CENTURY REALTY TRUST
320 N. Meridian Street - Suite 823
Indianapolis, Indiana 46204
April 5, 2004
TO OUR SHAREHOLDERS:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 5, 2004
The annual meeting of shareholders of CENTURY REALTY TRUST, an Indiana
business trust, will be held at the Indianapolis Athletic Club, 3rd Floor,
350 N. Meridian Street, Indianapolis, Indiana, on Wednesday, May 5, 2004,
at 10:30 A.M., for the following purposes:
(1) To elect three trustees;
(2) To consider a shareholder proposal, if it is presented at the
meeting, recommending that the Board of Trustees immediately
undertake a plan to sell all of the Trust's assets and liquidate
the Trust; and,
(3) To act on such other business as may properly come before the
meeting and all adjournments thereof.
The Trustees have fixed the close of business on March 29, 2004, as the
record date for determining shareholders entitled to notice of and to vote at
the meeting.
BY ORDER OF THE TRUSTEES,
John W. Adams
Secretary
PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY, THE ACCOMPANYING PROXY
IN THE RETURN ENVELOPE PROVIDED FOR THAT PURPOSE, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING.
CENTURY REALTY TRUST
320 N. Meridian Street - Suite 823
Indianapolis, Indiana 46204
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Trustees of Century
Realty Trust, an Indiana business trust (the Trust), the principal offices
of which are located at 320 N. Meridian Street - Suite 823, Indianapolis,
Indiana 46204. This proxy statement and the enclosed proxy were mailed on
April 5, 2004.
The enclosed proxy is solicited for use at the annual meeting of
shareholders to be held May 5, 2004. The purpose of the meeting is to elect
three trustees; to act on a shareholder proposal, if it is presented at the
meeting, that would recommend liquidation of the Trust; and, to act on such
other business as may properly come before the meeting.
All shares represented by the enclosed proxy will be voted in accordance
with the instructions given by the shareholders, but where no instruction is
given, the shares will be voted FOR the election of the nominees for Trustee
and, other than broker non-votes, AGAINST the shareholder proposal as noted on
the enclosed proxy. The Board does not know of any other matter to be acted
upon at the meeting. However, if any matter properly comes before the meeting
the shares will be voted in accordance with the best judgment of the proxy
holders. A shareholder executing and delivering the enclosed proxy may revoke
it at any time before it is exercised by execution of another proxy or by
attendance in person at the meeting.
The entire cost of soliciting proxies will be borne by the Trust. In
addition to the use of mails, proxies may be solicited by personal interview,
telephone and telegram by trustees and officers of the Trust and their agents.
VOTING
The close of business on March 29, 2004, has been fixed as the record date
for determining which shareholders are entitled to notice of and to vote at the
meeting. As of March 29, 2004, the Trust has 1,784,684 shares of beneficial
interest outstanding. In order to constitute a quorum, one-third of the
outstanding shares must be represented at the meeting, but, if a quorum is not
present, the meeting may adjourn from time to time. Any abstentions or
"broker non-votes" (shares held by a stockbroker or other nominee of a
beneficial owner who does not have express or discretionary authority to vote
on a particular matter and has not received instructions from the beneficial
owner) will be counted as present at the meeting for the purpose of determining
a quorum.
Each share is entitled to one vote with respect to every matter submitted
to a vote at the meeting. No cumulative voting is permitted. Trustees are
elected by a plurality of the votes cast in the election. Abstentions and
broker non-votes will have the effect of neither a vote for nor a vote against
the nominees. Approval of the shareholder proposal requires the affirmative
vote of the holders of a majority of the shares entitled to vote at the meeting
and represented in person or by proxy. Abstentions and broker non-votes will
have the effect of votes against the shareholder proposal.
SHARE OWNERSHIP INFORMATION
No person is known to the Trust to own of record or beneficially more
that 5% of the Trust's outstanding shares of beneficial interest except as set
forth in the following table. The information regarding holders of shares has
been obtained from reports filed by such persons with the Securities and
Exchange Commission (the "SEC").
Title of Name of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
_______________________________________________________________________________
Shares of John I. Bradshaw, Jr. 94,753(1) 5.3%
Beneficial 320 N. Meridian Street
Interest Indianapolis, IN
Shares of Murray R. Wise 122,650(2) 6.9%
Beneficial 4309 Crayton Road
Interest Naples, FL 34103
Shares of David C. Eades 114,600(3) 6.4%
Beneficial 1701 Broadmoor Drive
Interest Champaign, IL 61821
Shares of Nolton, LLC 190,000 10.6%
Beneficial 104 W. Chestnut Street
Interest Suite 356
Hinsdale, IL 60521
Shares of Prana Securities Adviser, LLC 217,595 (4) 12.2%
Beneficial 333 West 52nd St., Suite 600
Interest New York, NY 10019
(1) John I. Bradshaw, Jr., is sole owner of 92,294 shares and shares voting
and investment power with respect to 459 shares owned by his spouse and 2,000
shares owned by a trust for his sister.
(2) Murray R. Wise is sole owner of 103,883 shares and shares voting and
investment power with respect to 1,000 shares owned by his spouse, 15,767
shares owned by the Westchester Profit Sharing Trust, 1,000 shares owned by
the Westchester Foundation and 1,000 shares owned by Travinap Partnership.
(3) David C. Eades is sole owner of 83,300 shares and shares voting and
investment power with respect to 6,000 shares owned by his spouse, 4,000 shares
owned by the mother of his spouse, 16,300 shares owned by the Eades Foundation
and 5,000 shares owned by the Helen Virginia Eades Trust.
(4) The following persons and entities share voting and investment power with
respect to the indicated shares: Prana Securities Adviser, LLC, a New York
limited liability company (the "Investment Manager"), is the investment adviser
to Prana Securities Fund I, L.P., a Delaware limited partnership (the"Fund"),
the record holder of the indicated shares. The general partner of the Fund is
Prana Securities Manager, LLC, a Delaware limited liability company (the
"General Partner"). Prana Real Estate Securities, LLC, a California limited
liability company, is the sole member of the General Partner and the Investment
Manager, and a manager of the General Partner. Prana Holding Company, LLC is
the sole member of Prana Real Estate Securities, LLC. Kurt C. McCracken is
Chairman and a Manager of Prana Holding Company, LLC. Neil C. McKinnon is
the Manager of Prana Real Estate Securities, LLC and President and a Manager
of Prana Holding Company, LLC.
ELECTION OF TRUSTEES
The Board of Trustees, without having designated a nominating committee,
determines trustee nominations as a full Board. The Board of Trustees includes
seven individuals who meet the definition of "independent director" in the
rules of the NASDAQ Stock Market, as well as the individual serving as
President and Chief Executive Officer of the Trust. The Board of Trustees
believes that the determination of nominees is benefited by the knowledge and
perspective of all of these individuals acting together as the full Board.
The Board of Trustees will consider, on a case by case basis, trustee
candidates recommended by shareholders, generally, in the same manner as
candidates recommended by a trustee or an officer of the Trust. The Board
does not, at this time, have a written policy for how it will consider such
recommendations, but will develop such a policy within the next six months.
The Board of Trustees has not established minimum qualifications that must
be met by a nominee. In evaluating nominees, the Board will:
* consider whether a current board member wishes to be re-elected;
* if a new nominee is needed, determine the skills and experience
desired in a new trustee, such as business experience, financial
expertise, or compatible business development expertise;
* identify potential nominees who have such skills and experience;
* determine whether the candidates are willing and able to serve,
if elected;
* develop a consensus within the Board with respect to which, among
the available potential nominees, would be best suited for the
position;
* become acquainted with the nominee and conduct a background
investigation; and
* nominate the candidate, with the determination made by a vote of a
majority of the independent members of the Board of Trustees.
A shareholder who wishes to recommend a nominee must submit a written
request to do so to the Secretary of the Trust on or before November 30 of the
year immediately preceding the annual meeting of shareholders. The written
request must include the full name, age, business or residential address and
principal occupation of the potential nominee. The recommending shareholder
must state the number of shares in the Trust that he or she beneficially owns
and the length of time such shares have been so owned.
The Trust Instrument provides that the number of Trustees shall be fixed
from time to time by a resolution passed by a majority of the Trustees, but
shall not be less than five (5) nor more than nine (9). The number of Trustees
is presently fixed at eight (8). At the most recent election of trustees,
held at the annual meeting of shareholders on May 7, 2003, holders of 76.9% of
the then outstanding shares were present at the meeting, in person or by
proxy, and participated in the election.
The Sarbanes-Oxley Act of 2002 requires that the Audit Committee consist
entirely of independent board members, at least one of whom must be a financial
expert. Rules subsequently promulgated by the SEC define the qualifications
of a financial expert and specified December 31, 2003 as the date by which
Audit Committees were expected to comply with the new membership requirement.
The Board of Trustees added a trusteeship during 2003 and appointed Larry S.
Boulet, a qualified financial expert, to that position to serve until the
2004 annual shareholder meeting.
Three trustees will be elected at the meeting, two for terms of three
(3) years and one for a term of one (1) year. They will serve until their
successors are elected and qualified or until their earlier resignation,
retirement, removal from office or death. Unless authority is withheld, the
enclosed proxy will be voted in favor of electing as trustees: John J Dillon
and Murray R. Wise, each for a term of three years, and Larry S. Boulet for
a term of one year. All three nominees have been designated by the Board and
are presently serving as trustees.
In the event a nominee should become unavailable for election for any
reason, which event is not expected to occur, the proxies will be voted for a
substitute recommended by the Board of Trustees. The following table contains
information with respect to the nominees:
Shares of
Period During the Trust
Which He Beneficially
Principal Occupation Served as a Owned as of
Name and Address Age for Past Five Years Trustee March 29, 2004
________________________________________________________________________________
Larry S. Boulet(1) 57 President 2003 to date 100 (.01%)
Indianapolis, IN Boulet Consulting LLC
Business Consulting
(since July, 2002)
Senior Audit Partner
PricewaterhouseCoopers LLP
Public Accounting
(1998 to July, 2002)
Other Directorships:
None
John J. Dillon(2) 44 Businessman 2000 to date 23,128 (1.30%)
Indianapolis, IN Self employed
(August 2000 to January, 2002
and since March 1, 2003)
Chief Operating Officer
Standard Management Corp.
Financial services holding co.
(January, 2002 to March 1, 2003)
Chief Administrative Officer
Analytical Surveys, Inc.
Digital mapping
(July, 1997 to August, 2000)
Other Directorships:
Indianapolis Bond Bank
Murray R. Wise(3) 55 Chairman and CEO 2000 to date 122,650 (6.90%)
Naples, FL Westchester Group, Inc.
Agricultural investments
Other Directorships:
None
(1) Shares are held with sole voting and investment power.
(2) John J. Dillon is sole owner of 3,688 shares and shares voting and
investment power with respect to 19,440 shares owned by the Dillon Family
Limited Partnership in which he is a limited partner.
(3) Murray R. Wise is sole owner of 103,883 shares and shares voting and
investment power with respect to 1,000 shares owned by his spouse, 15,767
shares owned by the Westchester Profit Sharing Trust, 1,000 shares owned by
the Westchester Foundation and 1,000 shares owned by Travinap Partnership.
INFORMATION RELATIVE TO MEMBERS OF THE BOARD
OF TRUSTEES WHOSE TERMS HAVE NOT YET EXPIRED
Shares of
Period During the Trust
Which He Beneficially
Principal Occupation Served as a Owned as of
Name and Address Age for Past Five Years Trustee March 29, 2004
________________________________________________________________________________
John W. Adams(1) 55 Vice President 1996 to date 2,100 (0.12%)
Indianapolis, IN Browning Investments, Inc. (2006)
Real estate development
Other Directorships:
None
John I. Bradshaw, Jr.(2)
73 President and CEO 1982 to date 94,753 (5.31%)
Indianapolis, IN Century Realty Trust (2006)
Other Directorships:
None
Marvin L. Hackman(1)(5)
70 Partner, Hackman 2000 to date 1,200 (0.07%)
Indianapolis, IN Hulett & Cracraft LLP (2006)
Attorneys at Law
Other Directorships:
None
Francis M. Hapak(3) 78 Real estate investor 1987 to date 76,605 (4.29%)
Indianapolis, IN Self employed (2005)
Other Directorships:
None
John A Wallace(4) 80 Real estate investor 1973 to date 16,500 (0.92%)
Indianapolis, IN Self employed (2005)
Other Directorships:
None
Trustees and Officers as a Group (8 persons) 337,036 (18.88%)
(1) Shares are held with sole voting and investment power.
(2) John I. Bradshaw, Jr., is sole owner of 92,294 shares and shares voting
and investment power with respect to 459 shares owned by his spouse and 2,000
shares owned by a trust for his sister.
(3) Francis M. Hapak is the sole owner of 38,392 shares and shares voting and
investment power with respect to 38,213 shares owned by Charlotte H. Hapak,
his wife.
(4) John A. Wallace is the sole owner of 15,000 shares and shares voting and
investment power with respect to 1,500 shares owned by Brenda L. Wallace, his
wife.
(5) Marvin L. Hackman was listed in the proxy statement for the 2003 annual
shareholder meeting as the beneficial owner of 5,000 shares. All of those
shares represented exercisable options, of which total he exercised options to
purchase 700 shares, and allowed options for 4,300 shares to expire in 2003.
SHAREHOLDER PROPOSAL
Nolton, LLC, 104 West Chestnut Street, Suite 356, Hinsdale, Illinois 60521
has given Century Realty Trust notice that it intends to present the following
proposal at the annual meeting:
RESOLVED, that the shareholders of Century Realty Trust, SBI vote to
recommend that the Board of Trustees immediately undertake a plan to sell
all of the Company assets and liquidate the Company. The shareholders
recommend this plan be implemented as promptly as possible.
Statement by Shareholder in Support of Proposal
Nolton, LLC believes the owners of Century Realty Trust should support
this resolution and strongly recommends to the Company's Board of Trustees that
this plan of action be undertaken immediately in order to analyze the value of
its assets and marketability of these holdings as a means of achieving maximum
shareholder value.
Nolton, LLC forwards this resolution based on Century Realty Trust's
deteriorating financial performance over the last 5 years despite strong
results from its industry peers. The Board of Trustees and Management have
been slow to make the necessary changes to correct the Company's significant
downtrend in occupancy, funds from operations and dividend distributions.
Additionally, the Board of Trustees and Management have failed to either
enhance the value of its stock price or keep pace with industry peers. As of
the close of market for the month of November, 2003, Century Realty Trust's
share value had fallen over 20% from its high.
Nolton, LLC appreciates your consideration and support FOR this resolution.
Statement by Trustees in Opposition to Proposal
The Board of Trustees of Century Realty Trust recommends that the
shareholders vote AGAINST the above proposal. The Board of Trustees and
Management believe this proposal is not in the best interest of the
shareholders and would be totally inconsistent with the Board's duty to
maximize shareholder value. The proposal makes no reference to price, market
conditions, or the strategic plans of the Company. In the Board's opinion,
such a sale of the Trust assets without regard to these factors, could create
an atmosphere that could have the effect of reducing the perceived value of
the Trust to a very low level, thus forcing the Company to negotiate with
bidders from a position of weakness. Further, if the Trust were to undertake
a plan to sell all of its assets, the likely result would be that some of the
assets would be readily marketable, but others would not be, and the Trust
would be left to carry or dispose of the remaining assets under unfavorable
conditions. Moreover, selling the assets of the Trust would have the
additional disadvantage of losing the value of the existing public company
entity and structure. The Board believes that a publicly announced forced
sale would under these circumstances lead to a deterioration in the value of
the Trust.
The Management and Board of Trustees of Century Realty Trust are very
much aware of the significant downtrend we have experienced in recent years,
and particularly in 2003. The downtrend was caused in large part by the
economic environment that has hurt most owners of apartments, especially
apartments in the Midwest. In partial response to these conditions Century
Realty Trust, in 2003, changed management companies for its fifteen apartment
properties, which comprise over 90% of Century's assets. While expensive in
the short term, this change should help considerably in the longer term. In
addition, one underperforming apartment property is under contract to be sold
and Management is looking for replacement property.
Liquidation, as proposed by Nolton, LLC, is but one of several strategic
alternatives which the Trust may pursue to enhance shareholder value. The
Board is well aware of its fiduciary duties and responsibilities to the Trust's
shareholders, reviews and monitors the business and progress of the Trust, and
stays informed about trends and developments in the real estate markets in
which it operates. The Board of Trustees believes it is in the best and most
informed position to explore various strategic alternatives, which might
include a growth strategy within the existing REIT structure, a reverse merger
with one or more private companies with or without a simultaneous public
equity offering, a going-private transaction, a sale of the Trust or its
assets to a public REIT, a liquidation of assets, or other similar
transactions.
The Board attempts to be apprised of any such opportunities and will
continue to consider these possible transactions in carrying out its
obligations to the shareholders. But the proposal of the Nolton, LLC, if
it were to be carried out, would limit the options available to the Board
and Management to only one course of action, selling all of Century's assets.
This proposal would therefore hinder, rather than help, the efforts of the
Board and Management to identify and pursue other strategies that could be in
the best interest of the shareholders. The adoption of the proposal would
weaken the ability of the Board of Trustees to maximize shareholder value
and could seriously prejudice and jeopardize the financial interests of
shareholders in the Trust.
Although the Proposal only recommends and does not obligate the Board of
Trustees to take certain action, the Board believes that the approval of the
resolution would make our shareholders, lenders, suppliers, customers,
employees and community uncertain about your company's future. Such
uncertainty would undermine confidence in the Trust and would adversely
affect its relationship with its lenders, suppliers and customers. As a
result, the Trust's ability to compete effectively would be adversely affected,
causing a potential decline in revenues, profits and shareholder value.
For these reasons the Management and the Board of Trustees of Century
Realty Trust recommend a vote AGAINST the proposal of Nolton, LLC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that certain
Trustees, Officers and share owners file with the SEC and the Trust an initial
statement of beneficial ownership and certain statements of changes in
beneficial ownership of shares of the Trust. Based solely on its review of
such forms received by the Trust and written representation from those
individuals that no other reports were required, the Trust is unaware of
any instances, except (1) that Trustee John J. Dillon missed a due date by
one day for filing a Form 4, and (2) that Nolton, LLC, which claims to
beneficially own more than 10% of the Trust's outstanding shares , had not, as
of March 19, 2004, timely complied with filing requirements under Sec. 16(a)
and other SEC reporting obligations. Nolton, LLC subsequently informed the
Trust that, since that date, it had filed with the SEC all required reports.
COMPENSATION OF TRUSTEES
Each trustee, except the individual named in the "Summary Compensation
Table", is paid $750 per quarter plus $300 for each meeting of the trustees
attended by him. Members of the audit committee are each paid $300 for
attendance at each meeting of the committee. In addition, Trustees are paid
amounts, not in excess of $300 each day, for property inspections and special
assignments. No additional compensation is paid to those trustees, other than
John I. Bradshaw, Jr., who are also officers of the Trust. In 2003, under
these arrangements, the Trust paid a total of $38,600 in trustee compensation
to all trustees who, individually, were paid amounts ranging from $1,100 to
$6,600.
Except as set forth in the following schedules, no options, warrants, or
rights of any kind were granted or exercised during 2003. No long term or
deferred compensation arrangements have been awarded to any trustee, officer
or employee of the Trust.
EXECUTIVE OFFICER
John I. Bradshaw, Jr. is the sole executive officer of the Trust. He has
held the position of President and Chief Executive Officer since 1982.
SUMMARY COMPENSATION TABLE
Annual Compensation
___________________________________________ Long-Term
Name and Other Compensation
Principal Compen- Awards
Position Year Salary($) Bonus($) sation($) Options(#)
_______________________________________________________________________________
John I. Bradshaw, Jr. 2003 99,000 - 2,686* -
President 2002 99,000 - 2,686* -
Chief Exec. Officer 2001 99,000 - 2,686* -
*Compensation equivalent of club dues paid on behalf of named individual.
OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUE
Value of
Unexercised
Unexercised In-The-Money
Options at Fiscal Options at Fiscal
Shares Acquired Value Year End(#) Year End*
Name On Exercise(#) Realized* (All Exercisable) (All Exercisable)
_______________________________________________________________________________
John J. Dillon 5,000 $9,000 None None
Marvin L. Hackman 700 $ 875 None None
Murray R. Wise 5,000 $6,250 None None
*Value realized based on the closing share prices on the dates exercised.
OTHER MANAGEMENT INFORMATION
The Board of Trustees held ten (10) scheduled meetings during 2003. Each of
the Trustees attended 75% or more of those meetings and of meetings of the
Audit Committee on which he serves. The Trust does not have a policy with
regard to attendance by board members at annual meetings. All seven board
members attended the last annual shareholder meeting held on May 7, 2003;
and, all eight of the current board members are expected to attend the 2004
meeting.
A shareholder may communicate with the Board of Trustees or any individual
trustee by mailing a communication to the Trust addressed to the Board of
Trustees or the individual trustee. All of such communications, except those
clearly of a marketing nature, will be forwarded directly to the appropriate
individual trustee or presented to the full Board of Trustees at a meeting
of the Board of Trustees.
The Board of Trustees has a standing Audit Committee. Information
regarding the functions performed by the committee, its membership, and the
number of meetings held during 2003 is set forth in the "Audit Committee
Report" and the "Audit Committee Charter" included in this annual proxy
statement. All of the members of the Audit Committee are independent (as
defined in the Trust's NASDAQ listing requirements) of management of the
Trust. The Board of Trustees has not designated standing nominating or
compensation committees.
AUDIT COMMITTEE REPORT
The audit committee oversees the Trust's financial reporting process on
behalf of the board of trustees. Management has the primary responsibility
for the financial statements and the reporting process including the systems
of internal controls. The committee is comprised of three members, all of
whom are independent from the Trust and the Trust's management (as defined by
all applicable rules and regulations). In performing its oversight
responsibilities, the audit committee operates under a written charter, which
was recently updated to reflect requirements of the Securities and Exchange
Commission ("SEC"). The charter is reproduced as an appendix to this
proxy statement.
In fulfilling its oversight responsibilities, the committee reviewed the
audited financial statements in the Annual Report with management including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as
to the quality, not just the acceptability, of the Trust's accounting
principles and such other matters as are required to be discussed with the
committee under generally accepted auditing standards. In addition, the
committee has discussed with the independent auditors the auditors'
independence from management and the Trust.
The committee discussed with the Trust's independent auditors the overall
scope and plans for their audit. The committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of the Trust's internal controls, and the
overall quality of the Trust's financial reporting. The committee held two
meetings during 2003.
In reliance on the reviews and discussions referred to above, the
committee recommended to the board of trustees (and the board has approved)
that the audited financial statements be included in the Annual Report on
Form 10-K for the year ended December 31, 2003 for filing with the Securities
and Exchange Commission. The committee recommended, and the board approved,
the selection of the Trust's independent auditors.
Larry S. Boulet, Audit Committee Chairman (effective November 1, 2003)
John W. Adams, Audit Committee Member
Murray R. Wise, Audit Committee Member
March 11, 2004
AUDITORS
The Board of Trustees appointed the firm of Ernst & Young LLP, as
auditors for the Trust for the year ended December 31, 2003. This firm has
previously audited the Trust's financial statements each year beginning with
1973. The Audit Committee approved all non-audit services before they were
performed following specific consideration as to the possible effects of such
services on the independence of the auditors. Following is a schedule of fees
billed to the Trust and its subsidiaries by Ernst & Young during 2003 and
2002:
2003 2002
________ _________
Audit Fees $55,000 $49,200
Audit-Related Fees 2,734 2,750
Tax Fees 41,308 27,800
All Other Fees None None
A representative of Ernst & Young is expected to be present at the annual
meeting of shareholders, will have an opportunity to make a statement if the
representative so desires, and will be available to respond to appropriate
questions.
PROPOSALS OF SHAREHOLDERS
Proposals by shareholders of Century Realty Trust which are intended to
be presented at the 2005 annual meeting of shareholders must be received by
the Secretary at the office of the Trust not later than November 30, 2004,
for inclusion in the proxy statement for that meeting.
ANNUAL REPORT
The annual report for 2003, including audited financial statements for
the year ended December 31, 2003, is included herewith as a separate enclosure,
but is not incorporated herein by reference. A copy of the Annual Report to
the SEC (Form 10K) for 2003 will be furnished free of charge to any shareholder
upon written request to the Secretary at the office of the Trust.
BY ORDER OF THE TRUSTEES
John W. Adams
Secretary
APPENDIX
AUDIT COMMITTEE CHARTER
Adopted as of March 11, 2004
I. Statement of Purpose
The Audit Committee ("Committee") is established by and amongst the Board
of Trustees (the "Board") of Century Realty Trust ("the Trust") for the primary
purpose of assisting the Board in:
* overseeing the integrity of the Trust's financial statements,
* overseeing the Trust's compliance with certain legal requirements,
* overseeing the independent auditors' qualifications, independence
and performance, and
* overseeing the Trust's system of disclosure controls and system of
internal controls regarding finance, accounting, legal compliance
and the Code of Ethis for Senior Financial Officers approved by the
Board.
The Committee will regularly report to the Board regarding the execution
of its responsibilities, which are described in Section III of the Charter.
In performing its duties and responsibilities the Committee has the
authority to obtain advice and assistance from outside legal, accounting, or
other advisors as deemed appropriate. The Trust shall provide appropriate
funding, as determined by the Committee, for compensation to the independent
auditors and advisers that the Committee may engage.
Consistent with its purpose, the Committee should encourage continuous
improvement of, and should foster adherence to, the Trust's policies,
procedures and practices. The Committee should also provide an open avenue
of communication among the independent auditors, senior management and the
Board.
II. Organization
A. Charter- At least annually, the Audit Committee members shall review
and assess this Charter and any proposed changes shall be submitted to the
Board of Trustees for approval.
B. Members- The Audit Committee shall be comprised of at least three
trustees as determined by the Board, each of whom shall be an independent
trustee (as defined by all applicable rules and regulations), and free from
any relationship (including disallowed compensatory arrangements) that, in the
opinion of the Board, would interfere with the exercise of the member's
independent judgement. All Committee members shall have a working familiarity
with basic finance and accounting practices, and at least one Committee member
shall be a "financial expert" in compliance with the criteria established by
the Securities and Exchange Commission (SEC).
Vacancies or additions to the Committee may be filled at any time during
the year by action of the full Board. The term of service for Committee
members shall be one year or until their successors shall be duly elected and
qualified. Unless a Chair is elected by the full Board, the Committee may
designate a Chair by majority vote of the full Committee membership.
C. Meetings- In addition to its review of the Trust's quarterly interim
financial statements, the Committee shall meet at least three times annually.
Meetings may be conducted through the use of any means of communication by
which all members may simultaneously hear each other during the meeting.
D. Executive Sessions- The Trust's financial management and others may
from time to time be requested to attend the Committee's meetings. At the
conclusion of each meeting attended by members of management, the Chair may
conduct an executive session where trustees meet without management
participation.
E. Quorum; Action by Committee- A quorum at any Committee meeting shall
be at least a majority of the Committee. All determinations of the Committee
shall be at least a majority of its members present at a meeting duly called
and held. Any decision or determination of the Committee reduced to writing
and signed by all of the members of the Committee shall be fully as effective
as if it had been made at a meeting duly called and held.
F. Agenda, Minutes and Reports- The Chair of the Committee shall be
responsible for establishing the agenda for the Committee's meetings.
G. Performance- The Committee shall annually evaluate its performance
and develop criteria for such evaluation.
III Responsibilities
The following shall be the Committee's principal responsibilities:
A. Documents/Reports/Accounting Information Review
1. Review and discuss with management the Trust's annual financial
statements, quarterly interim financial statements, and all internal controls
reports (or summaries thereof). Review other relevant reports or financial
information submitted by the Trust to any governmental body, or the public,
including management certifications as required by the Sarbanes-Oxley Act of
2002 (Sections 302 and 906) and relevant reports rendered by the independent
auditors (or summaries thereof).
2. Recommend to the Board whether the financial statements should be
included in the Annual Report on Form 10-K. Review with financial management
and the independent auditors the quarterly Form 10-Qs prior to their filing
(or prior to the release of earnings). The review of Form 10-Qs may be
performed by the Chair of the Committee acting on behalf of the Committee.
3. Review earnings press releases with management, including review of
"pro-forma" or "adjusted" non-GAAP information, if any.
4. Discuss with management any financial information and earnings
guidance provided to analysts and rating agencies. Such discussions may be
on general terms (i.e., discussion of the types of information to be disclosed
and the type of presentation to be made).
B. Independent Auditors
1. Appoint (subject to shareholder ratification, if the Board determines
such ratification should be submitted to the Trust's shareholders), compensate,
and oversee the work performed by the independent auditors for the purpose of
preparing or issuing an audit report or related work. Review the performance
of the independent auditors and remove the independent auditors if
circumstances warrant. Review the experience and qualifications of senior
members of the independent audit team annually and ensure that all partner
rotation requirements, as promulgated by applicable rules and regulations,
are executed. The independent auditors shall report directly to the Committee
and the Committee shall oversee the resolution of any disagreements between
management and the independent auditors. Consider whether the auditors'
performance of permissible non-audit services is compatible with the
auditors' independence.
2. Review with the independent auditors any audit related problems or
other difficulties and management's response; review the independent auditor's
attestation and report on management's internal control report; and hold
timely discussions with the independent auditors regarding the following:
* all critical accounting policies and practices;
* all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with management,
ramifications of the use of such alternative disclosures and treatments,
and the treatment preferred by the independent auditors:
* other material written communications between the independent auditors
and management including, but not limited to, the management letter
and schedule of unadjusted differences; and
* an analysis of the auditors' judgment as to the quality of the Trust's
accounting principles, setting forth significant reporting issues and
judgments made in connection with the preparation of the financial
statements
3. At least annually, obtain and review a report by the independent
auditors describing:
* the auditing firm's internal quality control procedures;
* any material issues raised by the most recent internal quality-control
review, peer review, or by any inquiry or investigation by governmental
or professional authorities, within the preceding five years, respecting
one or more independent audits carried out by the firm, and any steps
taken to deal with any such issues; and
* (to assess the auditors' independence) any relationships between the
independent auditors and the Trust.
4. Review and pre-approve both audit and non-audit services to be
provided by the independent auditors (other than with respect to de minimis
exceptions permitted by the Sarbanes-Oxley Act of 2002). This duty may be
performed by the Audit Committee Chair with any such pre-approval reported to
the Committee at its next regularly scheduled meeting. Approval of non-audit
services shall be disclosed to investors in periodic reports required by
Section 13(a) of the Securities Exchange Act of 1934.
5. Follow hiring practices, compliant with governing laws or regulations,
for employees or former employees of the independent auditors.
C. Financial Reporting Processes and Accounting Policies
1. In consultation with the independent auditors periodically review the
integrity of the Trust's financial reporting processes (both internal and
external), and the internal control structure (including disclosure controls).
2. Review with management and the independent auditors any major issues
regarding accounting principles and financial statement presentations,
including any significant changes in the Trust's selection or application of
accounting principles, and major issues as to the adequacy of the Trust's
internal controls and any special steps adopted in light of material control
deficiencies.
3. Review analyses prepared by management and the independent auditors
setting forth financial reporting issues and judgments made in connection with
the preparation of the financial statements, including analysis of the effects
of alternative GAAP methods on the financial statements.
4. Review with management the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, if any, on the financial
statements of the Trust.
5. Establish and maintain procedures for the receipt, retention, and
treatment of complaints regarding accounting, internal control, or auditing
matters.
6. Establish and maintain procedures for the confidential, anonymous
submission by Trust employees and employees of the management company engaged
by the Trust regarding questionable accounting or auditing matters.
D. Ethical Compliance, Legal Compliance, and Risk Management
1. Establish, review and periodically update the Trust's Code of Ethics
for Senior Financial Officers. Ensure that the Code complies with applicable
rules and regulations.
2. Review Senior management's monitoring of the compliance with the
Trust's Code of Ethics for Senior Financial Officers, and ensure that
management has the proper review system in place to ensure that the Trust's
financial statements, reports and other financial information disseminated to
governmental organizations, and the public satisfy legal requirements.
3. Review, with the Trust's general counsel, legal compliance matters
including corporate securities trading policies.
4. Review, with the Trust's general counsel, any legal matter that could
have a significant impact on the Trust's financial statements.
5. Discuss the Trust's policies with respect to risk assessment and risk
management. Such discussions should include the Trust's major financial and
accounting risk exposures and the step(s) management has undertaken to
mitigate or control the risks.
F. Other Responsibilities
1. Review with the independent auditors and management the extent to
which changes or improvements in financial or accounting practices, as approved
by the Committee, have been implemented. (This review should be conducted at
an appropriate time subsequent to implementation of changes or improvements,
as decided by the Committee.)
2. Prepare the report that the SEC requires be included in the Trust's
annual proxy statement.
3. Perform any other activities consistent with this Charter, the
Trust's by-laws and governing law, as the Committee or the Board deems
necessary or appropriate.
IV. Limitations of the Audit Committee's Role
While the Audit Committee has the responsibilities and authority as set
forth in this Charter, it is not the Audit Committee's duty to plan or
conduct financial statement audits or to determine that the Trust's internal
or external financial statements and related disclosures are complete and
accurate or that they are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the
responsibilities of the Trust's management and the independent auditors.
FORM OF PROXY
Side A
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Francis M. Hapak, John A. Wallace and Marvin
L. Hackman, as Proxies, each with the power to appoint his or her substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the Shares of Beneficial Interest of Century Realty Trust held of record by
the undersigned on March 29, 2004 at the meeting of shareholders to be held
on May 5, 2004 or any adjournment thereof.
l. ELECTION OF TRUSTEES
Larry S. Boulet (one year term) FOR ____ VOTE WITHHELD ____
John J. Dillon (three year term) FOR ____ VOTE WITHHELD ____
Murray R. Wise (three year term) FOR ____ VOTE WITHHELD ____
2. SHAREHOLDER PROPOSAL
recommending plan to immediately
sell all assets and liquidate
the Trust FOR ____ AGAINST ____ ABSTAIN ____
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1 AND AGAINST PROPOSAL 2
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
Side B
RECEIPT OF THE PROXY STATEMENT DATED APRIL 5, 2004, IS HEREBY ACKNOWLEDGED
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by President or other authorized
officer. If a partnership, please sign full partnership name by authorized
person.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING THEREOF.
NUMBER OF SHARES
DATED ________________________ , 2004 _______________________________________
Signature
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY _______________________________________
USING THE ENCLOSED ENVELOPE. Signature of Joint Owner (if applicable)