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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
American Industrial Properties REIT
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(Name of Registrant as Specified In Its Charter)
American Industrial Properties REIT
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] 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:
Notes:
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[LETTERHEAD OF AMERICAN INDUSTRIAL PROPERTIES APPEARS HERE]
REIT
October 17, 1994
Dear Fellow Shareholders:
We are disappointed to have to inform you that Paul Koether, through his
company, American Holdings, Inc., will again be engaging your company, American
Industrial Properties REIT (the "Trust"), in another distracting and expensive
proxy contest. Despite his previous statements that he was not seeking control,
Koether is now seeking to further his own agenda by capturing total control of
the Trust through a fight for the board of Trust Managers.
Who will tell you the truth?
We believe it is very important that you understand who and what we are up
against. Koether and his group have been involved in many proxy fights over the
years. If history is any indication, we expect they will engage in a negative
campaign of misleading accusations and vague promises directed towards whatever
they think you will want to hear. To date, we think Koether has avoided
revealing important facts about his background which could shed light on his
true agenda.
Over the next several weeks, you can expect to receive several mailings,
and even personal phone calls from Koether. (That is, you may hear from him if
you are among the larger shareholders -- in the past, some of you have told us
that Koether has not communicated with the Trust's smaller shareholders.) At the
same time, you will hear from us. Through this process, you will have to
determine for yourself who is being truthful and straight-forward with you, and
who is not, and who will best serve your interests and the interests of the
Trust.
Koether's history of self-dealing
In 1988, Koether successfully completed a proxy fight for control of a
company named Computer Memories Inc., whose name he changed in 1992 to American
Holdings, Inc. (Sound familiar?) During that proxy fight, he worked to undermine
the plans of the management of the company while promising that, if shareholders
would only place their trust in him, he would implement a better plan that would
result in growth and greater value for all shareholders. According to American
Holdings' most recent 10-K, the company still appears to have no operating plan,
no growth plan, nor any of the other improvements promised by Koether in 1988.
SIX YEARS AFTER ITS TAKEOVER BY KOETHER, AMERICAN HOLDINGS HAS NOT
DISTRIBUTED A SINGLE DIVIDEND TO ITS COMMON SHAREHOLDERS, EVEN THOUGH IT HAS
CONTINUOUSLY HELD MILLIONS OF DOLLARS OF CASH IN THE BANK. During this time,
however, American Holdings has distributed millions of dollars collectively in
compensation to Koether (including regular bonuses), fee payments to his wife's
law firm, rent and other payments to Koether controlled affiliates and stock
buybacks directed towards Koether and other investors in his takeover group! It
makes you wonder what Koether has in mind for you and the Trust.
Koether's story keeps changing
In his previous proxy filings, Koether has said he does not seek control.
Now, he finally admits that he does in fact want control. In the past, he has
said we should liquidate the Trust, then he said we should auction it to the
highest bidder. Now he says we should trust him to "seek alternatives" and
direct the Trust towards "new growth." To us, this sounds deceptively vague. You
have to ask yourself, what is Koether's true agenda? Is he telling you the
truth?
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You may be interested to know that your Trust is not the first real estate
investment trust ("REIT") Koether has attacked. In 1979, Koether took a hostile
position in a REIT called Property Trust of America. According to published
reports, he criticized management harshly and declared that the company, which
then had assets of only $25 million, had no hope for future growth and should be
liquidated. Today, Property Trust of America is regarded as a strong, growing
REIT with assets well in excess of $1.1 billion. If the shareholders of Property
Trust of America had trusted Koether's judgment in 1979, and liquidated their
company when he insisted upon it, they would have missed out on one of the most
successful growth stories in the history of the REIT industry.
As you may be aware, Koether and his associates have been called
"greenmailers" by several courts. One court even said that a Koether-controlled
entity "dealt in many forms of shareholder blackmail in attempts to gain control
or be bought out at a substantial premium." Natalie Koether has been quoted in a
national business news magazine as saying greenmail is not necessarily a bad
thing. Well, we don't agree.
Does Koether know real estate?
In his previous proxy materials, Koether has claimed to be "in the real
estate related asset management business" through his subsidiary, Northcorp
Realty Advisors. In our opinion, Koether is not a real estate person. His
investment in Northcorp was typically short term. He took control of Northcorp
in June, 1992, and sold the company in two years late for a price less than his
purchase price.
After Koether took control of Northcorp, the performance of the company
began to deteriorate. The senior leadership of Northcorp, credited with building
Northcorp into a highly successful business, ultimately decided to leave the
company. In what was generally considered to be a favorable real estate
environment, Northcorp suffered, while most real estate companies prospered.
With all due respect to Koether's request that we entrust him to "stem the
decline" of the Trust, we would point out that since our new management team --
yes, our new management team -- assumed responsibility of the Trust's properties
from Trammell Crow Ventures on June 20, 1993, the quarterly operating
performance of the Trust has increased each quarter. While some of this
improvement has been the result of improving real estate markets (which Koether
somehow managed to miss at Northcorp), the Trust has benefitted from its team
of experienced real estate professionals. We believe that this performance is
best evidenced by hard facts rather than vague concepts.
The following graphs illustrate the progress your Trust's management has
made in the performance of the Trust's real estate assets for 1993 through the
second quarter of 1994.
Occupancy
86% 87% 87% 89% 91% 92%
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1Q 2Q 3Q 4Q 1Q 2Q
93 93 93 93 94 94
Net Operating Income
($ in millions)
1.374 1.544 1.504 1.570 1.710 1.790
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1Q 2Q 3Q 4Q 1Q 2Q
93 93 93 93 94 94
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Our response
After the last proxy contest with Koether, many shareholders expressed to
us their dissatisfaction with the waste in time and energy (not to mention
mailing costs) in the negative campaign that took place. Being real estate
people, rather than professional proxy fighters like Koether and his group, we
couldn't agree more with that sentiment. The stakes in this instance, however,
are high.
We believe every shareholder in the Trust owes it to himself or herself to
get to know the participants in this process. We welcome your calls at any time
to our toll-free number, 1-800-550-6053, or if possible, please visit our office
in Dallas. We will be pleased to discuss the progress we have made in the
operating performance of the Trust's properties and our plans to recapitalize
the Trust, removing the Zero Coupon Notes from our balance sheet and greatly
expanding our operating and financing flexibility. In addition, we will be
pleased to discuss our prospects for growth and the further changes that will be
required in the future, such as an increase in the Trust's authorized share
limit, if the Trust is to achieve its potential. (We note that Koether now talks
about issuing new equity to fund future growth -- even though the Trust would
have to increase its authorized share limit to accomplish this result. We wonder
what happened to Koether's harping on the supposed dilution caused by new
equity.) We are also prepared to speak with you about what went wrong in the
late 1980's and early 1990's when the Trust, along with many other real estate
companies, suffered through the deepest, most extended real estate depression in
this country in over fifty years.
We thank you for your time and for allowing us to share this information
with you. We believe we are in the early stages of a recovery of the real estate
markets and we are moving forward with the Trust. We need your support. We only
ask that over the next several weeks, in spite of misleading accusations which
may be leveled against your Trust, its Trust's Managers and its management, you
rely upon the standards of common sense and good judgment to discern the truth.
The future of American Industrial Properties REIT is in your hands.
Very truly yours,
AMERICAN INDUSTRIAL PROPERTIES REIT
/s/ Charles W. Wolcott
Charles W. Wolcott
President and CEO
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Important
1. Be sure to vote only on the WHITE PROXY CARD. WE URGE YOU NOT TO
SIGN ANY BLUE PROXY CARDS YOU RECEIVE FROM AMERICAN HOLDINGS OR
ITS ASSOCIATES.
2. If your shares are held in "street name," only your broker or
banker can vote your shares and only upon receipt of your
specific instructions. Please return the WHITE PROXY CARD in
the envelope provided or contact the person responsible for
your account and instruct that individual to vote a WHITE PROXY
CARD on your behalf today.
3. If you have executed American Holdings blue proxy card, you
have every right to change your vote by signing, dating and
returning the enclosed WHITE PROXY CARD. Any proxy may be
revoked by a later-dated proxy. Only your latest-dated proxy
will count at the Annual Meeting of Shareholders.
4. If you have any questions or need assistance in voting your
shares, please feel free to contact me, Charles Wolcott, at our
toll-free number, 1-800-550-6053, or contact D.F. King & Co., Inc.
at 1-800-669-5550.
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APPENDIX
Graphic and Image Material
1. Bar graphs on page 2 depict the following:
a) Occupancy percentages for all four quarters of 1993 and the first two
quarters of 1994.
b) Net Operating Income in millions of dollars for all four quarters of
1993 and the first two quarters of 1994.
