[TEXT]
HRE PROPERTIES
530 FIFTH AVENUE
NEW YORK, NEW YORK 10036
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 3, 1994
This Proxy Statement is furnished to shareholders of HRE Properties, a
Massachusetts business trust (hereinafter called the Trust), in connection
with the solicitation of proxies in the form enclosed herewith for use at
the Annual Meeting of Shareholders of the Trust to be held in The Grand
Hyatt Hotel, Park Avenue at Grand Central Station, New York, New York, on
March 3, 1994 at 11:00 a.m. for the purposes set forth in the Notice of
Meeting.
The Trust has retained D.F. King & Co. to assist in the solicitation of
proxies. D.F. King & Co. will be paid a fee of $7,500 for its services, plus
reasonable and customary expenses. The costs of the solicitation will be
borne by the Trust. Trustees, officers and employees of the Trust and its
affiliates may also solicit proxies by telephone, telegraph, fax or personal
interview The Trust will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by
them in sending proxy material to the beneficial owners of the shares.
Holders of record of Common Shares of the Trust as of the close of
business on the record date, January 14, 1994, are entitled to receive
notice of, and to vote at, the Meeting. The outstanding Common Shares
constitute the only class of securities entitled to vote at the Meeting, and
each Common Share entitles the holder thereof to one vote. At the close of
business on January 14, 1994, there were 5,320,106 Common Shares issued and
outstanding.
Shares represented by proxies in the form enclosed, if such proxies are
properly executed and returned and not revoked, will be voted as specified,
but where no specification is made, the shares will be voted for the
election of Trustees and for Proposal 2. To be voted, proxies must be filed
with the Secretary of the Trust prior to voting. Proxies may be revoked at
any time before exercise by filing a notice of such revocation, by filing a
later dated proxy with the Secretary of the Trust or by voting in person at
the Meeting.
The annual report for the Trusts fiscal year ended October 31, 1993 has
been mailed with this proxy statement. This proxy statement and the enclosed
proxy were mailed to shareholders on or about January 17, 1994. The
principal executive offices of the Trust are located at 530 Fifth Avenue,
New York, New York 10036.
ITEM 1. ELECTION OF TRUSTEES
At the Meeting, a Board of eight (8) Trustees will be elected. Unless
otherwise specified by the shareholder on the enclosed proxy, shares
represented thereby will be voted for each of the nominees as set forth
below.
<PAGE>
If the proposed amendment to the Declaration of Trust concerning
classification of the Board of Trustees (as described in Item 2.) is
approved by the shareholders at the 1994 Annual Meeting, and if each of the
nominees is elected, Messrs. Murdoch and Conway will serve an initial term
expiring at the 1995 Annual Meeting of Shareholders; Messrs. Herrick,
Paganucci and York will serve an initial term expiring at the 1996 Annual
Meeting of Shareholders; and Messrs. Douglass, Lawrence and Urstadt will
serve an initial term expiring at the 1997 Annual Meeting of Shareholders;
and in all cases until their respective successors are duly elected and
qualified. If the amendment is not approved, all eight (8) nominees will
serve a term expiring at the 1995 Annual Meeting of Shareholders and until
election and qualification of successors. Approval of the Election of
Trustees requires the approval by an affirmative vote of a majority of the
Common Shares entitled to vote and present, in person or by proxy, at the
Annual Meeting. Abstentions by the holders of such shares will be the
equivalent of negative votes and broker non-votes will have no effect, as
any shares subject to broker non-votes will not be present and entitled to
vote with respect to that proposal.
<TABLE>
INFORMATION REGARDING TRUSTEES (AS OF JANUARY 7, 1994)
<CAPTION>
PRINCIPAL OCCUPATION TRUSTEE
FOR THE PAST FIVE YEARS CONTINUOUSLY
NAME AND CURRENT DIRECTORSHIPS AGE SINCE
- ----- ------------------------- --- -----------
<S> <C> <C> <C>
E. Virgil Conway(C)(E) Chairman, Financial Accounting 64 1989
Standards Advisory Council
(May, 1992);Financial Consultant
and Corporate Director;
(since January 1989); Retired
Chairman and Director, The Seamens
Bank for Savings, FSB(1969-1989);
Trustee, Consolidated Edison Company
of New York, Inc.;Director, Union
Pacific Corporation;Trustee,
Phoenix Home Life Mutual Funds;
Trustee, Atlantic Mutual Insurance
Company; Director, Centennial Insurance
Company; Director,Atlantic Reinsurance
Company;Chairman, New York Housing
Partnership Development Corporation;
Vice Chairman, Academy of Political
Science; Trustee, Pace University;
Member, Metropolitan Transportation
Authority.
Robert R. Douglass(C) Of Counsel, Milbank, Tweed Hadley 62 1991
and McCloy; Retired Vice Chairman
and Director, The Chase Manhattan
Corporation (1985-1993); Executive
Vice President, General Counsel and
Secretary, The Chase Manhattan
Corporation (1976 to 1985); Trustee,
Dartmouth College (1983-1993);
Chairman, Downtown Lower Manhattan
Association; Trustee, The Museum of
Modern Art; Member, Board of Managers,
The New York Botanical Garden;
Director, Gryphon Holdings, Inc..
<PAGE>
Peter Herrick(A)(E) Retired Vice Chairman (1990-1992) and 66 1990
Director, The Bank of New York;
President and Chief Operating Officer,
The Bank of New York (February 1982
to June 1990); President and Director,
The Bank of New York Company, Inc.
(February 1984 to March 1992); Member,
New York State Banking Board (June 1990 to
April 1993); Director, BNY Hamilton Funds.
George H.C. Lawrence(C) Chairman, Chief Executive Officer and 56 1988
President, Lawrence Investing Company,
Inc.(since 1970); Director, Urstadt
Property Company, Inc.; Trustee,
Sarah Lawrence College;
Director, Westchester County Association;
Senior Vice President and Director,
Kensico Cemetery.
William F. Murdoch, Jr.(E) Real estate developer and counselor 62 1975
(since December 1989); Vice Chairman
of the Board of Trustees since
September 1989; President and Chief
Executive Officer of the Trust from
1975 to 1989; President, Hubbard
Advisory Corporation (formerly Advisor
to the Trust) (1979 to 1986);
Vice President, Merrill Lynch,
Hubbard Inc. (1974 to 1986)
Paul D. Paganucci(A) Chairman, Ledyard National Bank 62 1984
(since April 1991); Chairman of the
Executive Committee of W.R. Grace
& Co. (July 1989 to March 1991);
Vice Chairman, W.R. Grace & Co.
(November 1986 to July 1989);
Executive Vice President, W.R. Grace &
Co. from (January 1986 to November
1986); formerly Vice President and
Treasurer of Dartmouth College (July
1977 to December 1985); Director,
Filenes Basement, Inc.; Director,
State Mutual Securities, Inc.;
Trustee, Colby College; Director,
The Grace Foundation.
<PAGE>
Charles J. Urstadt(E) Chairman of the Board of Trustees 65 1975
(since September 1989) and President
and Chief Executive Officer of the
Trust; Chairman, President and
Director, Urstadt Property Company,
Inc. (a real estate investment
corporation) (September 1979 to
September 1989); Trustee, Pace University;
Trustee, Teachers Insurance and
Annuity Association.
James O. York(A) Real estate counselor (since 1988); 66 1979
Retired in 1987 as President of R.H. Macy
Properties Division and as Senior Vice
President and Director of R.H. Macy &
Co., Inc.; Trustee, The International
Council of Shopping Centers Education
and Research Foundation; Trustee,
Corporate Property Investors.
- -----------
(A)Member of Audit Committee
(C)Member of Compensation Committee
(E)Member of Executive Committee
</TABLE>
During the fiscal year ended October 31, 1993, the Trustees held five
meetings. Each Trustee attended at least 75% of the aggregate total number
of meetings held during the fiscal year by the Trustees and by all
committees of which each Trustee is a member.
The Audit Committee met twice during the fiscal year ended October 31,
1993. The Committee recommends to the Trustees the independent public
accountants to be engaged by the Trust, reviews with the Trusts independent
public accountants and management the Trusts internal accounting procedures
and controls, and reviews with the Trusts independent public accountants the
scope and results of the auditing engagement. Messrs. Paul D. Paganucci,
Peter Herrick and James O. York are the current members of the Audit
Committee.
The Executive Committee met once during the fiscal year ended October
31, 1993. In general, the Executive Committee may exercise such powers of
the Trustees between meetings of the Trustees as may be delegated to it by
the Trustees (except for certain powers of the Trustees which may not be
delegated). Messrs. E. Virgil Conway, Peter Herrick, William F. Murdoch, Jr.
and Charles J. Urstadt are the current members of the Executive Committee.
The Compensation Committee, which makes recommendations to the Trustees
concerning compensation and administers the Trusts Stock Option Plan, held
two meetings during the fiscal year ended October 31, 1993. Messrs. E.
Virgil Conway, George H.C. Lawrence and Robert R. Douglass are the current
members of the Compensation Committee.
<PAGE>
The Trustees do not have a nominating committee but act as a group on
such matters.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Trusts Trustees and officers, and persons who own more than 10%
of a registered class of the Trusts equity securities, to file initial
reports of ownership and reports of changes in ownership of such equity
securities with the Securities and Exchange Commission (the SEC). Such
persons are also required by SEC regulations to furnish the Trust with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such forms furnished to the Trust, or written representations that
no Forms 5 were required, the Trust believes that, with respect to the
period from November 1, 1992 through October 31, 1993, its Trustees,
officers and greater than 10% beneficial owners complied with all Section
16(a) filing requirements.
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND A VOTE FOR APPROVAL OF
THE NOMINEES FOR ELECTION AS TRUSTEES.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information as of January 7,
1994 available to the Trust with respect to the shares of the Trust (i) held
by those persons known to the Trust to be the beneficial owners (as
determined under the rules of the Securities and Exchange Commission) of
more than 5% of the Trusts Common Shares then outstanding and (ii) held by
each of the Trustees, each of the executive officers named in the Summary
Compensation Table below, and by all of the Trustees and executive officers
as a group:
5% BENEFICIAL OWNERS
NAME AND ADDRESS COMMON SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- --------------------- ------------------- ----------
Charles J. Urstadt(1) 1,037,050 19.1%
HRE Properties
530 Fifth Avenue
New York, New York 10036
The Kimco Group(2) 601,050 11.1%
1044 Northern Boulevard
Roslyn, New York 11576
- ---------
(1) Of these shares, 930,000 are owned by Urstadt Property Company, Inc., a
company of which Mr. Urstadt is the president, a director and a
principal stockholder and 40,000 shares are owned by Elinor Urstadt,
Mr. Urstadts wife. The figure excludes 101,250 shares issuable upon
exercise of options which are not currently exercisable and will not
become exercisable within 60 days, and includes 66,250 shares issuable
upon exercise of options exercisable within 60 days. See Compensation
and Transactions with Management and Others below. Also excludes 25,000
cash appreciation rights, all of which are exercisable within 60 days.
(2) Based on information contained in Amendment No. 10 to a Schedule 13D
filed with the Securities and Exchange Commission on December 11, 1989
by a group of persons and entities (the Kimco Group) comprised
principally of Milton Cooper, Kimco Corporation, Kimco Development
Corporation, CLS General Partnership Corp., K.O. Associates, Orentreich
Cooper Joint Venture and Dr. Norman Orentreich.
<PAGE>
TRUSTEES AND OFFICERS
COMMON SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
- ---- ------------------ --------
E. Virgil Conway 8,500(1)(3) *
Robert R. Douglass 1,600(3)(9) *
Peter Herrick 14,000(1)(3) *
George H.C. Lawrence 6,400(1)(3) *
William F. Murdoch, Jr. 2,373 *
Paul D. Paganucci 4,000(1)(3) *
Charles J. Urstadt 1,037,050(2) 19.1 %
James O. York 3,100(1)(3) *
James R. Moore 18,417(4)(6) *
Bryant Young 23,334(4)(7) *
Raymond P. Argila 5,417(4)(5) *
Trustees and executive
officers as a
group (11 persons) 1,124,191(8) 20.7 %
- --------
* Less than 1%
(1) Includes 2,000 Common Shares issuable upon exercise of options which
are currently exercisable or which will become exercisable within 60
days. See Compensation and Transactions with Management and Others
below.
(2) Includes 930,000 shares owned by Urstadt Property Company Inc. and
40,000 shares owned by Elinor Urstadt, Mr. Urstadts wife. Excludes
101,250 shares issuable upon exercise of options which are not
currently exercisable and will not become exercisable within 60 days,
and includes 66,250 Common Shares issuable upon exercise of options
exercisable within 60 days. Also excludes 25,000 cash appreciation
rights all of which are exercisable within 60 days. See Compensation
and Transactions with Management and Others below.
(3) Excludes 1,000 shares issuable upon exercise of options which are not
currently exercisable and will not become exercisable within 60 days.
(4) Represents Common Shares issuable upon exercise of options which are
currently exercisable or which will become exercisable within 60 days.
See Compensation and Transactions with Management and Others below.
(5) Excludes 11,166 shares issuable upon exercise of options which are not
currently exercisable and will not become exercisable within 60 days.
(6) Excludes 11,749 shares issuable upon exercise of options which are not
currently exercisable and will not become exercisable within 60 days.
(7) Excludes 9,000 shares issuable upon exercise of options which are not
currently exercisable and will not become exercisable within 60 days.
(8) Excludes 139,665 shares issuable upon exercise of options which are not
currently exercisable and will not become exercisable within 60 days,
but includes 124,418 Common Shares issuable upon exercise of options
which are exercisable within 60 days. Also excludes 25,000 cash
appreciation rights all of which are exercisable within 60 days.
(9) Includes 1,000 Common Shares issuable upon exercise of options which
are currently exercisable or which will become exercisable within 60
days. See Compensation and Transactions with Management and Others
below.
<PAGE>
COMPENSATION AND TRANSACTIONS WITH MANAGEMENT AND OTHERS
Executive Officer Compensation
There is set forth below information concerning the annual and
long-term compensation paid by the Trust during each of the three years
ended October 31, 1993 to those persons who were, at October 31, 1993
(i) the chief executive officer and (ii) the three other most highly
compensated executive officers of the Trust constituting the only persons
who were serving as executive officers at such date.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
Annual Compensation Awards/Payouts
- --------------------------------------------------------- ------------------------------
#
Name and Options/ All Other
Principal Position Year Salary Bonus Total SARs Compensation* Total
- ------------------ ---- ------- ------ --------- -------- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Charles J. Urstadt 1993 $191,667 $ 0 $191,667 67,500 $9,583 $201,250
Chief Executive 1992 $175,000 $ 0 $175,000 30,000 $8,750 $183,750
Officer 1991 $175,000 $ 0 $175,000 20,000 $8,750 $183,750
James R. Moore 1993 $125,345 $4,000 $129,345 7,500 $6,467 $135,812
Senior Vice 1992 $117,559 $1,000 $118,559 3,333 $5,928 $124,487
President 1991 $112,566 $6,500 $119,066 3,333 $5,953 $125,019
Raymond P. Argila 1993 $115,185 $3,000 $118,185 7,500 $5,909 $124,094
Senior Vice 1992 $109,267 $1,000 $110,267 3,333 $5,513 $115,780
President 1991 $105,502 $3,500 $109,002 3,333 $5,450 $114,452
Bryant Young 1993 $104,893 $2,500 $107,393 6,000 $5,370 $112,763
Senior Vice 1992 $ 97,417 $1,750 $ 98,167 2,667 $4,928 $103,095
President 1991 $ 93,250 $2,500 $ 95,750 2,667 $4,788 $100,538
<FN>
*Discretionary contribution by the Trust to the Trusts Profit Sharing and Savings Plan (the 401(k)
Plan)
allocated to an account of the named executive officer.
</TABLE>
Trustee Compensation
Other than Mr. Murdoch and Mr. Urstadt, each Trustee is entitled to an
annual retainer of $12,500 and compensation of $750 for each Trustee meeting
and each committee meeting attended. Trustees may elect to defer payment of
any Trustee fees until they leave office. The Trust paid annual interest of
8% on deferred Trustee fees during the fiscal year ended October 31, 1993
and currently accrues 7.5% annual interest on deferred Trustee fees.
EMPLOYMENT AND CONSULTING AGREEMENT AND CHANGE OF CONTROL AGREEMENTS
Employment and Consulting Agreement.In September 1989, the Trust and
William F. Murdoch, Jr. (Vice Chairman and former President and Chief
Executive Officer of the Trust) entered into an Employment and Consulting
Agreement (Agreement) under which Mr. Murdoch was employed by the Trust on a
part-time basis until May 31, 1990. Thereafter, until November 30, 1993, he
agreed to serve as a consultant to the Trust. The Agreement provided for Mr.
Murdoch to receive $100,000 per annum for consulting services and
approximately $38,000 per annum in lieu of retirement and welfare benefits.
The Agreement also
<PAGE>
(a) provided for the Trust to pay premiums of approximately $22,000 per
annum on Mr. Murdochs split-dollar life insurance policy through January 31,
1993 and (b) extended the exercise period of stock option grants available
to Mr. Murdoch which were exercisable on May 31, 1990, through the earlier
of the expiration of the original exercise period of any such stock option
or November 30, 1993. In December 1992, the Trust and Mr. Murdoch mutually
agreed to terminate the Agreement in consideration of a lump sum payment by
the Trust to Mr. Murdoch of $133,656, constituting the present value of all
amounts to be due to Mr. Murdoch during the remaining term of the Agreement.
Mr. Murdoch also agreed that all options to purchase the Trusts Common
Shares held by Mr. Murdoch which were outstanding and unexercised on
December 30, 1992 would be cancelled as of such date.
Change of Control Agreements.The Trust has agreements with each of its
officers, including Messrs. Urstadt, Moore, Argila and Young, under which,
in certain circumstances following a Change of Control of the Trust (as
defined in such agreements), the Trust would pay severance benefits to such
persons. If, within 18 months following the Change of Control, the Trust
terminates the executives employment other than for cause, or if the
executive elects to terminate his employment with the Trust for reasons
specified in the agreement, the Trust will make a severance payment equal to
a portion of such persons base salary, together with medical and other
benefits during such period. The severance payments range from 6 months to
12 months salary plus benefits. Messrs. Urstadt, Moore, Argila and Young
would each receive a severance payment equal to their respective twelve
month salaries plus benefits. The salaries of Messrs. Urstadt, Moore, Argila
and Young are currently $215,000, $132,000, $121,000 and $110,000,
respectively. Each of such agreements has an indefinite term.
Stock Options
Under the Trusts Stock Option Plan (Plan), 463,875 shares of the Trusts
authorized but unissued Common Shares are reserved for issuance upon the
exercise of options or stock appreciation rights which have been or may be
granted under the Plan. The persons eligible to participate in the Plan are
such key employees of the Trust as may be selected from time to time by the
Compensation Committee in its discretion, as well as non-employee Trustees.
The Plan provides that each Trustee who is not a full-time employee or
former full-time employee of the Trust will automatically be awarded options
covering 1,000 shares on April 1 of each year. The Plan is administered by
the Compensation Committee.
The following table sets forth, for the executive officers named in the
Summary Compensation Table, information regarding individual grants of stock
options and stock appreciation rights (SARs) made under the Plan in the
fiscal year ended October 31, 1993.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants Grant Date Value
-------------------------------------------- ------------------
% of Total
Options/
SARs
Options/ Granted to Average
SARs Employees Exercise or
Granted* in Fiscal Base Price Expiration Grant Date
Name (#) Year ($/sh) Date Present Value ($)**
- ----- ------- ------ ------- ------ -------------------
<S> <C> <C> <C> <C> <C>
Charles J. Urstadt 67,500 67.67% $12.75 11/10/02 $109,350
James R. Moore 7,500 7.52% $12.75 11/10/02 $ 12,150
Raymond P. Argila 7,500 7.52% $12.75 11/10/02 $ 12,150
Bryant Young 6,000 6.02% $12.75 11/10/02 $ 9,720
<FN>
<PAGE>
- --------
** All options granted during the past fiscal year vest over four years. No options granted during
the past fiscal year were granted with related stock appreciation rights.
** Based on the Black-Scholes option pricing model adapted for use in valuing executive stock
options. The actual value, if any, an executive may realize will depend on the excess of the
stock price over the exercise price on the date the option is exercised, so that there is no
assurance the value realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on arbitrary assumptions as
to variables such as interest rates, stock price volatility and future dividend yield.
</TABLE>
The Compensation Committee has authorized loans to finance the exercise
of incentive stock options granted to executive officers. The loans have a
five-year term, subject to extension at the discretion of the Compensation
Committee, bear interest at the Base Rate of The First National Bank of
Boston and are secured by a pledge of the related shares. The loans become
due on termination of employment by the Trust, but are automatically
extended for seven months following termination of employment other than for
cause, and for 13 months following termination of employment occurring after
a Change of Control of the Trust.
The following table sets forth, for the executive officers named in the
Summary Compensation Table, information concerning the fiscal year-end value
of unexercised options and SARs. No Common Shares of the Trust were acquired
by such executive officers through the exercise of options in fiscal 1993.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
------------ --------------
AT FY-END (#) AT FY-END ($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- ------------- --------------
Charles J. Urstadt 66,250/76,250 $145,781/$210,781
James R. Moore 18,417/8,750 $ 19,213/$ 24,427
Raymond P. Argila 5,417/8,750 $ 19,213/$ 24,427
Bryant Young 23,334/7,001 $ 13,565/$ 18,936
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Board of Trustees Compensation Committee, which is composed of
three independent outside Trustees, is responsible for making
recommendations to the Board concerning compensation and for administering
the Trusts Stock Option Plan. The Compensation Committee considered a
variety of factors and criteria in arriving at its recommendations for
compensation of the Trusts executive officers for fiscal 1993.
The Committee believes that compensation should be structured so as to
provide incentives to the Trusts officers to enhance the long-term
profitability of the Trust. It is the Committees view that increases in cash
flow, dividends paid and net equity values improve shareholder market value.
As a result, in making its
<PAGE>
recommendations regarding compensation, the Committee attempts to align the
financial interests of the Trusts executive officers with those of its
shareholders.
Options to purchase the Trusts Common Shares are a key element in the
Trusts compensation program. Since the Trusts Stock Option Plan provides for
a one-year waiting period before options may be exercised and an exercise
price of the Trusts Common Shares at fair market value as of the date of
grant, executive officers benefit from options only when the share price
increases. As a result, options help to motivate executives by providing
incentives tied to shareholder goals. The Committee determined that it was
advisable to consider the grant of options twice a year, rather than once a
year as had been the past practice, so as to provide a more immediate
incentive to loyal employees and align more closely the award of options to
job performance.
In evaluating the potential long-term profitability of the Trust and
making its fiscal 1993 compensation recommendations, the Committee
considered the continued recession in the real estate industry and the
resulting effect on the Trusts cash flow. The Committee also considered
stock price, projected and actual cash flow, leasing activities, new
acquisitions and other factors in arriving at its conclusions. The Committee
decided to grant options, pursuant to the Trusts Stock Option Plan, to
purchase the Trusts common shares to such officers which the Committee
believed would provide such officers with a direct incentive to improve the
Trusts profitability and consequently, shareholder value. Stock options were
granted in November 1992 as had been the practice in past years. In June
1993, a further grant of stock options was made on the basis that the
Committee would take this grant into account in setting the amount of the
fiscal year 1994 options granted, if any.
The Committee believes that the continued focus by the Chief Executive
Officer on financing, acquisitions and sales, leasing and cost containment,
in the face of a highly competitive market warrants special recognition and
that such focus will position the Trust for potential long-term
profitability as this strategy matures. In light of the efforts by Mr.
Urstadt to increase leasing and undertake strategic acquisitions and to
reduce office building holdings in order to improve cash flow, the Committee
decided to award Mr. Urstadt options to purchase 67,500 of the Trusts common
shares. This amount represents a grant of 45,000 options at the Committees
November 1992 meeting and an additional grant of one-half of that amount at
the Committees June 1993 meeting. The Committee believes that the Chief
Executive Officer should be able to profit directly from future increases in
the value of the Trusts common shares which enures to the benefit of all
shareholders.
The Committee compared the annual compensation of Mr. Urstadt with that
of Chief Executive Officers of other REITs and determined that Mr. Urstadts
current salary was lower than the mean annual salary of such other Chief
Executive Officers. The Committee noted that the annual salary of Mr.
Urstadt had not been increased for 3 years. Therefore, the Committee decided
that an increase in Mr. Urstadts annual salary to $215,000 was advisable and
warranted.
Compensation Committee
E. Virgil Conway, Chairman
George H.C. Lawrence
Robert R. Douglass
<PAGE>
ITEM 2. APPROVAL OF AMENDMENT TO THE DECLARATION OF TRUST
An amendment to the Trusts Declaration of Trust, which would amend
Section 2.2 of the Declaration, is being proposed for approval at the
Meeting. The amendment would institute a classified Board of Trustees
structure, under which approximately one-third of the Board (rather than the
entire Board) would be elected each year. As proposed to be amended, Section
2.2 of the Declaration would provide for the classification of the Board
into three classes, with each class to consist of not fewer than one and no
more than five Trustees. Class I Trustees would serve until the 1995 Annual
Meeting of Shareholders, Class II Trustees would serve until the 1996 Annual
Meeting and Class III Trustees would serve until the 1997 Annual Meeting. At
each Annual Meeting, commencing in 1995, the successors to any class of
Trustees whose terms then expire would be elected to serve three-year terms;
thus, commencing in 1995, each class of Trustees would be subject to
shareholder vote only once every three years. The text of proposed new
Section 2.2, as the same would read if such proposal is approved at the
Meeting, is set forth in Appendix A hereto.
The classification of Trustees will have the effect of making it more
difficult for shareholders to change the composition of the Board of
Trustees. However, the Trust believes that the longer time to elect a
majority of a classified Board of Trustees will help to ensure continuity
and stability of the Trusts management and policies. The classification
provisions could also have the effect of discouraging a third party from
accumulating large blocks of the Trusts shares of beneficial interest or
attempting to obtain control of the Trust, even though such an attempt might
be beneficial to the Trust and its shareholders.
AT THE MEETING, THE SHAREHOLDERS OF THE TRUST WILL BE REQUESTED TO
APPROVE THE AMENDMENT TO THE TRUSTS DECLARATION OF TRUST. THE AFFIRMATIVE
VOTE OF THE HOLDERS OF NOT LESS THAN A MAJORITY OF THE TRUSTS OUTSTANDING
COMMON SHARES WILL BE REQUIRED TO APPROVE THIS AMENDMENT.(ABSTENTIONS AND
BROKER NON-VOTES WILL THUS BE THE EQUIVALENT OF NEGATIVE VOTES ON THIS
PROPOSAL.) THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND APPROVAL OF THIS
AMENDMENT.
<PAGE>
OTHER INFORMATION
PERFORMANCE GRAPH
The following graph compares, for the five-year period ended October
31, 1993, the Trusts cumulative total return to its shareholders with the
returns for the NAREIT All REIT Total Return Index published by the National
Association of Real Estate Investment Trusts (NAREIT) and for the S&P 500
Index for the same period.
Comparison of Five Year Cumulative Total Return Among
HRE Properties, S&P 500 Index and NAREIT All-REIT Index
[GRAPH HERE]
AUDIT MATTERS
The Trustees have appointed Arthur Andersen & Co. to examine the
financial statements of the Trust for the fiscal year ended October 31,
1994, and to report the results of their examination.
It is expected that a representative of Arthur Andersen & Co. will be
present at the Annual Meeting. Such representative will be afforded the
opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions raised at the meeting.
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SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented to the Trusts Annual
Meeting of Shareholders to be held in 1995 must be received by the Trust by
September 12, 1994. Such proposals must also comply with the requirements as
to form and substance established by the Securities and Exchange Commission
for such proposals to be included in the proxy statement.
GENERAL
All shares represented by the accompanying proxy will be voted in
accordance with the proxy. The Trustees know of no other business which will
come before the Meeting for action. However, as to any such business, the
persons designated as proxies will have discretionary authority to act in
their best judgment.
The Declaration of Trust dated July 7, 1969 establishing HRE
Properties, a copy of which, together with all amendments thereto (the
Declaration), is on file in the office of the Secretary of the Commonwealth
of Massachusetts, provides that the name HRE Properties refers to the
trustees under the Declaration collectively as trustees, but not as
individuals or personally; and no trustee, shareholder, officer or agent of
HRE Properties shall be held to any personal liability; nor shall resort be
had to their private property for the satisfaction of any obligation or
claim or otherwise in connection with the affairs of said HRE Properties,
but the trust estate only shall be liable.
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APPENDIX A
SECTION 2.2 TERMS OF OFFICE; ELECTION AND QUALIFICATION. Subject to the
provisions of Sections 2.3 and 2.4, each Trustee shall hold office until the
expiration of his term and until the election and qualification of his
successor. Except as otherwise required by the provisions of any series of
Preferred Shares at the time outstanding, commencing at the Annual
Shareholders Meeting held in 1994, the terms of office of the Board of
Trustees shall be divided into three classes, Class I, Class II and Class
III. All classes shall be as nearly equal in number as possible, and no
class shall include fewer than one or more than five Trustees.
The terms of office of the Trustees initially classified shall be as
follows: (i) that of Class I shall expire at the Annual Meeting of
Shareholders to be held in 1995, (2) that of Class II shall expire at the
Annual Meeting of Shareholders to be held in 1996, and (3) that of Class III
shall expire at the Annual Meeting of Shareholders to be held in 1997, and
in all cases until a successor shall have been duly elected and shall have
qualified. At each Annual Meeting of Shareholders after the aforementioned
classification, the successor to Trustees whose terms shall then expire
shall be elected to serve from the time of election and qualification until
the third Annual Meeting of Shareholders following election and until a
successor shall have been duly elected and shall have qualified. Trustees
may succeed themselves in office.
Except as otherwise required by the provisions of any series of
Preferred Shares at the time outstanding, the election of Trustees at any
meeting of Shareholders shall be by the affirmative vote of the holders of a
majority of the shares present in person or by proxy at such meeting and
then entitled to vote in the election of Trustees. A Trustee shall be an
individual at least twenty-one (21) years of age who is not under legal
disability. Such individual shall qualify as a Trustee by signing this
Declaration of Trust, as so amended. Trustees continuing in office by
re-election or re-appointment need not re-qualify as Trustees. Trustees may,
but need not, own shares.
PROXY
1994 ANNUAL MEETING OF
HRE PROPERTIES
This Proxy is Solicited on behalf of the Trustees of HRE
Properties
The undersigned hereby appoints RAYMOND P. ARGILA and JAMES R.
MOORE, or either of them with full power of substitution to each,
proxies to vote and act at the Annual Meeting of Shareholders of
HRE Properties to be held on March ___, 1994 at 11:00 a.m. at
_____________________, New York, New York and at any adjournments
thereof, upon and with respect to the number of Common Shares of
HRE Properties as to which the undersigned may be entitled to
vote or act. The undersigned instructs such proxies, or their
substitutes, to vote in such manner designated on the reverse
side hereof on any matters which may come before the meeting, all
as indicated in the accompanying Notice of Annual Meeting and
Proxy Statement, receipt of which may come before the meeting,
all as indicated in the accompanying Notice of Annual Meeting and
Proxy Statement, receipt of which is acknowledged, and to vote on
the following as specified by the undersigned. The undersigned
hereby revokes any other proxy previously granted to vote the
Common Shares for said meeting.
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES
TO WHICH IT RELATES WILL BE VOTED AS SPECIFIED, BUT IF NO
SPECIFICATION IS MADE, THE SHARE TO WHICH IT RELATES WILL BE
VOTED FOR THE ELECTION OF TRUSTEES AND PROPOSAL 2 AND FOR ANY
ADJOURNMENT DEEMED DESIRABLE BY HRE PROPERTIES.
(Continued and to be signed and dated on reverse side)
Please mark box /_/ in blue or /X/ black ink.
1. Election of Trustees
Nominees: E. Virgil Conway, Robert R. Douglass, Peter
Herrick, George H.C. Lawrence, William F. Murdoch, Jr.,
Paul D. Paganucci, Charles J. Urstadt and James O. York.
FOR ALL /_/ WITHHOLD FROM ALL /_/
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For all nominees except as marked above.
(Instruction: To withhold authority to vote for any
individual nominee, write such nominee's name in this space
provided above.)
If proposal 2 is approved, the nominee will be elected as
follows: Messrs. Murdoch and Conway for a term expiring at
the 1995 Annual Meeting; Messrs Herrick, Paganucci and York
for a term expiring at the 1996 Annual Meeting; and Messrs.
Douglas, Lawrence and Urstadt for a term expiring at the
1997 Annual Meeting.
1. To amend the Trust's Declaration of Trust as set forth in
the accompanying Proxy Statement
FOR /_/ AGAINST /_/ ABSTAIN /_/
In their discretion the Proxies are authorized to vote upon
such other business as may property come before this
meeting.
ANY PROXY WHICH IS EXECUTED IN SUCH MANNER AS NOT TO
WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF ANY NOMINEE
SHALL BE DEEMED TO GRANT SUCH AUTHORITY OR IF NO DIRECTION
IS MADE SHALL BE DEEMED A VOTE FOR
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT/_/
(Please sign exactly as your name(s) appear
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please sign
your full title as such. If signer is a
partnership, please sign in partnership name by
authorized person. Each joint owner should sign.)
Date: ___________________________________
_________________________________________
Signature of Shareholder
_________________________________________
Signature if held jointly
Please mark, Sign, Date and Return This Proxy
Card Promptly Using the Enclosed Envelope
