<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
REALTY REFUND TRUST
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: Shares
of Beneficial Interest
(2) Aggregate number of securities to which transaction
applies: 1,020,586
(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:
(4) Date Filed:
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<PAGE> 2
[REALTY REFUND TRUST LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of Realty
ReFund Trust will be held at the Sheraton Cleveland City Centre, 777 St. Clair
Ave., N.E., Cleveland, Ohio on Monday, May 15, 1996 at 11:30 A.M., local time,
for the purpose of considering and acting upon:
1. The election of five (5) Trustees, each to hold office until the next
Annual Meeting of Shareholders and until his successor shall be elected
and qualified; and
2. The transaction of any other business which properly may come before the
meeting and any adjournments thereof.
Shareholders of Realty ReFund Trust of record at the close of business on
March 18, 1996 are entitled to vote at the Annual Meeting and any adjournments
thereof.
By order of the Board of Trustees
CHRISTINE TURK
Secretary
Cleveland, Ohio
April 5, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
<PAGE> 3
April 5, 1996
[REALTY REFUND TRUST LOGO]
REALTY REFUND TRUST
1385 Eaton Center
Cleveland, Ohio 44114
PROXY STATEMENT
The accompanying proxy is solicited by the Trustees of Realty ReFund Trust
(the "Trust") for use at the Annual Meeting of Shareholders to be held on May
15, 1996 and any adjournments thereof.
Shareholders of record at the close of business on March 18, 1996 (the
record date) will be entitled to vote at the Annual Meeting and at any
adjournments thereof. At that date the Trust had issued and outstanding
1,020,586 Shares of Beneficial Interest. Each such Share is entitled to one vote
on all matters properly coming before the Annual Meeting. At least 510,294
Shares of Beneficial Interest of the Trust must be represented at the Annual
Meeting in person or by proxy in order to constitute a quorum for the
transaction of business.
This Proxy Statement and the accompanying form of proxy were first mailed
to Shareholders on April 5, 1996.
ELECTION OF TRUSTEES
At this Annual Meeting, five Trustees are to be elected for a term expiring
at the 1997 Annual Meeting of Shareholders and until their respective successors
are duly elected and qualified. Unless a Shareholder requests that voting of the
proxy be withheld for any one or more of the nominees for Trustee in accordance
with the instructions set forth on the proxy, it presently is intended that
Shares of Beneficial Interest represented by proxies solicited hereby will be
voted for the election as Trustees of the five nominees named in the table
below. All nominees have consented to being named in this Proxy Statement and to
serve if elected. Should any nominee subsequently decline or be unable to accept
such nomination or to serve as a Trustee, an event which the Trustees do not now
expect, the persons voting the Shares of Beneficial Interest represented by
proxies solicited hereby may either vote such Shares for a slate of five persons
which includes a substitute nominee or for a reduced number of nominees, as they
may deem advisable.
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<PAGE> 4
The information concerning the nominees set forth in the following table is
based in part on information received from the respective nominees and in part
on the Trust's records.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
DURING PAST FIVE YEARS, FIRST
AGE AS OF MARCH 18, 1996 BECAME
NAME OF NOMINEE AND DIRECTORSHIPS HELD TRUSTEE
- ------------------------- --------------------------------------------- ---------
<S> <C> <C>
Alan M. Krause Chairman and Co-Chief Executive Officer of 1971
the Trust since 1990 and, prior thereto, Vice
Chairman of the Trust; Chairman of Mid-
America ReaFund Advisors, Inc. since 1990
(investment advisor to the Trust); Principal,
The Mid-America Companies (real estate
ownership); President, The Mid-America
Management Corporation (real estate man-
agement). Age 66.
James H. Berick President and Treasurer of the Trust since 1971
1990 and, prior thereto, Vice Chairman and
Secretary of the Trust; President and Trea-
surer of Mid-America ReaFund Advisors, Inc.
since 1990 (investment advisor to the Trust);
Chairman, Berick, Pearlman & Mills Co.,
L.P.A. (attorneys). Mr. Berick is a Director
or Trustee of MBNA Corporation, A. Schulman,
Inc., The Tranzonic Companies, and The Town
and Country Trust. Age 62.
Alvin M. Kendis* Retired. Formerly, of Counsel, McDonald, 1971
Hopkins, Burke & Haber Co., L.P.A. (attor-
neys). Age 77.
Frank L. Kennard* Retired. Formerly, Senior Vice President, The 1971
Huntington National Bank. Age 73.
Samuel S. Pearlman* Principal, Berick, Pearlman & Mills Co., 1990
L.P.A. (attorneys). Age 53.
<FN>
- ---------------
*Member of the Audit Committee.
</TABLE>
The Trustees held four meetings during the year ended January 31, 1996. The
Trustees do not have a standing nominating or compensation committee. All incum-
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bent Trustees attended all of such meetings and all meetings of committees of
the Trustees on which they served during the year.
The Audit Committee has the responsibility of recommending to the Trustees
the selection of the Trust's independent auditors, reviewing the scope and
results of audit and non-audit services, and reviewing internal accounting
controls. The Audit Committee met twice during the fiscal year.
James H. Berick and Samuel S. Pearlman are the Chairman and a principal,
respectively, of the law firm of Berick, Pearlman & Mills Co., L.P.A., general
counsel to the Trust, which received legal fees from the Trust during the year
ended January 31, 1996.
COMPENSATION OF TRUSTEES AND EXECUTIVE OFFICERS
The aggregate compensation, consisting exclusively of Trustees' fees, paid
by the Trust to all Trustees as a group (five persons) for the year ended
January 31, 1996 was $15,000.
The Trust pays Trustees' fees to each Trustee, other than Messrs. Krause
and Berick, in the amount of $250 per month plus $500 for each month in which a
Trustee attends a Board meeting.
TRUST PERFORMANCE GRAPH
The following graph compares total Shareholder returns over the last five
fiscal years to the Standard & Poor's 500 Stock Index ("S&P 500") and the
National Association of Real Estate Investment Trusts, Inc.'s Total Return
Indexes for mortgage real estate investment trusts ("NAREIT"). Total return
values for the S&P 500, NAREIT and the Trust were calculated based upon market
weighting at the beginning of the period and include reinvestment of dividends.
The Shareholder return shown on the following graph is not necessarily
indicative of future performance.
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The following graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Trust specifically incorporates this information
by reference and otherwise shall not be deemed filed under such Acts.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) TRUST S&P 500 NAREIT
<S> <C> <C> <C>
1/31/91 100.00 100.00 100.00
1/31/92 159.21 122.70 130.84
1/31/93 93.14 135.60 133.63
1/31/94 78.39 153.02 149.06
1/31/95 94.60 153.90 115.77
1/31/96 84.78 213.16 186.46
</TABLE>
CERTAIN TRANSACTIONS
The Trust is a party to an Advisory Agreement under which the Trust
receives certain services from Mid-America ReaFund Advisors, Inc. ("MARA"), a
corporation owned by Alan M. Krause and James H. Berick. The Advisory Agreement
provides that MARA, under the supervision of the Trustees, serves as investment
adviser and consultant in connection with the policy decisions to be made by the
Trustees of the Trust and as administrator of the day-to-day investment
operations of the Trust. In return for MARA's services, the Advisory Agreement
provides, in part, that MARA is to receive (a) a monthly fee of 1/12th of 1% of
the average book value of the invested assets of the Trust during the next
preceding month; (b) 15% of the commitment fees
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<PAGE> 7
received by the Trust for any stand-by or gap commitment relating to a mortgage
loan which is not closed; and (c) an incentive fee equal to 10% of the amount,
if any, by which the net profits of the Trust exceed 8% of the average monthly
net worth of the Trust for the year. MARA will refund to the Trust the amount,
if any, by which the operating expenses of the Trust in any fiscal year exceed
the lesser of (x) 1 1/2% of the invested assets of the Trust for such fiscal
year or (y) the greater of (i) 1 1/2% of the average month-end net assets of the
Trust for such fiscal year or (ii) 25% of the net income of the Trust for such
fiscal year. The Trust paid an aggregate amount of $223,278 to MARA for services
rendered under the Advisory Agreement during the year ended January 31, 1996.
Each of Messrs. Krause and Berick has an employment agreement with the
Trust, expiring in 2006, which provides that he will receive no compensation
from the Trust as long as the Advisory Agreement is in effect. Should MARA no
longer provide such services, Messrs. Krause and Berick will then be
compensated, collectively, upon the same annual basis as is MARA with each to
receive, as long as he continues to be employed pursuant to his employment
agreement, an amount equal to (a) if both of Messrs. Krause and Berick continue
their employment with the Trust, one-half of the compensation that would have
been paid to MARA or (b) if only one of Messrs. Krause and Berick continues his
employment with the Trust, the full amount of the compensation that would have
been paid to MARA.
The Trust has a wrap-around mortgage loan on an office building in Toledo,
Ohio owned by Riverview Tower Limited Partnership, a limited partnership of
which an affiliate of Mr. Krause is a general partner. The loan bears interest
at a rate per annum equal to 10%. The maturity date of this loan has been
extended to December 31, 1996. During the year ended January 31, 1996, the
largest principal balance of the loan was $10,978,235 and the largest amount of
the Trust's net investment in the loan was $7,200,521. As of March 18, 1996, the
outstanding principal balance of the loan was $9,447,767 and the Trust's net
investment in the loan was $6,350,521.
On March 16, 1993, the Trust borrowed $5,000,000 from Mr. Krause by selling
to him the Trust's $5,000,000 note (the "Note") at par. The Note bears interest
at the base lending rate of National City Bank, Cleveland, Ohio ("NCB") and will
mature on August 31, 1996. During the year ended January 31, 1996, the largest
principal balance under the Note was $5,000,000. As of March 18, 1996, the
outstanding principal balance under the Note was $4,500,000. The Note is secured
by a lien on the assets of the Trust, which lien is subordinate to the prior
lien of NCB. In connection with the closing of such financing, the Trustees
received the written opinion of an independent investment banking firm that the
terms of such financing were fair, from a financial point of view, to the other
Shareholders of the Trust. The proceeds of the
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<PAGE> 8
sale of the Note were used to reduce the Trust's outstanding indebtedness to NCB
under its revolving line of credit.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Mr. Krause has been both an owner and an investor in a significant number
of real estate projects and, directly or through affiliates, is a general
partner in numerous real estate partnerships. A property owned by one of such
real estate partnerships was sold in 1994 through foreclosure.
OWNERSHIP OF SHARES OF BENEFICIAL INTEREST
The following table sets forth information as of March 18, 1996 in respect
of any persons known to the Trustees to be the "beneficial" owner of more than
5% of the Trust's Shares and the number of the Trust's Shares owned
"beneficially" by each Trustee and nominee, and the Trustees, nominees and
executive officers as a group.
FIVE PERCENT BENEFICIAL OWNER; AND
BENEFICIAL OWNERSHIP OF TRUSTEES, NOMINEES AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES % OF
BENEFICIALLY OUTSTANDING
NAME OWNED SHARES
- ----------------------------------- ---------- ----------
<S> <C> <C>
Alan M. Krause(1) 183,001 17.9%
James H. Berick 14,780(2) 1.4%
Alvin M. Kendis 1,000 (3)
Frank L. Kennard 1,000 (3)
Samuel S. Pearlman 750 (3)
Trustees, Nominees and Executive
Officers as a group (five
persons) 200,531(2) 19.6%
<FN>
- ---------------
(1) Mr. Krause is the only person known to the Trust who beneficially owns more
than 5% of the Trust's outstanding Shares. Mr. Krause's address is 600 Eaton
Center, Cleveland, Ohio 44114.
(2) Includes 100 Shares owned by Mr. Berick's wife, 80 Shares owned by Mr.
Berick's adult children and 14,000 Shares owned by a partnership of which
Mr. Berick's adult children are partners, as to all of which Mr. Berick
disclaims beneficial ownership.
(3) Less than 1%.
</TABLE>
6
<PAGE> 9
SELECTION OF ACCOUNTANTS
The Trustees have selected Arthur Andersen LLP as independent auditors to
examine the books, records and accounts of the Trust for the fiscal year ending
January 31, 1997. Arthur Andersen LLP was the independent auditors of the Trust
for the fiscal year ended January 31, 1996 and is considered by the Trustees to
be well qualified.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
OTHER MATTERS
The Trustees know of no matters to be presented for action at the Annual
Meeting other than those described in this Proxy Statement. Should other matters
come before the meeting, the Shares represented by proxies solicited hereby will
be voted with respect thereto in accordance with the best judgment of the proxy
holders.
SHAREHOLDER PROPOSALS
If a Shareholder intends to present a proposal at the next Annual Meeting
of Shareholders, presently scheduled for May 15, 1997, it must be received by
the Trust for consideration for inclusion in the Trust's Proxy Statement and
form of proxy relating to that meeting on or before December 9, 1996.
REVOCATION OF PROXIES
A proxy may be revoked at any time before a vote is taken or the authority
granted is otherwise exercised. Revocation may be accomplished by the execution
of a later proxy with regard to the same shares or by giving notice in writing
or in open meeting.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Trust. The Trust may
pay compensation for the solicitation of proxies and will pay brokers, nominees,
fiduciaries and custodians their reasonable expenses for sending proxy material
to principals and obtaining their instructions. In addition to solicitation by
mail, proxies may be solicited in person, by telephone or telegraph, or by
Trustees and officers of the Trust.
By order of the Board of Trustees
CHRISTINE TURK
Secretary
April 5, 1996
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<PAGE> 10
<TABLE>
<S> <C>
REALTY REFUND TRUST P R O X Y
------------------------------------ THIS PROXY IS SOLICITED ON BEHALF
OF
THE TRUSTEES
</TABLE>
The undersigned hereby appoints ALAN M. KRAUSE, JAMES H.
BERICK and SAMUEL S. PEARLMAN as Proxies, each with the full
power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of
beneficial interest of Realty ReFund Trust held of record by the
undersigned on March 18, 1996, at the annual meeting of
shareholders to be held on May 15, 1996, or at any adjournments
thereof.
<TABLE>
<S> <C>
1. Election of Trustees.
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the contrary below) to vote for all nominees listed
below
</TABLE>
Alan M. Krause, James H. Berick, Alvin M. Kendis,
Frank L. Kennard and Samuel S. Pearlman
(Instruction: To withhold authority to vote for any Individual
nominee, write that nominee's name on the space
provided below.)
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2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
(Continued, and to be signed, on the other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1.
Please sign exactly as name appears below. When shares are held
by joint tenants, both should sign. When signing as attorney, as
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: _________________, 1996
______________________________
Signature
______________________________
Signature if held jointly
Please Sign and Return the
Proxy Card Promptly
PLEASE
SIGN AND
RETURN
THIS
PROXY
WHETHER
OR NOT
YOU EXPECT
TO ATTEND
THE
MEETING
YOU MAY
NEVERTHELESS
VOTE IN
PERSON IF
YOU ATTEND
