SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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(section)240-14a-12
Franklin Select Realty Trust
(Name of Registrant as Specified In its Charter)
Franklin Select Realty Trust
(Name of Person(s) Filing Proxy Statement)
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or Item 22(a)(2) of Schedule 14A
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Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
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FRANKLIN SELECT REALTY TRUST
777 Mariners Island Boulevard
San Mateo, CA 94404
(415) 312-3000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 1997
Dear Shareholder:
Notice is hereby given that the Annual Meeting of Shareholders of Franklin
Select Realty Trust will be held on June 5, 1997, at 9:00 a.m., Pacific
daylight time, at the Company's principal executive offices located at 777
Mariners Island Boulevard, San Mateo, California for the following purposes:
1. To elect a Board of Directors of the Company.
2. To ratify or reject the selection of Coopers & Lybrand L.L.P.,
independent public accountants, as the auditors for the Company for
the fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the close
of business on April 10, 1997 as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting. Only
shareholders of record at that time will be entitled to vote at the meeting
or any adjournment thereof.
You are cordially invited to attend the meeting in person. Even if you plan
to attend the Annual Meeting, please complete, date, sign, and return the
enclosed proxy promptly in the enclosed self-addressed, stamped envelope. If
you attend and wish to withdraw your proxy, you may vote personally.
Dated: April 17, 1997 By Order of the Board of Directors
Richard S. Barone
Secretary
PLEASE RETURN YOUR PROXY CARD PROMPTLY
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN
Shareholders are cordially invited to attend the annual meeting in person. If
you do not expect to attend the meeting, please indicate your voting
instructions on the enclosed proxy card, date and sign it, and return it in
the envelope provided, which is addressed for your convenience and needs no
postage if mailed in the United States. In order to avoid the additional
expense to the Company of further solicitation, we ask your cooperation in
mailing your proxy promptly.
FRANKLIN SELECT REALTY TRUST
PROXY STATEMENT
Annual Meeting of Shareholders June 5, 1997
SOLICITATION, REVOCATION AND VOTING OF PROXIES
This proxy statement and the enclosed proxy are furnished in connection with
the annual meeting of shareholders (the "Meeting") of Franklin Select Realty
Trust (the "Company") to be held on June 5, 1997, at 9 a.m., Pacific daylight
time, at the Company's principal executive offices located at 777 Mariners
Island Boulevard, San Mateo, California. Shareholders of record at the close
of business on April 10, 1997, are entitled to notice of and to vote at the
Meeting. On that date, there were 12,250,384 shares of Common Stock, Series A
outstanding, and 745,584 shares of Common Stock, Series B outstanding
(collectively the "Common Stock"). Each share of Common Stock is entitled to
one vote, and a majority of the shares entitled to vote will constitute a
quorum.
The enclosed proxy is being solicited by the Company's Board of Directors
(the "Directors"). You may revoke your proxy at any time before it is
exercised by delivering a written notice to the Company expressly revoking
your proxy, by signing and forwarding to the Company a later-dated proxy, or
by attending the Meeting and casting your votes in person.
The cost of soliciting proxies will be borne by the Company. The Company has
retained Chase Mellon Shareholder Services, L.L.C., its transfer agent, and
may also retain a professional proxy solicitation firm to assist shareholders
and the Company in the voting process in connection with the Meeting. The
Company may request brokerage houses and other institutions to forward the
solicitation material to persons for whom they hold shares of Common Stock
and to obtain authorization for the execution of proxies. The Company will
reimburse brokerage houses and other institutions for their reasonable
expenses in forwarding the Company's proxy material.
This proxy statement and the enclosed proxy are scheduled to be mailed to
shareholders commencing on or about April 17, 1997.
The proxy holders will vote all proxies received. It is the present intention
that, absent contrary instructions, the enclosed proxy will be voted: for the
election as Directors of the nominees named hereinafter, but the proxy
holders reserve full discretion to cast votes for other persons in the event
any such nominees are unable to serve; for the ratification of the selection
of Coopers & Lybrand L.L.P. as auditors for the Company for the fiscal year
ending December 31, 1997; and, in the discretion of the proxy holders, upon
such other matters not now known or determined which may properly come before
the Meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
The enclosed proxy will be voted, unless authority is withheld, for the
election of the nominees named herein as Directors of the Company, to hold
office until the next Annual Meeting of Shareholders and until their
successors are elected and qualified. All of the nominees have consented to
serve as Directors. However, if any nominee is not available for election at
the time of the Meeting, the proxy holders may vote for any substitute person
nominated by the Board of Directors, in their discretion. The presence of a
majority of the shares entitled to vote, in person or by proxy, at the
Meeting constitutes a quorum. A quorum is required to elect Directors and to
conduct business at the Meeting. In the election of Directors, the proxy
holders intend to distribute, in such proportions as they see fit, the votes
represented by each proxy among the seven nominees named herein or any such
substitute person nominated by the Board, and authority to do so is included
in the proxy.
Under the corporation law of the State of California, a shareholder is
entitled to cumulate his votes in the election of Directors. This means that
a shareholder may give to any one nominee a number of votes equal to the
number of Directors to be elected, multiplied by the number of votes to which
his shares are entitled; or, a shareholder may distribute such votes, based
upon the same principle, among as many candidates as he chooses. If a
majority of the shares of Common Stock entitled to vote are represented in
person or by proxy at the Meeting, the seven nominees who receive the highest
number of votes will be the Directors for the next year and until their
successors are elected and qualified. A shareholder may use his proxy for
cumulative voting by noting the number of shares to be voted for each
nominee. Unless otherwise noted on the proxy card, shares of persons
submitting a proxy will be voted equally for each nominee (subject to the
proxy holders' right to cumulate votes represented by each proxy as
referenced above).
The Board of Directors recommends a vote FOR the nominees named below or
their substitutes as set forth herein.
Name, Age and Five-Year Business ExperienceDirector Since
- ------------------------------------------------------------------------------
David P. Goss (49) 1989
Mr. Goss is the Chief Executive Officer, President and Director of
the Company. He is also Chief Executive Officer, President and
Director of Property Resources, Inc., Property Resources Equity
Trust (1987 to date), the Advisor and Franklin Real Estate
Management, Inc. (1991 to date). Mr. Goss has a B.A. degree from
the University of California, Berkeley, and a J.D. degree from the
New York University School of Law. Mr. Goss was also the Chief
Executive Officer, President and Director of Franklin Real Estate
Income Fund (1988 to May, 1996) and Franklin Advantage Real Estate
Income Fund (1990 to May, 1996).
Barry C. L. Fernald (50) 1996
Mr. Fernald is an Independent Director of the Company. He was
co-founder of, and until 1994 a Senior Vice President of Devcon
Construction, Inc. During his association with Devcon, Devcon
developed and constructed more than 10 million square feet of
industrial and commercial buildings in the Silicon Valley and
throughout Northern California. Since retiring from the day-to-day
operations of Devcon in 1994, Mr. Fernald continues to manage his
real estate holdings, as well as consult and participate in new
real estate ventures. Mr. Fernald holds a bachelor of architecture
degree from the University of California at Berkeley and is a
licensed architect in the State of California. He is a founder of
the Children's Discovery Museum of San Jose and of the Silicon
Valley Bank. Mr. Fernald also serves on the board of directors of
the San Jose Jet Center and the I Think I Can Foundation, is a
member of the American Institute of Architects and is a former
director of the Santa Clara Valley Chapter of The American
Institute of Architects.
Lloyd D. Hanford, Jr. (68) 1989
Mr. Hanford is an Independent Director of the Company. In 1988 he
was co-founder of, and until July 1992, principal of the
Hanford/Healy Companies, a San Francisco real estate appraisal,
asset management and consulting firm, practicing on a national
basis. Mr. Hanford is presently an independent real estate
appraiser and consultant. Mr. Hanford graduated from the University
of California, Berkeley and holds the professional designations
MAI, CRE and CPM awarded respectively by the Appraisal Institute,
the American Society of Real Estate Counselors and IREM. Mr.
Hanford was also a Director of Franklin Advantage Real Estate
Income Fund (1990 to May, 1996).
Egon H. Kraus (67) 1989
Mr. Kraus is an Independent Director of the Company. He was
formerly Vice President and director of McNeil Investors Inc. (1991
- - 1995). He is a Certified Public Accountant, primarily involved in
real estate transactions. He has a B.S. and an M.B.A. from the
University of California, Berkeley, where he was elected to Phi
Beta Kappa. Mr. Kraus is a member of the American Institute of
Certified Public Accountants, and a former member of the Financial
Executives Institute and the Tax Executives Institute. He was also
a Director of Franklin Real Estate Income Fund (1988 to May, 1996)
and Franklin Advantage Real Estate Income Fund (1990 to May 1996).
Name, Age and Five-Year Business Experience Director Since
Frank W. T. LaHaye (67) 1996
Mr. LaHaye is an Independent Director of the Company. He is General
Partner, Peregrine Associates and Miller & LaHaye, which are
General Partners of Peregrine Ventures and Peregrine Ventures II
(venture capital firms); Chairman of the Board and Director,
Quarterdeck Corporation; Director, Fischer Imaging Corporation;
Digital Transmission Systems, Inc.; and Director or trustee, as the
case may be, of 27 of the investment companies in the Franklin
Templeton Group of Funds. He was also a Director of Franklin Real
Estate Income Fund (1995 to May, 1996). Mr. LaHaye received a B.S.
degree in Metallurgical Engineering from Stanford University in
1954.
Larry D. Russel (50) 1996
Mr. Russel is an Independent Director of the Company. Mr. Russel
was a founding partner and former Chairman and President of Devcon
Construction, Inc. until his retirement in 1989. During his
association with Devcon, Devcon developed and constructed more than
10 million square feet of industrial and commercial buildings in
the Silicon Valley and throughout Northern California. Mr. Russel
served on the board of directors for Citation Insurance Company, a
publicly held insurance company, from 1984 to 1996. He is chairman
of the Board of Directors of the San Jose Jet Center and is also a
general partner in a private real estate management company.
E. Samuel Wheeler (53) 1989
Mr. Wheeler is an Independent Director of the Company. He is a
Certified Public Accountant and owns and manages an accounting and
tax practice (1990 to date). He is a current member of the National
Association of Real Estate Investment Trusts (NAREIT) Adjunct
Government Relations, Insurance Planning and Accounting Committees.
He received his B.S. in Accounting and Finance from San Jose State
University in 1966, and is a member of the American Institute of
Certified Public Accountants and the California Society of
Certified Public Accountants. Mr. Wheeler was also a Director of
Franklin Advantage Real Estate Income Fund (1990 to May, 1996).
The following table sets forth the beneficial ownership of the Company's
Common Stock by the Directors and by all Directors and officers as a group,
as of April 10, 1997. At such date, all Directors and officers as a group
owned less than 1% of the outstanding Common Stock of the Company.
Amount and
Nature of Shares
Name Title of Class Beneficially Owned
David P. Goss, Chief Executive Officer, Common Stock, Series A 7,191
President and Director
Barry C. L. Fernald, Independent Director Common Stock, Series A 4,500
Limited Partnership Units
of FSRT, L.P.* 406,250
Lloyd D. Hanford, Jr.,
Independent Director Common Stock, Series A 1,000
Egon H. Kraus, Independent Director Common Stock, Series A 12,430
Frank W.T. LaHaye, Independent Director Common Stock Series A 1,000
Larry D. Russel, Independent Director Limited Partnership Units
of FSRT, L.P.* 406,250
E. Samuel Wheeler, Independent Director Common Stock, Series A 2,000
Directors and officers as a group Common Stock Series A 35,219
Directors and officers as a group Limited Partnership Units
of FSRT, L.P.* 812,500
*The limited partnership units of FSRT, L.P. are convertible into shares of
the Company's Series A common stock on a one-for-one basis commencing October
31, 1997. The limited partnership units are non-voting interests.
To the Company's knowledge, as of April 10, 1997, no person beneficially
owned more than 5% of the outstanding Common Stock except as set forth below:
<TABLE>
<CAPTION>
Amount and
Nature of Shares
Name and Address Title of Class Beneficially Owned % of Class1
<S> <C> <C> <C>
Franklin Resources, Inc. Common Stock, Series A 1,685,400 13.0%
777 Mariners Island Boulevard
San Mateo, CA 94404
Franklin Properties, Inc Common Stock, Series B 745,5841 5.7%
1800 Gateway Drive
San Mateo, CA 94404
</TABLE>
1The Company has one class of Common Stock in two series, designated Series A
and Series B. The Series A shares and Series B shares vote together as one
class with each share being entitled to one vote.
The executive officers of the Company other than those listed above are:
Richard S. Barone (46)
Mr. Barone is Secretary of the Company (1989 to date). He is also secretary
of the Advisor, Property Resources, Inc., Property Resources Equity Trust,
and Franklin Real Estate Management, Inc. (1991 to date). He is also Senior
Vice President - Legal of the Advisor, Property Resources, Inc. (1988 to
date), and Franklin Real Estate management, Inc. (1991 to date); and
Corporate Counsel of Franklin Resources, Inc. (1988 to date). Mr. Barone
received a B.A. degree and a J.D. degree from the University of San
Francisco. He is a member of the State Bar of California. Mr. Barone was also
the Secretary of Franklin Real Estate Income Fund (1988 to May, 1996) and
Franklin Advantage Real Estate Income Fund (1990 to May, 1996).
Mark A. TenBoer (40)
Mr. TenBoer is Vice President - Finance and Chief Financial Officer of the
Company and has served as Vice President - Asset Management for the Advisor,
Property Resources, Inc., and Franklin Real Estate Management, Inc., since
1991. From 1983 to 1991 he was Director - Portfolio Management and Controller
of the Advisor and Property Resources, Inc. He received a B.S. degree in
Accounting from the University of Illinois. Mr. TenBoer is a Certified Public
Accountant. Mr. TenBoer was also the Vice President - Finance and Chief
Financial Officer of Franklin Real Estate Income Fund (1993 to May, 1996) and
Franklin Advantage Real Estate Income Fund (1993 to May, 1996).
Committees and Meetings of Directors
The Board of Directors met 11 times during 1996. Two Directors attended
eleven meetings, and three Directors attended 10 meetings. Mr. Werner
attended seven meetings until he retired from the Board of Directors as of
the 1996 Annual Meeting held on September 17, 1996. Mr. LaHaye was appointed
to the Board on May 7, 1996, and attended all of the meetings of the Board
since the date of his appointment. Mr. Russel and Mr. Fernald were appointed
to the Board on October 30, 1996, and attended all of the meetings of the
Board since the date of their appointment. The Special Independent Committee
met three times during 1996. The members of this committee during 1996 were
Messrs. Hanford, Kraus, Wheeler, and Werner. This committee was formed to
discuss merger related issues regarding the merger of Franklin Real Estate
Income Fund and Franklin Advantage Real Estate Income Fund into Franklin
Select Real Estate Income Fund. With the completion of the merger, this
committee no longer meets. The Audit Committee, which consists of all of the
Independent Directors of the Company, met twice during 1996. The members of
this committee during 1996 were Messrs. Hanford, Kraus, Wheeler, LaHaye and
Werner. Mr. LaHaye was appointed to the Audit Committee following his
appointment as a director. This committee advises and assists the Company's
principal financial officer in making periodic overall reviews of the
Company's internal controls and financial statements, appoints the Company's
independent auditors for the Company's annual audit, and meets periodically
with the auditors to discuss their audit.
No direct compensation has been paid by the Company to its Directors and
officers, or Directors and Officers of the Advisor in 1996, except that the
Independent Directors of the Company received fees of $2,000 per year plus
$400 per each regular meeting attended and $300 per each telephonic meeting
of the Board attended. For the fiscal year ended December 31, 1996, fees to
all Directors for attendance at Board meetings, including those of Franklin
Real Estate Income Fund and Franklin Advantage Real Estate Income Fund prior
to the merger, totaled approximately $65,000. Each Independent Director also
received $2,500 per quarter plus $400 per each meeting of the Special
Independent Committee during 1996. For the fiscal year ended December 31,
1996, fees to all Independent Directors for attendance at Special Independent
Committee Meetings totaled $49,600. Effective January 1, 1997, fees paid to
the Independent Directors of the Company were increased to $6,000 per year
plus $500 per each regular meeting attended and $300 per each telephonic
meeting of the Board attended. The Company has no annuity, pension or
retirement plans or any existing plans or arrangement under which payments
have or will in the future be made to any Director or officer. The Company
has paid certain fees and will reimburse certain expenses of the Advisor.
Performance Graph
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return with two indices, the Equity REIT Index
prepared by the National Association of Real Estate Investment Trusts
("NAREIT"), and the S&P 500 Index. The period covered by the graph commences
on January 14, 1994, which is the date when the Company's Series A Common
Stock commenced trading on the American Stock Exchange. Prior to that date,
there was no established trading market for the shares. The graph assumes
$100 was invested in January, 1994, in the Series A Common Stock and the
indices, and that all dividends were reinvested throughout the period.
Performance Measurement Comparison
Total Return
Franklin Select Realty Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN THE PRINTED GRAPHIC
SELECT REIT EQUITY INDEX S&P INDEX
1/94 100.00 100.00 100.00
1994 77.43 102.07 101.37
1995 89.84 117.65 139.23
1996 131.32 160.86 171.19
PROPOSAL 2: RATIFICATION OR REJECTION OF THE SELECTION OF AUDITORS
The Board of Directors recommends ratification of its designation of Coopers
& Lybrand L.L.P. as independent public accountants to audit the financial
statements of the Company for the fiscal year ending December 31, 1997.
During the fiscal year ended December 31, 1996, the audit services of Coopers
& Lybrand L.L.P. consisted of the rendering of an opinion on the financial
statements of the Company. Coopers & Lybrand has no material direct or
indirect beneficial interest in the Company or the Advisor, and does not
intend to send a representative to be present at the Meeting. Unless marked
to the contrary, proxies received will be voted for the ratification of the
appointment of Coopers & Lybrand L.L.P. as independent public accountants to
audit the financial statements of the Company for the fiscal year ending
December 31, 1997.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Coopers & Lybrand L.L.P. as independent public accountants to
audit the financial statements of the Company for the fiscal year ending
December 31, 1997.
OTHER MATTERS
The Directors know of no other matters to be brought before the Meeting. If
any other matters properly come before the Meeting, the proxy holders will
vote the proxies in accordance with their best judgment. In the event that
sufficient votes in favor of the proposals set forth in the Notice of Annual
Meeting of Shareholders are not received by the date of the Meeting, the
proxy holders may propose one or more adjournments of the Meeting for a
period or periods of not more than 45 days in the aggregate to permit further
solicitation of proxies, even though a quorum is present. Any such
adjournment will require the affirmative vote of a majority of the votes cast
on the question in person or by proxy at the session of the meeting to be
adjourned. The proxy holders will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of the election of the
nominees as Directors. The costs of any such additional solicitation and of
any adjourned session will be borne by the Company.
The Company's Annual Report for the year ended December 31, 1996, is enclosed
herewith.
OTHER INFORMATION
The Company's Board of Directors (including all of its Independent Directors)
have determined, after review, that the compensation paid to the Advisor and
to Continental Property Management Co. in 1996, as well as the reimbursements
made by the Company to the Advisor for certain types of compensation and
payments are fair and reasonable to the Company.
Advisor
The Advisor has entered into an agreement with the Company to administer the
day-to-day operations of the Company. Under the terms of the agreement, which
is renewable annually, the Advisor will receive quarterly an annualized
advisory fee equal to .50% of the book value of the Company's real estate
assets (without deduction for depreciation). The fee is reduced to .40% for
gross real estate assets exceeding $200 million. For the year ended December
31, 1996, the Company paid $551,000 in advisory fees to the Advisor including
fees paid by Franklin Advantage Real Estate Income Fund prior to its merger
into the Company on May 7, 1996.
Property Management Agreement
Pursuant to an agreement entered into between Continental Property Management
Co. ("CPMC") and the Company, CPMC is the property manager for seven of the
Company's properties. CPMC is an affiliate of the Advisor. The remaining
property is managed by an unaffiliated company. During the year ended
December 31, 1996, the Company paid CPMC property management and other fees
totaling $721,000.
Shareholders Proposals
Any Shareholders intending to present any proposal for consideration at the
Company's next Annual Meeting of Shareholders must, in addition to meeting
other applicable requirements, mail such proposal to the Company so that it
is received at the Company's executive offices not less than 120 days in
advance of April 30, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Richard S. Barone
Secretary
SHAREHOLDERS ARE REQUESTED TO FILL IN, DATE AND SIGN THE PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, GIVE
YOUR FULL TITLE AS SUCH. WHERE STOCK IS HELD JOINTLY, BOTH SIGNATURES ARE
REQUESTED.
