SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (the "Exchange Act")
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
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to Rule-14a-11(c) or Rule 14a-12
UNITED INVESTORS REALTY TRUST
(Name of Registrant as Specified in Its Charter)
Not Applicable
(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)(1) 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:
(4) Date Filed:
<PAGE>
UNITED INVESTORS REALTY TRUST
UNITED INVESTORS REALTY TRUST
----------------------------
Notice of Annual Meeting of Shareholders
To be held May 17, 1999
-------------------------------------
To Our Shareholders:
You are invited to attend the annual meeting of shareholders of United
Investors Realty Trust to be held at our corporate offices at 5847 San Felipe,
Suite 850, Houston, Texas 77057 on Monday, May 17, 1999, at 9:00 a.m., local
time, for the following purposes:
Proposal 1. To elect seven trust managers to serve for a one-year term
and until their successors are elected and qualified.
Proposal 2. To ratify the selection of Ernst & Young, LLP as
independent auditors for the fiscal year ending December 31,
1999.
Proposal 3. To transact such other business as may properly come
before the annual meeting or any adjournments thereof.
The record date for the annual meeting is April 5, 1999. Only shareholders
of record at the close of business on that date are entitled to notice of and to
vote at the annual meeting.
The Board of Trust Managers hopes that you will find it convenient to
attend the annual meeting in person, but whether or not you plan to attend,
please complete, sign, date and return the enclosed Proxy to ensure that your
common shares of beneficial interest are represented at the annual meeting.
Returning your Proxy does not deprive you of the right to attend the annual
meeting and vote your shares in person.
Robert W.Scharar Lewis H. Sandler
Chairman of the Board of Trust Managers Chief Executive Officer
April 8, 1999
<PAGE>
PROXY STATEMENT
------------
ANNUAL MEETING OF SHAREHOLDERS
Monday, May 17, 1999
---------------
United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
The Board of Trust Managers is soliciting proxies to be used at the
1999 annual meeting of shareholders to be held at 5847 San Felipe, Suite 1275,
Houston, Texas 77057 on Monday, May 17, 1999, at 9:00 a.m., local time. This
Proxy Statement, accompanying Proxy and Annual Report to Shareholders for the
fiscal year ended December 31, 1998 are first being mailed to shareholders on or
about April 8, 1999. Although the Annual Report to Shareholders is being mailed
to shareholders with this Proxy Statement, it does not constitute part of this
Proxy Statement.
Who Can Vote
Only shareholders of record as of the close of business on April 5,
1999 are entitled to notice of and to vote at the annual meeting. As of April 5,
1999, United Investors had outstanding 9,514,889 common shares of beneficial
interest, the only outstanding class of shares entitled to vote. Each
shareholder of record on the record date is entitled to one vote for each common
share held.
How You Can Vote
Common shares cannot be voted at the annual meeting unless the holder
of record is present in person or by proxy. All shareholders are urged to
complete, sign, date and promptly return the Proxy in the enclosed postage-paid
envelope after reviewing the information contained in this Proxy Statement and
in the Annual Report to Shareholders. Valid Proxies will be voted at the annual
meeting and at any postponements or adjournments thereof as you direct in the
Proxy. If no direction is given and the Proxy is validly executed, the Proxy
will be voted FOR the election of the nominees for the Board of Trust Managers
set forth in this Proxy Statement and FOR the ratification of the selection of
Ernst & Young LLP as independent auditors for the fiscal year ending December
31, 1998. The persons authorized under the Proxies will vote upon such other
business as may properly come before the annual meeting in accordance with their
best judgment.
Revocation of Proxies
You may revoke your Proxy at any time prior to the start of the annual meeting
in one of three ways:
(1) by delivering a written notice of revocation to the Secretary of United
Investors;
(2) by submitting a duly executed Proxy bearing a later date; or
(3) by attending the annual meeting and expressing the desire to vote your
shares in person.
Quorum
A majority of the outstanding common shares on April 5, 1999 ( 4,757,445
shares), represented in person or by proxy, shall constitute a quorum for the
transaction of business at the annual meeting. However, if a quorum is not
present, the shareholders present at the meeting have the power to adjourn the
meeting until a quorum is present. At any such adjourned meeting at which a
quorum is present or represented, any business may be transacted that might have
been transacted at the original meeting. Broker non-votes (i.e., a nominee
holding common shares for a beneficial owner who has not received voting
instructions from the beneficial owner with respect to a particular matter and
such nominee does not possess or choose to exercise discretionary authority with
respect thereto) will not be included in the determination of the number of
shares present at the annual meeting for quorum purposes.
Your proxy vote is important. Accordingly, you are asked to complete, date,
sign and return the accompanying Proxy whether or not you plan to attend the
annual meeting. If you plan to attend the annual meeting to vote in person and
your shares are registered with our transfer agent, Boston Equiserve, in the
name of a broker or bank, you must secure a Proxy from the broker or bank
assigning voting rights to you for your shares.
PROPOSAL ONE - ELECTION OF TRUST MANAGERS
United Investors, Bylaws provide that the Board of Trust Managers will
consist of two to nine trust managers, as determined from time to time by
resolution of the Board. The Board of Trust Managers has set the number of trust
managers at seven, all of whom are to be elected at the annual meeting. Each
trust manager will serve until the 2000 annual meeting and until a successor has
been elected and qualified or until the trust manager's earlier death,
resignation or removal. Each nominee has consented to being named in this Proxy
Statement and to serve if elected.
We have no reason to believe that any of the nominees will not serve if
elected, but if any of them should become unavailable to serve as a trust
manager, and if the Board of Trust Managers designates a substitute nominee, the
persons named in the accompanying Proxy will vote for the substitute nominee
designated by the Board of Trust Managers, unless a contrary instruction is
given in the Proxy.
Each shareholder is entitled to cast one vote for each common share held on
April 5, 1999. The majority vote of the shares represented in person or by proxy
at the annual meeting is required to elect each Trust Manager who has previously
been elected by the shareholders. Trust Managers that have not been previously
elected by the shareholders, such as Mr. Sandler and Ms. Moffett, must be
approved by the holders of a majority of the outstanding shares of United
Investors. Under the Bylaws, even if such Trust Managers do not receive such
vote, they will remain in office until their successors, if any, are elected.
Votes may be cast in favor or withheld. Votes that are withheld will be excluded
entirely from the vote and will have no effect. Votes that are withheld for a
particular nominee will be excluded from the vote for that nominee only.
Nominees
The persons nominated to be Trust Managers are listed below. Six of the
nominees listed below are currently Trust Managers and have been since January
1, 1989 except Mr. Brooks who has been a Trust Manager since March 1995, Mr.
Wender who has been a Trust Manager since December 1997 and Mr. Sandler who has
been a Trust Manager since August 1998, and Ms. Moffett, who has been a Trust
Manager since April 1999.
During fiscal year 1998, the Board of Trust Managers held four regularly
scheduled meetings and three special telephone meetings. No Trust Manager
attended less than 75% of the meetings held by the Board of Trust Managers and
the committees on which he served.
The following information as of April 5, 1999 is submitted concerning
the nominees named for election as trust managers:
<TABLE>
<CAPTION>
<S>
Name Age Position with United Investors Realty Trust
- ---- --- -------------------------------------------
<C> <C> <C>
Robert W. Scharar..... 50 Chairman of the Board of Trust Managers
Lewis H. Sandler...... 62 Trust Manager, President and Chief Executive Officer
William C. Brooks..... 62 Trust Manager
Jerry M. Coleman...... 63 Trust Manager
Josef C. Hermans...... 56 Trust Manager
Deborah G. Moffett.... 46 Trust Manager
Ira T. Wender......... 72 Trust Manager
</TABLE>
Robert W. Scharar - Mr. Scharar, who resides in Houston, Texas, received a
B.S.B.A. degree in business from the University of Florida in 1970, an M.B.A.
degree in 1971 from Northeastern University, a J.D. from Northeastern University
Law School in 1974, and an L.L.M. degree in Taxation from Boston University Law
School in 1979. He is a Florida-licensed certified public accountant. In 1975,
he formed First Commonwealth Associates, a Texas partnership, which engaged in
financial planning and advisory services. In 1981, the assets of First
Commonwealth Associates were acquired by UST Financial Planning Company, Inc., a
subsidiary of UST Corp. (a Massachusetts bank holding company), and Mr. Scharar
served as President of that subsidiary. In 1983, Mr. Scharar founded FCA Corp,
United Investors' external advisor (the "Investment Manager"), which acquired
the Texas and Florida offices of UST Financial Planning Company, Inc. Mr.
Scharar is the principal shareholder, President and a director of the Investment
Manager. Mr. Scharar also serves as one of four trustees of First Commonwealth
Mortgage Trust ("FCMT"), a private real estate investment trust ("REIT") which
is engaged in the business of originating and investing in real estate mortgage
loans, Ivy Realty Trust ("Ivy"), a private REIT engaged in the business of
acquiring and operating office buildings, and Holly Mortgage Trust ("Holly"), a
private mortgage REIT. The Investment Manager is also the investment manager for
FCMT, Ivy, and Holly. Since 1991, Mr. Scharar has served as President and
Portfolio Manager of Capstone New Zealand Fund and since 1997 as President and
Portfolio Manager of Capstone Japan Fund. From 1992 through 1996, he served as
director of South West Property Trust, Inc. ("SWP") and in 1997 when SWP merged
into United Dominion Realty Trust, Inc. ("UDR"), he became, and remains, a
director of UDR. Mr. Scharar has served as a Trust Manager and Chairman of the
Board of United Investors since its inception in 1989.
Lewis H. Sandler - Mr. Sandler resides in Dallas, Texas. Mr. Sandler has
served as President and Chief Executive Officer of United Investors since
January 1997 and as a Trust Manager of United Investors since August 1998. Prior
to that time, he served as Executive Vice President, Secretary, General Counsel
and a Director of Southwest Realty, Ltd., a publicly traded multi-family limited
partnership from 1983 through October 1992. From October 1992 through December
1996, Mr. Sandler served in similar roles for SWP. Mr. Sandler received a B.A.
degree from Hamilton College in 1958 and an L.L.B. from Columbia University Law
School in 1961.
William C. Brooks - Mr. Brooks is a financial consultant who resides in
Boynton Beach, Florida. Mr. Brooks is a graduate of Oberlin College. From 1980
to 1994, Mr. Brooks was Chief Financial Officer, Senior Vice President and
Treasurer of UST Corp., a Massachusetts bank holding company. Since 1994, Mr.
Brooks has served as a financial consultant. Mr. Brooks currently serves as a
Trust Manager of FCMT and Ivy. Mr. Brooks has served as a Trust Manager of
United Investors since March 3, 1995.
Jerry M. Coleman - Mr. Coleman resides in El Paso, Texas and is a
commercial real estate developer and builder. Mr. Coleman received his J.D. from
the University of Texas. Since 1975, Mr. Coleman has served as Chairman and CEO
of Capital Resource & Investment Co. and managing partner of Azar-Coleman
Properties since 1982. From 1977 to 1980, Mr. Coleman was Chairman of the Board
and Chief Executive Officer of Citizen National Bank of Austin, Texas and
remained Chairman of the Board of the successor MBank until 1988. Mr. Coleman
also serves as a Trust Manager of Ivy and of FCMT. Mr. Coleman has served as a
Trust Manager of United Investors since January 1, 1989.
Josef C. Hermans - Mr. Hermans resides in Houston, Texas and is a
consultant to the hotel industry. Mr. Hermans is a graduate of the Lausanne,
Switzerland Hotel Management School. In addition to his early experience in
European hotels, Mr. Hermans served as Vice President of Operations of Mariner
Corporation between 1976 and 1983. Since 1983, Mr. Hermans has been
self-employed as a consultant in the hospitality industry. Mr. Hermans currently
serves as a Trust Manager of FCMT and Ivy and a director of Mirror Properties
Corp. Mr. Hermans has served as a Trust Manager of United Investors since
January 1, 1989.
Deborah G. Moffett - Ms. Moffett resides in Houston, Texas. Since 1996, she
has been Senior Vice President and Chief Financial Officer of American
Habilitation Services, Inc., a healthcare company. From 1994 to 1996, she was
Chief Financial Officer and from 1991 to 1994 the Vice President of Finance of
Community Health Systems, Inc., a Houston healthcare company. Prior to 1991 she
held various positions in several financial institutions. Ms. Moffett received a
Bachelor of Science degree in Elementary Education from the University of Texas
in 1974 and a Masters of Business Administration degree from the University of
Houston in 1981
Ira T. Wender - Mr. Wender resides in New York, New York. He is a former
partner and is currently of counsel to the law firm of Patterson, Belknap, Webb
& Tyler, New York, New York, which he joined in July 1986. From 1982 through May
1997, Mr. Wender was a Director of Southwest Realty, Ltd. and its successors in
interests, SWP and UDR. From January 1994 to December 1995, Mr. Wender was
Chairman of Perry Ellis International, Inc. He is currently a director of Dime
Bancorp, Inc, REFAC Technology, Inc and Deatexis, Inc. Mr. Wender has served as
a Trust Manager of United Investors since December 1997.
The Board of Trust Managers unanimously recommends that shareholders vote FOR
the election of Trust Managers as set forth in Proposal One.
Committees of Board of Trust Managers
Executive Committee
Functions: Serves in the event action must be taken by the Board
of Trust Managers at a time when convening a meeting of the entire
Board of Trust Managers is not feasible.
May exercise all of the authority of the Board of Trust Managers in
the business and affairs of United Investors.
Members: Robert W. Scharar Lewis H. Sandler
Number of Meetings in 1998: None.
Audit Committee
Functions: Reviews proposals of United Investors' independent
auditors regarding annual audits.
Recommends the engagement or discharge of the auditors.
Reviews recommendations of the auditors concerning accounting
principles and the adequacy of internal controls and accounting
procedures and practices.
Reviews the scope of the annual audit.
Approves or disapproves each professional service or type of service
other than standard auditing services to be provided by the auditors.
Reviews and discusses the audited financial statements with the
auditors.
Members: William C. Brooks (Chairman) Jerry M. Coleman Josef C.
Hermans Ira T. Wender Deborah G. Moffett (if elected by shareholder
vote)
Number of Meetings in 1998: One.
Compensation Committee
Functions: Reviews annual salaries and bonuses granted by the
Investment Manager. Any salaries and any bonuses paid to executive
officers by United Investors are determined by the compensation
committee. In addition, the compensation committee determines the
recipients of, and time of granting of, stock options. The
compensation committee also determines the exercise price of each
option and the number of shares to be issued upon the exercise of each
stock option. The compensation committee determines vesting period of
options and the provisions of any loan stock and/or programs attendant
on the exercise of options.
Members: William C. Brooks(Chairman)
Jerry M. Coleman
Josef C. Hermans
Ira T. Wender
Number of Meetings in 1998: One.
Trust Managers Compensation
Non-employee Trust Managers receive:
o an annual fee of $10,000,
o a payment of $250 for each Board meeting attended, and
o a payment of $250 for each committee meeting attended.
<PAGE>
In addition, upon completion of United Investors' initial public offering on
March 13, 1998, Trust Managers received options to acquire 8,000 common shares
under the 1997 share incentive plan. The share options are exercisable over a
four year period commencing January 1, 1999 at an exercise price of $10 per
share. In addition, each non-employee Trust Manager is entitled to receive
options to acquire 2,000 common shares on January 1 of each year commencing
January 1, 1999. These options are exercisable one year after the grant date at
an excise price equal to the fair market value of the underlying common shares
on the date of grant.
MANAGEMENT
Executive Officers
<TABLE>
<CAPTION>
<S>
Name Age Title
- ---- --- -------
<C> <C> <C>
Lewis H. Sandler 62 Trust Manager, President and Chief Executive Officer
R. Steven Hamner 42 Vice President and Chief Financial Officer
Joseph W. Karp 47 Vice President, Asset Management
Randall D. Keith 40 Vice President and Chief Operating Officer
</TABLE>
Lewis H. Sandler - Set forth under "Proposal One - Election of Directors."
R. Steven Hamner - Mr. Hamner resides in Houston, Texas. He has been Vice
President and Chief Financial Officer since July 1, 1998. For the 10 years prior
to his employment with United Investors, he was employed by Ernst & Young LLP,
or its predecessors, most recently as Senior Audit Manager.
Joseph W. Karp - Mr. Karp resides in Houston, Texas. He currently serves as
Vice President and Director of Asset Management and Leasing for United
Investors. Prior to joining United Investors in August 1998, he was President of
Realty/REIT Advisors, Inc., a consulting practice that focused on providing real
estate and organizational enhancements to private organizations and the
governments of Poland, Hungary, Romania, Ukraine, Slovakia, Turkey and Russia.
From 1981 through 1995 he served as Vice President and Director of Operating
Properties for Weingarten Realty Investors.
Randall D. Keith - Mr. Keith resides in Houston, Texas. Mr. Keith currently
serves as Vice President and Chief Operating Officer of United Investors. Mr.
Keith has been involved with United Investors since its inception in 1988. He
served as Secretary of United Investors from 1988 to 1990 and from 1993 to 1996,
Treasurer from 1990 to 1993, Vice President from 1993 to 1996, and as Vice
President and Chief Operating Officer from 1996 to the present.
Compensation of Executive Officers
The following table summarizes the compensation paid by the Investment
Manager for the fiscal year ended December 31, 1998, to the Chief Executive
Officer and the other most highly compensated executive officer who received a
total annual salary and bonus in excess of $100,000 in fiscal year 1998. We are
not required to report compensation for the periods prior to United Investors'
IPO.
Summary Compensation Table
<TABLE>
<CAPTION>
<S>
Long-Term
Annual Compensation Compensation
------------------- ------------
Securities All
Other Annual Underlying Other
Name and Principal Position Fiscal Year Salary Bonus Compensation Options Compensation
- --------------------------- ----------- ------ ----- ------------ ------------ ------------
<C> <C> <C> <C> <C> <C> <C>
Lewis H. Sandler (1) 1998 $140,000 - - 40,000 -
Trust Manager, President and
Chief Executive Officer
R. Steven Hamner (2) 1998 $159,000 - $20,000 (3) 26,000 -
Vice President and Chief
Financial Officer
- -------------------
(1) Mr. Sandler became President and Chief Executive Officer effective January
1, 1997; he was appointed a Trust Manager on August 10, 1998.
(2) Mr. Hamner began his employment by the Investment Manager on July 1, 1998.
The amount reflected is his annualized salary.
(3) Mr. Hamner was granted 2,000 common shares of beneficial interest, valued
at $10.00 per share on July 1, 1998. Such shares are subject to partial
divestiture if Mr. Hamner's employment by United Investors or the
Investment Manager terminates prior to June 30, 2000.
</TABLE>
Option Tables
Option Grants
The following table sets forth the share option grants made in fiscal
year 1998 to each of United Investors executive officers described above in the
"Summary Compensation Table". The following table also sets forth the
hypothetical gains that would exist for the options at the end of their
five-year terms after vesting, assuming compound rates of stock appreciation of
5% and 10%. The actual future value of the options will depend on the market
value of United Investors' common shares. All option exercise prices are based
on the closing market price on the grant date.
Fiscal Year 1998 Option Grants
<TABLE>
<CAPTION>
<S>
Individual Grants
---------------------------------------------------
% of Total Potential Realizable
Number of Options Granted Value at Assumed
Shares To Employees and Annual Rates of Stock
Underlying the Investment Exercise Price Appreciation at
Options Manager in Price Per Expiration End of Five Year
Granted (2) Fiscal Year 1998 Share Date Option Term (1)
--------------- --------------------- ------------- ----------- ------------------------
<C>
Name 5% 10%
- ---- -- ---
<C> <C> <C> <C> <C> <C> <C>
Lewis H. Sandler 40,000 13% $10.00 12/31/07 $110,400 $244,400
R. Steven Hamner 26,000 9% $10.00 12/31/07 $73,140 $161,915
- -------------------
(1) "Potential Realizable Value" is disclosed in response to SEC rules, which
require such disclosure for illustrative purposes only, and is based on the
difference between the potential market value of shares issuable (based
upon assumed appreciation rates) upon exercise of such options and the
exercise price of such options. The values disclosed are not intended to
be, and should not be interpreted as, representations or projections of
future value of United Investors' shares or the share price.
(2) Share option grants vest in equal increments on each of the first four
anniversaries of their date of grant.
</TABLE>
<PAGE>
Option Exercises and Fiscal Year-End Option Values
The following table sets forth certain information concerning the value
of the unexercised options as of December 31, 1998 held by the executive
officers named above. No options were exercisable in fiscal year 1998 by any of
the executive officers.
Aggregate Option Exercises in Fiscal Year 1998 and
Fiscal 1998 Year-End Option Values
<TABLE>
<CAPTION>
<S>
Number of Shares
Underlying Unexercised Value of Unexercised
Options at Fiscal 1998 In-the-Money Options at
Year-End (1) Fiscal 1998 Year-End(2)(3)
----------------------------------- -------------------------------
<C> <C>
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<C> <C> <C> <C> <C>
Lewis H. Sandler - 40,000 - -
R. Steven Hamner - 26,000 - -
- -------------------
(1) On January 1, 1999 25% of the options became exercisable and Messers.
Sandler and Hamner exercised all of the such options.
(2) The fair market value on December 31, 1998 of the common shares underlying
the options was $6.75 per share.
(3) The Board of Trust Managers elected to forgive 80% (20% per year for four
years) of the exercise price ($10.00 per share) of those options which
became exercisable on January 1, 1999.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
United Investors' executive compensation is determined and paid by the
Investment Manager. Such compensation is subject to review and approval by the
compensation committee of the Board of Trust Managers. The functions of the
compensation committee are to review general compensation policies and to review
recommendations made by the Investment Manager regarding the salaries of
executive officers. United Investors seeks to ensure executive compensation that
will support the achievement of United Investors' financial goals while
attracting and retaining talented executives and rewarding superior performance.
In performing this function, the compensation committee reviews executive
compensation surveys and other available information and may from time to time
consult with independent compensation consultants.
In general, the Investment Manager compensates United Investors' executive
officers through base salary and long-term incentive compensation. In addition,
executive officers participate in benefit plans that are generally available to
the Investment Manager's employees.
The compensation committee's compensation policies for executive officers
follow United Investors' compensation policy for all employees whether paid by
the Investment Manager or directly by United Investors. This policy emphasizes
the principle that compensation should be commensurate with performance of the
individual and United Investors. With regard to the Chief Executive Officer, the
compensation committee considers a broad array of factors in approving his base
salary and bonus, including the salary and any bonus payments for Chief
Executive Officers at companies of similar size and in similar businesses. The
compensation committee has indicated that it expects to tie any share or share
option bonus program, at least in part, to increases in United Investors' funds
from operation per share.
The compensation committee approved the compensation recommended by the
Investment Manager for United Investors' Chief Executive Officer for fiscal year
1998 based on the foregoing factors.
Respectfully submitted,
Compensation Committee:
William C. Brooks, Chairman
Jerry M. Coleman
Josef C. Hermans
Ira T. Wender
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Trust Managers previously awarded to the Investment Manager,
certain officers, and the Trust Managers of United Investors 337,000 options to
acquire common shares at a price of $10.00 per share. See Compensation of Trust
Managers. The options become exercisable at 25% per year beginning January 1,
1999, and expire five years from the date they become eligible for exercise. As
of January 1, 1999, options to acquire 81,500 common shares were exercised,
including 2,000 each by Messrs. Brooks, Hermans, and Wender. United Investors
loaned 100% of the purchase price, of which 20% will be forgiven each year for
four years beginning January 1, 2000, conditioned upon continued employment by
United Investors or the Investment Manager.
Robert W. Scharar is Chairman of United Investors and of the Investment
Manager. Although he draws no salary from United Investors, he owns 52.7% of the
Investment Manager's voting stock and accordingly benefits from the advisory fee
paid by United Investors to the Investment Manager and from any stock grants or
options granted to the Investment Manager.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
United Investors has entered into an agreement (the "Advisory Agreement") with
the Investment Manager. Robert W. Scharar, United Investors' Chairman, owns
52.7% of the Investment Manger. The Advisory Agreement obligates the Investment
Manager to use its best efforts to administer the day-to-day operations of
United Investors and to implement the directives of the Trust Managers with
respect to property operations, maintenance, rehabilitation, acquisitions,
financings, refinancings, and dispositions.
The Investment Manager is paid a fee based on an amount equivalent to 6.8% of
earnings before interest, taxes, depreciation, amortization, and advisory fees.
In addition, United Investors reimburses the Investment Manager for the
salaries, benefits, and occupancy costs of employees who perform property
management, leasing, property level accounting, and other operational duties for
United Investors.
During 1998, United Investors paid the Investment Manager fees of $794,043, and
reimbursed the Investment Manger an additional $299,385 for salaries, benefits,
and occupancy costs. United Investors estimates that the Investment Manager will
be paid fees of approximately $1,400,000 and will be reimbursed approximately
$800,000 in 1999.
During 1998, United Investors granted options to purchase 337,000 common shares
to certain officers, employees, Trust Managers, and the Investment Manager. The
recipients become eligible to exercise 25% of their options each January 1,
beginning in 1999. The exercise price is $10.00 per share, 100% of which may be
borrowed from United Investors. Loans are repayable over four years and require
annual payments of 25% of the initial principal and interest calculated at the
Applicable Federal Rate published by the IRS. The Applicable Federal Rate as of
January 1, 1999 was 4.64%. Following is a table indicating related persons and
entities that had loans payable to United Investors for the purchase of shares:
<PAGE>
<TABLE>
<CAPTION>
<S>
Highest Amount Owed During 1998 Amount Owed at March 31, 1999
------------------------------- -----------------------------
Name <C> <C>
- ----
<C>
Robert W. Scharar (1) $ 100,000 $ 100,000
FCA Corp (1) $ 252,500 $ 252,500
Lewis H. Sandler (2) $ 100,000 $ 100,000
Randall D. Keith (3) $ 80,000 $ 80,000
R. Steven Hamner (3) $ 65,000 $ 65,000
(1) Mr. Scharar is the Chairman of the Board of Trust Managers of United
Investors and the principal shareholder of FCA Corp, the Investment
Manager.
(2) Mr. Sandler is a Trust Manager and an executive officer.
(3) Messrs. Keith and Hamner are executive officers.
</TABLE>
With respect to options that became exercisable on January 1, 1999, the Board of
Trust Managers elected to forgive 80% of the borrowed amount. The loan will be
forgiven at the rate of 20% per year, conditioned upon continued employment by
United Investors or the Investment Manager.
During 1998, United Investors borrowed $1,400,000 from FCMT, whose external
adviser is the Investment Manager. The borrowing was repaid, including interest,
which had accrued at 12% per annum, with proceeds from the IPO in March 1998.
United Investors believes the loan from FCMT was made on terms as favorable as
could have been obtained from an independent third party.
<PAGE>
PERFORMANCE GRAPH
SEC rules require the presentation of a line graph comparing, over a
period of five years (or such shorter period that a class of securities has been
registered under Section 12 of the Securities Exchange Act of 1934), the
cumulative total stockholder return to a performance indicator of a broad equity
market index and either a nationally recognized industry index or a peer group
index constructed by United Investors.
The graph below compares cumulative total return on United Investors
common shares to the cumulative total return of the NASDAQ Market Index and the
NAREIT Equity REIT Index from March 13, 1998, when United Investors' common
shares became publicly traded, through December 31, 1998. The comparison assumes
$100 was invested on March 13, 1998 in United Investors' common shares and in
each of the aforementioned indices and assumes reinvestment of dividends.
COMPARISON 5-YEAR CUMULATIVE TOTAL RETURN
AMONG UNITED INVESTORS REALTY TRUST,
NASDAQ MARKET INDEX AND NAREIT EQUITY INDEX
<TABLE>
<CAPTION>
<S>
03/13/98 03/31/98 04/30/98 05/29/98 06/30/98 07/31/98 08/31/98 09/30/98 10/30/98 11/30/98 12/31/98
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UIRT $100 $98 $99 $99 $95 $83 $81 $82 $78 $76 $74
Nasdaq Market
Index $100 $104 $106 $100 $107 $106 $85 $97 $101 $111 $125
NAREIT Equity
Index $100 $102 $98 $98 $97 $91 $82 $87 $85 $87 $84
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the common stock as of March 15, 1999 by (1) each person known by
United Investors to own beneficially more than 5% of its outstanding common
shares, (2) each current Trust Manager of United Investors, (3) each current
executive officer named in the executive compensation table, and (4) all current
Trust Managers and current named executive officers of United Investors as a
group. Unless otherwise indicated, the shares listed in the table are owned
directly by the individual or entity, or by both the individual and the
individual's spouse. The individual or entity has sole voting and investment
power as to shares shown or, in the case of the individual, such power is shared
with the individual's spouse.
<TABLE>
<CAPTION>
<S>
Amount and Nature of Percent of
Beneficial Ownership Class
---------------------- ----------------
<C> <C>
Over 5% Shareholders
Heartland Advisors
790 North Milwaukee Street
Milwaukee, Wisconsin 53202 493,900 5.2%
Other Directors and Executive Officers
Robert W. Scharar (1) 100,052 1.0
Lewis H. Sandler (4) 82,500 *
Ira T. Wender 19,000 *
R. Steven Hamner 14,000 *
William C. Brooks 12,600 *
Jerry M. Coleman (2) 11,169 *
Josef C. Hermans (3) 7,626 *
All trust managers and executive officers as a 270,521 2.8%
group (8 persons) (1)(2)(3)(4)
- ---------------------------
* Less than one percent.
(1) The amounts shown for Mr. Scharar include 31,000 shares owned by the
Investment Manager, as to which he is deemed to share beneficial ownership
due to his ownership of a majority of the common stock of the Investment
Manager, and 5,838 shares owned by trusts for the benefit of unrelated
individuals for which Mr. Scharar exercises voting power, but has no
beneficial interest.
(2) The amount shown for Mr. Coleman includes 2,000 shares that may be acquired
under options that are currently exercisable at $10.00 per share, and 7,569
shares owned by Azar-Coleman Properties as to which Mr. Coleman is deemed
to share beneficial ownership due to his ownership of a majority of the
interests in Azar-Coleman Properties.
(3) The amount shown for Mr. Wender includes 5,000 shares owned by his wife, as
to which shares Mr. Wender disclaims beneficial ownership.
(4) The amount shown for Mr. Sandler includes 37,000 shares owned by trusts for
the benefit of Mr. Sandler's children, as to which shares Mr. Sandler
disclaims beneficial ownership.
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 require United
Investors' officers and Trust Managers, and persons who own more than 10% of a
registered class of United Investors' equity securities, to file reports of
ownership and changes in ownership of such securities with the SEC. Officers,
directors and greater than 10% beneficial owners are required by applicable
regulations to furnish United Investors' with copies of all Section 16(a) forms
they file.
Based solely upon a review of the reports to United Investors with respect
to fiscal year 1998, no person failed to disclose on a timely basis reports
required by Section 16(a).
PROPOSAL TWO - RATIFICATION OF INDEPENDENT AUDITORS
The shareholders are asked to ratify the appointment by the Board of Trust
Managers of Ernst & Young LLP as independent auditors for the fiscal year ending
December 31, 1999. The selection was based upon the recommendation of the audit
committee.
Representatives of Ernst & Young LLP will be available at the annual
meeting to respond to appropriate questions from shareholders and to make a
statement if they desire.
Adoption of Proposal Two requires approval by the holders of majority of
common shares of beneficial interest present in person or represented by proxy,
and entitled to vote at the annual meeting. Abstentions may be specified on this
proposal to ratify the selection of the independent auditors. Abstentions will
be considered present and entitled to vote at the annual meeting but will not be
counted as votes cast in the affirmative. Abstentions will have the effect of a
negative vote for this proposal to ratify the selection of the independent
auditors.
The Board of Trust Managers unanimously recommends that shareholders vote
FOR the ratification of the appointment of Ernst & Young LLP as independent
auditors for fiscal 1999.
SHAREHOLDER PROPOSALS
A proper proposal submitted by shareholder for presentation of United
Investors' 2000 annual meeting and received by United Investors' corporate
secretary at United Investors' principal executive office no later than December
10, 1999 will be included in the Proxy Statement and Proxy related to the 2000
annual meeting.
OTHER BUSINESS
United Investors' management knows of no other business that will be
presented at the annual meeting. If other matters requiring a vote of the
shareholders properly comes before the annual meeting, the persons authorized
under the Proxies will vote and act according to their best judgment.
EXPENSES
The expense of preparing, printing, and mailing proxy materials to United
Investors' shareholders will be borne by United Investors. In addition to the
solicitation of Proxies by use of the mail, Proxies may be solicited personally
or by telephone or facsimile by directors, officers and regularly engaged
employees of United Investors, none of whom will receive additional compensation
therefor. Brokerage houses, nominees and other similar record holders will be
requested to forward proxy materials to the beneficial owners of the common
shares and will be reimbursed by United Investors upon request for their
reasonable out-of-pocket expenses.
ANNUAL REPORT
United Investors has provided without charge a copy of the Annual Report to
Shareholders for fiscal year 1998 to each person being solicited by this Proxy
Statement. Upon the written request by any person being solicited by this Proxy
Statement, United Investors will provide without charge a copy of the Annual
Report on Form 10-K as filed with the Securities and Exchange Commission
(excluding exhibits, for which a reasonable charge shall be imposed). All such
requests should be directed to R. Steven Hamner, Vice President-Chief Financial
Officer, United Investors Realty Trust, 5847 San Felipe, Suite 850, Houston,
Texas 77057.
<PAGE>
UNITED INVESTORS REALTY TRUST
ANNUAL MEETING OF SHAREHOLDERS
MAY 17, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUST MANAGERS
The shareholder of United Investors Realty Trust, a Texas real estate investment
trust, whose name and signature appear on the reverse side of this card, having
received the notice of the annual meeting of shareholders and the related proxy
statement for United's annual meeting of shareholders to be held at the
Company's corporate offices, 5847 San Felipe, Suite 850, Houston, Texas, on
Monday, May 17, 1999, at 9:00 a.m., Houston time, hereby appoints Robert W.
Scharar and Lewis H. Sandler, or each of them, the proxies of the shareholder,
each with full power of substitution, to vote at the annual meeting, and at any
adjournments of the annual meeting, all common shares, of United stock that the
shareholder is entitled to vote, in the manner shown on the reverse side of this
card.
THIS PROXY IS SOLICTED BY THE BOARD OF TRUST MANAGERS AND THE COMMON SHARES
REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE SHAREHOLDER'S DIRECTIONS
ON THE REVERSE SIDE OF THE CARD. IF NO DIRECTION IS GIVEN, THEN THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND IN THE
PROXIES' DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF, SUBJECT TO LIMITATIONS SET FORTH IN
APPICABLE REGULATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
Please mark, sign, date, and return this proxy card promptly using the enclosed
envelope. If you plan to attend the meeting, please so indicate in the space
provided on the reverse side.
SEE REVERSE SIDE
<PAGE>
UNITED INVESTORS REALTY TRUST
PLEASE MARK YOUR VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY: [ X]. THIS
PROXY, WHEN PROPERLY EXECUTED AND DELIVERED, WILL BE VOTED AS SPECIFIED BELOW.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THE BOARD OF TRUST MANAGER RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Trust Managers.
[_] FOR all nominees listed below [_] Withhold Authority to vote for all
(except as marked to the nominees listed below
contrary)
Robert W. Scharar, Lewis H. Sandler, William C. Brooks, Jerry M. Coleman, Josef
C. Hermans, Deborah G. Moffett and Ira T. Wender.
INSTRUCTION: To withhold authority to vote for any individual nominee, list the
individual's name below.
- --------------------------------------------------------------------------------
2. Ratification of Ernst & Young LLP as United's independent auditors.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon all other
matters which may properly come before the annual meeting or any
adjournments of the annual meeting.
The undersigned hereby revokes any proxy previously given with respect to
United's common shares and hereby ratifies and confirms all that the proxies,
then substitutes or any of them may lawfully do by virtue hereof.
Signature _______________________________________________ Date _____________
Signature _______________________________________________ Date _____________
Note: Please sign exactly as name(s) appear(s) on this card. When shares are
held jointly, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. When
executed by a corporation or partnership, please sign in full corporate or
partnership name by a duly authorized officer or partner, giving title. Please
sign, date and mail this proxy promptly whether or not you expect to attend the
meeting. You may nevertheless vote in person if you do attend.
SEE REVERSE SIDE
