SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 under Rule 14a-12
METROPOLIS REALTY TRUST, INC.
................................................................................
(Name of Registrant as Specified In Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the 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)(1) 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 written 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:
................................................................................
<PAGE>
METROPOLIS REALTY TRUST, INC.
c/o Victor Capital Group, L.P.
410 Park Avenue
14th Floor
New York, New York 10022
October 23, 2000
Dear Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Metropolis Realty Trust, Inc., to be held at 10:00 a.m., local
time, on Monday, November 20, 2000, at the law offices of Akin, Gump, Strauss,
Hauer & Feld, L.L.P., 590 Madison Avenue, Suite 2200, New York, New York. The
attached Notice of Annual Meeting and Proxy Statement describe the matters to be
acted upon at the meeting. I urge you to review them carefully.
It is important that your shares be represented and voted at the
meeting. Whether or not you personally plan to attend the meeting, please take a
few moments now to sign, date and return your proxy in the enclosed postage-paid
envelope. This will not limit your right to vote in person should you wish to
attend the meeting. Regardless of the number of shares you own, your presence by
proxy is important to establish a quorum, and your vote is important for proper
corporate governance.
Thank you for your interest in Metropolis Realty Trust, Inc.
Sincerely,
/s/ William L. Mack
--------------------------------
William L. Mack
Chairman of the Board
<PAGE>
METROPOLIS REALTY TRUST, INC.
c/o Victor Capital Group, L.P.
410 Park Avenue
14th Floor
New York, New York 10022
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 2000
--------------------
To the Stockholders of
Metropolis Realty Trust, Inc.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders
(the "Annual Meeting") of Metropolis Realty Trust, Inc., a Maryland corporation
(the "Company"), will be held on Monday, November 20, 2000 at 10:00 a.m. local
time at the law offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590
Madison Avenue, Suite 2200, New York, New York, for the following purposes:
1. To consider and vote upon a proposal to elect two Class III
directors and two Class IV directors of the Company to serve on
the Board of Directors until the Annual Meeting of Stockholders
in 2001 and until their successors are duly elected and qualify;
and
2. To consider and vote upon a proposal to ratify the selection of
Deloitte & Touche L.L.P. as the independent auditors of the
Company for the fiscal year ending December 31, 2000; and
3. To transact such other business that may properly be brought
before the Annual Meeting and at any adjournments or
postponements thereof.
Any action may be taken on the foregoing matters at the Annual Meeting
on the date specified above, or on any date or dates to which, by original or
later adjournment, the Annual Meeting may be adjourned, or to which the Annual
Meeting may be postponed.
Only stockholders of the Company of record as of the close of business
on October 19, 2000 will be entitled to notice of and to vote at the Annual
Meeting and at any adjournment or postponement thereof.
You are requested to complete and sign the enclosed form of proxy,
which is being solicited by the Board of Directors, and to mail it promptly in
the enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person even if they have previously delivered a signed proxy.
By Order of the Board of Directors,
/s/ John R.S. Jacobsson
-----------------------------------
John R.S. Jacobsson
Secretary
New York, New York
October 23, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
METROPOLIS REALTY TRUST, INC.
c/o Victor Capital Group, L.P.
410 Park Avenue
14th Floor
New York, New York 10022
-------------------
PROXY STATEMENT
--------------------
FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 2000
October 25, 2000
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Metropolis Realty Trust, Inc., a
Maryland corporation (the "Company"), for use at the 2000 Annual Meeting of
Stockholders of the Company to be held on Monday, November 20, 2000, at 10:00
a.m. local time at the law offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
and at any adjournment or postponement thereof (the "Annual Meeting"). At the
Annual Meeting, stockholders will be asked to consider and vote upon proposals
(1) to elect two Class III directors and two Class IV directors of the Company
to serve on the Board of Directors of the Company, (2) to ratify the selection
of Deloitte & Touche L.L.P. as the independent auditors of the Company for the
fiscal year ending December 31, 2000, and (3) to act upon any other matter
properly brought before the Annual Meeting or any adjournments or postponements
thereof.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about October 25, 2000.
The Board of Directors has fixed the close of business on October 19, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting (the "Record Date"). Only holders of record of the
Company's common stock, $10.00 par value per share (the "Common Stock"), at the
close of business on the Record Date will be entitled to notice of and to vote
at the Annual Meeting. As of the Record Date, there were 12,997,646 shares of
Common Stock outstanding and entitled to vote at the Annual Meeting, of which
8,061,586 shares were shares of Class A Common Stock and 4,936,060 shares were
shares of Class B Common Stock. Holders of Common Stock outstanding as of the
close of business on the Record Date will be entitled to one vote for each share
held by them. Holders of record of the Company's Class A Common Stock and Class
B Common Stock at the close of business on the Record Date will vote as a single
class.
The presence at the Annual Meeting, in person or by proxy, of holders
of at least a majority of the total number of outstanding shares of Common Stock
entitled to vote is necessary to constitute a quorum for the transaction of
business at the Annual Meeting. Abstentions and broker non-votes will be counted
as present in determining whether a quorum exists. The affirmative vote of a
plurality of all of the votes cast at the Annual Meeting, provided that a quorum
is present, is required for the election of directors. For purposes of the
election of directors, abstentions and broker non-votes will not be counted as
votes cast and will have no effect on the result of the vote. The affirmative
vote of a majority of all of the votes cast at the Annual Meeting (provided that
a quorum is present) is necessary to approve the proposal to ratify the
selection of the Company's auditors and to approve any other matters properly
presented at the Annual Meeting. For purposes of the vote on the ratification of
the selection of the Company's auditors, abstentions and broker non-votes will
not be counted as votes cast and will have no effect on the result of the vote.
Under Maryland law, abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum at the Annual Meeting.
<PAGE>
Stockholders of the Company are requested to complete, sign, date and
promptly return the accompanying Proxy Card in the enclosed postage-prepaid
envelope. Shares of Common Stock represented by a properly executed proxy
received prior to the vote at the Annual Meeting and not revoked will be voted
at the Annual Meeting as directed on the proxy. If a properly executed proxy is
submitted and no instructions are given, the proxy will be voted FOR the
election of the nominees for directors of the Company named in this Proxy
Statement and FOR ratification of the Board of Directors' selection of Deloitte
& Touche L.L.P. as the Company's independent auditors for the fiscal year ending
December 31, 2000. It is not anticipated that any matters other than those set
forth in this Proxy Statement will be presented at the Annual Meeting. If any
other matter is presented, proxies will be voted in accordance with the
discretion of the proxy holders.
A stockholder of record may revoke a proxy at any time before it has
been exercised by filing a written revocation with the Secretary of the Company
at the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person, whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy. Any
instrument of revocation should be sent to Metropolis Realty Trust, Inc., c/o
Victor Capital Group, L.P., 410 Park Avenue, 14th Floor, New York, New York
10022, Attention: Secretary.
The Company's 1999 Annual Report on Form 10-K (the "Annual Report")
and the Company's Quarterly Report on Form 10-Q for the quarter ending June 30,
2000 (the "Quarterly Report") are being mailed to stockholders concurrently with
this Proxy Statement. The Annual Report and the Quarterly Report, however, are
not part of the proxy solicitation material. Additional copies of the Annual
Report for the year ended December 31, 1999 and the Quarterly Report may be
obtained, without charge, by writing to the Company at the address above.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of the Company consists of nine directors who
are divided into five classes. The initial terms of the first, second and third
classes expired in 1997, 1998 and 1999, respectively. The initial terms of the
fourth and fifth classes will expire in 2000 and 2001, respectively. As the term
of each class expires, directors in that class are elected by the stockholders
of the Company for a term of years that will expire in 2001, after which time
all directors will be elected for one-year terms. Since no election of directors
occurred in 1999, the Class III directors, John R. S. Jacobsson and David A.
Strumwasser, continue to serve as directors of the Company pursuant to Section
2-405(a) of the Maryland General Corporation Law, which states that if directors
are not elected at the designated time, the incumbent directors automatically
hold over until their successors are elected and qualify.
At the Annual Meeting, four directors will be elected to serve on the
Board of Directors until the Annual Meeting of Stockholders in 2001 and until
their successors are duly elected and qualify or until their earlier death,
resignation or removal. The Board of Directors has nominated William L. Mack,
John R. S. Jacobsson, David A. Strumwasser and Ralph F. Rosenberg to serve as
the directors of the Company, to be voted on by all Class A and Class B
stockholders of record as of the Record Date. Messrs. Jacobsson and Strumwasser
are currently serving as Class III directors and Messrs. Mack and Rosenberg are
currently serving as Class IV directors of the Company. The Board of Directors
expects that Messrs. Mack, Jacobsson, Strumwasser and Rosenberg will all serve,
if elected, as directors of the Company. However, if any of Messrs. Mack,
Jacobsson, Strumwasser or Rosenberg is unable to accept election, the proxies
will be voted for the election of such other person or persons as the Board of
Directors may recommend.
The following discussion sets forth the names, ages and business
histories of the nominees for director and the five directors whose terms will
continue after the Annual Meeting, and the year of the annual meeting of
stockholders at which each director's term will expire (assuming, in the case of
the nominees, that they are elected). All of the following directors were
initially elected or appointed as directors in 1996, with the exception of John
R. S. Jacobsson, who was elected in October 1997 by the holders of Class B
Common Stock.
2
<PAGE>
Information Regarding Nominees and Directors
Nominees for Election at the 2000 Annual Meeting (Term to Expire in 2001)
William L. Mack (age 60) has served as the Chairman of the Board of
Directors of the Company since 1996. Mr. Mack is the managing partner of Apollo
Real Estate Advisors, L.P. ("AREA"), the manager of four opportunistic real
estate investment funds which he co-founded in 1993, and serves as President of
its corporate general partner. Beginning in 1969, Mr. Mack served as Managing
Partner of the Mack Company, where he oversaw the dynamic growth of the Mack
Company's office, industrial, retail and hotel facilities. Mr. Mack has served
as the Chairman of Mack-Cali Realty Corporation since the 1997 merger of the
Mack Company's office portfolio into Mack-Cali. Mr. Mack is also a director of
The Bear Stearns Companies, Inc., an investment banking firm, Vail Resorts,
Inc., an owner and operator of Colorado ski resorts, and Wyndham International,
Inc., an owner and operator of a national chain of hotel properties. Mr. Mack
attended the Wharton School of Business and Finance at the University of
Pennsylvania and received a B.S. degree in business administration, finance and
real estate from New York University.
John R. S. Jacobsson (age 32) is a partner of AREA, with which he has
been associated since its founding in 1993. Mr. Jacobsson is responsible for
investments, investment management and capital raising at AREA and co-heads
AREA's Japanese investment program. Prior to 1993, Mr. Jacobsson was associated
with the acquisitions group of Trammell Crow Ventures, a real estate investment
firm. Mr. Jacobsson is a director of Koger Equity, Inc., a real estate
investment trust that owns and operates office properties, Roland International
Corporation, a land development company, and Oasis Car Wash, Inc., an owner and
operator of car washes. Mr. Jacobsson received a B.A. from Harvard College in
1990.
David A. Strumwasser (age 49) is a principal of Whippoorwill
Associates, Incorporated ("Whippoorwill"), an investment management firm, and
has served as a Managing Director and General Counsel of Whippoorwill since
1993. From 1984 to 1993, Mr. Strumwasser was a Partner and co-head of the
Bankruptcy and Reorganization Practice at the New York law firm of Berlack,
Israels & Liberman LLP. Prior to that, he practiced bankruptcy law at Anderson
Kill & Olick, LLP, from 1981 to 1984 and at Weil, Gotshal & Manges LLP from 1976
to 1979. From 1979 to 1981, Mr. Strumwasser was an Assistant Vice President at
Citicorp Industrial Credit, Inc. Mr. Strumwasser serves on the Board of
Directors of Barneys New York, Inc. Mr. Strumwasser received a B.A. in political
science from the State University of New York at Buffalo in 1973 and a J.D. from
Boston College Law School in 1976.
Ralph F. Rosenberg (age 35) has been a Managing Director in the
Merchant Banking Division at Goldman, Sachs & Co. ("Goldman, Sachs") since
November of 1998 and prior to that he was a Vice President in the Investment
Banking Division at Goldman, Sachs since 1994. Mr. Rosenberg joined the Real
Estate Department of Goldman, Sachs as an Associate in 1990, transferred to
their Real Estate Principal Investment Area at its inception in 1992 and became
a Vice President in 1994. Mr. Rosenberg serves on the Whitehall Investment
Committee and the Goldman Sachs Emerging Market Real Estate Investment
Committee. Additionally, he serves on the Board of Directors of Rockefeller
Center Properties, Inc. He received a B.A. from Brown University in 1986 and an
M.B.A. from the Stanford Graduate School of Business in 1990.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR William L.
Mack, John R.S. Jacobsson, David A. Strumwasser and Ralph F. Rosenberg as
directors of the Company to hold office until the Annual Meeting of Stockholders
in 2001 and until their successors are duly elected and qualify. Proxies
received by the Board of Directors will be so voted unless stockholders specify
a contrary choice in their proxy.
3
<PAGE>
Continuing Directors (Term to Expire in 2001)
Lee S. Neibart (age 50) is a partner of AREA, with which he has been
associated since 1993, and directs portfolio and asset management. From 1979 to
1993, he was Executive Vice President and Chief Operating Officer of the Robert
Martin Company, a private real estate development and management firm. Mr.
Neibart is a director of Atlantic Gulf Communities Corp., a land development
company, Koger Equity, Inc., NextHealth, Inc., an owner and operator of spa and
wellness facilities, Roland International Corporation, a land development
company, Wyndham International, Inc. and Meadowbrook Golf Group, Inc., an owner
and operator of golf courses. Mr. Neibart received a BA from the University of
Wisconsin and an MBA from New York University.
Bruce H. Spector (age 58) is a partner of AREA, with which he has been
associated since 1993 and has been responsible for advising on matters of
reorganization strategy. From 1967 to 1992, Mr. Spector was a member of the law
firm of Stutman, Treister and Glatt, spending a substantial amount of that time
as a senior partner and head of the firm's executive committee. Mr. Spector is a
director of Telemundo Group, Inc., the owner of Spanish-language television
stations, Pacer International, Inc., a national intermodal and logistics
company, Vail Resorts, Inc. and Park Media, LLC, a firm specializing in bringing
advertising revenue to the owners of parking venues. Mr. Spector received a B.A.
from the University of Southern California and a J.D. from the UCLA School of
Law.
David Roberts (age 38) has been a Managing Director of Angelo, Gordon
& Co., L.P. ("Angelo, Gordon"), an investment management firm, since 1993, where
he oversees the firm's real estate and special situations investment activities.
From 1988 until 1993, Mr. Roberts was a principal of Gordon Investment
Corporation, a Canadian merchant bank, where he participated in a wide variety
of principal transactions including investments in the real estate and mortgage
banking industries. Prior to that, Mr. Roberts worked in the Corporate Finance
Department of L.F. Rothschild & Co. Incorporated, an investment bank, as a
Senior Vice President specializing in mergers and acquisitions. Mr. Roberts has
a B.S. in Economics from the Wharton School of the University of Pennsylvania.
Russel S. Bernard (age 42) is a Principal of Oaktree Capital
Management, LLC ("Oaktree"), with which he has been involved since 1995, and is
the portfolio manager of Oaktree's real estate and mortgage funds. Prior to
joining Oaktree in 1995, Mr. Bernard was a Managing Director of Trust Company of
the West ("TCW"). Under subadvisory relationships with Oaktree, Mr. Bernard
continues to serve as portfolio manager for the TCW Special Credits distressed
mortgage funds. From 1986 to 1994, Mr. Bernard was a partner in Win Properties,
Inc., a national real estate investment company, where he was responsible for
the acquisition, financing and operation of a national real estate portfolio.
Mr. Bernard holds a B.S. in Business Management and Marketing from Cornell
University.
John R. Klopp (age 46) is a Director, the Chief Executive Officer and
a Vice Chairman of Capital Trust, Inc., an investment management and finance
company focused on the commercial real estate industry. Mr. Klopp is a founder
and has been a Managing Partner of Victor Capital Group L.P. ("VCG") since 1989.
VCG is presently a subsidiary of Capital Trust. From 1982 to 1989, Mr. Klopp was
a Managing Director and co-head of Chemical Realty Corporation ("Chemical
Realty"), the real estate investment banking affiliate of Chemical Bank. Prior
to founding Chemical Realty, he held various positions in Chemical Bank's Real
Estate Division and was responsible for originating, closing and monitoring
portfolios of construction and interim loans. He received a B.A. from Tufts
University in 1976 with a major in economics and an M.B.A. in 1978 from the
Wharton School of Business and Finance at the University of Pennsylvania with a
major in real estate and finance.
Executive Officers
The following discussion sets forth the names, ages and business
histories of the executive officers of the Company. Each of the following
individuals has served as an executive officer of the Company since 1996, and it
is anticipated that each will be re-elected and continue to serve in their
respective positions.
<TABLE>
<CAPTION>
Name Age Office Business History
---- --- ------ ----------------
<S> <C> <C> <C>
William L. Mack 60 Chairman of the Board See above biography
Lee S. Neibart 50 President See above biography
John R. Klopp 46 Vice President See above biography
John R. S. Jacobsson 32 Vice President and See above biography
Secretary
</TABLE>
4
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following represent all related party transactions (i) for the
last fiscal year of the Company ended December 31, 1999, and (ii) for the six
months ended June 30, 2000.
John R. Klopp, a director, officer and stockholder of the Company, is
employed by Capital Trust, the parent company of VCG. VCG acted as one of the
Company's representatives in connection with the sale of its property located at
237 Park Avenue, New York, New York in November 1999. Pursuant to the terms of
the retention agreement between VCG and the Company, VCG was paid a fee equal to
$930,000 (0.25% of the total transaction value). In addition, VCG was paid
$1,593,750 by the Company in December 1999 as a finder's fee in connection with
the refinancing of the debt pertaining to the Company's property located at 1290
Avenue of the Americas, New York, New York (the "1290 Property").
Asset Management
The Company has retained 970 Management, LLC (the "Asset Manager"), an
affiliate of VCG, to serve as the Company's asset manager pursuant to the asset
management agreement, dated as of October 10, 1996 (the "Asset Management
Agreement"). Pursuant to the Asset Management Agreement, the Asset Manager
serves as the Company's advisor and consultant with respect to the management of
the 1290 Property and the Company's interests in 1290 Partners, L.P., a Delaware
limited partnership that owns the 1290 Property (the "1290 Property Owning
Partnership").
The Asset Management Agreement had an initial term of one year. The
term is automatically extended for consecutive one year periods thereafter
unless the Company or the Asset Manager notifies the other at least 30 days
before the then current term would otherwise terminate of its election not to
extend the term.
The Company may terminate the Asset Management Agreement (i) after the
expiration of a certain cure period, by notice to the Asset Manager if the Asset
Manager defaults in any material respect in its performance under the Asset
Management Agreement, and (ii) immediately upon notice to the Asset Manager if
the 1290 Property is sold or if there is a change in control of the Asset
Manager. The Asset Manager may terminate the Asset Management Agreement if the
Company defaults in the payment of any amount due and payable to the Asset
Manager and such default continues for 30 days after the Asset Manager's written
notice to the Company of such default. Either party may terminate the Asset
Management Agreement by giving notice to the other upon the occurrence of
certain events relating to the bankruptcy or insolvency of the other party.
Pursuant to the Asset Management Agreement, the Company pays the Asset
Manager a fee (the "Asset Management Fee") of $25,000 per month. Asset
management fees incurred for the year ended December 31, 1999 aggregated
approximately $300,000 and for the six months ended June 30, 2000 aggregated
approximately $150,000. In addition to the payment of the Asset Management Fee,
the Company reimburses the Asset Manager for certain expenses. If the Company
believes that the Asset Management Fee should be reduced and the parties are
unable in good faith to agree upon a reduced fee, the Asset Management Agreement
is terminable by either party upon 90 days' notice to the other.
Management and Leasing Agreements
The 1290 Property Owning Partnership entered into a management and
leasing agreement, dated as of October 10, 1996 (the "Property Management
Agreement"), with Tishman Speyer Properties, L.P. (the "Property Manager/Leasing
Agent"). Nyprop, LLC, a stockholder of the Company, is an affiliate of the
Property Manager/Leasing Agent. Pursuant to the Property Management Agreement,
the Property Manager/Leasing Agent performs all supervisory, management and
leasing services and functions reasonably necessary or incidental to the
leasing, management and operations of the 1290 Property. Fees under the Property
Management Agreement for the year ended December 31, 1999 were approximately
$5,528,000 and for the six months ended June 30, 2000 were approximately
$995,000.
5
<PAGE>
An affiliate of the Property Manager/Leasing Agent provides cleaning
services for the 1290 Property. Fees paid for cleaning services for the year
ended December 31, 1999 totaled $4,569,000 and for the six months ended June 30,
2000 totaled $1,599,000.
The Property Management Agreement had an initial term of two years.
The term is automatically extended for additional consecutive 90-day terms until
such time as the 1290 Property Owning Partnership notifies the Property
Manager/Leasing Agent in writing, at least 30 days before the then current term
would otherwise terminate, of its election not to extend the term of the
Property Management Agreement.
The 1290 Property Owning Partnership may terminate the Property
Management Agreement on 60 days notice if the 1290 Property is either sold by
the 1290 Property Owning Partnership or refinanced by the 1290 Property Owning
Partnership pursuant to a securitized financing of the 1290 Property; provided
that termination of the Property Management Agreement as a result of such
financing will only be effective if the Property Manager/Leasing Agent is not
approved by the rating agency participating in such financing. In addition, the
1290 Property Owning Partnership may terminate the Property Management Agreement
(i) after a certain cure period, upon notice to the Property Manager/Leasing
Agent if the Property Manager/Leasing Agent breaches a material term of the
Property Management Agreement, and (ii) immediately upon notice to the Property
Manager/Leasing Agent if (x) the Property Manager/Leasing Agent or any principal
of the Property Manager/Leasing Agent intentionally misappropriates funds of the
1290 Property Owning Partnership or commits fraud against the 1290 Property
Owning Partnership or (y) there is a change in control of the Property
Manger/Leasing Agent. The Property Manager/Leasing Agent may terminate the
Property Management Agreement (i) after a certain cure period, upon notice to
the 1290 Property Owning Partnership if the 1290 Property Owning Partnership
breaches a material term of the Property Management Agreement, and (ii) upon 60
days notice to the 1290 Property Owning Partnership if the 1290 Property Owning
Partnership fails to provide funds on a consistent basis to operate and maintain
the 1290 Property. Either party may terminate the Property Management Agreement
upon notice to the other party if (x) a petition in bankruptcy is filed against
the other party and is not dismissed within 60 days, (y) a trustee, receiver or
other custodian is appointed for a substantial portion of the other party's
assets and is not vacated within 60 days or (z) the other party makes an
assignment for the benefit of its creditors.
Pursuant to the Property Management Agreement, the 1290 Property
Owning Partnership (i) pays the Property Manager/Leasing Agent a fee in an
amount equal to 1.5% of gross revenues from the 1290 Property, which fee is paid
monthly, and (ii) reimburses the Property Manager/Leasing Agent for all
reasonable out-of-pocket expenses incurred by the Property Manager/Leasing Agent
related to the performance of its responsibilities under the Property Management
Agreement, to the extent set forth in the annual budget. In addition, the
Property Manager/Leasing Agent is entitled to receive commissions in connection
with the leasing of space at the 1290 Property and renewals and extensions of
leases.
The Company entered into a REIT Management Agreement with the Property
Manager/Leasing Agent (the "REIT Manager"). The REIT Manager performs certain
accounting, administrative and monitoring services. The REIT Management
Agreement provides for compensation to the REIT Manager of monthly fees
aggregating approximately $125,000 per annum and reimbursement of documented
out-of-pocket expenses. Fees and reimbursables paid to the REIT Manager under
the REIT Management Agreement for the year ended December 31, 1999 were $141,000
and for the six months ended June 30, 2000 aggregated approximately $63,000.
EXECUTIVE COMPENSATION
The Company has no employees. In 1999, each member of the Board of
Directors earned (i) $20,000 as an annual retainer and (ii) $750 per meeting of
the Board of Directors attended by such member. In 2000, the members of the
Board of Directors will receive (i) $15,000 in cash as an annual retainer and
(ii) 400 shares of Class A Common Stock to be issued under the Company's 1996
Directors' Stock Option Plan (as amended, the "Stock Plan"). Such stock and cash
will be paid to the then current members of the Board of Directors at the time
of the 2000 Annual Meeting of Stockholders. Each director will also receive an
additional payment of $750 for each meeting of the Board of Directors attended
by such member. Upon election to the Board of Directors, each initial Director
received options, which vested over two years, to purchase 3,000 shares of the
6
<PAGE>
Company's Class A Common Stock at an original exercise price of $25.00 per
share. In March 1998, John R. S. Jacobsson, a then newly elected director, was
granted options (which became fully exercisable on October 10, 1999) entitling
him to purchase an aggregate of 3,000 shares of Class A Common Stock at an
exercise price of $42.50 per share.
On December 13, 1999, the Board of Directors decreased the exercise
price of all outstanding options by $15.00 per share in consideration of a
special distribution to stockholders of $15.00 per share that was made on
December 10, 1999. On December 23, 1999, each member of the Board of Directors
(except Mr. Jacobsson) exercised his options. On December 28, 1999, the Board of
Directors decreased the exercise price of Mr. Jacobsson's options by another
$15.00 per share to $12.50 per share in consideration of a second special
distribution to stockholders of $15.00 per share that was made on December 27,
1999. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT".
The Company has purchased a directors' and officers' liability
insurance policy in the amount of $10,000,000.
BOARD OF DIRECTORS AND AUDIT COMMITTEE MEETINGS
The business of the Company is conducted under the general management
of its Board of Directors as required by the Company's bylaws and the laws of
Maryland. There are presently nine directors. During the year ended December 31,
1999, the Board of Directors held four meetings. Except for David Roberts and
Ralph F. Rosenberg, each of the directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and meetings of committees of the
Board of Directors on which he served.
In January 2000, the Directors of the Company appointed Lee S.
Neibart, John R. S. Jacobsson and John R. Klopp to serve as the members of the
Company's audit committee. Messrs. Neibart and Jacobsson are partners of AREA,
which is the general partner of Apollo Real Estate Investment Fund, L.P.
("AREIF"), a significant stockholder of the Company. Mr. Klopp is a Managing
Partner of VCG, whose relationship to the Company is described under "CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS - - Asset Manager". The audit
committee does not serve pursuant to a written charter. Its purposes are to (i)
make recommendations concerning the engagement of the Company's independent
public accountants, (ii) review with the Company's independent public
accountants the policies, procedures and results of the audit engagement, (iii)
approve professional services provided by the Company's independent public
accountants, (iv) review the independence of the Company's independent public
accountants, (v) consider the range of audit and non-audit fees, (vi) review the
adequacy of the Company's internal accounting controls, and (vii) recommend
information to be included in the Company's quarterly reports on Forms 10-Q and
annual reports on Forms 10-K. The Board of Directors has no committees other
than the audit committee.
STOCK PERFORMANCE GRAPH
The Company's securities do not actively trade, and are not traded, on
any exchange or included for quotation on any automated quotation system.
Therefore, the Company's securities do not have a fair market value that can be
readily determined for comparison to either a broad equity market index or an
industry index.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the following table is furnished as of
June 30, 2000 with respect to any person (including any "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who
is known to the Company to be the beneficial owner of more than 5% of any class
of the Company's voting securities, and as to those shares of the Company's
equity securities beneficially owned by each of its directors, its executive
officers and all of its executive officers and directors as a group. As of June
30, 2000, there were 12,997,646 shares of Common Stock outstanding of which
8,061,586 shares were shares of Class A Common Stock and 4,936,060 shares were
shares of Class B Common Stock.
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<TABLE>
<CAPTION>
Number of Shares Percent of Common
Name and Address of Beneficial Owner Beneficially Owned Stock
------------------------------------ ------------------- -----------------
<S> <C> <C>
Principal Stockholders
Apollo Real Estate Investment Fund, L.P. (1) 4,936,060 38.0%
The TCW Group, Inc.(2) 2,254,341 17.3%
Oaktree Capital Management, LLC (3) 1,916,663 14.8%
WSB Realty, L.L.C. (4) 1,122,421 8.6%
Angelo, Gordon & Co., L.P. (5) 1,077,364 8.3%
Intermarket Corp. (6) 931,000 7.2%
Directors and Executive Officers
William L. Mack (7) 3,800 *
Lee S. Neibart (8) 3,800 *
John R. S. Jacobsson (9) 3,800 *
Bruce H. Spector (10) 3,800 *
John R. Klopp (11) 23,800 *
Russel S. Bernard (12) 0 *
Ralph F. Rosenberg (13) 0 *
David A. Strumwasser (14) 3,800 *
David Roberts (15) 0 *
-----------------
Directors and Executive Officers as a group (9 42,800 *
=======
persons) (16)
</TABLE>
-----------------------
* Less than 1%
(1) Held of record by Atwell & Co., c/o The Chase Manhattan Bank, N.A., 4
New York Plaza, New York, NY 10004. AREA is the managing general
partner of Apollo Real Estate Investment Fund, L.P. ("AREIF") and a
joint reporting person with respect to beneficial ownership of these
shares of Common Stock according to AREIF's Schedule 13G filed with
the Securities and Exchange Commission (the "Commission") on February
13, 1998.
(2) Includes 1,586,814 shares as to which voting and dispositive power is
shared with Oaktree Capital Management, LLC ("Oaktree") as an
investment sub-adviser to TCW Asset Management Company for various
limited partnerships, trusts and third party accounts for which TCW
Asset Management Company acts as general partner or investment
manager. According to the Schedule 13G filed with the Commission on
February 12, 1998, Robert Day, Chairman and Chief Executive Officer of
The TCW Group, Inc. ("TCW"), may be deemed to be a control person of
TCW and certain other holders of the Company's Common Stock. Also
includes 667,527 shares held by various limited partnerships, trusts
and third party accounts for which TCW Special Credits acts as general
partner or investment manager. The shares shown are held of record by
(i) Taylor & Co., c/o Sanwa Bank California Trust Operations, 1977
Saturn Street, Monterey Park, CA 91754 (58,124 shares) and (ii) Cede &
Co., c/o Investors Bank and Trust Company, 200 Clavendon Street,
Boston, Massachusetts 02117-9130 (2,196,217 shares). To the extent
permitted by applicable law, TCW and Robert Day hereby disclaim
beneficial ownership of such shares.
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<PAGE>
(3) Includes 1,586,814 shares as to which voting and dispositive power is
shared with TCW Asset Management Company, which acts as general
partner or investment manager for certain funds and accounts for which
Oaktree acts as an investment sub-adviser. Also includes 284,839
shares held by two limited partnerships of which Oaktree is general
partner and 41,210 shares held by a third party account for which
Oaktree acts as investment manager. The 326,049 shares as to which
Oaktree has sole voting and dispositive power are held of record by
Cun & Co., c/o The Bank of New York, One Wall Street, New York, NY
10005. Also includes 3,800 shares held directly by Oaktree. To the
extent permitted by applicable law, Oaktree hereby disclaims
beneficial ownership of such shares.
(4) Does not include 3,800 shares owned by The Goldman Sachs Group, Inc.
WSB Realty, L.L.C. is located at 85 Broad Street, New York, NY 10004.
According to the Schedule 13G/A filed by The Goldman Sachs Group, Inc.
with the Commission on February 11, 2000, these shares are reported as
beneficially owned by: (i) Goldman, Sachs, & Co., (ii) The Goldman
Sachs Group, Inc., (iii) WSB Realty, L.L.C., (iv) Whitehall Street
Real Estate Limited Partnership V and (v) WH Advisors, L.L.C. V.
(5) Angelo, Gordon's address is 245 Park Avenue, New York, NY 10167.
According to the Schedule 13G/A filed by Angelo, Gordon with the
Commission on February 14, 2000, these shares are reported as
beneficially owned by: (i) Angelo, Gordon, (ii) John M. Angelo, in his
capacities as a general partner of AG Partners, L.P., the sole general
partner of Angelo, Gordon, and the chief executive officer of Angelo,
Gordon and (iii) Michael L. Gordon, in his capacities as the other
general partner of AG Partners, L.P. and the chief operating officer
of Angelo, Gordon.
(6) Intermarket Corp.'s address is 667 Madison Avenue, New York, NY 10021.
(7) Does not include shares owned by AREIF. Includes 800 shares of Common
Stock issued directly to Mr. Mack, and 3,000 shares of Common Stock
issued upon the exercise of options granted to Mr. Mack, under the
Stock Plan. Mr. Mack is the managing partner of AREA, which is the
general partner of AREIF, and the president of AREA's corporate
general partner. Mr. Mack disclaims beneficial ownership of the shares
of Common Stock owned by AREIF.
(8) Does not include shares owned by AREIF. Includes 800 shares of Common
Stock issued directly to Mr. Neibart, and 3,000 shares of Common Stock
issued upon the exercise of options granted to Mr. Neibart, under the
Stock Plan. Mr. Neibart is a partner of AREA. Mr. Neibart disclaims
beneficial ownership of the shares of Common Stock owned by AREIF.
(9) Does not include shares owned by AREIF. Includes 800 shares of Common
Stock issued directly to Mr. Jacobsson, and 3,000 shares of Common
Stock issuable upon the exercise of options granted to Mr. Jacobsson,
under the Stock Plan. Mr. Jacobsson is a partner of AREA. Mr.
Jacobsson disclaims beneficial ownership of the shares of Common Stock
owned by AREIF.
(10) Does not include shares owned by AREIF. Includes 800 shares of Common
Stock issued directly to Mr. Spector, and 3,000 shares of Common Stock
issued upon the exercise of options granted to Mr. Spector, under the
Stock Plan. Mr. Spector is a partner of AREA. Mr. Spector disclaims
beneficial ownership of the shares of Common Stock owned by AREIF.
(11) Includes 800 shares of Common Stock issued directly to Mr. Klopp, and
3,000 shares of Common Stock issued upon the exercise of options
granted to Mr. Klopp, under the Stock Plan.
(12) Does not include shares owned by funds and accounts managed by Oaktree
or shares owned directly by Oaktree. Does not include 800 shares of
Common Stock issued directly to Mr. Bernard, and 3,000 shares of
Common Stock issued upon the exercise of options granted to Mr.
Bernard, under the Stock Plan. Mr. Bernard is required to transfer to
Oaktree any shares of Common Stock he either receives directly under
the Stock Plan or purchases upon an exercise of options granted under
the Stock Plan. Mr. Bernard is a Principal of Oaktree. Mr. Bernard
disclaims beneficial ownership of the shares of Common Stock owned by
funds and accounts managed by Oaktree and the shares of Common Stock
owned directly by Oaktree.
9
<PAGE>
(13) Does not include shares owned by WSB Realty, L.L.C. Does not include
800 shares of Common Stock issued directly to Mr. Rosenberg, and 3,000
shares of Common Stock issued upon the exercise of options granted to
Mr. Rosenberg, under the Stock Plan. Pursuant to Mr. Rosenberg's
employment arrangements with Goldman, Sachs, Mr. Rosenberg is required
to transfer to Goldman, Sachs any shares of Common Stock he receives
either directly under the Stock Plan or purchases upon an exercise of
options granted under the Stock Plan. Mr. Rosenberg disclaims
beneficial ownership of the shares of Common Stock owned by WSB
Realty, L.L.C. Mr. Rosenberg is a Managing Director of Goldman, Sachs.
(14) Does not include 289,503 shares held by various limited partnerships,
a trust and third party accounts for which Whippoorwill has
discretionary authority and acts as general partner or investment
manager. Includes 800 shares of Common Stock issued directly to Mr.
Strumwasser, and 3,000 shares of Common Stock issued upon the exercise
of options granted to Mr. Strumwasser, under the Stock Plan. Mr.
Strumwasser is a principal, Managing Director and General Counsel of
Whippoorwill. Mr. Strumwasser disclaims beneficial ownership of the
shares of Common Stock owned by discretionary accounts managed by
Whippoorwill as set forth above.
(15) Does not include shares owned by Angelo, Gordon. Does not include 800
shares of Common Stock issued directly to Mr. Roberts, and 3,000
shares of Common Stock issued upon the exercise of options granted to
Mr. Roberts, under the Stock Plan. Mr. Roberts is required to transfer
to Angelo, Gordon any shares of Common Stock he either receives
directly under the Stock Plan or purchases upon an exercise of options
granted under the Stock Plan. Mr. Roberts is a Managing Director of
Angelo, Gordon. Mr. Roberts disclaims beneficial ownership of the
shares of Common Stock owned by Angelo, Gordon.
(16) See notes 7 through 15 above with respect to the nature of the
ownership of Directors and Executive Officers as a group, including
certain disclaimers of beneficial ownership described therein.
[text continued on following page]
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<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than 10% of a registered class of the Company's equity securities ("10%
Holders"), to file reports of ownership and changes in ownership with the
Commission. Officers, directors and 10% Holders are required by the Commission's
regulations to furnish the Company with copies of all Section 16(a) forms that
they file. To the Company's knowledge, based solely on its review of the copies
of such reports furnished to the Company, all Section 16(a) filing requirements
applicable to its executive officers, directors and 10% Holders with respect to
transactions during 1999 were properly and timely satisfied.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the accounting firm
of Deloitte & Touche L.L.P. to serve as independent auditors of the Company for
the fiscal year ending December 31, 2000. Deloitte & Touche L.L.P. has served as
the Company's independent auditors since the Company's formation in 1996 and is
considered by management of the Company to be well qualified. The Company has
been advised by that firm that neither it nor any member thereof has any
financial interest, direct or indirect, in the Company or any of its
subsidiaries in any capacity. A representative of Deloitte & Touche L.L.P. will
be present at the Annual Meeting, will be given the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
Although the Company is not required to submit the ratification of the
selection of its independent auditors to a vote of stockholders, the Board of
Directors believes that it is a sound policy to do so. If the majority of the
votes cast are against the selection of Deloitte & Touche L.L.P., the directors
will consider the vote and the reasons therefor in future decisions on the
selection of independent auditors.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the proposal to ratify
the selection of Deloitte & Touche L.L.P. as independent auditors of the Company
for the fiscal year ending December 31, 2000.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the
Board of Directors of the Company. The expenses of solicitation of proxies for
the Annual Meeting will be paid by the Company. In addition to the mailing of
the proxy material, such solicitation may be made in person or by telephone by
officers of the Company, who will receive no additional compensation therefor.
The Company has retained Continental Stock Transfer and Trust Company to assist
with the mailing of this proxy statement and related materials. Upon request,
the Company will reimburse brokers, dealers, banks and trustees, or their
nominees, for reasonable expenses incurred by them in forwarding material to
beneficial owners of shares of Common Stock of the Company.
STOCKHOLDER PROPOSALS
The Board of Directors will provide for the presentation of proposals
by the Company's stockholders at its annual meeting of stockholders for 2001,
provided that such proposals are submitted by eligible stockholders who have
complied with the relevant regulations of the Commission regarding stockholder
proposals and the Company's bylaws, a copy of which is available upon written
request from the Secretary of the Company. Stockholder proposals intended to be
submitted for presentation at the Company's annual meeting of stockholders for
2001 must be in writing and must be received by the Company at its executive
offices on or before June 25, 2001 for inclusion in the Company's proxy
statement and the form of proxy relating to the 2001 annual meeting. Any such
proposal should be mailed to: Metropolis Realty Trust, Inc., c/o Victor Capital
Group, L.P., 410 Park Avenue, 14th Floor, New York, New York 10022, Attention:
Secretary. Proposals received after that date may be excluded from the Company's
proxy materials.
11
<PAGE>
In accordance with the Company's bylaws, any new business proposed by
any stockholder to be taken up at the 2001 annual meeting of stockholders must
be stated in writing and filed with the Secretary of the Company no later than
September 21, 2001.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the discretion of the proxy holders.
12
