notwithstanding the foregoing (and notwithstanding the fact that some lesser
percentage may be permitted by law), the affirmative vote of the holders of 70%
or more of the outstanding shares of the Trust entitled to vote generally in the
election of Trustees shall be required to amend or repeal Sections 5.8, 5.10,
8.1, 8.2, this SENTENCE OF Section 10.1, or Article 15 of the Declaration of
Trust.
Section 10.2 is proposed to be amended to read as follows:
Section 10.2. Any Trustee may be removed either (1) at any meeting of
shareholders called for the purpose, by the affirmative vote of not less than
two-thirds in interest of the shares then outstanding hereunder and entitled to
vote IN THE ELECTION OF SUCH CLASS OF TRUSTEES; or (2) by the unanimous vote of
all other Trustees of such class with the approval of the holders of a majority
of the shares ENTITLED TO VOTE IN THE ELECTION OF SUCH CLASS OF TRUSTEES.
21
FRONT OF PROXY CARD
FOR WITHHELD
1. Election of three Trustees Nominees (for the terms stated in the
For, Except vote withheld from the following Proxy Statement):
Nominee: Edmund B. Cronin, Jr.
David M. Osnos
John P. McDaniel
2. Amendments of Declaration of Trust to authorize the issuance of Preferred
Shares.
3. Amendment of Declaration of Trust to authorize the Trustees to adopt future
changes to the Declaration of Trust to preserve REIT status.
4. Amendments of Declaration of Trust to modify certain investment policies.
5. Amendment of Declaration of Trust to revise the super-majority voting
provision.
6. Such other matters as may come before the meeting, hereby revoking any proxy
or proxies heretofore given.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE NOMINATED
TRUSTEES. PROXIES WILL BE VOTED AS DIRECTED OR SPECIFIED.
PLEASE vote at once. It is important.
Please mark your choice in black ink.
SIGNATURE __________ DATE ____________ SIGNATURE __________ DATE ____________
NOTE: SIGNATURE(S) MUST CORRESPOND EXACTLY WITH NAME(S) AS IMPRINTED HEREON.
When signing as attorney, executor, administrator, trustee or guardian,
please give the full title as such and if the signer is a corporation,
please sign with the full corporate name by a duly authorized officer. If
stock is held in the name of more than one person, all named holders must
sign the proxy.
REAR OF PROXY CARD:
WASHINGTON REAL ESTATE INVESTMENT TRUST
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS JUNE 24, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of Washington Real Estate Investment Trust
appoints Benjamin H. Dorsey and Edmund B. Cronin, Jr., and each of them, with
full power of substitution, as proxy to vote all shares of the undersigned in
Washington Real Estate Investment Trust at the Annual Meeting of Shareholders to
be held on June 24, 1998, and at any adjournment thereof, with like effect and
as if the undersigned were personally present and voting, upon the following
matters:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)