UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
American Community Properties Trust
- --------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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was paid previously. Identify the previous filing by registration
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<PAGE>
AMERICAN COMMUNITY PROPERTIES TRUST
222 SMALLWOOD VILLAGE CENTER
ST. CHARLES, MD 20602
NOTICE OF 1999 ANNUAL MEETING OF
SHAREHOLDERS AND PROXY STATEMENT
April 29, 1999
Dear Shareholders:
On behalf of the officers and trustees of American Community
Properties Trust (the "Company"), you are cordially invited to attend the
Company's Annual Meeting of Shareholders to be held at 10:00 a.m. EST, on
Wednesday, June 23, 1999, at the Holiday Inn, James Craik Room, 45 St.
Patrick's Drive, St. Charles, Maryland.
At the meeting, shareholders of the Company will be asked to consider
and act upon the election of one trustee and ratification of auditors as
described in the formal Notice of Meeting and in the accompanying Proxy
Statement.
The trustees of the Company unanimously recommend that all
shareholders of the Company vote in favor of the two proposals presented.
Your vote is important regardless of the number of shares you own. We
strongly encourage all shareholders of the Company to participate by voting
their shares by proxy whether or not they plan to attend the meeting.
Please sign, date and mail the enclosed proxy as soon as possible. If you
do attend the meeting, you may still vote in person.
Sincerely,
/s/ J. Michael Wilson
J. Michael Wilson
Chairman and
Chief Executive Officer
<PAGE>
AMERICAN COMMUNITY PROPERTIES TRUST
222 SMALLWOOD VILLAGE CENTER
ST. CHARLES, MD 20602
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 23, 1999
TO THE SHAREHOLDERS OF AMERICAN COMMUNITY PROPERTIES TRUST:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
American Community Properties Trust (the "Company") will be held on
Wednesday, June 23, 1999, at 10:00 a.m. at the Holiday Inn, James Craik
Room, 45 St. Patrick's Drive, St. Charles, Maryland, for the following
purposes:
(1) To elect one trustee of the Company to serve until the Annual
Meeting of the shareholders in 2002;
(2) To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for 1999; and
(3) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Trustees has fixed the close of business on May 7, 1999
as the record date for the determination of the shareholders entitled to
notice of and to vote at the meeting and at any adjournment or postponement
thereof.
Shareholders are invited to attend the meeting. Whether or not you
expect to attend, we urge you to sign, date and promptly return the
enclosed proxy card in the enclosed postage prepaid envelope. If you
attend the meeting, you may vote your shares in person, which will revoke
any previously executed proxy.
If your shares are held of record by a broker, bank or other nominee
and you wish to attend the meeting, you must obtain a letter from the
broker, bank or other nominee confirming your beneficial ownership of the
shares and bring it to the meeting. In order to vote your shares at the
meeting, you must obtain from the record holder a proxy issued in your
name.
By Order of the Board of Trustees
Paul Resnik
Secretary
St. Charles, Maryland
April 29, 1999
<PAGE>
AMERICAN COMMUNITY PROPERTIES TRUST
222 SMALLWOOD VILLAGE CENTER
ST. CHARLES, MD 20602
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 23, 1999
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Trustees of American Community
Properties Trust, a Maryland real estate investment trust (the "Company" or
"ACPT"), for the 1999 Annual Meeting of the shareholders of the Company
(the "1999 Annual Meeting") to be held at the Holiday Inn, James Craik
Room, 45 St. Patrick's Drive, St. Charles, Maryland on Wednesday, June 23,
1999 at 10:00 a.m. The Notice of the Annual Meeting, this proxy statement
and the accompanying proxy are first being mailed on or about May 21, 1999
to shareholders of record of the Company's common shares ("Common Shares")
as of the close of business on May 7, 1999. You can ensure that your
shares are voted at the meeting by signing, dating and promptly returning
the enclosed proxy card in the envelope provided. Each share entitles the
registered holder to one vote. As of April 15, 1999, there were 5,191,554
Common Shares outstanding. Sending in a signed proxy will not affect your
right to attend the meeting and vote in person. You may revoke your proxy
at any time before it is voted by notifying the Secretary of the Company in
writing, or by executing a subsequent proxy, which revokes your previously
executed proxy. Additionally, if you attend the meeting, you may vote your
shares in person, which will revoke any previously executed proxy.
At the 1999 Annual Meeting, shareholders will have the opportunity to
elect one Trustee to serve until the Annual Meeting in 2002; to ratify the
selection of Arthur Andersen LLP to serve as the Company's independent
auditors for 1999; and to transact such other business as may properly come
before the meeting.
The Company's principal executive offices are located at 222 Smallwood
Village Center, St. Charles, Maryland, 20602.
VOTING OF PROXIES
Proxies will be voted as specified by the shareholders. Where
specific choices are not indicated, proxies will be voted FOR the election
of all nominees for Trustee. The presence in person or by proxy of
stockholders entitled to cast a majority of all votes entitled to be cast
at the 1999 Annual Meeting constitutes a quorum. The election of Trustees
requires the affirmative vote of a majority of the outstanding Common
Shares, in person or by proxy, and entitled to vote at the 1999 Annual
Meeting. Accordingly, abstentions and broker non-votes have the same
effect as a vote against the nominated trustee. The ratification of
auditors selection requires the affirmative vote of a majority of the
shares present and voting, in person or by proxy, at the meeting.
Accordingly, abstentions and broker non-votes have no effect on voting with
respect to the ratification of auditors.
<PAGE>
ELECTION OF TRUSTEES
At the 1999 Annual Meeting, one Trustee is to be elected to serve for
a term to expire at the 2002 Annual Meeting of the shareholders. The
nominee for election to serve until the 2002 Annual Meeting of the
shareholders is Pedro Vazquez. Mr. Vazquez was appointed by the Board of
Trustees as a Trustee in January 1999 to fill a vacancy on the Board of
Trustees to replace Donald G. Blakeman, who resigned on January 4, 1999.
Information regarding the Board's nominee for trustee is set forth below.
Information regarding the two Trustees whose terms expire in 2000 and the
two Trustees whose terms expire in 2001 is also set forth below.
Pursuant to the Company's Declaration of Trust and Bylaws, the Board
of Trustees consists of not less than three nor more than nine trustees,
with the initial number of trustees set at six. The Board of Trustees is
divided into three classes serving staggered terms, with each class
consisting of one-third of the total number of trustees. With the
resignation on March 10, 1999 of Francisco Arrivi Cros, the Board of
Trustees is currently comprised of five members. Mr. Arrivi's term would
have expired in 1999. The Board has not determined whether to fill the
vacancy attributable to Mr. Arrivi's resignation.
The accompanying proxy will be voted for election of the Board's
nominee unless contrary instructions are given. If the Board's nominee is
unable to serve, which is not anticipated, the persons named as proxies
intend to vote, unless the number of nominees is reduced by the Board of
Trustees, for such other person as the Board of Trustees may designate.
Recommendation of the Board of Trustees
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE ELECTION OF MR. PEDRO
VAZQUEZ AS TRUSTEE, WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED
PROXY CARD.
Nominee for Election to the Board of Trustees for a Three-Year Term to
Expire at the 2002 Annual Meeting of Shareholders.
Pedro Vazquez, 64. Mr. Vazquez has been a Trustee of the Company since
January 1999. He founded PMD Corporation, a project management and
development company, and has been its President since 1995. He served as
Executive Vice President with MJ Consulting and Development Co., a property
management and real estate developer, from 1992 to 1995. He is an attorney
with extensive practice in real estate financing, development, construction
and syndication of equity interest in social interest housing. He has
served as President of a daily newspaper, held the second ranking position
in the Government of Puerto Rico, and served on various Boards of Directors
in different industries, including real estate, insurance and
manufacturing. He graduated from the U.S. Naval Academy in Annapolis,
Maryland, with a degree in engineering in 1957, and from the University of
Puerto Rico with a law degree in 1964.
Members of the Board of Trustees Continuing in Office; Terms Expire at the
2000 Annual Meeting of Shareholders
Edwin L. Kelly, 57. Mr. Kelly has been a Trustee of the Company since
March 13, 1997. Mr. Kelly was President and Chief Operating Officer of
<PAGE>
Interstate General Company L.P. ("IGC") and Interstate General Management
Corporation ("IGMC") from 1997-1998. Prior to that, he served as Senior
Vice President and Treasurer of IGC and Senior Vice President of IGMC since
their formation in 1986. He has served in various executive positions with
IGC and its predecessor companies since 1974, including as a Director of
IGMC from 1986 to 1998.
Thomas B. Wilson, 36. Mr. Wilson has been a Trustee of the Company since
March 13, 1997. Mr. Wilson was a Director of IGMC from December 1995 to
October 1998. He has been a Vice President of one of IGC's general
partners, Interstate Business Corporation ("IBC") since 1994. From 1994 to
1998, he was President of El Comandante Operating Company, Inc. ("ECOC"),
which leased El Comandante Race Track in Puerto Rico from a subsidiary of
Equus Gaming Company L.P. ("Equus"). Since January 1998, he has served as
a Director, Chief Executive Officer, and President of Equus and Equus
Management Company ("EMC"). He is the brother of J. Michael Wilson.
Members of the Board of Trustees Continuing in Office; Terms Expire at the
2001 Annual Meeting of Shareholders
J. Michael Wilson, 33. Mr. Wilson has been a Trustee of the Company since
March 13, 1997. Mr. Wilson was a Director of IGMC from 1996 to 1998 and
from January 1997 to November 1998 was Vice Chairman, Secretary, and Chief
Financial Officer of IGC. He has been President and Chief Operating
Officer of IBC since 1994 and a Director since 1991. He served as Vice
President of IBC from 1991 to 1994. He has been a director of Wilson
Securities Corporation since 1991, and President since March 1996. He was
Vice President of Wilson Securities Corporation from 1991 to 1996. He has
been Vice President of Interstate Waste Technologies ("IWT") since 1994.
He is the brother of Thomas B. Wilson.
Thomas J. Shafer, 69. Mr. Shafer has been a Trustee of the Company since
August 3, 1998. He is a registered Professional Engineer specializing in
real estate evaluation and land development. He was a partner of Whitman,
Requardt and Associates, LLP ("Whitman Requardt"), an engineering and
architectural firm from 1976 through 1997 and its managing partner from
1989 through 1997. He has been a director of IGMC since January 1998. Mr.
Shafer currently serves as the President of the Charles Village Community
Benefits District and the Charles Village Community Foundation, Inc.
Whitman Requardt has provided engineering services to the Company for St.
Charles for thirty years.
Requirements of Board Members
Pursuant to the Company's Declaration of Trust and Bylaws, no fewer
than two of the members of the Board of Trustees must not be employed by
(i) the Company, (ii) any Affiliate of the Company, or (iii) a member of
the family of James J. Wilson, the President and Chief Executive Officer of
Interstate General Company L.P.
Committees of the Board--Board Meetings
The Board of Trustees held their first quarterly meeting on January 4,
1999. During 1998, the Board held two meetings by telephone. All members
attended one of the telephonic meetings and all but Mr. Thomas Wilson
attended the other telephonic meeting.
<PAGE>
The Board of Trustees established the following standing committees on
January 4, 1999:
Audit Committee. The Audit Committee will consist of no fewer than
two members, each of whom will be an Independent Trustee. The
responsibilities of the Audit Committee will include making recommendations
concerning the engagement of independent public accountants, reviewing with
the independent public accountants the plans for and results of the annual
audit engagement, approval of any other professional services provided by
the independent public accountants, approval of the fees paid to the
independent public accountants for audit and non-audit services, and
periodically reviewing, with the assistance of the independent public
accountants, the adequacy of ACPT's internal accounting controls. The
members of the Audit Committee are Messrs. Shafer and Vazquez.
Compensation Committee. The Compensation Committee will consist of no
fewer than two members, each of whom will be an Independent Trustee. The
Compensation Committee will be responsible for the administration of the
Share Incentive Plan and for approving the compensation of the executive
officers of ACPT. The members of the Compensation Committee are Messrs.
Shafer and Vazquez.
Nominating Committee. The Board of Trustees does not have a standing
committee for the recommendation of nominees for election to the Board of
Trustees. This function is performed by the entire Board of Trustees.
Compensation of Trustees
The Company pays its Trustees who are neither employees of the Company
or any of its Affiliates fees for their services as Trustees. Trustees
receive fees of $5,000 per quarter plus $1,400 per meeting and out of
pocket travel reimbursements for meeting attendance.
Pursuant to a consulting agreement, Thomas J. Shafer is paid $2,500
per month for the engineering and consulting services he provides the
Company. The agreement may be terminated by either party with a thirty day
notice.
Trustee Share Incentive Plan. The Trustee Share Incentive Plan
authorizes the Board of Trustees, in its discretion, to grant to eligible
Trustees awards of the same type and terms as the awards available under
the Employee Share Incentive Plan discussed in Executive Compensation.
Only Trustees who are not employees of ACPT or any affiliated company are
eligible to receive awards under the Trustee Share Incentive Plan. 52,000
Common Shares have been reserved for issuance under the Trustee Share
Incentive Plan.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the Chief Executive Officer and the four other most highly
compensated executive officers of the Company (the "Named Executive
Officers") as if they were ACPT employees during these periods. These
executive officers were employed by IGC, ACPT's predecessor, prior to the
completion of the restructuring and distribution of ACPT shares by IGC on
<PAGE>
October 5, 1998 ("the Restructuring"), at which time ACPT became
responsible for their salaries and benefits.
Long-Term
Compensation
------------
Annual Compensation Awards
--------------------------------- ------------
Securities
Other Underlying
Annual Options/ All Other
Name & Principal Year Salary Bonus Compensation SAR's Compensation
Position ($) ($) ($) (2) # ($) (1)
- ------------------- ---- ------- ------ ------------ ---------- ------------
James Michael Wilson 1998 90,834 -- -- -- --
Chairman & Chief 1997 14,167 -- -- -- --
Executive Officer 1996 -- -- -- -- --
Edwin L. Kelly 1998 273,217 -- -- -- 10,064
President & Chief 1997 223,827 -- -- -- 10,184
Operating Officer 1996 197,367 -- -- -- 9,492
Francisco Arrivi Cros 1998 275,300 -- -- -- 10,064
Executive Vice 1997 227,244 -- -- 32,500 9,420
President, Treasurer 1996 205,200 100,000 -- -- 9,492
Paul Resnik 1998 198,939 -- -- -- 10,064
Senior Vice 1997 168,781 -- -- 25,000 10,184
President, Secretary 1996 164,800 -- -- -- 9,492
Eduardo Cruz Ocasio 1998 111,800 -- -- -- 6,299
Vice President 1997 100,100 -- -- -- 5,428
1996 97,000 10,000 -- -- 4,488
(1) Reflects IGC's contributions to Retirement Plan discussed
below.
(2) Represents the difference between the price paid for common
shares of the Company obtained by exercising share options and
the fair market value of the shares at the date of purchase.
EMPLOYMENT AGREEMENTS
Each of Messrs. Kelly and Resnik entered into an employment agreement
(the "Employment Agreements") with American Rental Management Company
("American Management") on August 25, 1998. Pursuant to the Employment
Agreements, Mr. Kelly will serve as President and Chief Operating Officer
and will be paid an annual base salary of $275,000, and Mr. Resnik will
serve as Senior Vice President and will be paid an annual base salary of
$200,000. The Employment Agreements provide for salary raises at the
discretion of the Board of Trustees. Each of the Employment Agreements
will continue in effect until the death or resignation of the executive or
his termination by American Management or Interstate General Properties
Limited Partnership S.E. ("IGP"). Also on August 25, 1998, Mr. Arrivi
entered into an employment agreement with IGP pursuant to which he served
as Executive Vice President with an annual salary of $275,000. Mr. Arrivi
resigned effective March 10, 1999 and will receive no future compensation
under his employment agreement.
<PAGE>
Under the terms of the Employment Agreements, if the executive's
employment with American Management is terminated by American Management
other than for "cause" (as defined in the Employment Agreement), or is
terminated by the executive for "good reason" (as defined in the Employment
Agreement) the terminated executive will be entitled to continue to receive
his base salary for 24 months following the date of termination.
SHARE OPTIONS AND UNIT APPRECIATION RIGHTS
Certain named executive officers held options and/or incentive rights
pursuant to IGC's plan. Pursuant to the terms of the Restructuring, the
value of these options and rights were allocated between IGC and ACPT based
on their average closing price for the 20 days after they commenced trading
independently. As a result, ACPT options and incentive rights were issued
in 1998 to certain of the named executives. The value of these awards were
reported in the year of the original issue. These awards did not represent
additional compensation in 1998 and are not reported as such. The values
at December 31, 1998 of these options and rights are reflected below.
AGGREGATED OPTION/SHARE APPRECIATION RIGHTS EXERCISED IN 1998
AND DECEMBER 31, 1998 OPTION/SHARE APPRECIATION RIGHTS VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-money
Options Options and
and Share Share
Appreciation Appreciation
Rights at Rights at
December 31, December 31,
1998 1998
------------------------------
Units Value Exercisable/ Exercisable/
Acquired On Realized Unexercisable Unexercisable
Name Exercise (#) ($) (#) ($)
- ------------------- ------------ -------- ------------- --------------
J. Michael Wilson -- -- --/-- --/--
Edwin L. Kelly -- -- 16,000/4,000 0/0
Francisco Arrivi Cros (1) -- -- 21,500/28,500 0/0
Paul Resnik -- -- 5,000/20,000 0/0
Eduardo Cruz Ocasio -- -- 1,600/400 0/0
(1) Mr. Arrivi's options and rights cease to be exercisable on June
10, 1999.
LONG-TERM INCENTIVE PLAN
Under the Share Incentive Plan, the Compensation Committee of the
Board of Trustees may grant to key employees the following types of Share-
based incentive compensation awards ("Awards"): (i) options to purchase a
specified number of Common Shares ("ACPT Options"), (ii) forfeitable Common
Shares that vest upon the occurrence of certain vesting criteria
("Restricted Shares"), or (iii) Share Appreciation Rights ("ACPT Rights")
that entitle the holder to receive upon exercise an amount payable in cash,
<PAGE>
Common Shares or other property (or any combination of the foregoing) equal
to the difference between the market value of Common Shares and a base
price fixed on the date of grant. A total of 208,000 Common Shares has
been reserved for issuance under the Share Incentive Plan.
The Share Incentive Plan authorizes the Compensation Committee to
determine the exercise price and manner of payment for ACPT Options and the
base price for ACPT Rights. The Compensation Committee also is authorized
to determine the duration and vesting criteria for Awards, including
whether vesting will be accelerated upon a change in control of ACPT.
RETIREMENT PLAN
ACPT established a retirement plan (the "Retirement Plan") for
eligible employees of the Company. Employees are generally eligible to
participate when they complete one year of service. Time of service
performed for the Predecessor qualifies for the service requirement.
Contributions to the plan are 4% of base salaries and wages not in excess
of the U.S. Social Security taxable wage base, and 8% of salaries (limited
to $150,000) that exceed that wage base.
In addition, the Retirement Plan contains a profit sharing provision
allowing ACPT to award annual cash bonuses to the officers and employees in
reasonable amounts reflecting their contributions to the Company. The
awards are determined by the Compensation Committee. A portion of each
bonus is contributed on behalf of the employee to the Retirement Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's executive compensation programs for 1998 were
established by the Board of Directors of IGMC prior to the Restructuring.
Messrs. Wilson, Kelly and Arrivi were members of the IGMC Board and
participated in deliberations concerning executive compensation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In January 1999, the Company's Board of Trustees formed a Compensation
Committee comprised of Messrs. Shafer and Vazquez. The Compensation
Committee of the Board of Trustees is responsible for the administration of
the Share Incentive Plan and for approving the compensation of the
executive officers of ACPT. The newly formed compensation committee will
develop and establish a compensation plan during 1999.
Compensation Committee
Thomas J. Shafer
Pedro Vazquez
April 29, 1999
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Shares by each of the
Company's Trustees, the Company's Chief Executive Officer, each of the four
most highly compensated executive officers who were serving as executive
officers at the end of 1998, other than the Company's Chief Executive
<PAGE>
Officer, all Trustees and current executive officers as a group and each
person who is known by the Company to beneficially own five percent or more
of any class of the Company's voting securities as of March 1, 1999. The
Company has relied upon information supplied by its officers, trustees, and
certain shareholders and upon information contained in filings with the
SEC.
Number of
Shares of Percent of
Common Stock All Shares of
Name Beneficially Owned Common Stock
---- ------------------ -------------
James Michael Wilson, (1)(2) 89,920 1.73
Edwin L. Kelly, 55,607 1.07
Thomas B. Wilson, (1) 86,397 1.67
Francisco Arrivi Cros, (3) 5,000 *
Paul Resnik, 5,000 *
Eduardo Cruz Ocasio -- *
Thomas J. Shafer, -- *
Pedro Vazquez -- *
All Trustees and executive officers of
ACPT as a group (9 persons)(2)(3) 241,924 4.66
Bessemer Interstate Corporation 261,104 5.02
245 Peachtree Center Avenue #804
Atlanta, GA 30303
Interstate Business Corporation (1)(4)(5) 1,574,976 30.31
222 Smallwood Village Center
St. Charles, MD 20602
Wilson Securities Corporation 545,673 10.50
222 Smallwood Village Center
St. Charles, MD 20602 (1)(4)
* Less than 1%.
(1) These parties are members of the Wilson Group. The Wilson
Group is comprised of James J. Wilson, Barbara A. Wilson, their
six children, James Michael Wilson, Thomas B. Wilson, Kevin J.
Wilson, Elizabeth W. Weber, Mary P. Wilson and Brian J. Wilson,
Interstate Business Corporation, Wilson Securities Corporation
and Wilson Family Limited Partnership. The Wilson Group,
collectively has voting and dispositive control through direct
and indirect ownership of 51.54% of ACPT's outstanding shares
as reflected in James Michael Wilson's Schedule 13D. However,
there is no formal arrangement among the members of the group
in regard to their voting and dispositive voting rights.
(2) Includes 3,523 shares attributable to ACPT shares held by the
Wilson Family Limited Partnership, a partnership for which J.
Michael Wilson serves as a general partner.
(3) Includes 5,000 ACPT shares subject to options exercisable under
the ACPT (Trustees/Employees) Incentive Plan.
(4) Owned by certain members of the Wilson Family, including J.
Michael Wilson and Thomas B. Wilson.
(5) Includes 25,000 shares owned by Equus Management Company, a
wholly owned subsidiary of Interstate Business Corporation.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Staggered Transfer of Partnership Interests to American Housing Properties,
L.P. ("American Housing")
Prior to the Restructuring, the transfer from IGC to American Housing
of portions of IGC's general partnership interests in nine U.S. apartment
partnerships was not completed. The transfer of three of these
partnerships was completed in April 1999. These remaining transfers will
be deferred to permit IGC to obtain limited partner and HUD, where
required, consents or to avoid certain of the partnerships from triggering
a tax termination pursuant to Section 708 of the Code. The partnership
interests temporarily retained by IGC until the required consents can be
obtained are:
Essex Apartment Associates Limited Partnership--a 1% general
partnership interest
Brookside Gardens Limited Partnership--a 1% general partnership
interest
Lakeside Apartments Limited Partnership--a 1% general partnership
interest
The Essex limited partner consents for such transfer have been
obtained and IGC expects to submit the transfer approval request to HUD
within the next 30 days. IGC will use its best efforts to obtain the
remaining limited partner and HUD consents for such transfers as soon as
practicable. Pending such consent, IGC assigned to American Housing the
beneficial interest in Brookside Gardens and Lakeside and any distributions
received from Essex to the extent that such distributions would not
disqualify American Rental as a REIT. Any distributions received by IGC
from Essex that cannot be assigned to American Housing will be assigned to
American Land.
The partnership interests temporarily retained by IGC to avoid a
technical termination of the partnership under Section 708 of the Code are:
Headen House Associates Limited Partnership--a .6% general
partnership interest
Palmer Apartments Associates Limited Partnership--a .6% general
partnership interest
Wakefield Terrace Associates Limited Partnership--a .6% general
partnership interest
Wakefield Third Age Associates Limited Partnership--a .6% general
partnership interest.
Subject to obtaining prior consent of Banc One, IGC will transfer its
retained interest in these Apartment Partnerships on October 7, 1999.
Prior to that time, IGC will retain the economic benefits associated with
the retained interests.
<PAGE>
ACPT will indemnify and hold IGC harmless from any liability to any
third party arising after the initial transfer of partnership interests
that might be imposed upon IGC in its capacity as a general partner of any
of the nine apartment partnerships in which it temporarily retains an
interest.
14 Acre Commercial Land Parcel
IGC retained ownership to a 14 acre commercial land parcel in St.
Charles. Pursuant to the terms of the Restructuring, IGC conditionally
agreed to transfer this parcel to American Land Development U.S., Inc.
("American Land") if and when IGC settles the wetlands litigation on terms
approved by the Board of Directors of IGMC, provided that IGC shall have
received confirmation that the transfer of this parcel (and resulting
decrease in the value of IGC's assets) will not cause the IGC Units to be
delisted from the American Stock Exchange or the Pacific Exchange. If IGC
is unable to settle the wetlands litigation on satisfactory terms or IGC
does not receive confirmation of the continued listing of IGC Units, IGC
will retain this parcel. This land is encumbered by the Banc One loan
discussed below.
Consulting Agreement.
American Rental Management Company ("American Management") entered
into a consulting and retirement compensation agreement with IGC's founder
and Chief Executive Officer, James J. Wilson, effective October 5, 1999.
The Consulting Agreement (the "Consulting Agreement") provides for annual
cash payments during the first two years of $500,000 and annual cash
payments for eight years thereafter of $200,000. However, if Mr. Wilson
dies or ACPT is sold during the term of the Consulting Agreement, the
agreement provides for a lump sum payment equal to the lesser of $400,000
or the aggregate of annual payments then payable under the agreement.
During the Consulting Agreement term, Mr. Wilson will remain available to
provide consulting services requested from time to time by the Board of
Trustees including strategic planning and transaction advisory services.
Pursuant to the Consulting Agreement, American Management will reimburse
the reasonable costs and expenses incurred by Mr. Wilson in providing
requested consulting services. At the request of Mr. Wilson, ACPT has been
making payments under this Consulting Agreement to IGC. Mr. Wilson is the
father of J. Michael Wilson and Thomas B. Wilson.
Banc One Financing.
On September 19, 1997, IGC refinanced substantially all of its U.S.
land development recourse indebtedness pursuant to a Master Loan Agreement
dated August 1, 1997 by and among IGC, ACPT, St. Charles Community LLC and
Banc One. As of March 1, 1999, the outstanding loan balance is
$15,044,000. The loan bears interest at prime plus 2.5% and requires
semi-annual principal payments of $1 million during the first year and $1.5
million thereafter until maturity at the end of the seventh year. The loan
is secured by substantially all of ACPT's assets and the 14 acre commercial
land parcel discussed above. During the first 3 years of the loan, Banc
One is generally entitled to receive 50% of the net sales proceeds of any
collateral as a mandatory principal curtailment with the percentages
increasing to 60% in years 4 and 5, 70% in year 6, and 80% in year 7. The
loan with Banc One requires additional interest payments on each annual
anniversary date. The amount due is 1% of the outstanding balance in 1998
and 1999, and increases 1/2% each year thereafter, through 2003.
<PAGE>
In connection with the loan, IGC granted Banc One options to purchase
225,000 IGC Units at an exercise price of $3.0016 per unit. The IGC options
were replaced with ACPT options to purchase 112,500 ACPT common shares for
$6.10 per share. During any year that the loan remains outstanding, ACPT
is required to grant Banc One 37,500 additional options with an exercise
price equal to the lesser of $6.10 or the market price on the date of
grant.
IGC remains liable to Banc One for outstanding indebtedness but was
released from most of the other covenant obligations. ACPT has agreed to
indemnify and hold harmless IGC from any liability under the Banc One loan.
Joint Litigation with Charles County.
In connection with the Restructuring, IGC has assigned to ACPT its
rights under the 1989 settlement agreement with Charles County. However,
with respect to pending litigation to enforce the settlement agreement, IGC
has retained its claim for any monetary damages for excess sewer connection
fees and impact fees paid prior to the Distribution that may be awarded as
a result of such litigation. See Item 3 "Legal Proceedings" in the
Company's Annual Report on Form 10-K.
Services of Whitman, Requardt.
Whitman, Requardt, an engineering and consulting firm of which Thomas
Shafer, ACPT trustee and IGC director, recently retired as the managing
partner, has regularly performed engineering, surveying, inspection and
environmental assessment services for ACPT and its predecessors with
respect to the St. Charles land assets for over 30 years. Whitman,
Requardt has charged IGC and ACPT $146,000 for services performed in 1998,
and as of March 1, 1999 ACPT owes Whitman, Requardt $172,000 for services
rendered.
NationsBank Letter of Credit.
NationsBank has issued in the name of IGC a standby letter of credit
in the face amount of $4.2 million which serves as collateral for municipal
bonds in the principal amount of $4.2 million issued by a District of
Columbia agency that financed the Chastleton Apartments. IGC's obligations
under the letter of credit are secured by certain IGC assets and by
partnership interests in three apartment partnerships indirectly owned by
ACPT. Additional collateral has been provided by Interstate Business
Corporation ("IBC"), one of IGC's general partners, and IBC has undertaken
steps to replace the NationsBank letter of credit with a letter of credit
secured only by assets of IBC.
Payments to IBC for Services Provided by J. Michael Wilson.
J. Michael Wilson, the Chairman of ACPT and President of IBC, is on
the payroll of IBC. ACPT will reimburse IBC for one half of Mr. Wilson's
salary, up to $90,000 per year, plus the amount of related costs, including
FICA and FUTA taxes, incident to such salary.
<PAGE>
Apartment Management Services.
ACPT provided management services to five apartment rental projects
and two commercial properties in which ACPT is not the general partner and
IBC or an IBC related entity holds an ownership interest. The management
contracts provide for fees ranging from 2.5% to 3.5% of rents. Total fees
in 1998 were $568,000. Management believes that the terms of these
transactions are comparable to those that could be negotiated with an
independent third party.
Support Services Provided IGC.
During the transition period after the Restructuring, the Company has
provided land development, accounting, tax, human resources, payroll
processing and other miscellaneous administrative support services to IGC.
After the transition period, ACPT has agreed to continue to provide human
resources, payroll processing and tax services to IGC on a cost
reimbursement basis. During 1998, IGC was billed $67,000 for these
services. As of December 31, 1998, $58,000 of these fees were outstanding.
Land Development Associates S.E. ("LDA") Receivable.
IGC will retain a portion of a $9 million receivable due from LDA
after the completion of the Restructuring. The note receivable is payable
from LDA's first available cash flow determined by ACPT after debt service,
cost of operations and working capital requirements. ACPT retained the
right to collect the first $2,400,000 paid on this note.
SHARE PRICE PERFORMANCE GRAPH
The following share price performance graph compares cumulative total
returns of the Company and the indicated indexes assuming an investment of
$100 on October 6, 1998 (first trading day following the Restructuring) and
the two indices on September 30, 1998 and further assumes the reinvestment
of all dividends. Stock price performance is not necessarily indicative of
future results.
(The performance graph appears here. The plot points are listed in the
table below.)
Total Return Performance
(price appreciation plus dividends paid plus dividends reinvested)
Period Ending
-----------------
Company/Index 10/6/98 12/31/98
------------- ------- --------
American Community Properties Trust 100 60.71
Standard and Poor 500 Index 100 151.54
NAREIT Equity REIT Index 100 95.21
PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees has appointed the firm of Arthur Andersen LLP,
certified public accountants, to audit the accounts of ACPT and its
subsidiaries for fiscal 1999. Arthur Andersen LLP served as the Company's
<PAGE>
independent accountants for fiscal 1998. Representatives of this firm are
expected to be present at the 1999 Annual Meeting, with the opportunity to
make a statement, should they desire to do so, and will be available to
respond to appropriate questions from shareholders. The Board recommends a
vote "For" Proposal No. 2.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each director and officer of the Company is required to file with the
Securities and Exchange Commission, by a specified date, reports regarding
his or her transactions involving the Company's Common Shares. To the
Company's knowledge, based solely on the information furnished to the
Company and written representations that no other reports were required,
during the fiscal year ended December 31, 1998, all such filing
requirements were complied with.
ANNUAL REPORT
The Company's audited financial statements and notes thereto,
including selected financial data and management's discussion and analysis
of financial condition and results of operations for the year ended
December 31, 1998, are included on page 16 through 54 of the Company's
Annual Report on Form 10-K, which is being mailed to all shareholders with
this proxy statement.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholders who intend to submit proposals for consideration at the
Company's next annual meeting of shareholders must submit such proposals to
the Company no later than February 25, 2000, in order to be considered for
inclusion in the proxy statement and form of proxy to be distributed by the
Board in connection with that meeting. Shareholder proposals should be
submitted to American Community Properties Trust, Attn: Paul Resnik,
Secretary, 222 Smallwood Village Center, St. Charles, Maryland, 20602.
OTHER MATTERS
The Board of Trustees does not know of any matter other than those
described in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons
named as proxies intend to vote the shares they represent in accordance
with their judgment.
EXPENSES OF SOLICITATION
The cost of proxy solicitation will be borne by the Company. In an
effort to have as large a representation at the meeting as possible,
special solicitation of proxies may, in certain instances, be made
personally, or by telephone, telegraph, or mail by one or more Company
employees. The Company will also reimburse brokers, banks, nominees and
other fiduciaries for postage and reasonable clerical expenses of
forwarding the proxy materials to their principals, the beneficial owners
of the Company's Shares.
Paul A. Resnik
Secretary
<PAGE>
AMERICAN COMMUNITY PROPERTIES TRUST
Proxy for Meeting of ACPT Shareholders on June 23, 1999
The undersigned, a shareholder of American Community Properties Trust, (the
"Company") hereby appoints Edwin L. Kelly and Paul Resnik, and each of them
individually, as Proxies to represent and vote all of the Company's Common
Shares held of record by the undersigned, each with full power of substitution,
at the Annual Meeting of Shareholders of the Company, to be held at the Holiday
Inn, James Craik Room, 45 St. Patrick's Drive, St. Charles, Maryland, on
Wednesday, June 23, 1999 at 10:00 a.m., EST, and at any adjournment or
postponement thereof, as follows on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE BELOW. IF A CHOICE IS NOT INDICATED
WITH RESPECT TO ITEM (1) BELOW, THIS PROXY WILL BE VOTED "FOR" SAID PROPOSAL OR
PROPOSALS. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
1. To elect 1 director of the Company for a term of three years.
Nominee: Pedro Vazquez
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ] ______________________________________
For all nominees except as noted above
2. Ratification of the selection of Arthur Andersen LLP as the Company's
Independent Accountants for 1999 FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting of any adjournment or
postponement thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
The undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 29, 1999.
Please complete, sign, and date this proxy card and return it promptly in the
enclosed postage prepaid envelope or otherwise to P.O. Box 2637, Waldorf,
Maryland 20604.
- ---------------------------------------- ---------------------
Name of Shareholder Number of Shares Held
, 1999
- ---------------------------------------- ---------------------
Signature Date
- ----------------------------------
Title or Authority, if applicable
Note: If Shares are registered in more than one name, the signatures of all
such persons are required. A corporation should sign in its full
corporate name by a duly authorized officer, giving his or her title.
A partnership should sign in the partnership name by an authorized
person. Trustees, guardians, executors and administrators should sign
in their official capacity, giving full title as such.
PLEASE COMPLETE, SIGN AND DATE THIS CARD AND RETURN IT PROMPTLY.
