BRE PROPERTIES INC, DEF 14A, 1994-10-19

BRE PROPERTIES INC
DEF 14A, 1994-10-19
REAL ESTATE INVESTMENT TRUSTS

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<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
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

BRE Properties, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:

------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:

------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*

------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:

------------------------------------------------------------------------
3) Filing Party:

------------------------------------------------------------------------
4) Date Filed:

------------------------------------------------------------------------

<PAGE>
[LOGO]

-----------------------

BRE PROPERTIES, INC.
----------------------

October 20, 1994

Fellow Shareholders:

It is a pleasure to invite you to join us at our 1994 Annual Meeting of
Shareholders to be held on Tuesday, November 22, 1994 at 2:00 p.m. in the A.P.
Giannini Auditorium, Bank of America Center, 555 California Street, San
Francisco, California.

This booklet includes the notice of meeting and proxy statement, which
contains information about the formal business to be acted on by the
shareholders. The meeting will also feature a report on the operations of your
company, followed by a question and discussion period. After the meeting, you
will have the opportunity to speak informally with the directors and officers.

It is important that your shares be voted whether or not you plan to be
present at the meeting. Please complete, sign, date and return the enclosed form
of proxy promptly. If you attend the meeting and wish to vote your shares
personally, you may revoke your proxy.

Sincerely,

BRE PROPERTIES, INC.

ARTHUR G. VON THADEN
PRESIDENT & CHIEF EXECUTIVE OFFICER

One Montgomery Street, Suite 2500, Telesis Tower, San Francisco, CA 94104-5525
(415) 445-6530
<PAGE>
BRE PROPERTIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Notice is hereby given that the Annual Meeting of Shareholders of BRE
Properties, Inc. (the "company") will be held on Tuesday, November 22, 1994, at
2:00 p.m. San Francisco time, in the A.P. Giannini Auditorium, Bank of America
Center, 555 California Street, San Francisco, California, for the following
purposes:

1. To elect two Class I directors for a term of three years.

2. To approve the amended and restated 1992 Employee Stock Plan.

3. To approve the 1994 Non-Employee Director Stock Plan.

4. To approve the selection of Ernst & Young as the company's
independent auditors for the fiscal year ending July 31, 1995.

5. To transact such other business as may properly come before the
meeting or any adjournment thereof.

Shareholders of record at the close of business on September 27, 1994 shall
be entitled to vote at the meeting.

By Order of the Board of Directors

ELLEN G. BRESLAUER, SECRETARY

Dated: October 20, 1994

To assure that your shares are represented at the meeting, please fill in,
date, sign and mail promptly the enclosed proxy in the post-paid envelope
provided. If you attend the meeting, you may choose to vote in person even
though you have sent in your proxy.
<PAGE>
BRE PROPERTIES, INC.
ONE MONTGOMERY STREET, SUITE 2500
TELESIS TOWER
SAN FRANCISCO, CA 94104-5525

TELEPHONE: (415) 445-6530
FACSIMILE: (415) 445-6505

-------------------

PROXY STATEMENT
-------------------

ANNUAL MEETING OF SHAREHOLDERS

The enclosed proxy is solicited by the Board of Directors of BRE Properties,
Inc., a Delaware corporation (the "company"), for use at the Annual Meeting of
Shareholders of the company (the "Annual Meeting") to be held on Tuesday,
November 22, 1994, at 2:00 p.m., San Francisco time, or at any adjournment
thereof. The meeting will be held in the A.P. Giannini Auditorium, Bank of
America Center, 555 California Street, San Francisco, California. At the
meeting, holders of record of Class A common stock ("Common Stock") at the close
of business on September 27, 1994 will be entitled to vote. On that date, the
company's outstanding capital stock consisted of 10,925,483 shares of Common
Stock, entitled to one vote each at the meeting.

The cost of soliciting proxies in the enclosed form will be borne by the
company. The company has engaged D.F. King & Co., Inc., a professional proxy
soliciting firm, to aid in the solicitation of proxies and will pay such firm a
fee of $5,000, plus its expenses. Directors, officers and employees of the
company may also, without additional compensation, solicit proxies by mail,
personal interview, telephone and telecopy.

The company will request banks, brokerage houses and other institutions,
nominees or fiduciaries to forward the soliciting material to the beneficial
owners of shares and to obtain authorization for the execution of proxies. The
company will, upon request, reimburse banks, brokerage houses and other
institutions, nominees and fiduciaries for their reasonable expenses in
forwarding proxy materials to the beneficial owners.

All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting as specified in such proxies. If
no choice is specified, the shares represented by a signed proxy will be voted
in favor of the proposals set forth in the notice attached hereto. The two
nominees for election as Directors who receive the highest number of votes
therefor at the Annual Meeting shall be elected as directors (Proxy Item No. 1).
The affirmative votes of the holders of a majority of the shares present in
person or by proxy at the Annual Meeting shall be required to approve the
amended and restated 1992 Employee Stock Plan (Proxy Item No. 2) and the 1994
Non-Employee Director Stock Plan (Proxy Item No. 3).

Votes at the Annual Meeting will be tabulated by one or more independent
inspectors of election appointed by the company. Abstentions and votes withheld
by brokers in the absence of instructions from street-name holders (broker
non-votes) will be included in the determination of shares present at the Annual
Meeting for purposes of determining a quorum. Abstentions will be counted
towards the tabulation of votes cast on proposals submitted to shareholders and
will have the same effect as negative votes, while broker non-votes will not be
counted as votes cast for or against such matters.

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
company a written notice of revocation or a duly executed proxy bearing a later
date, or by attending the meeting and voting in person.

The company's principal executive offices are located at One Montgomery
Street, Suite 2500, Telesis Tower, San Francisco, California 94104-5525.

1
<PAGE>
This Proxy Statement and the enclosed proxy are scheduled to be mailed to
shareholders commencing on or about October 20, 1994.

ELECTION OF DIRECTORS
(PROXY ITEM NO. 1)

The company's Board of Directors (the "Board") consists of six members,
divided into three classes designated Class I, Class II and Class III.
Currently, there are two Class I directors, two Class II directors and two Class
III directors.

At this Annual Meeting, the Class I directors are to be elected for a term
of three years (expiring 1997) or until the election and qualification of their
successors. Management proposes reelection of Mr. Arthur G. von Thaden and Mr.
Malcolm R. Riley as the Class I directors of the company. The accompanying
proxies solicited by the Board of Directors (unless otherwise directed, revoked
or suspended) will be voted for the reelection of Messrs. von Thaden and Riley.
Messrs. von Thaden and Riley are at present the Class I directors of the company
and were elected to their present term of office at the 1991 Annual Meeting of
Shareholders of the company.

In the unanticipated event that either nominee should become unavailable for
election or upon election should be unable to serve, the proxies will be voted
for the election of such other person or persons as shall be determined by the
persons named in the proxy in accordance with their judgment.

The following table sets forth certain information as to the nominees, as
well as other members of the Board, including their ages, principal business
experience during the past five years, the year they each first became a
director, Board committee membership and other directorships currently held in
companies with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "Exchange Act") or subject to the
requirements of Section 15(d) of that Act or any company registered as an
investment company under the Investment Company Act of 1940.

<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE DIRECTOR BOARD COMMITTEE
NAME DURING PAST FIVE YEARS AGE SINCE (1) MEMBERSHIP
- - ------------------------------ -------------------------------------------------- --- ---------- -------------------
<S> <C> <C> <C> <C>
NOMINEES
Arthur G. von Thaden.......... President and Chief Executive Officer of the 62 1981 Executive
company. Chief Executive Officer, BankAmerica
Realty Services, Inc., a real estate investment
advisory firm, from 1970 to September 1987.
Malcolm R. Riley.............. Partner, Riley/Pearlman/Mitchell Company, a 62 1990 Audit,
shopping center developer and manager since 1986, Compensation
and President, Plaza Management Company, a wholly
owned subsidiary of Riley/Pearlman/Mitchell,
since 1992. President, MRR Development, Inc., a
shopping center developer and manager, from 1979
to 1986.
</TABLE>

2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE DIRECTOR BOARD COMMITTEE
NAME DURING PAST FIVE YEARS AGE SINCE (1) MEMBERSHIP
- - ------------------------------ -------------------------------------------------- --- ---------- -------------------
OTHER MEMBERS OF THE BOARD
<S> <C> <C> <C> <C>
CLASS II - TERM EXPIRES IN 1995
John McMahan.................. President, McMahan Real Estate Securities, Inc., 57 1993 Audit,
an investment management firm. Chairman and Chief Compensation
Executive Officer, Mellon/McMahan Real Estate Ad-
visors, Inc., a real estate advisory firm, from
1990 to 1994. Chairman and Chief Executive
Officer, McMahan Real Estate Advisors, Inc., a
real estate advisory firm, from 1980 to 1990.
Trustee, Mellon Participating Mortgage Trust.
L. Michael Foley.............. Consultant, Sears Roebuck and Co., since 1993. 55 1994 None
Senior Executive Vice President, Coldwell Banker
Real Estate Group, from 1986-1993.
CLASS III - TERM EXPIRES IN 1996
C. Preston Butcher............ President and Chief Executive Officer, Lincoln 55 1985 Audit,
Property Company, N.C., Inc., real estate Compensation,
developer. Director, The Charles Schwab Executive
Corporation.
Eugene P. Carver.............. Chairman, Hoffman Associates Incorporated, a real 65 1973 Audit,
estate investment and counseling firm. Chairman Compensation,
of the company since 1974. Executive
<FN>
- - ------------------------
(1) Years indicated are calendar years. For all directors except Messrs. Riley,
McMahan and Foley, includes period of service as a trustee of the company's
predecessor, BankAmerica Realty Investors.
</TABLE>

A description of the business experience of the other executive officers of
the company is contained in the company's annual report on Form 10-K for the
year ended July 31, 1994, to be filed with the Securities and Exchange
Commission. The company will provide, without charge, a copy of its annual
report of Form 10-K upon the written request of each shareholder solicited
hereby made to the Secretary of the company at the address set forth on page one
of this Proxy Statement.

Mr. Butcher, a Class III director of the company, is a managing general
partner in approximately 280 partnerships which act as the general partner of
single purpose limited partnerships, each of which owns a rental real estate
property. To date, fourteen of these single purpose limited partnerships have
filed for protection under the Federal bankruptcy laws.

BOARD AND COMMITTEE MEETINGS; COMPENSATION OF DIRECTORS

The Board of Directors has established an Audit Committee, an Executive
Committee and a Compensation Committee. The members of these committees are
indicated in the preceding section of this Proxy Statement. There is no
Nominating Committee.

The Audit Committee reviews the annual financial statements with both
management and the independent auditors. Such review includes an assessment as
to whether the financial statements are complete and consistent with information
known to them and reflect appropriate accounting principles. The Audit Committee
meets annually with the independent auditors in preparation for, and in review
of, the annual audit. During fiscal 1994, the Audit Committee met twice.

3
<PAGE>
The Executive Committee has all powers of the Board in the management and
affairs of the company, subject to limitations prescribed by the Board and by
Delaware law. The executive committee did not meet during fiscal 1994.

The Compensation Committee reviews the compensation of officers of the
company and administers the 1984 and the 1992 Option Plans. The Compensation
Committee met twice during fiscal 1994.

During the fiscal year ended July 31, 1994, the Board held 11 meetings. All
of the directors attended 75% or more of the meetings of the Board and each of
the committees on which they served during fiscal 1994, except Mr. McMahan.

The company's policy regarding compensation of directors is to pay the
Chairman of the Board an annual retainer of $30,000 and to pay each other
director who is not an employee of the company an annual retainer of $10,000.
Directors (including the Chairman) who are not employees of the company receive
an additional $1,000 for each Board meeting attended and they are also
reimbursed for reasonable expenses incurred in attending Board and Committee
meetings. The company has entered into an agreement with the Chairman pursuant
to which payment of compensation earned by the Chairman after December 31, 1993
is deferred, with interest, until after the age of seventy and one-half years.

Under the new Non-Employee Director Stock Plan, directors who are not
employees will receive annually a stock option to purchase 2,500 shares of
Common Stock, subject to shareholder approval of such Plan at the Annual
Meeting. See "Approval of 1994 Non-Employee Director Stock Plan" (Proxy Item
No.3). That Plan also authorizes payment of director fees, including meeting
fees, in shares of Common Stock.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the company's
directors and executive officers, and persons who own more than ten percent of a
registered class of its equity securities, to file with the Securities and
Exchange Commission and the New York Stock Exchange initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the company.

To the company's knowledge, based solely on review of the copies of such
reports furnished to it and written representations that no other reports were
required during the fiscal year ended July 31, 1994, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
shareholders were complied with; except that Mr. McMahan inadvertently failed to
timely file a report showing initial ownership of Common Stock following his
appointment as a director in November 1993 and a report showing change in
ownership of Common Stock arising from the acquisition of 1,000 shares of Common
Stock in June 1994.

4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of September 8, 1994, information
regarding the beneficial ownership of the company's Common Stock by each
director of the company, by each named executive officer (as hereinafter
defined) and by all directors and executive officers as a group. The amounts
shown are based upon information provided by the individuals named.

<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
BENEFICIALLY SHARES OWNED
NAME CURRENT POSITION WITH COMPANY OWNED (1) BENEFICIALLY (1)(2)
- - -------------------------------------------------------------------------------- ------------ --------------------
<S> <C> <C> <C>
Eugene P. Carver Director and Chairman 24,627(3) *
Arthur G. von Thaden Director and Chief Executive Officer 147,857(4) 1.4%
C. Preston Butcher Director 2,000(5) *
L. Michael Foley Director 0 *
John McMahan Director 1,000(6) *
Malcolm R. Riley Director 1,000(7) *
Byron M. Fox Executive Vice President 21,939(8) *
Howard E. Mason, Jr. Senior Vice President, Finance 22,272(9) *
Ronald P. Wargo Senior Vice President 21,929(10) *
Ellen G. Breslauer Secretary and Treasurer 21,326(11) *

All Directors and Executive Officers as 263,950(12) 2.4%
a group (10 persons)
<FN>
- - ------------------------
(1) The amounts and percentages of the company's Common Stock beneficially
owned are reported on the basis of regulations of the Securities and
Exchange Commission governing the determination of beneficial ownership of
securities. Except as otherwise indicated, each individual has sole voting
and sole investment power with regard to the shares owned by him.

(2) Except where otherwise indicated, does not exceed 1%.

(3) Mr. Carver -- includes 7,000 shares held in a trust of which Mr. Carver and
his wife are trustees, as to which he has shared voting and investment
power. Also includes 1,000 shares held by Mr. Carver's Individual
Retirement Account, as to which Mr. Carver has sole voting and investment
power. Also includes 14,171 shares owned by a foundation, an endowment
fund, two trusts, and Hoffman Associates, Inc., (of which Mr. Carver is
Chairman) and its retirement plan, as to which Mr. Carver has shared
investment and voting power and as to which he disclaims any beneficial
interest. Also includes 2,426 shares held by Mr. Carver as trustee for
several persons. Mr. Carver disclaims any beneficial interest in these
2,426 shares.

(4) Mr. von Thaden -- includes 378 shares held by Mr. von Thaden's wife in her
Individual Retirement Account, as to which Mr. von Thaden has no voting or
investment power. Also includes 130,500 shares that may be purchased upon
the exercise of stock options that are currently exercisable or that will
become exercisable on or before November 8, 1994. Also includes 5,200
shares of Common Stock held as restricted shares.

(5) Mr. Butcher -- includes 1,000 shares held by Mr. Butcher's wife as her
separate property and 1,000 shares held by Mr. Butcher and his wife as
community property, as to which he has shared voting and investment power.

(6) Mr. McMahan -- owned in joint tenancy by Mr. McMahan and his wife, as to
which he has shared voting and investment power.

(7) Mr. Riley -- includes 500 shares owned in joint tenancy by Mr. Riley and
his wife, and 500 owned in a family partnership as to which he has shared
voting and investment power.
</TABLE>

5
<PAGE>
<TABLE>
<S> <C>
(8) Mr. Fox -- includes 18,000 shares that may be purchased upon the exercise
of stock options that are currently exercisable or that will become
exercisable on or before November 8, 1994. Also includes 2,900 shares of
Common Stock held as restricted shares.

(9) Mr. Mason -- includes 150 shares held by Mr. Mason's wife as her separate
property and 700 shares held by Mrs. Mason as custodian for herself and her
sisters. With respect to these 850 shares, Mr. Mason has no voting or
investment power. Also includes 623 shares held by Mrs. Mason in her
Individual Retirement Account, as to which Mr. Mason has shared investment
power and no voting power. Also includes 6,526 shares held by Mr. Mason and
his wife as community property, as to which shares Mr. Mason has shared
voting and investment power. Also includes 11,250 shares that may be
purchased upon the exercise of stock options that are currently exercisable
or that will become exercisable on or before November 8, 1994. Also
includes 2,400 shares of Common Stock held as restricted shares.

(10) Mr. Wargo -- includes 17,800 shares that may be purchased upon the exercise
of stock options that are currently exercisable or that will become
exercisable on or before November 8, 1994. Also includes 2,400 shares of
Common Stock held as restricted shares.

(11) Ms. Breslauer -- includes 741 shares held by Ms. Breslauer's husband in his
Individual Retirement Account, as to which Ms. Breslauer has shared
investment power and no voting power. Also includes 6,157 shares held by
Ms. Breslauer and her husband as community property, for which she has
shared voting and investment power. Also includes 12,400 shares that may be
purchased upon the exercise of stock options that are currently exercisable
or that will become exercisable on or before November 8, 1994. Also
includes 1,500 shares of Common Stock held as restricted shares.

(12) Includes 189,950 shares that may be purchased upon the exercise of stock
options that are currently exercisable or that will become exercisable on
or before November 8, 1994. Also includes 14,400 shares of Common Stock
held as restricted shares.
</TABLE>

6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION

SUMMARY COMPENSATION TABLE

The following table shows the compensation for the past three fiscal years
of the company's Chief Executive Officer and each other executive officer with
salary and bonus of over $100,000 for the fiscal year ended July 31, 1994 (the
"named executive officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------------------
RESTRICTED
ANNUAL COMPENSATION SHARE OPTIONS/
----------------------- AWARDS SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) (#) COMPENSATION (2)
- - ----------------------------------- --------- ---------- ----------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
1994 $ 260,417 $ -0- $ 21,113 35,000 $ 21,559
1993 247,883 95,000 19,125 35,000 22,034
1992 237,000 -0- 16,913 25,000 21,403
Arthur G. von Thaden
President and Chief
Executive Officer
1994 159,375 -0- 10,556 3,000 21,320
1993 151,667 45,000 9,563 5,000 17,582
1992 147,000 -0- 8,456 5,000 16,638
Byron M. Fox
Executive Vice President
Acquisitions and Asset Management
1994 102,167 -0- 10,556 2,500 14,326
1993 98,000 30,000 9,563 3,000 10,611
1992 97,167 -0- 8,456 3,000 10,280
Howard E. Mason, Jr.
Senior Vice President,
Finance
1994 103,333 -0- 14,075 4,000 15,572
1993 93,500 40,000 6,375 5,000 9,941
1992 85,000 -0- 5,638 2,500 8,733
Ronald P. Wargo
Senior Vice President
Asset Management
1994 82,417 -0- 7,038 2,000 11,479
1993 78,917 27,000 6,375 2,500 8,049
1992 75,333 -0- 2,819 2,000 7,522
Ellen G. Breslauer
Secretary and Treasurer
<FN>
- - ------------------------
(1) The amounts reported represent the aggregate value of restricted share
awards at the date of award. In fiscal 1994, 1993 and 1992, the named
executive officers received the following numbers of restricted share
awards, respectively: Mr. von Thaden -- 600, 600, 600; Mr. Fox -- 300, 300,
300; Mr. Mason -- 300, 300, 300; Mr. Wargo -- 400, 200, 200; and Ms.
Breslauer -- 200, 200, 100. At July 31, 1994, the aggregate number and
value of shares of restricted stock held by each of the named executive
officers were as follows: Mr. von Thaden -- 4,200 shares and $126,788; Mr.
Fox -- 1,450 shares and $43,772; Mr. Mason -- 1,550 shares and $46,791; Mr.
Wargo -- 800 shares and $24,150; and Ms. Breslauer -- 500 shares and
$15,094. The restrictions imposed on restricted share awards lapse on the
fifth anniversary of the date of grant, or if earlier, upon normal
retirement, death or disability. In addition, the restrictions imposed on
Mr. von Thaden's restricted shares may lapse upon termination of employment
following a change in control of the company. See "-- Employment Contracts
and Termination of Employment and Change-in-Control Arrangements."
Dividends are paid on restricted shares at the same rate and at the same
time as on the Common Stock.

(2) Consists of the company's contributions to its defined contribution
retirement plan (401(k) Plan) on behalf of the named executive officers.
</TABLE>

STOCK OPTION PLANS

The following table sets forth (i) all individual grants of stock options
made by the company during fiscal 1994 to each of the named executive officers,
(ii) the ratio that the number of options granted to each

7
<PAGE>
individual bears to the total number of options granted to all employees of the
company, (iii) the exercise price and expiration date of these options and (iv)
the estimated potential realizable values assuming certain stock price
appreciation over the ten-year term.

OPTION GRANTS IN FISCAL 1994

<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS OF STOCK PRICE
------------------------------------------------- APPRECIATION
OPTIONS % OF TOTAL OPTIONS EXERCISE OR FOR OPTION TERM (2)
GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION ------------------------
NAME (#)(1) IN FISCAL 1994 ($/SH) DATE 5% 10%
- - ------------------------------ ----------- ----------------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Arthur G. von Thaden 35,000 62.0% $ 35.19 8/30/03 $ 774,523 $ 1,962,793
Byron M. Fox 3,000 5.3 35.19 8/30/03 66,388 168,239
Howard E. Mason, Jr. 2,500 4.4 35.19 8/30/03 55,323 140,200
Ronald P. Wargo 4,000 7.1 35.19 8/30/03 88,517 224,319
Ellen G. Breslauer 2,000 3.5 35.19 8/30/03 44,258 112,160
<FN>
- - ------------------------
(1) All options shown in the table were granted under the company's 1992
Employee Stock Plan (the "1992 Plan"). The exercise price is 100% of fair
market value on the date of grant. Options vest 50% on each of the first
and second anniversary dates of grant and expire ten years from the date of
grant. The option price is payable in cash or by delivery of previously
acquired shares of Common Stock, and the option holder may in certain
circumstances elect to have shares withheld to satisfy tax withholding
requirements in connection with the exercise of options. Options granted
may become immediately exercisable in certain events such as an optionee's
retirement, death or disability, or in connection with a merger,
acquisition or "change in control" as defined in the 1992 Plan. All options
held by Mr. von Thaden may become immediately exercisable upon termination
of employment following a change in control of the company. See "--
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements".

(2) Potential realizable value is calculated based on an assumption that the
price of the company's Common Stock appreciates at the annual rate shown
(5% and 10%), compounded annually, from the date of grant of the option
until the end of the option term (10 years). The value is net of the
exercise price but is not adjusted for the taxes that would be due upon
exercise. The 5% and 10% assumed rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
company's estimate or projection of future stock prices. Actual gains, if
any, upon future exercise of any of these options will depend on the actual
performance of the company's Common Stock and the continued employment of
the executive officer holding the option through its vesting period. At 5%
annual appreciation from $35.19 over a ten-year term, the stock price would
be $57.32. At 10% annual appreciation from $35.19 over a ten-year term, the
stock price would be $91.27.
</TABLE>

8
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1994
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth (i) the number of shares received and the
aggregate dollar value realized in connection with each exercise of outstanding
stock options during fiscal 1994 by each of the named executive officers, (ii)
the total number of all outstanding unexercised options held by the named
executive officers as of the end of fiscal 1994 and (iii) the aggregate dollar
value of all such unexercised options based on the excess of the market price of
the Common Stock over the exercise price of the option.

<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
NAME ACQUIRED ON EXERCISE REALIZED (1)
- - ------------------------- -------------------- ------------ NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 7/31/94 IN-THE-MONEY OPTIONS
------------------------------- AT 7/31/94 (2)
EXERCISABLE / UNEXERCISABLE ----------------------------
EXERCISABLE / UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Arthur G. von Thaden 0 $ 0 95,500 52,500 $156,500 $ 0
Byron M. Fox 0 0 14,000 5,500 27,529 0
Howard E. Mason, Jr. 0 0 8,500 4,000 10,580 0
Ronald P. Wargo 1,200 11,250 13,300 6,500 19,668 0
Ellen G. Breslauer 134 4,725 10,150 3,250 16,387 0
<FN>
- - ------------------------
(1) Value realized is calculated by subtracting the total exercise price from
the market value of the underlying Common Stock on the date of exercise. As
a result of the option exercises, Mr. Wargo and Ms. Breslauer increased
their holdings of company Common Stock by the 1,200 and 134 shares
indicated.

(2) The market value of the company's Common Stock at July 31, 1994 was $30.88
per share.
</TABLE>

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

In 1988, the company entered into an employment agreement with Mr. von
Thaden. This agreement terminates one year from the end of any month in which
notice of termination is given by Mr. von Thaden or by the company. If Mr. von
Thaden's employment is terminated at his option within 12 months after a "change
in control" (as defined in the employment agreement) he would be entitled to
receive a lump sum payment equal to 100% of the annual base salary then payable
to him plus 100% of the average of his last two incentive bonuses. Based on his
current base salary of $262,500 and assuming average incentive bonus
compensation in the maximum amount of $157,500, this payment would amount to
$420,000. If Mr. von Thaden's employment is terminated by the company without
"cause" (as defined in the employment agreement) within 12 months after a change
in control, or if Mr. von Thaden resigns during this 12 month period following a
material change in the nature or principal place of the company's business or in
his responsibilities, authority or working conditions, he would be entitled to
receive a lump sum payment equal to 200% of the annual base salary then payable
to him plus 200% of the average of his last two incentive bonuses. Based on his
current base salary of $262,500 and assuming average incentive bonus
compensation in the maximum amount of $157,500, this payment would amount to
$840,000. Upon termination under these latter two circumstances, the company
would also provide for Mr. von Thaden's continued participation in all life
insurance, medical and disability plans for a period of up to one year after
termination, and any unvested stock options, share appreciation rights and
restricted shares then held by Mr. von Thaden would become fully vested
concurrent with such termination.

SUPPLEMENTAL RETIREMENT BENEFITS

In 1988, the company established an unfunded plan to provide supplemental
retirement benefits to Arthur G. von Thaden and Howard E. Mason, Jr. This plan
generally provides for the payment of supplemental benefits to each of Mr. von
Thaden and Mr. Mason in an amount equal to the greater of (i) the excess of the
benefits he would have received under the defined benefit pension plan of
BankAmerica Corporation (assuming his employment with BankAmerica Realty
Services, Inc. had continued until retirement at his BRE Properties, Inc.
earnings levels) over the benefits he is entitled to receive under the
Retirement Plan or (ii) the benefits he would have received from company
contributions to the Retirement Plan absent

9
<PAGE>
applicable contribution limitations. These supplemental benefits are payable
upon termination of employment in any actuarially equivalent form. Assuming
retirement prior to age 65, the maximum estimated supplemental benefits payable
to Mr. von Thaden and Mr. Mason, respectively, are $12,700 and $1,580 (under a
five year certain and life annuity), or $107,500 and $14,100 (as a single lump
sum payment). Assuming retirement at age 65, the estimated supplemental benefits
payable to Mr. von Thaden and Mr. Mason, respectively, are $14,400 and $1,450
(under a five year certain and life annuity), or $119,100 and $12,200 (as a
single lump sum payment).

COMPENSATION COMMITTEE REPORT ON COMPENSATION
OF EXECUTIVE OFFICERS

GENERAL

The Compensation Committee of the Board of Directors (the "Committee")
administers the company's executive compensation program. The Committee is
composed entirely of outside directors.

The objective of the company's executive compensation program is to develop
and maintain executive reward programs which contribute to the enhancement of
shareholder value, while attracting, motivating and retaining key executives who
are essential to the long-term success of the company. As discussed in detail
below, the company's executive compensation program consists of both fixed (base
salary) and variable (incentive) compensation elements. Variable compensation
consists of annual cash incentives, restricted share grants and stock option
grants. These elements are designed to operate on an integrated basis and
together comprise total compensation value.

Each year, the Committee reviews executive compensation in light of the
company's performance during the last fiscal year and compensation data at
companies that are considered comparable. In reviewing the company's performance
during fiscal 1994, the Committee considered a variety of factors. Funds from
operations increased 29% from $22,116,000 in fiscal 1993 to $28,431,000 in
fiscal 1994. On a per share basis, the increase was 3% due to 25% more weighted
averages outstanding this year than last. At the same time, the real estate
portfolio grew 15% from $284,134,000 to $326,628,000. However, the market price
of the company's common stock decreased 11% during the year, from $34.75 to
$30.88. In reviewing company performance, the Committee considered these factors
as a whole without assigning specific weights to particular factors.

It is the Compensation Committee's belief that none of the company's
executive officers will be affected by the provisions of Section 162(m) of the
Internal Revenue Code (the "Code") which limits the deductibility of certain
executive compensation during 1994. Therefore, the Committee has not adopted a
policy as to compliance with the requirements of Section 162(m).

BASE SALARY

Base salary levels of the company's key executives are largely determined
through comparison with comparable companies in the real estate industry. For
this purpose, the Committee gives primary consideration to companies included in
the equity REIT peer group used for the five-year comparison of total
shareholder return. Salary information about comparable companies is surveyed by
reference to public disclosures made by companies in the real estate industry.
In addition, the Committee from time to time obtains information about
comparable salary levels from an outside compensation consultant.

For fiscal 1994, base salaries of the company's executive officers,
including that of the Chief Executive Officer ("CEO"), were set to approximate
the 50th percentile of the survey data.

ANNUAL CASH INCENTIVES

The annual cash incentive is designed to provide a short-term (one-year)
incentive to executive officers based on a percentage of the individual's base
salary. Incentive awards are based on the achievement of predetermined corporate
and individual performance goals. For the CEO, the relative weights of the
corporate and individual performance measures are 75% to the company's goals and
25% to the individual's goals. For the Executive Vice President and the Senior
Vice Presidents, the relative weights are 50% to the company's goals and 50% to
the individual's goals, and for vice presidents and other officers who
participate

10
<PAGE>
in the bonus program, the relative weights are 25% company goals and 75%
individual goals. Specific individual goals for each executive are established
at the beginning of the year (by the Committee in the case of the CEO and by the
CEO in all other cases) and are tied to the functional responsibilities of each
executive. Individual goals may include objective and subjective factors, such
as improving the performance of assets managed by the executive, successful
acquisitions or sales, development of leadership skills and personal training
and education. The company's goals are based on operating performance, as
measured by a predetermined increase in funds from operations. Other than the
allocation between individual and company goals, no specific weights are
assigned to the individual goals. In addition, no bonus awards are made if a
minimum level of funds from operations is not met.

In fiscal 1994, the company and certain of the individual performance
targets were met. However, no cash bonuses were awarded to the named executive
officers for fiscal 1994, including the CEO.

STOCK OPTIONS AND RESTRICTED SHARES

Stock options are designed to provide long-term (ten year) incentives and
rewards tied to the price of the company's common stock. Given the fluctuations
of the stock market, stock price performance and financial performance are not
always consistent. The Committee believes that stock options, which provide
value to participants only when the company's shareholders benefit from stock
price appreciation, are an important component of the company's annual executive
compensation program. The number of options or shares currently held by an
officer is not a factor in determining individual grants, and the Committee has
not established any target level of ownership of company Common Stock by the
company's officers. However, accumulation and retention of shares of company
stock by officers is encouraged.

Stock options are awarded annually in the first month following the close of
each fiscal year. The company does not adhere to any firmly established formulas
for the issuance of options. During fiscal 1994, 10 officers received stock
option grants, including all executive officers. The Summary Compensation Table
shows the options granted to the named executive officers for the past three
years, including the CEO. In determining the size of the grants to the CEO and
the other named executive officers, the Committee assessed relative levels of
responsibility and the long-term incentive practices of other comparable
companies.

In accordance with the provisions of the company's 1992 Employee Stock Plan,
the exercise price of all options granted was equal to the market value of the
underlying Common Stock on the date of grant. Accordingly, the value of these
grants to the officers is dependent solely upon the future growth and share
value of the company's Common Stock.

The Committee also awards restricted shares as a compensation vehicle and to
retain key executive managers. Currently 11 officers, each of whom is an
assistant vice president or higher of the company, hold awards. The number of
restricted shares covered by each award is determined by the Committee in its
discretion and generally reflects the extent of the officer's success in
achieving the company's goals during the preceding year and the level of the
officer's responsibility. The Summary Compensation Table shows restricted share
awards made to the named executive officers over the last three years, including
the CEO.

All awards of restricted shares over the past three fiscal years have
provided for vesting at the end of a period of five years. Since the holder of
restricted shares would generally forfeit them if he or she were to leave the
company prior to vesting, the Committee believes these awards are a significant
factor in the retention of key employees and support a long-term view among the
officers.

The foregoing report is given by the members of the Compensation Committee,
namely:

Malcolm R. Riley, Chairman
C. Preston Butcher
Eugene P. Carver
John McMahan

11
<PAGE>
COMPARATIVE STOCK PERFORMANCE

The line graph below compares the cumulative total shareholder return on
Common Stock of the company for the last five fiscal years with the cumulative
total return on the S&P 500 Index, the NAREIT Equity REIT Total Return Index and
the NAREIT Equity REIT Without Health Care Total Return Index over the same
period. This comparison assumes that the value of the investment in the
company's Common Stock and in each index was $100 on July 31, 1989 and that all
dividends were reinvested.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BRE Properties, Inc. S&P 500 Index NAREIT Equity Index(*) NAREIT Equity Without Health Care Index(*)
<S> <C> <C> <C> <C>
7/31/89 $100 $100 $100 $100
7/31/90 $90.49 $106.47 $92.19 $87.70
7/31/91 $108.56 $120.07 $103.51 $90.34
7/31/92 $125.86 $135.39 $119.99 $104.15
7/31/93 $151.96 $147.13 $153.32 $135.61
7/31/94 $145.18 $154.93 $159.92 $140.94
</TABLE>

- - ------------------------
(1) Indicates appreciation of $100 invested on July 31, 1989 in BRE Common
Stock, S&P 500, NAREIT Equity REIT Total Return Index and NAREIT Equity REIT
Without Health Care Total Return Index securities, assuming reinvestment of
dividends.

* The NAREIT Equity REIT Total Return Index includes 170 companies with a
total market capitalization of $36.8 billion. The NAREIT Equity REIT Without
Health Care Total Return Index includes 162 companies with capitalization of
$33.4 billion. Of these two indices, the company believes that the NAREIT
Equity REIT Without Health Care Total Return Index is the more appropriate
basis for comparison of stock performance due to a narrower industry focus.

12
<PAGE>
APPROVAL OF THE AMENDED AND RESTATED
1992 EMPLOYEE STOCK PLAN
(PROXY ITEM NO. 2)

On November 24, 1992, the shareholders approved the 1992 Employee Stock
Option Plan which provides for grant of stock options, stock appreciation rights
and restricted stock to officers and other key employees of the company for an
aggregate of up to 375,000 shares of Common Stock. On September 26, 1994, the
Board of Directors amended and restated the Plan to (i) provide for grants of
Common Stock in combination or in tandem with the company's cash compensation
plans, (ii) eliminate certain express requirements in the Plan as to vesting of
restricted stock and provide the Compensation Committee with authority to
condition vesting on the attainment of performance, longevity or other goals
established by the Committee, (iii) eliminate the six-month service requirement
for eligibility to receive restricted shares, and (iv) delete the authorization
for regrant of options to the same optionee following surrender, cancellation or
other termination of previously granted options. Such amendment and restatement,
which did not otherwise materially change the Plan, is subject to approval of
the company's shareholders.

The purpose of the Plan is to provide incentives to eligible employees by
providing them with a proprietary interest in the company. A copy of the amended
and restated 1992 Employee Stock Plan (the "Employee Plan" or the "Plan") is
attached as Exhibit A. The following summary of certain provisions of the
Employee Plan does not purport to be complete and is qualified in its entirety
by reference to Exhibit A.

ADMINISTRATION OF PLAN

The Plan provides that it shall be administered by a committee of the Board
of Directors consisting of two or more directors who are "disinterested persons"
and also are "outside directors." The Board of Directors has designated the
Compensation Committee (the "Committee") to administer the Plan. "Disinterested
person" has the meaning set forth in Rule 16b-3 under the Exchange Act. "Outside
director" has the meaning set forth in the rules and regulations under Section
162(m) of the Code .

The Committee is authorized to grant awards to eligible employees, to
determine the terms and conditions thereof, to determine which persons meet the
requirements with respect to eligibility, and to adopt rules and regulations
relating to the Employee Plan. The individuals eligible to participate are those
key salaried employees, including officers and directors who are also employees
of the company, as the Committee shall determine. Currently, there are 11
persons eligible to participate in the Plan.

SHARES AVAILABLE UNDER PLAN

Under the Plan, 375,000 shares of Common Stock are reserved for issuance
pursuant to Plan grants or awards, subject to anti-dilution adjustments. To
date, options and restricted stock have been awarded for 78,950 shares, leaving
296,050 shares available for further grants. As amended and restated, the Plan
provides that the maximum number of shares which may be the subject of options
granted to any individual in any calendar year is 100,000 shares.

Each award under the Employee Plan contains customary anti-dilution
provisions which are applicable in the event of a stock dividend, stock-split,
conversion, exchange, reclassification or substitution. In the event of any
other change in the corporate structure or outstanding shares, the Committee may
make such equitable adjustments to the number of shares and the class of shares
available under the Employee Plan or to any outstanding award as it shall deem
appropriate to prevent dilution or enlargement of rights. Upon termination of
any outstanding Plan awards, the shares subject to those awards may again be
made the subject of additional Plan awards.

TYPES OF AWARDS

STOCK OPTIONS. The Committee will have discretion to grant either
"incentive stock options" (within the meaning of Section 422 of the Code) or
non-qualified stock options. A further description of these two types of stock
options appears below under the heading "Certain Federal Income Tax
Consequences." All option grants will be evidenced by written agreements in such
form approved by the Committee consistent

13
<PAGE>
with the terms of the Employee Plan. The Committee will, subject to the terms
and conditions of the Employee Plan, determine the terms and conditions of
option grants and the number of shares to be issued pursuant to such options.

The Employee Plan provides that the Committee may, in its discretion,
provide that an option may not be exercised in whole or in part for a specified
period or periods of time. Except as so specified, an option may be exercised in
whole or in part from time to time for a period of up to ten years from the date
of grant. In the discretion of the Committee, an option may become immediately
exercisable upon the occurrence of certain events, including upon the death or
permanent disability of an optionee or upon a change in control (as defined in
the Plan) of the company. In the event of the optionee's termination of
employment with the company, the option shall also terminate unless extended by
the Committee for a period of up to three months after termination; provided,
that this period may be extended for a period of up to 12 months following
termination due to death or permanent disability and for a period of up to three
years following retirement at or after normal retirement age. As amended and
restated, in the event of a merger, sale of assets or certain other corporate
transactions, the Plan authorizes the Committee to cancel options which were
exercisable at any time prior to the effective date of such transaction.

Payment of the option price upon exercise of an option shall be in cash or,
in the discretion of the Committee, in shares of Common Stock already owned by
the optionee having a fair market value equal to the option price, or any
combination of cash and Common Stock having a combined value equal to the option
price. At the discretion of the Committee, an option agreement may also provide
for the extension of an interest bearing loan from the company to the optionee
to finance exercise of an option, provided that the term of the loan does not
exceed ten years, the loan is with full recourse to the optionee and repayment
of the loan is secured by the shares so acquired by the optionee. The Employee
Plan also provides that the Committee may permit optionees to use cashless
exercise methods that are permitted by law and in connection therewith the
company may establish a cashless exercise program, including a program where the
commissions on the sale of stock subject to an exercised option are paid by the
company.

In general, options shall be transferable only by will or by the laws of
descent and distribution and, during the lifetime of the optionee, the option
shall be exercisable only by the optionee or by his guardian or legal
representative; however, the Committee will have the discretion to permit
lifetime and death transfers to the extent permitted by Rule 16b-3 as in effect
from time to time. The Securities and Exchange Commission has proposed to amend
Rule 16b-3 to permit options to become transferable.

SHARE APPRECIATION RIGHTS (SARS). The Employee Plan provides that the
Committee may grant SARs in connection with all or part of any option granted
under the Plan. The number of SARs granted to an optionee may not exceed the
number of shares of Common Stock which the optionee may then purchase upon
exercise of the related option or options.

The holder of an option and related SARs may elect to exercise the SARs or a
part thereof in lieu of exercising the option or its related portion. Upon any
exercise of SARs, the optionee must surrender the related option with respect to
a number of shares equal to the number of SARs exercised and, in exchange, the
optionee will receive the excess of the fair market value of the Common Stock
covered by the portion of the option surrendered over its option price. Payment
of SARs may be made in shares of Common Stock valued at fair market value or, in
the discretion of the Committee, in cash. In the event of the surrender of all
or a portion of an option for SARs, the shares represented by the portion
surrendered will not be available for reissuance under the Employee Plan.

If SARs are granted with respect to an option, the existence of the SARs
will require charges to income for compensation expense based on the amount, if
any, by which the market price of the shares of Common Stock subject to the SARs
exceeds the option price.

RESTRICTED STOCK AWARDS. The Committee may grant restricted share, i.e,
shares of Common Stock which are subject to transfer restrictions determined by
the Committee in its sole discretion, and subject to substantial risk of
forfeiture unless and until specific conditions established by the Committee at
the time of grant are met. Such conditions may be based on continuing employment
or achievement of pre-established

14
<PAGE>
performance goals, or both, as determined by the Committee. The specific
categories of and procedures for establishing such goals are set forth in
Section 4.3 of the Employee Plan. The Committee's discretion in establishing
performance goals would not be limited to Section 4.3 when an employee's
compensation amount is not expected to be subject to the deduction limitations
of Code Section 162(m).

Stock certificates for restricted shares shall be issued in the name of the
holder, but the certificates may be retained in escrow until such time as the
restrictions shall have lapsed. The holder of restricted shares shall have all
rights of a shareholder with respect to the Common Stock registered in his or
her name, including the voting and dividend rights, unless otherwise provided in
the restricted stock award. Under the amended and restated Plan, restricted
shares which are forfeited may become available again for further Plan awards.

SHARE AWARDS. The Employee Plan also authorizes the Committee to award or
offer shares of Common Stock, either restricted or unrestricted, and as current
or deferred compensation, in lieu of all or any portion of the cash compensation
to which the employee is entitled, for a number of shares having a value on the
grant date equal to the amount of such cash compensation.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following discussion is based on federal income tax laws and regulations
as in effect on the date of this Proxy Statement and does not purport to be a
complete description of the federal income tax aspects of the Employee Plan. No
information is provided herein with respect to estate, inheritance, or state or
local tax laws, although there may be certain tax consequences upon the receipt
or exercise of an award or the disposition of any of the acquired shares under
those laws. The exact federal income tax treatment of awards will depend on the
specific nature of any such award. An award may, depending on the conditions
applicable to the award, be taxable as an option, an award of restricted or
unrestricted shares, an award which is payable in cash, or otherwise.

INCENTIVE STOCK OPTIONS. Neither the grant nor the exercise of an incentive
stock option is taxable to the employee receiving the option. If the employee
holds the stock purchased upon exercise of an incentive stock option for at
least one year after the purchase of the stock and until at least two years
after the option was granted, his or her sale of the shares will produce
long-term capital gain or loss, and the company will not be entitled to any tax
deduction. However, if the employee sells or otherwise transfers the stock
before these holding periods have elapsed, he or she will generally be taxed at
ordinary income rates on the sale in the amount of the excess of the fair market
value of the stock when the option was exercised over the option exercise price,
and the company will be entitled to a tax deduction in the same amount. Any
remaining gain or loss will be short-term or long-term capital gain or loss as
the case may be.

NON-QUALIFIED OPTIONS. Although the grant of non-qualified stock options
under the Employee Plan also is not generally taxable to the optionee, upon
exercise the optionee will be taxed at ordinary income rates on the excess of
the fair market value of the stock received over the option exercise price, and
the company will be entitled to a tax deduction in the same amount. The amount
included in an individual's income as a result of the exercise of a
non-qualified option will be treated as his or her basis in the shares acquired,
and any remaining gain or loss on the subsequent sale of the shares will be
treated as long-term or short-term capital gain or loss as the case may be.

RESTRICTED STOCK. The acquisition of restricted stock is not a taxable
event. When restrictions imposed upon the restricted stock expire, the holder
will recognize ordinary income in an amount equal to the excess, if any, of the
fair market value of the restricted stock on the date of such expiration over
the purchase price, if any, for the shares. The holder may, however, elect
within 30 days after the date of acquisition to recognize ordinary income on the
date of purchase in an amount equal to the excess of the fair market value of
the restricted stock on the date of grant, determined without regard to the
restrictions imposed on such shares, over the purchase price, if any, for the
shares. If and when the holder recognizes ordinary income attributable to the
restricted stock, the company will be entitled to a deduction for the same
amount.

15
<PAGE>
SHARE APPRECIATION RIGHTS. The grant of a SAR is generally not a taxable
event for the grantee. Upon the exercise of the SAR, the grantee will recognize
ordinary income in an amount equal to the amount of cash or stock received upon
such exercise, and the company will be entitled to a deduction for the same
amount.

OTHER AWARDS. Awards may be granted to employees under the Employee Plan
that do not fall into the categories described above. The federal income tax
treatment of these awards will depend upon the specific terms of such awards. In
general, compensation in lieu of cash will be treated as ordinary, taxable
income to the employees and deducted by the company. The company will generally
be required to withhold applicable taxes with respect to any ordinary income
recognized by a participant in connection with awards made under the Employee
Plan. The Plan authorizes employees to elect to have the company withhold shares
from any award in the amount of the tax withholding, in which event the company
would then pay the withholding amount in cash.

EXCESS PARACHUTE PAYMENTS. Where the terms of the agreements pursuant to
which specific awards made under the Employee Plan provide for accelerated
vesting or payment of an award in connection with a change in ownership or
control of the company, certain amounts with respect to such awards may
constitute "excess parachute payments" under the golden parachute provisions of
the Code. Pursuant to such provisions, an employee will be subject to a 20%
excise tax on any excess parachute payment and the company will be denied any
deduction with respect to such excess parachute payment.

ALTERNATIVE MINIMUM TAX. The amount by which the fair market value of the
shares received upon exercise of an incentive option exceeds the exercise price
of the shares is included in the calculation of "alternative minimum taxable
income" of the optionee. The alternative minimum tax imposed on individual
taxpayers is equal to the amount by which 26% of alternative minimum taxable
income (28% for AMTI in excess of $175,000) exceeds the regular federal income
tax rate for a taxable year. For minimum tax purposes, the basis of stock
acquired through the exercise of an incentive stock option equals the fair
market value taken into account in determining the amount of the alternative
minimum taxable income. A portion of a taxpayer's minimum tax attributable to
certain items (including the spread on the exercise of an incentive stock
option) may be credited against the taxpayer's regular tax liability in later
years to the extent that the regular tax liability exceeds the alternative tax.

SECTION 162(M) COMPENSATION DEDUCTION LIMITATION. Stock options, SARs and
performance-based restricted stock granted under the Employee Plan are intended
to be "performance-based compensation" and therefore not subject to the
deduction limitation of Code Section 162(m).

AMENDMENT AND DURATION OF THE PLAN

The Plan expires September 27, 2002. The Plan may be terminated or amended
by the Board at any time; however, any modification or amendment (i) increasing
the aggregate number of shares of Common Stock which may be issued under the
Plan, (ii) enlarging the class of persons who are eligible to receive awards, or
(iii) otherwise requiring shareholder approval pursuant to Rule 16b-3 of the
Exchange Act or Section 162(m) of the Code will be subject to shareholder
approval within one year of the adoption of such amendment.

RECENT STOCK PRICE

The closing price of the Common Stock on October 14, 1994, as reported by
the New York Stock Exchange, was $30.38 per share.

16
<PAGE>
PLAN BENEFITS

The following table sets forth certain information regarding benefits under
the Employee Plan awarded during the fiscal year ended July 31, 1994.

<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF RESTRICTED DOLLAR
NAME AND POSITION OPTIONS (1) SHARES (2) VALUE (3)
- - ------------------------------------------------ ----------- ----------- ---------
<S> <C> <C> <C>
Arthur G. von Thaden 35,000 600 $ 21,113
President and CEO

Byron M. Fox 3,000 300 10,556
Executive Vice President
Acquisitions & Asset Management

Howard E. Mason, Jr. 2,500 300 10,556
Senior Vice President, Finance

Ronald P. Wargo 4,000 400 14,075
Senior Vice President, Asset
Management

Ellen G. Breslauer 2,000 200 7,038
Secretary & Treasurer

All Executive Officers (5 persons) 46,500 1,800 63,338

Directors who are not Executive -- -- --
Officers

Non-Executive Officer Employee 10,000 1,050 36,950
Group
<FN>
- - ------------------------
(1) The exercise price of all such options is equal to the fair market value of
a share of Common Stock on the date of grant.
(2) See footnote (1) of the Summary Compensation Table for terms of the
restricted shares.
(3) Based on the number of Restricted Shares multiplied by $35.19, the closing
price of the company's Common Stock on the date of award.
</TABLE>

SHAREHOLDER APPROVAL

The Board of Directors has unanimously approved the amended and restated
1992 Employee Stock Plan and recommends that shareholders vote "FOR" such plan.

APPROVAL OF 1994 NON-EMPLOYEE DIRECTOR STOCK PLAN
(PROXY ITEM NO. 3)

On September 26, 1994, the Board of Directors adopted, subject to
shareholder approval, the 1994 Non-Employee Director Stock Plan (the "Director
Plan") providing for (i) the automatic annual award of stock options to purchase
shares of Common Stock to directors of the company who are not employees, and
(ii) authority to award such directors shares of Common Stock in lieu of their
director fees.

The purpose of the Director Plan is to help attract and retain experienced
and knowledgeable persons to serve the company as directors through
participation in stock ownership of the company. A copy of the Director Plan is
attached as Exhibit B. The following summary of certain provisions of the
Director Plan does not purport to be complete and is qualified in its entirety
by reference to Exhibit B.

17
<PAGE>
DIRECTOR STOCK OPTIONS

Under the Director Plan, an option for 2,500 shares of Common Stock is
automatically granted to each director who is not an employee, on the date he or
she becomes a director, and for an additional 2,500 shares on each subsequent
anniversary date. For the five current non-employee directors, their initial
grant date is September 26, 1994, subject to shareholder approval of the Plan.
Having a formula in the Director Plan allows non-employee directors to receive
stock options while administering the company's Employee Plan without causing
the loss for certain participants in the Employee Plan of the exemption provided
by Rule 16b-3.

All options granted under the Director Plan have exercise prices equal to
the fair market value of the shares on the date of grant, which is defined in
the Plan as the closing sale price on the New York Stock Exchange on the date of
grant. The options have terms of ten years and become exercisable as to one-half
of the shares on each of the first two anniversaries of the date of grant. The
options expire 90 days after the option holder ceases to be a director of the
company, except that in the case of death or permanent disability of the
director, the option may be exercised in full for one year after the holder
ceases to be a director. The options are not transferable in any manner other
than by will or the laws of descent and distribution or, in the Committee's
discretion, as permitted from time to time by Rule 16b-3. Upon exercise, the
purchase price for the shares is payable in full in cash.

PAYMENT OF DIRECTOR FEES IN STOCK

The Plan also allows the Board to establish a program for non-employee
directors to elect to receive all or a portion of their annual retainer and
meeting fees, in lieu of cash, in shares of Common Stock valued at fair market
value at the time of payment. In accordance with Rule 16b-3, a director must
make an irrevocable election to receive stock in lieu of cash compensation at
least six months prior to the date of any such payment. Alternatively, the Board
may require that all or a portion of such fees be paid in Common Stock.

SHARES AVAILABLE UNDER PLAN.

Under the Director Plan, up to 125,000 shares of Common Stock are available
for issuance pursuant to stock options and stock awards for director fees,
subject to anti-dilution adjustments.

DURATION OF PLAN

The Plan expires September 25, 2004, although shares of Common Stock can be
issued after that date pursuant to options granted prior to that date.

ADMINISTRATION OF PLAN

The Director Plan provides that it will be administered by the Board of
Directors or the Compensation Committee. Because of the Plan's automatic formula
provisions, administration of the Plan does not involve decisions with regard to
the granting of stock options or of shares issued to pay director fees. However,
the Board or the Compensation Committee is authorized to do all things necessary
or desirable in connection with the administration of the Plan, including
adopting rules and regulations relating to the Plan, interpreting the Plan and
the terms and conditions of any option granted under the Plan, and determining
the appropriate adjustments under the anti-dilution provisions of the Plan.

AMENDMENT AND TERMINATION

The Board of Directors may amend or terminate the Director Plan at any time,
except that no such amendment can deprive the recipient of an option previously
granted under the Plan or of his or her rights with respect to such option. In
addition, the Plan cannot be amended more than once every six months except to
the extent permitted by Rule 16b-3 and no amendment of the Plan may become
effective without the approval of the shareholders of the company if such
approval is required by Rule 16b-3.

FEDERAL INCOME TAX CONSEQUENCES

Options granted under the Director Plan are subject to the federal income
tax consequences for non-qualified options described above in "Approval of the
Amended and Restated 1992 Employee Stock Plan -- Certain Federal Income Tax
Consequences." Share awards for director fees are taxable in the same manner as
would the cash payment of director fees.

18
<PAGE>
OPTIONS GRANTED TO DIRECTORS UNDER THE NON-EMPLOYEE DIRECTOR STOCK PLAN

The following table shows the options granted under the Director Plan to the
five non-employee directors on September 26, 1994, subject to approval of the
Director Plan by the shareholders at the Annual Meeting. In accordance with the
Director Plan, additional options for 2,500 shares will be awarded to each
non-employee director annually.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- - --------------------- ---------
<S> <C>
C. Preston Butcher 2,500
Eugene P. Carver 2,500
L. Michael Foley 2,500
John McMahan 2,500
Malcolm R. Riley 2,500
</TABLE>

RECOMMENDATION OF BOARD OF DIRECTORS

The Board of Directors has unanimously approved the 1994 Non-Employee
Director Stock Plan and recommends that shareholders vote "FOR" the plan.

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(PROXY ITEM NO. 4)

Ernst & Young LLP, independent auditors, provided auditing services to the
company during the fiscal year ended July 31, 1994. The directors have selected
Ernst & Young LLP to audit the financial statements of the company for the
fiscal year ending July 31, 1995 and recommend to the shareholders that such
selection be ratified. The affirmative vote of a majority of the shares
represented at the Annual Meeting and voted with respect to this proposal, if a
quorum is present, is sufficient to ratify such selection. Representatives of
Ernst & Young LLP will be present at the Annual Meeting, with the opportunity to
make a statement if they so desire. Such representatives will also be available
to respond to appropriate questions. The Board of Directors unanimously
recommends a vote FOR this proposal.

PRINCIPAL SHAREHOLDERS

The following table indicates the only person known by the company to be the
beneficial owner of more than 5% of the company's shares of Common Stock as of
September 8, 1994 and the percentage of all outstanding shares of Common Stock
that such shares represented. The information for the 5% holder is based on
information furnished by the holder or contained in filings made with the
Securities and Exchange Commission.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS OF COMMON STOCK OF SHARES
- - ------------------------------------- ----------------- ----------
<S> <C> <C>
State Farm Insurance Companies 2,409,479 22%
One State Farm Plaza
Bloomington, Illinois 61701
</TABLE>

PROPOSALS FOR THE 1995 ANNUAL MEETING

Any shareholder intending to present a proposal at the 1995 Annual Meeting
of Shareholders and desiring the Board to consider it for inclusion in the proxy
statement and form of proxy for that meeting must submit such proposal
sufficiently far in advance of the meeting that it is received at the company's
executive offices on or before June 14, 1995.

19
<PAGE>
OTHER BUSINESS

The Board does not know of any other matters to be presented for action at
the Annual Meeting other than those listed in the notice of meeting and referred
to herein. If any other matters properly come before the meeting or any
adjournment thereof, it is intended that the proxies will be voted in respect
thereto and in accordance with the recommendations of the Board.

DATED: October 20, 1994

By Order of the Board
Ellen G. Breslauer, Secretary
BRE PROPERTIES, INC.

20
<PAGE>
[LOGO]
<PAGE>
EXHIBIT A

BRE PROPERTIES, INC.
AMENDED AND RESTATED
1992 EMPLOYEE STOCK PLAN
SEPTEMBER 26, 1994

ARTICLE I
GENERAL

1.1 PURPOSE OF THE PLAN. The purpose of the 1992 Employee Stock Plan (the
"Plan") is to provide officers and other key employees of the company with
incentives to continue their employment with the company and to afford them the
opportunity to acquire a continuing stock ownership interest in the company,
thereby providing them a proprietary interest in the success of the company.

1.2 DEFINITIONS. As used in the Plan and the related Award Agreements, the
following terms will have the meanings stated below:

(a) "Award" means any Option, SAR, Shares or Restricted Shares granted
pursuant to the Plan.

(b) "Award Agreement" means the written agreement between the company
and an employee pursuant to which an Award may be granted. The Committee
shall determine the terms of each Award Agreement, subject to the terms and
conditions of the Plan.

(d) "company" means BRE Properties, Inc., a Delaware corporation.

(e) "Code" means the Internal Revenue Code of 1986, as amended.

(f) "Committee" means the Compensation Committee appointed by the Board
to administer the Plan. The Committee shall consist of not less than two
members of the Board, who are not employees of the company and who are
"disinterested persons" during their period of service on the Committee, as
that term is defined in the rules and regulations promulgated by the
Securities and Exchange Commission pursuant to Section 16 of the Exchange
Act, and who are "outside directors" as that term is defined in the rules
and regulations promulgated by the Internal Revenue Service under Section
162(m) of the Code. The Board shall have the power from time to time to add
or remove members of the Committee and to fill vacancies arising for any
reason.

(g) "Exchange Act" means the Securities Exchange Act of 1934.

(h) The "Fair Market Value" of a Share on any date means the closing
price per Share on the New York Stock Exchange for that day (or, if no
Shares were publicly traded on that Exchange on that date, the next
preceding day that Shares were so traded on that Exchange).

(i) "Incentive Stock Option" or "ISO" means an Option that meets the
requirements of Section 422 of the Code.

(j) "Non-qualified Stock Option" or "NQSO" means an Option that is not
intended to qualify as an ISO.

(k) "Option" means an option to purchase Shares and shall be either an
ISO or a NQSO.

(l) "Optionee" means the holder of an Option.

(m) "Option Price" means the price to be paid for Shares upon exercise
of an Option as determined in accordance with Section 2.2.

(n) "Restricted Shareholder" shall have the meaning set forth in Section
4.1.

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<PAGE>
(o) "Restricted Shares" means Shares issued pursuant to Article IV.

(p) "Share Appreciation Right" or "SAR" means rights granted pursuant to
Article III.

(q) "Shares" means shares of Class A common stock, $.01 par value, of
the company.

(r) "Subsidiary" means any corporation in which the company owns,
directly or indirectly, stock possessing more than 50 percent of the total
combined voting power of all classes of stock.

1.3 ADMINISTRATION OF PLAN.

(a) The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee shall have the sole authority to
determine:

(i) The employees to whom Awards shall be granted;

(ii) The number of Shares or Restricted Shares to be covered by an
Award;

(iii) Whether and to what extent an Optionee may use already-owned
Shares in payment of the Option Price upon exercise of Options;

(iv) Which Options granted shall be ISOs and which shall be NQSOs;

(v) The Option Price;

(vi) The period and conditions, if any, under which each Award shall
vest or be exercisable; and

(vii) The terms and conditions of each Award Agreement between the
company and each employee.

(b) The Committee's decision construing, interpreting and administering
the Plan shall be conclusive and binding on all parties. No member of the
Committee or the Board shall be liable for any action taken or determination
made in good faith with respect to the Plan or to any Award granted pursuant
to the Plan.

1.4 ELIGIBILITY. The individuals who shall be eligible to participate in
the Plan shall be those key salaried employees, including officers and directors
if they are employees, of the company, or of any Subsidiary, as the Committee
shall determine during the period of the Plan. Awards under the Plan may be made
to the same eligible employee on more than one occasion.

1.5 TYPES OF GRANTS AND AWARDS UNDER PLAN. Awards under the Plan may be in
the form of Options, SARs, Shares and Restricted Shares. Options may be granted
with or without related SARs. SARs may be granted only with respect to a related
Option. The date of grant of an Award hereunder shall be deemed to be the date
of action by the Committee, notwithstanding that issuance may be conditioned on
the execution of an Award Agreement.

1.6 TRANSFERABILITY. Except as permitted by the Committee in accordance
with the rules and regulations promulgated under the Exchange Act with respect
to any exemption from the short swing profit provisions of Section 16(b) of that
Act, Awards under the Plan shall not be transferable by the holder other than by
will or the laws of descent and distribution and shall be exercisable during the
holder's lifetime only by the holder or the holder's guardian or legal
representative. This restriction shall apply to all employees receiving grants
under the Plan, whether or not the employee is subject to Section 16(b).

1.7 SHARES SUBJECT TO PLAN. The maximum number of Shares which may be
issued under the Plan shall be 375,000, subject to adjustment in accordance with
Section 6.4. In the event that any outstanding Award shall expire or terminate
for any reason, the Shares or Restricted Shares allocable to the unused or
forfeited portion of that Award may again be available for additional Awards
under the Plan. However, in the event of a surrender of an Option, or a portion
of it, for SARs, the Shares represented by the Option or that part of it which
is so surrendered shall not be available for reissuance under the Plan.

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<PAGE>
1.8 EFFECTIVE DATE AND TERM OF PLAN.

(a) The Plan, as amended hereby, shall be effective and shall be deemed
to have been amended on September 26, 1994, if within twelve months after
that date the Plan has been approved by the affirmative vote of the holders
of a majority of those outstanding shares of voting stock of the company
voting in person or by proxy at a duly held shareholder meeting.

(b) The Board may terminate the Plan at any time. If not sooner
terminated by the Board, the Plan will expire on September 27, 2002.
Expiration or termination of the Plan will not affect the validity of any
Awards then outstanding.

ARTICLE II
STOCK OPTIONS

2.1 OPTION AGREEMENTS. The grant of an Option shall be evidenced by a
written Option Agreement. Each Option Agreement shall state the number of Shares
subject to the Option, the Option Price, the option period, the method of
exercise, the manner of payment, the restrictions on transfer, and such other
terms and conditions as the Committee shall determine consistent with the Plan.
The maximum number of Shares for which Options may be granted under the Plan to
any employee in any calendar year is 100,000 Shares.

2.2 OPTION PRICE. The price to be paid for Shares upon the exercise of an
Option shall be fixed by the Committee at the time the Option is granted, but
shall in no event be less than 100% of the Fair Market Value of the Shares on
the date the Option is granted.

2.3 DURATION OF OPTION. No Option shall be exercisable after the
expiration of ten years from the date of grant.

2.4 DATE OF EXERCISE. Any Option may be exercised at any time following
the date of grant, in whole or in part, unless the Committee shall otherwise
provide for vesting or other restrictions under which an Option may be exercised
by the Optionee, in whole or in part. In the discretion of the Committee, an
Option may become immediately and fully exercisable upon the occurrence of
certain times or events, including, without limitation, (i) in the event of
death or permanent disability of the Optionee or (ii) upon the occurrence of a
change of control of the company. For purposes of the Plan, a change of control
shall be deemed to occur if any person or group together with its affiliates and
associates (other than the company or any of its subsidiaries or employee
benefit plans), after the effective date of the Plan, acquires direct or
indirect beneficial ownership of 32 percent or more of the then outstanding
Shares or commences a tender or exchange offer for 40 percent or more of the
then outstanding Shares. The terms "group," "affiliates," "associates" and
"beneficial ownership" shall have the meanings ascribed to them in the rules and
regulations promulgated under the Exchange Act.

2.5 METHOD OF EXERCISE. The Committee shall establish procedures governing
the exercise of an Option consistent with the purposes of the Plan. Such
procedures may include, without limitation, delivery to the company of written
notice of exercise accompanied by payment in full of the Option Price for the
Shares to which the exercise relates and payment of any amount necessary to
satisfy any withholding tax liability that may result from exercise of the
Option.

2.6 PAYMENT OF OPTION PRICE. Upon exercise of an Option, the Option Price
for the Shares to which the exercise relates shall be paid in full in cash or,
as specified in the Option Agreement or as otherwise permitted by the Committee
at the time of exercise, (i) by delivering to the company already-owned Shares
having a Fair Market Value equal to the Option Price on the date of exercise,
(ii) by cashless exercise methods which are permitted by law, including, without
limitation, methods whereby a broker sells the Shares to which the exercise
relates or holds them as collateral for a margin loan, delivers the Option Price
to the company, and delivers the remaining proceeds to the Optionee (and in
connection therewith the company may establish a cashless exercise program
including a program where the commissions on the sale of Shares to which the
exercise relates are paid by the company), or (iii) by any combination of cash,
already-owned Shares or such cashless exercise methods having a combined value
equal to the Option Price. In the

A-3
<PAGE>
discretion of the Committee, already-owned Shares must have been owned by the
Optionee at the time of exercise for at least the period of time specified by
the Committee (which generally shall be not less than six months). Whenever
payment of the Option Price would require delivery of a fractional Share, the
Optionee shall deliver the next lower whole number of Shares and a cash payment
shall be made by the Optionee for the balance of the Option Price.

2.7 OPTION EXERCISE LOANS. An Option Agreement may provide for the
extension of a loan from the company to the Optionee to finance exercise of the
Option. Any such loan shall have a term that does not exceed ten years, shall be
secured by a pledge of the Shares acquired pursuant to exercise of the Option,
shall be with full recourse against the Optionee, shall bear interest at rates
determined by the Committee, and shall contain such other terms and conditions
as the Committee shall determine consistent with the Plan.

2.8 TERMINATION OF EMPLOYMENT. Options shall normally terminate
immediately upon termination of an Optionee's employment with the company for
any reason, or not more than three months following the date of termination if
permitted by the Committee, acting in its discretion. However, (i) if an
Optionee dies or becomes permanently disabled while in the continuous employ of
the company, the Committee may in its discretion allow the Optionee or the
Optionee's estate, personal or legal representative or beneficiary, to exercise
the Option (to the same extent the Optionee could have exercised it on the date
of death or permanent disability) for a period of up to twelve months from the
date of death or disability and (ii) if an Optionee retires at or after normal
retirement age the Committee may in its discretion allow the Optionee to
exercise the Option (to the same extent the Optionee could have exercised it on
the date of retirement) for a period of up to three years from the date of
retirement, but, in either (i) or (ii), not beyond the original option term.

ARTICLE III
SHARE APPRECIATION RIGHTS

3.1 GRANT OF SARS. Share appreciation rights may be granted in connection
with all or any part of any Option granted under the Plan. The number of SARs
granted to an Optionee shall not exceed the number of Shares which the optionee
may purchase upon exercise of the related Option. SARs granted under the Plan
shall be included in the related Option Agreement between the company and the
Optionee.

3.2 EXERCISE OF SARS. A holder of SARs may exercise such rights, in whole
or in part, in lieu of exercise of the related Option, only to the same extent
and subject to the same conditions as the related Option is then exercisable and
unexercised. At the time of exercise, the Optionee shall surrender the Option
with respect to the number of Shares equal to the number of SARs exercised and
shall receive in return the number of Shares or amount of cash determined
pursuant to Section 3.3. The number of Shares available for the grant of future
Options and SARs under the Plan shall be reduced by the number of Shares with
respect to which an Option is so surrendered. The Committee, in its discretion,
may prescribe terms, conditions and limitations on the exercise of SARs,
including, without limitation, the requirement that SARs be exercised only
during the "window period" specified in Rule 16b-3(e)(3)(iii) under the Exchange
Act (or any successor rule).

3.3 PAYMENT OF SARS. Upon exercise of SARs, in consideration of the
surrender of the related Option, the holder thereof shall be entitled to
receive, with respect to each such right, an amount equal to the excess of the
Fair Market Value of one Share at the time of exercise over the Option Price per
Share for the Shares subject to the related Option and SAR being exercised. This
amount shall be payable as the Optionee shall elect, in cash, Shares or any
combination of cash and Shares; provided, however, that the Committee shall have
sole discretion to consent to or disapprove any election to receive cash in full
or partial payment of such amount. If the Optionee is to receive all or any
portion of such amount in Shares, the number of Shares shall be determined by
dividing such amount or portion thereof by the Fair Market Value of one Share at
the time of exercise. If the number of Shares so determined is not a whole
number, such number shall be reduced to the next lower whole number.

A-4
<PAGE>
ARTICLE IV
RESTRICTED SHARES

4.1 AWARD OF RESTRICTED SHARES. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award Shares to be held under the restrictions set
forth in this Article IV to any eligible employee of the company. Upon making
such an award, the company shall cause to have Restricted Shares issued and
registered in the name of the employee to whom Restricted Shares are awarded
(the "Restricted Shareholder").

4.2 RESTRICTIONS. Restricted Shares shall be subject to forfeiture upon
such terms and conditions, E.G., continued employment and performance goals, and
to such restrictions against sale, transfer or other disposition as may be
determined by the Committee at the time Restricted Shares are awarded. The
Committee may, in its discretion, remove, modify or accelerate the release of
restrictions on any Restricted Shares, including upon a change of control as
defined in Section 2.4.

4.3 PERFORMANCE GOALS.

(a) When the Committee determines to provide for forfeiture of
Restricted Shares based on performance goals, and when in the Committee's
judgment the provisions of Code Section 162(m) may be applicable to an Award
of Restricted Stock, the Committee shall be guided by this Section 4.3. The
Committee shall establish performance goals prior to the start of the
restriction period; provided that such goals may be established after the
start of the fiscal year but while the outcome of the performance goal is
substantially uncertain to the extent permitted under proposed or final
regulations issued under Section 162(m).

(b) Each performance goal shall identify one or more business criterion
that is to be monitored during the restriction period. Such criteria may
include, among other things, any of the following:

<TABLE>
<S> <C>
Funds from operations per share Net income
Return on net assets Earnings per share
Operating ratios Debt reduction
Cash flow Return on investment
Shareholder return Revenue
Revenue growth
</TABLE>

(c) The Committee shall determine the target level of performance that
must be achieved with respect to each criterion that is identified in a
performance goal in order for a performance goal to be treated as attained.

4.4 FORFEITURE OF RESTRICTED SHARES. In the event of the forfeiture of any
Restricted Shares, the company shall have the right to reacquire all or any
portion of such Shares, as determined by the Committee in its sole discretion,
without the payment of consideration in any form to such Restricted Shareholder,
and the Restricted Shareholder shall unconditionally forfeit any right, title or
interest to such Restricted Shares. All forfeited Restricted Shares shall be
transferred and delivered to the company. The Committee may, in its sole
discretion, waive in writing the company's right to reacquire some or all of a
holder's Restricted Shares, whereupon such shares shall become fully vested in
such Restricted Shareholder.

4.5 ESCROW. In order to administer the provisions of this Article IV the
stock certificates evidencing Restricted Shares, although issued in the name of
the Restricted Shareholder, shall be held by the company in escrow subject to
delivery to the Restricted Shareholder upon vesting. An employee's receipt of an
award of Restricted Shares pursuant to the Plan shall constitute the grant of an
irrevocable power of attorney to the company to permit the transfer and delivery
to the company of any or all Restricted Shares which are forfeited to the
company.

4.6 DIVIDENDS ON RESTRICTED SHARES. While the Restricted Shares are held
in escrow, all cash dividends the company pays on the Restricted Shares shall be
subject to such terms, conditions and restrictions on payment as the Committee
shall determine, and shall be delivered directly to the Restricted Shareholder,
to

A-5
<PAGE>
the escrow account, or otherwise held in the manner specified by the Committee.
Share dividends or other dividends in kind on any Restricted Shares held in
escrow shall be paid into such escrow in the name of the Restricted Shareholder
and shall be subject to the same restrictions on disposition and forfeiture
provisions applicable to the Restricted Shares on which such dividend was paid.

ARTICLE V
OTHER STOCK-BASED AWARDS

The Committee, in its discretion, may grant Awards under the Plan in the
form of Shares, either current or deferred, restricted or unrestricted, and in
tandem or combination with, or as an alternative to, any other employee
compensation plan of the company.

ARTICLE VI
MISCELLANEOUS

6.1 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or messenger or facsimile
transmission, addressed

(a) if to the company, at

BRE Properties, Inc.
Telesis Tower, Suite 2500
One Montgomery Street
San Francisco, CA 94104-5525
Attn: Treasurer

(b) If to the Award holder, at the last address shown on the company's
personnel records, or

6.2 AMENDMENT OR TERMINATION. The Board may, at any time and from time to
time, modify, amend, suspend or terminate the Plan in any respect. Amendments to
the Plan shall be subject to stockholder approval to the extent required to
comply with any exemption to the short swing profit provisions of Section 16(b)
of the Exchange Act pursuant to rules and regulations promulgated thereunder,
with the exclusion for performance-based compensation under Internal Revenue
Code Section 162 (m), or with the rules and regulations of any securities
exchange on which the Shares are listed. The Board may also modify or amend the
terms and conditions of any outstanding Award, subject to the consent of the
holder and consistent with the provisions of the Plan.

6.3 LEAVE OF ABSENCE. The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence from the company taken by the recipient of any grant
under the Plan. Without limiting the generality of the foregoing, the Committee
shall be entitled to determine (a) whether or not any such leave of absence
shall be treated as a termination of employment with the company within the
meaning of the Plan and (b) the impact, if any, of any such leave of absence on
grants and awards under the Plan.

6.4 RECAPITALIZATION. In the event of any change in capitalization which
affects the Shares, whether by stock dividend, stock distribution, stock split,
subdivision or combination of Shares, reclassification, merger or consolidation
or otherwise, such proportionate adjustments, if any, as the Committee in its
discretion deems appropriate to reflect such change shall be made with respect
to the total number of Shares in respect of which Awards may be granted under
the Plan, the number of Shares covered by each outstanding Award and the Option
Price per Share under each Option and related SAR; however, any fractional
shares resulting from any such adjustment shall be eliminated.

6.5 REORGANIZATION. If the company merges or consolidates with another
corporation and is not the surviving corporation, or if the company is
liquidated or sells or otherwise disposes of substantially all its

A-6
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assets while unexercised Options remain outstanding under the Plan, (a) subject
to the provisions of clause (c) below, after the effective date of the merger,
consolidation, liquidation, sale or other disposition, as the case may be, each
holder of any outstanding Option shall be entitled, upon exercise of an Option,
to receive, in lieu of Shares, the number and class or classes of shares of
stock or other securities or property to which the holder would have been
entitled if, immediately prior to the merger, consolidation, liquidation, sale
or other disposition, the holder had been the holder of record of a number of
Shares equal to the number of Shares as to which the Option may be exercised;
(b) the Committee may in its discretion waive any limitations set out in or
imposed pursuant to this Plan so that all Options, from and after a date prior
to the effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Committee, shall be
exercisable in full; and (c) all outstanding Options which are exercisable at
any time prior to the effective date of any merger, consolidation, liquidation,
sale or other disposition may be cancelled by the Committee in its discretion,
as of such effective date.

6.6 GENERAL RESTRICTION. Each Award under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine that (a) the
listing, registration or qualification of the related Shares upon any securities
exchange or under any state or federal law, (b) the consent or approval of any
government regulatory body, or (c) an agreement by the recipient of an Award
restricting disposition of Shares, is necessary or desirable as a condition of,
or in connection with, the making of an Award or the issue or purchase of Shares
thereunder, then such grant shall not be effective in whole or in part unless
such listing, registration, qualification, consent, approval or agreement shall
have been effected or obtained free of any conditions not acceptable to the
Committee.

6.7 WITHHOLDING TAXES. The company, with the approval of the Committee,
may, at the request of an employee, retain Shares which would otherwise be
delivered to the employee upon exercise of an Option or SAR or vesting of
Restricted Shares or other Award, to satisfy any withholding tax liability that
may result from such exercise or vesting. The Shares shall be valued for this
purpose at their Fair Market Value on the date of the exercise or vesting, as
the case may be. Whenever, under the Plan, payments by the company are made in
cash, such payments shall be net of an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements.

6.8 NO RIGHT TO EMPLOYMENT. Nothing in the Plan nor in any agreement
entered into pursuant to the Plan shall confer upon any Award holder the right
to continue in the employment of the company, nor affect any right which the
company may have to terminate the employment of such person.

6.9 RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a stockholder
with respect to Shares acquired under the Plan unless and until the certificates
for such Shares are delivered to him or her.

6.10 EXCHANGE ACT. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To
the extent any provision of the Plan or action by the Plan administrators fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.

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<PAGE>
EXHIBIT B

BRE PROPERTIES, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK PLAN
SEPTEMBER 26, 1994

1. PURPOSE OF THE PLAN. The purpose of the 1994 Non-Employee Director Stock
Option Plan (the "Plan") is to attract and retain the services of
experienced and knowledgeable non-employee directors to devote their utmost
effort and skill to the advancement and betterment of the company by
permitting them to participate in the ownership of the company.

2. DEFINITIONS. As used in the Plan and the related Option Agreements, the
following terms will have the meanings stated below:

(a) "Award" means any Option or Shares granted pursuant to the Plan.

(b) "Board" means the Board of Directors of the company.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(e) "Committee" means the Board or its Compensation Committee appointed
by the Board to administer the Plan.

(f) "Exchange Act" means the Securities Exchange Act of 1934.

(g) The "Fair Market Value" of a Share on any date means the closing
price per Share on the New York Stock Exchange for that day (or, if no
Shares were publicly traded on that Exchange on that date, the next
preceding day that Shares were so traded on that Exchange).

(h) "Option" means an option to purchase Shares.

(i) "Optionee" means the holder of an Option.

(j) "Option Price" means the price to be paid for Shares upon exercise
of an Option.

(k) "Shares" means shares of Class A common stock, $.01 par value, of
the company.

(l) "Subsidiary" means any corporation in which the company owns,
directly or indirectly, stock possessing more than 50 percent of the total
combined voting power of all classes of stock.

3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. Subject to the provisions of the Plan, the Committee shall have
the power to interpret the Plan and prescribe, amend, and rescind rules and
regulations relating to it.

4. PARTICIPATION IN THE PLAN.

(a)ANNUAL STOCK OPTIONS FOR 2,500 SHARES.

(i) INITIAL GRANTS. Each director of the company who is not otherwise an
employee of the company (a "Non-Employee Director") on the date of
the adoption of the Plan by the Board, but subject in any event to
the approval of the Plan by the shareholders of the company not later
than 12 months after the date the Board adopts the Plan, shall
automatically receive an Option, subject to the further terms and
conditions of the Plan, to acquire 2,500 Shares. Additionally, any
Non-Employee Director hereafter appointed or elected to the Board
shall also automatically receive an Option to acquire 2,500 Shares,
which grant will be effective as of the date such Non-Employee
Director shall be appointed or elected to the Board.

B-1
<PAGE>
(ii)SUBSEQUENT ANNUAL GRANTS. In addition to the initial grant of
Options provided for in paragraph (a) above, each Non-Employee
Director shall automatically receive an Option, subject to the terms
and conditions of the Plan, for 2,500 additional Shares on each
anniversary of the date of grant of the Option received pursuant to
paragraph (i) above.

(b)PAYMENT OF DIRECTOR FEES IN SHARES. Non-Employee Directors may be
permitted or required, subject to policies and procedures established by
the Committee, to receive Shares at Fair Market Value in lieu of cash
payment of all or a portion of their fees for serving as a director and
attending Board and Board committee meetings.

5. SHARES SUBJECT TO PLAN. The maximum number of Shares which may be issued
pursuant to Awards under the Plan shall be 125,000, subject to adjustment in
accordance with Section 8. In the event that any outstanding Award shall
expire or terminate for any reason, the Shares allocable to the unused
portion of that Award may again be available for additional Awards under the
Plan.

6. TRANSFERABILITY. Except as permitted by the Committee in accordance with
the rules and regulations promulgated under the Exchange Act with respect to
any exemption from the short swing profit provisions of Section 16(b) of
that Act, Awards under the Plan shall not be transferable by the holder
other than by will or the laws of descent and distribution and shall be
exercisable during the holder's lifetime only the holder or the holder's
guardian or legal representative.

7. TERMS AND CONDITIONS OF OPTIONS. The Options granted hereunder will not be
"incentive stock options" under Section 422 of the Code. Each Option
Agreement shall state the number of Shares subject to the Option, the Option
Price, the option period, the method of exercise, the manner of payment, any
restrictions on transfer, and such other terms and conditions as the
Committee shall determine consistent with the Plan and the following:

(a)OPTION PRICE. The price to be paid for Shares upon the exercise of an
Option shall be 100% of the Fair Market Value of the Shares on the date
the Option is granted.

(b)EXPIRATION OF OPTION. No Option shall be exercisable after the
expiration of ten years from the date of grant.

(c)PAYMENT OF OPTION PRICE. Upon exercise of an Option, the Option Price
for the Shares to which the exercise relates shall be paid in full in
cash.

(d)VESTING OF OPTIONS. The Options granted hereunder shall become
exercisable as to 1,250 Shares on the first anniversary of the grant date
and the remaining 1,250 Shares on the second anniversary of the grant
date.

(e)TERMINATION OF OPTIONS. Options shall terminate prior to expiration upon
termination of a Non-Employee Director's service as a director of the
company; provided that, the Option may be exercised for 90 days following
the termination date (but not beyond the expiration date) to the extent
vested at the termination date; and provided further that, if termination
is caused the Non-Employee Director's death or permanent disability, the
Option may be exercised in full during the one year period following
termination by the Optionee or the Optionee's estate.

(f)RIGHTS AS SHAREHOLDER. No Optionee shall have rights as a shareholder
with respect to Shares acquired under the Plan unless and until the
certificates for such Shares are delivered to him or her.

8. CAPITAL ADJUSTMENTS. The aggregate number of Shares with respect to which
Options or other Awards may be granted hereunder, the number of Shares
thereof covered by each outstanding Option and the purchase price per Share
shall be proportionately adjusted for changes in the capitalization of the
company resulting from a recapitalization, reorganization, merger,
consolidation, exchange of shares, stock dividend, stock split, reverse
stock split, or other subdivision or consolidation of shares or the like. No
fractional shares shall be issued, and any fractional shares resulting from
the adjustments contemplated by this subparagraph shall be eliminated from
the respective Option.

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<PAGE>
9. EXCHANGE ACT SECTION 16. Transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successor under
the Exchange Act. To the extent any provision of the Plan or action by the
Plan administrators fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.

10. DURATION OF THE PLAN. The Plan shall be deemed effective on September 26,
1994, if within twelve months after that date the Plan has been approved by
the affirmative vote of a majority of those outstanding shares of voting
stock of the company voting in person or by proxy at a duly held shareholder
meeting. The Plan shall terminate on September 25, 2004. The Plan may be
terminated by the Board at any time. Expiration or termination of the Plan
will not affect any Options then outstanding.

11. AMENDMENT OF THE PLAN. The Board may amend the Plan at any time; provided,
however, that the Plan may not be amended more than once every six months,
except to the extent permitted by Rule 16b-3 or to comply with changes in
the Code, or the rules and regulations thereunder, and provided further that
no such amendment shall, without the approval of the holders of a majority
of the Shares voting at a duly held shareholder meeting, (i) increase the
maximum number of Shares which may be purchased pursuant to the Plan, (ii)
change the purchase price, (iii) change the Option period or increase the
time limitation on the grant of Options under the Plan, (iv) materially
modify the Plan in any manner which requires shareholder approval under Rule
16b-3 or its successor under the Exchange Act.

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<PAGE>
This Proxy is Solicited on Behalf of the
Board of Directors

ARTHUR G. VON THADEN, HOWARD E. MASON, JR. or ELLEN G. BRESLAUER, and each
of them, are hereby appointed proxies, with power of substitution, to vote all
shares of Class A common stock of the undersigned at the Annual Meeting of
Shareholders of BRE Properties, Inc. to be held at the A. P. Giannini
Auditorium, Bank of America Center, 555 California Street, San Francisco,
California, on November 22, 1994, and at any continuation thereof, in the manner
indicated below, and in their discretion on any other matter which may properly
come before the Meeting.

This Proxy will be voted in accordance with instructions given. In the
absence of instructions, the Proxy will be voted "FOR" Items 1, 2, 3 and 4.

The Directors recommend a vote "FOR" the following four items:

Item No. 1. - Election of Class III Directors

FOR / / WITHHOLD / /
nominees AUTHORITY to
listed below vote for
nominees
listed below.

Malcolm R. Riley
Arthur G. von Thaden

Item No. 2-

Approval of the
Amended and Restated
1992 Employee Stock Plan FOR / / AGAINST / / ABSTAIN / /

Item No. 3-

Approval of the
1994 Non-Employee
Director Stock Plan FOR / / AGAINST / / ABSTAIN / /

Item No. 4-

Ratification
of the selection
of Ernst & Young
to serve as
independent auditors
for the fiscal
year ending
July 31, 1995 FOR / / AGAINST / / ABSTAIN / /

<PAGE>

The undersigned hereby revokes any proxy heretofore given to vote at the
meeting and acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated October , 1994 and the company's 1994
Annual Report to Shareholders.

________________, 1994
Dated

________________________
Signature of Shareholder

PROXY INSTRUCTIONS

Please sign exactly as the name or names appear hereon. A proxy executed
by a corporation should be signed in its name by its authorized officers.
Executors, administrators and trustees should so indicate when signing.
SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.