SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 Section 240.14a-11(c) or
Section 240.14a-12
CHELSEA GCA REALTY, INC.
(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 previously paid 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>
CHELSEA GCA REALTY, INC.
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1999
-------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Chelsea
GCA Realty, Inc. (the "Company") will be held at The Eagle Rock Club, 4 Becker
Farm Road, Roseland, New Jersey, on June 25, 1999 at 10:00 in the morning for
the following purposes:
1. To elect three Directors.
2. To approve the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999.
3. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Stockholders of record at the close of business on April 16, 1999, shall be
entitled to notice of, and to vote at, the meeting.
By order of the Board of Directors
Denise M. Elmer
SECRETARY
Dated: April 30, 1999
Roseland, New Jersey
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY
IN THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES ARE REPRESENTED
AT THE MEETING.
<PAGE>
CHELSEA GCA REALTY, INC.
103 EISENHOWER PARKWAY
ROSELAND, NEW JERSEY 07068
-----------------------------
PROXY STATEMENT
-----------------------------
The accompanying Proxy is solicited by the Board of Directors of Chelsea
GCA Realty, Inc., a Maryland corporation (the "Company"), for use at the Annual
Meeting of Stockholders (the "Meeting") to be held on June 25, 1999, at 10:00 in
the morning, or any adjournment thereof, at which stockholders of record at the
close of business on April 16, 1999 shall be entitled to vote. The cost of
solicitation of proxies will be borne by the Company. The Company may use the
services of its Directors, officers, employees and others to solicit proxies,
personally or by telephone; arrangements may also be made with brokerage houses
and other custodians, nominees, fiduciaries and stockholders of record to
forward solicitation material to the beneficial owners of stock held of record
by such persons. The Company may reimburse such solicitors for reasonable
out-of-pocket expenses incurred by them in soliciting, but no compensation will
be paid for their services.
Each proxy executed and returned by a stockholder may be revoked at any
time before it is voted by timely submission of written notice of revocation or
by submission of a duly executed proxy bearing a later date (in either case
directed to the Secretary of the Company) or, if a stockholder is present at the
Meeting, he may elect to revoke his proxy and vote his shares personally.
There is being mailed herewith to each stockholder of record the Company's
Annual Report to Stockholders for the fiscal year ended December 31, 1998. It is
intended that this Proxy Statement and form of Proxy will first be sent or given
to stockholders on or about May 12, 1999.
On April 16, 1999, the Company had outstanding and entitled to vote with
respect to all matters to be acted upon at the meeting 15,609,310 shares of
Common Stock. Each holder of Common Stock is entitled to one vote for each share
of stock held by such holder. The presence of holders representing a majority of
all the votes entitled to be cast at the meeting will constitute a quorum at the
meeting. In accordance with Maryland law, abstentions, but not broker non-
votes, are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. Each item on the agenda must receive the
affirmative vote of a majority of the shares voted at the meeting in order to
pass. Abstentions and broker non-votes are not counted in determining the votes
cast with respect to any of the matters submitted to a vote of stockholders.
It is expected that the following business will be considered at the
meeting and action taken thereon:
1. ELECTION OF DIRECTORS
Pursuant to the By-Laws of the Company, the number of Directors of the
Company has been set at seven members who are divided into three classes serving
staggered three-year terms of office. It is proposed to elect three Class III
Directors at this Meeting to hold office for a three-year term until the 2002
Annual Meeting of Stockholders and until their successors are duly elected and
qualify. Class I and Class II Directors will be elected at the Annual Meetings
to be held in 2000 and 2001, respectively, for three-year terms, and until their
respective successors are duly elected and qualify. It is intended that the
accompanying form of Proxy will be voted for the nominees set forth below, each
of whom is presently a Director of the Company. If some unexpected occurrence
should make necessary, in the Board of Directors' judgment, the substitution of
some other person or persons for any of the nominees, shares will be voted for
such other person or persons as the Board of Directors may select. The Board of
Directors is not aware that any nominee may be unable or unwilling to serve as a
Director. The following table sets forth certain information with respect to the
nominees and also with respect to each Director whose term of office will
continue after this Meeting.
NOMINEES FOR ELECTION
Year
Term
of Served as
Principal Occupation and Office a Director
Name Age Positions Held Will Expire Since
- ----- --- ------------------------ ----------- ----------
David C. Bloom 42 Chairman of the Board and Chief 2002 1993
Executive Officer of the
Company since 1993; founder and
principal of The Chelsea Group,
a predecessor of the Company
("Chelsea") and President of
Chelsea from 1985 until
formation of the Company.
Barry M. Ginsburg 61 Vice Chairman of the Company 2002 1993
since 1993; principal in
Ginsburg Craig Associates (a
predecessor of the Company) and
its predecessor companies from
1986 to 1993; employed by Dansk
International Designs, Ltd. from
1966 through 1985 and corporate
Chief Operating Officer and
Director from 1980 to 1985.
Philip D. Kaltenbacher 61 Chairman of the Board of 2002 1993
Directors and Chief Executive
Officer of Seton Company, a
manufacturer of leather; health
care products; industrial foams,
films, tapes, adhesives and
laminates and chemicals since
1974; Commissioner of The Port
Authority of New York and New
Jersey from September 1985
through February 1993, and
Chairman from September 1985
through April 1990.
<PAGE>
DIRECTORS WHOSE TERM OF OFFICE WILL
CONTINUE AFTER MEETING
Year
Term
of Office Served as
Principal Occupation and Will a Director
Name Age Positions Held Expire Since
- ----- --- ------------------------ --------- --------
William D. Bloom 36 Executive Vice President of the 2000 1995
Company since 1993; employed by
Chelsea since 1986.
Brendan T. Byrne 75 Senior partner in the law firm 2001 1993
of Carella, Byrne, Bain,
Gilfillan, Cecchi, Stewart &
Olstein since 1982; Governor of
New Jersey from 1974 to 1982;
former prosecutor Essex County
(New Jersey), President of the
Public Utility Commission,
Assignment Judge of the New
Jersey Superior Court, Vice
President of the National
District Attorneys Association,
Trustee of Princeton University,
Chairman of the Princeton
University Council on New Jersey
Affairs, Chairman of the United
States Marshals Foundation,
Commissioner of the New Jersey
Sports and Exposition Authority
and Chairman of the National
Commission on Criminal Justice
Standards and Goals (1977);
serves on a Board of the
National Judicial College.
Robert Frommer 64 Principal of Robert Frommer 2000 1993
Associates, a real estate
consulting firm, since 1991;
President of PG&E Properties,
Inc. from 1993 to 1998;
President of The Harlan Company
from 1987 to 1991; Executive
Vice President of Urban
Investment & Development
Company, a wholly-owned
subsidiary of Aetna Life &
Casualty Company, from 1972 to
1984; Vice President for
Institutional Facilities for New
York University from 1984 to 1987.
Reuben S. Leibowitz 51 Managing Director of E.M. 2000 1993
Warburg, Pincus & Co., LLC
("Warburg, Pincus"), a venture
banking and investment firm;
associated with Warburg, Pincus
since 1984.
Mr. Leibowitz is a director of Grubb & Ellis Company and Lennar
Corporation. Mr. Byrne is a director of Mack-Cali, Inc. David Bloom and William
Bloom are brothers.
The Company's Board of Directors has several committees, consisting of an
Audit Committee, a Compensation Committee and an Executive Committee. The
functions of the Audit Committee (which consists of Messrs. Byrne, Frommer and
Kaltenbacher) include recommending to the Board of Directors the engaging and
discharging of the independent auditors, reviewing with the independent auditors
the plan and results of the auditing engagement, reviewing the independence of
the independent auditors, including the range of audit and non-audit fees, and
reviewing the adequacy of the Company's system of internal accounting controls.
The functions of the Compensation Committee (which consists of Messrs. Byrne,
Frommer and Leibowitz) include determining compensation for the Company's
executive officers, and administering the Company's 1993 Stock Option Plan (the
"Option Plan") and the Long Term Incentive Plan (the "Incentive Plan"). The
Executive Committee consists of Messrs. D. Bloom, Ginsburg and Leibowitz.
In the fiscal year ended December 31, 1998, there were four meetings of the
Audit Committee, one meeting of the Compensation Committee and four meetings of
the Board of Directors. Each Director of the Company attended in excess of 75%
of the total number of meetings of the Board of Directors and committees on
which he served.
COMPENSATION OF DIRECTORS
The Company pays its directors who are not principals of or representatives
of principals of the Company's predecessors an annual fee of $15,000 and a per
meeting fee of $1,000 (for each directors' meeting attended), and each such
director is reimbursed for expenses incurred in attending meetings. In addition,
three of such directors have received 30,000 stock options and the remaining
such director 15,000 stock options, each at an exercise price equal to the
closing price on the day the options were granted, with each such set of options
vesting over five years.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company to its Chief Executive Officer and to each of the four most
highly compensated executive officers whose salary and bonus for 1998 exceeded
$100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
---------------------------------------- ------------
Other
Annual Stock All Other
Salary Bonus Compensation Options Compensation(1)
Name and Principal Position Year $ $ $ # $
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David C. Bloom 1998 325,000 250,250 - 50,000 10,000
Chief Executive Officer 1997 280,000 165,200 - - 9,500
1996 232,313 139,388 - - 9,500
Leslie T. Chao 1998 250,000 192,500 - 75,000 10,000
President 1997 189,271 131,543 - - 9,374
1996 180,688 108,413 - - 9,231
Thomas J. Davis 1998 225,000 173,250 - 25,000 10,000
Chief Operating Officer 1997 177,225 120,513 - - 9,500
1996 170,000 100,000 - - 9,500
William D. Bloom 1998 200,000 154,000 - 25,000 7,965
Executive Vice President 1997 177,178 116,000 - - 7,079
1996 170,363 96,468 - - 7,317
Bruce Zalaznick 1998 183,306 141,146 - - 10,000
Executive Vice President 1997 175,833 116,929 - - 9,500
1996 170,000 76,932 - 20,000 9,500
(1) Consists of employee contributions to the Company's 401(k) Plan as a tax
deferral.
</TABLE>
OPTIONS GRANTED
The table below shows information regarding the grant of stock options
made to the executive officers named in the Summary Compensation Table during
the fiscal year ended December 31, 1998. The amounts shown for each officer as
potential realizable values are based on arbitrarily assumed annualized rates of
stock price appreciation over the term of the options. Actual gains, if any, on
stock option exercises are dependent on the future performance of the Company's
Common Stock. There is no assurance that such potential realizable values will
be achieved.
<TABLE>
<CAPTION>
OPTION GRANTS IN THE LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term (3)
---------------------------------------------------------------------- ---------------------------
% Exercise
Number Grants Price 5% Stock 10%
Granted to All Per Expiration Price Stock
Name (1) Employees Share ($)(2) Date ($) Price ($)
- ---- --------- --------- ------------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
David C. Bloom 50,000 3.7% 37.00 3/10/08 1,163,455 2,948,424
Leslie T. Chao 75,000 5.5% 37.00 3/10/08 1,745,183 4,422,635
William D. Bloom 25,000 1.8% 37.00 3/10/08 581,728 1,474,212
Thomas J. Davis 25,000 1.8% 37.00 3/10/08 581,728 1,474,212
Bruce Zalaznick -- -- -- -- -- --
- -------------------
(1) These options may not be exercised prior to one year from the date of
grant and may be exercised 20% per year thereafter, subject to
acceleration upon the occurrence of certain events.
(2) The exercise price was established at the market price on the date of
grant, March 10, 1998.
(3) The assumed annual rate of appreciation of five and ten percent would
result in the price of the Company's stock increasing to $60.27 and
$95.97 per share, respectively.
</TABLE>
<PAGE>
The table below sets forth information for the executive officers named in
the Summary Compensation Table concerning option exercises during 1998 and
outstanding options at December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION/SAR VALUES
Number of Securties
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options/SARs in-the-Money
on Realized at December 31, Options/SARs
Name Exercise(#) ($) 1998 (#) December 31, 1998($)(1)
- ------------- ------------ ----------- -------------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
David C. Bloom 4,278 52,406 82,888 75,000 1,015,378 306,250
Leslie T. Chao - - 48,000 87,000 588,000 147,000
William D. Bloom 4,278 52,406 31,444 35,000 385,189 122,500
Thomas J. Davis - - 30,000 45,000 183,750 122,500
Bruce Zalaznick 550 6,738 29,650 18,000 319,213 154,500
(1) Assumes, for all unexercised in-the-money options, the difference between
fair market value ($35.625 per share) at December 31, 1998 and the exercise
price of the options ranging from $23.375 to $29.50 per share.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Brendan T. Byrne, Robert Frommer and Reuben S. Leibowitz are members of the
Compensation Committee. None of the executive officers of the Company has served
on the Board of Directors or compensation committee of any other entity that has
had any of such entity's officers serve either on the Company's Board of
Directors or Compensation Committee. During 1997, Mr. Frommer received $240,318
in fees and expenses for consulting services performed in connection with the
Company's acquisition of Waikele Factory Outlet Stores on March 31, 1997. In
addition, Mr. Frommer and the Company entered into a consulting agreement
effective August 1, 1997. See "Certain Relationships and Transactions."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee currently consists of Brendan T. Byrne, Robert
Frommer and Reuben S. Leibowitz. The Compensation Committee is responsible for
determining the level of compensation paid to the Chief Executive Officer,
approving the level of compensation paid to the Company's other executive
officers, determining awards under, and administering, the Option Plan and
Incentive Plan and reviewing and establishing any and all other executive
compensation plans adopted from time to time by the Company. The Company's
philosophy for compensating executive officers is designed to attract, retain,
motivate and reward key executives in the Company's highly competitive industry.
The Company's compensation program for 1998 consisted of salary and bonuses
designed to motivate individuals to enhance the long-term value of the Company's
stock.
The amount of compensation to be paid to an executive officer is generally
based upon the Compensation Committee's subjective analyses of each individual's
performance, contributions to the Company and responsibilities to be undertaken
on behalf of the Company. The Committee did not use any specific qualitative or
quantitative measures or factors in assessing individual performance. In 1999,
the Compensation Committee increased the salary of each of its executive
officers based on the performance of the Company in 1998 and upon its knowledge
of salaries paid by competitors of the Company as disclosed in public documents.
The Company has established a bonus plan for the Senior Executives which
has been approved by the Compensation Committee and provides for bonuses of up
to 50% in 1995, 75% in 1996 and 100% in 1997 and beyond of the Senior
Executive's base salary. The award of any bonus compensation, however, is
dependent on meeting or exceeding the Company's internal funds from operations
forecast. Bonus compensation levels above the forecast will be established at
the discretion of the Compensation Committee.
Stock-based compensation is also an important element of the Company's
compensation program. The Option Plan was adopted and approved by the Board of
Directors on October 20, 1993 and amended November 30, 1995 to allow the Company
to grant options to purchase shares of the Company. The Compensation Committee
determines in its sole discretion, subject to the terms and conditions of the
Option Plan, the size of a particular award based upon its subjective assessment
of the individual's performance, responsibility and functions and how this
performance may have contributed to the Company's performance. The Compensation
Committee believes awards pursuant to the Option Plan align the interests of
management with those of the Company's stockholders by emphasizing long-term
stock ownership and increases in stockholder value. Management will be benefited
under such options only if the other shareholders of the Company also benefit.
The purpose of the Option Plan is to encourage executives and others to acquire
a larger proprietary interest in the Company, thereby further stimulating their
active interest in the development and financial success of the Company. All
options granted under the Option Plan have been granted at the fair market value
of the Company's Common Stock on the date of grant. The number of options that
the Compensation Committee grants to executive officers is based on individual
performance and level of responsibility. Since stock options are tied to the
future performance of the Company's Common Stock, they will provide value only
if the price of the Company's Common Stock exceeds the exercise price of the
options.
Certain of the Company's executive officers also participate in the
Incentive Plan, which is designed to provide a strong incentive to participants
to improve the Company's performance. In addition, the Incentive Plan requires
the continued employment of participants over five years in order to receive the
full benefits under the Incentive Plan. No units were awarded in 1998 under the
Incentive Plan.
The Chief Executive Officer's compensation for 1998 was based on the same
performance and other criteria as summarized in the preceding paragraphs
relative to all executive officers.
The Internal Revenue Code of 1986, as amended, was amended in 1993 with
respect to the ability of publicly-held corporations such as the Company to
deduct compensation in excess of $1,000,000 per individual, other than
performance-based compensation. The Compensation Committee continues to evaluate
maximizing the deductibility of executive compensation, while retaining the
discretion it deems necessary to compensate executive officers. The Incentive
Plan is designed to meet the requirements of Section 162(m) of the Internal
Revenue Code.
THE COMPENSATION COMMITTEE
Brendan T. Byrne
Robert Frommer
Reuben S. Leibowitz
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph sets forth for the period December 31, 1993,
through December 31, 1998, a comparison of the percentage change in the
cumulative total stockholder return on the Company's Common Stock compared to
the index of equity real estate investment trusts prepared by the National
Association of Real Estate Investment Trusts ("NAREIT"), the NAREIT Equity REIT
Total Return Index and the index of the Company and the two other publicly
traded factory outlet REITs ("Outlet REIT Peer Group"), prepared by SNL
Securities. The Outlet REIT Peer Group consists of Prime Retail, Inc. and Tanger
Factory Outlet Centers, Inc.
The graph assumes that the value of the investment in each of the Company's
Common Stock and the indices was $100 at the beginning of the period. The graph
further assumes the reinvestment of dividends.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
<PAGE>
<TABLE>
<CAPTION>
CHELSEA GCA REALTY, INC.
TOTAL RETURN PERFORMANCE
Period Ending
-------------------------------------------------------------------------------------
Index 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chelsea GCA Realty, Inc. 100.00 107.58 127.84 159.21 187.91 189.01
NAREIT All Equity REIT INDEX 100.00 103.70 119.48 164.04 198.75 165.71
Outlet REIT Peer Group 100.00 84.28 90.12 106.45 129.73 102.66
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 31, 1999, to the knowledge of the Company, the following is a
schedule of all persons who beneficially owned more than 5% of the outstanding
stock of the Company:
Number of Shares Percent
Beneficially of
Name and Address Owned Stock
- ----------------- ---------------- --------
Alliance Capital Management L.P. 1,830,500 11.7%
1290 Avenue of the Americas
New York, New York 10104
Simon Property Group, L.P. 1,408,450 9.0%
115 West Washington Street
Indianapolis, IN 46204
LaSalle Advisors Capital Management, Inc. 1,365,717 8.7%
ABKB/LaSalle Securities Limited Partnership
200 East Randolph Drive
Chicago, IL 60603
David C. Bloom 1,003,091 6.0%
c/o Chelsea GCA Realty, Inc.
103 Eisenhower Parkway
Roseland, NJ 07068(1)
(1) Includes limited partnership interests in the Partnership (the "Units")
convertible into shares of Common Stock of the Company and vested options
to purchase shares of Common Stock under the Company's Option Plan.
The following table sets forth information concerning the security
ownership of directors and executive officers as of March 31, 1999.
Number of Shares Percent
Beneficially of
Name Owned(1) Stock
- ----- ---------------- --------
David C. Bloom(2) 1,003,091 6.0%
William D. Bloom (2) 445,235 2.8%
Brendan T. Byrne (2) 15,000 *
Leslie T. Chao(2) 230,695 1.5%
Thomas J. Davis(2) 42,500 *
Robert Frommer(2) 22,985 *
Barry M. Ginsburg(3) 527,218 3.3%
Philip D. Kaltenbacher(2)(4) 390,619 2.4%
Reuben S. Leibowitz(5) 20,600 *
Bruce Zalaznick(2) 32,000 *
Directors and Executive 2,913,871 15.8%
officers as a group(6)
(17 persons)
- --------------------
* Less than 1%
(1) Includes Units which are convertible into shares of Common Stock of the
Company.
(2) Includes vested options to purchase shares of Common Stock granted under
the 1993 Stock Option Plan.
(3) Includes Units beneficially owned by Mr. Ginsburg's family and trusts
for the benefit of Mr. Ginsburg's family.
(4) Includes 185,931 Units owned by Mr. Kaltenbacher as trustee for his
daughters and 1,000 Units owned by Mr. Kaltenbacher's wife, as to which
Mr. Kaltenbacher disclaims beneficial ownership.
(5) Includes 2,500 shares of Common Stock owned by the wife of Mr. Leibowitz,
2,000 shares of Common Stock owned by a foundation and 600 shares of
Common Stock owned by the children of Mr. Leibowitz. Mr. Leibowitz
disclaims beneficial ownership of all these shares.
(6) Includes Units convertible into 2,320,858 shares of Common Stock and
vested options to purchase 528,432 shares of Common Stock granted under
the Option Plan.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
America Direct Outlets, a company formerly 50%-owned by Philip D.
Kaltenbacher and presently 100%-owned by a trust for the benefit of the wife of
Edward Bloom, a brother of David and William Bloom, rents a total of 56,013
square feet of GLA (1.1% of the Company's total GLA) from the Company in twelve
centers. The gross annual rental (including expense reimbursements) for such
space was $1,761,000 in 1998. Management considers these rentals to be at fair
market value.
During 1997, Robert Frommer received $240,318 in fees and expenses for
consulting services performed in connection with the Company's acquisition of
Waikele Factory Outlet Stores on March 31, 1997. Effective August 1, 1997, Mr.
Frommer and the Company entered into a Consulting Agreement pursuant to which
Mr. Frommer agreed to perform services for the Company in connection with the
development and operation of manufacturers outlet centers in Japan and Hawaii.
The agreement provides for a payment of $10,000 per month and expires December
31, 2001, unless terminated effective December 31, 1999 on at least six months
prior notice. If the Company elects to terminate the agreement, it shall pay to
Mr. Frommer the amount of $40,000. In addition, during the agreement and for
four years after the agreement ends, Mr. Frommer will be entitled to a fee of 1%
of the development costs, up to a maximum amount of $500,000 per project, on all
projects in which he was involved in Japan or Hawaii. During 1997 and 1998, Mr.
Frommer received $54,377 and $182,794, respectively, for fees and expenses under
this agreement.
In March 1997, the Company loaned Thomas J. Davis the amount of $115,000,
which is due in five years, together with interest at the rate of 7.5% per
annum.
All transactions in which a director is an interested party, including any
interest in a lessee of space from the Company, require the approval of a
majority of the disinterested directors.
David C. Bloom guarantees certain of the Company's obligations under a
lease for one of the Company's properties. The Company has indemnified him from
and against any liability which he may incur pursuant to this guaranty.
The Company has entered into a registration rights agreement with all
recipients of Units (the "Rightholders") to enable the Rightholders to sell or
distribute shares of Common Stock owned by or issuable to any of them upon
exchange of Units or any other securities with respect to such Common Stock
issued or issuable to any of them through any registered offering of its
securities that the Company has determined to undertake. In addition, the
Rightholders have the right to demand that the Company prepare and file from
time to time a registration statement with respect to the sale or distribution
of their common stock. In such event, the expenses of such registration will be
borne by the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company believes that during 1998 all of its officers, directors and
holders of more than 10% of its Common Stock complied with all filing
requirements under Section 16(a) of the Securities Exchange Act of 1934. In
making this disclosure, the Company has relied solely on written representations
of its directors, officers and more than 10% holders and on copies of reports
that have been filed with the Securities and Exchange Commission.
2. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending December 31,
1999. A representative of Ernst & Young LLP is expected to be present at the
meeting with the opportunity to make a statement if such representative so
desires and to respond to appropriate questions.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS.
3. OTHER MATTERS
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 2000
Annual Meeting of Stockholders must be received by the Company on or prior to
December 31, 1999 to be eligible for inclusion in the Company's Proxy Statement
and form of Proxy to be used in connection with such meeting.
OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the Meeting is
that hereinabove set forth. If any other matter or matters are properly brought
before the meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of Proxy to vote the Proxy on such
matters in accordance with their judgment.
Denise M. Elmer
SECRETARY
Dated: April 30, 1999
<PAGE>
PROXY
CHELSEA GCA REALTY, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS - JUNE 25, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of CHELSEA GCA REALTY, INC., a Maryland
corporation, hereby appoints David C. Bloom, Leslie T. Chao, Michael J. Clarke
and Denise M. Elmer, and each of them the proxies of the undersigned with full
power of substitution to vote at the Annual Meeting of Stockholders of the
Company to be held at 10:00 a.m. on June 25, 1999, and at any adjournment or
adjournments thereof (the "Meeting"), with all the power which the undersigned
would have if personally present, hereby revoking any proxy heretofore given.
The undersigned hereby acknowledges receipt of the proxy statement for the
Meeting and instructs the proxies to vote as directed on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SEE REVERSE
SIDE SIDE
<PAGE>
DETACH HERE
Please mark
/X/ vote as in this
example
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
LISTED BELOW, FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
THE COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999 AND IN THE
DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING.
1. To elect three nominees 2. To ratify the appointment FOR AGAINST ABSTAIN
for Directors: Nominees: of Ernst & Young as / / / / / /
David C. Bloom, Barry M. independent auditors
Ginsberg, Philip D. for the fiscal year ending
Kaltenbacher December 31, 1999.
/ / FOR / / WITHHELD
3. With discretionary FOR AGAINST ABSTAIN
authority upon such / / / / / /
other matters as
/ / may properly
___________________________ come before
For all nominees except as this meeting.
noted above
MARK HERE IF YOU PLAN TO / /
ATTEND THE MEETING
MARK HERE FOR ADDRESS / /
CHANGE AND NOTE AT LEFT
Please sign exactly as
your name appears on
this proxy card. When
signing as attorney,
executor, trustee or
guardian, please give
your full title.
Signature__________ Date________ Signature____________________ Date_________
