HRE PROPERTIES
530 FIFTH AVENUE
New York, New York 10036
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
to be held on March 15, 1995
This Proxy Statement is furnished to shareholders of HRE
Properties,a Massachusetts business trust(hereinafter called the "Trust"),
in connection with the solicitation by the Trustees of the Trust 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, March 15, 1995 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 bepaid 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 26, 1995, 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 26, 1995, there
were 5,341,696 Common Shares issued and outstanding.
Shares represented by proxies, 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 one Trustee and for Proposal Two.
To be voted, proxies must be filed with the Secretary of the
Trust prior to voting. The presence of a shareholder at the Meeting will not
automatically revoke such shareholder's proxy. However, 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 Trust's fiscal year ended
October 31, 1994 has been mailed with this proxy statement. This proxy
statement and the enclosed proxy were mailed to shareholders on or about
January __, 1995. The principal executive offices of the Trust are located at
530 Fifth Avenue,New York, New York 10036.
PROPOSAL ONE
ELECTION OF TRUSTEES
Pursuant to Section 2.2 of the Trust's Declaration of
Trust, the Trustees are divided into three classes serving three year terms.
One Trustee, comprising Class I, is to be elected at the 1995
Annual Meeting.Mr. E. Virgil Conway has been nominated for election as a Trustee
to hold office until the 1998 Annual meeting and until his successor has
been elected and shall qualify.
<TABLE>
INFORMATION REGARDING TRUSTEES (AS OF JANUARY 6,1995)
Name Principal Occupation Age Trustee Term
For the Past Five Years Continuous to
And Current Directorships Since Expire
<S> <C> <C> <C> <C>
(to be nominated for election
by holders of Common Shares
(to serve for three years))
E. Virgil Conway(C)(E) Chairman, Financial Accounting 65 1989 1998
Standards Advisory Council (May,
1992); FinancialConsultant and
Corporate Director(since January
1989); Retired Chairman and
Director, The Seamen's 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,
Trism, Inc.;Director, AccuHealth,
Inc.; Chairman, NewYork Housing
PartnershipDevelopment
Corporation; Vice Chairman,
Academy of Political Science;
Trustee, Pace University; Member,
Metropolitan Transportation
Authority.
For the Past Five Years
And Current Directorships
CLASS II
(Term of Office expires in 1996)
Peter Herrick(A)(E) Retired Vice Chairman(1990-1992) 67 1990 1996
and Director, The Bank of New
York; President andChief 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.
Paul D Paganucci(A) Chairman, Ledyard National Bank 63 1984 1996
(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.(January 1986
to November 1986);formerly Vice
President and Treasurer of
Dartmouth College(July 1977 to
December 1985);Director, Filene's
Basement, Inc.;Director, Allmerica
Securities Trust; Trustee, Colby
College; Director, The Grace
Foundation.
James O York(A) Real Estate Counselor(since 1988) 67 1979 1996
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.
Principal Occupation
For the Past Five Years
And Current Directorships
CLASS III
(Term of Office expires in 1997)
Robert R. Douglass(C) Of Counsel, Milbank,Tweed 63 1991 1997
Hadley and McCloy;Retired Vice
Chairman and Director,The Chase
Manhattan Corporation(1985 to
1993); Executive Vice President,
General Counsel and Secretary, The
Chase Manhattan Corporation (1976
to 1985); Trustee, Dartmouth
College (1983 to 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.
George HC Lawrence(C) Chairman, ChiefExecutive Officer 67 1988 1997
and President,Lawrence Investing
Company, Inc. (since1970);
Director, Urstadt Property
Company, Inc.;Trustee, Sarah
Lawrence College;Director,
Westchester County Association;
Senior Vice President and Director,
Kensico Cemetery.
Charles J Urstadt(E) Chairman of the Board of Trustees 66 1975 1997
(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) (since
September 1979);Trustee, Pace
University; Trustee,Teacher's
Insurance and Annuity Association.
(A) Member of Audit Committee
(C) Member of Compensation Committee
(E) Member of Executive Committee
During the fiscal year ended October 31, 1994, the
Trustees held five meetings. The Trustees have three
standing committees: an Audit Committee, an Executive Committee
and a Compensation Committee. 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 such Trustee is a member.
The Audit Committee met twice during the fiscal year
ended October 31, 1994. The Committee
recommends to the Trustees the independent public accountants to
be engaged by the Trust, reviews with the Trust's
independent public accountants and management the Trust's
internal accounting procedures and controls, and reviews
with the Trust's 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 did not meet during the fiscal
year ended October 31, 1994. 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, 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 Trust's Stock Option Plan, held two meetings
during the fiscal year ended October 31, 1994.
Messrs. E. Virgil Conway, George H.C. Lawrence and Robert R.
Douglass are the current members of the
Compensation Committee.
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 Trust's Trustees and
officers, and persons who own more than 10% of a registered class
of the Trust's 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, 1993 through October 31, 1994, its Trustees, officers
and greater than 10% beneficial owners
complied with all Section 16(a) filing requirements.
At the meeting, the shareholders of the Trust will be
requested to elect one Trustee, comprising Class I.
The affirmative vote of the holders of not less than a majority
of the Trust's Common Shares entitled to vote and
present, in person or by proxy, at the annual meeting will be
required to elect a Trustee. Abstentions will thus 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 any
proposal to which the broker non-vote applies.
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND A VOTE FOR APPROVAL
OF THE NOMINEE FOR ELECTION AS A TRUSTEE.
Security Ownership of Certain Beneficial Owners and Management
The following tables set forth certain information as of
January 6, 1995 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 Trust's 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
</TABLE>
<TABLE>
Name and Address
of Beneficial Owner Common Shares Percent
Beneficially Owned of Class
<S> <C> <C>
Charles J. Urstadt(1)
HRE Properties
530 Fifth Avenue
New York, New York 10036 1,072,675 19.5%
The Kimco Group(2)
1044 Northern Boulevard
Roslyn, New York 11576 601,050 10.9%
________________
(1) Of these shares, 15,000 are owned by Urstadt Property
Company, Inc., a company of which Mr. Urstadt
is the president, a director and a principal
stockholder, 15,000 shares are held by George H. C. Lawrence,
a Trustee, which Urstadt Property Company, Inc. has the
power to vote pursuant to an irrevocable proxy,
900,000 shares are owned by two irrevocable trusts
established for Mr. Urstadt's children and 40,000
shares are owned by Elinor Urstadt, Mr. Urstadt's wife.
The figure excludes 115,625 shares issuable upon
exercise of options which are not currently exercisable
and will not become exercisable within 60 days,
and includes 101,875 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.
</TABLE>
<TABLE>
TRUSTEES AND OFFICERS
Name Common Shares
Beneficially Owned Percent Of Class
<S> <C> <C>
E.Virgil Conway. . . . . . . . . . . . . . . . 9,500(1)(3) *
Robert R. Douglass. . . . . . . . . . . . . . 4,600(3)(8) *
Peter Herrick . . . . . . . . . . . . . . . . 15,000(1)(3) *
George H.C. Lawrence. . . . . . . . . . . . . 22,400(1)(3)(9) *
Paul D. Paganucci . . . . . . . . . . . . . . 5,000(1)(3) *
Charles J. Urstadt. . . . . . . . . . . . . . 1,072,675(2) 19.5 %
James O. York . . . . . . . . . . . . . . . . 4,100(1)(3) *
James R. Moore. . . . . . . . . . . . . . . . 22,709(4)(6) *
Bryant Young. . . . . . . . . . . . . . . . . 26,668(4)(7) *
Raymond P. Argila . . . . . . . . . . . . . . 9,584(4)(5) *
Trustees and executive officers
as a group (10 persons) . . . . . . . . . . 1,177,236 (10) 21.3%
* Less than 1%
(1) Includes 3,000 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 15,000 Common Shares owned by Urstadt
Property Company, Inc., 900,000 Common Shares
owned by two irrevocable trusts established for Mr.
Urstadt's adult children, 40,000 Common Shares
owned by Elinor Urstadt, Mr. Urstadt's wife, and
15,000 Common Shares held by George H.C.
Lawrence which Urstadt Property Company, Inc. has the
power to vote pursuant to an irrevocable
proxy. Excludes 115,625 Common Shares issuable upon
exercise of options which are not currently
exercisable and will not become exercisable within 60
days, and includes 101,875 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 Common 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 13,083 Common Shares issuable upon exercise
of options which are not currently exercisable
and will not become exercisable within 60 days.
(6) Excludes 14,458 Common Shares issuable upon exercise
of options which are not currently exercisable
and will not become exercisable within 60 days.
(7) Excludes 9,667 Common Shares issuable upon exercise
of options which are not currently exercisable
and will not become exercisable within 60 days.
(8) 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.
(9) Includes 15,000 Common Shares held by Mr. Lawrence
which Urstadt Property Company, Inc. has the
power to vote pursuant to an irrevocable proxy.
(10) Excludes 158,833 Common Shares issuable upon exercise
of options which are not currently exercisable
and will not become exercisable within 60 days, but
includes 177,836 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.
</TABLE>
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 Trustduring each of the three
years ended October 31, 1994 to those persons who were, at October 31, 1994
(i) the chief executive officer and (ii) the three other most highly
compensated executive officers of the Trust, which persons constitute the
only persons who were serving as executive officers at such date or at any
time during the 1994 fiscal year.
<TABLE>
SUMMARY
COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards/Payouts
Name and
Principal
Position Year Salary Bonus Total #
Options/ Total
SARs All Other Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
Charles J. 1994 $215,000 $20,000 $235,000 50,000 $7,500 $242,500
Urstadt 1993 $191,667 $ 0 $191,667 67,500 $9,583 $201,250
Chief 1992 $175,000 $ 0 $175,000 30,000 $8,750 $183,750
Executive
Officer
James R. 1994 $132,415 $ 6,500 $138,915 6,500 $6,946 $145,861
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
Raymond P. 1994 $121,115 $ 4,500 $125,615 5,500 $6,280 $131,895
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
Bryant 1994 $110,225 $ 3,000 $113,225 4,000 $5,661 $118,886
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
* Discretionary contribution by the trust to the Trust's Profit
Sharing and Savings Plan (the "401(k) Plan") allocated to an account of the named executive officer.
</TABLE>
Trustee Compensation
Other than 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 7.5% on deferred Trustee fees during the fiscal year
ended October 31, 1994 and currently accrues 7.5% annual interest
on deferred Trustee fees.
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 executive's 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 person's 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 $110,000, respectively. Each of such agreements has
an indefinite term.
Stock Options
Under the Trust's Stock Option Plan ("Plan"), 460,333 shares
of the Trust's authorized but unissued Common Shares are reserved for
issuance upon the exercise of options or stock appreciation rights which
have been or maybe granted under the Plan. The persons eligible to
participate in the Plan are such key employees of the Trust as may be
selected from time to time by the Compensation Committee in its discretion, as
well as non-employee Trustees. The Plan provides that each Trustee who
is not a full-time employee or former full-time employee of the Trust will
automatically be awarded options covering 1,000 Common Shares on
April 1 of each year. The Plan is administered by the Compensation
Committee.
The following table sets forth, for the executive officers
named in the Summary Compensation Table,information regarding individual
grants of stock options and stock appreciation rights ("SARs") made under
in the fiscal year ended October 31, 1994.
<TABLE>
OPTION/SAR GRANTS IN
LAST FISCAL YEAR
Individual Grants Grant Date Value
% of Total
Options/
SARs
Options/ Granted to
SARs Employees Exercise or
Granted* in Fiscal Base Price Expiration Grant Date
Name (#) Year ($/sh) Date Present Value ($)**
<S> <C> <C> <C> <C> <C>
Charles J. Urstadt 25,000 33.11% $15.25 11/10/03 $ 62,500
25,000 33.11% $14.875 6/10/04 $ 61,500
James R. Moore 3,000 3.97% $15.25 11/10/03 $ 7,500
3,500 4.64% $14.875 6/10/04 $ 8,610
Raymond P. Argila 2,500 3.31% $15.25 11/10/03 $ 6,250
3,000 3.97% $14.875 6/10/04 $ 7,380
Bryant Young 2,000 2.65% $15.25 11/10/03 $ 5,000
2,000 2.65% $14.875 6/10/04 $ 4,920
</TABLE>
* 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 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.
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 1994.
<TABLE>
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
<S> <C> <C>
Charles J. Urstadt . . . . . . . . . 101,875/115,625 $199,609/$98,203
James R. Moore . . . . . . . . . . . 22,709/ 14,458 $25,650/$10,911
Raymond P. Argila. . . . . . . . . . 9,584/ 13,083 $25,650/$10,911
Bryant Young . . . . . . . . . . . . 26,668/ 9,667 $18,438/$ 8,730
</TABLE>
<PAGE>
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
Trust's Stock Option Plan. The Compensation Committee considered a
variety of factors and criteria in arriving at its recommendations for
compensation of the Trust's executive officers for fiscal 1994.
The Committee believes that compensation should be
structured so as to provide incentives to the Trust's officers to enhance the
long-term profitability of the Trust. It is the Committee's view that
increases in cash flow, dividends paid and net equity values improve
shareholder market value. As a result, in making its recommendations regarding
compensation, the Committee attempts to align the financial interests of the
Trust's executive officers with those of its shareholders.
Options to purchase the Trust's Common Shares are a key
element in the Trust's compensation program.
Since the Trust's Stock Option Plan provides for a one-year
waiting period before options may be exercised and
an exercise price of the Trust's 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 has determined that it is advisable to consider the
grant of options twice a year, 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 1994 compensation recommendations, the
Committee has considered stock price, projected and actual cash flow, leasing
activities, new acquisitions, sales and other factors in arriving at its
conclusions. The Committee decided to grant options pursuant to the Trust's
Stock Option Plan to purchase the Trust's Common Shares to certain executive
officers which theCommittee believed would provide such officers with a
direct incentive to improve the Trust's profitability and,consequently,
shareholder value.
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 during 1994 to increase leasing and undertake
strategic acquisitions and sales which has resulted in a 12.6% improvement
in cash flow in fiscal 1994, the Committee decided to award Mr. Urstadt
options to purchase 50,000 of the Trust's Common Shares. The Committee
believes that the Chief Executive Officer should be able to profit directly
from future increases in the value of the Trust's Common Shares which ensures
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. Urstadt's current salary remains below the mean annual salary
of such other Chief Executive Officers. However, Mr. Ustadt informed the
Committee that he did not desire a salary increaseat this time.
Accordingly, the Committee determined not to increase Mr. Urstadt's annual
salary in fiscal 1994 but nonetheless decided to award him a bonus of $20,000.
The Committee noted that the current salary of Mr.Urstadt was last
increased in June, 1993.
Compensation
Committee
E. Virgil Conway,
Chairman
George H.C.
Lawrence
Robert R.
Douglass
<PAGE>
PROPOSAL TWO
APPROVAL OF AMENDMENTS TO THE DECLARATION OF TRUST
The Trustees unanimously recommend amendments to
Sections 2.3 and 10.1 of the Declaration of Trust to require, subject to the
rights of the holders of any series of outstanding Preferred Shares at the
time outstanding,the approval of two-thirds (2/3) of the outstanding
Common Shares entitled to vote to approve the removal of any
Trustee with or without cause, and to require the approval of two-thirds to
remove or alter that provision.
Under the current Declaration, subject to the provisions
of any series of Preferred Shares at the time outstanding, a Trustee may
be removed with or without cause upon the approval of a majority of the
Common Shares then outstanding and entitled to vote in the election of
Trustees (which action shall be taken only by vote at a meeting called for
the purpose in accordance with Section 7.3 of the Declaration) and
the Declaration (subject to certain limitations specified therein)
may be amended by a majority vote.
The amendments will have the effect of increasing the
percentage of votes for shareholders to change the
composition of the Board of Trustees and to amend the Declaration
to remove or alter new Section 2.3 of the Declaration. However, the
Trust believes that the larger vote required to remove a trustee will
help to ensure continuity and stability of the Trust's management and policies.
The provision could also have the effect of discouraging a third
party from accumulating large blocks of the Trust's 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.
Approval of this Proposal requires the affirmative vote
of a majority of the outstanding Common Shares of the Trust, since
approval of a greater number of shareholders is not required under the terms of
the Declaration or applicable law. If this proposal is adopted, any
subsequent amendment of the Declaration, subject to the rights of
any series of outstanding Preferred Shares, relating to Section 2.3
will require the approval of two-thirds (2/3) of the outstanding
Common Shares entitled to vote. The text of proposed new Section 2.3 and the
new sentence to be added to Section 10.1, as the same would read if such
Proposal is adopted, is set forth in Appendix A hereto.
At the meeting, the shareholders of the Trust will be
requested to approve the Amendment to the Trust's Declaration of Trust. The
affirmative vote of the holders of not less than a majority of the Trust's
outstanding Common Shares will be required to approve this Amendment.
Abstentions and broker non-votes will thus be theequivalent 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, 1994, the Trust's cumulative total return to its shareholders
with the returns for the NAREIT All REIT Total Return Index published by
the NationalAssociation of Real Estate Investment Trusts (NAREIT) and for the
S&P 500 Index for the same period.
[Insert Graph]
Audit Matters
The Trustees have appointed Arthur Andersen & Co. to examine
the
financial statements of the Trust for the fiscal year ended
October 31, 1995, 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. Suchrepresentative will be
afforded the opportunity to make a statement if he or she so desires and
respond to appropriate questions raised at the meeting.
Submission of Shareholder Proposals
Proposals of shareholders intended to be presented to the
Trust's Annual Meeting of Shareholders to be heldin 1996 must be received by the
Trust by September 12, 1995. Such proposals must also comply with
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
persons designated as proxies will have discretionary authority to act in
their best judgement.
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 Propertiesshall 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.
<PAGE>
Appendix A
"SECTION 2.3 Resignation and Removal. Any Trustee may
resign his trusteeship by instrument in writing signed by him and delivered
or mailed to the President or Secretary, and such resignation shall take
effectimmediately upon receipt by the President or Secretary or at a
later date according to the terms of the instrument. Subject to the
provisions of any series of Preferred Shares at the time outstanding, the
Shareholders, by action of the holders of two-thirds (2/3) of the Shares then
outstanding and entitled to vote in the election of Trustees (which action shall
be taken only by vote at a meeting called for the purpose in accordance
with Section 7.3), may remove any Trustee with or without cause."
AND THE FOLLOWING ADDITIONAL SENTENCE AT THE END OF CURRENT
SECTION 10.1:
". . . Further, notwithstanding the foregoing, no
amendment may be made pursuant to this Section 10.1 which would relate to
Section 2.3 except with the vote or written consent of the holders of
two-thirds (2/3) of the outstanding Common Shares entitled to vote thereon."
PROXY
1995 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 15, 1995 at 11:00 a.m. at The
Grand Hyatt Hotel, 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 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 SHARES TO WHICH IT RELATES WILL BE
VOTED FOR THE ELECTION OF ONE TRUSTEE 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 black ink.
1. Election of one Trustee to serve for the ensuing three
years:
Nominee: E. Virgil Conway
FOR / / WITHHOLD AUTHORITY / /
2. 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 properly come before
this meeting.
ANY PROXY WHICH IS EXECUTED IN SUCH MANNER AS NOT TO WITHHOLD AUTHORITY
TO VOTE FOR THE ELECTION OF THE NOMINEE SHALL BE DEEMED TO GRANT SUCH
AUTHORITY OR IF NO DIRECTION IS MADE SHALL BE DEEMED A VOTE FOR.
(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 corporation, please sign in full corporate name by
authorized officer. If signer is a partnership, please sign in partnership
name by authorized person. Each joint owner should sign.)
Dated________________________________
_____________________________________
Signature of Shareholder
_____________________________________
Signature if held jointly
