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 Sec. 240.14a-11(c) or
Sec. 240.14
WELLINGTON PROPERTIES TRUST
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies;
2. Aggregate number of securities to which transaction applies;
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange 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 be registration
statement number, or the Form or Schedule and the date of filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration No.:
3. Filing Party:
4. Fate Filed:
<PAGE>
WELLINGTON PROPERTIES TRUST
18650 W. Corporate Drive, Suite 300
Brookfield, WI 53008-0919
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 29, 1999
To the Shareholders of Wellington Properties Trust:
Notice is hereby given that the Annual Meeting of
Shareholders (together with any adjournments or
postponements thereof, the "Meeting") of Wellington
Properties Trust (the "Company") will be held at Thresher
Square, 708 S. 3rd Street, Minneapolis, MN, on Wednesday,
December 29, 1999 at 10:00 a.m., CST time, for the purpose
of considering and voting upon the following matters:
(1) To elect two persons to the Board of Trustees
for three year terms and two persons for one
year terms;
(2) To consider and act upon a proposal to
amend the Company's Restated Declaration
of Trust to change the Company's name; and
(3) To transact such other business as may
properly come before the Meeting.
These items are more fully described in the
accompanying Proxy Statement, which is hereby made a part of
this Notice of Annual Meeting of Shareholders.
The Board of Directors has fixed the close of business
on November 15, 1999 as the record date for the determination
of shareholders entitled to notice of, and to vote at, the Meeting.
A copy of the Company's Annual Report for the year
ended December 31, 1998 is enclosed. The Annual Report is
not a part of the proxy soliciting material enclosed with this
Notice.
By Order of the Board of Trustees,
/s/ Robert F. Rice
President/Secretary
Brookfield, Wisconsin
December 13, 1999
ALL SHAREHOLDERS ARE CORDIALLY INVITED
TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO
ENSURE YOUR REPRESENTATION AT THE MEETING. A
RETURN ENVELOPE (WHICH IS POSTAGE-PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR
THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR
PROXY, YOU MAY STILL VOTE IN PERSON IF YOU
ATTEND THE MEETING. PLEASE NOTE, HOWEVER,
THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH
TO VOTE AT THE MEETING, YOU MUST BRING TO THE
MEETING A LETTER FROM THE BROKER, BANK OR
OTHER NOMINEE CONFIRMING YOUR BENEFICIAL
OWNERSHIP OF THE SHARES. ADDITIONALLY, IN
ORDER TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY
ISSUED IN YOUR NAME.
<PAGE>
WELLINGTON PROPERTIES TRUST
18650 W. Corporate Drive, Suite 300
Brookfield, WI 53008-0919
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
WELLINGTON PROPERTIES TRUST
December 29, 1999
INFORMATION CONCERNING SOLICITATION AND
VOTING
This Proxy Statement (the "Proxy Statement") and the
accompanying form of proxy are being furnished to the
shareholders of Wellington Properties Trust (the "Company") in
connection with the solicitation of proxies by the Board of
Trustees of the Company (the "Board") from holders of its
outstanding Common Shares, $.01 par value per share (the
"Common Shares"), from holders of its Class A Cumulative
Convertible Preferred Shares (the "Class A Preferred Shares")
and from holders of its Class B Junior Cumulative Convertible
Preferred Shares (the "Class B Preferred Shares") for use at the
Annual Meeting of Shareholders of the Company (together with
any adjournments or postponements thereof, the "Meeting") to
be held at Thresher Square, 708 S. 3rd Street, Minneapolis, MN,
on Wednesday, December 29, 1999 at 10:00 a.m., CST
time. This Proxy Statement, the accompanying form of proxy
and the Annual Report to Shareholders are expected to be
mailed to shareholders of the Company on or about December
13, 1999.
SOLICITATION
The expense of this solicitation will be borne by the
Company. Solicitation will be primarily by use of the mails.
Executive officers and other employees of the Company may
solicit proxies, without additional compensation, personally and
by telephone and other means of communication. The Company
will also reimburse brokers and other persons holding Common
Shares, Class A Preferred Shares and Class B Preferred Shares
in their names or in the names of their nominees for their
reasonable expenses in forwarding proxies and proxy materials
to beneficial owners.
VOTING RIGHTS AND OUTSTANDING SHARES
Shareholders of record as of the close of business on
November 15, 1999 (the "Record Date") will be entitled to vote
at the Meeting. Each outstanding Common Share is entitled to
one vote and each Class A Preferred Share and each Class B
Preferred Share is entitled to 3.448 votes on each matter to
come before shareholders at the Meeting. As of the Record
Date, there were 1,372,152 Common Shares, 700,000 Class A
Preferred Shares and 349,800 Class B Preferred Shares
(collectively the "Voting Shares") outstanding and entitled to
vote.
The presence at the Meeting, in person or by proxy, of a
majority in interest of the outstanding Voting Shares
as of the Record Date will constitute a quorum for transacting
business at the Meeting. Abstentions and broker non-votes are
counted towards a quorum. Provided a quorum is present at the
Meeting, directors will be elected by a plurality of the votes
present in person or represented by proxy and entitled to vote at
the Meeting and the proposed amendment to the Company's
Restated Declaration of Trust will require a vote of a
majority in interest of all Voting Shares entitled to vote at the
meeting.
<PAGE>
All votes will be tabulated by the inspector of elections
appointed for the Meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-
votes. Abstentions will be counted for purposes of determining
both the presence or absence of a quorum for the transaction of
business and the total number of votes cast with respect to a
particular matter. Broker non-votes will be counted for purposes
of determining the presence of absence of a quorum for the
transaction of business but will not be counted for purposes of
determining the presence or absence of a quorum for
action on a particular proposal on which the broker has
expressly not voted. Broker non-votes with respect to proposals
set forth in this Proxy Statement, other than with respect to a
matter that requires the approval of a majority in interest of the
outstanding Voting Shares, will therefore not be considered
votes cast and, accordingly, will not affect the determination as
to whether sufficient votes have been obtained with respect to
such matters. Because approval of the amendment to the
Company's Restated Declaration of Trust will require the
affirmative vote of a majority in interest of the outstanding
Voting Shares, broker non-votes with respect to such proposal
will have the same effect as a negative vote.
REVOCABILITY OF PROXIES
The Voting Shares represented by proxy will be voted as
instructed if received in time for the Meeting. If no instructions
are indicated, such shares will be voted in favor of (FOR) (i)
each nominee for election as a director specified herein, (ii) the
proposal to amend the Company's Restated Declaration of Trust
to change the Company's name, and (iii) in the discretion of the
proxy holder, as to any other matter that may properly come
before the Meeting. Any person signing and mailing the proxy
may, nevertheless, revoke it at any time before it is exercised by
written notice to the Company (Attention Robert F. Rice,
President and Secretary) at its offices at 18650 W. Corporate
Drive, Suite 300, Brookfield, WI 53008-0919, or by attending
in person and voting at the Meeting. Attendance at the Meeting,
however, will not itself constitute the revocation of a proxy.
PROPOSAL 1 -- ELECTION
OF TRUSTEES
Four trustees, are to be elected at the Meeting and, if
elected, two will serve until the next Annual Meeting of
Shareholders and two will serve for three year terms and until
their successors have been elected and qualified.
The nominees of the Board are set forth below. In the
event any nominee is unable or declines to serve as a director at
the time of the Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board to fill the
vacancy. If additional persons are nominated for election as
trustees, then the proxy holders intend to vote all proxies
received by them for the nominees listed below unless
instructed otherwise. As of the date of this Proxy Statement, the
Company is not aware of any nominee who is unable or who
will decline to serve as a trustee if elected.
NOMINEES FOR ELECTION AS TRUSTEES
Set forth below are the names, positions and offices held
and a brief description of the business experience during the
past five years of each person nominated to serve as a trustee of
the Company.
Terms to Expire in 2002
Robert D. Salmen joined the Board in August 1999. Mr.
Salmen founded Equity Financial Services in 1993. While
continuing to operate Equity Financial's investment services
company, he co-founded Equity Commercial Services in 1996
to incorporate leasing and then property management services
for Equity Financial and currently serves as its president. Prior
to founding Equity Financial Services, Mr. Salmen was vice
president of institutional investment sales with Welsh
Companies for eight years. He established the Institutional
Investment division at Welsh Companies in 1985. From its
inception through 1992, he directed Welsh's sales marketing
force. Prior to joining Welsh, Mr. Salmen spent over nine years
with Towle Real Estate. Mr. Salmen is a graduate of the
University of Minnesota.
<PAGE>
Mark S. Whiting joined the Board in October 1999, upon the
completion of the public offering of the Class A Preferred Shares. Mr.
Whiting has an extensive public REIT background, having
served as the President and a member of the board of directors
of TriNet Corporate Realty Trust, Inc. (NYSE: TRI) from 1993
until 1998 and as its Chief Executive Officer from 1996 until
1998. At the time, TriNet owned a commercial real estate
portfolio consisting of over 20 million square feet located in 26
states and a total market capitalization of $1.6 billion. Mr.
Whiting holds an M.B.A. from Stanford University Graduate
School of Business.
Terms to Expire in 2000 (Joining Class II)
Duane H. Lund (35) has been the Chief Executive Officer of the
Company since November 1998. Mr. Lund was a founding
shareholder of First Industrial Realty Trust, Inc. and served as a
senior regional director of First Industrial from 1994 to 1998.
In such capacity, Mr. Lund acquired and managed over
11,000,000 square feet of commercial property with a value in
excess of $750 million. From 1989 to 1994, Mr. Lund was an
acquisition partner with The Shidler Group, where he was
involved in coordinating the underwriting and due diligence for
over $200 million of commercial property. Mr. Lund was a tax
consultant with Peat Marwick Main & Company from 1986
until 1988. Mr. Lund is a member of the boards of directors of
the Wisconsin Real Estate Alumni Association and National
Association of Industrial and Office Properties, Minnesota
Chapter and is a member of the advisory boards of the Midwest
Real Estate News, the Minnesota Real Estate Journal and the
KPMG Peat Marwick Alumni Association.
Robert F. Rice (48), the President and corporate Secretary of the
Company, has served as Secretary since the Company's
inception in 1994 and as Executive Vice President from May
1997 until becoming President in November 1998. Prior to
November 1998, Mr. Rice served as Vice President and General
Counsel to Wellington Management Corporation, beginning in
November 1993. From 1989 to October 1993, Mr. Rice
provided advice with respect to Resolution Trust Corporation
matters through Resource Alternatives, Inc., a provider of legal
and consulting services to the real estate industry. From 1984
to 1989, Mr. Rice served as a director, officer and general
counsel for various affiliates of St. Francis Bank, F.S.B. Mr.
Rice graduated from Marquette University Law School in 1976.
MANAGEMENT OF THE COMPANY
BOARD OF TRUSTEES
The Board is currently comprised of the following
persons:
<TABLE>
<CAPTION>
<S> <C>
Name Age
Arnold K. Leas 65
Steven B. Hoyt 47
Paul T. Lambert 47
Peter Ogden 47
Robert P. Ripp 72
Robert D. Salmen 44
Mark S. Whiting 42
</TABLE>
<PAGE>
Following is a description of the current trustees (other
than the nominees) of the Company.
Class I Trustees - Terms to Expire in 2001
Paul T. Lambert, has been a trustee since November
1998. Mr. Lambert has been a private investor since 1995. He
served on the board of directors and was the chief operating
officer of First Industrial Realty Trust, Inc. from its initial
public offering in June 1994 to the end of 1995. Mr. Lambert
was one of the largest contributors to the formation of First
Industrial and one of its founding shareholders. Prior to
forming First Industrial, Mr. Lambert was managing partner of
the Midwest region for The Shidler Group, a national private
real estate investment company. Prior to joining Shidler, Mr.
Lambert was a commercial real estate developer with
Dillingham Corporation and, prior to that, was a consultant with
The Boston Consulting Group. Mr. Lambert was also a
founding shareholder of CGA Group, Ltd., a holding company
whose subsidiary is a AAA-rated financial guarantor based in
Bermuda.
Arnold K. Leas, the Chairman of the Board of Trustees,
served as the Company's original President/Chief Executive
Officer from its inception in 1994 until November 1998. Mr.
Leas also served as a Director, Chief Executive Officer and
President of Wellington Management Corporation since its
inception in 1988. Wellington Management and its subsidiary,
Wellington Investment Services Corp., currently manage over
$100 million dollars of investors' funds. From 1984 to 1988,
Mr. Leas was Executive Vice President of Decade Securities,
Inc., a Milwaukee, Wisconsin based company that was involved
primarily in the syndication of multi-family apartment
communities throughout the United States. Mr. Leas is on the
board of directors of the Metropolitan Milwaukee Association
of Commerce Council of Small Business Executives and is a
graduate of the Realtors Institute.
Class II Trustees - Terms to Expire in 2000
Steven B. Hoyt became a trustee in November 1998. He
has served as managing general partner of Hoyt Development
(from 1979 to 1989) and Chief Executive Officer of Hoyt
Properties, Inc. (from 1989 to present). Hoyt Properties
currently owns over 1,000,000 square feet of industrial and
office property in Minnesota and has developed over 5,000,000
square feet of commercial property since its inception. From
1994 to 1995, Mr. Hoyt served as a Senior Regional Director of
First Industrial Realty Trust, Inc. Mr. Hoyt is a member of the
board of directors of the Better Business Bureau and has served
in numerous state and national positions for the National
Association of Industrial and Office Parks (NAIOP).
Robert P. Ripp has served as one of the trustees since
the Company's inception in 1994. Mr. Ripp is the owner of
RESI Realtor, a Milwaukee based real estate brokerage firm.
Prior to forming RESI Realtor in 1985, Mr. Ripp was the Vice
President/General Sales Manager for Wauwatosa Realty, a real
estate brokerage firm with 27 offices in the State of Wisconsin.
Class III Trustees - Terms to Expire in 1999
Peter Ogden has been a trustee since the Company's
inception in 1994. Mr. Ogden has served as the president and
owner of Ogden Development Group, Inc. since 1986, both of
which are Milwaukee-based providers of real estate brokerage,
leasing and property management services and which together
manage over 2,500 apartment and condominium units, in
addition to shopping centers and office, industrial and mixed-
use buildings.
Mr. Ripp has indicated that he intends to resign upon
the election of the nominees at the Meeting. Mr. Ogden is not
seeking another term with the Board.
<PAGE>
COMMITTEES OF THE BOARD OF TRUSTEES
The Board has appointed an Audit Committee and a
Compensation Committee but has no Nominating Committee.
Audit Committee. The Audit Committee, which held
one meeting during 1998, currently consists of Messrs. Ogden
and Salmen. The committee reviews
related party transactions, makes recommendations concerning
the engagement of independent public accountants, reviews the
performance of independent public accountants, considers the range of audit
and non-audit fees that the Company pays to the independent
accountants and reviews the adequacy of the internal
accounting controls.
Compensation Committee. The Company's Compensation
Committee, which held one meeting during 1998, currently
consists of Messrs. Leas, Hoyt and Lambert. The committee
makes recommendations and exercises all powers of the Board
in connection with certain compensation matters, including
incentive compensation and benefit plans. The Compensation
Committee administers and has authority to grant awards under
our 1998 Stock Incentive Plan.
SHAREHOLDER'S AGREEMENT
In November 1998, the Company entered into a ten year
shareholders' agreement with each of American Real Estate
Equities, LLC, Duane H. Lund, WLPT Funding, Paul T.
Lambert, Lambert Equities II, LLC, Steven B. Hoyt, Wellington
Management Corporation, Robert F. Rice, Arnold K. Leas,
Rose Marie Leas and Gregory S. Leas. Under the shareholders'
agreement, the signing shareholders have agreed to take
whatever actions are necessary (including, but not limited to,
the voting of all shares owned, from time to time, by each of
them, whether directly or indirectly) in order to: (1) cause
Messrs. Lambert and Hoyt to be, and to continue to be, elected
to the Board ; (2) cause the Board to fill any vacancies on the
Board with a person mutually selected by American Real Estate
Equities and Wellington Management Corporation; and (3)
cause the Board to elect Mr. Lund as the Chief Executive
Officer, Mr. Rice as the President, and Mr. Leas as the
Chairman of the Board of Trustees.
ATTENDANCE AT BOARD AND COMMITTEES MEETINGS
During 1998, the Board met seven times. No incumbent
Board member attended fewer than 75% of the aggregate of (i)
the total number of meetings of the Board which such director
was eligible to attend during 1998 and (ii) the total number of
meetings held by any committee of the Board upon which such
trustee served during 1998.
EXECUTIVE OFFICERS
The Company's only executive officers are Messrs. Lund, Chief
Executive Officer and Rice, President and Secretary.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with
respect to the beneficial ownership of the Company's Voting
Shares as of the Record Date by: (i) each person known by the
Company to own more than 5% in interest of the outstanding Voting
Shares: (ii) each of the Company's trustees and nominees for
election; (iii) each of the Company's executive officers
included in the Summary Compensation Table included
elsewhere herein; and (iv) all of the Company's trustees and
executive officers as a group. Except as otherwise noted, the
person or entity named has sole voting and investment power
over the shares indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
NAME BENEFICIAL OWNERSHIP
Number(1) Percent(1)
Arnold K. Leas (2) (3) (4) 524,738 10.5%
Steven B. Hoyt (2) (3) (5) 1,527,936 30.6%
Paul T. Lambert (2) (3) (6) 1,045,216 20.9%
Duane H. Lund (2) (3) (7) 1,085,216 21.6%
American Real Estate
Equities, LLC (3) (8) 1,045,216 20.9%
Lambert Equities
II, LLC (3) (9) 1,045,216 20.9%
WLPT Funding,
LLC (3) (10) 1,045,216 20.9%
Wellington Management
Corporation (3) (11 ) 477,881 9.6%
Robert F. Rice (2) (3) (14) 52,948 1.1%
Peter Ogden (2) (12) 3,167 *
Robert P. Ripp (2) (13) 4,199 *
Mark S. Whiting (2) -- *
Robert D. Salmen (2) -- *
All trustees and current
executive officers as a
group (9 persons) (15) 2,152,98 8 42.3%
</TABLE>
* Indicates less than one percent.
(1) Based on 1,372,152 Common Shares, 700,000 Class A
Preferred Shares and 349,800 Class B Preferred Shares
outstanding as of November 15, 1999. Also assumes
exercise by only the shareholder or group named in each
row of all options and warrants for the purchase of the
Common Shares held by such shareholder or group and
exercisable within 60 days of November 15, 1999.
(2) The business address for each of the current trustees and
executive officers is 18650 W. Corporate Drive, Suite
300, Brookfield, WI 53045.
(3) All of these parties have entered into a ten year
agreement providing for the election of trustees and
certain other matters. Each such party disclaims
beneficial ownership of the Common Shares owned by
each other party.
(4) Includes 990 Common Shares held by a trust for the
benefit of Mr. Leas' wife and options to purchase 9,500
Common Shares exercisable within 60 days of
November 15, 1999. Also includes 150,321 Common
Shares and an additional 327,560 Common Shares
issuable upon conversion of 95,000 Class B Junior
Cumulative Convertible Preferred Shares held by
Wellington Management Corporation, of which Mr.
Leas is the president and chief executive officer and
with respect to which Mr. Leas, members of his
immediate family and trusts for the benefit of such
persons own approximately 41.8% of the outstanding
capital stock. Of the shares held by Mr. Leas or for the
benefit of his wife, 30,544 Common Shares have been transferred
to an excess share trust and may not be voted by Mr. Leas or
his wife on any matter coming before the Company's
shareholders. Mr. Leas disclaims beneficial ownership
of Common Shares held for the benefit of his wife.
(5) Does not reflect 691,690 ordinary common units and
168,417 Class B common units of the operating
partnership held by Mr. Hoyt or members of his
immediate family. All Common Shares and
Class B Preferred Shares indicated are held by
American Real Estate Equities, LLC, of which Mr. Hoyt
is a member. Includes 166,666 Common Shares, 482,720
Common Shares issuable upon conversion of 140,000
Class A Preferred Shares and 878,550 Common Shares
issuable upon conversion of 254,800 Class B Junior
Cumulative Convertible Preferred Shares.
<PAGE>
(6) Does not reflect 168,416 Class B common units of our
operating partnership held by Lambert Equities II, LLC,
of which Mr. Lambert is the controlling majority
member and sole manager. All shares indicated are held
by American Real Estate Equities, LLC, of which
Lambert Equities II, LLC is a member. Includes
878,550 Common Shares issuable upon conversion of
254,800 Class B Junior Cumulative Convertible
Preferred Shares.
(7) Does not reflect 375,666 ordinary common units and
168,416 Class B common units of our operating
partnership held by WLPT Funding, LLC, of which Mr.
Lund is the owner and the sole manager. All shares
indicated are held by American Real Estate Equities,
LLC, of which WLPT Funding, LLC is a member.
Includes 166,666 Common Shares, 878,550 Common Shares issuable
upon conversion of 254,800 Class B Junior Cumulative
Convertible Preferred Shares and options to purchase 40,000
Common Shares exercisable within 60 days of November 15, 1999.
(8) Includes 878,550 Common Shares upon conversion of
254,800 Class B Junior Cumulative Convertible
Preferred Shares. The business address for American
Real Estate Equities, LLC is 300 First Avenue North,
Suite 115, Minneapolis, Minnesota 55401.
(9) Figures indicated do not reflect ownership of 168,416
Class B common units of the operating partnership. All
shares indicated are held by American Real Estate
Equities, LLC, of which Lambert Equities II, LLC is a
member. Includes 878,550 Common Shares issuable
upon conversion of 254,800 Class B Junior Cumulative
Convertible Preferred Shares. The business address for
Lambert Equities II, LLC is 4155 East Jewel, Suite 103,
Denver, Colorado 80222.
(10) Figures do not reflect 375,666 ordinary common units
and 168,416 Class B common units of the operating
partnership. All shares indicated are held by American
Real Estate Equities, LLC, of which WLPT Funding,
LLC is a member. Includes 878,550 Common Shares
issuable upon conversion of 254,800 Class B Junior
Cumulative Convertible Preferred Shares. The business
address for WLPT Funding, LLC is c/o Golden Acres
Incorporated, 15315 Masons Pointe, Eden Prairie,
Minnesota 55347.
(11) Includes 327,560 Common Shares issuable upon
conversion of 95,000 Class B Junior Cumulative
Convertible Preferred Shares. The business address for
Wellington Management Corporation is 18650 W.
Corporate Drive, Suite 300, P.O. Box 0919, Brookfield,
WI 53008-0919.
(12) Consists solely of options to purchase Common Shares
exercisable within 60 days of November 15, 1999.
(13) Includes options to purchase 3,167 Common Shares
exercisable within 60 days of November 15, 1999.
(14) Includes 3,448 Common Shares issuable upon conversion
of 1,000 Class A Preferred Shares and options to
purchase 47,917 Common Shares exercisable within 60
days of November 15, 1999.
(15) Includes options to purchase an aggregate of 103,751
Common Shares exercisable within 60 days of November
15, 1999, 482,720 Common Shares issuable upon
conversion of 140,000 Class A Preferred Shares
and 1,206,110 Common Shares issuable upon
conversion of 349,800 Class B Junior Cumulative
Convertible Preferred Shares. Of the total, 30,544 Common
Shares indicated have been transferred to an
excess share trust and may not be voted by the holders
thereof on any matter coming before the shareholders.
Figures do not reflect an aggregate of 1,067,356
common units and 505,249 Class B common units of
our operating partnership.
<PAGE>
COMPENSATION OF TRUSTEES AND EXECUTIVE
OFFICERS
COMPENSATION OF TRUSTEES
Trustees of the Company who are not employees of the
Company receive a fee of $250 for each Board or committee
meeting attended, plus the reimbursement of all reasonable out-
of-pocket expenses incurred in connection with such
attendance.
EXECUTIVE COMPENSATION
Summary Compensation
From its inception in 1994 through the year ended December
31, 1997, the Company was externally managed and paid no
compensation to any of the executive officers. In 1998 the
following compensation was paid:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Principal Securities Underlying
Position Year Salary Options
Duane H. Lund 1998 $18,750(l) --
Chief Executive Officer
Robert F. Rice 1998 $62,500(2) 7,917(3)
President and Secretary
</TABLE>
(1) Amount reflects base annual salary of $150,000. Mr. Lund
became our chief executive officer on November 20, 1998.
(2) Amount reflects base annual salary of $150,000. Mr. Rice
was paid commencing August 1, 1998.
(3) All options were granted on May 27, 1998
and have an exercise price of $5.37 per
Common Share, which was the fair market
value per share on the date of grant. All such
options are currently exercisable.
<TABLE>
<CAPTION>
Options/SAR Grants in Last Fiscal Year
<S> <C> <C> <C> <C>
Percentage of
Total Options
Name and Number of Common Granted to
Principal Shares Underlying Employees Exercise Expiration
Position Options Granted in Fiscal Year Price Date
Duane H. Lund
Chief Executive
Officer -- -- -- --
Robert F. Rice
President and
Secretary 7,917 18.98% $5.37 5-26-08
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year End Option/SAR Values
<S> <C> <C> <C> <C>
# of Securities Value of
Underlying Unexercised in
Common Options/SARs the Money Options/
Name and Shares at Fiscal SARs at Fiscal Year
Principal Acquired on Value Year End End ($) Exercisable/
Position Exercise Realized Exercisable (1) Unexercisable(2)
Duane H.
Lund -- -- -- --
Chief Executive
Officer
Robert F. Rice -- -- 7,917 $0/--
President and
Secretary
</TABLE>
(1) All of the options held by the named executive officers
are currently exercisable.
(2) Calculations are based upon the closing bid price of $4.30
per Common Share as of December 31, 1998.
EMPLOYMENT AND SERVICES AGREEMENTS
EMPLOYMENT AGREEMENTS
Effective as of October 1, 1999, the Company has
entered into new employment agreements with Duane H. Lund,
the Chief Executive Officer and Robert F. Rice, the President.
The employment agreements each provide for an initial base
salary of $80,000 and, if the Company achieves progressive
annual targets of earnings per share, the Board may elect to
award Mr. Lund and Mr. Rice a bonus of up to 100% of base
salary. In addition, each employment agreement provides that
the officers shall receive those health, life and disability and
other benefits extended by the Board to other similarly situated
executives. Each of the employment agreements extends
through December 31, 2000, subject to the Company's right to
terminate the agreement at any time. In the event that the
Company terminates either officer's employment without cause
or in the event such person's employment discontinues upon the
expiration of the employment agreement or following a change
in control, the Company or, in the case of a change in control,
our successor, will be obligated to pay to such officer an
amount equal to one year's base salary and continue his benefits
for one year.
Further, effective October 1, 1999, the Company
issued each of Mr. Lund and Mr. Rice options to purchase
80,000 of our Common Shares at $2.90, a price equal to 110%
of the average closing bid price for the Company's common
shares over the
<PAGE>
10 trading days preceding the effective date of the Registration
Statement covering the Class A Preferred Shares. These options
will become exercisable as to 40,000 shares on December 31,
1999 and, if the Company meets specified financial goals for
the preceding periods, as to an additional 40,000 shares on
December 31, 2000.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
American Real Estate Equities, LLC. American Real
Estate Equities, LLC is owned in equal thirds by WLPT
Funding, LLC, Lambert Equities II, LLC and Steven B. Hoyt.
Duane Lund, chief executive officer of the Company, owns
100% of WLPT Funding and is its sole manager. Paul T.
Lambert, one of the Company's trustees, is a majority owner
and sole manager of Lambert Equities. Steven Hoyt is also one
of the trustees of the Company.
In November 1998, the Shareholders approved a
transaction whereby American Real Estate Equities would
purchase 166,666 of our Common Shares for $1,000,000, or
$6.00 per share, and would contribute certain assets, principally
our Cold Springs office center in St. Cloud, Minnesota and
contracts for the purchase of 29 other real estate investment
properties (some of which Mr. Hoyt had an ownership interest
in), to the operating partnership, Wellington Properties
Investments, L.P. As consideration for such assets, the
Company agreed to:
- - hire Mr. Lund as chief executive officer and nominate Mr.
Lambert and Mr. Hoyt for election to the board of trustees;
- - issue 4,933,233 common units of the operating partnership
to American Real Estate Equities or its members;
- - issue an additional 9,934,663 common units to the owners
of the properties to be acquired (including 4,510,671 units
to Mr. Hoyt and his affiliates);
- - assume $64.0 million in third-party mortgage indebtedness
on the properties to be acquired;
- - pay $31.2 million in cash to the owners of the properties to
be acquired (none of which was to be paid to Mr. Hoyt);
- - issue to American Real Estate Equities a warrant to
purchase 791,667 Common Shares at a price of $5.37 per
share with respect to 395,833 shares, $6.47 with respect to
197,917 shares, $7.74 per share with respect to 118,750
shares and $9.32 per share with respect to a price of $5.37
per share with respect to 395,833 shares, and $6.47 with respect
to 197,917 79,167 shares; and
- - reimburse certain of American Real Estate Equities' costs,
including costs in obtaining the contractual rights
contributed to the operating partnership, upon the
completion of the transaction.
Following shareholder approval of the proposed
arrangement in November 1998 due principally to increased
financing costs, the Company and American Real Estate
<PAGE>
Equities consummated a much smaller transaction pursuant to which the
operating partnership acquired only the Cold Springs office
center and two other investments properties in Minnesota.
Under the final negotiated terms of the smaller transaction, the
Company:
- - issued 2,557,707 units of its operating partnership;
- - assumed only $17.1 million in third-party mortgage
indebtedness on the properties acquired;
- - paid no cash to the owners of the properties acquired; and
- - hired Mr. Lund as Chief Executive Officer and Mr. Lambert
and Mr. Hoyt were elected to the Board of Trustees.
During the second quarter of 1999, the Company entered
into further discussions with American Real Estate Equities
because the original contemplated transactions could not be
consummated. As a result of these discussions:
- - Mr. Lund remained Chief Executive Officer and Mr.
Lambert and Mr. Hoyt remained on Board of Trustees;
- - the recipients of the operating partnership units returned
838,372 units to the Company for cancellation; of the
1,719,335 operating partnership units still outstanding after
the cancellation, 1,214,086 units are ordinary common units
and 505,249 are Class B common units, which have no
direct economic value, but which will convert to ordinary
common units upon the determination of the Board of Trustees
that the Company's funds from operations equal or exceed $0.55 per
share, assuming the exercise of all outstanding rights to
purchase the Company's equity securities and conversion of all
securities convertible into Common Shares;
- - only 1,719,335 operating partnership units remain
outstanding with the owners of the three properties acquired
(including only 860,107 units to Mr. Hoyt and his
affiliates);
- - American Real Estate Equities returned the warrant
covering 791,667 Common Shares to the Company for
cancellation; and
- - the Company paid no cash to American Real Estate Equities
in reimbursement of the $1,356,000 it spent in connection
with the transaction; instead, it issued American Real Estate
Equities, in the third quarter of 1999, 135,600 of its Class
Preferred Shares, all of which the Company has the right to
redeem for $1 if it does not have total assets in excess of
$150,000,000 or has not achieved funds from operations
equal to at least $0.55 per share (on a fully-diluted basis)
prior to June 30, 2002.
Apart from the foregoing transactions, American Real
Estate Equities advanced the Company an aggregate of
$1,392,000 during the summer and fall of 1998 for working
<PAGE>
capital purposes. Pursuant to the agreement with American Real
Estate Equities, the Company has issued 119,200 Class B
Preferred Shares to them in
discharge of $1,192,000 of the repayment obligation.
Wellington Management Corporation. Chairman of the
Board, Arnold Leas, is the president and chief executive officer
of Wellington Management Corporation and owns, together
with certain members of his family and family trusts, 41.8% of
Wellington Management Corporation's outstanding stock.
President, Robert Rice, was a vice president and general counsel
of Wellington Management before joining the Company. Mr.
Rice has no ownership interest in Wellington Management
Corporation.
In connection with the contemplated American Real
Estate Equities transactions of November 1998 described above,
the Company also entered into a number of agreements with
Wellington Management Corporation pursuant to which:
- - Mr. Rice would be appointed the President of the Company;
- - Wellington Management would contribute the office
building housing the Company's Brookfield, Wisconsin
offices in Brookfield, Wisconsin to the operating
partnership in exchange for $2.5 million in cash, the
assumption of $7.3 million in mortgage indebtedness on the
property, and 745,098 operating partnership units;
- - the Company would issue to Wellington Management a
warrant to purchase 791,667 Common Shares at a price
of $5.37 per share with respect to 395,833 shares, $6.47
with respect to 197,917 shares, $7.74 per share with respect
to 118,750 shares and $9.32 per share with respect to
79,167 shares;
- - the Company would terminate its obligations to Wellington
Management under certain advisory fee arrangements in
exchange for $1.6 million; and
- - the Company would enter into a property management
agreement with Wellington Realty, Inc., a wholly-owned
subsidiary of Wellington Management Corporation,
whereby Wellington Realty would manage the day-to-day
operations of the Company's existing apartment community
properties in Wisconsin for a management fee equal to 5%
of gross income from such properties.
Subsequent to November 1998, the Company and
Wellington Management agreed that the transfer of the
Brookfield office building could not occur because the
Company was unable to arrange financing to provide the stipulated
$2.5 million cash payment on acceptable terms. In connection
with the discussions described previously, the Company entered
into an agreement during the second quarter of 1999 with
Wellington Management whereby:
- - Mr. Rice remained the President of the Company;
- - Wellington Management returned the warrant covering
791,667 Common Shares for cancellation;
<PAGE>
- - the advisory fee arrangement was still terminated, but the
Company agreed that Wellington Management would retain
cash payments received in 1998 totaling $550,000 and that
the Company would issue, in the third quarter of 1999,
95,000 Class B Preferred Shares as consideration for the
termination; and
- - the Company entered into the new property management
agreement with Wellington Realty, Inc. on the terms
contemplated by the original agreement.
In January 1998, the Company also entered into a listing
agreement with Wellington Realty. Inc. whereby the Company
agreed to pay 3% of the sale price of our Maple Grove and Lake
Pointe apartment communities in the event of a sale. Though we
are not presently marketing the Lake Pointe property, the
Company subsequently sold the Maple Grove property and Wellington
Realty, Inc., received a fee totaling $501,000 upon
consummation of the sale.
From time to time, the Company may purchase
insurance through another affiliate of Wellington Management
Corporation, Wellington Insurance Services, Inc., which will
receive a commission of those sales equal to 15% of scheduled
premiums.
Hoyt Properties Inc. Steven Hoyt, a Trustee of the
Company is the principal of Hoyt Properties Inc.
On November 20, 1998, the Company's operating partnership
entered into a property management agreement with Hoyt
Properties. Under this agreement, Hoyt Properties manages the
day-to-day operations of the existing commercial properties in
Minnesota for a management fee equal to 5% of gross income
from such properties, a fee management believes is consistent
with industry norms.
In November 1999. Mr. Hoyt purchased 140,000 Class A Preferred
Shares for an aggregate purchase price of $1.4 million.
As mentioned above, Steven Hoyt also owns a one-third
membership interest in American Real Estate Equities, LLC.
Additional advances of working capital. In April 1999,
the operating partnership borrowed $50,000 from each of
American Real Estate Equities, LLC and Wellington
Management Corporation for working capital purposes under
term loans that were due December 31, 1999. An interest rate of
10% per year accrues on the principal balance of each of these
loans until repayment. The loans were repaid in November 1999 out
of the proceeds of the Maple Grove sale.
PROPOSAL 2 -- PROPOSAL TO AMEND THE
COMPANY'S RESTATED
DECLARATION OF TRUST TO
CHANGE THE CORPORATE
NAME
The Company's Board of Trustees has adopted, and is
recommending to the shareholders for their approval at the
Meeting, a resolution to amend Section 1.1 of the Company's
Restated Declaration of Trust, as amended, to change the
corporate name. The applicable text of the resolutions of the
Board is as follows:
"RESOLVED, that the Company's Restated
Declaration of Trust be amended to change the name of
the corporation and that such amendment be effected by
deleting Section 1.1 of the Company's Declaration of
Trust in its entirety and substituting in lieu thereof:
<PAGE>
"SECTION 1.1 Name. The name of the trust (hereinafter referred
to as the "Trust") is Stonehaven Realty Trust."
If the amendment is adopted, shareholders will not be
required to exchange outstanding stock certificates for new
certificates.
Approval of this proposal requires the affirmative vote
of a majority in interest of the outstanding Voting Shares of the
Company entitled to vote at the Meeting. If approved by the
shareholders, the amendment to Section 1.1 will become
effective upon filing Articles of Amendment to the Company's
Restated Declaration of Trust, as amended, with the Maryland
State Department of Assessments and Taxation, which filing is
expected to take place shortly after the Meeting. However, the
Board will be authorized, without a further vote of the
shareholders, to abandon the name change and determine not to
file the Articles of Amendment if the Board concludes that such
action would be in the best interest of the Company and its
shareholders. If this proposal is not approved by the
shareholders, then the Articles of Amendment will not be filed.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF
PROPOSAL 2.
ACCOUNTANTS
The Board currently plans to appoint Price Waterhouse
Coopers, LLP as independent auditors for the Company for the
fiscal year ending December 31, 1999, Price Waterhouse
Coopers, LLP has no relationship with the Company other than
that arising from its appointment as independent auditors.
Representatives of Price Waterhouse Coopers, LLP are
expected to be present at the Meeting, will have an opportunity
to make a statement if they desire to do so and will be available
to respond to appropriate questions from shareholders.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act requires the
Company's trustees, executive officers, and persons who own
beneficially more than 10% of a registered class of the
Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of such
securities of the Company. Trustees, executive officers and
greater than 10% shareholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) reports
they file.
Prior to November 1998 Wellington Management Corporation and each
of the Trustees and executive officers of the Compnay had failed to
file any Form 3, Form 4 or Form 5 as required under Rule 16a-3(e).
The Company cannot estimate the number of such Forms that were
required but were not filed.
To the Company's knowledge and except as noted above,
based solely on review of the copies of such reports
furnished to the Company and representations that no other
reports were required, all Section 16(a) filing requirements
applicable to its trustees, executive officers and greater than
10% beneficial owners were complied with during 1998. Such
reports were not filed timely prior to November 1998, but have
been subsequently filed.
<PAGE>
OTHER MATTERS
The Board does not know of any other matters which
may come before the Meeting. If any other matters are properly
presented to the Meeting, it is the intention of the persons
named in the accompanying proxy to vote, or otherwise to act,
in accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the
Company's 2000 Annual Meeting of Shareholders must be
received by the Company no later than April 1, 2000, in order to
be included in the proxy statement and proxy relating to that
annual meeting pursuant to Rule 14a-8 of the Securities and
Exchange Act of 1934. Shareholder proposals other than pursuant to
rule 14a-8 must be submitted by
April 1, 2000 in order to be considered timely. If the Board
chooses to present a proposal despite its untimeliness, the
persons named in the proxies solicited for the 2000 Annual
Meeting may exercise their discretionary voting power with
respect to such proposal.
Whether or not you plan to attend, you are urged to
complete, sign and return the enclosed proxy in the
accompanying envelope. A prompt response will greatly
facilitate arrangements for the Meeting, and your cooperation
will be appreciated. Shareholders who attend the Meeting may
vote their shares personally even though they have sent in their
proxies.
By Order of the Board of Trustees,
\s\ ROBERT F. RICE
Robert F. Rice
President/Secretary
Brookfield, Wisconsin
December 13, 1999
<PAGE>
PROXY FOR THE ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON DECEMBER 29, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF
TRUSTEES OF WELLINGTON PROPERTIES TRUST
The undersigned appoints Duane H. Lund and Robert F.
Rice and each of them, with full power of substitution, the
proxies and attorneys of the undersigned, to vote as specified
hereon at the Annual Meeting of Shareholders (the "Annual
Meeting") of Wellington Properties Trust (the "Company") to
be held at Thresher Square, 708 S. 3rd Street, Minneapolis, MN
on Wednesday, December 29, 1999 at 10:00 a.m., CST
time, and at any adjournments or postponements thereof, with
all powers (other than the power to revoke the proxy or vote the
proxy in a manner not authorized by the executed form of
proxy) that the undersigned would have if personally present at
the Annual Meeting, to act in their discretion upon any other
matter or matters that may properly be brought before the
Annual Meeting and to appear and vote all the Voting Shares of
the Company that the undersigned may be entitled to vote. The
undersigned hereby acknowledged receipt of the accompanying
Proxy Statement and Annual Report to Shareholders, and
hereby revokes any proxy or proxies heretofore given by the
undersigned relating to the Annual Meeting.
[ X ] Please mark your votes as in this example.
The Board of Directors recommends a vote FOR the following
proposals:
To elect the four nominees listed below to the Board of Trustees
of Wellington Properties Trust.
NOMINEES: Robert D. Salmen, Mark S. Whiting, Duane H.
Lund and Robert F. Rice
1. Election of Trustees
[ ] FOR all nominees (except [ ] WITHHELD from all nominees
as indicated below)
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), write that name(s) in the space
provided below.
2. To approve the Amendment to the Company's Restated
Declaration of Trust to change the Company's name.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This proxy may be revoked at any time prior to the voting
hereof.
UNLESS OTHERWISE MARKED, THIS PROXY WILL BE
VOTED AS IF MARKED FOR THE PROPOSALS ABOVE.
Please date and sign as name appears hereon. When signing as
executor, administrator, trustee, guardian or attorney, please
give full title as such. If a corporation, please sign in full
corporate name by president or other authorized corporate
officer. If a partnership, please sign in partnership name by
authorized person. Joint owners should each sign.
___________________________________
Signature
___________________________________
Signature if
held jointly
Dated ____________________________, 1999
