<PAGE>
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
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
</TABLE>
G & L REALTY CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(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 transactions applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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>
[LOGO OF G & L REALTY CORP.]
G & L REALTY CORP.
439 N. Bedford Drive, Beverly Hills, CA 90210
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 31, 1999
Notice is hereby given that the Annual Meeting of Stockholders of G&L
Realty Corp. (the "Company") will be held at the Beverly Hilton Hotel, 9876
Wilshire Boulevard, Beverly Hills, California on August 31, 1999 at 9:00 a.m.
Pacific Standard time, for the following purposes:
(1) To elect six directors to serve until the 2000 Annual Meeting of
Stockholders and until their successors are duly elected and qualify;
(2) To consider and vote upon a proposal to adopt an amendment to the
Charter which would give the Board of Directors the authority (i) to waive the
ownership limitation under the Charter for any person(s), and (ii) to decrease
the ownership limit under the Charter for all other persons.
(3) To consider and vote upon ratification of the appointment by the Board
of Directors of Deloitte & Touche, LLP as independent accountants for the
Company for the year ending December 31, 1999; and
(4) To consider and act upon any other matter that may be properly brought
before the Annual Meeting and at any adjournment or postponement thereof.
Only Stockholders whose names appear of record on the books of the Company
at the close of business on June 25, 1999 are entitled to notice of, and to vote
at, such Annual Meeting or any adjournment or postponement thereof.
You are cordially invited to attend the meeting in person. Whether or not
you expect to attend this meeting, please sign and date the enclosed proxy and
return it as promptly as possible in the enclosed self-addressed, postage-
prepaid envelope. If you attend the Annual Meeting, you may vote your shares in
person, which will revoke any previously executed proxy. If your shares are held
of record by a broker, bank or other nominee and you wish to vote your shares at
the Annual Meeting, you must obtain from the record holder a proxy issued in
your name.
By Order of the Board of Directors
/s/ George Nagler
George Nagler
Secretary and General Counsel
Beverly Hills, California
July 15, 1999
<PAGE>
G & L REALTY CORP.
439 North Bedford Drive, Beverly Hills, CA 90210
--------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 31, 1999
This proxy statement is furnished to the Stockholders of G&L Realty Corp.,
a Maryland corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Beverly Hilton Hotel,
9876 Wilshire Boulevard, Beverly Hills, California at 9:00 a.m., Pacific
Standard time, on August 31, 1999, and at adjournment or postponement thereof.
The principal executive offices of the Company are located at 439 North Bedford
Drive, Beverly Hills, California 90210. The approximate date on which this proxy
statement and form of proxy solicited on behalf of the Board of Directors is
expected to be sent to the Company's Stockholders is July 15, 1999.
At the Annual Meeting, the Company Stockholders will be asked:
(1) To elect 6 directors to serve until the 2000 annual meeting of
Stockholders and until their successors are duly elected and qualify;
(2) To consider and vote upon a proposal to adopt an amendment to the
Charter which would give the Board of Directors the authority (i) to waive the
ownership limitation under the Charter for any person(s), and (ii) to decrease
the ownership limit under the Charter for all other persons.
(3) To consider and vote upon ratification of the appointment by the Board
of Directors of Deloitte & Touche, LLP as independent accountants for the
Company for the year ending December 31, 1999; and
(4) To consider and act upon any other matter that may be properly brought
before the Annual Meeting and at any adjournment or postponement thereof.
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors and officers of the Company, without
receiving any additional compensation, may solicit proxies personally or by
telephone or telegraph. The Company will request brokerage houses, banks, and
other custodians or nominees holding stock in their names for others to forward
proxy materials to their customers or principals who are the beneficial owners
of shares and will reimburse them for their expenses in doing so. The Company
has retained the services of Chase Mellon Shareholder Services to assist in the
solicitation of proxies from brokerage houses, banks, and other custodians or
nominees holding stock in their names for others for a fee of approximately
$6,500, plus expenses.
On June 25, 1999, the record date for the determination of Stockholders
entitled to notice of, and to vote at, the Annual Meeting, the Company had
3,928,300 shares of common stock, par value $.01 per share (the "Common Stock"),
outstanding. Each such share of Common Stock is entitled to one vote on all
matters properly brought before the meeting. The Common Stock is the only class
of securities of the Company entitled to vote. The vote of a plurality of the
shares cast in person or by proxy is required to elect a nominee for director.
With respect to the election of each director at the Annual Meeting, each holder
of Common Stock is entitled to vote the number of shares owned by such
Stockholders. The six nominees who receive the greatest number of votes will be
elected.
2
<PAGE>
Stockholders are not entitled to cumulate their shares of Common Stock for the
purpose of electing directors or otherwise. The vote of two-thirds of the
outstanding shares of Common Stock is required for approval of the Charter
amendment. The affirmative vote of a majority of all votes cast is required for
ratification of the appointment of Deloitte & Touche, LLP to serve as the
Company's independent accountants.
Presence at the Annual Meeting, in person or by proxy, of holders entitled
to cast at least a majority of the outstanding shares of Common Stock will
constitute a quorum for the transaction of business at the Annual Meeting.
Under Maryland law, abstentions and broker non-votes (i.e. proxies from brokers
or nominees that disclaim their authority to vote such shares on a particular
matter) will count toward the presence of a quorum. Abstentions are not counted
as votes cast and will have no effect on the vote for election of directors or
the ratification of the appointment of Deloitte & Touche, LLP. For purposes of
the vote on the Charter amendment, abstentions and broker non-votes will have
the same effect as votes against the proposal.
3
<PAGE>
Daniel M. Gottlieb, Steven D. Lebowitz and George Nagler, the persons named
as proxies on the proxy card accompanying this proxy statement, were selected by
the Board of Directors to serve in such capacity. Messrs. Gottlieb and Lebowitz
are each directors of the Company.
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted at the Annual Meeting FOR
the nominees named below for election as directors, FOR approval of the Charter
amendment, and FOR the ratification of the appointment of Deloitte & Touche, LLP
as the Company's independent accountants. With respect to any other business
which may properly come before the Annual Meeting and be submitted to a vote of
Stockholders, proxies received by the Board of Directors will be voted in
accordance with the best judgment of the designated proxy holders. It is not
anticipated that any matter other than those set forth in the proxy statement
will be presented at the Annual Meeting. A Stockholder of record may revoke his
or her proxy at any time before exercise by delivering to the Secretary of the
Company a written notice of such revocation, by filing with the Secretary of the
Company a duly executed proxy bearing a later date, or by voting in person at
the Annual Meeting. Any Stockholder of record as of the record date attending
the Annual Meeting may vote in person, whether or not a proxy has been
previously given, but the presence (without further action) of a Stockholder at
the Annual Meeting will not constitute revocation of a previously given proxy.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of the Company is currently comprised of seven
members. All directors are elected each year at the Annual Meeting.
The Board of Directors has nominated Daniel M. Gottlieb, Steven D.
Lebowitz, Richard D. Lesher, Leslie D. Michelson, Charles P. Reilly and S. Craig
Tompkins to continue to serve as directors of the Company. Each of the nominees
is currently serving as a director of the Company. Reese L. Milner will finish
his current term as director but has declined to stand for reelection to the
Board and thus has not been renominated. The Board of Directors has chosen not
to nominate a seventh director to stand for electon when Mr. Milner's term
expires. Accordingly, it is intended that the size of the Board will be reduced
to six members. Proxies cannot be voted for a greater number of persons than
the number of nominees named. Accordingly, proxies will only be voted for six
directors.
In the absence of instructions to the contrary, the persons named as proxy
holders in the accompanying proxy intend to vote in favor of the election of the
nominees designated below, to serve until the next Annual Meeting and until
their respective successors are elected and qualify. The Board of Directors
expects that each of the nominees will be available to serve as a director, but
if any such nominee should become unavailable for election, the shares of Common
Stock represented by the enclosed proxy may (unless such proxy contains
instructions to the contrary) be voted for such other person or persons as may
be determined by the holders of such proxies or the Board may amend the Bylaws
to reduce the number of directors to be elected at the Annual Meeting.
Nominations of persons for election to the Board at the Annual Meeting may
be made by a Stockholder of record if the Stockholder submits the nomination in
compliance with the requirements of the Company's Bylaws. See "Other Matters -
Stockholder Proposal" for a summary of these requirements.
The Board of Directors recommends a vote for the election of each of the
nominees. Proxies received will be voted for each of the nominees unless
stockholders specify otherwise in the proxy.
Information Regarding Nominees and Directors
The following table sets forth certain information with respect to the
nominees for director, based on information furnished to the Company by each
such nominee.
4
<PAGE>
<TABLE>
<CAPTION>
Director
Name Age Position Since
---- --- -------- -----
<S> <C> <C> <C>
Daniel M. Gottlieb 58 Chief Executive Officer, Co-Chairman of the 1993
Board and Director
Steven D. Lebowitz 58 President, Co-Chairman of the Board and 1993
Director
Richard L. Lesher 65 Director 1993
Leslie D. Michelson 48 Director 1995
Charles P. Reilly 56 Director 1993
S. Craig Tompkins 48 Director 1993
</TABLE>
The following is a biographical summary of the experience of the directors
of the Company.
Mr. Gottlieb is the Chief Executive Officer and Co-Chairman of the Board of
the Company and has held these positions since the Company commenced operations
in 1993. Mr. Gottlieb co-founded G&L Development ("G&L Development") in 1976 and
has been a general partner of G&L Development and active in commercial real
estate management and development since that time. Mr. Gottlieb received his
B.A. with honors from the University of Southern California and earned a J.D.
from Boalt Hall School of Law at the University of California at Berkeley. Prior
to forming G&L Development, Mr. Gottlieb first served as a Los Angeles County
Deputy District Attorney for Beverly Hills and later entered private practice
specializing in real estate law and business management. Mr. Gottlieb has also
served on the Board of Directors of the United States Chamber of Commerce,
Washington, D.C. since February 1996.
Mr. Lebowitz is the President and Co-Chairman of the Board of the Company
and has held these positions since the Company commenced operations in 1993. Mr.
Lebowitz is the co-founder and a general partner of G&L Development and has been
active in the development, management and ownership of a wide range of real
estate properties since 1968. Mr. Lebowitz received a B.S. in Accounting from
the University of Southern California, where he also received his MBA with
highest honors in 1965. From 1962 to 1964, Mr. Lebowitz worked for Deloitte &
Touche LLP and was licensed as a Certified Public Accountant in 1964. From 1965
to 1968, Mr. Lebowitz worked with the U.S. Department of Commerce and the
Brookings Institution in Washington D.C. Mr. Lebowitz served on the Board of
Directors of the United States Chamber of Commerce, Washington, D.C. from 1989
to 1994.
Dr. Lesher has served as a director of the Company since the Company
commenced operations in 1993. Dr. Lesher is the immediate past President and
has been a member of the Board of Directors of the United States Chamber of
Commerce, Washington D.C. since 1975. He served on numerous committees of the
Board, including the Executive and Budget committees. In addition, Dr. Lesher is
a member of the Board of Directors of World Heart Corporation (Ottawa, Canada),
an artificial heart research and development company and AIT Corporation, a
high-tech company. Dr. Lesher received a B.B.A. from the University of
Pittsburgh in 1958, an M.S. from Pennsylvania State University in 1960 and a
D.B.A. from Indiana University in 1963.
Mr. Michelson has served as a director of the Company since 1995 and serves
as Chairman of the Company's Compensation Committee. Mr. Michelson has been
active in the creation and management of a number of health care companies. He
co-founded Protocare, a clinical trials and disease management company, and
currently serves as its Chairman and Co-CEO. Prior to forming Protocare, Mr.
Michelson was a founder, Chairman and co-Chief Executive Officer of Value Health
Sciences, Inc. Mr. Michelson is also a director of Catellus Development
Corporation, an NYSE traded real estate developer. He served as Special
Assistant to the General Counsel of the U.S. Department of Health and Human
Services from 1979 to 1981. He received a B.A. from The Johns Hopkins
University and a J.D. from Yale Law School.
Mr. Milner has served as a director of the Company since the Company
commenced operations in 1993. Mr. Milner is a private real estate developer and
investor. Mr. Milner received a B.A. from the University of California at
5
<PAGE>
Berkeley and a joint J.D./MBA from Stanford University. Mr. Milner practiced
law from 1975 through 1979 before entering the real estate industry in 1980.
Mr. Reilly has served as a director of the Company since the Company
commenced operations in 1993. Mr. Reilly is the managing general partner of
Shamrock Investments, an investment and merchant banking firm that specializes
in the health care industry. Prior to forming Shamrock Investments in 1987, Mr.
Reilly served as Senior Executive Vice President and Chief Development Officer
for American Medical International, Inc. In this position, Mr. Reilly was
responsible for growth through the acquisition and development of new health
care facilities and related business in the United States and abroad. Mr. Reilly
was a member of American Medical International's Board of Directors and served
on its Finance, Management, and Executive Committees. Mr. Reilly is currently
the Chairman of the Board of Directors of PHP Healthcare Corporation ("PHP"), a
New York Stock Exchange Company, which is an owner/operator of primary care
clinics for sponsored beneficiary populations. In November 1998, PHP filed a
petition under Chapter 7 of the U.S. Bankruptcy Code. He also serves as
Chairman of the Board of Directors of Dynamic Health, Inc., an owner/operator of
acute care hospitals; and is the former Chairman of the Board of Directors of
Paragon Ambulatory Surgery Centers, Inc., an owner/operator of freestanding
ambulatory surgery centers. Mr. Reilly holds a law degree from the University of
Pennsylvania and a bachelor's degree in accounting and finance from Pennsylvania
State University. He has served as a director, trustee, and governing council
member of the Federation of American Healthcare Systems, the National Committee
for Quality Health Care and the American Hospital Association and is a past
President of the Beverly Hills Chamber of Commerce.
Mr. Tompkins has served as a director of the Company since the Company
commenced operations in 1993. Mr. Tompkins is the President and a director of
The Craig Corporation, a New York Stock Exchange company engaged in the
ownership and strategic management of its controlling interests in other
operating companies, including a 78% voting interest in Reading Entertainment,
Inc. ("Reading Entertainment") and a 40% interest in Citadel Holding
Corporation. Reading Entertainment, whose shares are quoted on the NASDAQ/NMS,
is principally in the beyond-the-home entertainment business, developing and
operating multiplex cinemas and entertainment centers in the United States,
Puerto Rico and Australia. Citadel Holding Corporation, is an American Stock
Exchange company, whose assets consist primarily of office buildings in
California and Arizona, certain agricultural property in Kern County,
California, and a preferred stock interest in Reading Entertainment. Mr.
Tompkins also serves on the Boards of Directors of Reading Entertainment (where
he is Vice-Chairman) and Citadel Holding Corporation (where he is also Vice-
Chairman). Mr. Tompkins has served, since the third quarter of 1994, as the
Secretary, Treasurer and Principal Accounting Officer of Citadel Holding
Corporation and since 1997 as the President of Citadel's agricultural
subsidiary; Citadel Agricultural, Inc. Beginning in 1984 and prior to joining
Craig and Reading Entertainment in March 1993, Mr. Tompkins was a partner
specializing in corporate and real estate law in the law firm of Gibson, Dunn &
Crutcher LLP. Mr. Tompkins holds a bachelor's degree from Claremont McKenna
College and a J.D. from Harvard Law School.
The Board of Directors and its Committees
Board of Directors. The Company is managed under the direction of a Board
of Directors, a majority of whom are independent of the Company's management.
The Board currently consists of seven members, but will be reduced to six
members. The Board of Directors met four times in 1998. Each of the directors
attended at least 75% of the total number of meetings of the Board of Directors
and of each committee on which he served during the year. The Board of
Directors has Executive, Audit, Compensation and Strategic Planning Committees.
The Board does not have a nominating committee.
Executive Committee. The Executive Committee of the Board of Directors
consists of Messrs. Gottlieb, Lebowitz, Milner, Reilly and Tompkins. The
Executive Committee has such authority as is delegated by the Board of
Directors, including to authorize (i) the acquisition and disposition of real
property and (ii) the execution of certain contracts and agreements. The
Executive Committee held eight meetings in 1998. All of the Executive Committee
members attended every meeting except Messrs. Milner and Reilly who missed two
meetings and one meeting, respectively.
6
<PAGE>
Audit Committee. The Audit Committee consists of Messrs. Michelson, Milner
and Tompkins. The function of the Audit Committee is to make recommendations
concerning the engagement of independent public accountants, review with the
independent public accountants the plans and results of the audit engagement,
approve professional services provided by the independent public accountants,
review the independence of the independent public accountants, consider the
range of audit and non-audit fees and review the adequacy of the Company's
internal accounting controls. The Audit Committee held four meetings in 1998.
All Audit Committee members attended the four meetings.
Compensation Committee. The Compensation Committee consists of Messrs.
Michelson and Lesher. The Compensation Committee determines officers' salaries
and bonuses and administers the Company's 1993 Stock Incentive Plan. The
Compensation Committee held no meetings in 1998.
Strategic Planning Committee. The Strategic Planning Committee consists of
Messrs. Gottlieb, Lebowitz and Tompkins. The function of the Strategic Planning
Committee is to develop plans concerning the future growth and opportunities of
the Company. The Strategic Planning Committee held two meetings in 1998. Both
meetings were attended by all members.
Compensation of Directors
The Company pays an annual fee of $12,000 plus a fee of $1,000 for
attending regular meetings and $500 for attending committee meetings to its
directors who are not employees of the Company. Employees of the Company who
are also directors are not paid any director fees. Messrs. Gottlieb and
Lebowitz are the only directors who are also employees of the Company. The
reasonable expenses incurred by each director in connection with the performance
of the director's duties are also reimbursed by the Company. In addition,
pursuant to the 1993 Stock Incentive Plan, each nonemployee director is
automatically granted an option to purchase 500 shares of Common Stock each year
on the first business day after the date of the Annual Meeting and each person
who becomes a nonemployee director is granted an option to purchase 3,000 shares
of Common Stock upon joining the Board of Directors. The exercise price of
these option grants is equal to 100% of the fair market value of the Common
Stock at the date of grant.
On June 5, 1998, Messrs. Lesher, Michelson, Milner, Reilly and Tompkins
were each granted an option to purchase 500 shares of Common Stock at a price of
$17.50 per share. These options became fully exercisable on December 5, 1998.
The options generally expire on the earlier of the first anniversary of the date
upon which the director shall cease to be a director as a result of death or
total disability, the 90th day after the date upon which the director shall
cease to be a director for any other reason or ten years after the date of
grant.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of June 25, 1999 regarding
the beneficial ownership of Common Stock, Preferred Stock and Operating
Partnership Units ("Units") by (i) each person or company known by the Company
to be the beneficial owner of more than 5% of the Company's outstanding shares
of Common Stock, (ii) each director of the Company, (iii) each of the named
Executive Officers of the Company and (iv) the directors and executive officers
of the Company as a group. As of June 25, 1999 the Company had 3,928,300 shares
of Common Stock outstanding. In addition there were 633,027 Units outstanding
which were not owned by the Company.
Each person named in the table has sole voting and investment power with
respect to all shares shown as beneficially owned by such person except as
provided under applicable state marital property laws or as set forth in the
notes following the table.
<TABLE>
<CAPTION>
Number of Percentage of Percentage Number of
Shares of Shares of Interest In Percentage Shares of
Name and address Common Common Stock Number of Operating Ownership in Preferred
of Beneficial Owner Stock(1) Outstanding(2) Units(3) Partnership(4) Company(5) Stock
- ---------------------------------- ------------ ---------------- ------------ -------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph Carroll.................... 21,000 * -- -- * 1,000 (6)
439 N. Bedford Drive
Beverly Hills, CA 90210
Daniel M. Gottlieb (7)............ 411,332 10.1% 303,098 6.6% 15.2% --
439 N. Bedford Drive
Beverly Hills, CA 90210
Steven D. Lebowitz (8)............ 336,128 8.2 269,315 5.9 12.8 --
439 N. Bedford Drive
Beverly Hills, CA 90210
Richard Lesher.................... 9,000 * -- * * --
1126 Cider Press Road
Chambersburg, PA 17201
Leslie D. Michelson............... 4,500 * -- * * --
2400 Broadway, Suite 100
Santa Monica, CA 90404
Reese L. Milner................... 5,000 * 47,486 (9) 1.0 1.1 --
439 N. Bedford Drive
Beverly Hills, CA 90210
George Nagler..................... 6,666 * -- -- * --
439 N. Bedford Drive
Beverly Hills, CA 90210
John H. Rauch..................... 15,000 * -- -- * --
439 N. Bedford Drive
Beverly Hills, CA 90210
Charles P. Reilly................. 5,000 * -- -- * --
2049 Century Park East
Suite 3330
Los Angeles, CA 90067
S. Craig Tompkins (10)............ 10,500 * -- -- * --
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Directors and Executive Officers.. 826,792 20.2% 619,899 13.5% 30.6% 1,000
as a group (11 persons)
</TABLE>
* Less than 1%
See numbered footnotes on the following page.
8
<PAGE>
(1) The number of shares beneficially owned includes shares that the following
individuals have the right to acquire within 60 days of June 25, 1999 upon
exercise of stock options, but not shares that such individuals have the
right to acquire upon exchange of Units, in the following amounts: (a)
33,500 shares as to Messrs. Gottlieb and Lebowitz, (b) 20,000 shares as to
Mr. Carroll (c) 2,666 as to Mr. Hamer, (d) 500 shares as to Dr. Lesher, (e)
6,666 shares as to Mr. Nagler, (f) 15,000 shares as to Mr. Rauch, (g) 5,000
shares as to each of Messrs. Milner, Reilly and Tompkins and (h) 4,500
shares as to Mr. Michelson.
(2) For the purposes of determining the percentage of outstanding Common Stock
held by each person or group set forth in the table, the number of shares
indicated as beneficially owned by such person or group is divided by the
sum of the number of outstanding shares of Common Stock as of June 25, 1999
plus the number of shares of Common Stock subject to options exercisable
currently or within 60 days of June 25, 1999 by such person or group, in
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Assumes that none of the outstanding Units
of the Company are redeemed for or converted into shares of Common Stock.
(3) Units in the Operating Partnership (other than those held by the Company)
are redeemable at the option of the holder for shares of Common Stock or
cash, at the election of the Company, at the date one year from the date of
issuance. All Units, except the 94,149 and 40,350 Units issued to Messrs.
Lebowitz and Gottlieb, respectively, on December 31, 1998, are currently
redeemable. The initial redeemable ratio is one Unit for one share of
Common Stock.
(4) Based on a total of 4,561,327 Units outstanding, including the 3,928,300
Units held by the Company as of June 25, 1999.
(5) Assumes that all Units held by the person or group and all options
exercisable within 60 days of June 25, 1999 held by the person or group are
redeemed or exercised for shares of Commons Stock and that none of the
Units held by other persons are redeemed for or converted into Shares of
Common Stock, notwithstanding the percentage limitations under the
Company's Charter that limit the number of shares that may be acquired by
such person.
(6) Mr. Carroll purchased 1,000 shares of the Company's Series A Preferred
Stock on December 15, 1998. This amount represented 0.07% of the Company's
outstanding Series A Preferred Stock as of June 25, 1999.
(7) Mr. Gottlieb has pledged 110,000 shares of Common Stock and 239,219 Units
to Mr. Milner, members of the Milner family and related entities to secure
certain indebtedness. In addition his remaining 267,832 shares of Common
Stock and 63,879 Units have been pledged to various financial institutions
to secure other indebtedness.
(8) Mr. Lebowitz has pledged 105,000 shares of Common Stock and 159,480 Units
to Mr. Milner, members of the Milner family and related entities to secure
certain indebtedness. In addition his remaining 195,168 shares of Common
Stock and 109,835 Units have been pledged to various financial institutions
to secure other indebtedness. Also includes 2,460 shares of Common Stock
held in trust for the benefit of Mr. Lebowitz's children.
(9) Includes 13,128 Units held by Milner Investment Corporation, which is
controlled by Mr. Milner. Does not include 13,128 shares held by Mr.
Milner's sister, as to which Mr. Milner disclaims beneficial ownership.
(10) Includes 1,400 shares of Common Stock held in trust for the benefit of Mr.
Tompkins' child's trust account, as to which Mr. Tompkins disclaims
beneficial ownership.
9
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of each of the
Company's executive officers. Subject to rights pursuant to any employment
agreements, officers of the Company serve at the pleasure of the Board of
Directors.
<TABLE>
<CAPTION>
Officer
Name Age Position Since
- ----------------------------------- --- ----------------------------------------------------- ---------------
<S> <C> <C> <C>
Daniel M. Gottlieb 58 Chief Executive Officer and Co-Chairman of the Board 1993
Steven D. Lebowitz 58 President and Co-Chairman of the Board 1993
Joseph D. Carroll 43 Senior Vice President 1997
John H. Rauch 68 Senior Vice President, Operations 1996
George Nagler 62 Vice President, General Counsel and Secretary 1998
David Hamer 25 Chief Accounting Officer 1998
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the Company. For the biographical summary of the experience of
Messrs. Gottlieb and Lebowitz, see the biographical summary of the experience of
the directors of the Company.
Mr. Carroll has been a Senior Vice President of the Company since 1997.
Mr. Carroll is responsible for the acquisition of health care properties for the
Company. From 1987 to 1997 he was President of Traid Partners, Inc.; a Costa
Mesa-based company that develops shopping centers, with responsibilities that
included the acquisition of property for development, the arrangement of debt
and equity capital, property management, and disposition of completed centers.
From 1994 to 1995, Mr. Carroll served as Senior Vice President of Caesar's
World, Inc. where he directed resort and gaming expansion in the United States
and South America. Mr. Carroll received his bachelor's degree in business
administration from the University of Southern California in 1981.
Mr. Rauch has been Senior Vice President, Operations for the Company since
1996. Mr. Rauch is responsible for the asset management of all of the Company's
medical office buildings. From 1975 to 1996 he was founder and President of
Camden Consultants, Inc., an economic consulting firm providing clients with
real estate and corporate planning information. Mr. Rauch was President of
Beverly Hills Bancorp from 1968 to 1975. Mr. Rauch received his law degree from
the University of Southern California with honors in 1961 and his bachelor's
degree in economics from the University of California, Los Angeles in 1954.
Mr. Nagler has been Vice President and General Counsel for the Company
since 1998. Mr. Nagler has been in the private practice of law for over 28
years with an emphasis on real estate, business planning, corporate and general
business matters. Mr. Nagler received his law degree from Harvard Law School
Cum Laude and a Bachelor of Commerce from the University of British Columbia
with first class honors. He is currently a member of the Beverly Hills, Los
Angeles County and California Bar Associations. He is past chairman of the Tax
Subcommittee of the Real Estate Section of the Los Angeles County Bar
Association and has lectured frequently on various real estate topics to
attorneys, accountants and real estate professionals.
Mr. Hamer has been Controller and Chief Accounting Officer of the Company
since 1998. Mr. Hamer worked for Deloitte & Touche LLP from 1995 to 1998;
specializing in real estate. He graduated from the University of California,
Los Angeles in 1995 with a Bachelor of Arts degree in political science and a
specialization in business administration. Mr. Hamer is a registered Certified
Public Accountant.
10
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to the
chief executive officer of the Company and the four other most highly
compensated executive officers of the Company whose cash compensation exceeded
$100,000 during the fiscal year ended December 31, 1998 (collectively, the
"Named Executive Officers"). The Company did not grant any restricted stock
awards or stock appreciation rights or make any long-term incentive plan payouts
during such period.
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Compensation Securities
Fiscal Year ------------------------------------------ Underlying
Ended Other Annual Options/
Name and Principal Position December 31 Salary($) Bonus($) Compensation($) SARS(#)
- --------------------------- ----------- --------- -------- --------------- -------
<S> <C> <C> <C> <C> <C>
Daniel M. Gottlieb............. 1998 $255,000 --- --- ---
Chief Executive Officer, 1997 230,000 $ 25,000 $725,500(1) ---
Co-Chairman of the Board 1996 181,100 15,000 275,000(2) ---
and Director
Steven D. Lebowitz............. 1998 $255,000 --- --- ---
President, Co-Chairman 1997 230,000 $ 25,000 $725,200(1) ---
of the Board and Director 1996 181,100 15,000 225,000(2) ---
Joseph Carroll................. 1998 $120,000 $191,227 --- ---
Senior Vice President 1997 75,000(3) 120,000 --- 40,000
1996 --- --- --- ---
John Rauch..................... 1998 $108,864 $ 10,000 --- ---
Senior Vice President 1997 103,680 10,000 --- ---
1996 24,000(3) 5,000 --- 12,000
George Nagler.................. 1998 $100,000(3) $ 25,000 --- 20,000
Vice President, General 1997 --- --- --- ---
Counsel and Secretary 1996 --- --- --- ---
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(1) On December 18, 1997, Messrs. Gottlieb and Lebowitz exercised options
acquiring 67,000 shares of Common Stock each. The Company received cash of
approximately $645,000 from each of Messrs. Gottlieb and Lebowitz as a
result of these option exercises. Other compensation includes taxable
income to Messrs. Gottlieb and Lebowitz in the amount of $708,000 each
based upon the difference between the exercise price of $9.625 per share
and the closing price of $20.1875 per share on December 18, 1997. During
1997, the Company also paid $17,500 and $17,200 for life insurance premiums
for the benefit of Messrs. Gottlieb and Lebowitz, respectively.
(2) Such amounts were paid to Messrs. Gottlieb and Lebowitz partially to defray
tax liabilities imposed on them as a result of the transfer by the Company
of the property at 436 North Bedford Drive, Beverly Hills,
11
<PAGE>
California (which was contributed by Messrs. Gottlieb and Lebowitz to the
Company in exchange for Units in 1993) to the lender in satisfaction of the
loan on the property.
(3) Messrs. Carroll, Rauch and Nagler joined the Company in May 1997, October
1996 and March 1998, respectively. On an annualized basis, Messrs.
Carroll, Rauch and Nagler would have earned base salaries of $120,000 in
1997, $96,000 in 1996 , and $120,000 in 1998, respectively.
Employment Agreements and Arrangements
In December 1993, each of Daniel M. Gottlieb and Steven D. Lebowitz entered
into separate but identical employment agreements with the Company and the
Operating Partnership for a term of three years. The agreements provide for
automatic renewal for succeeding terms of one year unless the Company or Messrs.
Gottlieb or Lebowitz give notice at least three months prior to expiration of
any term. The employment agreements provide for automatic annual increases in
base compensation equal to 5% per annum; however, the Compensation Committee of
the Board of Directors may review the annual base compensation every twelve
months in light of various factors, and following each such review, the annual
base compensation may be increased above the 5% automatic increase.
In addition, each of Messrs. Gottlieb and Lebowitz are entitled to receive
an annual bonus as determined by the Compensation Committee in an amount not to
exceed a maximum of 100% of annual base compensation. Furthermore, each
agreement provides that Messrs. Gottlieb and Lebowitz are entitled: (i) to
participate in all medical, dental, life insurance, retirement, profit sharing,
stock incentive, disability and bonus plans of the Company which may be made
available to executives of the Company (only medical plans presently exist) and
(ii) to severance payments, under certain circumstances, equal to two times
their then-current annual compensation.
The agreements require Messrs. Gottlieb and Lebowitz to devote
substantially all of their working time and best efforts to performance of their
duties for the Company and, during the term of their employment, prohibits them,
with certain exceptions, from directly or indirectly owning or operating or
otherwise investing or participating in any other business that is in
competition with the business of the Company without the prior approval of a
majority of the independent members of the Board of Directors of the Company.
Option Grants for 1998
The following table sets forth information with respect to options granted
to the Named Executive Officers during the fiscal year ended December 31, 1998
pursuant to the Company's 1993 Stock Incentive Plan, as amended. No options
were granted to Messrs. Gottlieb, Lebowitz, Carroll and Rauch during 1998.
<TABLE>
<CAPTION>
% of Total
Options
Number of Granted to
Name and Principal Options Employees in Exercise Price Expiration Grant Date
Position Granted (#) (1) Fiscal Year ($/Share) Date Value ($) (2)
- -------------------------- --------------- --------------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
George Nagler............. 20,000 45.5% $17.375 4/15/08 $33,300
Vice President, General
Counsel and Secretary
</TABLE>
(1) All of the options granted vest between the years 1999 and 2003.
12
<PAGE>
(2) Calculated using the Binary option pricing model. The following variables
were used in this model: risk-free interest rate of 5.01%, 12.1% dividend
yield, expected life of three years and expected volatility of 24.0%.
Aggregated Option Exercises in 1998 and Options Values at December 31, 1998
The following table sets forth information with respect to options
exercised and the value of unexercised options held by the Named Executive
Officers as of the end of the fiscal year ended December 31, 1998. All options
were granted pursuant to the Company's 1993 Stock Incentive Plan, as amended.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised In-The-Money
Number of Options at Options at
Shares Fiscal Year End (#) Fiscal Year End ($) (1)
Name and Principal Acquired on Value --------------------------- ---------------------------
Position Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. Gottlieb........ --- --- 33,500 --- $108,875 ---
Chief Executive Officer
and Co-Chairman of the
Board
Steven D. Lebowitz........ --- --- 33,500 --- $108,875 ---
President and Co-Chairman
of the Board
Joseph Carroll............ --- --- 13,333 26,667(2) --- ---
Senior Vice President
John Rauch................ --- --- 11,000 4,000(3) $ 9,750 ---
Senior Vice President
George Nagler............. --- --- --- 20,000(4) --- ---
Vice President, General
Counsel and Secretary
</TABLE>
See numbered footnotes on the following page.
13
<PAGE>
- ------------
(1) This amount represents solely the difference between the market value at
December 31, 1998 ($12.875) of those unexercised options which had an
exercise price below such market price (i.e., "in-the-money options") and
the respective exercise prices of the options. No assumptions or
representations regarding the "value" of such options are made or intended.
(2) The stock options are exercisable as follows: 20,000 shares of Common Stock
at $16.75 per share, 1/3 on May 28, 1998, 1/3 on May 28, 1999, and 1/3 on
May 28, 2000; and 20,000 shares of Common Stock at $20.125 per share, 1/3
on December 19, 1998, 1/3 on December 19, 1999, and 1/3 on December 19,
2000
(3) The stock options are exercisable as follows: 4,000 shares of Common Stock
that will vest on May 7, 1999 at $13.625 per share.
(4) The stock options are exercisable as follows: 20,000 shares of Common Stock
at $17.375 per share, 1/3 on April 15, 1999, 1/3 on April 15, 2000 and 1/3
on April 15, 2001.
14
<PAGE>
COMPENSATION COMMITTEE REPORT
The following Report of the Compensation Committee and the Stock
Performance Graph included in this proxy statement shall not be deemed filed
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, except to the extent the Company specifically incorporates
this Report or the Stock Performance Graph by reference therein, and shall not
be deemed soliciting material or otherwise deemed filed under either of such
Acts.
The Compensation Committee is chartered to establish the general
compensation policy of the Company, to review and approve compensation of the
executive officers of the Company and to administer all of the Company's
employee benefit plans. The Compensation Committee reviews the overall
compensation program of the Company to assure that it (i) is reasonable and
consistent with competitive practices, (ii) adequately recognizes performance,
and (iii) meets overall Company compensation and business objectives. Messrs.
Lesher and Michelson are the two members of the Compensation Committee.
Compensation Philosophy
Objectives. The primary focus of the Company's compensation program is to
create value for Stockholders. The Committee attempts to promote desired
financial and operational results by attracting, motivating and retaining key
employees with outstanding ability. In addition, the compensation program is
designed to promote teamwork, initiative and resourcefulness on the part of key
employees whose performance and responsibilities directly affect Company
profits. In this regard, the compensation program is designed to balance short
and long-term incentive compensation to achieve desired results and above all to
pay for performance.
Elements. The Company's executive compensation is based on three components
designed in each case to accomplish the Company's compensation philosophy.
Base Salary. Salaries for Messrs. Gottlieb and Lebowitz are reviewed
by the Compensation Committee on an annual basis and may be increased based
upon an assessment of each individual's contribution to the asset and
financial growth of the Company as well as competitive pay levels. Based
on the 1997 annual review of the Compensation Committee, Messrs. Gottlieb
and Lebowitz were granted a base salary increase of $25,000, or 10.9%,
effective January 1, 1998. Based on the Company's performance during 1998,
Messrs. Gottlieb and Lebowitz waived their right to receive the automatic
5% salary increase for 1999 pursuant to their employment agreements; thus,
the Compensation Committee did not meet in 1998 to review the salaries of
Messrs. Gottlieb and Lebowitz.
Bonus. In December 1995, the Compensation Committee adopted an annual
incentive program for Messrs. Gottlieb and Lebowitz based upon the
accomplishment of specific predetermined performance objectives which are
linked to the Company's business plan and approved annually by the
Compensation Committee. Under this program, incentive compensation is
associated with specific performance objectives. In addition, pursuant to
their employment agreements; each of Messrs. Gottlieb and Lebowitz is
entitled to receive an annual bonus equal to 20% of his base salary based
on a 5% increase in funds from operations ("FFO") per share above the prior
year's amount and an additional 8% of base salary for each additional 1%
increase in FFO per share up to a maximum of 100% of annual base
compensation. The annual bonus available to Messrs. Gottlieb and Lebowitz
is equal to the greater of (x) the annual bonus as determined by the
percentage point increase in the Company's FFO as contained in their
employment agreements, or (y) the incentive compensation associated with
specific objectives outlined in the Company's business plan. Based on the
Company's performance during 1998, Messrs. Gottlieb and Lebowitz were
granted no bonus for 1998. The remaining executive officers of the Company
were given bonuses for 1998 based upon the evaluation of their performances
by Messrs. Gottlieb and Lebowitz.
15
<PAGE>
Stock Options. The Compensation Committee may grant stock options and
restricted stock to executives and other key employees of the Company
pursuant to the 1993 Stock Incentive Plan. In 1998, options to purchase
20,000 shares and 8,000 shares of Company Common Stock were granted to Mr.
Nagler and Mr. Hamer, respectively. In determining the grants of stock
options and restricted stock the Compensation Committee will take into
account, among other things, the respective scope of responsibility and the
anticipated performance requirements and contributions to the Company of
each proposed award recipient as well as the amount of prior grants. Stock
options are designed to align the interest of executives with those of the
Stockholders. The Committee is currently contemplating various methods to
provide additional incentives to management and employees of the Company,
including granting additional stock options. The Compensation Committee
believes that significant equity interests in the Company held by the
Company's management serve to retain and motivate management.
Section 162(m). The Commission requires that this Report comment upon the
Company's policy with respect to Section 162(m) of the Code, which limits the
deductibility of compensation over $1 million to certain executive officers
unless, in general, the compensation is paid pursuant to a plan which is
performance related, non-discretionary and has been approved by the Company's
Stockholders. The Company did not pay any compensation in 1998 that would be
subject to the Section 162(m) limitation. The Compensation Committee intends to
establish policies regarding qualification of compensation under Section 162(m)
of the Code to the extent it considers such policies appropriate.
Members of the Compensation Committee
Richard L. Lesher
Leslie D. Michelson
16
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the S&P
500 Index and the Equity REIT Total Return Index ("REIT Equity Index") of the
National Association of Real Estate Investment Trusts ("NAREIT") from December
31, 1993 to December 31, 1998. The REIT Equity Index includes REITs with 75% or
more of their gross invested book value of assets invested directly or
indirectly in the equity ownership of real estate.
The graph assumes that the shares of the Company's Common Stock were
purchased at the IPO price of $18.25 per share and that the value of the
investment in each of the Common Stock and the indices was $100 at the beginning
of the period. The graph further assumes reinvestment of dividends. The
initial period for the REIT Equity Index is February 28, 1994 because it is only
published monthly based on the last closing prices of the preceding month.
Upon written request to the Secretary of the Company, the Company will
provide any stockholder with a list of the REITs included in the REIT Equity
Index. The historical information set forth below is not necessarily indicative
of future performance. Data for the REIT Equity Index and the S&P 500 Index
were provided to the Company by McDonald & Co.
Period Ending
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
--------- --------- --------- --------- --------- ---------
G&L Realty Corp................. $100.00 $ 84.11 $ 76.03 $136.47 $184.33 $123.49
S&P 500......................... 100.00 101.32 139.39 171.26 228.42 293.69
REIT Equity Index............... 100.00 103.70 119.48 164.04 198.75 165.71
</TABLE>
[PERFORMANCE GRAPH APPEARS HERE]
17
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy pursuant to which material transactions
between the Company and its executive officers, directors and principal
Stockholders (i.e., Stockholders owning beneficially 5% or more of the
outstanding voting securities of the Company) are submitted to the Board of
Directors for approval by a disinterested majority of the directors voting with
respect to the transaction. For this purpose, a transaction is deemed material
if such transaction, alone or together with a series of similar transactions
during the same fiscal year, involves an amount which exceeds $60,000.
On December 31, 1998, the Company acquired an office and retail complex
located in Coronado, California from a limited liability company (the "LLC")
owned by Messrs. Gottlieb and Lebowitz, each of whom is both a director and an
officer of the Company. Messrs. Gottlieb and Lebowitz held interests in the LLC
of 30% and 70%, respectively. The property was acquired for an aggregate
purchase price of $9.5 million. The Company assumed $7.5 million in long-term
debt and issued 134,499 Units valued at $2.0 million. The Units were issued at
an effective price of $14.87 per Unit, a 15.5% premium over the $12.875 closing
price of the Company's Common Stock on December 31, 1998. In connection with
the purchase of the property, G&L Coronado Managers Corp., an entity owned 30%
and 70% by Messrs. Gottlieb and Lebowitz, respectively, signed a lease with the
Company for the entire third floor of the building. Under the terms of the
lease, G&L Coronado Managers Corp. will lease the executive suites located on
the third floor of the building on behalf of the Company for rental payments
equal to $19,000 per month. The lease expires on November 30, 2010.
During 1998, a subsidiary of PHP Healthcare, Inc. ("PHP") occupied 100% of
six medical office buildings in New Jersey owned by the Company, which accounted
for approximately 10.8% of the Company's total rental revenues. The Company
also purchased $2.8 million of PHP bonds for approximately $1.3 million during
1998. In late November 1998, both PHP and its subsidiary filed for bankruptcy.
As a result, the Company has increased its reserves for delinquent rents and
established a reserve against the bonds. Mr. Reilly, one of the Company's
directors, is the Chairman of the Board of Directors of PHP.
On April 15, 1999, the Company borrowed $2.0 million from Reese L. Milner,
a director of the Company. The loan bore interest at 12% per annum and was due
on May 13, 1999. The Company also paid a loan fee of $20,000 to Mr. Milner. The
loan was secured by a first trust deed against a parcel of real property owned
by the Company. On May 13, the loan was extended until new financing on the
building was obtained. On June 13, the Company repaid the loan.
On May 4, 1999, the Company sold a vacant parcel of real property for $1.6
million to the Craig Corporation, whose president is S. Craig Tompkins, a
director of the Company. The Company has the option to repurchase the property
beginning on November 15, 1999 and ending on December 3, 1999 for $1.8 million
plus any costs incurred by the Craig Corporation with respect to the property.
Beginning on January 24, 2000 and ending on January 31, 2000, the Craig
Corporation has the option to sell the property to the Company for $1.9 million.
Thereafter, the option sale price will increase at a rate of 3% per month,
adjusted pro rata for any periods of less than one month. The Company intends
to account for this transaction in accordance with FAS 66 "Accounting for Sales
of Real Estate."
18
<PAGE>
PROPOSAL 2
ADOPTION OF AN AMENDMENT TO THE CHARTER WHICH WOULD GIVE THE BOARD OF DIRECTORS
THE AUTHORITY (I) TO WAIVE THE OWNERSHIP LIMITATION UNDER THE CHARTER FOR ANY
PERSON(S), AND (II) TO DECREASE THE OWNERSHIP LIMIT UNDER THE CHARTER FOR ALL
OTHER PERSONS
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to adopt the Charter amendment which would permit
the Board of Directors to waive the ownership limitation under the Charter for
any person(s) and to decrease the ownership limit for all other persons. The
Charter amendment is intended (i) to give the Board of Directors more
flexibility in considering proposals by individuals who wish to make a
substantial investment in the Company which would be in excess of the ownership
limit, (ii) to give the Board of Directors the ability to expand the number of
potential bidders interested in making a competitive proposal if there is an
interested bidder, (iii) to permit the Company to continue to repurchase shares
of the Company from time to time, and (iv) to permit Messrs. Gottlieb and
Lebowitz to convert their Units into Common Stock.
In accordance with Maryland law, the Charter amendment must be approved by
the Stockholders of the Company by the affirmative vote of two-thirds of the
outstanding shares of Common Stock of the Company. The Charter amendment was
unanimously declared advisable by the Board of Directors on May 25, 1999.
Accordingly, the Board of Directors recommends a vote in favor of the Charter
amendment.
The discussion below sets forth the reason for the ownership limitation,
the exception to the ownership limitation as set forth in the Charter at
present, the reasons for the Charter amendment, the effect of the Charter
amendment and the text of the Charter amendment.
In order for the Company to qualify as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), the
ownership of more than 50 percent of the Company's shares cannot be held by five
or fewer individuals during the last half of its taxable year. To prevent a
violation of this five-or-fewer rule, the Company's Charter contains an "excess
shares" provision, which provides for the exchange of excess shares for shares
of equity stock which are transferred in excess of the ownership limit. The
ownership limit under the Charter is currently at 9.8% (in value or in number of
shares, whichever is more restrictive) of the outstanding shares of the
Company's equity stock, which includes the Company's Common Stock and Preferred
Stock.
At present, the Charter gives the Board of Directors the authority to
exempt a person from the ownership limitation, subject to certain limitations.
One of the limitations is that such person cannot be an individual for purposes
of the Code. The reason for this limitation is that for purposes of the five-or-
fewer rule, the Code "looks through" stock bonus, pension and profit sharing
plans and certain other types of investors to their beneficiaries. For example,
for a pension plan which owns the Company's Common Stock and has 100
participants, the Company's Common Stock held in such plan would be considered
held by 100 individuals, rather than just one individual. In limiting the
exemption to non-individuals, the thought was that this was more protective in
preventing a violation of the five-or-fewer rule.
The current exemption, which is set forth in subparagraph B(4)(i) of
Article IV in the Charter, provides as follows:
"(i) Exceptions.
----------
The Board of Directors, with a ruling from the Internal Revenue
Service or an opinion of counsel, may exempt a Person from the Ownership
Limits if such Person is not an individual for purposes of Section
542(a)(2) of the Code and the Board of Directors obtains such
representations and undertakings from such Person as are reasonably
necessary to ascertain that no individual's Beneficial Ownership of Equity
Stock will violate the Ownership Limit, agrees that if the IRS Ruling
Satisfactory To The Corporation has been obtained that any violation or
attempted violation will result in such Equity Stock being exchanged for
Excess Stock in accordance with subparagraph B(4)(c) of this Article IV,
and the
19
<PAGE>
Board of Directors is otherwise satisfied that such ownership will not then
or in the future jeopardize the Corporation's status as a REIT."
The Board of Directors believes that the Charter should be amended to
increase the flexibility of the Board of Directors by giving the Board the
authority to waive the ownership limitation for individuals who propose to make
a substantial investment in the Company, to allow the Board of Directors to
provide incentives for competitive proposals when there is already an interested
person making an offer thereby potentially increasing the price per share that a
successful bidder may pay, to permit the Company to continue to repurchase
shares of the Company from time to time, and to permit Messrs. Gottlieb and
Lebowitz to convert their Units to Common Stock. In certain cases, the Board of
Directors may determine that it is in the best interests of the Company and its
stockholders to permit an individual to make an investment in the Company which
would be in excess of the ownership limit. By giving the Board the authority to
waive the ownership limit for such a person, the Board of Directors will be able
to consider such proposals. In certain circumstances, the Board of Directors may
be able to attract competitive bidders when there already is one interested
buyer of a substantial number of shares of Common Stock. This may benefit the
existing stockholders by tending to raise the price per share that an interested
investor may be prepared to pay.
In addition, the Board of Directors has in the past and may in the future
determine that it is in the best interests of the Company and its stockholders
to repurchase shares of the Company's equity stock. Repurchasing shares of the
Company's stock reduces the number of outstanding shares of the Company's stock
and may at some point in the future have the effect of causing certain
stockholders to violate the ownership limit. By giving the Board the authority
to waive the ownership limit for such stockholders, the Company would have
greater flexibility in repurchasing shares of the Company's stock. Last, the
Board would be able to grant waivers to Messrs. Gottlieb and Lebowitz so that
they would be able to convert their Units to Common Stock as contemplated in the
partnership agreement they entered into with the Company and the operating
partnership in 1993. Many other real estate investment trusts provide their
boards of directors with this power.
The Charter amendment would give the Board of Directors the authority to
waive the ownership limitation for any person, including an individual. The
Board's authority to waive the ownership limitation for any person will still be
subject to the requirement that the five-or-fewer rule is met. To help comply
with the five-or-fewer rule, the Charter amendment also contains a provision
which allows the Board of Directors to decrease the ownership limit for all
other persons. However, Stockholders whose ownership at that point would be
above the decreased ownership limit would not be in violation of the ownership
limit, but they would not be able to increase their ownership above that level.
If the Charter amendment is approved by the requisite vote of Stockholders and
the Board grants waivers to Messrs. Gottlieb and Lebowitz, then Messrs. Gottlieb
and Lebowitz would be able to own a greater percentage of the Company than they
would be able to otherwise.
The Board of Directors is not aware that there are interested investors
currently proposing to make a substantial investment in the shares of Common
Stock; nor does the Company currently intend to repurchase such a number of its
shares such that Messrs. Gottlieb or Lebowitz's ownership would exceed the
existing ownership limit; nor is the Board of Directors aware that either of
Messrs. Gottlieb or Lebowitz currently intends to convert part or all of their
Units into Common Stock.
The proposed Charter amendment, which would amend the current subparagraph
B(4)(i) of Article IV in the Charter, would provide as follows:
"(i) Exceptions.
----------
(i) Subject to subparagraph B(4)(b)(iv) and (v) of Article IV, the
Board of Directors, with a ruling from the Internal Revenue Service,
an opinion of counsel or other evidence satisfactory to the Board of
Directors to the effect that the waiver described below would not
adversely affect the ability of the Company to qualify as a REIT under
the Code and upon at least 15 days written notice from a Person(s)
prior to a proposed Transfer (or prior to an event other than a
Transfer) which, if consummated, would result in such Person(s) owning
shares in excess of the Ownership Limit, and upon such other
conditions as the Board of Directors may direct, may waive, as
determined in its sole discretion, the Ownership Limit with respect to
such Person(s).
(ii) In connection with the waiver of the Ownership Limit pursuant
to subparagraph B(4)(i)(i) above or at any other time, the Board of
Directors may decrease the Ownership Limit for all other Persons;
provided, however, that the decreased Ownership Limit will not be
effective for any Person whose percentage ownership in Equity Stock is
in excess of such decreased Ownership Limit until such time as such
Person's percentage ownership of Equity Stock equals or falls below
the decreased Ownership Limit, but any further acquisition of Equity
Stock in excess of such percentage ownership of Equity Stock will be a
violation of the Ownership Limit."
The affirmative vote of two-thirds of the outstanding shares of the
Company's Common Stock, with each share entitled to one vote, is required for
approval of the Charter amendment.
20
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMMENDS A VOTE "FOR" APPROVAL OF THE
CHARTER AMENDMENT. PROXIES RECEIVED WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY OTHERWISE IN THE PROXY.
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee, has
appointed Deloitte & Touche LLP, certified public accountants, as the
independent auditors of the Company for the fiscal year ending December 31,
1999. Deloitte & Touche LLP has served as the principal independent public
accountants for the Company since its formation in 1993. Deloitte & Touche LLP
has advised the Company that it has no direct or indirect financial interest in
the Company or any of its subsidiaries, and that it has had, since the Company's
organization, no connection with the Company or any of its affiliates other than
as independent auditors and related activities.
The financial statements of the Company for the period ended December 31,
1998, and report of the auditors thereon, will be presented at the Annual
Meeting. Deloitte & Touche LLP will have a representative present at the
meeting who will have an opportunity to make a statement if he or she so desires
and to respond to appropriate questions.
During 1998, Deloitte & Touche LLP provided services consisting of the
audit of the financial statements of the Company for the year ended December 31,
1998, consultations with respect to the Company's quarterly financial
statements, reports and registration statements filed with the Securities and
Exchange Commission, consultation relating to tax matters including preparation
of the Company's tax returns and other pertinent matters.
If the Stockholders of the Company do not ratify the selection of Deloitte
& Touche LLP, or if such firm should decline decline to act or otherwise become
incapable of acting, or if the employment should be discontinued, the Board of
Directors, an the recommendation of the Audit Committee, will appoint substitute
indepedent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE YEAR ENDED DECEMBER 31, 1999. PROXIES RECEIVED WILL BE SO
VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THE PROXY.
OTHER MATTERS
Submission of Stockholder Proposals. For a matter to be properly presented
at the Annual Meeting by a stockholder, the Secretary of the Company must have
received written notice thereof after March 6, 1999 and before April 6, 1999,
as specified in the Company's Bylaws.
A stockholder proposal submitted pursuant to Exchange Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the 2000 Annual
Meeting of Stockholders must be received by the Company before March 17, 2000.
Such a proposal must also comply with the requirements as to form and substance
established by the Commission for such proposals. A stockholder otherwise
desiring to bring a proposal before the 2000 Annual Meeting of Stockholders
(including generally any proposal relating to the nomination of a director to be
elected ot the Board of Directors) must deliver the proposal to the principal
executive officers of the Company between June 2, 2000 and July 2, 2000 (not
less than 60 or more than 90 days prior to the first anniversary of the previous
year's annual meeting). Any such proposal should be mailed to: G&L Realty
Corp., 439 N. Bedford Drive, Beverly Hills, California, 90210, Attn: Secretary.
Copies of the Charter and Bylaws may be obtained by providing a written request
to the Secretary of the Company at that address.
21
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Section 16(a) Beneficial Ownership Reporting Compliance. Based solely upon
a review of Securities and Exchange Commission Forms 3, 4 and 5 furnished to the
Company and certain written representations, the Company believes that all
reports required by Section 16(a) of the Securities and Exchange Act of 1934
with respect to the Company's fiscal year ended December 31, 1998 have been
filed by its officers and directors.
Other Matters. The Board of Directors of the Company knows of no matters
to be presented at the Annual Meeting other than those described in this proxy
statement. Other business may properly come before the meeting, and in that
event it is the intention of the persons named in the accompanying proxy to vote
in accordance with their judgment on such matters.
Annual Report. The Company's Annual Report, including the Company's
audited financial statements for the year ended December 31, 1998, is being
mailed herewith to all Stockholders of record. The Annual Report however is not
part of the proxy solicitation material.
22
<PAGE>
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ George Nagler
George Nagler
Secretary and General Counsel
Beverly Hills, California
July 15, 1999
23
<PAGE>
G & L REALTY CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON AUGUST 31, 1999
<TABLE>
<C> <S>
P The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
R of G&L Realty Corp. ("the Company") and the accompanying Proxy Statement. This proxy revokes
O all prior proxies and appoints each of Daniel M. Gottlieb, Steven D. Lebowitz and
X George Nagler proxies of the undersigned, each with full power of substitution, to
Y represent the undersigned, and to vote all shares of Common Stock of the Company owned by
the undersigned, at the Annual Meeting of Stockholders of the Company to be held at the
Beverly Hilton Hotel, 9876 Wilshire Boulevard, Beverly Hills, California, on August 31, 1999
at 9:00 a.m., local time, and at any adjournment(s) or postponement(s) of the meeting,
with all powers the undersigned would be entitled to vote if personally present.
1. ELECTION OF DIRECTORS [_] FOR all nominees listed below (except as marked to the contrary
below)
[_] WITHHOLD AUTHORITY to vote for all nominees listed below
(Instruction: To withhold authority to vote for any individual nominee, strike a line
through the nominee's name on the list below.)
Daniel M. Gottlieb Steven D. Lebowitz Richard L. Lesher
Leslie D. Michelson Charles P. Reilly S. Craig Tompkins
2. APPROVAL OF THE CHARTER AMENDMENT WHICH WOULD GIVE THE BOARD OF DIRECTORS THE AUTHORITY
(I) TO WAIVE THE OWNERSHIP LIMITATION UNDER THE CHARTER FOR ANY PERSON(S), AND (II) TO
DECREASE THE OWNERSHIP LIMIT UNDER THE CHARTER FOR ALL OTHER PERSONS.
[_] FOR
[_] AGAINST
[_] ABSTAIN
3. RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT ACCOUNTANTS OF
THE COMPANY FOR 1999.
[_] FOR
[_] AGAINST
[_] ABSTAIN
4. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENTS OR POSTPONEMENTS OF THE MEETING AND AS TO WHICH THE UNDERSIGNED HEREBY CONFERS
DISCRETIONARY AUTHORITY.
This proxy when properly executed will be voted in the manner directed above by the
undersigned Stockholder. If no direction is made, this proxy will be voted FOR Proposal 1,
FOR Proposal 2, FOR Proposal 3 and in the discretion of the proxies on any matters arising
under Proposal 4.
Dated: _______________________________________________ 1999 .......................................
PLEASE MARK/SIGN, DATE AND RETURN THIS PROXY Signature
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name is printed. When shares are
held by joint tenants, both should sign. When signing as an
attorney, executor, administrator, trustee or guardian, .......................................
please give your full title as such. If a corporation, Signature if held jointly
please sign the full corporate name by the President or other
authorized officer. If a partnership, please sign in
partnership name by an authorized person.
</TABLE>
