<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE PEREGRINE 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with 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> 2
THE PEREGRINE REAL ESTATE TRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 1997
The Annual Meeting of Shareholders of The Peregrine Real Estate Trust
(the "Trust") will be held at the Holiday Inn -- Sacramento I-80 (Northeast),
5321 Date Avenue, Sacramento, California, 95841, on Friday, May 30, 1997, at
10:00 a.m. local time, for the following purposes:
1. To elect five Trustees for a term of one year.
2. To ratify the appointment of the Trust's independent certified
public accountants.
3. To transact such other business as may properly come before
the meeting or any postponement or adjournment thereof.
The Board of Trustees has fixed the close of business on April 16,
1997 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any postponement or adjournment
thereof.
The Trust's Annual Report to Shareholders for the year ended December
31, 1996 accompanies this Notice of Annual Meeting of Shareholders and Proxy
Statement. You are requested to date, complete and sign the enclosed proxy,
which is solicited by the Trust's Board of Trustees, and return it promptly in
the enclosed envelope. Shareholders who execute and return proxies retain the
right to revoke them at any time prior to the voting thereof.
By Order of the Board of Trustees
1300 Ethan Way, Suite 200
Sacramento, California 95825
May 2, 1997
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE YOUR SHARES IN PERSON EVEN IF YOU HAVE PREVIOUSLY
SUBMITTED A PROXY.
<PAGE> 3
THE PEREGRINE REAL ESTATE TRUST
1300 Ethan Way, Suite 200
Sacramento, California 95825
Telephone: (916) 929-8244
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 30, 1997
This Proxy Statement and the accompanying proxy card are being
furnished in connection with the solicitation of proxies by the Board of
Trustees of The Peregrine Real Estate Trust (the "Trust"), 1300 Ethan Way,
Suite 200, Sacramento, California 95825, for use at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on May 30, 1997 at the Holiday
Inn -- Sacramento I-80 (Northeast), 5321 Date Avenue, Sacramento, California
95841. The proxies that are solicited may be revoked at any time prior to the
voting thereof. All properly executed proxies received by the Trust and not
revoked will be voted as directed or, if no direction is given, as recommended
by the Trust. The proxies will also be voted in the discretion of the appointed
proxyholders on any other matter of business properly brought before the Annual
Meeting or any postponement or adjournment thereof.
The cost of soliciting proxies in the enclosed form will be borne by
the Trust. The Trust may reimburse brokerage firms or other persons
representing beneficial owners of shares for their expenses incurred in
forwarding solicitation materials to such beneficial owners. This Proxy
Statement is first being mailed to shareholders on or about May 2, 1997.
STATUS OF THE TRUST
In October 1994, the Trust emerged from bankruptcy under a Plan of
Reorganization (the "Plan") approved by the U.S. Bankruptcy Court. As a result
of the Plan, approximately 52% of the Trust's outstanding Common Shares of
Beneficial Interest (the "Common Shares") are held among a group of secured
lenders which includes The Prudential Insurance Company of America, Pacific
Mutual Life Insurance Company, ORIX USA Corporation and Trust Company of the
West (the "Senior Lender Group"). The Senior Lender Group also holds all of
the outstanding Redeemable Convertible Preferred Shares of the Trust (the
"Preferred Shares"). The Trust has received written notice from certain members
of the Senior Lender Group of their intention to nominate four candidates for
election as Trustees at the Annual Meeting. See "Election of Trustees --
Potential Alternative Nominees to the Board of Trustees." Additional information
concerning the Senior Lender Group, the Plan and the financial status of the
Trust is included in the Trust's Annual Report for the year ended December 31,
1996, a copy of which is included with this Proxy Statement.
OUTSTANDING SHARES AND VOTING RIGHTS
As of April 16, 1997, the record date for determining shareholders
entitled to vote at the Annual Meeting, there were outstanding and entitled to
vote on the matters described herein a
<PAGE> 4
total of 4,881,122 Common Shares. Each holder of Common Shares shall be
entitled to one vote for each share held on the record date, except that, for
the election of Trustees, subject to the requirements described below, each
holder of such shares may be entitled to cumulative voting rights, under which
he or she would have as many votes as equals the number of shares held,
multiplied by four, the number of trustee positions to be filled by the holders
of the Common Shares, all of which votes may be cast for a single candidate or
distributed among any or all of the candidates in such proportions as such
shareholder sees fit. However, no shareholder will be entitled to cumulate
votes with respect to a candidate unless the candidate's name was placed in
nomination prior to the voting and unless the shareholder has given notice at
the meeting (prior to the voting) of the shareholder's intention to cumulate
votes. If any one shareholder has given such notice, all shareholders may
cumulate their votes for candidates in nomination.
As to all matters on which holders of Common Shares are entitled to
vote, a majority of the outstanding Common Shares, represented in person or by
proxy, will constitute a quorum. Votes at the Annual Meeting will be tabulated
by one or more independent inspectors of election appointed by the Trust.
Abstentions and votes withheld by brokers in the absence of instructions from
street-name holders (broker non-votes) will be included in the determination of
shares present at the Annual Meeting for purposes of determining the presence
of a quorum, i.e., a majority of the shares outstanding on the record date.
Abstentions will be counted toward the tabulation of votes cast on proposals
submitted to shareholders and will have the same effect as negative votes,
while broker non-votes will not be counted as votes cast for or against such
matters.
The Trust's Amended and Restated Declaration of Trust provides that,
so long as any Preferred Shares are outstanding, the Trust is to be managed by
a Board of five Trustees, four of whom are to be elected by the holders of
Common Shares and one of whom is to be elected by the holders of Preferred
Shares. As of April 16, 1997, the record date for determining shareholders
entitled to vote at the Annual Meeting, there were outstanding and entitled to
vote on the matters described herein a total of 14,424,362 Preferred Shares, all
of which were held by the Senior Lender Group. Therefore, the four nominees to
the Board of Trustees receiving the highest number of votes cast in person or by
proxy by holders of Common Shares shall be elected as Trustees, and the nominee
to the Board of Trustees receiving the highest number of votes cast in person or
by proxy by holders of Preferred Shares shall be elected as the fifth Trustee.
As to all other matters on which holders of Common Shares may be
entitled to vote, such matters may be authorized by the affirmative vote of the
holders of a majority of such shares voting in person or by proxy.
Any proxy given pursuant to this solicitation may be revoked by a
shareholder prior to the voting at the Annual Meeting by giving written notice
to the Secretary of the Trust, by submitting another proxy bearing a later
date, or upon oral request at the Annual Meeting.
2
<PAGE> 5
ELECTION OF TRUSTEES
(PROXY STATEMENT PROPOSAL NO. 1)
At the Annual Meeting, the holders of Common Shares will have the
right to elect four Trustees and the holders of the Preferred Shares will have
the right to elect one Trustee, for a term of one year or until their
successors are elected and qualified.
The four persons proposed by the Board of Trustees for election by
holders of the Common Shares (the "Common Share Nominees") and the person
proposed by the Senior Lender Group for election by the holders of the
Preferred Shares (the "Preferred Share Nominee") are listed below, together
with summary biographical information. Unless otherwise instructed, the
proxyholders will vote the proxies received by them for the Common Share
Nominees. All of the nominees have consented to being named in this Proxy
Statement, and to serve as Trustees if elected. Although it is not
contemplated that any of the nominees will subsequently decline or be unable to
serve as a Trustee, in either event, the proxies will be voted by the
proxyholders for such other persons as may be designated by the Board of
Trustees.
COMMON SHARE NOMINEES
The following table sets forth certain information as of March 31,
1997 with respect to the Common Share Nominees.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
John McMahan 59 Chairman of the Board of
Trustees
E. Lawrence Hill, Jr. 46 Trustee
John F. Salmon 51 Secretary and Trustee
Kenneth T. Seeger 48 Trustee
</TABLE>
JOHN MCMAHAN, CHAIRMAN OF THE BOARD. Mr. McMahan has served as a
Trustee and Chairman of the Board of the Trust since September 1994. Mr.
McMahan is President of the McMahan Group, a San Francisco-based real estate
management firm founded in 1994. Between 1990 and 1994, Mr. McMahan served as
the Chief Executive Officer of Mellon/McMahan Real Estate Advisors, Inc., which
grew into one of the country's largest real estate investment advisors. Mr.
McMahan also served as a Vice President of Booz, Allen & Hamilton, Inc., a
management consulting firm. He is a faculty member at the Haas Graduate School
of Business at the University of California at Berkeley. Mr. McMahan has
published many articles on real estate investment and has been active in
several national real estate organizations, including the National Association
of Real Estate Investment Trusts. Mr. McMahan graduated from the University of
Southern California and received an MBA degree in 1961 from the Harvard
Graduate School of Business. He serves on the board of BRE Properties, Inc.,
has served on the
3
<PAGE> 6
board of California Real Estate Investment Trust, and has been chairman of The
National Association of Real Estate Investment Managers.
JOHN F. SALMON, SECRETARY AND TRUSTEE. Mr. Salmon has served as a
Trustee since September 1994 and has served as Secretary since January 1996.
He has been a San Francisco-based commercial real estate consultant since 1994.
From 1989 to 1994, he served in Sacramento as Director of the Governor's Office
of Asset Management of the State of California. While in that position, he
established procedures for reviewing the state's sizable real estate holdings,
developed real property operating and disposition proposals for the
Administration and the Legislature, redirected the state's office leasing
policies and counseled state government agencies on institutional facility and
asset management strategies. Prior to joining the Governor's Office, Mr.
Salmon was the Vice President, Property Development and Sales of Santa Fe
Pacific Realty Corporation (now Catellus Development Corporation) in San
Francisco. There he managed the land planning, building development and
property disposition activities of the company's three million acre, 18-state
real estate portfolio. Mr. Salmon graduated from the University of Notre Dame
in 1967 with a BA degree in Accounting, and received a JD degree from the
University of Illinois in 1971.
E. LAWRENCE HILL, JR., TRUSTEE. Mr. Hill, who has served as a Trustee
since September 1994, is the founder and president of Hickey & Hill, Inc., a
13-year old turnaround and workout specialty firm based in the San Francisco
Bay Area. Mr. Hill's firm has worked with a variety of clients including
high-technology, banking and real estate companies requiring near and/or long
term rescue. His real estate clients have included hotel, mixed-use light
industrial, residential and retail property owners. Successful turnarounds
managed by his company have used various restructuring, recapitalization and
reorganization strategies. Prior to founding his own company in 1984, Mr. Hill
was a Vice President with the Bank of California in its Workout and
Restructuring Department. In this capacity, for more than five years, he
managed approximately one-third of the bank's non-performing assets,
implementing appropriate hold/sell plans for each property. Mr. Hill received
a BS degree and an MS degree in engineering from Stanford University in 1974.
He currently serves as interim Chief Executive Officer of Carlos Murphy's, Inc.
KENNETH T. SEEGER, TRUSTEE. Mr. Seeger, who has served as a Trustee
since September 1994, has been the president of The Presidio Group, Inc., TPG
Management, Inc., and Residences, Inc., all of which are real estate asset
management and development companies based in the San Francisco Bay Area, since
1994. Between August 1985 and November 1993, Mr. Seeger was responsible for all
finance and acquisition activities for Southwest Diversified/Coscan Partners, a
major Irvine-based development company. His real estate development projects
have included both residential and commercial properties throughout California
and in Arizona. Prior to that, from 1979 to 1985, Mr. Seeger was a Senior Vice
President with The Fox Group of Companies where he was responsible for all
project financing and a member of that firm's Investment Advisory Committee. He
also has had considerable experience in risk management, income-property
operations and new business development. Mr. Seeger graduated with a BS in
economics from the Wharton School at the University of Pennsylvania in 1972. He
is a full member of the Urban Land Institute, is a past member of the
4
<PAGE> 7
Pacific Rim Urban Planning and Development Council and has served on the
advisory Board of the School of Real Estate at the University of California at
Berkeley.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE COMMON SHARE
NOMINEES.
PREFERRED SHARE NOMINEE
The following table sets forth certain information as of March 31,
1997 with respect to the Preferred Share Nominee.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Roger D. Snell 41 Trustee
</TABLE>
ROGER D. SNELL, TRUSTEE. Mr. Snell, who was elected as a Trustee in
February 1997, is the founder and principal of Snell&Co, a firm focused on real
estate investment, advisory, and development. Prior to founding Snell&Co in
1996, he was President and Chief Executive Officer of Pacific Gateway
Properties, from 1992 to 1995, where he led the turnaround of this troubled
company listed on the American Stock Exchange. He was also a member of the
Board of Directors and acting Chairman. Between 1985 and 1992, Mr. Snell was a
Partner with Paragon Group, a national development company. He started
Paragon's Northern California operations, directing the development of $275
million worth of projects as well as the turnaround of 1.3 million square feet
of properties on behalf of institutional and private clients. Prior to joining
Paragon Group, he served as a project manager for Transpacific Development
Company ("TDC"), where he directed $100 million worth of development projects,
ranging from high-rise office to high-cube distribution. Before joining TDC,
Mr. Snell acquired investment properties and development opportunities for the
Grosvenor Estate of England. Mr. Snell has a BS degree in Business
Administration from University of California at Berkeley and a MBA from the
Harvard Graduate School of Business. He is an active member of the Urban Land
Institute and the Young Presidents Organization.
POTENTIAL ALTERNATIVE NOMINEES TO THE BOARD OF TRUSTEES
On March 20, 1997, two members of the Senior Lender Group with
approximately 36% of the outstanding Common Shares, i.e., Trust Company of the
West and certain of its affiliates (collectively, the "TCW Related Entities")
and The Prudential Insurance Company of America and certain of its affiliates
(collectively, "PIC"), filed Amendment No. 1 to the Schedules 13D previously
filed by TCW on February 3, 1997 and by Prudential on January 30, 1997 (the "13D
Amendment"). The 13D Amendment, in Item 4 thereof, disclosed the following
(alterations to or corrections of the text of the 13D Amendment have been
indicated in brackets):
"(a) Representatives of the TCW Related Entities have
conferred with other creditors and shareholders of the Issuer [i.e.,
the Trust], and have had discussions with the management and the Board
of Trustees of the Issuer
5
<PAGE> 8
concerning alternatives available to the Issuer to enhance the value
of the Issuer and its assets, including, among other things, the
restructuring of the Issuer, the sale of individual assets of the
Issuer, the refinancing of the Issuer's obligations, or the sale of
the Issuer through the sale of all or substantially all of the assets
of the Issuer to, or the merger or other business combination with, a
third party. These discussions may result in a decision by the TCW
Related Entities to pursue in cooperation with the Issuer and/or other
creditors and shareholders of the Issuer one or more restructuring
options. As of March 20, 1997, these discussions have resulted in a
decision by the TCW Related Entities to pursue, in cooperation with
PIC, the replacement of a portion of the Board of Trustees of the
Issuer, at the annual meeting of the shareholders. Please see Item 6
[of the 13D Amendment] for further discussion of the understanding
between the TCW Related Entities and PIC.
The TCW Related Entities, individually or together, reserve
the right, subject to applicable law, to seek proxies, consents and/or
ballots in support of nominees at a special or scheduled meeting of
shareholders or a subsequent meeting of shareholders or otherwise, or
in support of or against other matters that may come before the
Issuer's shareholders for their vote or consent.
The TCW Related Entities intend to review on a continuing
basis their respective investments in the Common Shares and may,
subject to the continuing evaluation of the factors discussed herein,
acquire from time to time additional Common Shares in the open market
or in privately negotiated transactions. Depending on the factors
discussed herein, the TCW Related Entities may, from time to time,
retain or sell all or a portion of their respective holdings of the
Common Shares in the open market or in privately negotiated
transactions and such open market and privately negotiated purchases
or sales may be made at any time without further prior notice. Any
actions that the TCW Related Entities might undertake with respect to
the Common Shares will be dependent upon their review of numerous
factors, including, among other things, the availability of Common
Shares for purchase and the price levels of such Common Shares,
general market and economic conditions as well as those in the areas
in which the Issuer's properties are located, ongoing evaluation of
the Issuer's business, financial condition, properties, operations and
prospects, the relative attractiveness of alternative business and
investment opportunities, the actions of the management and the Board
of Trustees of the Issuer, and other future developments.
In addition to the possible actions described in the preceding
paragraph, the TCW Related Entities and the other holders of shares of
the Issuer's Preferred Shares (the "Preferred Shares"), which
Preferred Shares are convertible into common shares of the Issuer in
accordance with Section 5.2 of the Issuer's Restated Declaration of
Trust, are entitled to designate one Trustee. On January 24, 1997,
the TCW Related Entities and PIC exercised their rights to
6
<PAGE> 9
designate such a Trustee by designating Roger Snell as such Trustee.
The Preferred Shares are not convertible as of the date hereof or
within 60 days hereof.
Although the foregoing reflects activities presently
contemplated by the TCW Related Entities with respect to the Issuer,
the foregoing is subject to change at any time, and there can be no
assurance that the TCW Related Entities will take any of the actions
referred to above or participate in a group that will take any of the
actions referred to above. Except as set forth above [and below], the
TCW Related Entities have no present plans or intentions which would
result in or relate to any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
(b) Representatives of PIC have conferred with other
creditors and shareholders of the Issuer, and have had discussions
with the management and the Board of Trustees of the Issuer concerning
alternatives available to the Issuer to enhance the value of the
Issuer and its assets, including, among other things, the
restructuring of the Issuer, the sale of individual assets of the
Issuer, the refinancing of the Issuer's obligations or the sale of the
Issuer through the sale of all or substantially all of the assets of
the Issuer to, or the merger or other business combination of the
[Issuer] with, a third party. These discussions may result in a
decision by PIC to pursue, in cooperation with the Issuer and/or other
creditors and shareholders of the Issuer or otherwise, one or more
restructuring options, which may include the acquisition by PIC and
other creditors and shareholders of the Issuer of all of the
outstanding Common Shares they do not currently own either through a
negotiated cash merger transaction, a tender offer or another form of
business combination. As of March 20, 1997, these discussions have
resulted in a decision by PIC, to pursue in cooperation with the TCW
Related Entities, the replacement of a portion of the Board of
Trustees of the Issuer. Please see item 6 for further discussion of
the understanding between the TCW Related Entities and PIC.
In addition to the possible actions described in the preceding
paragraph, PIC and the other holders of the Issuer's Preferred Shares
are entitled to designate one Trustee of the Issuer. PIC and the TCW
Related Entities exercised their rights to designate such a Trustee.
Although the foregoing reflects activities presently
contemplated by PIC with respect to the Issuer, it is subject to
change at any time, and there can be no assurance that PIC will take
any of the actions referred to above or participate in a group that
will take any of the actions referred to above. Except as set forth
above [and below], PIC has no present plans or intentions which would
result in or relate to any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D."
7
<PAGE> 10
In addition, a letter from counsel to the TCW Related Entities and PIC
was attached as an exhibit to the 13D Amendment and separately mailed to the
Trust's counsel (the "Notification Letter"). The Notification Letter stated
that the TCW Related Entities and PIC intend to nominate a slate of four
persons for election as Trustees at the Annual Meeting by holders of the Common
Shares (the "Alternative Nominees"). THE NOTIFICATION LETTER ALSO INDICATED
THAT THE TCW RELATED ENTITIES AND PIC HAVE NO PRESENT INTENTION TO SOLICIT
PROXIES WITH RESPECT TO THE ALTERNATIVE NOMINEES.
Assuming other members of the Senior Lender Group vote for the
Alternative Nominees and assuming a quorum is present at the Annual Meeting, the
Common Shares held by the Senior Lender Group (equal to approximately 52% of the
outstanding shares) would enable the Senior Lender Group to elect all four of
the Alternative Nominees at the Annual Meeting, unless votes are cumulated in
which event the Senior Lender Group would be able to elect a minimum of two of
the Alternative Nominees. Even with cumulative voting, the Senior Lender Group
will be able to elect at least three of the five Trustees (including the
Preferred Share Nominee). The Trust and its Board do not intend to implement
cumulative voting procedures unless requested by a holder of the Common Shares.
Therefore, if no shareholder requests cumulative voting and the Senior Lender
Group votes for the four Alternative Nominees, the Alternative Nominees named
below, if nominated at the Annual Meeting by the TCW Related Entities and PIC,
will be elected to the Board in lieu of the Common Share Nominees. If the
Alternative Nominees control the Board, the services of current officers,
employees and agents of the Trust, including the CEO, may be terminated.
The following biographical disclosure regarding the Alternative
Nominees was attached to the Notification Letter or was provided to the Trust
by or on behalf of the Alternative Nominees following receipt of the
Notification Letter:
MR. RICHARD MASSON. Mr. Masson, age 38, has been a Principal of
Oaktree Capital Management, LLC since May 1995. Prior to the founding of
Oaktree, he was a partner of TCW Special Credits and served as a Managing
Director of Trust Company of the West and TCW Asset Management Company
("TAMCO"), wholly owned subsidiaries of The TCW Group Inc., in various other
capacities since 1988. TCW Special Credits serves as a general and investment
advisor to certain limited partnerships, trusts, and accounts invested in the
securities and debt obligations of financially distressed companies. Mr. Masson
currently serves as a member of the Boards of Directors of Aureal Semiconductor
and Chief Auto Parts.
MR. BRUCE A. KARSH. Mr. Karsh, age 41, currently serves as President
of Oaktree Capital Management, LLC, an investment advisory firm which he
co-founded in May 1995. Prior to the founding of Oaktree, he was a partner of
TCW Special Credits and served as a Managing Director of Trust Company of the
West and TAMCO, wholly owned subsidiaries of The TCW Group, Inc., in various
other capacities since 1988. TCW Special Credits serves as a general partner
and investment advisor to certain limited partnerships, trusts, and accounts
invested in the securities and debt obligations of financially distressed
companies. Before joining TCW in 1987, he
8
<PAGE> 11
previously worked as Assistant to the Chairman of Sun Life Insurance Company
and SunAmerica Inc., its parent. Mr. Karsh currently serves as a member of the
Boards of Directors of Littelfuse, Inc., Furniture Brands International and
Triangle Pacific Corp.
MR. CARSON R. MCKISSICK. Mr. McKissick, age 63, has been Senior
Advisor of Trust Company of the West, an investment management company, since
1992. Prior thereto, he was Managing Director of the Mergers and Acquisitions
Department of Citibank. Mr. McKissick currently serves as a member of the
Boards of Directors of Alexander & Baldwin, Inc. and Triangle Pacific, Corp.
MR. MATTHEW L. WITTE. Mr. Witte, age 39, has been a Director and an
Officer of Marwit Capital, a private investment firm with diversified holdings
in approximately 20 middle-market companies primarily based in the Western U.S.
("Marwit"). He was appointed President/CEO of Marwit in April 1994 and is
responsible for managing Marwit's day-to-day operations. He also serves as a
member of Marwit's Investment Committee. He is currently President of the
Western Regional Association of SBICs and a member of the NASBIC Board of
Governors. Prior to becoming President of Marwit, Mr. Witte was a General
Partner in the Related Companies, a real estate investment and development firm
with offices in New York and California, and previously, the Director of
Development for Grosvenor International, an investment affiliate of the
Grosvenor Estate of London. In May 1993, Mr. Witte also formed Regent Partners,
Inc. to pursue large scale urban development projects in partnership with
various institutional investors. He is a graduate of Cornell University, and is
a member of the Southland Venture Alliance, and is a Director of Infotec
Commercial Systems, New West Communications, Inc., H&W Foods, Inc., Protrave
Services, Inc., and Signature Theatres, LLC.
INFORMATION REGARDING THE BOARD OF TRUSTEES AND COMMITTEES
The Board of Trustees has established a Compensation Committee and an
Audit Committee, and has two less formal working groups, a Special Committee
and a Litigation Committee.
The Compensation Committee, whose current member is Kenneth T. Seeger,
met at the time of the Board's regularly scheduled monthly meetings during
1996. This committee is responsible for establishing the Trust's executive
compensation policies and for administration of such policies.
The Audit Committee, whose current member is John F. Salmon, held
three meetings in 1996. The committee's duties are to (1) review the Trust's
accounting policies and practices and the adequacy of internal controls with
the Trust's management and independent accountants; (2) review the scope and
the results of the annual examination performed by the independent accountants;
and (3) make recommendations to the Board of Trustees regarding the appointment
of the independent accountants and approval of the services performed by the
independent accountants, and fees related thereto.
9
<PAGE> 12
The Special Committee, whose current members are John F. Salmon and
Kenneth T. Seeger, was primarily responsible for negotiating the disposition of
the CalREIT investment and for resolving professional fee disputes remaining
from the Bankruptcy Plan, and is responsible for overseeing the development of
the strategic direction of the Trust and making recommendations to the Board of
Trustees regarding the appointment of an investment banker and approval of the
services performed and fees charged by the investment banker. The Litigation
Committee, whose current members are John F. Salmon and Kenneth T. Seeger, is
responsible for overseeing litigation filed against the Trust.
The Board of Trustees held a total of 19 meetings during the last
fiscal year. Each current Trustee attended at least 75% of the aggregate of
the meetings of the Board and the meetings of the committees of which he was a
member, with the exception of Mr. Hill.
COMPENSATION OF TRUSTEES
During 1996, each Independent Trustee (a Trustee who was not a
full-time employee of the Trust or any subsidiary of the Trust) was paid $5,000
per quarter, $1,000 for each full-day Trustee meeting attended, and $500 for
each half-day Trustee meeting or telephone Trustee meeting attended. Each
Trustee was also reimbursed for out-of-pocket expenses.
In addition, under the terms of the Trust's Stock Option Plan, each
Independent Trustee elected to the Board initially receives a ten-year option
to purchase 6,666 Common Shares at $2.00 per share. Each Independent Trustee
is also granted a similar option to purchase 6,667 Common Shares on each of the
first and second anniversaries of the date of their initial grant under the
Plan.
As a result of the termination of Frank A. Morrow as the Trust's Chief
Executive Officer in January 1996, the Trust utilized the services of certain
of its Independent Trustees in connection with its analysis of alternative
operating strategies, asset dispositions, and day-to-day management activities.
In connection with the consulting services performed, the following amounts
were paid to such Trustees (or affiliated companies) during 1996, in addition
to normal Trustee fees and in addition to Mr. McMahan's compensation for his
services as interim CEO:
The McMahan Group (John McMahan, Trustee) $ 69,000
John F. Salmon, Trustee $ 49,000
The Presidio Group (Kenneth T. Seeger, Trustee) $ 41,000
Snell&Co (Roger D. Snell, Trustee) $ 10,000
10
<PAGE> 13
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Trust's Trustees and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Trust's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of all equity securities of the Trust.
To the Trust's knowledge, based solely on review of the copies of such
reports furnished to it and written representations that no other reports were
required during the fiscal year ended December 31, 1996, the Trust's Trustees,
executive officers and greater than ten percent shareholders complied with the
applicable Section 16(a) filing requirements, except that John McMahan, E.
Lawrence Hill, Jr., John F. Salmon and Kenneth T. Seeger inadvertently did not
timely file a Form 5 with respect to their automatic option grants under the
Trust's Stock Option Plan during 1994, 1995 and 1996.
11
<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows compensation paid by
the Trust, including the California Real Estate Investment Trust ("CalREIT"),
76% of which was owned by the Trust until January 3, 1997 at which time the
Trust sold its interest in CalREIT, from the effective date of the
reorganization in 1994 until the end of fiscal 1996 to each person serving in
the capacity of Chief Executive Officer of the Trust during 1996. No other
executive officer of the Trust received annual compensation in excess of
$100,000 during 1996. Mr. Morrow served as Chief Executive Officer of the Trust
through January 15, 1996, at which time his services were terminated. Mr.
McMahan served as Interim Chief Executive Officer from the date of Mr. Morrow's
termination through May 31, 1996, when the Trust hired Mr. Mock to fill the
position. Hereafter, Messrs. Mock, McMahan and Morrow are referred to as the
"Named Executive Officers."
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
NUMBER OF
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION PERIOD SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ------------------ ------ ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Mock June 1 to $105,000 None None None None
Chief Executive December 31, 1996
Officer
John McMahan January 15 to $67,500(1) None None 6,667 Shares(2) $64,000(3)
Interim Chief May 31, 1996
Executive
Officer
Frank A. Morrow(4) 1996 $192,500(5) None $212,500(6) None None
Chief Executive
Officer
1995 $300,000 None None None None
October 7 to $70,000 None None None None
December 31, 1994
</TABLE>
(1) Amount represents consulting compensation paid to Mr. McMahan for his
service as Interim Chief Executive Officer.
(2) Amount represents options granted to Mr. McMahan by the Trust for his
services as a Trustee.
(3) Amount represents compensation received by Mr. McMahan for serving as
a Trustee of the Trust ($34,000) and CalREIT ($30,000) during 1996.
Amount does not include $69,000 paid to the McMahan Group for
consulting services.
(4) Mr. Morrow was engaged by the Trust upon the Effective Date of the
Plan of Reorganization on October 7, 1994 and his employment was
terminated on January 15, 1996.
(5) The amount includes $12,500 in compensation paid by the Trust to Mr.
Morrow for his services as Chief Executive Officer of the Trust, and
$180,000 in deferred compensation accrued by CalREIT during 1996 for
Mr. Morrow in connection with his services as Chief Executive Officer
of CalREIT, which was paid in March 1997.
(6) Amount represents severance pay paid by the Trust pursuant to the
terms of a personal services contract executed at the time of the
reorganization in 1994 which entitled Mr. Morrow to a severance
payment equal to $212,500.
12
<PAGE> 15
OPTIONS GRANTS IN 1996
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1996 to the Trust's Named
Executive Officers.
<TABLE>
<CAPTION>
PERCENT OF
TOTAL OPTIONS
NUMBER OF GRANTED TO POTENTIAL REALIZABLE VALUE AT
SECURITIES EMPLOYEES IN ASSUMED ANNUAL RATES OF STOCK
NAME AND POSITION GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION DATE PRICE APPRECIATION FOR OPTION TERM
- ----------------- ------- ----------- -------------- --------------- ----------------------------------
5% 10%
----------------------------------
<S> <C> <C> <C> <C> <C> <C>
John McMahan 6,667 100% $2.00/Share October 7, 2006 None* None*
</TABLE>
* Based on the market price of the Common Shares at the date of grant
($.04 per share), the potential realizable value of the options at an
assumed 5% and 10% appreciation rate is below the exercise price of
$2.00 per share.
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTION VALUES
The following table shows the number of Common Shares represented by
outstanding stock options held by the Named Executive Officers as of December
31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FY-END
OPTION AT FY-END
SHARES
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
John McMahan -0- -0- 20,000/0 0/0
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Joseph M. Mock currently serves as President, Chief Executive Officer,
and Principal Accounting Officer of the Trust. Mr. Mock's employment began on
June 1, 1996, and pursuant to an employment agreement he receives a monthly
salary of $15,000. If terminated without cause prior to December 31, 1997, Mr.
Mock is entitled to receive severance pay equal to three months' salary.
13
<PAGE> 16
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors administers the
Trust's executive compensation program. The Compensation Committee is composed
of a Trustee who is not an employee of the Trust.
The objective of the Trust's executive compensation program is to
develop and maintain an executive reward program which (i) contributes to the
enhancement of shareholder value, (ii) is competitive with the pay practices of
other industry-leading companies and (iii) attracts, motivates and retains key
executives who are critical to the long-term success of the Trust. The Trust's
executive compensation program currently consists solely of fixed, base
compensation. No stock option plan is available to the Trust's executive
officers and no options were granted to the Trust's executives.
The Compensation Committee reviews executive compensation in light of
the Trust's performance with respect to its operational and strategic goals, as
well as its financial performance during 1996. In reviewing the Trust's 1996
performance, the Compensation Committee considered a variety of factors,
including the Trust's successful disposition of selected real estate assets, an
increase in occupancy rates at commercial properties and management of the
Trust's liquidity and limited financial resources. In reviewing the Trust's
performance, the Compensation Committee considered these factors, among others,
as a whole without assigning specific weights to particular factors.
Base compensation levels for the Trust's executives are determined by
the Compensation Committee based on factors such as management skill, industry
experience, level of responsibility and other considerations of individual
performance, as well as the Trust's performance. For 1996, base salaries for
the named executive officers were established by the criteria discussed above.
The foregoing report is given by the Compensation Committee, namely:
Kenneth T. Seeger
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 16,
1997 with respect to the beneficial ownership of the outstanding Common Shares
of Beneficial Interest and Preferred Shares by (i) all persons known by the
Trust to own more than five percent of either class of shares, or to be a member
of a group that owns more than five percent of either class of shares, based on
information furnished by such persons or contained in filings made with the
Securities and Exchange Commission, (ii) by each officer described in the
Summary Compensation Table (the "Named Executive Officers"), and (iii) by the
Trustees and Named Executive Officers as a group:
14
<PAGE> 17
<TABLE>
<CAPTION>
SHARES
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- -------------- ------------------------------------ ------------------ ----------------
<S> <C> <C> <C>
Common Shares Pacific Mutual Life Insurance Company 681,913 13.9%
c/o Ronn Cornelius
700 Newport Center Drive
Newport Beach, CA 92660
The Prudential Insurance Company of America 207,983 4.2%
c/o Richard Greenwood
Corporate Finance Group, 9th Floor
Four Gateway Center
100 Mulberry Center
Newark, NJ 07102-4069
Gateway Recovery Trust 473,929 9.7%
c/o Richard Greenwood
The Prudential Insurance Company of America
Corporate Finance Group
Four Gateway Center
100 Mulberry Center
Newark, NJ 07102-4069
ORIX USA Corp. 102,287 2.1%
c/o Arnold Kawano
780 Third Avenue, Floor #48
New York, NY 10017
Weyerhaeuser Company Master Retirement Trust 98,502 2.0%
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Plus Fund 339,286 6.9%
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Fund IV 317,396 6.5%
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Trust IV 273,618 5.6%
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Fund IVA 65,668 1.3%
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
John McMahan 20,000 (1) *
John F. Salmon 20,000 (1) *
E. Lawrence Hill, Jr. 20,000 (1) *
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
SHARES
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- -------------- ------------------------------------ ------------------ ----------------
<S> <C> <C> <C>
Common Shares continued Kenneth T. Seeger 20,000 (1) *
Roger D. Snell 6,666 (2) *
Named Executive Officers and Trustees as a 86,666 (3) 1.7%
Group
(7 persons)
</TABLE>
____________
* Less than 1%.
(1) Includes options to purchase of 20,000 Common Shares held by the
respective Trustee, all of which are immediately exercisable.
(2) Includes options to purchase 6,666 Common Shares held by Mr. Snell,
all of which are immediately exercisable.
(3) Includes options to purchase 86,666 Common Shares, all of which are
immediately exercisable.
16
<PAGE> 19
<TABLE>
<CAPTION>
SHARES
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- -------------- ------------------------------------ ------------------ ----------------
<S> <C> <C> <C>
Redeemable Convertible Pacific Mutual Life Insurance Company 3,841,374 26.6%
Preferred Shares (1) c/o Ronn Cornelius
700 Newport Center Drive
Newport Beach, CA 92660
The Prudential Insurance Company of America 1,171,619 8.1%
c/o Richard Greenwood
Corporate Finance Group, 9th Floor
Four Gateway Center
100 Mulberry Center
Newark, NJ 07102-4069
Gateway Recovery Trust 2,669,755 18.5%
c/o Richard Greenwood
The Prudential Insurance Company of America
Corporate Finance Group
Four Gateway Center
100 Mulberry Center
Newark, NJ 07102-4069
ORIX USA Corp. 576,207 4.0%
c/o Arnold Kawano
780 Third Avenue, Floor #48
New York, NY 10017
Weyerhaeuser Company Master Retirement Trust 554,887 3.8%
c/o Richard Masson
Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Fund IV 1,787,967 12.4%
c/o Richard Masson
Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Plus Fund 1,911,276 13.3%
c/o Richard Masson
Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Trust IV 1,541,352 10.7%
c/o Richard Masson
Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
TCW Special Credits Trust IVA 369,925 2.6%
---------- -----
c/o Richard Masson
Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071
Total 14,424,362 100.0%
- ------------ ========== =====
</TABLE>
(1) None of the Preferred Shares are convertible into Common Shares as of
the date hereof, or within 60 days hereof.
17
<PAGE> 20
PERFORMANCE GRAPH
The line graph below compares the cumulative total return to holders
of Common Shares for the period indicated with the cumulative total return in
the same period of (i) the Standard & Poor's 500 Index and (ii) a peer group
index composed of the companies comprising the National Real Estate Investment
Trust Equity Index. The graph assumes an investment of $100 on June 5, 1995,
the first date following the Trust's reorganization in bankruptcy for which
Nasdaq reported closing quotations for the Common Shares, in the Trust and in
the two comparison indices. "Total return," for purposes of the graph, assumes
reinvestment of all dividends.
[Performance Graph]
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROXY STATEMENT PROPOSAL NO. 2)
Subject to ratification by the shareholders, the Board of Trustees of
the Trust may re-appoint Coopers & Lybrand LLP as independent accountants for
the Trust for the fiscal year ending December 31, 1997. Representatives of
Coopers & Lybrand LLP are expected to be present at the meeting and will have
an opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions. If the shareholders should
fail to ratify the appointment of the independent accountants, the Board of
Trustees would reconsider the appointment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
SELECTION OF INDEPENDENT AUDITORS.
18
<PAGE> 21
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Copies of resolutions proposed by shareholders to be presented at the
1998 Annual Meeting of Shareholders must be received by the Trust at its
headquarters, 1300 Ethan Way, Suite 200, Sacramento, California 95825, on or
before January 1, 1998, to have such resolutions included in the proxy
statement and form of proxy for such annual meeting.
OTHER MATTERS
The Trust does not know of any matters other than those discussed in
the foregoing materials to be brought before the Annual Meeting. If any other
matters should properly come before the meeting, or at a postponement or
adjournment thereof, it is the intention of the persons named in the
accompanying proxy to vote such proxy in accordance with their discretion.
By Order of the Board of Trustees
19
<PAGE> 22
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
I hereby appoint John McMahan and John F. Salmon, and each of them or
either of them, with full power to act without the other and with full power of
substitution, my true and lawful proxies, to vote all the shares of The
Peregrine Real Estate Trust held of record by me on April 16, 1997 and to act
for me and in my name, place and stead at the Annual Meeting of Shareholders to
be held on Friday, May 30, 1997, at 10:00 a.m., or any postponement or
adjournment thereof, for the purpose of considering and voting upon the matters
listed hereon.
Please mark this proxy as indicated to vote on any item. If you wish
to vote in accordance with the Board of Trustees' recommendations, please sign
the reverse side; no boxes need to be checked.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
1. ELECTION OF TRUSTEES
[ ] For the Nominees listed below [ ] Withhold Authority to vote
(except as marked to the for all Nominees listed below
contrary below)
Nominees: John McMahan, E. Lawrence Hill, Jr., John F. Salmon, and
Kenneth T. Seeger
To withhold authority to vote for any individual Nominee, write that Nominee's
name in the space provided below:
___________________________________________________
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND LLP AS THE
TRUST'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997
_ For _ Against
_ Abstain
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED FOR ALL OF THE MATTERS LISTED ABOVE, AND IN THE DISCRETION OF THE
PROXYHOLDERS UPON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENVELOPE
PROVIDED.
<PAGE> 23
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership's name by authorized person.
Dated: ________________________, 1997
______________________________________
Signature
______________________________________
Signature, if held jointly
2
