SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Grove Property Trust
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
---------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------
5) Total fee paid:
---------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
GROVE PROPERTY TRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 1999
To our Shareholders:
The Annual Meeting of Shareholders of Grove Property Trust, a Maryland
real estate investment trust (the "Company"), will be held at The Hartford Club,
46 Prospect Street, Hartford, Connecticut, on Friday, June 18, 1999, at 11:00
a.m., local time, for the purpose of acting upon the following matters, as well
as such other business as may properly come before the Annual Meeting or any
adjournment thereof:
1. The election of three Trust Managers, each to serve until the
annual meeting of the Company's Shareholders to be held in 2002;
2. The ratification of the appointment of Ernst & Young LLP as the
Company's independent public accountants for the year ending
December 31, 1999; and
3. The consideration of any other business which may properly come
before the Annual Meeting.
Only shareholders of record on the books of the Company at the close
of business on April 23, 1999 will be entitled to vote at the Annual Meeting or
any adjournment thereof.
In order that your shares may be represented at the Annual Meeting,
please date and sign the enclosed proxy card and return it promptly in the
enclosed envelope. If you attend the Annual Meeting, you may vote in person even
though you have previously sent in your proxy card.
A copy of the Company's Annual Report for the year 1998 is enclosed.
By order of the Board of Trust Managers,
Joseph R. LaBrosse
Chief Financial Officer,
Secretary and
Treasurer
<PAGE>
Hartford, Connecticut
April 30, 1999
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
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<PAGE>
GROVE PROPERTY TRUST
598 ASYLUM AVENUE
HARTFORD, CONNECTICUT 06105
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 18, 1999
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Trust Managers (the "Board") of Grove Property Trust, a Maryland
real estate investment trust ("Grove" or the "Company"), of proxies from the
holders (the "Shareholders") of the Company's issued and outstanding common
shares of beneficial interest, $0.01 par value per share (the "Common Shares"),
in connection with the Annual Meeting of Shareholders to be held on Friday, June
18, 1999, at The Hartford Club, 46 Prospect Street, Hartford, Connecticut 06103,
at 11:00 a.m. local time, and at any adjournment(s) or postponement(s) of such
meeting (the "Annual Meeting"), for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders.
This Proxy Statement and enclosed Proxy Card are being mailed to the
Shareholders on or about May 5, 1999.
At the Annual Meeting, the Shareholders will consider and vote upon
proposals (the "Proposals") set forth in the accompanying Notice of Annual
Meeting.
Only the holders of the Common Shares at the close of business on
April 23, 1999 (the "Record Date"), are entitled to vote at the Annual Meeting.
Each Common Share is entitled to one vote on all matters. As of the Record Date,
8,508,553 Common Shares were outstanding.
A majority of all votes entitled to be cast at the Annual Meeting
shall constitute a quorum for the transaction of business at the Annual Meeting.
A plurality of all votes cast at the Annual Meeting is sufficient to elect a
Trust Manager (Proposal 1). The affirmative vote of a majority of the Common
Shares voted is required to ratify the appointment of Ernst & Young LLP as the
Company's independent public accountants (Proposal 2). Abstentions and broker
non-votes will not be counted as votes cast and will have no effect on the
result of the vote on Proposals 1 and 2.
The Common Shares represented by all properly executed proxies will be
voted at the Annual Meeting as indicated or, if no instruction is given, in
favor of each of the Proposals. As to any other business which may properly come
before the Annual Meeting, all properly executed proxies will be voted by the
persons named therein in accordance with their best judgment. Grove does not
know of any business other than the Proposals which may come before the Annual
Meeting.
<PAGE>
Any person giving a proxy has the right to revoke it at any time
before it is exercised (a) by filing with the Secretary of the Company a duly
signed revocation or a proxy bearing a later date or (b) by electing to vote in
person at the Annual Meeting. A notice of revocation need not be on any specific
form.
The By-laws of the Company provide that any shareholder who nominates
anyone for election to the Board or proposes any business to be considered at an
annual meeting must give written notice thereof to the Secretary of the Company
at the Company's principal executive office not less than 60 nor more than 90
days prior to the date corresponding to the date on which the preceding year's
annual meeting was held. The shareholder must be a shareholder of record at the
time of giving the notice and be entitled to vote at the relevant annual
meeting. The notice must contain, in the case of nominations to the Board,
information about the nominee required to be included in a proxy statement
prepared in accordance with the rules of the Securities and Exchange Commission
and the nominee's written consent to serve if elected, and in the case of other
business proposed for the annual meeting, a brief description of the business
and the reason(s) therefor. In addition, certain information about the
shareholder giving the notice must be included.
PROPOSAL 1
ELECTION OF TRUST MANAGERS
The number of Trust Managers comprising the Board is currently nine,
divided into three classes. Each class is elected to serve a three-year term,
and classes are elected on a staggered basis. The three Trust Managers who are
nominated for election by the Shareholders at the Annual Meeting are J. Joseph
Garrahy, Joseph R. LaBrosse and Gerald A. McNamara. Three Trust Managers, Damon
D. Navarro, Harold V. Gorman and J. Timothy Morris, have been elected to hold
office until the Annual Meeting of Shareholders to be held in 2000 and three
Trust Managers, Keith W. Munsell, Edmund F. Navarro and James F. Twaddell, have
been elected to hold office until the Annual Meeting of Shareholders to be held
in 2001.
The affirmative vote of the holders of a plurality of the Common
Shares voted at the Annual Meeting in person or by proxy is required for the
election of each nominee for Trust Manager. Unless otherwise specified therein,
any proxy received will be voted FOR the election of the listed nominees.
The nominees for Trust Manager and the continuing Trust Managers,
their present principal occupation or employment as of April 15, 1999, and other
positions held during the past five years are set forth below.
NOMINEES FOR ELECTION AS TRUST MANAGERS TO SERVE UNTIL THE 2002 ANNUAL MEETING:
J. JOSEPH GARRAHY, age 68, has been a Trust Manager of Grove since its
formation in June 1994. Mr. Garrahy has served as President of J. Joseph Garrahy
& Associates, Inc., in Providence, Rhode Island, a business consulting firm,
since its formation in 1990. Mr.
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<PAGE>
Garrahy began his career in public service in 1962 as a Rhode Island State
Senator. In 1968, he was elected Lieutenant Governor of the State of Rhode
Island, where he served four two-year terms. In 1976, Mr. Garrahy was elected
Governor of the State, and was re-elected to that office in 1978, 1980 and 1982.
He served as Chairman of the National Governors' Association's Subcommittee on
Health Policy in 1977 and the National Governors' Association's Human Services
Committee and as Chairman of the Coalition of Northeast Governors' Committee on
Transportation. Mr. Garrahy was a Senior Vice President with the merchant
banking firm of G. William Miller & Company, Inc. of Washington, D.C., from 1985
to 1990. He is a Director of the Providence and Worcester Railroad Company. Mr.
Garrahy attended the University of Buffalo and the University of Rhode Island.
JOSEPH R. LABROSSE, age 36, has been the Chief Financial Officer,
Secretary and Treasurer as well as a Trust Manager of Grove since its formation
in June 1994. Prior to March 1997, Mr. LaBrosse was Chief Financial Officer of
the Grove Companies since 1988. He is responsible for financing, loan portfolio
management, financial reporting, tax planning, cash management, strategic
budgeting and planning. Prior to joining the Company's predecessor in 1988, Mr.
LaBrosse was a real estate tax consultant at Arthur Andersen & Co. in Hartford,
Connecticut. He is a magna cum laude graduate of the University of Connecticut
with a degree in Accounting. He is a licensed Certified Public Accountant and a
member of the American Institute of Certified Public Accountants, the
Connecticut Society of Certified Public Accountants and the Real Estate Finance
Association.
GERALD A. MCNAMARA, age 59, has been the Executive Vice President -
Marketing and Strategic Planning of the Company since 1997 and was Vice
President - Marketing and Investor Relations of the Company from its formation
in June 1994 to 1997. Mr. McNamara has been a principal of the Company and its
predecessor since 1982 and a Trust Manager of the Company since November 1998.
Mr. McNamara is responsible for public relations and strategic planning. Prior
to joining the Company, Mr. McNamara was Senior Vice President of Heublein
International responsible for its food and beverage operations overseas. Mr.
McNamara is a graduate of Trinity College with a degree in History and
Economics.
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THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE ABOVE
NOMINEES FOR TRUST MANAGER.
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CONTINUING TRUST MANAGERS SERVING UNTIL THE 2000 ANNUAL MEETING:
J. TIMOTHY MORRIS, age 32, has been a Trust Manager of Grove since
March 1999. Mr. Morris joined Morgan Stanley Dean Witter & Co. in 1988, and is
currently a Principal for the Firm's real estate direct investment activities,
where he is responsible for the Morgan Stanley Real Estate Special Situations
Program. He has recently relocated to New York from Hong Kong, where he was in
charge of Morgan Stanley Dean Witter's Non-
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<PAGE>
Japan Asia real estate activities, which included both agency and direct
investment initiatives. He has spent the last eleven years working in New York
and Hong Kong, where he has assisted several corporate financial clients access
to the international debt and equity capital markets. He has executed principal
investments on behalf of Morgan Stanley Dean Witter & Co. He received his B.S.
in Finance from Indiana University in May of 1988.
HAROLD V. GORMAN, age 55, has been a Trust Manager of Grove since its
formation in June 1994. From 1968 to 1993, Mr. Gorman served as Vice President
and Assistant General Counsel of IDV North America. From 1993 to 1995, he served
as Vice President/General Counsel to the Paddington Corporation. From 1995 to
1999, he served as Vice-President and Regulatory Counsel of Heublein, Inc.,
located in Hartford, Connecticut. Since [January] 1999, he has been Vice
President and General Counsel of Allied Domecq, PLC. He received his B.A. from
Wesleyan University in 1965 and his J.D. from the University of Connecticut Law
School. Mr. Gorman is a member of the Connecticut Bar Association, the American
Bar Association and the Board of Directors of the Connecticut Arthritis
Foundation.
DAMON D. NAVARRO, age 45, has been the Chairman of the Board,
President and Chief Executive Officer of Grove since its formation in June 1994.
Mr. Navarro co-founded the Company's predecessor in 1980 and is responsible for
new business development and strategic planning. Mr. Navarro is a graduate of
the University of Rhode Island with a degree in Finance.
CONTINUING TRUST MANAGERS SERVING UNTIL THE 2001 ANNUAL MEETING:
KEITH W. MUNSELL, age 51, has been a Trust Manager of Grove since
November 1998. Mr. Munsell is a real estate professional with 22 years of
experience in construction and management of residential and commercial
property. He is the Chief Operating Officer and Executive Vice President of the
McNeil Real Estate Group, Inc. of Dedham, Massachusetts. Mr. Munsell is also a
faculty member of the school of Management at Boston University. He received a
BSCE from Rutgers University in June 1969, with a major in civil engineering and
a MBA from Boston University in May 1971.
EDMUND F. NAVARRO, age 38, has been a Trust Manager of Grove since
April 1997 and Chief Operating Officer of the Company since 1997. From its
formation in 1994 to 1997, Mr. Navarro was Vice President--Property Management
of Grove. Prior to the March 1997 acquisition by the Company of the property
management and related liabilities of Grove Property Services Limited
Partnership ("GPS") and of properties formerly controlled by affiliates of the
Company's executive officers (collectively, the "Grove Companies"), Edmund
Navarro was President of GPS since 1983. He is responsible for the management of
the properties owned by Grove, marketing and supervision of construction
projects and had similar responsibilities for the Grove Companies. Prior to his
employment with the Grove Companies, Mr. Navarro was a Media Marketing Planner
with
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<PAGE>
Vitt Median International in New York City. Mr. Navarro is a graduate of the
University of Rhode Island with a degree in Marketing.
JAMES F. TWADDELL, age 58, has been a Trust Manager of Grove since
June 1994. He has been a member of the Investment Banking Group of Schneider
Securities, Inc., Providence, Rhode Island, since 1995. From 1974 to 1995, Mr.
Twaddell served as Chairman of Barclay Investments, Inc., a member firm of the
National Association of Securities Dealers, Inc. ("NASD"). Mr. Twaddell also
served as Chairman of the Regional Investment Bankers Association, a 125-member
cooperative association of regional investment bankers and broker dealers
conducting business throughout the United States, from 1993 to 1994. For the
1993 - 1995 term, he served on both the NASD District 11 Committee and the
District Business Conduct Committee. He has served as Chairman of the Board of
First Mutual Fund, a publicly traded mutual fund, since 1979. Mr. Twaddell
received his B.A. degree from Brown University in 1961.
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<PAGE>
EXECUTIVE OFFICERS
Each executive officer holds office at the pleasure of the Board,
subject to the Employment Agreements described below. The executive officers of
Grove (the "Executive Officers") and their positions and offices with Grove as
of the date hereof are set forth below:
Name Age Positions and Offices Held
---- --- --------------------------
Damon D. Navarro 45 Chairman of the Board, President, and Chief
Executive Officer
Joseph R. LaBrosse 36 Chief Financial Officer, Secretary and
Treasurer
Edmund F. Navarro 38 Chief Operating Officer
Munawar A. Cheema 33 Chief Investment Officer
Brian A. Navarro 44 Executive Vice President - Acquisitions
Gerald A. McNamara 59 Executive Vice president - Marketing and
Strategic Planning
Information as to the recent business experience of Damon Navarro,
Joseph LaBrosse, Edmund Navarro and Gerald McNamara is included above.
MUNAWAR A. CHEEMA, joined the Company in 1996 and serves as its Chief
Investment Officer. His responsibilities include negotiating acquisition and
disposition transactions and structuring financing for such transactions. Prior
to joining the Company, Mr. Cheema was an Associate Vice President with
Citicorp's commercial mortgage backed securities business. He graduated from
Columbia University in 1989 and received an M.S. in electrical engineering from
Columbia's Center for Telecommunications in 1991.
BRIAN A. NAVARRO, has been Executive Vice President - Acquisitions of
the Company since 1997 and was Vice President - Acquisitions of the Company from
its formation in June 1994 to 1997. Mr. Navarro is responsible for the
acquisition and disposition of properties for the Company. Prior to co-founding
the Company's predecessor in 1980, Brian Navarro acquired, renovated and resold
over 30 residential properties in the Hartford, Connecticut, Springfield,
Massachusetts, and Westerly, Rhode Island, markets. Mr. Navarro is a graduate of
the University of Connecticut with a degree in Finance and a concentration in
real estate.
Damon, Brian and Edmund Navarro are brothers. No family relationship
exists among any of the other Trust Managers or Executive Officers of Grove. No
arrangement or understanding exists between any Trust Manager or Executive
Officer and any other person pursuant to which any Trust Manager or Executive
Officer was elected as a Trust Manager or Executive Officer. Subject to the
provisions of their respective Employment Agreements, Executive Officers of the
Company are elected by and serve at the discretion of the Board.
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<PAGE>
INDEBTEDNESS OF MANAGEMENT
Beginning in November 1998, the Company extended credit to Mr. Cheema
in order to facilitate certain purchases of Common Shares by Mr. Cheema. The
loans to Mr. Cheema bear interest at LIBOR plus 1.6% and are evidenced by a
promissory note, dated as of November 30, 1998, pursuant to which any dividends
paid on the Common Shares purchased by Mr. Cheema shall be applied to the
payment of interest on such promissory note.
A revolving credit facility (the "Facility") has been established with
BankBoston, N.A. ("BankBoston") pursuant to which BankBoston will make unsecured
loans to each of the Executive Officers (other than Munawar Cheema) of up to an
aggregate principal amount not to exceed $2,150,000 for each participating
Executive Officer. The Company has guaranteed the obligations of the Executive
Officers (other than Munawar Cheema) under the Facility and participating
Executive Officers have agreed that all loan proceeds will be used to purchase
Common Shares. As of March 31, 1999, the following Executive Officers had
aggregate principal balances outstanding under the Facility as follows: Damon
Navarro $2,052,470, Edmund Navarro $2,052,218, Brian Navarro $1,783,812, Joseph
LaBrosse $1,050,542, and Gerald McNamara $330,218.
SECURITY OWNERSHIP OF TRUST MANAGERS AND EXECUTIVE OFFICERS
The following table sets forth information as of the Record Date
regarding the beneficial ownership of Common Shares by each Trust Manager and
Executive Officer of Grove named in the Summary Compensation Table below (the
"Named Executive Officers"), and by all Trust Managers and Named Executive
Officers of Grove as a group. Each person named in the table has the sole voting
and investment power with respect to all shares shown as beneficially owned by
such person, except as otherwise set forth in the notes to the table.
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS OF COMMON COMMON
BENEFICIAL OWNER(1) SHARES SHARES
Damon D. Navarro.............................. 720,776(2) 8.0%
Joseph R. LaBrosse............................ 255,984(3) 3.0%
Edmund F. Navarro............................. 654,904(4) 7.3%
J. Timothy Morris............................. 1,700,766(5) 20.0%
James F. Twaddell............................. 65,716(6) *
Harold V. Gorman.............................. 14,725(7) *
J. Joseph Garrahy............................. 16,725(8) *
Brian A. Navarro.............................. 675,206(9) 7.5%
Gerald A. McNamara............................ 119,858(10) 1.4%
Keith W. Munsell................................ - *
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<PAGE>
Munawar A. Cheema............................. 42,372(11) *
Trust Managers and Named Executive
Officers as a Group (11 Persons).............. 4,267,032(12) 41.5%
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* Less than 1%
(1) Each person listed has a business address c/o the Company, 598 Asylum
Avenue, Hartford, Connecticut 06105.
(2) Includes 331,337 Common Shares which might be acquired by Mr. Navarro upon
redemption of an equal number of Common Units and 135,308 Common Shares
which could be acquired within 60 days upon exercise of options.
(3) Includes 76,833 Common Shares which might be acquired by Mr. LaBrosse upon
redemption of an equal number of Common Units and 57,422 Common Shares
which could be acquired within 60 days upon exercise of options.
(4) Includes 280,357 Common Shares which might be acquired by Mr. Navarro upon
redemption of an equal number of Common Units and 133,909 Common Shares
which could be acquired within 60 days upon exercise of options.
(5) Represents the Common Shares which are owned by entities managed by Morgan
Stanley or an affiliate of Morgan Stanley as to which Mr. Morris has
shared voting and investment power.
(6) Includes 22,442 and 14,725 Common Shares which could be acquired by Mr.
Twaddell within 60 days upon exercise of warrants and options,
respectively.
(7) Common Shares which could be acquired by Mr. Gorman within 60 days upon
exercise of options.
(8) Includes 14,331 Common Shares which could be acquired by Mr. Garrahy
within 60 days upon exercise of options.
(9) Includes 322,784 Common Shares which might be acquired by Mr. Navarro upon
redemption of an equal number of Common Units and 133,909 Common Shares
which could be acquired within 60 days upon exercise of options.
(10) Includes 40,750 Common Shares which might be acquired by Mr. McNamara upon
redemption of an equal number of Common Units and 39,436 Common Shares
which could be acquired within 60 days upon exercise of options.
(11) Includes 8,333 Common Shares which could be acquired by Mr. Cheema within
60 days upon exercise of options.
(12) Includes 1,053,062 Common Shares which might be acquired upon redemption
of an equal number of Common Units and 22,442 and 562,098 Common Shares
which could be acquired within 60 days upon exercise of warrants and
options, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is a table indicating those persons whom the management
of the Company believes to be beneficial owners of more than 5% of the Common
Shares. Except where otherwise indicated, the following information is based on
reports filed with the Company and the Securities and Exchange Commission as of
December 31, 1998.
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<PAGE>
COMMON SHARES
NAME AND BUSINESS ADDRESS BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED COMMON SHARES
- ------------------------------------------ ------------- -----------------
MORGAN STANLEY GROUP, INC. 1,700,766(1) 20.0%
1221 Avenue of the Americas
22nd Floor
New York, NY 10020
OREGON PUBLIC EMPLOYEES' RETIREMENT 859,129(2) 10.1%
FUND, BY ABKB/LASALLE SECURITIES LIMITED,
AS AGENT FOR OREGON PUBLIC EMPLOYEES'
RETIREMENT FUND
100 East Pratt Street, 20th Floor
Baltimore, MD 21202
WELLINGTON MANAGEMENT COMPANY, LLP 683,300(3) 8.0%
75 State Street
Boston, MA 02109
DAMON D. NAVARRO 720,776(4) 8.0%
c/o Grove Property Trust
598 Asylum Avenue
Hartford, CT 06105
BRIAN D. NAVARRO 675,206(5) 7.5%
c/o Grove Property Trust
598 Asylum Avenue
Hartford, CT 06105
EDMUND F. NAVARRO 654,904(6) 7.3%
c/o Grove Property Trust
598 Asylum Avenue
Hartford, CT 06105
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(1) Morgan Stanley Group, Inc. has advised that with respect to such shares it
has sole voting and dispositive power for all shares.
(2) ABKB/LaSalle Securities Limited has advised that with respect to such
shares it has (i) sole voting and dispositive power for 46,000 shares and
(ii) shared voting and dispositive power for 813,129 shares.
(3) Wellington Management Company, LLP has advised that with respect to such
shares it has (i) sole voting and dispositive power for no shares, (ii)
shared voting power for 473,400 shares and (iii) shared dispositive power
for 683,300 shares.
(4) Common Shares beneficially owned as of March 31, 1999. Includes 331,337
Common Shares which might be acquired by Mr. Navarro upon redemption of an
equal number of Common Units and 135,308 Common Shares which could be
acquired within 60 days upon exercise of options.
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<PAGE>
(5) Common Shares beneficially owned as of March 31, 1999. Includes 322,784
Common Shares which might be acquired by Mr. Navarro upon redemption of an
equal number of Common Units and 133,909 Common Shares which could be
acquired within 60 days upon exercise of options.
(6) Common Shares beneficially owned as of March 31, 1999. Includes 280,357
Common Shares which might be acquired by Mr. Navarro upon redemption of an
equal number of Common Units and 133,909 Common Shares which could be
acquired within 60 days upon exercise of options.
BOARD MEETINGS
The Board held five meetings during 1998. The Board also took action
two times during the year by consent action. Management also confers frequently
with the Trust Managers on an informal basis to discuss Grove's affairs.
BOARD COMMITTEES
The Board has established an Audit Committee, an Acquisition and
Investment Committee and a Compensation Committee. The Board does not have a
nominating committee or a committee performing the functions of a nominating
committee; the entire Board performs the usual functions of such committee.
Audit Committee. The Audit Committee makes recommendations concerning
the engagement of independent public accountants, reviews with the independent
public accountants the plans and results of audit engagements, 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 current members of the Audit Committee are Messrs.
Gorman and Garrahy. The Audit Committee met once during 1998.
Acquisition and Investment Committee. The Acquisition and Investment
Committee has the authority to acquire, dispose of and finance investments for
the Company (including the direct or indirect purchase or sale by the Company of
real estate properties or interests in real estate properties) and to execute
contracts and agreements, including those related to the borrowing of money by
the Company or the purchase or sale by the Company of direct or indirect
interests in real properties, and generally to exercise all other powers of the
Trust Managers except those which require action by all Trust Managers or the
Independent Trust Managers under the Charter or Bylaws or under applicable law.
The current members of the Acquisition and Investment Committee are Messrs.
Garrahy and E. Navarro. The Acquisition and Investment Committee met five times
during 1998.
Compensation Committee. The Compensation Committee has the authority
to determine compensation for the Company's Executive Officers and to administer
the 1994 Share Option Plan (the "1994 Plan") and the 1996 Share Incentive Plan
(the "1996 Plan"). The Compensation Committee has the authority to grant share
options in accordance with the 1994 Plan to the Trust Managers, Executive
Officers, other key employees of the Company and consultants and to grant share
options and share appreciation rights to the
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<PAGE>
Trust Managers, Executive Officers, other key employees and consultants of the
Company in accordance with the 1996 Plan. The current members of the
Compensation Committee are Messrs. Garrahy and Gorman. The Compensation
Committee met two times during 1998.
COMPENSATION OF TRUST MANAGERS
Currently, the Company pays the non-employee Trust Managers a fee of
$1,000 for attending each meeting of the Board. Trust Managers who are employees
of the Company are not paid any trust manager fees. In addition, the Company
reimburses the Trust Managers for travel expenses incurred in connection with
their activities on behalf of the Company.
The 1996 Plan provides that each Non-Employee Trust Manager (as
defined in the 1996 Plan) who is first elected or appointed after the 1996
Annual Meeting of Shareholders receives an automatic initial grant of a
nonqualified stock option to purchase 10,000 Common Shares. In addition,
promptly following the date of each annual meeting of shareholders, each
Non-Employee Trust Manager elected by the shareholders will receive an
additional automatic grant of an option to purchase 5,000 Common Shares;
provided, however, that no Non-Employee Trust Manager will receive more than one
such automatic grant in any calendar year. The exercise price for options
granted to Non-Employee Trust Managers under the 1996 Plan is 100% of the fair
market value of the Common Shares on the date of grant. Each such option will
expire ten years from the grant date (subject to earlier termination).
Non-Employee Trust Managers who assist the Company in locating
acquisitions which are consummated receive a finder's fee of 0.2% of the
acquisition purchase price plus an additional 0.1% if they participate in the
negotiations. During 1998, the Company paid Mr. Garrahy an aggregate finder's
fee of $100,000 for his assistance in locating and negotiating the acquisition
of three investment properties.
EXECUTIVE COMPENSATION
The following tables set forth information concerning compensation
paid and share options granted to the Company's Named Executive Officers for the
years ended December 31, 1998, 1997 and 1996.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------------------- --------------------------
Bonus Awards
---------------------------- --------------------------
Name and Restricted
Principal Stock Stock Options/
Position Year Salary Regular Purchase(1) Awards(2) SARs
-------- ---- ------ ------- ----------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Damon D. 1998 $100,000 none $99,961 $143,922(3) none
Navarro/Chief 1997 34,839 none none none 177,133
Executive 1996 none none none none 12,048(4)
Officer
Joseph R. 1998 $100,000 none $60,147 $107,996(3) 50,000
LaBrosse/Chief 1997 38,512 none none none 101,601
Financial Officer 1996 none none none none 4,016(4)
Edmund F. 1998 $100,000 none $99,898 $143,992(3) none
Navarro/Chief 1997 34,839 none none none 177,133
Operating Officer 1996 none none none none 12,048(4)
Brian A. 1998 $100,000 none $76,436 $143,992(3) none
Navarro/ 1997 35,331 none none none 177,133
Executive Vice 1996 none none none none 12,048(4)
President
Munawar A. 1998 $98,217 $50,000 $16,688 $29,992(3) 50,000
Cheema/ Chief 1997 292 none none none 25,000
Investment 1996 none none none none none
Officer
</TABLE>
- -------------
(1) The proceeds of these bonus amounts, after payment of applicable income
taxes, were applied by the receipients to the repayment of loans incurred
in connection with the acquisition by such receipients of Common Shares of
the Company.
(2) Dollar amount shown equals the number of shares of restricted stock granted
multiplied by the stock price on the date of grant. This valuation does not
take into account the diminution in value attributable to the restrictions
applicable to the shares.
(3) The shares vest over a period of five years and are subject to forfeiture
if the executive officer's employment with the Company is terminated at any
time in the four year period following the date of grant, except if such
termination is "without cause" or due to a "change in control" of the
Company.
(4) The number of Common Shares underlying such options has been adjusted to
give effect to the stock split and stock dividend paid by the Company in
March 1997 (the "Stock Split"), as provided in the 1994 Plan.
-12-
<PAGE>
OPTIONS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------
Potential
Realizable Value
at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Securities Granted to Exercise Appreciation for
Underlying Employees or Base Option Term
Options During Price Expiration -----------------
Name Granted (#) Year ($/Share) Date 5%($) 10%($)
---- ----------- ---- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Damon Navarro None
Joseph LaBrosse 50,000 45% 10.25 11/05/08 322,308 816,793
Brian Navarro None
Edmund Navarro None
Munawar Cheema 50,000 45% 10.25 11/05/08 322,308 816,793
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST
YEAR AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Securities In-the-Money
Acquired Underlying Unexercised Options at FY-End
on Value Options at FY-End ($) Exercisable/
Name Exercise Realized Exercisable/Unexercisable Unexercisable
---- -------- -------- ------------------------- -------------
<S> <C> <C> <C> <C>
Damon Navarro 0 0 97,808/109,605 171,196/139,577
Joseph LaBrosse 0 0 44,922/114,906 64,774/145,641
Brian Navarro 0 0 96,409/109,605 167,934/139,577
Edmund Navarro 0 0 96,409/109,605 167,934/139,577
Munawar Cheema 0 0 8,333/66,667 7,083/89,167
</TABLE>
EMPLOYMENT AGREEMENTS
Grove has entered into an employment agreement with each Named
Executive Officer (other than Munawar Cheema) (the "Employment Agreements"). The
annual base salary for each Executive Officer who is a party to an Employment
Agreement is $100,000.
The Employment Agreements provide that the Executive Officers shall
devote a substantial part of their business time to the operations of Grove. The
Employment Agreements establish the base salaries set forth above and provide
for an initial three-year
-13-
<PAGE>
term for each of the Executive Officers (other than Munawar Cheema). The term of
each Employment Agreement is automatically extended for an additional year upon
expiration of the initial term and any extension period unless either Grove or
the Executive Officer (other than Munawar Cheema) provides the other with at
least 120 days' prior written notice that such term will not be extended. If the
Employment Agreements are terminated by Grove "without cause" or are terminated
by the Executive Officer (other than Munawar Cheema) after a "change in control"
or for "good reason" (as defined therein), such Executive Officer will be
entitled to a lump sum payment equal to 200 percent of such Executive Officer's
annual base salary plus an amount equal to the aggregate value of all bonuses,
whether cash, stock, options, or otherwise, granted to such Executive Officer
for the previous year.
During 1998, in order to facilitate the acquisition of Common Shares
by the Named Executive Officers, the Company approved a three y ear bonus
program which, subject to the financial and other results of the Company, would
provide, on an after tax basis, all or a substantial portion of the amounts used
by the Named Executive Officers in purchasing the Company's Common Shares. Under
the terms of such three-year bonus program, in the event that any Named
Executive Officer is terminated as a direct result of a Change in Control (as
defined in the 1996 Plan), the bonuses payable to such named Executive Officer
shall become payable in a lump sum as of the date of such Named Executive
Officer's termination.
NON-COMPETITION AGREEMENTS
Grove has entered into a non-competition agreement with each Named
Executive Officer (other than Munawar Cheema) (the "Non-Competition
Agreements"). The Non-Competition Agreement of each Named Executive Officer
(other than Munawar Cheema) precludes him from directly or indirectly
developing, redeveloping, acquiring, managing or operating multi-family or
retail mixed-use properties, other than certain properties set forth in the
Non-Competition Agreements, which compete with properties owned by Grove or with
properties acquired by Grove in the future for so long as he is an Executive
Officer, Trust Manager, significant Shareholder (5% or more of the outstanding
Common Shares) or employee of, or consultant to, Grove, and for a period of
twenty-four months after termination thereof other than in the event of
termination of his employment by Grove without cause or by such Executive
Officer in the event of a "change in control" or "for good reason" (as defined
therein). Except for the Executive Officers (other than Munawar Cheema), no
other Trust Manager had an interest in any of the Grove Companies and will not
be bound by the Non-Competition Agreements.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program is intended to attract,
retain and reward experienced, highly motivated executives who contribute to the
Company's growth. The Compensation Committee of the Board is currently composed
of two Independent Trust Managers. The Compensation Committee is responsible for
setting base salaries for
-14-
<PAGE>
the Named Executive Officers. For each of the Named Executive Officers other
than Munawar Cheema, base salaries are currently fixed by the Employment
Agreements between the Company and each of these Named Executive Officers,
including the Chief Executive Officer. Mr. Cheema's base salary was fixed by the
Chief Executive Officer prior to Mr. Cheema's becoming a Named Executive Officer
in late 1998. Adjustments to Mr. Cheema's base salary in the future will be
determined by the Compensation Committee. The Compensation Committee also
determines awards under, and administers, the 1994 Plan and the 1996 Plan.
During 1997, the Compensation Committee approved the salaries paid to
the Named Executive Officers other than Mr. Cheema under Employment Agreements
which became effective upon completion of the Consolidation Transactions. Prior
to March 1997, the Company did not pay cash compensation to the Named Executive
Officers. The salaries of $50,000 per year payable to Messrs. D. Navarro,
LaBrosse, E. Navarro and B. Navarro reflected the Compensation Committee's
evaluation of the expense which the Company could reasonably bear at that time
and took into consideration the substantially expanded role of the Named
Executive Officers following consummation of the Consolidation Transactions.
In connection with the completion of the Company's underwritten public
offering in November 1997, the Compensation Committee approved amendments to the
Employment Agreements with the Named Executive Officers (other than Mr. Cheema)
increasing the base salary of each to $100,000 per year. The Compensation
Committee believed that this adjustment was appropriate to reflect more
accurately the contributions of the Named Executive Officers to the Company as
the Company continued to grow. The Compensation Committee also concluded, based
on a review of base salaries in the Company's industry, that increased base
salaries for the Named Executive Officers (other than Mr. Cheema) would be
necessary for the Company to remain competitive in attracting and retaining
talented executives.
The Compensation Committee also believes that the granting of stock
options to the Named Executive Officers, including the Chief Executive Officer,
or otherwise facilitating their increased ownership of Common Shares of the
Company, benefits the Company's shareholders generally by tying a significant
portion of an Executive Officer's long-term compensation and economic success to
the market value of the Company's Common Shares and, therefore, to the interests
of its shareholders. After consultation with independent compensation
consultants, the Compensation Committee concluded that a significant increase in
compensation for the Named Executive Officers for 1998 was appropriate, taking
into account such factors as the success of the Company's acquisition program
which resulted in more than doubling the assets of the Company between January
1, 1998 and December 31, 1988 and the financial performance of the Company for
1998.
During 1998, the Compensation Committee (or the Compensation Committee
together with the Board of Trust Managers) approved various transactions
designed not
-15-
<PAGE>
only to provide compensation to the Named Executive Officers but also to
increase their equity interest in the Company. These actions included the grant
of restricted stock awards under the 1996 Plan, the grant of options under the
1996 Plan and the private sale of Common Shares to the Named Executive Officers.
To facilitate the acquisition of Common Shares by the Named Executive Officers
either directly from the Company or in open market purchases, the Compensation
Committee approved a three-year bonus program which, subject to the financial
and other results of the Company, would provide on an after-tax basis all or a
substantial portion of the amounts used by the Named Executive Officers in
purchasing the Company's Common Shares. The amounts used by the Named Executive
Officers in acquiring shares were either borrowed by the Named Executive
Officers from a bank with the borrowings guaranteed by the Company or borrowed
from the Company.
The Compensation Committee intends to continue its review of the
compensation of the Named Executive Officers and will make such modification in
its approach to executive compensation as it determines to be appropriate in
light of the Company's financial performance, changes in the size of the
Company, the performance of its officers and executive compensation practices of
its peer group.
EXECUTIVE COMPENSATION COMMITTEE
J. Joseph Garrahy
Harold V. Gorman
-16-
<PAGE>
PERFORMANCE GRAPH
The line graph below sets forth the cumulative total shareholder
return on the Common Shares as compared with the cumulative total return of the
American Stock Exchange ("AMEX") Market Value Index and the NAREIT Equity REIT
Index-Apartments, in each case (i) for the five years ended on December 31,
1998, and (ii) assuming that $100 was invested on June 30, 1994 and that all
dividends were reinvested.
6/30/94 1994 1995 1996 1997 1998
------- ---- ---- ---- ---- ----
Grove Property Trust $100.00 82.49 84.92 105.91 156.19 187.42
NAREIT Equity REIT Index -
Apartments 100.00 100.79 113.15 145.89 169.28 154.43
AMEX Market Value Index 100.00 102.26 129.28 137.54 161.43 162.47
-17-
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed the firm of Ernst & Young LLP to audit the
financial statements of the Company for the year ending December 31, 1999. Ernst
& Young LLP served as the Company's independent public accountants for the year
ended December 31, 1998. A proposal to ratify this appointment is being
presented to the Shareholders at the Annual Meeting. A representative of Ernst &
Young LLP is expected to be present at the meeting and available to respond to
appropriate questions and, although that firm has indicated that no statement
will be made, an opportunity for a statement will be provided.
- --------------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSED RATIFICATION OF
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 1999.
- --------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that
Grove's Executive Officers and Trust Managers, and persons who own more than ten
percent of a registered class of Grove's equity securities, file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Trust Managers, Executive Officers and greater-than-ten-percent shareholders are
required by regulation of the Securities and Exchange Commission to furnish
Grove with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, Grove believes that all Section 16(a) filings
required to be filed in respect of 1998 by its Executive Officers, Trust
Managers and greater-than-ten-percent beneficial owners were timely made.
-18-
<PAGE>
SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be present at the Annual Meeting
of Shareholders to be held in 2000 must be received by the Secretary of Grove at
Grove's principal executive office no later than January 5, 2000, for inclusion
in Grove's proxy statement and form of proxy relating to that meeting.
FINANCIAL AND OTHER INFORMATION
Grove's Annual Report for the year ended December 31, 1998, including
financial statements, is being concurrently sent to the Shareholders. The Annual
Report is not a part of the proxy solicitation materials.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by Grove. Brokers and
nominees should forward soliciting materials to the beneficial owners of the
Common Shares held of record by such persons, and Grove will reimburse them for
their reasonable forwarding expenses. In addition to the use of the mails,
proxies may be solicited by Trust Managers, Executive Officers and regular
employees of Grove, who will not be specially compensated for such services, by
means of personal calls upon, or telephonic or telegraphic communications with,
Shareholders or their personal representatives. In addition, the Company has
retained Corporate Investor Communications, Inc. to assist in the solicitation
of proxies at a fee estimated to be $4,500.
OTHER MATTERS
The Board knows of no matters other than those described in this Proxy
Statement which are likely to come before the Annual Meeting. If any other
matters properly come before the Annual Meeting, the persons named in the
accompanying form of Proxy intend to vote the proxies in accordance with their
best judgment.
-19-
<PAGE>
DETACH HERE
|X| Please mark
votes as in
this example.
This proxy is solicited by the Board of Trust Managers and may be revoked prior
to exercise. This proxy, when properly executed, will be voted as directed
herein by the undersigned shareholder. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED FOR ITEMS 1 AND 2.
<TABLE>
<S> <C>
1. Election of three Trust Managers, each to 2. The ratification [ ] [ ] [ ]
serve until the annual meeting of the Company's of the appointment
shareholders to be held in 2002. of Ernst & Young LLP
as the Company's
independent public
NOMINEES: J. Joseph Garrahy, accountants for the
Joseph R. LaBrosse, and year ending December
Gerald A. McNamara 31, 1999.
FOR WITHHELD
[ ] [ ]
[ ]
------------------------
For all nominees
except as noted above
3. Other Business:
In their discretion, the proxies are authorized
to vote upon such other business as may
properly be brought before the meeting. The
Board of Trust Managers at present knows of no
other formal business to be brought before the
meeting.
MARK HERE FOR MARK HERE IF YOU
ADDRESS CHANGE [ ] PLAN TO ATTEND [ ]
AND NOTE AT LEFT THE MEETING
Signature Date Signature Date
-------------------------- --------- ----------------------------- ---------
</TABLE>
<PAGE>
DETACH HERE
GROVE PROPERTY TRUST
The undersigned hereby appoints Damon D. Navarro and Joseph R.
P LaBrosse, and each of them, as proxies, with full power of substitution in
R each, to vote the shares of Grove Property Trust (the "Company") of the
O undersigned at the Annual Meeting of the Shareholders to be held on Friday,
X June 18, 1999 at 11:00 a.m. at The Hartford Club, 46 Prospect Street,
Y Hartford, Connecticut 06103 and any adjournment thereof as specified on the
reverse side.
----------------
(CONTINUED ON REVERSE SIDE) SEE REVERSE
SIDE
----------------
