<PAGE> 1
AMERICAN INDUSTRIAL PROPERTIES
REIT
May 3, 1994
Dear Fellow Shareholder:
Last year, we embarked upon a plan -- to maximize shareholder value by
allowing the Trust to participate in the growth taking place in the real estate
investment trust industry. To achieve this goal, we had to accomplish the
following:
- become a perpetual, non-liquidating REIT
- proceed with the recapitalization of the Trust
VOTE NOW FOR CONTINUED PROGRESS!
Last October, by an overwhelming 81% vote, you and your fellow
shareholders set in motion the Trust's plan by deciding not to proceed with the
liquidation of the Trust.
We then moved to the next phase of the plan -- by pursuing the ultimate
recapitalization of the Trust. We feel our financing agreement with Kidder
Peabody Mortgage Capital Corporation is an important step toward this
recapitalization. We also feel that the merger is necessary to achieve our goal
of maximizing shareholder value through a successful recapitalization. Why?
- We believe the Trust is better served to be organized in
Maryland -- which is consistent with the large majority of recently
formed REITs.
- The Trust needs more authorized shares in order to compete in the future
for equity capital.
- The reverse share split should increase the Trust's trading price per
share -- which is needed to attract capital from investors who cannot
invest in low value stocks.
DON'T VOTE FOR KOETHER'S AGENDA OF LIQUIDATION
In previous letters, we have described Paul Koether's history of greenmail
activities. We have also emphasized that Koether always appears to have his own
agenda -- in this case "liquidation" of the Trust or "auction" to the highest
bidder.
<PAGE> 2
VOTE ON THE WHITE PROXY CARD FOR THE TRUST'S PLAN
Our program has been carefully designed to allow the Trust and its
shareholders to participate in the growth of the real estate investment trust
industry in coming years and to maximize the value of your investment. We urge
you to reject Koether's agenda and support your Trust's future by voting FOR the
proposed merger.
Please vote only on the WHITE PROXY CARD.
On behalf of your Trust Managers,
/s/ CHARLES W. WOLCOTT
Charles W. Wolcott
President and CEO
IMPORTANT
1. Be sure to vote only in 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 Special 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.
<PAGE> 3
AMERICAN INDUSTRIAL PROPERTIES REIT
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST MANAGERS OF
AMERICAN INDUSTRIAL PROPERTIES REIT
SPECIAL MEETING MAY 10, 1994
The undersigned hereby appoints W. H. Bricker and Charles W. Wolcott, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes either of them to represent and to vote all of the
undersigned's Shares of Beneficial Interest in the Trust, held of record on
March 4, 1994, at the Special Meeting of Shareholders to be held on May 10,
1994 or at any postponements or adjournments thereof, on the proposals below,
as directed.
(1) THE ADOPTION AND APPROVAL OF THE MERGER AGREEMENT AND THE MERGER
THEREUNDER OF AMERICAN INDUSTRIAL PROPERTIES REIT (THE "TRUST")
WITH AND INTO A MARYLAND CORPORATION WHICH IS A WHOLLY-OWNED
SUBSIDIARY OF THE TRUST.
/ / FOR: / / AGAINST: / / ABSTAIN:
(2) IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE SPECIAL MEETING OR ANY POSTPONEMENTS OR ADJOURNMENTS
THEREOF.
/ / FOR: / / AGAINST: / / ABSTAIN:
This Proxy, when properly executed, will be voted in the manner described
above. If no direction is made, this Proxy will be voted FOR the first proposal
and at the discretion of the Proxies with respect to the second proposal.
Please sign exactly as your name appears on your Share certificate. When Shares
are held in more than one name, all parties 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 an authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
_________________________ ______
Signature of Shareholder Date
_________________________ ______
Signature if Shares held Date
in more than one name
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
