WESTERN INVESTMENT REAL ESTATE TRUST, DEF 14A, 1994-03-29

WESTERN INVESTMENT REAL ESTATE TRUST
DEF 14A, 1994-03-29
REAL ESTATE INVESTMENT TRUSTS

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<PAGE>
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12

Western Investment Real Estate Trust
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Western Investment Real Estate Trust
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / 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:*

------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:

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<PAGE>
[LOGO]

March 28, 1994

Dear Shareholder:

You are cordially invited to attend the annual meeting of shareholders of
Western Investment Real Estate Trust to be held at the A.P. Giannini Auditorium,
Bank of America Center, 555 California Street, San Francisco, California on
Thursday, May 12, 1994 at 10:00 a.m. The business scheduled to be conducted at
the meeting is set forth in the formal notice that follows.

The Trust relies upon all shareholders to promptly execute and return their
proxies. In order to save the Trust the unnecessary expense of further proxy
solicitation, please promptly sign and return the enclosed proxy to Chemical
Bank in the envelope provided. If you attend the annual meeting, as we hope you
will, you may withdraw your proxy at the meeting, and vote your shares in person
from the floor. You may also withdraw your proxy by delivering to the Trust a
subsequently dated proxy before or at the annual meeting.

Sincerely,
Barbara J. Donham
SECRETARY

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

3450 CALIFORNIA STREET (415) 929-0211
SAN FRANCISCO, CA 94118 FAX (415) 929-0905
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
3450 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94118
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Notice is hereby given that the annual meeting of the shareholders of
Western Investment Real Estate Trust will be held at the A.P. Giannini
Auditorium, Bank of America Center, 555 California Street, San Francisco,
California, at 10:00 a.m., on Thursday, May 12, 1994, for the following
purposes:

(1) To elect two trustees to Class III for three-year terms to expire at the
conclusion of the 1997 annual meeting.

(2) To approve the appointment of independent auditors for the Trust.

(3) To transact any other business which may properly come before the
meeting.

Only shareholders of record at the close of business on March 14, 1994 will
be entitled to vote at the meeting.

A majority of the outstanding shares must be represented at the meeting in
person or by proxy in order to transact business. TO ASSURE A PROPER
REPRESENTATION AT THE MEETING PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
MAIL IT PROMPTLY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. Your proxy will not be
used if you are personally present at the meeting and you indicate a desire to
revoke such proxy or if a subsequently dated proxy of yours is delivered prior
to or at the meeting.

Dated: San Francisco, California
March 28, 1994

BARBARA J. DONHAM
SECRETARY

If your shares are held in the name of a brokerage firm, bank, nominee or other
institution, only it can vote your shares. Please PROMPTLY CONTACT the person
responsible for your account and GIVE INSTRUCTIONS for your shares to be voted.
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
3450 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94118
PROXY STATEMENT

THIS STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY THE MANAGEMENT OF WESTERN INVESTMENT REAL ESTATE TRUST, hereinafter called
the Trust, for use at the annual meeting of shareholders to be held on Thursday,
May 12, 1994 at 10:00 a.m., at the A.P. Giannini Auditorium, Bank of America
Center, 555 California Street, San Francisco, California, and at any and all
adjournments thereof, for the purposes set forth in the Notice of Annual Meeting
of Shareholders. The cost of soliciting proxies will be borne by the Trust. In
addition to solicitation by mail, proxies may be solicited personally or by
telephone by trustees, officers or other employees of the Trust.

Only shareholders of record of the Trust at the close of business on March
14, 1994 will be entitled to vote at the annual meeting. The approximate date on
which the proxy statement and form of proxy are first sent or given to
shareholders will be March 30, 1994.

You are requested to sign, date and return the accompanying proxy in the
enclosed envelope. Proxies duly executed and received by the Trust on or before
10:00 a.m. on May 12, 1994 will be voted in accordance with the instructions
thereon. Such proxies may be revoked by executing and delivering to the Trust a
written revocation or by executing and delivering a subsequently dated proxy
before or at the meeting or by voting by ballot at the meeting.

As of the record date, 16,645,791 shares of the Trust's shares of beneficial
interest were issued and outstanding, each of which is entitled to one vote at
the annual meeting. There will be no cumulative voting for the election of
trustees.

ELECTION OF TRUSTEES

NOMINEES

Two members of the Board of Trustees (Class III) are to be elected at the
1994 annual meeting. Under the terms of the Declaration of Trust, the four
trustees who are not up for election this year will continue to serve until they
stand for election as provided in the Declaration of Trust. In 1995 one of such
trustees (Class I) will stand for election for a three-year term. In 1996 the
remaining three trustees (Class II) will stand for election for a three-year
term. All proxies received by the Trust will be voted in accordance with the
specifications on the proxy. Unless the proxy specifies otherwise, proxies held
by the trustees will be voted in the manner described below under "Voting" for
the election of the two nominees listed under "Trustees and Executive Officers,"
to hold office until the expiration of their three-year term and until their
respective successors shall be elected and qualified. In the unanticipated event
that either of the current nominees declines to or cannot be a candidate at the
annual meeting, all proxies held by the trustees will be voted in favor of the
remaining nominee and for such substitute nominee (if any) as shall be
designated by the trustees.

1
<PAGE>
Each of the two nominees, if elected, will serve for a three-year term to
expire at the conclusion of the 1997 annual meeting of shareholders and until
their respective successors shall be elected and qualified.

VOTING

Each shareholder will be entitled to cast one vote for each share registered
in his or her name on the record date of March 14, 1994 for each of the trustee
positions to be filled. There will be no cumulative voting for the election of
trustees.

All shares represented by proxies solicited by the trustees will be voted in
equal shares for the two nominees named hereafter, unless a proxy specifies
otherwise. The two nominees receiving the greatest number of affirmative votes
shall be elected to the office of trustee. The withholding of a vote for a
nominee will have the practical effect of voting against that nominee.

TRUSTEES AND EXECUTIVE OFFICERS

Information regarding the two Class III trustees nominated for election as
trustees this year for a term of three years expiring at the conclusion of the
1997 annual meeting of shareholders is set forth below:

2
<PAGE>

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED DIRECTLY OR
TRUSTEE INDIRECTLY AS OF TERM TO
NAME PRINCIPAL OCCUPATION SINCE MARCH 1, 1994(1) EXPIRE
- ---------------------------- ------------------------------------- ---------- ---------------------- ------------
<S> <C> <C> <C> <C>
O.A. Talmage Mr. Talmage, 70, is the Chairman of 1962 186,046(1.12%) 1996
the Board of Trustees, President and Founder (Class II)
Chief Executive Officer of the Trust.
During the past five years his
principal occupation has been of-
ficer and trustee of the Trust. He
was a member of the Board of Di-
rectors of Bay View Federal Bank
through December 31, 1991.
James L. Stell Mr. Stell, 70, is the retired Vice 1985 24,600(0.15%) 1996
Chairman of the Board of Lucky (Class II)
Stores. During the past five years
his principal occupation has been
trustee of the Trust.
William A. Talmage Mr. Talmage, 46, is an Executive Vice 1986 25,504(0.15%) 1996
President of the Trust. During the (Class II)
past five years his principal oc-
cupation has been trustee and of-
ficer of the Trust and through De-
cember 1990 he was involved in the
management of DeWolf Realty Co., a
real property management company. He
is the son of O.A. Talmage, trustee,
Chairman of the Board, President and
Chief Executive Officer of the Trust.
Dennis D. Ryan Mr. Ryan, 38, is a Vice President and N/A 400(0.00%) N/A
the Chief Financial Officer of the
Trust. Mr. Ryan, a CPA, was ap-
pointed Chief Financial Officer on
February 1, 1994. He joined the Trust
in September of 1993 as Controller
and was appointed Vice President,
Finance, effective November 1993.
Prior to joining the Trust, Mr. Ryan
was a financial and real estate
consultant to a variety of clients.
Prior to 1992, he was a Vice
President and Chief Financial Of-
ficer of Reininga Corporation, a
shopping center development, leasing
and property management firm.
All executive officers and trustees (7) persons.................... -- 527,355(3.17%) --
<FN>
- --------------------------
(1) The number and percentage of shares shown in this table reflect beneficial
ownership in accordance with Rule 13d-3 of the Securities Exchange Act of
1934, including shares which are not owned but as to which options are
outstanding and may be exercised within 60 days of the date of this proxy
statement.
(2) Includes 3,000 shares held by Mr. Oliver's wife as custodian for their
minor children. Mr. Oliver disclaims any ownership of such shares.
</TABLE>

3
<PAGE>
BOARD AND COMMITTEE MEETINGS

During 1993, the Board of Trustees held four meetings. The executive
committee of the Board of Trustees presently consists of O. A. Talmage and
William A. Talmage. Chester R. MacPhee, Jr. served on the committee until his
retirement on January 31, 1994. The committee maintains such powers and
exercises such duties of the Board of Trustees in the management of the business
of the Trust as are delegated to it from time to time by the Board of Trustees.
The executive committee held 31 meetings in 1993.

The Trust has no standing nominating committee. It does have an audit
committee whose functions are to meet with the Trust's auditors at least
annually to review accounting and auditing procedures, to report to the Board of
Trustees any recommended changes in auditing procedures and to recommend to the
Board of Trustees at the close of each fiscal year the independent auditing firm
to be selected for the ensuing fiscal year. The audit committee during 1993
consisted of James L. Stell, Reginald B. Oliver and John R. Beckett. The audit
committee presently consists of James L. Stell, Reginald B. Oliver, John R.
Beckett and Chester R. MacPhee, Jr. (formerly Executive Vice President and Chief
Financial Officer). The committee held two meetings in 1993.

The compensation committee held two meetings in 1993. The compensation
committee during 1993 consisted of James L. Stell, Reginald B. Oliver and John
R. Beckett. The compensation committee presently consists of Reginald B. Oliver,
James L. Stell, John R. Beckett and Chester R. MacPhee, Jr. (formerly Executive
Vice President and Chief Financial Officer). The committee is responsible for
administering and approving compensation for trustees and officers and certain
other employees.

Each of the trustees attended at least 75% of the total number of board
meetings and meetings of committees on which they served in 1993.

OWNERSHIP OF SHARES

The Trust has one outstanding class of voting securities, consisting of
shares of beneficial interest without par value.

As of December 31, 1993, no person or entity known to the Trust was a
beneficial owner of more than 5% of the Trust's outstanding shares, based on
information publicly reported to the Securities and Exchange Commission.

As of December 31, 1993, Capital Guardian Trust and Capital Research and
Management Company, subsidiaries of The Capital Group, Inc., exercised
investment discretion with respect to 7,830 and 1,315,000 shares, respectively,
which were owned by various institutional investors. The combined total of the
shares represents 7.95% of the Trust's shares outstanding as of the record date.
CEDE, a stock depository for brokers and other nominees, as of the record date,
holds approximately 13,997,478 shares or 84% of the Trust's outstanding shares
in its capacity as a stock depository.

COMPENSATION OF TRUSTEES

During 1993, John R. Beckett, Reginald B. Oliver and James L. Stell each
received an annual independent trustee fee of $14,000 and $500 per meeting
attended. Members of the executive committee and officers receive no
compensation from the Trust other than that shown in the Compensation Table set
forth hereafter for serving as trustees or attending meetings.

4
<PAGE>
The independent trustees (other than members of the compensation committee)
may be awarded stock options pursuant to the Trust's Nonqualified Stock Option
Plan. No options were granted to any of the independent trustees during 1993.

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows for the fiscal years ending December 31, 1993,
1992 and 1991, certain compensation paid by the Trust to its Chief Executive
Officer and the other most highly compensated executive officers whose
compensation exceeded $100,000 at December 31, 1993:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------------------- AWARDS
OTHER ANNUAL --------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS COMPENSATION(1)
- --------------------------------- --------- -------------- --------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
O.A. Talmage 1993 $ 275,000 0 0 45,000 0(2)
President & CEO 1992 $ 275,000 0 0 0 0(2)
Chairman of the Board 1991 $ 275,000 0 0 12,000 0(2)
Chester R. MacPhee, Jr. 1993 $ 150,000(3) 0 0 0 0(2)
Executive Vice President 1992 $ 140,000(3) 0 0 0 0(2)
Chief Financial Officer 1991 $ 140,000(3) 0 0 5,000 0(2)
(Retired eff. 1/31/94)
William A. Talmage 1993 $ 130,000(3) 0 $ 794(4) 0 $ 3,900(5)
Executive Vice President 1992 $ 115,000(3) 0 794(4) 0 3,300(5)
1991 $ 95,000(3) 0 0 10,000 3,800(5)
<FN>
- --------------------------
(1) None of the named individuals received perquisites which exceeded the
lesser of 10% of annual compensation or $50,000.
(2) Eligible for Trustee Emeritus Program and Death and Disability Program
described hereinafter.
(3) Includes amounts earned but deferred under the Trust's 401(k) Plan at the
election of the executive.
(4) Cost of life insurance paid by the Trust for the benefit of William A.
Talmage; the other named executives are not covered.
(5) Consists of the Trust's employer matching contribution and discretionary
contribution under 401(k) Plan. Mr. William A. Talmage is the only listed
executive eligible to benefit from Trust contributions; the others are
eligible to participate in the Trust's Trustee Emeritus and Death and
Disability Programs.
</TABLE>

COMPENSATION PURSUANT TO PLANS

The Trust has a Trustee Emeritus Program, a Death and Disability Program and
a Nonqualified Stock Option Plan, each of which were approved and adopted by the
shareholders. The Trust also has a Tax Qualified Retirement Plan pursuant to
Section 401(k) of the Internal Revenue Code which was

5
<PAGE>
adopted during 1990. The Trust has no other bonus, profit-sharing, stock
purchase, deferred compensation or other remuneration or incentive plan now in
effect or in effect since the date of its organization.

TRUSTEE EMERITUS PROGRAM AND DEATH AND DISABILITY PROGRAM

Chester R. MacPhee (a founder who elected to become a Trustee Emeritus
effective 1/1/91), Bernard Etcheverry (a founder who elected to become a Trustee
Emeritus effective 1/1/93), O.A. Talmage and Chester R. MacPhee, Jr. are the
only persons eligible to participate in the Trust's Trustee Emeritus and Death
and Disability Programs. These programs were adopted by the Trust in 1986 to
replace the then existing Retirement Benefits Plan which covered the above
individuals.

A participant under the Trustee Emeritus program is eligible to become a
trustee emeritus on reaching age 65 and ceasing to be a trustee and officer of
the Trust. A trustee emeritus is required to be available to provide advice and
counsel to the Trust regarding Trust properties and investments. Participants
under the Trust's Death and Disability Program and their present spouses are
eligible for certain benefits in the case of death or disability.

The amount payable to a participant under either program is $60,000 per
annum ($75,000 per annum for Chester R. MacPhee) subject to increase at the
discretion of the Board of Trustees. Under the Death and Disability Program,
payments continue until the number of payments received under both programs
equals the number of months the participant served as a trustee or officer or,
if sooner, until the death of the last to survive of the participant and his
spouse.

If the Trust is terminated or an eligible trustee or an eligible trustee
emeritus is removed other than for good cause shown or not reelected as a
trustee, the trustee will be entitled to receive as a lump sum severance payment
an amount equal to the actuarially determined present value of the payments he
would have received under the programs. If an eligible trustee or trustee
emeritus is removed as a result of a change of control in the Trust the
severance payments made under the programs may be subject to provisions of the
Internal Revenue Code which impose an excise tax payable by the recipient on
certain excess payments and make such payments not deductible by the Trust.
Where such Internal Revenue Code sections are applicable, the severance
payments, or portions thereof, which are subject to such excise tax will be
increased by dividing the amounts subject to excise tax by 25%. Messrs. MacPhee,
Talmage, Etcheverry and MacPhee, Jr. would have been entitled to $595,000,
$575,000, $954,000, and $576,000, respectively, had they qualified for increased
lump sum severance payments in connection with a change of control under the
programs as of December 31, 1993. The four persons eligible for benefits under
the programs, as a group, would have been entitled to receive a total of
$2,700,000, had they all qualified for increased lump sum severance payments
under the programs as of December 31, 1993. Compensation under the Trustee
Emeritus Program will be expensed as earned by the trustee emeritus. The Death
and Disability Program is unfunded; however, Death and Disability Program costs
are accrued. Each of the participants has satisfied the time in service
requirements for the programs.

6
<PAGE>
NONQUALIFIED STOCK OPTION PLAN

Under the Nonqualified Stock Option Plan (the "Plan") for trustees, officers
and employees of the Trust, the compensation committee of the Board of Trustees
determines the persons to whom options are granted, the time at which options
are granted to each person, and the terms and conditions of exercise of options.
A maximum of three hundred thousand (300,000) shares of beneficial interest may
be issued under the Plan. The exercise price per share is the fair market value
at the date of the grant. Each option vests and becomes exercisable as to 20% of
the shares covered by each grant at the end of each year for five years. No
option is exercisable after six years from the date of the grant. Options to
purchase shares have been granted as follows:

<TABLE>
<CAPTION>
TOTAL NO.
OF UNEXPIRED
OPTIONS PRICE PER
GRANT DATE GRANTED SHARE
- ---------- ------------- ---------
<S> <C> <C>
5/18/88 141,000 $ 17.375
11/20/89 38,500 $ 18.00
11/18/91 35,700 $ 11.44
11/23/92 15,400 $ 12.625
11/11/93 67,000 $ 13.81
</TABLE>

In each instance, the option price was 100% of the fair market value at the
date of the grant.

STOCK OPTION GRANTS AND EXERCISES

Stock options were granted to the executive officers during 1993 as shown on
the following table:

STOCK OPTION/SAR GRANTS IN THE LAST FISCAL YEAR

<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF SHARE
GRANTED TO PRICE APPRECIATION
EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL OR BASE EXPIRATION --------------------------------
NAME GRANTED(1) YEAR PRICE DATE 5% 10%
- -------------------------------------- ----------- ----------- ---------- ---------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
O.A. Talmage 45,000 67.1% $ 13.81 11/11/99 $ 212,000 $ 480,000
Chester R. MacPhee, Jr. 0
William A. Talmage 0
All Shareholders(2) N/A N/A N/A N/A $ 78,141,000 $ 177,230,000
Potential realizable value of the
CEO's options as a percentage of
potential value to all shareholders 0.27% 0.27%
<FN>
- ------------------------
(1) Options are exercisable as to 20% of the shares covered by the grant at the
end of each of five years. No option is exercisable after six years from
the date of grant. No SAR's have been granted.
(2) The potential gains for all shareholders have been calculated for the same
period as the option term, i.e., between November 11, 1993 and November 11,
1999. There is no assurance that such increase in the price of the shares
will be achieved. There were 16,625,723 shares outstanding at the close of
business on November 11, 1993.
</TABLE>

7
<PAGE>
The number and value of unexercised options at year-end 1993 are shown on
the following table:

FISCAL YEAR-END OPTION/SAR VALUE

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1993(1) AT DECEMBER 31, 1993(2)
-------------------------------- --------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------- -------------------------------- --------------------------
<S> <C> <C>
O.A. Talmage....................................... 59,400/54,600 $ 6,888/$10,332
Chester R. MacPhee, Jr. ........................... 27,000/4,000 $ 2,870/$4,305
William A. Talmage................................. 13,600/6,400 $ 5,740/$8,610
<FN>
- ------------------------
(1) Includes options which were granted at an exercise price of $17.375,
$18.00 and $13.81. The fair market value of shares at December 31, 1993,
was $12.875.
(2) Fair market value of shares at December 31, 1993 ($12.875) minus the
exercise price of the in-the-money options ($11.440). These options were
40% vested at 12/31/93 and will vest an additional 20% at May 18 of each
year until fully vested. No option is exercisable after 6 years from date
of grant.
</TABLE>

TAX QUALIFIED RETIREMENT PLAN PURSUANT TO IRS CODE SECTION 401(K)

The Trust adopted a Tax Qualified Retirement Plan pursuant to Section 401(k)
(the "Plan") in 1990. Under the Plan, the Trust makes contributions as follows:
(a) the total amount of compensation deferred by all eligible employees through
salary deferral contributions to the Plan; (b) a discretionary matching
contribution equal to a percentage of the amount of employee salary deferral
contributions, which percentage will be determined each year by the Trust; and
(c) a discretionary contribution determined each year by the Trust. All salaried
employees are eligible to become Plan participants on completion of six months
of employment and the attainment of age 21; however, under the Plan the Trust
will not make discretionary matching contributions or discretionary profit
sharing contributions on behalf of Chester R. MacPhee, O. A. Talmage, Bernard
Etcheverry and Chester R. MacPhee, Jr. inasmuch as they are eligible to
participate in the Trustee Emeritus Program and Death and Disability Program.
Compensation deferrals and discretionary matching contributions are fully vested
and any discretionary contributions become vested as follows: 20% at 2 years of
service; 40% at 3 years of service; 60% at 4 years of service; 80% at 5 years of
service and 100% at 6 years of service. For the year 1993, the Trust made
approximately $41,300 of discretionary contributions for all eligible employees.
Inasmuch as the Plan is a defined contribution plan, rather than a defined
benefit plan, it is not possible to estimate annual benefits upon retirement.

8
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Trustees ("Committee"), composed
of the three independent trustees during 1993, is responsible for administering
and approving salaries for trustees, officers and department heads as well as
any employee earning $60,000 per year or above. In addition, the Committee
reviews the general compensation strategy and approves the percentage range
increases for all staff members. The review process includes performance
evaluation as well as consideration for promotion and succession.

It is the objective of the Committee to develop and maintain executive
compensation programs that attract, motivate and retain key executives who will
help meet the Trust's goals to increase long term shareholder value.

The compensation program consists of a base salary, 401(k) plan and stock
option plan. We review executive compensation annually. While several sources of
information on salary levels are consulted, we apply our own guidelines to
determine appropriate levels of compensation for our employees. The Committee's
guidelines include evaluating the Trust's operating performance and financial
position and the results compared with the industry and real estate in general.
The performance, in achieving acceptable levels of funds from operations per
share compared to the shareholder investment, is our most important guideline.

BASE SALARY

Executive salaries are determined by evaluating the responsibilities of the
position held and the experience of the individual and by reference to median
levels of salaries paid in the competitive marketplace for comparable positions.
Individual salary increases are based on the Trust's financial performance and
the attainment of individual non-financial objectives during the preceding year.
The Committee monitors total administrative expenses as a percentage of assets
and intends to compare favorably to other real estate trusts.

During the last year, Mr. O.A. Talmage, the Trust's Chief Executive Officer,
received a base salary of $275,000, which is unchanged from the previous year.
In determining the base salary of Mr. Talmage, the Committee took into
consideration his experience and stature in the real estate community, the base
salary paid to other chief executive officers in the industry and the Trust's
earnings and dividends per share.

STOCK OPTIONS

The stock options are granted under a plan approved by the shareholders in
1988 to key officers and employees and provide an incentive for such officers
and employees to manage with a long term view to building shareholder value.
Stock options provide a long term incentive for the creation of shareholder
value because a stock option provides a benefit only from appreciation in the
price of the Trust's shares of beneficial interest over the term of the option.
The stock option plan is administered by the compensation committee. The
committee encourages accumulation and retention of shares of beneficial interest
by employees. Stock options are granted annually at an option price of 100% of
the market value on the date of grant and vest over five years at 20% per year.
Stock option award levels are based on the recipient's responsibilities, ability
to influence shareholder value and total compensation.

9
<PAGE>
In 1993, six employees received stock option grants, including the Chief
Executive Officer. Mr. Talmage, the CEO, was granted options to purchase 45,000
shares of beneficial interest, as set forth in the Stock Option/SAR Grant Table.
The grant to Mr. Talmage was based on the guidelines established by the
committee as described above.

The 1993 Compensation Committee
Reginald B. Oliver, Chairman
John R. Beckett
James L. Stell

10
<PAGE>
COMPANY PERFORMANCE

PERFORMANCE MEASUREMENT COMPARISON
TOTAL RETURN
WESTERN INVESTMENT REAL ESTATE TRUST
NAREIT EQUITY INDEX AND S&P 500 INDEX

<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Equity 100.00 108.84 92.13 125.02 143.26 171.42
S&P 100.00 131.49 127.32 166.21 178.96 196.84
WIRET 100.00 116.08 96.15 84.02 99.68 112.72
</TABLE>

<TABLE>
<S> <C>
<FN>
- ------------------------
(1) The total return on investment (change in the year-end share price plus
reinvested dividends) for each of the periods for the Trust, The NAREIT
Equity Index (peer group) and the S&P 500 Index.
(2) The NAREIT Equity Index includes 133 tax-qualified REITS (all of which are
listed on either the New York Stock Exchange, American Stock Exchange or
the NASDAQ National Market System). The 133 REITS have a total market
capitalization of $25.6 billion. The NAREIT Equity Index is maintained by
the National Association of Real Estate Trusts, Washington, D.C.
</TABLE>

11
<PAGE>
APPOINTMENT OF AUDITORS

KPMG Peat Marwick, Certified Public Accountants, were the auditors for the
Trust for the year ended 1993. The Board of Trustees has appointed KPMG Peat
Marwick as auditors for the year ending December 31, 1994 and recommends to the
shareholders that such appointment be approved. Representatives of KPMG Peat
Marwick are expected to attend the annual meeting with the opportunity to make a
statement if desired and are also expected to be available to respond to
appropriate questions from the shareholders at the annual meeting.

OTHER BUSINESS

The management of the Trust knows of no matters to be brought before the
meeting other than those set forth in the Notice of Annual Meeting of
Shareholders. If, however, any other matters of which management is not now
aware are presented for action, it is the intention of the proxy holders named
in the enclosed proxy to vote in accordance with their discretion on such
matters. The giving of the proxy does not preclude the right to vote in person
should the shareholder giving it so desire, as the proxy may be revoked at any
time prior to its having been exercised.

SHAREHOLDER PROPOSALS

Any shareholder proposal to be submitted for inclusion in proxy soliciting
material for the 1995 annual shareholder's meeting must be received by the
Secretary of the Trust no later than December 2, 1994.

Dated: San Francisco, California
March 28, 1994
BARBARA J. DONHAM
SECRETARY

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

A COPY OF THE TRUST'S 1993 ANNUAL REPORT ON FORM 10-K FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS,
SCHEDULES AND EXHIBITS, WILL BE PROVIDED WITHOUT CHARGE TO EACH SHAREHOLDER WHO
SENDS A WRITTEN REQUEST TO INVESTOR RELATIONS, WESTERN INVESTMENT REAL ESTATE
TRUST, AT 3450 CALIFORNIA STREET, SAN FRANCISCO, CALIFORNIA 94118.
- --------------------------------------------------------------------------------

12
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints O. A. Talmage, Chester R. MacPhee, Jr.,
Reginald B. Oliver, James L. Stell, William A. Talmage and John R. Beckett as
Proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
beneficial interest of Western Investment Real Estate Trust held of record by
the undersigned on March 14, 1994, at the annual meeting of shareholders to be
held on May 12, 1994 or any adjournment thereof.

Should the undersigned be present and choose to vote at the meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Trust at the meeting of the shareholder's decision to terminate
this proxy, then the power of the attorneys or proxies shall be deemed
terminated and of no further force and effect. This proxy may also be revoked by
filing a written notice of revocation with the Secretary of the Trust or by duly
executing a proxy bearing a later date.

THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSITIONS.

<TABLE>
<S> <C> <C> <C>
1. The election as trustees of all nominees listed below (except as marked to the contrary).
/ / FOR / / VOTE WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S
NAME IN THE LIST BELOW.
CHESTER R. MACPHEE, JR. and REGINALD B. OLIVER
2. Ratification of the appointment of KPMG Peat Marwick as auditors for the fiscal year ending
December 31, 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment or postponement thereof.
</TABLE>

IMPORTANT: PLEASE DATE AND SIGN ON REVERSE SIDE.
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF TRUSTEES
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.

The undersigned acknowledges
receipt from the Trust, prior to the
execution of this proxy, of notice of
the Meeting, a Proxy Statement dated
March 28, 1994 and an Annual Report
to shareholders.
Dated: ________________________, 1994
_____________________________________
Signature of Shareholder
_____________________________________
Signature of Shareholder
Please sign exactly as your name(s)
appear(s) to the left. When signing
as attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held
jointly, each holder should sign.

PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.