<PAGE> 1
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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
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ASSOCIATED ESTATES REALTY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ASSOCIATED ESTATES REALTY CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
ASSOCIATED ESTATES REALTY CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
Notice is hereby given that the Annual Meeting of Shareholders of
Associated Estates Realty
Corporation, an Ohio corporation (the "Company"), will be held at The Forum, One
Cleveland Center, 1375 E. Ninth St., Cleveland, Ohio 44114, on Thursday, May 8,
1997, at 10:00 a.m. (EDT) for the following purposes:
1. To elect seven directors, each to serve until the next annual
meeting of shareholders and until his successor has been duly elected and
qualified; and
2. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on March 14, 1997,
will be entitled to notice of and to vote at said meeting or any adjournment
thereof. Shareholders are urged to complete, date and sign the enclosed proxy
and return it in the enclosed envelope.
By Order of the Board of Directors,
MARTIN A. FISHMAN
Secretary
Dated: March 21, 1997
<PAGE> 3
ASSOCIATED ESTATES REALTY CORPORATION
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies to be used at the annual meeting of shareholders (the "Annual Meeting")
of Associated Estates Realty Corporation, an Ohio corporation (the "Company"),
to be held at The Forum, One Cleveland Center, 1375 E. Ninth St., Cleveland,
Ohio 44114, on Thursday, May 8, 1997, at 10:00 a.m. (EDT) and at any adjournment
thereof. This proxy statement and the accompanying notice and proxy, together
with the Company's Annual Report to Shareholders for the year ended December 31,
1996 are first being sent to shareholders on or about March 21, 1997.
If the enclosed proxy is returned, the Common Shares, without par value
("Common Shares") represented thereby will be voted in accordance with any
specifications made therein by the shareholder. In the absence of any such
specification, they will be voted to elect the directors set forth under
"Election of Directors" below. A shareholder's presence alone at the Annual
Meeting will not operate to revoke such shareholder's proxy. The proxy is
revocable by a shareholder at any time insofar as it has not been exercised by
giving notice to the Company in writing or in open meeting.
The close of business on March 14, 1997, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting. On such date, the Company had outstanding 15,322,391 Common
Shares, each of which is entitled to one vote at the Annual Meeting.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Shares of the Company as of March 1, 1997 by: (a) the
Company's Chief Executive Officer and the Company's other executive officers
named in the Summary Compensation Table; (b) the Company's directors and
nominees for director; (c) each other person who is known by the Company to own
beneficially more than 5% of the outstanding Common Shares (based on filings
with the Securities and Exchange Commission); and (d) the Company's executive
officers and directors as a group. Except as otherwise described in the notes
below, the following beneficial owners have sole voting power and sole
investment power with respect to all Common Shares set forth opposite their
names.
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES
BENEFICIALLY PERCENTAGE
OWNED(1) OWNERSHIP
------------- -----------
<S> <C> <C>
Jeffrey I. Friedman............................................. 1,004,573(2) 6.6%
5025 Swetland Court
Richmond Heights, Ohio 44143
Albert T. Adams................................................. 0 *
Gerald C. McDonough............................................. 9,750(3) *
Mark L. Milstein................................................ 1,178,453(4) 7.7
4400 Emery Industrial Parkway
Warrensville Heights, Ohio 44128
Frank E. Mosier................................................. 10,750(3) *
Richard T. Schwarz.............................................. 8,605(3) *
Dennis W. Bikun................................................. 20,500(3) *
Martin A. Fishman............................................... 21,030(3) *
Thomas G. Selby................................................. 0 *
Jerome Spevack.................................................. 147,350(5) *
Robert Milstein................................................. 1,368,324 8.9
7777 Forest Lane Rd., Suite C 618
Dallas, Texas 75230
All executive officers and directors as a group (nine
persons)........................................................ 2,401,011 15.7%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes Common Shares subject to options currently exercisable or
exercisable within 60 days as follows: Mr. Friedman -- 200,000; Mr.
Spevack -- 25,000; Mr. Fishman -- 20,000; Mr. Bikun -- 20,000; Mr.
McDonough -- 6,250; Mr. Mosier -- 6,250; and Mr. Schwarz -- 6,250.
(2) Includes 399,865 Common Shares owned of record by Susan M. Friedman, Mr.
Friedman's wife and 7,346 Common Shares owned of record by Mr. Friedman's
children.
(3) Includes 500 Common Shares granted to the individual on December 6, 1995
which are subject to restrictions on transfer for a three year period.
(4) Consists of Common Shares held in a revocable trust of which Mark L.
Milstein is the sole trustee.
(5) Includes 45,000 Common Shares held by the Jerome Spevack Charitable
Remainder Trust.
2
<PAGE> 5
ELECTION OF DIRECTORS
At the Annual Meeting, Common Shares represented by proxies, unless
otherwise specified, will be voted for the election of the seven nominees
hereinafter named, each to serve as a director until the next annual meeting of
shareholders and until his successor is duly elected and qualified.
If for any reason any of the nominees is not a candidate (which is not
expected) when the election occurs, it is intended that proxies will be voted
for the election of a substitute nominee designated by the Board of Directors.
The following information is furnished with respect to each person nominated for
election as a director.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION SINCE
- ----------------------- ------------------------------------------------------ ---------
<S> <C> <C>
Jeffrey I. Friedman Chairman of the Board of Directors, President and 1993
45 Chief Executive Officer of the Company
Jerome Spevack Executive Vice President of the Company 1993
64
Mark L. Milstein President of Adam Construction Company 1993
34
Albert T. Adams Partner, Baker & Hostetler LLP 1996
46
Gerald C. McDonough Retired 1993
68
Frank E. Mosier Director of Centerior Energy Corporation 1993
66
Richard T. Schwarz President of Laurel Industries, Inc., a wholly-owned 1994
45 subsidiary of Occidental Chemical Corporation
</TABLE>
Jeffrey I. Friedman has been Chairman of the Board, President and Chief
Executive Officer of the Company since its organization in July 1993. Mr.
Friedman joined Associated Estates Group, the Company's predecessor ("AEG"), in
1974 and was the Chief Executive Officer and President of Associated Estates
Corporation, an owner and manager of multifamily residential apartment
facilities ("AEC"), from 1979 to 1993.
Jerome Spevack has been Executive Vice President and a Director of the
Company since its organization. Mr. Spevack joined AEG in 1967 and held various
positions within the organization, including Executive Vice President of AEC
since 1979 and President of A.E.C. Management Company from 1987 until shortly
before it was merged into the Company in October 1993. Mr. Spevack is a
Certified Property Manager.
Mark L. Milstein has been a Director of the Company since its organization.
Mr. Milstein has been President of Adam Construction Company since 1993 and has
been a Senior Project Manager for Adam Construction Company, a general
contractor, since 1988, supervising the construction and rehabilitation of
various projects for AEG. Mr. Milstein is the brother-in-law of Jeffrey I.
Friedman.
Albert T. Adams has been a partner with the law firm of Baker & Hostetler
LLP in Cleveland, Ohio since 1984, and has been affiliated with the firm since
1977. Mr. Adams is a graduate of Harvard College, Harvard Business School and
Harvard Law School. He serves as a member of the Board of Trustees of the
Western Reserve Historical Society and is a Vice President of the Harvard
Business School Club of Northeastern Ohio. Mr. Adams is a director of Boykin
Lodging Company and Developers Diversified Realty Corporation.
Gerald C. McDonough served as Chairman and Chief Executive Officer of
Leaseway Transportation Corp., a highway transportation company, from 1982 until
his retirement in July 1988. Mr. McDonough serves as an Independent Trustee of
Fidelity Management and Research Co. and is a director of Acme-Cleveland
Corporation, Brush Wellman, Inc., Commercial Intertech Corporation and York
International Corporation.
Frank E. Mosier is a director of Centerior Energy Corporation. Mr. Mosier
was Vice Chairman of the Advisory Board of BP America Inc., a producer and
refiner of petroleum products, from 1991 to 1993. Mr. Mosier was Vice Chairman
of BP America Inc. from 1988 until his retirement in 1991 and President and
Chief Operating Officer of BP America Inc. from 1986 to 1988.
3
<PAGE> 6
Richard T. Schwarz has been President of Laurel Industries, Inc., a
wholly-owned subsidiary of Occidental Chemical Corporation, since August 1996.
Mr. Schwarz was Vice President and General Manager, Antimony Division, Laurel
Industries, Inc. from 1983 to August 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, an Executive Compensation
Committee and an Executive Committee. The Board of Directors does not have a
nominating committee. The Board of Directors held five meetings in 1996. Each
member of the Board of Directors attended at least 75% of the meetings of the
Board of Directors and committees of which he was a member held in 1996 while he
served as a director.
Audit Committee. The Audit Committee, which consists of Messrs. McDonough
(Chairman), Adams, Mosier and Schwarz, makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants the audit plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls. The Audit Committee held two meetings in 1996.
Executive Compensation Committee. The Executive Compensation Committee,
which consists of Messrs. Mosier (Chairman), Adams, McDonough and Schwarz,
determines compensation for the Company's executive officers and administers the
Company's compensation plans. The Executive Compensation Committee held two
meetings in 1996.
Executive Committee. The Executive Committee, which consists of Messrs.
Friedman (Chairman), Milstein and Spevack, possesses and may exercise the power
of the Board of Directors in the management of the business and affairs of the
Company (other than filling vacancies on the board or any committees thereof)
during intervals between meetings of the Board of Directors. The Executive
Committee held seven meetings in 1996.
COMPENSATION OF DIRECTORS
The Company pays an annual fee of $12,000 plus a fee of $1,000 for each
Board or committee meeting attended to its directors who are not employees of
the Company. Employees of the Company who are also directors are not paid any
director fees. Each non-employee director is reimbursed for expenses incurred in
attending meetings.
Non-employee directors are permitted to defer all or a portion of their
fees pursuant to the Company's Directors' Deferred Compensation Plan. The plan
is unfunded and participants' contributions are converted to units the value of
which fluctuate according to the market value of the Company's Common Shares.
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
Introduction. The Executive Compensation Committee of the Company's Board
of Directors (the "Committee") is responsible for determining compensation to be
paid to the Company's executive officers. The Committee is comprised of Frank E.
Mosier (Chairman), Albert T. Adams, Gerald C. McDonough and Richard T. Schwarz.
The Committee is also responsible for making major policy decisions with respect
to health care and other benefit plans and administering the Company's Stock
Option Plan, Executive Incentive Plan, Long-Term Incentive Plan and Equity-Based
Plan.
In establishing executive compensation, the Committee's philosophy with
respect to the compensation of the Company's executive officers is (i) to
provide a competitive total compensation package that enables the Company to
attract and retain qualified executives and align their compensation with the
Company's overall business strategies and (ii) to provide each executive officer
with a significant equity stake in the Company through various forms of equity
ownership.
To this end, the Committee determines executive compensation consistent
with a philosophy of compensating executive officers, including the Chief
Executive Officer, based on their responsibilities and the Company's performance
measured by the achievement of established annual and longer term performance
goals. The primary components of the Company's executive compensation program
are (i) base salaries and
4
<PAGE> 7
certain other annual compensation, (ii) performance bonuses for certain
executive officers, and (iii) equity-based awards.
The Committee has examined the Company's potential exposure relating to
Section 162(m) of the Internal Revenue Code of 1986, as amended, and does not
foresee exceeding the million dollar deduction limitation for compensation in
the near term. In any event and in order to avoid potential problems with
deductibility in the future, the Company has obtained shareholder approval of
certain of its compensation plans in order that amounts paid under these plans
would qualify as performance-based compensation and thus be exempt from the
limitations on deductibility in Section 162(m).
Base Salaries and Other Annual Compensation. The base salaries and certain
other annual compensation for the Company's executive officers in 1996 were
determined with reference to the experience of the executives in the industry,
together with comparisons of compensation paid by companies of similar size in
the real estate investment trust industry including certain, but not all, of the
companies included in NAREIT, or Peer Group 1997 identified in the performance
graph on page 8. This data is gathered by analyzing the NAREIT Executive
Compensation Survey and other survey sources, as they are available. The
Executive Compensation Committee has sought to compensate the executive officers
of the Company above the 50th percentile of their peer group relative to total
cash compensation.
The base salary for Jeffrey I. Friedman was established and has been
administered pursuant to an employment agreement (the "Employment Agreement")
entered into between Mr. Friedman and the Company as of November 10, 1993 in
connection with the Company's IPO which agreement was amended and restated as of
January 1, 1996. The terms of the Employment Agreement were fixed following
discussions with the managing underwriters for the IPO. See "Employment
Agreement."
Bonuses. All of the Company's executive officers other than Mr. Friedman
are eligible to participate in the Company's Executive Incentive Plan. This Plan
provides for annual performance bonuses based upon the Company's performance
against certain annual performance benchmarks tied to Funds From Operations per
share. Funds From Operations is net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from
sales of property, plus depreciation and amortization, and after adjustments for
unconsolidated joint ventures. Incentive amounts are set at the beginning of
each year and are based upon the participant's level of responsibility and
salary. These incentives are communicated to participants in the form of target,
minimum and maximum incentive opportunities which are attained if the Company
reaches certain predetermined performance benchmarks tied to Funds From
Operations per share. The participants did earn bonuses under the Plan in 1996
and received payouts based upon the Company achieving the Funds From Operations
per share targets established at the beginning of the Plan year. The Company
engaged Towers Perrin, an executive compensation consulting firm, which assisted
in the development and implementation of the Plan.
Prior to 1996, the Employment Agreement between the Company and Mr.
Friedman had provided for an annual cash bonus for Mr. Friedman based on the
growth in the Company's Distributable Cash Flow (as defined in the agreement).
In an effort to align Mr. Friedman's bonus provision with those of the Company's
other executive officers and to the generally accepted practice in the NAREIT
comparison group, Mr. Friedman's Employment Agreement was amended in January
1996 to provide for a performance bonus based upon annual performance benchmarks
tied to Funds From Operations per share. Mr. Friedman did earn a bonus in 1996
based upon Company performance as measured by Funds From Operations per share.
Mr. Friedman's incentive amounts are set at the beginning of each fiscal year
and are commensurate with his responsibilities as Chief Executive Officer. See
"Employment Agreement."
Executive Compensation Committee
Frank E. Mosier, Chair
Albert T. Adams
Gerald C. McDonough
Richard T. Schwarz
5
<PAGE> 8
I. SUMMARY COMPENSATION TABLE
The following table sets forth information for the year ended December 31,
1996, with respect to the cash compensation earned and the long-term
compensation awards granted to the Company's Chief Executive Officer and the
Company's other executive officers whose annual base compensation exceeded
$100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
AWARDS
-------------------------
ANNUAL COMPENSATION(1) RESTRICTED
---------------------------------- STOCK STOCK
NAME AND PRINCIPAL FISCAL SALARY BONUS AWARDS OPTIONS
POSITION YEAR ($) ($) ($)(1) (#)
- ------------------------- --------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Jeffrey I. Friedman 1996 440,000 227,854 -0- -0-
Chairman, President and 1995 385,000 101,409 -0- -0-
Chief Executive 1994 350,000 -0- -0- -0-
Officer
Jerome Spevack 1996 175,000 54,374 -0- -0-
Executive Vice 1995 175,000 52,500 -0- -0-
President
1994 175,000 21,000 -0- -0-
Martin A. Fishman 1996 154,500 52,277 -0- -0-
Vice President, General 1995 154,500 46,350 10,250 -0-
Counsel and 1994 150,000 22,500 -0- -0-
Secretary
Thomas G. Selby 1996 37,500 (2) 10,000 -0- 25,000(3)
Vice President,
Operations
Dennis W. Bikun 1996 135,713 42,167 -0- -0-
Chief Financial Officer 1995 123,375 37,013 10,250 -0-
and Treasurer 1994 117,500 17,626 -0- -0-
</TABLE>
- ---------------
(1) Five hundred restricted Common Shares were granted on December 6, 1995 and
are subject to restrictions on transfer and forfeiture for a period of three
years from the date of grant. The closing market price of the Company's
Common Shares on the date of grant was $20.50.
(2) Mr. Selby was employed by the Company as of September 30, 1996.
(3) In connection with his employment, Mr. Selby was granted 25,000 options to
purchase Common Shares at an exercise price of $20.50. The options vest in
annual 33 1/3% increments beginning September 11, 1997.
II. AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
The following table sets forth information with respect to options to
purchase Common Shares exercised during 1996 by the executive officers named in
the Summary Compensation Table and the number and value of options held on
December 31, 1996.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN- THE-MONEY
OPTIONS AT OPTIONS AT
1996 YEAR-END 1996
(#) YEAR-END($)(1)
SHARES ------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Jeffrey I.
Friedman -0- -0- 200,000/-0- 350,000/-0-
Jerome Spevack -0- -0- 25,000/-0- 43,750/-0-
Martin A. Fishman -0- -0- 20,000/-0- 35,000/-0-
Thomas G. Selby -0- -0- -0-/25,000 -0-/81,250
Dennis W. Bikun -0- -0- 20,000/-0- 35,000/-0-
</TABLE>
- ---------------
(1) Based on the market price of $23.75 at the close of trading on December 31,
1996 and the exercise price of $22.00 ($20.50, in the case of options held
by Mr. Selby).
6
<PAGE> 9
EMPLOYMENT AGREEMENT
The Company has an employment agreement with Jeffrey I. Friedman. This
agreement provided for an initial three-year term which commenced November 18,
1993 and is automatically extended for an additional year at the end of each
year of the agreement, subject to the right of either party to terminate by
giving one year's prior written notice. Pursuant to this agreement, Mr. Friedman
is required to devote to the Company his entire business time and may engage in
future real estate activities only through the Company. In addition, Mr.
Friedman is prohibited from competing with the Company for a period of three
years following termination of employment. The agreement provides for the annual
base salary set forth under the Summary Compensation Table, as well as the use
of an automobile, membership in a golf club and a business club, an allowance of
up to $10,000 annually for financial planning, tax return and preparation
service, and certain additional compensation. The agreement was amended in
January 1996 to reflect Mr. Friedman's current base salary and to provide for an
annual performance bonus equal to 25% to 100% of his annual base salary based on
the Company achieving certain Funds From Operations benchmarks.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Executive Compensation Committee are Frank E. Mosier
(Chairman), Albert T. Adams, Gerald C. McDonough and Richard T. Schwarz. For a
discussion of the relationship between the Company and Mr. Adams, see "Certain
Transactions."
7
<PAGE> 10
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of a
hypothetical investment in the Common Shares with the cumulative total return of
a hypothetical investment in each of the Standard & Poor's Composite -- 500
Index, Peer Group 1996, the peer group of residential equity REITs used by the
Company for comparison last year, and Peer Group 1997, a peer group of
multifamily equity REITs which includes some, but not all, of the companies of
Peer Group 1996. The Company has refined Peer Group 1997 to more accurately
reflect its segment of the REIT industry. The comparison is based on the
respective market prices of each such investment on the dates shown below,
assuming an initial investment of $100 on November 11, 1993 and the reinvestment
of dividends.
COMPARISON OF THE CUMULATIVE TOTAL RETURN
AERC, S&P COMPOSITE 500, PEER GROUP 1996 AND PEER GROUP 1997
<TABLE>
<CAPTION>
ASSOCIATED ES-
MEASUREMENT PERIOD TATES REALTY PEER GROUP PEER G ROUP
(FISCAL YEAR COVERED) CORPORATION S&P 500 1996(A) 1997(B)
<S> <C> <C> <C> <C>
11/10/93 100.00 100.00 100.00 100.00
06/30/94 104.48 97.52 89.80 99.11
12/31/94 104.05 102.28 100.56 99.02
06/30/95 106.98 122.95 100.55 99.87
12/31/95 115.83 140.71 113.55 113.08
06/30/96 115.63 154.90 120.93 118.99
12/31/96 139.33 172.80 147.68 145.59
</TABLE>
(a) Associated Estates Realty Corporation, America First REIT, Inc., Apartment
Investment & Management, Amli Residential Properties, Avalon Properties,
Inc., BRE Properties, Inc., Berkshire Realty Co., Bay Apartment Communities,
CRI Liquidating REIT, Inc., Columbus Realty Trust, Continental Mortgage &
Equity, CRIIMI MAE Inc., Chateau Properties, Inc., Camden Property Trust,
Equity Residential Property Trust, Essex Property Trust, Inc., Evans
Withycombe Residential, Gables Residential Trust, Grove Real Estate Asset
Trust, Home Properties of New York, Irvine Apartment Communities,
Mid-America Apartment, Manufactured Home Communities, Merry Land &
Investment Co., North American Trust, Inc., National Income Realty Trust,
Oasis Residential, Inc., Pacific Gulf Properties Inc., Paragon Group, Inc.,
Post Properties, Inc., Prime Residential, Inc., Property Trust of America,
ROC Communities, Inc., REIT of California, American RE Investment, Summit
Properties, Inc., Charles E. Smith Residential, Sun Communities, Inc., South
West Property Trust, Town & Country Trust, United Dominion Realty Trust,
United Mobile Homes, Inc., Vinland Property Trust, Banyan Strategic Land
Fund II, Walden Residential Properties and Wellsford Residential Property.
8
<PAGE> 11
(b) Associated Estates Realty Corporation, Ambassador Apartments, Inc., Amli
Residential Properties, Avalon Properties, Inc., BRE Properties, Inc.,
Berkshire Realty Co., Bay Apartment Communities, Camden Property Trust,
Columbus Realty Trust, Equity Residential Property Trust, Essex Property
Trust, Inc., Evans Withycombe Residential, Gables Residential Trust, Home
Properties of New York, Irvine Apartment Communities, Merry Land &
Investment Co., Mid-America Apartment, Oasis Residential, Inc., Post
Properties, Inc., Prime Residential, Inc., Security Capital Pacific Trust,
Summit Properties, Inc., Charles E. Smith Residential, Town & Country Trust,
United Dominion Realty Trust and Walden Residential Properties.
CERTAIN TRANSACTIONS
Baker & Hostetler LLP, a law firm with which Albert T. Adams is a partner,
has been retained by the Company to perform legal services on its behalf, and
the Company expects that Baker & Hostetler LLP will continue to provide such
services during 1997. Mr. Adams is a director of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and beneficial owners of more than ten percent
of a registered class of the Company's equity securities ("ten percent owners"),
to file with the Securities and Exchange Commission (the "SEC") and the New York
Stock Exchange initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Executive officers,
directors and ten percent owners are required by SEC regulations to furnish the
Company with copies of all forms they file pursuant to Section 16(a). To the
Company's knowledge, based on review of the copies of such reports furnished to
the Company, during the fiscal year ended December 31, 1996, all Section 16(a)
filing requirements applicable to its executive officers, directors and ten
percent owners were met.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP served as independent public accountant to the Company
in 1996 and has been selected to do so in 1997. A representative of Price
Waterhouse LLP is expected to be present at the Annual Meeting and will answer
appropriate questions from shareholders.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received by the Company at 5025 Swetland
Court, Richmond Heights, Ohio 44143, on or before November 21, 1997 for
inclusion in the Company's proxy statement and form of proxy relating to the
1998 Annual Meeting of Shareholders.
9
<PAGE> 12
OTHER MATTERS
This solicitation of proxies is made by and on behalf of the Board of
Directors. The cost of the solicitation of proxies will be borne by the Company.
The Company may reimburse banks, brokerage firms and other custodians, nominees
and fiduciaries for expenses incurred by them in sending proxy materials to the
beneficial owners of the Company's Common Shares.
If the enclosed proxy is executed and returned to the Company, the persons
named in it will vote the shares represented by such proxy at the meeting. The
form of proxy permits specification of a vote for the election of directors as
set forth under "Election of Directors" or the withholding of authority to vote
in the election of directors. If no specification is made, such shares will be
voted at the meeting to elect directors as set forth under "Election of
Directors" above. Director nominees who receive the greatest number of
affirmative votes will be elected directors thus abstentions and broker nonvotes
will not affect the results of the election. If any other matters shall properly
come before the meeting, the persons named in the proxy will vote thereon in
accordance with their judgment. Management does not know of any other matters
which will be presented for action at the meeting.
By order of the Board of Directors,
MARTIN A. FISHMAN,
Secretary
Dated: March 21, 1997
10
<PAGE> 13
ASSOCIATED ESTATES REALTY CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeffrey I. Friedman, Martin A. Fishman
and Dennis W. Bikun, and each of them, the attorneys and proxies of the
undersigned with full power of substitution to vote as indicated herein,
all the Common Shares of Associated Estates Realty Corporation held of
record by the undersigned on March 14, 1997, at the Annual Meeting of
Shareholders to be held on May 8, 1997, or any adjournment thereof, with
all the powers the undersigned would possess if then and there
personally present.
1. [ ] FOR or [ ] WITHHOLD AUTHORITY to vote (except as marked to the
contrary below) for the election
of each of the nominees for
Director listed below:
Jeffrey I. Friedman, Mark L. Milstein, Jerome Spevack, Albert T. Adams,
Gerald C. McDonough, Frank E. Mosier and Richard T. Schwarz
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
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2. In their discretion, to vote upon such other business as may
properly come before the meeting.
(Continued on reverse side)
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
SHAREHOLDER. IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE VOTED TO
ELECT THE NOMINEES DESCRIBED IN ITEM 1 ABOVE.
Receipt of Notice of Annual Meeting of Shareholders and the related
Proxy Statement dated March 21, 1997, is hereby acknowledged.
Date ______________ , 1997
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Signature(s) of Shareholder(s)
PLEASE SIGN AS YOUR NAME
APPEARS HEREON. IF SHARES
ARE HELD JOINTLY, ALL
HOLDERS MUST SIGN. WHEN
SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE
GIVE YOUR FULL TITLE. IF A
CORPORATION, PLEASE SIGN IN
FULL CORPORATE NAME BY
PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY
AUTHORIZED PERSON.
Proxy Card
