<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Security Capital Atlantic Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
SECURITY CAPITAL ATLANTIC INCORPORATED
SIX PIEDMONT CENTER
ATLANTA, GEORGIA 30305
----------------
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1997
To the shareholders:
The 1997 annual meeting of shareholders of Security Capital Atlantic
Incorporated ("ATLANTIC") will be held on Thursday, May 29, 1997, at the
Renaissance Waverly Hotel, 2450 Galleria Parkway, Atlanta, Georgia, at 2:00
p.m. (Eastern Daylight Time) for the following purposes:
1. To elect a Class III Director to serve until the annual meeting of
shareholders in the year 2000 and until his successor is duly elected and
qualifies; and
2. To transact such other business as properly may come before the
meeting and any adjournment or postponement thereof.
Further information regarding the business to be transacted at the meeting
is given in the accompanying Proxy Statement.
Shareholders of record at the close of business on April 16, 1997 are
entitled to notice of, and to vote at, the meeting.
Please help ATLANTIC by promptly marking, dating, signing and returning the
enclosed proxy card in the envelope provided for your convenience. If you
attend the meeting and decide to vote in person, you may revoke your proxy.
By Order of the Board of Directors,
Jeffrey A. Klopf
Secretary
April 25, 1997
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
SECURITY CAPITAL ATLANTIC INCORPORATED
SIX PIEDMONT CENTER
ATLANTA, GEORGIA 30305
----------------
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1997
----------------
GENERAL INFORMATION
The Board of Directors (the "Board") of Security Capital Atlantic
Incorporated ("ATLANTIC") is soliciting the accompanying proxy for use at the
1997 annual meeting of shareholders to be held on Thursday, May 29, 1997 and
at any and all adjournments or postponements thereof. Any shareholder giving a
proxy has the right to revoke it at any time before it is voted by giving
written notice to the Secretary of ATLANTIC, by delivering to the Secretary of
ATLANTIC a duly executed proxy bearing a later date or by attending and voting
in person at the meeting. The designated proxy holders will vote shares of
common stock, par value $0.01 per share (the "Shares"), represented by a proxy
which is received and not revoked. If the shareholder specifies a choice with
respect to any matter to be acted upon and for which a ballot is provided in
the proxy, the Shares will be voted in accordance with his or her
specifications.
This Proxy Statement and the accompanying proxy card are first being mailed
to shareholders on or about April 25, 1997.
If you are a registered owner and plan to attend the meeting in person,
please detach and retain the admission ticket which is attached to your proxy
card. Beneficial owners who plan to attend the meeting in person may obtain
admission tickets in advance by sending written requests, along with proof of
ownership, such as a bank or brokerage firm account statement, to: Lucinda G.
Marker, Assistant Secretary, Security Capital Atlantic Incorporated, 125
Lincoln Avenue, Santa Fe, New Mexico 87501. Record owners and beneficial
owners (including the holders of valid proxies therefrom) who do not present
admission tickets at the meeting will be admitted upon verification of
ownership at the admissions counter at the annual meeting.
The cost of soliciting proxies will be borne by ATLANTIC. In addition to
solicitation by mail, and without additional compensation for such services,
proxies may be solicited personally, or by telephone or telegraph, by officers
or employees of Security Capital (Atlantic) Incorporated, ATLANTIC's REIT
manager (the "REIT Manager" or "REIT Management"). See "Certain Relationships
and Transactions--REIT Management Agreement." ATLANTIC will also request
banking institutions, brokerage firms, custodians, trustees, nominees,
fiduciaries and other like parties to forward the solicitation material to the
beneficial owners of Shares held of record by such persons, and ATLANTIC will
upon request of such record holders reimburse forwarding charges and expenses.
SHARES OUTSTANDING AND VOTE REQUIRED
At the close of business on April 16, 1997, approximately 41,891,580 Shares
were outstanding. Each whole Share outstanding on April 16, 1997, the record
date for determination of shareholders entitled to notice of, and to vote at,
the meeting, is entitled to one vote, and each fractional Share is entitled to
its fraction of one vote. There is no right to cumulative voting. A majority
of the outstanding Shares represented in person or by proxy will constitute a
quorum at the meeting.
<PAGE>
Assuming the existence of a quorum, the affirmative vote of a majority of
the Shares entitled to vote and represented in person or by proxy at the
meeting is required to elect the nominee for Director. Representatives of
ATLANTIC's transfer agent will assist ATLANTIC in the tabulation of the votes.
Abstentions and broker non-votes are counted as Shares represented at the
meeting for purposes of determining a quorum. An abstention has the effect of
a vote "withheld" with respect to the election of Directors.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 16, 1997, the beneficial
ownership of Shares for (i) each person known to ATLANTIC to have been the
beneficial owner of more than five percent of ATLANTIC's Shares on such date,
(ii) each Director of ATLANTIC and (iii) all Directors and executive officers
of ATLANTIC as a group. Unless otherwise indicated in the footnotes, all of
such interests are owned directly and the indicated person or entity has sole
voting and dispositive power.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED ALL SHARES
------------------- ------------------ ----------
<S> <C> <C>
Security Capital Group Incorporated...... 21,545,669(1) 51.4%
125 Lincoln Avenue
Santa Fe, NM 87501
Ameritech Pension Trust.................. 2,223,320(2) 5.3
Ameritech Corporation
225 West Randolph Street
HQ-13A
Chicago, IL 60606
General Motors Investment Management 2,173,913(3) 5.2
Corporation.............................
767 Fifth Avenue
New York, NY 10153
Manuel A. Garcia III..................... 11,000(4) *
P.O. Box 2066
Davgar Restaurants, Inc.
Winter Park, FL 32790
Ned S. Holmes............................ 58,500(4)(5) *
Parkway Investments/Texas, Inc.
55 Waugh Drive
Houston, TX 77007
Constance B. Moore....................... 11,600 *
Six Piedmont Center
Atlanta, GA 30305
James C. Potts........................... 13,050 *
Six Piedmont Center
Atlanta, GA 30305
John M. Richman.......................... 11,000(4) *
Wachtell, Lipton, Rosen & Katz
227 West Monroe Street, Suite 4825
Chicago, IL 60606
All Directors and executive officers as a 105,150 *
group (9 persons).......................
</TABLE>
- --------
*Less than 1%
2
<PAGE>
(1) These Shares are owned of record by SC Realty Incorporated, a wholly owned
subsidiary of Security Capital Group Incorporated ("Security Capital
Group"), and are pledged to secure Security Capital Group's $300 million
revolving line of credit facility with a syndicate of banks. As of April
16, 1997, there were no borrowings outstanding under the line of credit.
The line of credit is also secured by securities owned by Security Capital
Group of Security Capital Pacific Trust, a publicly traded REIT ("PTR"),
Security Capital Industrial Trust, a publicly traded REIT ("SCI"),
Homestead Village Incorporated, a publicly traded real estate operating
company ("Homestead"), and Security Capital U.S. Realty, a publicly traded
entity based in Luxembourg which invests in real estate operating
companies in the United States. Security Capital Group estimates that the
aggregate market value of the pledged securities exceeded $2.8 billion as
of April 16, 1997. Security Capital Group was in compliance with the
covenants under the line of credit at December 31, 1996.
(2) This information is based on a Schedule 13G dated February 14, 1997.
According to the Schedule 13G, the Shares were not acquired for the
purpose, and do not have the effect, of changing or influencing control of
ATLANTIC.
(3) 1,956,522 of these Shares are owned by the General Motors Hourly-Rate
Employees Pension Trust and 217,391 of these Shares are owned by the
General Motors Salaried Employees Pension Trust.
(4) Includes 1,000 Shares each for Messrs. Garcia, Holmes and Richman which
are issuable upon exercise of Options granted under the Outside Directors
Plan. See "Outside Directors Plan."
(5) Mr. Holmes directly owns 2,500 of these Shares. Mr. Holmes may be deemed
to beneficially own 55,000 of these Shares which are owned by Mr. Holmes'
wife and children and by Holmes Family Venture Ltd., a family entity with
respect to which Mr. Holmes shares voting and dispositive power.
3
<PAGE>
ELECTION OF DIRECTOR
NOMINEE
The Shares represented by the accompanying proxy will be voted to elect Mr.
Potts as a Class III Director, unless otherwise indicated on the proxy. Mr.
Potts, if elected, will serve as a Director until the annual meeting of
shareholders in the year 2000. Should Mr. Potts become unavailable for
election, which is not anticipated, the Shares represented by the accompanying
proxy will be voted for the election of another person recommended by
ATLANTIC. Directors are elected to serve until the annual meeting of
shareholders held in the third year following the year of their election. The
Board recommends that shareholders vote FOR the election of the nominee for
Director.
<TABLE>
<CAPTION>
DIRECTOR AGE BUSINESS EXPERIENCE TERM EXPIRES
- -------- --- ------------------- ------------
<S> <C> <C> <C>
James C. Potts.......... 50 Co-Chairman and Chief Investment Officer of ATLANTIC 2000
and the REIT Manager since January 1996 and Director
of ATLANTIC and the REIT Manager since October 1993,
where he has overall responsibility for investments
of ATLANTIC; Chairman of ATLANTIC and the REIT
Manager from May 1994 to December 1995; from
December 1992 to April 1994, Managing Director of
PTR's REIT manager, where he supervised the asset
management of all of PTR's multifamily communities
and oversaw the relationship of PTR's REIT manager
with SCG Realty Services Incorporated, which
provides onsite management for these communities;
from April 1984 to December 1992, Chief Executive
Officer of four regional multifamily management
companies of Trammell Crow Residential Services,
which collectively managed approximately 52,000
units and employed 1,600 associates. Under Mr.
Potts' direction, Trammell Crow Residential Services
supervised the lease-up of over 25,000 units, the
assumption of management of over 15,000 acquired
units, and the increase in its third-party asset
management business from 14,000 to 30,000 units. Mr.
Potts was also on the Management Board of Trammell
Crow Residential Services (managing 90,000 units
nationwide).
</TABLE>
Security Capital Group has the right to nominate up to three Directors,
depending upon its level of ownership of Shares. See "Certain Relationships
and Transactions--Security Capital Group Investor Agreement." Ms. Moore and
Mr. Potts are deemed to be the nominees of Security Capital Group. ATLANTIC's
charter requires that a majority of the Directors be independent Directors.
CONTINUING DIRECTORS
The following persons will continue to hold positions as Directors as
discussed below:
MANUEL A. GARCIA III--53--Director of ATLANTIC since December 1995; Chief
Executive Officer of Davgar Restaurants, Inc. since May 1969 where he is the
owner/operator of ten Burger King Restaurants in central Florida, five Pebbles
Restaurants, Harvey's Bistro and Manuel's on the 28th Restaurant in Orlando,
Florida; Director of Sprint/United Telephone, Homestead, The Foundation for
Orange County Public Schools, Florida State University Seminole Boosters'
Association, a Director and Member of the Executive Committee of the Florida
Citrus Sports Association and National Director of Cities in Schools. Mr.
Garcia is also on the Board of the National Conference of Christians and Jews
and an Honorary Director of the Boys' Clubs and Boy Scouts of Central Florida.
In addition, Mr. Garcia is a former member of former President Bush's Drug
Advisory Council. Mr. Garcia's term as Director expires in 1998.
4
<PAGE>
NED S. HOLMES--52--Director of ATLANTIC since May 1994; President and Chief
Executive Officer of Laing Properties, Inc. ("Laing") since May 1990; Chairman
and President of Parkway Investments/Texas, Inc. since April 1984. Mr. Holmes
also serves as a Director of Commercial Bancshares, Inc. and Heritage Bank,
both based in Houston, Texas. Mr. Holmes is chairman of the Port Commission of
the Port of Houston Authority and a Director of the Greater Houston
Partnership. Mr. Holmes' term as Director expires in 1998.
CONSTANCE B. MOORE--41--Co-Chairman, Chief Operating Officer and Director of
ATLANTIC and the REIT Manager since January 1996, where she has overall
responsibility for operations of ATLANTIC; from May 1994 to December 1995,
Managing Director of PTR, Director and Managing Director of PTR's REIT manager;
Senior Vice President of Security Capital Group from March 1993 to April 1994;
from January 1990 to December 1992, President and Director of Kingswood Realty
Advisors, Inc., investment advisor to ICM Property Investors, a NYSE-listed
real estate investment trust (a "REIT"), and from March 1991 to December 1992,
President and Director of ICM Property Investors; from April 1989 to December
1989, consultant to Bedford Properties, a real estate development and
management firm where Ms. Moore was responsible for acquiring a controlling
interest in ICM Property Investors and Kingswood for Bedford; from January 1983
to November 1988, Senior Vice President and Director of Consolidated Capital
Equities Corporation, where she was in charge of portfolio and asset management
for Consolidated Capital's $3.0 billion diversified debt and equity portfolio.
Ms. Moore's term as Director expires in 1999.
JOHN M. RICHMAN--69--Director of ATLANTIC since September 1996; Counsel to
the law firm of Wachtell, Lipton, Rosen & Katz since January 1, 1990. Mr.
Richman is a member of the American, Illinois and New York Bar Associations. He
was Chairman and Chief Executive Officer of Kraft, Inc. from 1979 to 1989,
prior to which he was Senior Vice President--Administration and General Counsel
of that company. He is currently a Director of BankAmerica Corporation and Bank
of America National Trust and Savings Association, USX Corporation, the
Evanston Hospital Corporation and R.R. Donnelley and Sons Company. He is also a
Trustee of the Chicago Symphony Orchestra, Northwestern University and The
Johnson Foundation. In addition, Mr. Richman is a Director of The Chicago
Council on Foreign Relations and Lyric Opera of Chicago and a member of The
Business Council, The Commercial Club of Chicago and the Economic Club of
Chicago. Mr. Richman's term as Director expires in 1999.
MEETINGS AND COMMITTEES
The Board held 12 meetings during 1996, including seven telephonic meetings.
The Board has established an Audit Committee consisting of Messrs. Garcia and
Holmes. The Audit Committee is responsible for making recommendations governing
the engagement of independent public accountants, reviewing the plans and
results of the audit engagement with the independent public accountants,
approving professional services provided by the independent public accountants,
reviewing the independence of the independent public accountants, considering
the range of audit and non-audit fees and reviewing the adequacy of ATLANTIC's
internal accounting controls. During 1996, the Audit Committee held one
meeting.
The Board has established an Investment Committee consisting of Messrs.
Holmes and Potts. The Investment Committee is responsible for reviewing and
approving all asset acquisitions and other investment decisions between
meetings of the full Board. Any decisions made by the Investment Committee are
reported to the full Board at its next quarterly meeting. The Investment
Committee receives recommendations from the REIT Manager's Investment
Committee. During 1996, the Investment Committee held 12 meetings, including
seven telephonic meetings.
In January 1997, the Board established a Compensation Committee consisting of
Messrs. Garcia, Holmes and Richman, with Mr. Potts and Ms. Moore serving as
non-voting members, which reviews and approves ATLANTIC's compensation
arrangements and plans. ATLANTIC has no standing nominating committee. During
1996, each Director attended at least 75 percent of the total number of
meetings of the Board and the committees on which he or she served.
5
<PAGE>
DIRECTOR COMPENSATION
ATLANTIC pays an annual retainer of $14,000 to Directors who are not officers
or employees of ATLANTIC, the REIT Manager or its affiliates. These fees are
currently paid to Directors in cash (quarterly on each meeting date) and will
be paid to the Directors in Shares (quarterly on each dividend payment date)
based on the then-current market price of the Shares following the adoption by
ATLANTIC of a dividend reinvestment and share purchase plan as described below.
Such Directors also receive $1,000 for each meeting attended (other than
telephonic meetings), which is also paid in cash. Non-employee chairpersons of
Board committees (other than the Investment Committee) receive an additional
annual retainer of $1,000 payable in cash and non-employee members of the
Investment Committee receive an additional annual retainer of $4,000 payable in
cash. In the event that ATLANTIC adopts a dividend reinvestment and share
purchase plan, both the retainer and fees will be paid directly into such plan.
Officers of ATLANTIC, the REIT Manager or its affiliates who are Directors are
not paid any Director fees.
In addition, pursuant to the Outside Directors Plan, each Director who is not
an employee or officer of ATLANTIC or Security Capital Group or any of its
affiliates (the "Outside Directors") will be entitled to receive, on the date
of each annual meeting of shareholders, an option (an "Option") to purchase
1,000 Shares at a price per Share equal to the closing price of one Share on
the New York Stock Exchange (the "NYSE") on such date. See "--Outside Directors
Plan."
Directors are reimbursed for any out-of-town travel expenses incurred in
connection with attendance at Board meetings. Ms. Moore and Mr. Potts are not
separately compensated for serving as Directors.
OUTSIDE DIRECTORS PLAN
On March 12, 1996, the Board approved the Security Capital Atlantic
Incorporated Share Option Plan for Outside Directors (the "Outside Directors
Plan"). The purpose of the Outside Directors Plan is to enable the Outside
Directors of ATLANTIC to increase their ownership of ATLANTIC and thereby
increase the alignment of their interests with those of ATLANTIC's other
shareholders.
To achieve the foregoing objective, the Outside Directors Plan provides for
grants of Options to purchase Shares. The Secretary of ATLANTIC (the
"Administrator") administers the Outside Directors Plan with a view to
ATLANTIC's best interests and the Outside Directors Plan's objectives. The
Administrator has authority to adopt administrative guidelines, rules and
regulations relating to the Outside Directors Plan and to make all
determinations necessary or advisable for the implementation and administration
of the Outside Directors Plan.
The number of Shares reserved for issuance upon exercise of Options granted
under the Outside Directors Plan is 100,000. Shares that are forfeited will
again become available for awards under the Outside Directors Plan.
In the event of changes in the outstanding Shares by reason of any increase
or decrease in the number of issued Shares resulting from a subdivision or
consolidation of Shares or the payment of a dividend in Shares, or any other
increase or decrease in the number of Shares, or merger or consolidation, or
recapitalization, reorganization, spinoff, exchange or other distribution or
other similar event, the Administrator shall make appropriate adjustments to
the aggregate number of Shares available under the Outside Directors Plan and
the type and number of Shares subject to Options under the Outside Directors
Plan and the terms of such Options (including the exercise price thereof).
On the date of each annual meeting of shareholders of ATLANTIC for the years
1997 through and including 2006, each Outside Director serving on such date
(after the election of Directors in the meeting) will be granted an Option to
purchase 1,000 Shares at an exercise price equal to the closing price of the
Shares on the NYSE on such date. Also, each Outside Director serving at the
time of ATLANTIC's initial public offering was granted an Option to purchase
1,000 Shares at the initial public offering price of $21.25 per Share, after
adjusting for the Homestead Distribution described below. In 1997, Options for
1,000 Shares will be awarded under the Outside Directors Plan to each of
Messrs. Garcia, Holmes and Richman.
6
<PAGE>
Each Option will be immediately exercisable, but must be exercised before the
earliest of the following events to occur: the date that is three months after
the date that the Option holder's position as a Director terminates, the date
that is twelve months after the date the Director becomes disabled or dies or
the date that is five years after the date the Option is granted.
If fifty percent or more of the outstanding Shares are acquired in a cash
tender offer or exchange offer, each Option holder shall have the right to
exercise his or her Option in full or surrender his or her outstanding Option
in exchange for a cash payment from ATLANTIC in an amount equal to the excess
of the offer price or value over the Option price. If ATLANTIC dissolves, each
Option holder shall have the right to exercise his or her Option in full before
the date of the dissolution.
The Outside Directors Plan may be amended or terminated at any time by the
Board. The provisions relating to the amount, price and timing of grants under
the Outside Directors Plan may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code of 1986, as
amended, or the rules thereunder, unless such amendment would not affect the
exemption provided by Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
ATLANTIC OFFICERS
All of the officers of ATLANTIC are officers and employees of the REIT
Manager and are compensated solely by the REIT Manager for their services as
employees of the REIT Manager, including the services which such persons
perform pursuant to the REIT Management Agreement between the REIT Manager and
ATLANTIC described below. All executive functions of ATLANTIC are performed by
the REIT Manager and ATLANTIC currently has no employees. See "Certain
Relationships and Transactions--REIT Management Agreement." For a description
of an agreement that ATLANTIC has entered into with Security Capital Group to
merge the REIT Manager and SCG Realty Services Atlantic Incorporated ("SCG
Realty Services"), its property management affiliate, into a newly formed
subsidiary of ATLANTIC in exchange for Shares, see "Certain Relationships and
Transactions--The Merger Transaction."
7
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on Shares against the cumulative total
return of the Standard & Poor's Composite-500 Stock Index and the National
Association of Real Estate Investment Trusts ("NAREIT") Equity REIT Index for
the period commencing October 15, 1996, the date that the Shares began trading
on the NYSE, and ended December 31, 1996. The Share price performance shown on
the graph is not necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN(1)
ATLANTIC SHARES, S&P COMPOSITE-500 STOCK INDEX
& NAREIT EQUITY REIT INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
OCTOBER 15, 1996 DECEMBER 31, 1996
---------------- -----------------
<S> <C> <C>
ATLANTIC............................... $100.00 $114.16
S&P 500................................ 100.00 105.91
NAREIT................................. 100.00 118.85
</TABLE>
- --------
(1) Assumes that the value of the investment in Shares and each index was
$100.00 on October 15, 1996 and that all dividends were reinvested. For
purposes of calculating total return on the Shares, the Homestead
Distribution described below in "Certain Relationships and Transactions--
Homestead Transaction" was valued based on the closing prices of the
securities distributed on the American Stock Exchange (the "ASE") on
November 12, 1996, the day of the distribution.
8
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
REIT MANAGEMENT AGREEMENT
ATLANTIC has a REIT management agreement (the "REIT Management Agreement")
pursuant to which the REIT Manager provides management services to ATLANTIC.
All officers of ATLANTIC are employees of the REIT Manager and ATLANTIC
currently has no employees. The REIT Manager provides both strategic and day-
to-day management of ATLANTIC, including research, investment analysis,
acquisition, development, marketing, disposition of assets, asset management,
due diligence, capital markets, legal and accounting services.
The REIT Management Agreement requires ATLANTIC to pay an annual fee of 16%
of cash flow as defined in the REIT Management Agreement, payable monthly.
Cash flow is calculated by reference to ATLANTIC's cash flow from operations
plus (i) fees paid to the REIT Manager, (ii) extraordinary expenses incurred
at the request of the independent Directors of ATLANTIC (of which there were
none), and (iii) 33% of any interest paid by ATLANTIC on convertible
subordinated debentures (of which there are none); and after deducting (i)
regularly scheduled principal payments (excluding prepayments or balloon
payments) for debt with commercially reasonable amortization schedules, (ii)
assumed principal and interest payments on senior unsecured debt treated as
having regularly scheduled principal and interest payments like a 20-year
level-payment, fully amortizing mortgage (of which there are none) and (iii)
distributions actually paid with respect to any non-convertible preferred
stock (of which there are none). Cash flow does not include: (i) realized
gains or losses from disposition of investments, (ii) interest income from
cash equivalent investments and the Homestead convertible mortgage notes and
dividend and interest income from Atlantic Development Services Incorporated,
(iii) provisions for possible losses on investments and (iv) extraordinary
items.
The REIT Manager also receives a fee of 0.20% per year on the average daily
balance of cash equivalent investments. The REIT Management fee aggregated
$10.4 million for 1996.
Total real estate operating, interest, general and administrative costs will
increase due to ATLANTIC's larger asset size, as well as unforeseen changes
that may occur. REIT Management fees paid by ATLANTIC will increase if cash
flow of ATLANTIC, as defined in the REIT Management Agreement, increases,
including such increases that may relate to increases in ATLANTIC's assets.
ATLANTIC does not expect its other operating costs and expenses to increase
except as a result of inflation, market conditions or other factors over which
the REIT Manager has no control. Operating costs for particular items,
however, may be increased if they are expected to result in greater decreases
in other expenses or increases in revenues from ATLANTIC's assets.
ATLANTIC must reimburse the REIT Manager for third-party and out-of-pocket
expenses relating to travel, transaction costs and similar costs relating to
the acquisition, development or disposition of assets or the obtaining of
financing for ATLANTIC and its operations. The REIT Manager pays all of its
own salary and other overhead expenses. ATLANTIC does not have any employee
expense; however, it pays all of the third-party costs related to its normal
operations, including legal, accounting, travel, architectural, engineering,
shareholder relations, independent Director fees and similar expenses,
property management and similar fees paid on behalf of ATLANTIC, and travel
expenses incurred in seeking financing, community acquisitions, community
sales and similar activities on behalf of ATLANTIC and in attending ATLANTIC
Board, committee and shareholder meetings. Under the REIT Management
Agreement, the REIT Manager or any of its affiliates are not precluded from
rendering services to other investors, including REITs, even if such investors
compete with ATLANTIC. The REIT Manager is owned by ATLANTIC's largest
shareholder and, consequently, the REIT Manager has no intention of rendering
services to investors who compete with ATLANTIC.
The REIT Management Agreement is renewable by ATLANTIC annually, subject to
a determination by the independent Directors that the REIT Manager's
performance has been satisfactory and that the compensation payable to the
REIT Manager is fair. Each of ATLANTIC and the REIT Manager may terminate the
REIT Management Agreement on 60 days' notice. Because of the year-to-year
nature of the agreement, its maximum
9
<PAGE>
effect on ATLANTIC's results of operations cannot be predicted, other than
that REIT Management fees will generally increase or decrease in proportion to
cash flow increases or decreases. See "--The Merger Transaction" for a
description of an agreement that ATLANTIC has entered into with Security
Capital Group to merge the REIT Manager and SCG Realty Services into a newly
formed subsidiary of ATLANTIC in exchange for Shares.
SECURITY CAPITAL GROUP INVESTOR AGREEMENT
ATLANTIC and Security Capital Group are parties to an Investor Agreement,
dated as of October 28, 1993 (the "Investor Agreement"), which required
Security Capital Group to purchase $21.5 million in Shares, subject to certain
conditions. The Investor Agreement, among other things, requires ATLANTIC to
obtain Security Capital Group's approval of (i) the annual operating budget
and substantial deviations therefrom, (ii) contracts for investment
management, property management or leasing services or that contemplate annual
payments in excess of $100,000 and (iii) acquisitions or dispositions in a
single transaction or a group of related transactions where the purchase price
exceeds $5 million. The Investor Agreement also provides that, so long as
Security Capital Group owns at least 10% of the outstanding Shares, ATLANTIC
may not increase the Board to more than seven members. Security Capital Group
is entitled to designate one or more persons as Directors, and ATLANTIC is
obligated to use its best efforts to cause the election of such persons, as
follows: (i) so long as Security Capital Group owns at least 10%, but less
than 20%, of the outstanding Shares, it is entitled to nominate two persons;
and (ii) so long as Security Capital Group owns at least 20% of the
outstanding Shares, it is entitled to nominate three persons. See "--The
Merger Transaction--Relationship with Security Capital Group After the Merger"
for a description of the revised investor agreement which would replace the
current Investor Agreement if the Merger described below is consummated.
SHAREHOLDERS' AGREEMENT
To facilitate ATLANTIC's acquisition of certain communities from Laing,
Security Capital Group granted Laing certain rights to require Security
Capital Group to purchase Laing's Shares at pre-agreed prices. ATLANTIC
assumed Security Capital Group's first put obligation for 2,500,000 Shares and
on March 31, 1995 purchased such Shares from Laing at $22.00 per Share. In
exchange for ATLANTIC's assumption of the first put obligation, Security
Capital Group purchased $94.8 million of Shares at $22.00 per Share from
ATLANTIC in a private offering. In November 1995, ATLANTIC assumed Security
Capital Group's second put obligation for 1,250,000 Shares at $23.136 per
Share. In exchange for ATLANTIC's assumption of the second put obligation,
Security Capital Group purchased 1,250,000 Shares at a price of $23.136 per
Share and purchased an additional $21.1 million of Shares at $23.00 per Share
in a private offering. Security Capital Group's purchase under the third put
obligation of 1,250,000 Shares (representing all Shares owned by Laing) at
$24.53 per Share occurred on July 1, 1996.
PROPERTY MANAGEMENT COMPANY
Commencing May 12, 1994, SCG Realty Services, an affiliate of the REIT
Manager, began providing property management services for certain of
ATLANTIC's communities. The agreement terminates September 30, 1997, subject
to earlier termination by ATLANTIC on 30 days' notice, is renewable annually
upon approval of ATLANTIC's independent Directors and contemplates a fee to
SCG Realty Services of 3.5% per annum of property revenues for properties
located in Atlanta and Washington, D.C. markets and 3.75% per annum of
community revenues for all other communities, paid monthly, which was $4.2
million for the year ended December 31, 1996. The REIT Manager anticipates
that SCG Realty Services will manage additional ATLANTIC communities in the
future. Any management contracts executed with SCG Realty Services are
expected to be at market rates. See "--The Merger Transaction" for a
description of an agreement that ATLANTIC has entered into with Security
Capital Group to merge the REIT Manager and SCG Realty Services into a newly
formed subsidiary of ATLANTIC in exchange for Shares.
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HOMESTEAD TRANSACTION
In March 1996, the Board began considering ways for ATLANTIC to maximize
shareholder value with respect to its Homestead Village(R) properties. In May
1996, ATLANTIC, PTR, Security Capital Group and Homestead entered into a
merger agreement, pursuant to which each of ATLANTIC, PTR and Security Capital
Group agreed to sell, through a series of merger transactions, all of their
respective assets relating to Homestead Village(R) properties to Homestead,
and ATLANTIC and PTR agreed to enter into funding commitment agreements (see
"--Funding Commitment Agreement"). ATLANTIC's and PTR's respective
shareholders approved the Homestead transaction on September 13, 1996 and
September 12, 1996, respectively, and the closing of the Homestead transaction
occurred on October 17, 1996, which resulted in ATLANTIC (a) owning 4,201,220
shares of Homestead common stock, (b) owning 2,818,517 warrants to purchase
one share of Homestead common stock at $10.00 per share, (c) owning up to
$98.0 million in convertible mortgage notes as described below (see "--Funding
Commitment Agreement") and (d) providing a cash payment of $16.6 million to
Homestead on the closing date. The $16.6 million payment was required because
ATLANTIC's Homestead Village(R) properties, only one of which was operating,
were in earlier states of development than PTR's Homestead Village(R)
properties, therefore, ATLANTIC had not funded the same percentage of total
costs as PTR. The payment also assured that ATLANTIC received all of its
shares of Homestead common stock at the closing of the transaction rather than
in smaller increments over time as funds are expended to complete the
properties contributed by ATLANTIC. ATLANTIC distributed the Homestead common
stock and warrants which it received to its shareholders pro rata on November
12, 1996 (the "Homestead Distribution"). Each holder of record of a Share on
October 29, 1996 received 0.110875 shares of Homestead common stock and
warrants to purchase 0.074384 shares of Homestead common stock. The Homestead
common stock and warrants trade on the ASE under the symbols "HSD" and
"HSD.W," respectively.
FUNDING COMMITMENT AGREEMENT
Pursuant to a funding commitment agreement entered into at the closing of
the Homestead transaction, ATLANTIC agreed to fund up to $111.1 million to
Homestead, which amount was anticipated to be sufficient to complete the
development of the Homestead Village(R) properties contributed by ATLANTIC.
ATLANTIC received 2,818,517 warrants, each to purchase one share of Homestead
common stock, in exchange for its entering into the funding commitment
agreement, which ATLANTIC subsequently distributed pro rata to its
shareholders in the Homestead Distribution. Each Homestead warrant is
exercisable at $10.00 per share and expires October 27, 1997. The exercise
price was determined based on the overall structure of the Homestead
transaction and, in particular, considering Homestead's future capital needs
and a desire to provide liquidity to ATLANTIC's shareholders with respect to
their warrants. ATLANTIC will receive convertible mortgage notes in respect of
fundings under the funding commitment agreement in stated amounts of up to
$98.0 million. The effect of these provisions of the funding commitment
agreement is that ATLANTIC will fund $1,133,535 for each $1,000,000 principal
amount of convertible mortgage loans. The convertible mortgage loans will be
recorded for financial reporting purposes at a premium of approximately $13.1
million which will be amortized and recorded as an adjustment to interest
income over the ten-year term of the mortgage loans using the effective
interest method. The relative ownership percentages of ATLANTIC, PTR and
Security Capital Group in Homestead were determined based upon the relative
value of the contributed assets assuming that all of the properties to be
contributed had been developed and were fully operational. ATLANTIC agreed to
fund convertible mortgages to provide for the development of the Homestead
Village(R) properties and to achieve its ownership allocations. The funded
amount of ATLANTIC under the convertible mortgages therefore was in an amount
that was anticipated, pursuant to development budgets, to be sufficient to
complete the development of the Homestead Village(R) properties contributed by
ATLANTIC. The difference between the funded amount and the stated amount of
the convertible mortgage loans arose because the rate of return on the
existing Homestead Village(R) properties contributed by PTR was projected to
exceed the rates of return on the Homestead Village(R) facilities contributed
by ATLANTIC and PTR to Homestead which were under construction or in
predevelopment planning. This expected difference in the rates of return arose
because, as of July 1, 1996, PTR was expected to have 28 Homestead Village(R)
properties in operation and generating income, while ATLANTIC was expected to
have none and the average property development costs for the existing PTR
Homestead Village(R)
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properties, on balance, were expected to be less than those for the ATLANTIC
and PTR Homestead Village(R) properties projected to be built in the future
because a large portion of the existing PTR Homestead Village(R) properties
were in planning or under development during 1992 and 1993 when land prices and
construction costs were less than they were when the transaction was negotiated
and were anticipated to be over the next 18 months. Because of the foregoing
factors, and as a result of Homestead's desire to issue a single class of
convertible mortgage notes bearing a 9% per annum interest rate, the stated
amounts of the convertible mortgage notes were adjusted to provide an effective
yield (after giving effect to the premium due to the issuance of the Homestead
warrants and the convertibility of the mortgage notes) to each of ATLANTIC
(8.46% on a fully funded basis) and PTR (12.42% on a fully funded basis) that
was reflective of the relative rates of return anticipated to be realized on
all of the properties contributed by ATLANTIC and PTR, respectively. The
obligation of ATLANTIC is limited to a specific dollar amount for each property
identified in the funding commitment agreement. Upon any determination by
Homestead to commence development of a property identified in the funding
commitment agreement, Homestead is required to notify ATLANTIC and ATLANTIC is
required to fund up to the full amount of its obligation with respect to such
property. Homestead is required to endeavor in good faith to complete the
development of such property consistent with the development plans for such
property. Each mortgage note issued by Homestead pursuant to the funding
commitment agreement is convertible into shares of Homestead common stock on
the basis of one share of Homestead common stock for every $11.50 of principal
outstanding on the mortgage loan. The obligation of Homestead to call for
funding of, and the obligation of ATLANTIC to provide funding for, the mortgage
loans expire on March 31, 1998, except with respect to properties for which
Homestead has given notice that it intends to develop. Interest on the mortgage
notes accrues at the rate of 9% per annum on the unpaid principal balance,
payable every six months. The mortgage notes are scheduled to mature on October
31, 2006, and are not callable until October 27, 2001. Homestead has pledged
the assets being contributed by ATLANTIC as collateral for the mortgage loans
being made by ATLANTIC. At December 31, 1996, no funds had been advanced
pursuant to the funding commitment agreement and there were no convertible
mortgage notes outstanding. ATLANTIC advanced $20.0 million under the funding
commitment agreement through March 31, 1997 and $17.6 million of mortgage notes
was outstanding on such date.
PROTECTION OF BUSINESS AGREEMENT
ATLANTIC entered into a protection of business agreement with Homestead at
the closing of the Homestead transaction which prohibits ATLANTIC and its
affiliates from engaging, directly or indirectly, in the extended-stay lodging
business except through Homestead and its subsidiaries. The agreement also
prohibits Homestead from, directly or indirectly, engaging in the ownership,
operation, development, management or leasing of multifamily properties. The
agreement does not prohibit ATLANTIC from: (i) owning securities of Homestead;
(ii) owning up to 5% of the outstanding securities of another person engaged in
owning, operating, developing, managing or leasing extended-stay lodging
properties, so long as it does not actively participate in the business of such
person; (iii) owning the outstanding securities of another person, a majority-
owned subsidiary, division, group, franchise or segment of which is engaged in
owning, operating, developing, managing or leasing extended-stay lodging
properties, so long as not more than 5% of such person's consolidated revenues
are derived from such properties; and (iv) owning securities of another person
primarily engaged in a business other than owning, operating, developing,
managing or leasing extended-stay lodging properties, including a person
primarily engaged in business as an owner, operator or developer of hotel
properties, whether or not such person owns, operates, develops, manages or
leases extended-stay lodging properties. The agreement does not prohibit
Homestead from: (i) owning securities of ATLANTIC, PTR or Security Capital
Group; (ii) owning up to 5% of the outstanding securities of another person
engaged in owning, operating, developing, managing or leasing garden-style
multifamily properties; and (iii) owning the outstanding securities of another
person, a majority-owned subsidiary, division, group, franchise or segment of
which is engaged in owning, operating, developing, managing or leasing garden-
style multifamily properties, so long as not more than 5% of such person's
consolidated revenues are derived from such properties. The agreement will
terminate in the event of an acquisition, directly or indirectly (other than by
purchase from ATLANTIC, PTR or Security Capital Group or any of their
respective affiliates), by any person (or group of associated persons acting in
concert), other than
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ATLANTIC, PTR or Security Capital Group or their respective affiliates, of 25%
or more of the outstanding voting stock of Homestead, without the prior
written consent of Homestead's board of directors. Subject to earlier
termination pursuant to the preceding sentence, the protection of business
agreement will terminate on October 17, 2006.
HOMESTEAD INVESTOR AGREEMENT
ATLANTIC entered into an investor and registration rights agreement with
Homestead at the closing of the Homestead transaction pursuant to which
ATLANTIC is entitled to designate one person for nomination to the Homestead
board of directors, and Homestead will use its best efforts to cause the
election of such nominee, until March 31, 1998 and for so long thereafter as
ATLANTIC has the right to convert in excess of $20 million in principal amount
of loans made pursuant to its funding commitment agreement. Such nominee may,
but need not, include the same person(s) nominated by Security Capital Group
pursuant to Security Capital Group's investor agreement with Homestead. In
addition, Homestead has granted to ATLANTIC registration rights with respect
to the distribution of all of the shares of Homestead common stock issuable
upon conversion of the convertible mortgage notes. Prior to October 22, 1997,
ATLANTIC may request one registration of those shares of Homestead common
stock which are issued upon conversion of any or all of the convertible
mortgage notes during such one-year period and which it intends to distribute
to its shareholders. After such one-year anniversary, ATLANTIC may request
three additional registrations pursuant to Rule 415 promulgated under the
Securities Act of 1933, as amended, of all shares of Homestead common stock
issued or issuable upon conversion of the convertible mortgage notes. Such
registration, except for the fees and disbursements of counsel to ATLANTIC,
shall be at the expense of Homestead.
DEVELOPMENT AGREEMENT
ATLANTIC and Hanover Realty Services Inc. ("Hanover") are parties to several
development agreements, in connection with the acquisition and development of
six communities. In consideration for Hanover's development of these
communities the development agreements provide that ATLANTIC will make certain
earnout payments to Hanover either in the form of cash, Shares or shares of
Security Capital Group's common stock, as determined in the sole discretion of
Hanover. The amount of such payments shall be determined on a per site basis
and shall be a percentage of the amount by which annualized net operating
income, capitalized at a rate as provided by the agreement, exceeds the total
actual project costs. In February 1997, Hanover was paid $0.8 million with
respect to one community. The aggregate amount of such earnout amounts for the
five remaining communities cannot exceed $5.8 million. Hanover was not
entitled to receive any earnout payments at March 31, 1997 on the five
remaining communities.
THE MERGER TRANSACTION
The Transaction
In January 1997, Security Capital Group made a proposal to the Board that
Security Capital Group exchange the REIT Manager and SCG Realty Services for
Shares, with the result that ATLANTIC would become an internally managed REIT.
On March 24, 1997, Security Capital Group and ATLANTIC entered into a Merger
and Issuance Agreement, as amended (the "Merger Agreement"), which is subject
to shareholder approval and other customary conditions, including the approval
of ATLANTIC's shareholders, pursuant to which Security Capital Group will
cause the REIT Manager and SCG Realty Services to be merged into a newly
formed subsidiary of ATLANTIC (the "Merger"). The employees of the REIT
Manager and SCG Realty Services will become employees of ATLANTIC as a result
of the Merger. In exchange for the transfer of those businesses, ATLANTIC will
issue to Security Capital Group Shares valued at approximately $54.6 million.
The number of Shares issuable to Security Capital Group will depend on the
average market price of the Shares prior to the record date for determining
ATLANTIC's shareholders entitled to vote at the meeting in connection with the
Merger, subject to a maximum and minimum number of Shares.
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In order to allow ATLANTIC's shareholders to maintain their relative
ownership in ATLANTIC, concurrently with the proxy solicitation seeking
approval of the Merger, ATLANTIC will conduct a rights offering entitling its
shareholders (other than Security Capital Group) to purchase up to
approximately $51.6 million of additional Shares (subject to adjustment for
further issuances of Shares prior to the record date therefor). The exercise
price for Shares in the rights offering is expected to be the same price at
which Shares will be issued to Security Capital Group under the Merger
Agreement if the price of the Shares remains within a specified range. In
addition, as part of the Merger transaction, and in order to permit holders of
Shares to benefit from the Merger transaction on the same terms as equity
holders in Security Capital Group, Security Capital Group will issue warrants
to purchase shares of Security Capital Group's Class B common stock, par value
$0.1 per share (the "Class B Stock") pro rata to ATLANTIC's shareholders (the
"Warrant Issuance"), other than Security Capital Group, after the closing of
the Merger and the rights offering. The Warrant Issuance will result in
taxable ordinary income to ATLANTIC's shareholders who receive the warrants,
whether or not the shareholders sell the warrants received in the Warrant
Issuance.
THIS PROXY STATEMENT DOES NOT RELATE TO THE MERGER. YOU WILL BE RECEIVING A
SEPARATE PROXY STATEMENT WITH RESPECT TO THE MERGER. A SPECIAL SHAREHOLDERS'
MEETING TO VOTE ON THE MERGER IS EXPECTED TO BE HELD IN THE THIRD QUARTER OF
1997.
Relationship with Security Capital Group After the Merger
Under the terms of the Merger Agreement, ATLANTIC will enter into a revised
investor agreement with Security Capital Group upon consummation of the Merger
which will provide that so long as Security Capital Group owns 25% or more of
the Common Shares, Security Capital Group will continue to have rights to
direct major policies of ATLANTIC. See "--Security Capital Group Investor
Agreement" for a description of the current Investor Agreement. Security
Capital Group will have the right, so long as it owns between 10% and 25% of
the Common Shares, to nominate one person to the Board. So long as Security
Capital Group owns 25% or more of the Common Shares, Security Capital Group
will be entitled to nominate a proportionate number of persons to the Board
subject to a maximum of three nominees if the size of the Board does not
increase above the current size. Under the revised investor agreement,
ATLANTIC will be required to consult with Security Capital Group's nominees to
the Board prior to taking any action with respect to the following: (i)
finalization of the annual budget and substantial deviations therefrom; (ii)
the acquisition or sale of assets in a single transaction where the price
exceeds $25 million; (iii) any contract for investment, property management or
leasing services; and (iv) any service contract providing for payments in
excess of $1.0 million. ATLANTIC will have no obligation to follow the advice
of Security Capital Group with respect to the foregoing matters.
Under the revised investor agreement, Security Capital Group will also have
the right of prior approval with respect to the following matters: (i) the
issuance of equity securities or securities convertible into equity securities
(other than issuances in connection with option, dividend reinvestment and
similar plans) for less than the fair market value of such securities; (ii)
the issuance of any preferred shares which would result in the Fixed Charge
Coverage Ratio (as defined) being less than 1.4 to 1.0; (iii) adopting any
employee benefit plans under which Common Shares may be issued; (iv) the
compensation of senior officers of ATLANTIC; and (v) incurring additional
indebtedness which would result in the Interest Expense Coverage Ratio (as
defined) being less than 2.0 to 1.0. Finally, under the revised investor
agreement, Security Capital Group has the right to call a special meeting of
shareholders to consider a Security Capital Group proposed slate of nominee
Directors in the event that any of its approval rights are held to be
unenforceable by a court.
Security Capital Group will be permitted to make job opportunities with its
affiliates, including PTR and SCI, available to the officers and employees of
ATLANTIC; provided that Security Capital Group gives the Board two weeks'
notice prior to making an opportunity available to a senior officer of
ATLANTIC.
Under the terms of the Merger Agreement, ATLANTIC will also enter into an
administrative services agreement with a subsidiary of Security Capital Group.
Under this agreement, Security Capital Group will
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provide ATLANTIC with certain administrative services requested by ATLANTIC.
The fees payable to Security Capital Group will be equal to Security Capital
Group's cost of providing such services plus 20%. For the initial term of the
agreement (through December 31, 1998), the fees payable to Security Capital
Group will not exceed approximately $5.2 million of which approximately $1.5
million will apply to the period between the closing of the Merger and
December 31, 1997 and the remainder will apply to 1998, but may be less than
such amount.
In addition, pursuant to a protection of business agreement to be entered
into with Security Capital Group in connection with the Merger Agreement,
Security Capital Group will agree that, for a three-year term, neither it nor
any affiliate will provide substantially the same advice and services as those
being provided by the REIT Manager and SCG Realty Services to any person
within the United States owning or operating real property that is or is
planned to be used primarily for multifamily communities.
OTHER TRANSACTIONS WITH AFFILIATES
In ATLANTIC's March through June 1995 private offering, Security Capital
Group purchased $94.8 million of Shares at $22.00 per Share. In ATLANTIC's
December 1995 through May 1996 private offering, Security Capital Group
purchased an aggregate of $50.0 million of Shares, $21.1 million of which were
purchased at $23.00 per Share (which was the price per Share paid by other
investors in the offering) and $28.9 million of which were purchased at
$23.136 per Share. See "--Shareholders' Agreement". In ATLANTIC's October 1996
initial public offering, Security Capital Group purchased $10 million of
Shares at $24.00 per Share. Except as described above, all subscriptions were
made on the same terms and at the same times as made available to other
investors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires ATLANTIC's Directors, officers
and beneficial owners of more than 10 percent of the outstanding Shares to
file reports of ownership and changes in ownership of the Shares with the
Securities and Exchange Commission and to send copies of such reports to
ATLANTIC. Based solely upon a review of such reports and amendments thereto
furnished to ATLANTIC and upon written representations of certain of such
persons that they were not required to file certain of such reports, ATLANTIC
believes that no such person failed to file any such report on a timely basis
during 1996, except that Security Capital Group made one late filing with
respect to one transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Ernst & Young LLP, certified public accountants, who
have served as auditors for ATLANTIC since inception, to serve again as the
auditors of ATLANTIC's books and records for the coming year. A representative
of Ernst & Young LLP is expected to be present at the annual meeting, and will
be given an opportunity to make a statement if such representative desires to
do so and will be available to respond to appropriate questions.
ANNUAL REPORT
ATLANTIC's 1996 Annual Report, which includes financial statements, has
previously been mailed to shareholders or is being mailed to shareholders
together with this Proxy Statement. The Annual Report does not constitute a
part of the proxy solicitation material.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder of ATLANTIC intended to be presented at the
1998 annual meeting of shareholders must be received by ATLANTIC at its
principal executive offices not later than December 25, 1997, for inclusion in
ATLANTIC's proxy statement and form of proxy relating to that meeting.
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OTHER MATTERS
ATLANTIC is not aware of any business or matter other than those indicated
above which may properly be presented at the meeting. If, however, any other
matter properly comes before the meeting, the proxy holders will, in their
discretion, vote thereon in accordance with their best judgment.
By Order of the Board of Directors,
Jeffrey A. Klopf
Secretary
April 25, 1997
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P R O X Y
APPENDIX
SECURITY CAPITAL ATLANTIC INCORPORATED
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1997
The undersigned hereby appoints each of Constance B. Moore, James C. Potts and
Jeffrey A. Klopf, as proxies with full power of substitution, to represent the
undersigned at the annual meeting of shareholders of Security Capital Atlantic
Incorporated to be held on May 29, 1997, and at all adjournments or
postponements thereof, and to vote at such meeting the shares of common stock
that the undersigned would be entitled to vote if present at such meeting, in
accordance with the instructions indicated on the reverse side of this card; if
no instructions are indicated, the shares represented by this proxy will be
voted for the election of the listed nominee for Director and, at the direction
of the proxies named above, on any other matter that may properly come before
the meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting and the
Proxy Statement together with this Proxy.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
(Continued and to be signed and dated on the other side.)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
SECURITY CAPITAL ATLANTIC INCORPORATED
ANNUAL MEETING
OF SHAREHOLDERS
ADMISSION TICKET
Thursday, May 29, 1997
2:00 p.m. (Eastern Daylight Time)
Renaissance Waverly Hotel
2450 Galleria Parkway
Atlanta, Georgia 30339
[Insert Recordholder Information]
Please present this ticket for admittance of shareholder(s) named above and
guest.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
[X] Please mark your
vote as indicated
in this example.
1. The election of the following person as a Class III Director:
James C. Potts
FOR [_] WITHHELD [_]
2. To vote upon any other matters that may properly be presented at the meeting
according to their best judgment and in their discretion.
I HAVE MADE [_]
COMMENTS OR
INDICATED AN
ADDRESS CHANGE:
COMMENTS/ADDRESS CHANGE
----------------------------------
----------------------------------
----------------------------------
Please sign, date and return this proxy
card promptly using the enclosed
postage-paid envelope whether or not
you plan to attend the meeting.
Please sign exactly as names(s) appears
to the left. If shares are held
[Insert Recordholder Information] jointly, each joint tenant should sign.
If signing as attorney, executor,
administrator, trustee or guardian or
as officer of a corporation or other
entity, please give full title and
capacity in which you are signing.
Signature:________________ Date:_______ Signature:_______________Date:________
