WESTERN INVESTMENT REAL ESTATE TRUST, DEF 14A, 1995-04-03

WESTERN INVESTMENT REAL ESTATE TRUST
DEF 14A, 1995-04-03
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 (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

WESTERN INVESTMENT REAL ESTATE TRUST
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (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:
------------------------------------------------------------------------
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
3450 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94118
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 1995

Notice is hereby given that the annual meeting of the shareholders of
Western Investment Real Estate Trust will be held at the Bank of America Center,
Bankers Club of San Francisco, Pacific Room, 52nd Floor, 555 California Street,
San Francisco, California, at 10:00 a.m., on Thursday, May 11, 1995, for the
following purposes:

(1) To elect two trustees to Class I for three-year terms to expire at the
conclusion of the 1998 annual meeting.

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

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

All shareholders of record at the close of business on March 14, 1995, are
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, 1995

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 11, 1995, at 10:00 a.m., at the Bank of America Center, Bankers Club of San
Francisco, Pacific Room, 52nd Floor, 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, 1995, 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, 1995.

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 11, 1995, 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, 16,745,026 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 I) are to be elected at the 1995
annual meeting. Under the terms of the Declaration of Trust, the five 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 1996, three of such
trustees (Class II) will stand for election for a three-year term. In 1997, the
remaining two trustees (Class III) 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 1998 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, 1995, 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 I trustees nominated for election as
trustees this year for a term of three years expiring at the conclusion of the
1998 annual meeting of shareholders is set forth below:

2
<PAGE>
Information regarding the trustees who are not standing for election this
year is set forth below:

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED DIRECTLY OR
TRUSTEE INDIRECTLY AS OF TERM TO
NAME PRINCIPAL OCCUPATION SINCE MARCH 1, 1995(1) EXPIRE
- ---------------------------- ------------------------------------ ---------- -------------------------- ------------
<S> <C> <C> <C> <C>
O.A. Talmage Mr. Talmage, 71, is the Chairman of 1962 150,799(0.90%)(3) 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
officer 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, 71, is the retired Vice 1985 17,000(0.10%)(4) 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, 47, is an Executive 1986 22,226(0.13%)(5) 1996
Vice President and the Chief Oper- (Class II)
ating Officer of the Trust. During
the past five years his principal
occupation 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.
Chester R. MacPhee, Jr. Mr. MacPhee, 61, is the retired Ex- 1971 251,743(1.50%)(6) 1997
ecutive Vice President and Chief (Class III)
Financial Officer of the Trust. Dur-
ing the past five years his
principal occupation has been
officer and trustee of the Trust.
Reginald B. Oliver Mr. Oliver, 56, is a private 1984 48,000(0.29%)(7)(8) 1997
investor. Until April 1, 1990, he (Class III)
was Executive Vice President of the
Pershing Division of Donaldson,
Lufkin & Jenrette Securities
Corporation, an investment banking
firm, and continues to be associated
with the firm as a consultant.
All executive officers and trustees (7) persons................... -- 502,720(3.00%)(9) --
<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 that are not owned but as to which options are
outstanding and may be exercised within 60 days of the date of this proxy
statement. Shares owned in certain cases reflect the lapse of stock options
that were included in the prior-year proxy. There were no sales of shares
by the trustees during 1994.
(2) Includes beneficial ownership of 2,000 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
</TABLE>

3
<PAGE>
<TABLE>
<S> <C>
(3) Includes beneficial ownership of 28,200 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
(4) Includes beneficial ownership of 2,000 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
(5) Includes beneficial ownership of 8,000 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
(6) Includes beneficial ownership of 8,000 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
(7) Includes beneficial ownership of 2,000 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
(8) Includes 3,000 shares held by Mr. Oliver's wife as custodian for their
minor children. Mr. Oliver disclaims any ownership of such shares.
(9) All executive officers of the Trust are trustees. In addition to the
502,720 shares indicated above, a Trustee Emeritus beneficially owned
96,533 shares as of 3/1/95, which would increase the total held by all
executive officers, trustees and Trustees Emeritus to 599,253, or 3.58% of
total shares outstanding.
</TABLE>

BOARD AND COMMITTEE MEETINGS

During 1994, the Board of Trustees held four meetings. The Executive
Committee of the Board of Trustees presently comprises O.A. Talmage, William A.
Talmage, Chester R. MacPhee, Jr., and Dennis D. Ryan. 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 18 meetings in 1994.

The Trust has no standing nominating committee. It does have an Audit
Committee that meets 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 presently comprises
James L. Stell, Reginald B. Oliver, John R. Beckett and Chester R. MacPhee, Jr.
The committee held two meetings in 1994.

The Compensation Committee is responsible for administering and approving
compensation for trustees and officers and certain other employees. The
Compensation Committee held two meetings in 1994. The Committee presently
comprises Reginald B. Oliver, James L. Stell, John R. Beckett and Chester R.
MacPhee, Jr.

Each of the trustees attended at least 75% of the total number of board
meetings and meetings of committees on which they served in 1994.

OWNERSHIP OF SHARES

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

4
<PAGE>
The following table sets forth beneficial ownership of the Trust's shares
with respect to each person known by the Trust to own more than 5% of
outstanding shares as of December 31, 1994.

<TABLE>
<CAPTION>
NAME AND BUSINESS AMOUNT & NATURE OF
ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP PERCENT OF SHARES
- ----------------------------------------------------------------------- --------------------- ------------------
<S> <C> <C>
The Capital Group Companies, Inc. and 1,205,010(1) 7.2%
Capital Research and Management Co.
333 South Hope Street
Los Angeles, CA 90071
Smith Barney Inc. and Smith Barney Holdings, Inc. 1,179,232 7.1%
1345 Avenue of the Americas
New York, NY 10105
and their parent company
The Travelers Inc.
65 East 55th Street
New York, NY 10022
LaSalle Advisors Limited Partnership 887,752 5.3%
11 South LaSalle Street
Chicago, IL 60603
<FN>
- ------------------------
(1) Capital Guardian Trust Company and Capital Research and Management Company,
operating subsidiaries of The Capital Group Companies, Inc., exercised as
of December 31, 1994, investment discretion with respect to 2,610 and
1,202,400 shares, respectively, or a combined total of 7.2% of outstanding
shares of the Trust. Such shares are beneficially owned by various
institutional investors. No managed account by itself owns 5% or more of
outstanding shares as of December 31, 1994.
</TABLE>

Additionally, CEDE, a stock depository for brokers and other nominees, as of
the record date, holds approximately 14,240,644 shares, or 84% of the Trust's
outstanding shares, in its capacity as a stock depository.

COMPENSATION OF TRUSTEES

During 1994, John R. Beckett, Reginald B. Oliver, James L. Stell, and
Chester R. MacPhee, Jr., each received an annual independent trustee fee of
$14,000 and $500 for each Board meeting or Board committee meeting attended,
other than Executive Committee meetings. Mr. MacPhee was paid $500 per quarter
for serving on the Executive Committee. Mr. MacPhee received a prorated portion
of the $14,000 annual fee for the period February 1, 1994, through December 31,
1994. He received a salary through January 31, 1994, the date of his resignation
as EVP and CFO. Management trustees 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.

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 1994.

5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS

The following table shows for the fiscal years ending December 31, 1994,
1993 and 1992, 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, 1994:

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 1994 $ 275,000 0 0 51,000 0(2)
President & CEO 1993 275,000 0 0 45,000 0(2)
Chairman of the Board 1992 275,000 0 0 0 0(2)
William A. Talmage 1994 135,000(3) 0 $ 794(4) 15,000 $ 8,100(5)
Executive Vice President 1993 130,000(3) 0 794(4) 0 3,900(5)
& Chief Operating Officer 1992 115,000(3) 0 794(4) 0 3,300(5)
Dennis D. Ryan 1994 115,833(3) 0 293(4) 15,000 5,975(5)
Vice President & Chief 1993 --(6) -- -- -- --
Financial Officer 1992 --(6) -- -- -- --
<FN>
- --------------------------
(1) None of the named individuals received perquisites that 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 the named
executives.
(5) Comprises the Trust's employer matching contribution and discretionary
contribution under 401(k) Plan.
(6) Dennis D. Ryan became an executive officer in 1994. His compensation for
1992 or 1993 is not required to be disclosed.
</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 adopted during 1990.
During 1994, the Trust had no other bonus, profit-sharing, stock purchase,
deferred compensation or other remuneration or incentive plan in effect or in
effect since the date of its organization.

TRUSTEE EMERITUS PROGRAM AND DEATH AND DISABILITY PROGRAM

Four persons, Chester R. MacPhee, Sr., Bernard Etcheverry, O.A. Talmage and
Chester R. MacPhee, Jr. are eligible to participate in the Trust's Trustee
Emeritus, and Death and Disability programs. Chester R. MacPhee, Sr., a founder,
elected to become a Trustee Emeritus effective January 1, 1991, and
subsequently, on August 1, 1994, qualified for disability benefits under the
Death and

6
<PAGE>
Disability Program. Bernard Etcheverry, a founder, elected to become a Trustee
Emeritus effective January 1, 1993. These programs were adopted by the Trust in
1986 to replace the then existing Retirement Benefits Plan that 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, Sr.) 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,
Sr., Talmage, Etcheverry and MacPhee, Jr. would have been entitled to $253,000,
$561,000, $1,042,000 and $835,000, respectively, had they qualified for
increased lump sum severance payments in connection with a change of control
under the programs as of December 31, 1994. The four persons eligible for
benefits under the programs, as a group, would have been entitled to receive a
total of $2,691,000, had they all qualified for increased lump sum severance
payments under the programs as of December 31, 1994. 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.

7
<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>
11/20/89 36,500 $ 18.00
11/18/91 35,300 11.44
11/23/92 15,400 12.63
11/11/93 67,000 13.81
6/28/94 25,000 13.88
11/11/94 81,800 12.31
</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 1994 as shown on
the following table:

STOCK OPTION 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 25,000 100.0% $ 13.88 6/14/2000 $ 117,900 $ 267,100
26,000 31.8% 12.31 11/11/2000 108,800 246,400
William A. Talmage 15,000 18.3% 12.31 11/11/2000 62,800 142,200
Dennis D. Ryan 15,000 18.3% 12.31 11/11/2000 62,800 142,200
<FN>
- ------------------------
(1) Options are exercisable as to 20% of the shares covered by the grant at the
end of each year for five years. No option is exercisable after six years
from the date of grant. No SARs have been granted.
</TABLE>

8
<PAGE>
The number and value of unexercised options at year-end 1994 are shown on
the following table:

FISCAL YEAR-END OPTION VALUE

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1994 AT DECEMBER 31, 1994(1)
-------------------------------- --------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------- -------------------------------- --------------------------
<S> <C> <C>
O.A. Talmage 28,200/91,800 $ 10,332/$21,578
William A. Talmage 8,000/19,000 8,610/ 14,215
Dennis D. Ryan 2,000/23,000 --/ 8,475
<FN>
- ------------------------
(1) Fair market value of shares at December 31, 1994 ($12.875) minus the
exercise price of the in-the-money options ($11.440 and $12.310). No
options were exercised during 1994.
</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 "401(k) Plan") in 1990. Under the 401(k) Plan, the Trust makes
contributions as follows: (a) the total amount of compensation deferred by all
eligible employees through salary-deferral contributions to the 401(k) 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 401(k) Plan
participants on completion of six months of employment and the attainment of age
21; however, under the 401(k) Plan the Trust will not make discretionary
matching contributions or discretionary profit-sharing contributions on behalf
of Chester R. MacPhee, Sr., 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 1994, the Trust made approximately $81,442
of discretionary contributions for all eligible employees. Inasmuch as the
401(k) Plan is a defined contribution plan, rather than a defined benefit plan,
it is not possible to definitively estimate annual benefits upon retirement.

9
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Trustees ("Committee"), composed
during 1994 of four non-employee trustees, is responsible for administering and
approving salaries for trustees, officers and department heads, as well as any
employee earning a base salary of $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.

COMPENSATION PHILOSOPHY AND OBJECTIVES

It is the philosophy of the Compensation Committee and the Trust that in
order to meet the Trust's goal to increase long-term shareholder value, the
Trust must develop and maintain a compensation program that attracts, motivates
and retains qualified executives.

The compensation program comprises a base salary, 401(k) plan and stock
option plan. The Committee reviews the compensation program annually. The
Committee consults several sources of information and data related to salary
trends in similar companies and other real estate investment trusts. The
Committee also evaluates the Trust's operating performance, financial position
and the results compared with the industry and real estate in general. The
primary measure of performance reviewed by the Committee is the level of funds
from operations generated and available for distribution to shareholders.

BASE SALARY

Executive salaries are determined through an evaluation of the
responsibilities of the position held and the experience of the individual and
by reference to salary levels paid in comparable companies for comparable
positions. Consideration is also given to the Trust's financial performance and
the attainment of certain individual non-financial objectives during the
preceding year. The Committee monitors on an annual basis total administrative
expenses as a percentage of assets and intends to compare favorably to other
real estate investment trusts.

No increase in base salary was granted during 1994 to Mr. O.A. Talmage, the
Trust's Chief Executive Officer. Mr. Talmage's base salary of $275,000 remains
unchanged from fiscal year 1990. Each year in determining the base salary of Mr.
Talmage, the Committee considers the Trust's earnings, growth in funds from
operations and dividends paid per share.

STOCK OPTIONS

The Compensation Committee believes that the best interests of shareholders
and executives will be closely aligned by providing executives, as well as other
key officers and employees who have substantial responsibility for the
management of the Trust and its assets, an opportunity to increase their
ownership in the Trust. Stock option award levels are based on the recipient's
responsibilities, ability to influence shareholder value and total compensation.
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.

10
<PAGE>
During 1994, eleven employees received stock option grants, including the
Chief Executive Officer. Mr. Talmage, the CEO, was granted options to purchase
51,000 shares of beneficial interest, as set forth in the Stock Option Grant
Table. No benefit will inure to Mr. Talmage or any other recipient unless stock
price appreciation occurs over the term of the option.

Submitted by the Compensation
Committee
Reginald B. Oliver, CHAIRMAN
John R. Beckett
Chester R. MacPhee, Jr.
James L. Stell

11
<PAGE>
COMPANY PERFORMANCE

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
WIRET NAREIT EQUITY INDEX (2) S&P 500 INDEX
<S> <C> <C> <C>
89 $100 100 100
90 81.77 84.65 96.83
91 71.42 114.86 126.41
92 84.73 131.62 136.1
93 95.82 157.49 149.7
94 105.09 162.49 159.27
<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 173 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 173 REITS have a total market
capitalization of $38.8 billion. The NAREIT Equity Index is maintained by
the National Association of Real Estate Investment Trusts, Washington, D.C.
</TABLE>

12
<PAGE>
APPOINTMENT OF AUDITORS

KPMG Peat Marwick LLP, Certified Public Accountants, were the auditors for
the Trust for the year ended 1994. The Board of Trustees has appointed KPMG Peat
Marwick LLP as auditors for the year ending December 31, 1995, and recommends to
the shareholders that such appointment be approved. Representatives of KPMG Peat
Marwick LLP 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 1996 annual shareholder's meeting must be received by the
Secretary of the Trust no later than December 2, 1995.

Dated: San Francisco, California
March 28, 1995

BARBARA J. DONHAM
SECRETARY

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

A COPY OF THE TRUST'S 1994 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.
- --------------------------------------------------------------------------------

13
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 1995
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, John R. Beckett and
Dennis D. Ryan 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, 1995, at the annual meeting of
shareholders to be held on May 11, 1995 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.

JOHN R. BECKETT AND DENNIS D. RYAN

2. Ratification of the appointment of KPMG Peat Marwick LLP as auditors for the fiscal year
ending December 31, 1995.

/ / 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, 1995 and an Annual Report
to shareholders.
Dated: ________________________, 1995
_____________________________________
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.