<PAGE>
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
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
ARCHSTONE COMMUNITIES 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)(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 (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:
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(4) Date Filed:
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Notes:
<PAGE>
ARCHSTONE COMMUNITIES TRUST
7670 South Chester Street
Englewood, Colorado 80112
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 16, 1999
To the shareholders:
The 1999 annual meeting of shareholders of Archstone Communities Trust
("Archstone") will be held on Wednesday, June 16, 1999, at the Hyatt Regency
Tech Center, 7800 E. Tufts Avenue, Denver, Colorado, at 10:30 a.m. (Mountain
Time) for the following purposes:
1. To elect three Class I Trustees to serve until the annual meeting of
shareholders in 2002 and until their successors are duly elected and
qualify; and
2. To transact such other business as properly may come before the
meeting and any adjournment or postponement thereof.
Further information regarding the business to be transacted at the meeting
is given in the accompanying Proxy Statement.
Shareholders of record at the close of business on April 20, 1999 are
entitled to notice of, and to vote at, the meeting.
Please help Archstone by promptly marking, dating, signing and returning
the enclosed proxy card in the envelope provided for your convenience. If you
attend the meeting and decide to vote in person, you may revoke your proxy.
Jeffrey A. Klopf
Secretary
May 14, 1999
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
ARCHSTONE COMMUNITIES TRUST
7670 South Chester Street
Englewood, Colorado 80112
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 16, 1999
GENERAL INFORMATION
This proxy statement is being sent on May 14, 1999, to solicit proxies on
behalf of the Board of Trustees (the "Board") of Archstone Communities Trust
("Archstone") to be voted at the Archstone 1999 annual meeting of shareholders
to be held on Wednesday, June 16, 1999, and to provide information concerning
the use of the proxy and the business to be transacted at the meeting. If a
shareholder specifies a choice with respect to any matter to be acted upon and
for which a ballot is provided in the proxy, the proxy holders will vote the
common shares of beneficial interest, par value $1.00 per share (the "Common
Shares"), represented by the proxy in accordance with the shareholder's
specifications. If a shareholder signs and returns a proxy without specifying
choices, the proxy holders will vote the Common Shares represented by the
proxy in accordance with the recommendations of the Board.
If you are a registered owner and plan to attend the meeting in person,
please detach and retain the admission ticket, which is attached to your proxy
card. Beneficial owners whose ownership is registered under another party's
name and who plan to attend the meeting in person may obtain admission tickets
in advance by sending written requests, along with proof of ownership, such as
a bank or brokerage firm account statement, to: Secretary, Archstone
Communities Trust, 7670 South Chester Street, Englewood, Colorado 80112.
Record owners and beneficial owners (including the holders of valid proxies
therefrom) who do not present admission tickets at the meeting will be
admitted upon verification of ownership at the admissions counter at the
annual meeting.
Any shareholder giving a proxy has the right to revoke it at any time
before it is voted by giving written notice to the Secretary of Archstone, by
delivering to the Secretary of Archstone a duly executed proxy bearing a later
date or by attending and voting in person at the meeting.
Archstone will bear the cost of soliciting the proxies. In addition to
solicitation by mail, proxies may be solicited personally, or by telephone,
facsimile transmission or other electronic means, by officers or employees of
Archstone. Archstone will also request banking institutions, brokerage firms,
custodians, trustees, nominees, fiduciaries and similar parties to forward the
solicitation material to the beneficial owners of Common Shares held of record
by those persons, and Archstone will, upon request of those record holders,
reimburse forwarding charges and expenses.
SHARES OUTSTANDING AND VOTE REQUIRED
At the close of business on April 20, 1999, the record date for
determination of shareholders entitled to notice of, and to vote at, the
meeting, there were 139,106,790 Common Shares outstanding. Each whole Common
Share outstanding on the record date represents one vote, and each fractional
Common Share represents its fraction of one vote. There is no right to
cumulative voting. A majority of the outstanding Common Shares represented in
person or by proxy will constitute a quorum at the meeting.
<PAGE>
Assuming the existence of a quorum, the affirmative vote of a majority of
the Common Shares entitled to vote and represented in person or by proxy at
the meeting is required to elect each nominee for Trustee. Representatives of
Archstone's transfer agent will assist Archstone in the tabulation of the
votes. Abstentions and broker non-votes are counted as Common Shares
represented at the meeting for purposes of determining a quorum. An abstention
or broker non-vote has the effect of a vote "withheld" with respect to the
election of Trustees.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 1, 1999, the beneficial
ownership of Common Shares for (i) each person known to Archstone to have been
the beneficial owner of more than five percent of the outstanding Common
Shares, (ii) each Trustee of Archstone, (iii) each Named Executive Officer,
who include the Chief Executive Officer and the four other most highly
compensated officers of Archstone during 1998, and (iv) all Trustees and
executive officers of Archstone as a group. Unless otherwise indicated in the
footnotes, all of such interests are owned directly and the indicated person
or entity has sole voting and dispositive power. The following table assumes,
for purposes of calculating the number and percent of Common Shares
beneficially owned by a person, that (i) all Cumulative Convertible Series A
Preferred Shares of Beneficial Interest, par value $1.00 per share, of
Archstone ("Series A Preferred Shares"), beneficially owned by that person
have been converted into Common Shares and (ii) all options held by that
person which are exercisable within 60 days have been exercised, but that no
options or convertible securities held by other persons have been exercised or
converted. Fractional Common Shares have been rounded to the nearest whole
Common Share in the table below and elsewhere in this Proxy Statement. The
address of each Trustee and Named Executive Officer listed below is c/o
Archstone Communities Trust, 7670 South Chester Street, Englewood, Colorado
80112.
<TABLE>
<CAPTION>
Number of
Archstone Common Percentage of
Shares All
Beneficially Archstone Common
Name of Beneficial Owner Owned Shares
- ------------------------ ---------------- ----------------
<S> <C> <C>
Security Capital Group Incorporated....... 54,540,283(1) 39.2%
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Wellington Management Company, LLP........ 10,849,131(2) 7.8%
75 State Street
Boston, MA 02109
James A. Cardwell......................... 37,706(3) *
Ned S. Holmes............................. 17,554(4)(5) *
John T. Kelley, III....................... 58,585(3)(6) *
Calvin K. Kessler......................... 36,285(3) *
Constance B. Moore........................ 117,200 *
James H. Polk, III........................ 15,028(3)(7) *
John M. Richman........................... 14,250(4) *
John C. Schweitzer........................ 94,500(3)(8) *
R. Scot Sellers........................... 109,272(9) *
Patrick R. Whelan......................... 88,183 *
Richard A. Banks.......................... 38,526 *
J. Lindsay Freeman........................ 44,568 *
All Trustees and executive officers as a
group (32 persons)....................... 969,365 *
</TABLE>
- --------
* Less than 1%.
(1) These Common Shares are owned of record by SC Realty Incorporated, a
wholly owned subsidiary of Security Capital Group Incorporated ("Security
Capital").
2
<PAGE>
(2) Information regarding beneficial ownership of Common Shares by Wellington
Management Company, LLP, is included herein in reliance on an amendment to
Schedule 13G, filed with the Securities and Exchange Commission ("SEC") on
February 9, 1999. Wellington Management Company, LLP, may be deemed to be
the beneficial owner of the Common Shares reported, which are owned by
various investment companies. The beneficial ownership reported includes
7,232,600 Common Shares (5.2%) owned by Vanguard/Windsor Funds Inc., which
also were reported separately in a Schedule 13G filed with the SEC by
Vanguard/Windsor Funds Inc. on February 11, 1999. Wellington Management
Company, LLP has shared dispositive power with respect to all Common
Shares reported, and such Common Shares were acquired in the ordinary
course of business and were not acquired for the purpose, and do not have
the effect of, changing or influencing control of Archstone.
(3) Includes for each of Messrs. Cardwell and Kessler beneficial ownership of
10,000 Common Shares, for Messrs. Kelley and Schweitzer beneficial
ownership of 8,000 Common Shares and for Mr. Polk beneficial ownership of
2,000 Common Shares, which are issuable upon exercise of options granted
under Archstone's 1996 and 1987 Share Option Plans for Outside Trustees.
See "Election of Trustees--Trustee Compensation" below.
(4) Includes for each of Messrs. Holmes and Richman beneficial ownership of
3,000 Common Shares which were issued under the former Security Capital
Atlantic Incorporated 1996 Share Option Plan for Outside Directors and are
exercisable under Archstone's 1996 Share Option Plan for Outside Trustees.
(5) Includes 4,000 Common Shares held by family limited partnerships and 5,554
Common Shares held in trust for Mr. Holmes' children.
(6) Includes 50,585 Common Shares held by Mr. Kelley's family trust.
(7) Includes 1,028 Common Shares held in trust for Mr. Polk's children.
(8) Includes 6,000 Common Shares held by Mr. Schweitzer's spouse; 25,000
Common Shares held by Campbell Capital Ltd.; 10,000 Common Shares held by
Mesa Investment Company; and 1,500 Common Shares held by a family trust.
(9) Includes 421 Common Shares held by Mr. Sellers' spouse as her separate
property, 718 Common Shares held in trust for Mr. Sellers' children and
449 Common Shares held in Mr. Sellers' IRA.
ELECTION OF TRUSTEES
(Proposal 1)
Effective as of the completion of the merger between Security Capital
Pacific Trust ("PTR") and Security Capital Atlantic Incorporated ("Atlantic")
in July 1998, Archstone had a classified Board consisting of the following
twelve Trustees: James A. Cardwell; Manuel A. Garcia, III; James H. Polk, III;
James C. Potts; John T. Kelley, III; Calvin K. Kessler; Constance B. Moore;
William G. Myers; Ned S. Holmes; John M. Richman; John C. Schweitzer; and R.
Scot Sellers. Messrs. Garcia, Potts and Myers resigned as Trustees on July 15,
1998; January 27, 1999 and February 5, 1999, respectively. The three vacancies
on the Board were not filled, and on March 17, 1999, the Board reduced the
number of Trustees from twelve to nine. Mr. Schweitzer, formerly a Class III
Trustee, has been reclassified as a Class I Trustee.
The Common Shares represented by the accompanying proxy will be voted to
elect the three nominees named below as Class I Trustees, unless a shareholder
indicates otherwise on the proxy. Should any of the nominees named below
become unavailable for election, which is not anticipated, the Common Shares
represented by the accompanying proxy will be voted for the election of
another person recommended by the Board. Messrs. Cardwell, Polk and
Schweitzer, if elected, will serve as Class I Trustees until the annual
meeting of shareholders in 2002. The Board recommends that shareholders vote
FOR the election of each nominee for Trustee.
3
<PAGE>
Nominees
<TABLE>
<CAPTION>
Trustee
Trustee Age Business Experience since
------- --- ------------------- ------------
<C> <C> <S> <C>
James A. Cardwell.... 67 Chief Executive Officer of Petro May 1980
Stopping Centers, L.P. (operation of
full-service truck stopping centers)
and its predecessor since 1975; and
Director of El Paso Electric
Company.
James H. Polk, III... 56 Managing Director, SING LTD. Co. January 1976
(operation and ownership of self-
storage facilities) since January
1998; Managing Director of Security
Capital Markets Group Incorporated
from August 1992 to June 1997 and
President from March 1997 to June
1997; affiliated with Archstone from
January 1976 to present in various
capacities, including Trustee,
President and Chief Executive
Officer; past President and Trustee
of the National Association of Real
Estate Investment Trusts, Inc.;
Director of M.D. Anderson Hospital,
Houston, Texas, and Mortgage West,
Santa Fe, New Mexico.
John C. Schweitzer... 54 Director of Homestead Village April 1976
Incorporated since April 1997;
Director of Regency Realty
Corporation (ownership and
development of infill retail
properties throughout the United
States) since March 1999; Trustee of
Pacific Retail Trust from June 1997
to February 1999; President,
Westgate Corporation (real estate
and investments) since 1979;
Managing Partner, Campbell Capital
Ltd. (real estate and investments)
since 1976; Trustee of Texas
Christian University; and Director
of Chase Bank of Texas-Austin and
KLRU Public Television, Austin,
Texas.
</TABLE>
Continuing Trustees
The following persons will continue to hold positions as Trustees:
Ned S. Holmes--54--Trustee of Archstone since July 1998; Director of
Atlantic from May 1994 to July 1998; President and Chief Executive Officer of
Laing Properties, Inc. since May 1990; Chairman and President of Parkway
Investments/Texas Inc., a Houston-based real estate investment and development
company which specializes in residential (apartment and townhouse), commercial
(office and warehouse) and subdivision projects since April 1984; Director of
Heritage Bank and Commercial Bancshares, Inc.; Chairman of the Port Commission
of the Port of Houston Authority; Director of the Institute of International
Education and the Houston International Protocol Alliance; and Vice Chairman
of Greater Houston Partnership. Mr. Holmes' term as Trustee expires in 2001.
John T. Kelley, III--58--Trustee of Archstone since January 1988; founding
officer and Advisory Trustee of ProLogis Trust (ownership and operation of
corporate distribution facilities throughout the United States and Europe)
since January 1993; Director of Security Capital since 1990; Director of
Regency Realty Corporation since March 1999, prior to which he served as
Chairman of the Board of Pacific Retail Trust. Mr. Kelley's term as Trustee
expires in 2000.
Calvin K. Kessler--67--Trustee of Archstone since January 1972; and
President and principal shareholder of Kessler Industries, Inc., (manufacturer
of furniture and aluminum castings) since 1960. Mr. Kessler's term as Trustee
expires in 2000.
4
<PAGE>
Constance B. Moore--43--Trustee of Archstone since July 1998; Managing
Director of the Capital Division of Security Capital since January 1999; Co-
Chairman and Chief Operating Officer of Archstone from July 1998 to December
1998, at which time she left Archstone to become a Managing Director of the
Capital Division of Security Capital; Director, Co-Chairman and Chief
Operating Officer of Atlantic from January 1996 to July 1998; Managing
Director of Archstone from May 1994 to December 1995; and Senior Vice
President of Security Capital from March 1993 to April 1994. Ms. Moore's term
as Trustee expires in 2000.
John M. Richman--71--Trustee of Archstone since July 1998; Director of
Atlantic from September 1996 to July 1998; counsel to the law firm of
Wachtell, Lipton, Rosen & Katz from January 1990 to October 1996 and from
April 1997 to present; former Chairman and CEO of Kraft Foods; Director, USX
Corporation, Stream International Inc., Evanston Northwestern Healthcare,
Chicago Council on Foreign Relations and Lyric Opera of Chicago; Trustee of
the Chicago Symphony Orchestra, Northwestern University and The Johnson
Foundation; retired Director of R.R. Donnelley & Sons Company and served as
Acting Chairman and Chief Executive Officer of that company from October 1996
to April 1997; retired Director of BankAmerica Corporation and Bank of America
National Trust and Savings Association; and Member, The Business Council and
The Commercial Club of Chicago. Mr. Richman's term as Trustee expires in 2001.
R. Scot Sellers--42--Trustee of Archstone since July 1998; Chairman and
Chief Executive Officer of Archstone since December 1998; Co-Chairman and
Chief Investment Officer of Archstone from July 1998 to December 1998;
President and Chief Executive Officer of Archstone from June 1997 to July
1998; from September 1994 to June 1997, Managing Director of Archstone, where
he had overall responsibility for Archstone's investment strategy and
implementation; Senior Vice President of Archstone from May 1994 to September
1994; from April 1993 to May 1994, Senior Vice President of Security Capital,
where he was responsible for portfolio acquisitions from institutional
sources. Mr. Sellers' term as Trustee expires in 2001.
Security Capital has the right to nominate up to three Trustees, depending
on its level of ownership of Common Shares. See "Certain Relationships and
Transactions--Security Capital Investor Agreement." Mr. Kelley and Ms. Moore
are nominees of Security Capital.
Meetings and Committees
The Board held five meetings during 1998, including one telephonic meeting.
The Audit Committee of the Board, composed of Messrs. Cardwell and Kessler, is
responsible for recommending to the Board the appointment of independent
auditors, reviewing all recommendations of the auditors with respect to
accounting methods and internal controls of Archstone, reviewing and approving
non-audit services and reviewing the scope of the audits conducted by the
auditors. The Audit Committee held two meetings during 1998.
Prior to July 30, 1998, the Board had an Investment Committee consisting of
Messrs. Kessler, Myers, and Schweitzer. The Investment Committee was
responsible for reviewing and approving all asset acquisitions and other
investment decisions between meetings of the full Board. On July 30, 1998, the
Board established an Executive and Investment Committee, the members of which
are Ms. Moore and Messrs. Sellers, Schweitzer, Holmes and Kelley. The
Executive and Investment Committee has the responsibility to act on behalf of
the entire Board between regular Board meetings to the extent permitted by
applicable law; review and make recommendations regarding strategic corporate
actions; price securities to be issued by Archstone; and review and approve
proposed investments and property dispositions. During 1998, the Investment
Committee held nine meetings and the Executive and Investment Committee held
fifteen meetings.
The Board has an Executive Compensation Committee which consisted of
Messrs. Kelley and Myers and Mr. C. Ronald Blankenship prior to the merger
with Atlantic. Effective July 30, 1998, the Executive Compensation Committee
consisted of Messrs. Schweitzer, Myers, Richman, and Polk as voting members
and Mr. Sellers and Ms. Moore as nonvoting members. Following Mr. Myers'
resignation, Ms. Moore was elected as a voting member. The Executive
Compensation Committee reviews and approves Archstone's executive compensation
arrangements and plans. The Executive Compensation Committee held two meetings
during 1998.
5
<PAGE>
Archstone has no standing nominating committee.
During 1998, each Trustee attended at least 75% of the total number of
meetings of the Board and the committees on which he or she served, except
that Mr. Holmes attended approximately 52% of such meetings.
Trustee Compensation
During 1998, Trustees who are not employees of Archstone or Security
Capital ("Outside Trustees") received an annual retainer of $18,000 and
meeting fees of $1,000 for each Board meeting attended in person. Members of
the Executive and Investment, Executive Compensation and Audit Committees
received an additional $3,000, $2,000 and $1,000 per year, respectively.
Members of special committees received an additional $2,000 per year;
chairpersons of special committees received an additional $4,000 per year.
During 1999, Trustees will receive an annual retainer of $22,000; meeting fees
of $1,000 for each Board meeting attended, whether in person or by telephone;
and $500 for each committee meeting attended, whether in person or by
telephone. The Chairman of any committee of the Board also shall receive
$3,000 per year per committee chaired. Both the retainers and meeting fees are
paid quarterly. Each Outside Trustee may defer compensation to be received
under the Deferred Fee Plan for Outside Trustees for up to ten years from the
date it originally was to be received. Trustees who are employees of Archstone
or Security Capital are not separately compensated for serving as Trustees.
Trustees are reimbursed for any out-of-town travel expenses incurred in
connection with attendance at Board meetings.
Outside Trustees Plan
The purpose of the Outside Trustees Plan is to enable the Outside Trustees
of Archstone to increase their ownership of Archstone and thereby increase the
alignment of their interests with those of Archstone's other shareholders. The
Outside Trustees Plan provides for grants of options to purchase Common
Shares. The Secretary of Archstone (the "Administrator") administers the
Outside Trustees Plan.
The number of Common Shares reserved for issuance upon exercise of options
granted under the Outside Trustees Plan is 200,000. On the date of each annual
meeting of shareholders of Archstone beginning in 1999 through and including
2006, each Outside Trustee serving on that date will be granted an option to
purchase 5,000 Common Shares at an exercise price equal to the average of the
highest and lowest sales price of the Common Shares on the New York Stock
Exchange ("NYSE") on that date. The options vest at the rate of 25% per year
on each anniversary of the date of the award for the four succeeding years
after the award. In the event of changes in the outstanding Common Shares, the
Administrator may make appropriate adjustments to the aggregate number of
Common Shares available under the Outside Trustees Plan and the terms of the
options for Common Shares subject to the Outside Trustees Plan. The Outside
Trustees are credited with dividend equivalent units with respect to the
options provided under the Outside Trustees Plan. The dividend equivalent
units credited equal the number of options held by the Outside Trustee,
multiplied by the excess between the average annual dividend yield on the
Common Shares and the average annual dividend yield for the Standard & Poor's
500 Stock Index. The dividend equivalent units are credited annually in
December of each year. Dividend equivalent units are credited in Common Shares
on the basis of one Common Share per dividend equivalent unit. The payment of
all awards under the Outside Trustees Plan may be deferred at the option of
the Outside Trustee.
Prior to 1999, each Outside Trustee received an option to purchase 2,000
Common Shares at an exercise price equal to the closing price of the Common
Shares on the NYSE on the date of the award. Those options vested upon award
and did not have dividend equivalent units awarded with them.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table presents the compensation for 1998, 1997 and 1996 paid
to the Chief Executive Officer and the four other most highly compensated
executive officers of Archstone (the "Named Executive Officers"). All
compensation for 1996 for Mr. Sellers and Mr. Whelan was paid by Security
Capital. During 1996 and through September 1997, Mr. Sellers and Mr. Whelan
were employees of Security Capital Pacific Incorporated, the REIT manager for
Archstone's predecessor (the "REIT Manager"). Prior to July 1998, Ms. Moore
and Mr. Freeman were employed by Atlantic or the REIT manager for Atlantic.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
- ----------------------------------------------- -----------------------------------------
Archstone Shares of
Common Shares Security Capital
Underlying Restricted Class A Common All Other
Named and Salary Bonus Stock Options Stock Stock Underlying Compensation
Position Year ($) ($) (#)(1) Awards (#) Options (#) ($)(2)
- --------- ---- ------ ----- ------------- ---------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Scot
Sellers
(3)....... 1998 250,000 602,000 187,353 64,198(4) 51(5) 15,734
Chairman
and 1997 250,000 350,000 194,899 -- 1,108(6) 4,221
Chief
Executive
Officer 1996 214,800 236,000 -- -- 658(6) 270
Constance
B. Moore
(7)....... 1998 115,000 247,500 19,452 -- -- 11,621
Co-
Chairman
and 1997 -- -- -- -- 406(6) --
Chief
Operating
Officer 1996 -- -- -- -- 571(6) --
Patrick R.
Whelan
(3)....... 1998 225,000 377,000 68,909 20,397(8) -- 15,174
Chief
Operating 1997 205,385 270,000 183,567 -- 281(6) 3,969
Officer 1996 190,000 150,000 -- -- 395(6) 216
Richard A.
Banks (9). 1998 197,692 205,725 26,972 18,130(8) -- 7,948
Managing
Director, 1997 74,667 65,000 95,182 -- -- 1,715
West
Region 1996 -- -- -- -- -- --
J. Lindsay
Freeman
(10)...... 1998 97,500 82,500 34,266 -- -- 5,352
Managing
Director, 1997 -- -- -- -- 197(6) --
East
Region 1996 -- -- -- -- 395(6) --
</TABLE>
- --------
(1) The recipients of the options awarded in 1998 are credited with dividend
equivalent units with those options. The options awarded in 1997 that are
credited with dividend equivalent units are as follows: Mr. Sellers,
13,597 options; Mr. Whelan, 11,331 options; and Mr. Banks, 18,130
options. See "--Long-Term Incentive Plan."
(2) Includes contributions made by Archstone in 1998 under its 401(k) Savings
Plan and the Non-Qualified Savings Plan, and the dollar value of
insurance premiums paid by Archstone with respect to term life insurance
for the benefit of the Named Executive Officer, and imputed interest
income, if any, deemed incurred on loans made by Archstone for the
purchase of Common Shares under the share purchase program of the 1997
Long-Term Incentive Plan, having an interest rate lower than the rate
mandated by the Internal Revenue Service. The interest rate under each
loan is 6% and the mandated rate is 6.55%. Beginning in 1998, Archstone
has matched up to 50% of the first 6% of compensation contributed by the
employee under the 401(k) Savings Plan.
(3) In December 1998, Mr. Sellers was elected Chairman and Chief Executive
Officer and Mr. Whelan was elected Chief Operating Officer.
(4) The amount shown represents an award of restricted share units made by
Archstone to Mr. Sellers in December 1998 under the 1997 Long-Term
Incentive Plan. The restricted share units vest for the number of Common
Shares indicated at a rate of 25% per year in December of each of the
four years 1999 through 2002 that Mr. Sellers is employed by Archstone.
All restricted share units will vest earlier in the event of Mr. Sellers'
disability or death, or upon termination of his employment due to a
Change in Control of Archstone (as defined by Mr. Sellers' restricted
share award agreement). The restricted share units, awarded to Mr.
Sellers at a share price of $20.25, were valued at $1,300,000 on the date
of grant. Mr. Sellers also is credited with dividend equivalent units in
connection with these restricted shares. See "--Long-Term Incentive
Plan".
(5) These options to acquire shares of Security Capital's Class A Common
Stock, par value $.01 per share (the "Class A Common Stock") were awarded
by Security Capital under Security Capital's 1991 and 1992 option plans.
These options were issued to replace options surrendered by Mr. Sellers
to cover tax payment obligations arising from a previous exercise of
options for Class A Common Stock.
(6) These options to acquire shares of Class A Common Stock were awarded by
Security Capital under Security Capital's 1995 option plan. These options
were awarded to Mr. Sellers and Mr. Whelan as employees of the REIT
Manager, and Ms. Moore and Mr. Freeman as employees of the REIT manager
for Atlantic.
7
<PAGE>
(7) Ms. Moore joined Archstone on July 7, 1998 upon the merger of Archstone
and Atlantic, and her compensation information reflects only the portion
of 1998 during which she was an officer of Archstone. If Ms. Moore's
compensation were annualized, she would have been one of Archstone's five
most highly compensated executive officers. Ms. Moore resigned in
December 1998 from her position as Co-Chairman and Chief Operating
Officer, but she remains a Trustee.
(8) The amounts shown represent awards of restricted share units made by
Archstone as part of a key employee retention program initiated prior to
the merger with Atlantic in June 1998 under the 1997 Long-Term Incentive
Plan. The Restricted share units vest for the number of Common Shares
indicated at a rate of 20% per year on December 31 of each of the five
years 1998 through 2002 that the grantee is employed by Archstone. All
restricted share units will vest earlier in the event of the grantee's
disability or death, or upon termination of his employment due to a
Change in Control of Archstone (as defined by the grantee's restricted
share unit award agreement). The restricted share units, awarded to
Messrs. Whelan and Banks at a share price of $22.0625, were valued on the
date of grant as follows: Mr. Whelan, $450,000 and Mr. Banks, $400,000.
Dividend equivalent units are credited in connection with the restricted
shares awarded. See "--Long-Term Incentive Plan."
(9) Mr. Banks joined Archstone on September 18, 1997 and his compensation
information reflects the portion of 1997 during which he was an officer
of Archstone.
(10) Mr. Freeman joined Archstone on July 7, 1998 upon the merger of Archstone
and Atlantic, and his compensation information reflects only the portion
of 1998 during which he was an officer of Archstone. If Mr. Freeman's
compensation were annualized, he would be one of Archstone's five most
highly compensated executive officers.
Option Grants in 1998
During 1998, options for 1,586,518 Common Shares were granted to 186 key
employees and officers of Archstone.
The following table sets forth certain information with respect to
individual grants of options to each of the Named Executive Officers:
<TABLE>
<CAPTION>
Archstone Common Share
------------------------------------------------------------------------
Individual Grants
------------------------------------------------------------------------
Common Shares Percent of
Underlying Total Options Exercise
Options Granted to or
Granted Employees in Base Price Expiration Grant Date Present
Name (#)(1) 1998 ($/share) Date Value ($) (2)
- ---- ------------- ------------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
R. Scot
Sellers
(3) 19,452 20.5625 8/10/08 56,397
167,901 20.25 12/14/08 479,408
------- -------
187,353 11.81 535,805
Constance
B. Moore 19,452(4) 1.23 20.5625(4) 12/31/98(4) 56,397
Patrick
R.
Whelan 14,589 20.5625 8/10/08 42,298
54,320 20.25 12/14/08 155,100
------- -------
68,909 4.34 197,398
Richard
A. Banks 12,158 20.5625 8/10/08 35,250
14,814 20.25 12/14/08 42,298
------- -------
26,972 1.70 77,548
J.
Lindsay
Freeman 19,452 20.5625 8/10/08 56,397
14,814 20.25 12/14/08 42,298
------- -------
34,266 2.16 98,695
</TABLE>
- --------
(1) These options become exercisable in one-fourth increments on the first,
second, third and fourth anniversaries of the date of grant (August 10,
1998 and December 14, 1998), except that such options may be exercised
earlier in the event of the optionee's retirement, disability or death, or
upon termination of an optionee's employment due to a change in control of
Archstone. As described under "--Long-Term Incentive Plan," the options
granted to the Named Executive Officers in 1998 have dividend equivalent
units.
(2) The amounts shown are based on the Black-Scholes option pricing model. The
material assumptions incorporated in the Black-Scholes model in estimating
the value of the options include the following: an expected option life of
6.74 years; a risk-free interest rate of
8
<PAGE>
4.74%; an expected dividend yield of 6.43%; and expected volatility of
25.44%. The actual value, if any, an optionee will realize upon exercise of
an option will depend on the excess of the market value of the Common Shares
over the exercise price on the date the option is exercised. There can be no
assurance that the value realized by an optionee will be at or near the value
estimated by using the Black-Scholes model.
(3) Mr. Sellers also was awarded by Security Capital options to purchase 51
shares of Class A Common Stock under Security Capital's 1991 and 1992
option plans. The options for Class A Common Stock were issued to replace
options surrendered by Mr. Sellers to cover tax payment obligations arising
from a previous exercise of options for shares of Class A Common Stock. The
options for Class A Common Stock represented .58% of all options for Class
A Common Stock granted to employees of Security Capital and its affiliates
during 1998. The exercise price of each option is $945 per share. The
options vested on March 11, 1999, and terminate on December 31, 1999. The
present value of the options on the grant date was $10,463, based upon the
Black-Scholes option pricing model, assuming a risk-free interest rate of
4.62%, an expected option life of 1.3 years, no expected dividends and
expected volatility of 43.29%.
(4) On August 10, 1998, Ms. Moore was awarded 19,452 options bearing matching
dividend equivalent units at a price of $20.5625, with an original
expiration date of August 10, 2008; however, the options expired
unexercised on December 31, 1998, the effective date of Ms. Moore's
resignation and transfer to Security Capital.
Option Exercises in 1998 and Year-End Option Values
None of the Named Executive Officers exercised any options for Common Shares
during 1998. The following table sets forth certain information concerning the
year-end value of unexercised options owned by the Named Executive Officers.
<TABLE>
<CAPTION>
Archstone Common Shares Shares of Security Capital Class A Common Stock
----------------------- -----------------------------------------------
Securities Underlying Value of Unexercised in- Securities Underlying Value of Unexercised in-
Unexercised Options at the-Money Options at Unexercised Options at the-Money Options at
Year-End(#) Year-End($) (1) Year-End(#) Year-End($) (2)
---------------------- ------------------------ ---------------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. Scot Sellers (3) -- 382,252 -- -- 1,927 2,634 524,688 135,241
Constance B. Moore -- 211,094(4) -- -- 1,638 1,820 442,174 136,520
Patrick R. Whelan -- 252,476 -- -- 1,509 940 331,078 --
Richard A. Banks -- 122,154 -- -- -- -- -- --
J. Lindsay Freeman -- 131,224(5) -- -- 1,319 1,165 393,915 129,608
</TABLE>
- --------
(1) Based on the December 31, 1998 NYSE closing price of $20.25 per Archstone
Common Share.
(2) Based on the December 31, 1998 NYSE closing price of $660 per share of
Security Capital Class A Common Stock.
(3) On August 28, 1998, Mr. Sellers exercised options to purchase 263 shares of
Class A Common Stock in amounts and at exercise prices as follows: 41
shares at $123.07; 85 shares at $1,046 and 137 shares at $227. Based on the
$1,075 closing price of the Class A Common Stock on that date, Mr. Sellers
realized a pre-tax gain of $157,613.
(4) Includes 19,452 options awarded under the 1997 Long-Term Incentive Plan,
and 191,642 options awarded under the former Atlantic long-term incentive
plan. Ms. Moore's Archstone options expired unexercised on December 31,
1998, the effective date of her resignation as Co-Chairman and Chief
Operating Officer of Archstone.
(5) Includes 34,266 options awarded under the 1997 Long-Term Incentive Plan,
and 96,958 options awarded under the former Atlantic long-term incentive
plan.
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
Archstone has not entered into any employment contracts with any Named
Executive Officer and there currently are no plans or arrangements by which any
of those executive officers will be compensated as a result of the officer's
resignation or retirement or any other termination of the officer's employment
with Archstone or in connection with a change in control of Archstone, except
that if a change in control, as that term is defined in the Archstone 1997
Long-Term Incentive Plan, occurs and the employment with Archstone of such
person is terminated for reasons other than cause, option awards granted under
the 1997 Long-Term Incentive Plan will become immediately exercisable and all
restricted share units will immediately vest.
9
<PAGE>
Long-Term Incentive Plan
General
The Archstone 1997 Long Term Incentive Plan (the "Incentive Plan")
authorizes the establishment of one or more option programs and share purchase
programs and the award of share grants. No more than 8,650,000 Common Shares
in the aggregate may be awarded under the Incentive Plan and no individual may
be granted awards with respect to more than 500,000 Common Shares in any one-
year period. The Executive Compensation Committee administers the Incentive
Plan. Subject to the terms of the Incentive Plan, the Executive Compensation
Committee determines which employees will be eligible to receive awards under
the Incentive Plan, and the amount, price, timing and other terms and
conditions applicable to those awards. Non-employee Trustees are not eligible
to participate in the Incentive Plan. All employees of Archstone or any of its
subsidiaries are eligible to participate in the Incentive Plan. In the event
of certain transactions affecting the type or number of outstanding shares,
the number of shares subject to the Incentive Plan, the number or type of
shares subject to outstanding awards and the exercise price thereof may be
appropriately adjusted.
Options
Options become exercisable in accordance with the terms established by the
Executive Compensation Committee, which may include conditions relating to
completion of a specified period of service or achievement of performance
standards or such other criteria as the Executive Compensation Committee deems
appropriate. Options expire on the date determined by the Executive
Compensation Committee which shall not be later than the tenth anniversary of
the grant date. The Incentive Plan provides generally that participants who
are awarded options will also be credited with dividend equivalent units with
respect to the options. Dividend equivalent units credited to options are
awarded annually at the end of each year and represent the number of options
held multiplied by the excess between the average annual dividend yield on
Common Shares and the average annual dividend yield for the Standard & Poor's
500 Stock Index. Each dividend equivalent unit accumulates additional dividend
equivalent units on an annual basis. The dividend equivalent units will be
subject to the same vesting schedule as the options and will be payable when
the options are exercised, unless the participant elects to defer receipt, or
the options expire. All dividend equivalent units are paid in the form of
Common Shares at the rate of one Common Share per dividend equivalent unit.
Restricted Share Units
The Executive Compensation Committee may also award restricted share units.
Each restricted share unit awarded represents one Common Share as of the date
of the award. Outstanding restricted share units are generally credited with
dividend equivalent units at the end of each year. Such dividend equivalent
units are equal to the average annual dividend yield per Common Share
multiplied by the number of restricted share units held. Each dividend
equivalent unit accumulates additional dividend equivalent units on an annual
basis. Restricted share units vest in accordance with the terms established by
the Executive Compensation Committee.
Performance Awards
The Incentive Plan provides that the Executive Compensation Committee may
award participants performance stock, the distribution of which is subject to
achievement of performance objectives. The number of shares and the
performance measures and periods shall be established by the Executive
Compensation Committee at the time the award is made.
Share Purchase Program
The Incentive Plan permits the Executive Compensation Committee to allow
officers and employees to purchase Common Shares with, at the Executive
Compensation Committee's discretion, matching options or shares for each share
purchased. The Executive Compensation Committee also sets other terms and
restrictions governing the share purchases.
10
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation Committee is responsible for acting on behalf of
the Board with respect to (i) general compensation and benefits practices of
Archstone, (ii) review and approval of salaries and other compensation actions
for Archstone's Chief Executive Officer, the other Named Executive Officers and
other senior executive officers, and (iii) adopting, administering and
approving awards under annual and long-term incentive compensation plans. None
of the voting members of the Executive Compensation Committee are officers or
employees of Archstone.
Compensation Philosophy
The Executive Compensation Committee is committed to a compensation
philosophy which rewards employees on the basis of Archstone's success in
attaining corporate financial objectives as well as on the basis of the
employees' success in attaining individual financial and qualitative
performance objectives. Archstone's compensation program is designed to:
. Attract, reward and retain highly qualified executives.
. Align shareholder and employee interests.
. Reward long-term career contributions to Archstone.
. Emphasize the variable portion of total compensation (cash and stock) as
an individual's level of responsibility increases.
. Provide fully competitive compensation opportunities consistent with
performance.
. Encourage teamwork.
During 1998, the Executive Compensation Committee conducted a full review of
Archstone's executive compensation programs with primary focus on the
compensation of the Chief Executive Officer. This review included a
comprehensive report from independent compensation consultants assessing the
effectiveness of the programs and relative competitiveness versus identified
comparable companies of similar size and business characteristics to Archstone.
This group of comparable companies included companies from the real estate
investment trust marketplace with a residential focus and represents the most
direct competitors for executive talent. Key findings from this review were
discussed extensively with senior management and the Executive Compensation
Committee. Their impact on compensation philosophy and practices for 1999 are
outlined below by element.
Key Elements of Compensation
The key elements of Archstone's executive compensation program consist of
base salary, annual bonus and long-term incentives. As an executive's level of
responsibility increases, a greater portion of total compensation is based on
annual and long-term performance-based incentive compensation and less on
salary and employee benefits, creating the potential for greater variability in
the individual's compensation level from year to year. The mix, level and
structure of performance-based incentive elements reflect market industry
practices as well as the executive's role and relative impact on business
results consistent with Archstone's variable pay-for-performance philosophy.
Base Salary
Base salaries for senior executives are based on an overall assessment of
the executive's responsibilities and contribution to Archstone. Before 1999,
base salaries were reviewed every two years. Beginning in 1999, base salaries
will be reviewed annually. A key finding of the 1998 compensation review showed
that salaries were below comparable market benchmarks for certain Named
Executive Officers. Base salaries effective for 1999 will be positioned at mid-
market levels consistent with the overall responsibilities of the position and
the performance and experience of the individual.
11
<PAGE>
Annual Bonus
Archstone's senior executives are eligible for annual cash bonus awards
based on Archstone, business unit and individual performance during the prior
year. Historically, individual bonus awards have been paid in amounts which
achieve a targeted level of competitive total cash compensation (base salary
and annual bonus) consistent with performance. A key finding of the 1998
compensation review showed that target bonus levels for senior executives
(expressed as a percentage of an executive's base salary) were below target
bonus levels for similar positions in comparable companies. For 1999, target
bonus levels will be reviewed and adjusted as needed.
Annual performance goals will be established by the Executive Compensation
Committee at the beginning of each fiscal year for the Named Executive
Officers. Specifically, the Executive Compensation Committee will consider
performance based on financial measures such as funds from operations, same-
store net operating income and total shareholder returns, both absolute and
relative to comparable companies, as well as more qualitative measures for
each individual.
Performance versus these criteria will determine individual awards with
100% achievement resulting in payment of the target award. Awards for
performance below and above this level of achievement will be at the
discretion of the Executive Compensation Committee. Additionally, awards
earned under the program may be further adjusted up or down at the discretion
of the Executive Compensation Committee based on the quality of the results,
extraordinary circumstances, and other factors that the Executive Compensation
Committee deems relevant.
Long-Term Stock Incentives
Long-term stock incentives are designed to foster significant ownership of
Common Shares, promote a close identity of interests between Archstone senior
executives and shareholders, and motivate and reward long-term strategic
management and enhancement of shareholder value.
Non-qualified stock options have been the primary long-term incentive form
and constitute a major component of senior executive compensation. Option
awards generally reflect the executive's level of responsibility and impact on
the long-term success of Archstone. Additionally, consideration is given to an
executive's potential for future responsibility and impact. The number of
shares covered by annual grants generally reflects competitive industry
practices. Stock options awarded in 1998 were granted with an exercise price
equal to the market price on the date of grant and vest ratably over four
years.
In order to promote long-term retention of critical executives and promote
the growth of shareholder value, restricted share units were granted to the
Chief Executive Officer in December 1998, and on a selected basis to key
executives critical to the long-term success of Archstone in June 1998. The
June 1998 awards will vest ratably so long as the recipients remain employees
of Archstone on December 31 of each of 1998 through 2002. The December 1998
award will vest ratably so long as the Chief Executive Officer remains an
employee of Archstone on December 14 of 1999 through 2002.
It was determined in the course of the 1998 compensation review that
Archstone's long-term incentive programs are effective and generally
competitive with market practices for most senior executives. For certain
Named Executive Officers however, grants made over the prior three years
placed their long-term incentive opportunity below that of similar positions
in comparable companies. Long-term incentive opportunities for these
individuals will be adjusted to mid-market levels relative to the defined
competitive market and consistent with individual and Archstone performance.
The Executive Compensation Committee believes long-term incentives are
integral in motivating senior executives to achieve Archstone's long-range
goals and enhance shareholder value. The Executive Compensation Committee
intends to continue to emphasize this element of the compensation package.
12
<PAGE>
Chief Executive Officer Compensation
The Executive Compensation Committee meets annually without the Chief
Executive Officer present to evaluate the Chief Executive Officer's
performance and to determine the Chief Executive Officer's compensation. In
considering Mr. Sellers' compensation, the Executive Compensation Committee
considers his principal responsibilities, which are to provide the overall
vision and strategic direction for Archstone, to attract and retain highly
qualified employees and to develop and maintain key capital relationships for
Archstone.
Mr. Sellers' salary of $250,000, which became effective January 1, 1997,
was increased in 1999 to $400,000. Based on the market compensation study
conducted by outside consultants in 1998, it was determined that Mr. Sellers'
base salary was significantly below competitive base salary levels of other
chief executive officers in companies of comparable size and business profile.
In determining Mr. Sellers' 1998 annual bonus and long-term incentive
award, the Executive Compensation Committee reviewed the overall performance
of Archstone and Mr. Sellers' individual performance. During 1998, Archstone
achieved several important objectives which the Executive Compensation
Committee believed Mr. Sellers was instrumental in achieving:
. Improved funds from operations 14% to $1.79 per share in 1998 versus
$1.57 in 1997.
. Managed Archstone's balance sheet to preserve significant financial
flexibility for investment opportunities in 1999.
. Commenced construction on $429.4 million of development communities and
completed construction on $324.7 million of development communities in
1998, while maintaining strong performance in Archstone's existing
operating communities.
. Established the foundation for new technology initiatives that will be
fully implemented in 1999.
. Successfully integrated PTR and Atlantic into a strong, efficient
national organization now known as Archstone.
In view of these accomplishments, the Executive Compensation Committee
awarded Mr. Sellers an annual bonus award of $600,000 for 1998. Additionally,
the Executive Compensation Committee granted Mr. Sellers stock options to
acquire 187,353 Common Shares. Restricted stock units for 64,198 Common Shares
were awarded to Mr. Sellers as the last component of the key executive
retention grants made in 1998. The Executive Compensation Committee has
determined that the combination of the annual bonus award and share grants, in
addition to base salary, would place Mr. Sellers' total compensation at
approximate mid-market levels versus the comparable companies.
Section 162(m)
The Executive Compensation Committee is aware of the limitations imposed by
Section 162(m) of the Internal Revenue Code on the deductibility of
compensation paid to certain senior executives to the extent it exceeds $1
million per executive. The law exempts compensation paid under plans that
relate compensation to performance. Although Archstone's plans are designed to
relate compensation to performance, certain elements of the plans may not meet
the tax law's requirements because they allow the Executive Compensation
Committee to exercise discretion in setting compensation. The Executive
Compensation Committee is of the opinion that it is better to retain
discretion in determining executive compensation. However, the Executive
Compensation Committee will continue to monitor the requirements of the
Internal Revenue Code to determine what actions, if any, should be taken with
respect to Section 162(m).
This report is submitted by the members of the Executive Compensation
Committee: John C. Schweitzer, Chairman, John M. Richman, James H. Polk, III,
and Constance B. Moore.
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on Common Shares against the cumulative
total return of the Standard & Poor's Composite-500 Stock Index and the NAREIT
Equity REIT Index for the five-year period commencing December 31, 1993 and
ended December 31, 1998. The Common Share price performance shown on the graph
is not necessarily indicative of future price performance.
Comparison of Cumulative Total Return(1)
Archstone Common Shares, S&P Composite-500 Stock Index & NAREIT Equity REIT
Index
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31, December 31,
1993 1994 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Archstone $100.00 $ 95.01 $111.09 $158.51 $181.87 $161.19
S&P 500 100.00 101.32 139.39 171.40 228.58 293.91
NAREIT Equity REIT Index 100.00 103.17 118.92 160.86 193.45 159.59
</TABLE>
(1) Assumes that the value of the investment in Common Shares and each index
was $100.00 on December 31, 1993 and that all dividends were reinvested. For
purposes of calculating total return on the Common Shares, (i) the Homestead
Distribution described below in "Certain Relationships and Transactions--
Homestead Transactions" was valued based on the closing prices of the
securities distributed on the American Stock Exchange on November 12, 1996, the
date of the distribution; and (ii) the warrant issuance described below in
"Certain Relationships and Transactions--Acquisition of Management Companies"
was valued based on the closing price of the warrants distributed on the NYSE
on September 18, 1997, the date the warrants were issued to the distribution
agent.
14
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Homestead Transactions
In October 1996, PTR and Atlantic and Security Capital sold, through a
series of merger transactions, all of their respective assets relating to
Homestead Village(R) properties to Homestead Village Incorporated
("Homestead"), and PTR and Atlantic entered into funding commitment
agreements. The transaction resulted in PTR owning shares of Homestead common
stock and warrants to purchase shares of Homestead common stock at $10.00 per
share, and providing $84.5 million in convertible secured debt to Homestead.
PTR distributed the Homestead common stock and warrants which it received to
its shareholders pro rata in November 1996.
Pursuant to a funding commitment agreement entered into upon the formation
of Homestead, PTR agreed to make mortgage loans to Homestead of up to $198.8
million. Archstone has fully funded its commitment and has received
convertible mortgage notes to evidence fundings under the funding commitment
agreement in stated amounts of $221.3 million. Each mortgage note issued by
Homestead pursuant to the funding commitment agreement is convertible into
shares of Homestead common stock on the basis of one share of Homestead common
stock for every $11.50 of principal outstanding on the mortgage loan. Interest
on the mortgage notes accrues at the rate of 9% per annum on the unpaid
principal balance, payable every six months. The mortgage notes are scheduled
to mature on October 31, 2006, and are not callable until October 27, 2001.
The notes issued to Archstone are secured by mortgages on certain properties
of Homestead. Homestead paid Archstone $22.9 million, calculated in accordance
with generally accepted accounting principles ($21.0 million for purposes of
calculating funds from operations), in interest payments under the mortgage
notes during 1998.
In July 1998 prior to Atlantic's merger with and into Archstone, Atlantic
and Homestead entered into a mortgage loan purchase agreement with Merrill
Lynch Mortgage Capital Inc. ("MLMC") under which the $98 million of Homestead
convertible mortgage notes held by Atlantic were modified to, among other
things, eliminate their convertibility feature in exchange for a payment of
$21.4 million from Homestead to Atlantic. The amount paid to Atlantic was
based on trailing market prices of Homestead common stock at the time the
agreement was entered into, which exceeded the conversion price of the
convertible mortgage notes at that date. Homestead funded the payment with the
proceeds received from the sale of $24 million of 7.5% convertible
subordinated debentures. Also pursuant to the mortgage loan purchase agreement
Atlantic sold such amended note to MLMC for $98 million, resulting in a total
payment of $119.4 million to Atlantic for the mortgages.
Protection of Business Agreement
Archstone and Homestead are parties to a Protection of Business Agreement,
dated as of October 17, 1996 (the "Protection of Business Agreement"), which
prohibits Archstone and its affiliates from engaging, directly or indirectly,
in the extended-stay lodging business except through Homestead and its
subsidiaries. The Protection of Business Agreement also prohibits Homestead
from directly or indirectly engaging in the ownership, operation, development,
management or leasing of multifamily properties. The Protection of Business
Agreement does not prohibit Archstone from: (i) owning securities of
Homestead; (ii) owning up to 5% of the outstanding securities of another
person engaged in owning, operating, developing, managing or leasing extended-
stay lodging properties, so long as it does not actively participate in the
business of that person; (iii) owning the outstanding securities of another
person, a majority-owned subsidiary, division, group, franchise or segment of
which is engaged in owning, operating, developing, managing or leasing
extended-stay lodging properties, so long as not more than 5% of that person's
consolidated revenues are derived from those properties; and (iv) owning
securities of another person primarily engaged in a business other than
owning, operating, developing, managing or leasing extended-stay lodging
properties, including a person primarily engaged in business as an owner,
operator or developer of hotel properties, whether or not that person owns,
operates, develops, manages or leases extended-stay lodging properties. The
Protection of Business Agreement does not prohibit Homestead from: (i) owning
securities of Archstone or Security Capital; (ii) owning up to 5% of the
outstanding securities of another person engaged in owning, operating,
developing, managing or leasing garden-style multifamily properties; and (iii)
owning the outstanding securities of another person, a majority-owned
15
<PAGE>
subsidiary, division, group, franchise or segment of which is engaged in
owning, operating, developing, managing or leasing garden-style multifamily
properties, so long as not more than 5% of that person's consolidated revenues
are derived from those properties. The Protection of Business Agreement will
terminate in the event of an acquisition, directly or indirectly (other than
by purchase from Archstone, or Security Capital or any of their respective
affiliates), by any person (or group of associated persons acting in concert),
other than Archstone or Security Capital or their respective affiliates, of
25% or more of the outstanding voting stock of Homestead, without the prior
written consent of Homestead's board of directors. Subject to earlier
termination pursuant to the preceding sentence, the Protection of Business
Agreement will terminate on October 17, 2006.
Homestead Investor Agreement
Archstone and Homestead are parties to an investor and registration rights
agreement (the "Archstone Investor Agreement") pursuant to which Archstone is
entitled to designate one person for nomination to the Homestead board of
directors for so long as Archstone has the right to convert into Common Shares
in excess of $20 million in principal amount of loans made pursuant to its
funding commitment agreement. Archstone's nominee may, but need not, be one of
the persons nominated by Security Capital pursuant to Security Capital's
investor agreement with Homestead. In addition, Homestead has granted to
Archstone registration rights with respect to the distribution of all of the
shares of Homestead common stock issuable upon conversion of the convertible
mortgage notes. Archstone may request three registrations pursuant to Rule 415
promulgated under the Securities Exchange Act of 1934 (the "Securities Act"),
of all shares of Homestead common stock issued or issuable upon conversion of
the convertible mortgage notes. That registration, except for the fees and
disbursements of counsel to Archstone, will be at the expense of Homestead.
Acquisition of Management Companies
In September 1997, PTR acquired the REIT Manager and certain other entities
and PTR became an internally managed REIT. As part of the transaction, PTR
issued to Security Capital 3,295,533 Common Shares valued at approximately
$75.8 million. Concurrently with the proxy solicitation seeking approval of
the acquisition of the REIT Manager and other entities, PTR in a rights
offering sold and issued Common Shares at a price of $21.8125 per Common
Share. In addition, Security Capital issued warrants to purchase 3,644,430
shares of Security Capital's Class B common stock pro rata directly to holders
of Common Shares. The warrants expired on September 18, 1998.
The 1998 Merger
In July 1998, Atlantic merged with and into PTR with PTR continuing as the
surviving entity under the name Archstone Communities Trust. Upon consummation
of the merger each outstanding share of Atlantic common stock was converted
into the right to receive one Common Share, and each outstanding share of
Atlantic Series A Preferred Stock was converted into the right to receive one
Archstone Series C Preferred Share. Prior to the merger approximately 47.7
million shares of Atlantic common stock, 2.0 million shares of Atlantic Series
A Preferred Stock and approximately 95 million Common Shares were outstanding.
Security Capital held approximately 23.8 million shares of Atlantic common
stock, representing 49.9% of such outstanding shares, and held approximately
30.6 million Common Shares, representing 32.3% of such outstanding shares. On
April 1, 1998, at the time Atlantic and PTR agreed to merge, Security Capital
agreed to vote its Atlantic common stock and its Common Shares in favor of the
merger. The merger was completed in July 1998 and Security Capital continues
to be Archstone's largest shareholder.
Security Capital Investor Agreement
Archstone and Security Capital are parties to a Third Amended and Restated
Investor Agreement (the "Investor Agreement"). The Investor Agreement provides
that, without first having consulted with the nominees to the Board of
Security Capital designated in writing, Archstone may not seek Board approval
of (i) Archstone's annual budget; (ii) incurring expenses in any year
exceeding (a) any line item in the annual budget by the greater
16
<PAGE>
of $1,000,000 or 20% and (b) the total expenses set forth in the annual budget
by 15%; (iii) the acquisition or sale of any assets in any single transaction
or series of related transactions in the ordinary course of Archstone's
business where the aggregate purchase price paid or received by Archstone
exceeds $50 million; and (iv) entering into any new contract with a service
provider (a) for investment management, property management or leasing
services or (b) which reasonably contemplates annual contract payments by
Archstone in excess of $2 million. Archstone is under no obligation to accept
or comply with any advice offered by Security Capital with respect to the
foregoing matters.
Additionally, so long as Security Capital beneficially owns at least 25% of
the Common Shares, Security Capital has the right to approve the following
matters proposed by Archstone: (i) the issuance or sale of any Common Shares
(including the grant of any rights, options or warrants to subscribe for or
purchase Common Shares or any security convertible into or exchangeable for
Common Shares or the issuance or sale of any security convertible into or
exchangeable for Common Shares), at a price per share less than the fair
market value of a Common Share on the date of that issuance or sale; (ii) the
issuance and sale of any disqualified shares (as defined) if, as a result
thereof, Archstone's Fixed Charge Coverage Ratio (as defined) would be less
than 1.4 to 1.0; (iii) the adoption of any employee benefit plan pursuant to
which shares of Archstone or any securities convertible into shares of
Archstone may be issued and any action with respect to the compensation of the
senior officers of Archstone (including the granting or award of any bonuses
or share-based incentive awards); and (iv) the incurrence of any additional
indebtedness (including guarantees and including renegotiations and
restructurings of existing indebtedness) if, as a result thereof, Archstone's
Interest Expense Coverage Ratio (as defined) would be less than 2.0 to 1.0.
The restriction referred to in clause (i) above does not apply to (A) the sale
or grant of any options to purchase shares of Archstone pursuant to the
provisions of any benefit plan approved by the shareholders of Archstone, (B)
the issuance or sale of shares of Archstone upon the exercise of any rights,
options or warrants granted, or upon the conversion or exchange of any
convertible or exchangeable security issued or sold, prior to the date of the
Investor Agreement or in accordance with the provisions of the Investor
Agreement, (C) the issuance and sale of any shares of Archstone pursuant to
any dividend reinvestment and share purchase plan approved by the Board or (D)
the issuance, grant or distribution of rights, options or warrants to all
holders of Common Shares entitling them to subscribe for or purchase shares of
Archstone or securities convertible into or exercisable for shares of
Archstone.
The Investor Agreement also provides that, so long as Security Capital owns
at least 10% of the outstanding Common Shares, Archstone may not increase the
number of persons serving on the Board to more than twelve. Security Capital
also is entitled to designate one or more persons to be nominated for election
to the Board, as follows: (i) so long as Security Capital owns at least 10%
but less than 25% of the outstanding Common Shares, it is entitled to nominate
one person; and (ii) so long as Security Capital owns at least 25% of the
outstanding Common Shares, it is entitled to nominate that number of persons
as bears approximately the same ratio to the total number of members of the
Board as the number of Common Shares beneficially owned by Security Capital
bears to the total number of outstanding Common Shares.
In addition, the Investor Agreement provides Security Capital with
registration rights pursuant to which, in certain specified circumstances,
Security Capital is permitted to request, at any time, registration of all of
Security Capital's Common Shares pursuant to Rule 415 under the Securities
Act. Security Capital is permitted to request one registration for every $100
million (based on market value) of Common Shares it owns.
The agreement also restricts Security Capital (or a group of which it is a
member) from acquiring in excess of 49% of the Common Shares subject to
certain exceptions.
Administrative Services Agreement
Archstone and Security Capital entered into an Administrative Services
Agreement (the "Administrative Services Agreement"), pursuant to which
Security Capital provides Archstone with certain administrative and other
services with respect to certain aspects of Archstone's business, as selected
from time to time by Archstone at its option. These services include, but are
not limited to, payroll administration services, cash management
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and accounts payable services, data processing services, research, insurance
administration and some legal services. Prior to 1999, the fees payable to
Security Capital were equal to Security Capital's direct cost of providing
those services, plus 20%. Effective January 1, 1999, the fee arrangement was
revised to provide for the payment of Archstone's specific usage at fixed
rates per unit for each service provided. This new billing arrangement is
designed to provide Archstone with more control over charges incurred under
the Administrative Services Agreement. Archstone incurred $6.5 million for
services rendered in 1998, and $7.9 million on a combined basis including
amounts incurred by Atlantic in 1998 prior to its merger with and into
Archstone. Management anticipates incurring approximately $5.5 million for
services rendered under the Administrative Services Agreement during 1999. The
Administrative Services Agreement, which expires on December 31, 1999,
provides for annual renewals for consecutive one-year terms, subject to
approval by a majority of Archstone's Outside Trustees. The Administrative
Services Agreement can be modified or terminated by Archstone at any time with
90 days' notice.
Protection of Business Agreement
Archstone and Security Capital are parties to a Protection of Business
Agreement (the "Protection of Business Agreement"), which prohibits Security
Capital and its affiliates from providing, anywhere within the United States,
directly or indirectly, substantially the same services as those previously
provided by the REIT Manager and other entities affiliated with Security
Capital to any entity which owns or operates multifamily properties. The
agreement does not prohibit Security Capital or its affiliates from owning any
class of Archstone securities. The Protection of Business Agreement will
terminate in the event of an acquisition, directly or indirectly (other than
by purchase from Security Capital or any of its affiliates), by any person (or
group of persons acting in concert), other than Security Capital or any of its
affiliates, of the greater of (i) 25% or more of the outstanding shares of
voting securities of Archstone and (ii) the percentage of outstanding voting
securities of Archstone owned directly or indirectly by Security Capital and
its affiliates, in either case without the prior written consent of the Board.
Subject to earlier termination pursuant to the preceding sentence, the
Protection of Business Agreement will terminate on September 9, 2000.
AMERITON
In September 1998, PTR Development Services Incorporated merged with and
into AMERITON Properties Incorporated ("AMERITON"), a corporation which
opportunistically invests in real estate assets with shorter expected holding
periods. Archstone has a 95% economic interest in AMERITON. A charitable trust
and limited liability company collectively own the remaining 5% of the
economic interest in AMERITON. Archstone has made equity investments of
approximately $29.5 million in AMERITON and the charitable trust and the
limited liability company have made equity investments in the aggregate of
$1.6 million. The limited liability company has agreed to invest up to an
additional $4 million in AMERITON in conjunction with additional investments
by Archstone which will maintain Archstone's 95% economic interest.
The outstanding shares of AMERITON Class A Common Stock (the "Class A
Shares"), which are voting shares and are held by the trust and the limited
liability company, and the outstanding shares of Class B Common Stock (the
"Class B Shares"), which are non-voting shares and are held by Archstone, are
the only outstanding equity securities of AMERITON, and have equivalent
rights, on a per share basis, to dividends. In addition, the AMERITON Class B
Shares are convertible into AMERITON Class A Shares under certain
circumstances. The members of the limited liability company are Security
Capital and two independent investors. Security Capital's membership interest
is a non-voting interest. The limited liability company has the right (the
"Put Right") to require Archstone to purchase the limited liability commpany's
AMERITON Class A Shares at fair market value if Archstone converts its
AMERITON Class B Shares into AMERITON Class A Shares, or sells its AMERITON
Class B Shares if such sale is not approved by the limited liability company
and the proposed transferee of the AMERITON Class B Shares refuses to provide
the limited liability company with a Put Right on the same terms as the
limited liability company has with Archstone.
In addition to its investment in AMERITON, the limited liability company
has also loaned Archstone $454,999. The loan is evidenced by a promissory
note. The note is payable upon demand by the Limited Liability Company and
bears interest at a rate equal to the prime rate of the Chase Bank of Texas,
National Association, plus .50%.
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Other Transactions with Affiliates
As of January 27, 1999, James C. Potts resigned from the Board. Mr. Potts
was elected a Trustee upon the merger of PTR and Atlantic. Mr. Potts had been
Co-Chairman of Atlantic prior to the merger. Prior to the merger, Mr. Potts
had purchased 89,136 shares of common stock of Atlantic for $22.4375 per share
under the Atlantic 1997 Long-Term Incentive Plan, payment for which consisted
of $99,999.45 in cash and a promissory note for $1,899,989.55. Atlantic had
also awarded Mr. Potts options to purchase 178,272 shares of common stock of
Atlantic at an exercise price of $22.4375 per share and additional options
with dividend equivalent units to purchase 13,370 shares of common stock of
Atlantic at an exercise price of $22.4375 per share. The Atlantic options and
shares of common stock of Atlantic were exchanged for Archstone options and
Common Shares at the same exercise price upon the consummation of the merger.
Upon Mr. Potts' resignation as a Trustee, Archstone redeemed his Common
Shares, options and dividend equivalent units, and in consideration for such
redemption cancelled the $1,899,989.55 promissory note and paid Mr. Potts
$550,000.
Security Capital has made two loans to R. Scot Sellers, the first in 1995
and the second in 1997. Under the terms of the first promissory note, Security
Capital loaned Mr. Sellers $249,997, which amount is due on the earlier of
January 4, 2005 or 120 days after Mr. Sellers is no longer an officer of
Archstone. Under the terms of the second promissory note, Security Capital
loaned Mr. Sellers $100,000, which amount is due on the earlier of January 10,
2005 or 120 days after Mr. Sellers is no longer an officer of Archstone.
Interest on the unpaid balance of both notes accrues at a floating rate per
annum equal to the lowest rate charged by Morgan Guaranty Trust Company of New
York to its most creditworthy corporate customers for unsecured loans having a
maturity of 90 days or less, in effect from time to time, plus 0.25%, and is
payable semiannually. The loans were used by Mr. Sellers to purchase Common
Shares.
Constance B. Moore, a Trustee, is a party to three loans with Security
Capital aggregating $586,007. On September 1, 1993, Security Capital entered
into an unsecured, fully recourse promissory note with Ms. Moore. Under the
terms of such promissory note, Security Capital loaned Ms. Moore $117,250,
which amount has been paid down to $72,382, with this amount due on September
1, 2003. Interest on the unpaid balance accrues at a floating rate per annum
equal to the lowest rate charged by Morgan Guaranty Trust Company of New York
to its most creditworthy corporate customers for unsecured loans having a
maturity of ninety days or less, in effect from time to time, plus 0.25%, and
is payable annually on each January 4. The proceeds of such promissory note
were used by Ms. Moore to purchase Security Capital common stock. On March 31,
1995, Security Capital entered into a secured, fully recourse promissory note
with Ms. Moore, then a Managing Director of Property Trust of America, now
Archstone. Under the terms of such promissory note, Security Capital loaned
Ms. Moore $245,625, which amount is due on the earlier of January 4, 2005, or
120 days after Ms. Moore is no longer an officer of Archstone or an affiliate
thereof. Interest on the unpaid balance accrued at a floating rate per annum
equal to the lowest rate charged by Morgan Guaranty Trust Company of New York
to its most creditworthy corporate customers for unsecured loans having a
maturity of ninety days or less, in effect from time to time, plus 0.25%, and
is payable semiannually on each January 4 and July 4. The proceeds of such
promissory note were used by Ms. Moore to purchase common shares of Archstone.
The promissory note is secured by 15,000 Common Shares of Archstone owned by
Ms. Moore. In April 1999, Ms. Moore repaid this loan. On May 10, 1996,
Security Capital entered into an unsecured, fully recourse promissory note
with Ms. Moore, who at the time was Co-Chairman and Chief Operating Officer of
Atlantic. Under the terms of such promissory note, Security Capital loaned Ms.
Moore $250,000, which amount is due on the earlier of January 5, 2006, or 120
days after Ms. Moore is no longer an officer of Archstone or an affiliate
thereof. Interest on the unpaid balance accrues at a floating rate per annum
equal to the lowest rate charged by Morgan Guaranty Trust Company of New York
to its most creditworthy corporate customers for unsecured loans having a
maturity of ninety days or less, in effect from time to time, plus 0.25%, and
is payable semiannually on each January 5 and July 5. The proceeds of such
promissory note were used by Ms. Moore to purchase common shares of Atlantic,
which are now Common Shares.
Archstone has loans outstanding with executive officers as follows: Mr.
Sellers, $1,900,000; Mr. Whelan, $1,805,000; Mr. Freeman, $949,994; and Mr.
Banks, $807,500. Each loan is full recourse to the executive officer, the
proceeds of each loan was used to purchase Common Shares and is secured by the
purchased Common
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Shares. The loans bear interest at the lower of 6.0% per annum or the dividend
yield of a Common Share determined based on the fair market value of a Common
Share on the purchase date and have a ten-year term. The loans will become due
and payable (i) immediately upon the sale of the purchased Common Shares or
Archstone's termination of the executive officer's employment for cause, (ii)
180 days after Archstone's termination of the executive officer's employment
following a change in control, (iii) 365 days after termination of the
executive officer's employment by reason of death, disability or retirement or
(iv) 90 days after termination of the executive officer's employment for any
other reason. The loans were used to purchase Common Shares under the share
purchase program under the Incentive Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Archstone's Trustees, officers
and beneficial owners of more than ten percent of the outstanding Common Shares
to file reports of ownership and changes in ownership of the Common Shares with
the SEC Commission and to send copies of those reports to Archstone. Based
solely on a review of those reports and amendments thereto furnished to
Archstone and on written representations of certain of those persons that they
were not required to file certain of those reports, Archstone believes that no
such person failed to file any such report on a timely basis during 1998,
except that Richard O. Campbell filed a late initial report; John C. Schweitzer
filed one late report with respect to six transactions; and John T. Kelley, III
filed one late report with respect to one transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected KPMG LLP, certified public accountants, who have
served as auditors for Archstone since 1980, to serve again as the auditors of
Archstone's books and records for the coming year. A representative of KPMG LLP
is expected to be present at the annual meeting, and will be given an
opportunity to make a statement if that representative desires to do so and
will be available to respond to appropriate questions.
ANNUAL REPORT
Archstone's 1998 Annual Report, which includes financial statements, has
previously been mailed to shareholders or is being mailed to shareholders
together with this Proxy Statement. The Annual Report does not constitute a
part of the proxy solicitation material.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder of Archstone intended to be presented at the
2000 annual meeting of shareholders must be received by Archstone at its
principal executive offices not later than January 14, 2000, for inclusion in
Archstone's proxy statement and form of proxy relating to that meeting.
In addition, shareholders may present proposals which are proper subjects
for consideration at an annual meeting, even if the proposal is not submitted
by the deadline for inclusion in the proxy statement. To do so, the shareholder
must comply with the procedures specified by Archstone's bylaws. Archstone's
bylaws require that all shareholders who intend to make proposals at an annual
shareholders' meeting submit their proposals to Archstone during the period 60
to 90 days before the anniversary date of the previous year's annual meeting.
To be eligible for consideration at the 2000 annual meeting, proposals which
have not been submitted by the deadline for inclusion in the proxy statement
must be received by Archstone between March 16 and April 16, 2000.
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OTHER MATTERS
Archstone is not aware of any business or matter other than those indicated
above which may properly be presented at the meeting. If, however, any other
matter properly comes before the meeting, the proxy holders will, in their
discretion, vote thereon in accordance with their best judgment.
Jeffrey A. Klopf
Secretary
May 14, 1999
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ARCHSTONE COMMUNITIES TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF ARCHSTONE COMMUNITIES TRUST
The undersigned shareholder of Archstone Communities Trust, a Maryland real
estate investment trust ("Archstone"), hereby appoints R. Scot Sellers, Charles
E. Mueller, Jr. and Jeffrey A. Klopf, and each of them, as proxy for the
undersigned, with full power of substitution to attend the Annual Meeting of
Shareholders of Archstone to be held on Wednesday, June 16, 1999, at 10:30 a.m.,
mountain time, at the Hyatt Regency Tech Center, 7800 East Tufts Avenue, Denver,
Colorado 80237 and at any adjournment(s) or postponement(s) thereof, and to vote
and otherwise represent all the shares that the undersigned is entitled to vote
with the same effect as if the undersigned were present and voting such shares,
on the following matters and in the following manner as further described in the
accompanying Proxy Statement. The undersigned hereby revokes any proxy
previously given with respect to such shares.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the accompanying proxy statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" ITEM 1 ON THE REVERSE SIDE,
AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S)
THEREOF.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
Please mark you vote as indicated in this example [X]
The election of each nominee for Trustee to serve until the annual meeting of
shareholders in 2002, and their successors are duly elected and qualify -- James
A. Cardwell; James H. Polk, III; and John C. Schweitzer.
FOR ALL WITHHELD FROM (INSTRUCTION: To withhold authority to vote for
NOMINEES ALL NOMINEES any individual nominee, write that nominee's name
[_] [_] in the space provided below.)
------------------------------------------------
To vote and otherwise represent the shares MARK HERE IF YOU PLAN
on any other matters which may properly come TO ATTEND THE MEETING [_]
before the meeting or any adjournment(s) or
postponement(s) thereof in their discretion.
Please sign exactly as name appears hereon and date.
If the shares are held jointly, each holder should
sign. When signing as attorney, executor,
administrator, trustee, guardian or as an officer
signing for a corporation, please give the full
title under signature.
----------------------------------------------------
Signature
----------------------------------------------------
Signature, if held jointly
Dated: , 1999
--------------------------------------
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. FOLD AND DETACH HERE .
[Logo of Archstone]
Archstone Communities Trust
Annual Meeting of Shareholders
ADMISSION TICKET
Wednesday, June 16, 1999
10:30 a.m. (Mountain Time)
Hyatt Regency Tech Center
7800 East Tufts Avenue
Denver, Colorado 80237
