SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c)
or 240.14a-12
VININGS INVESTMENT PROPERTIES TRUST
-----------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ X ]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: Schedule 13E-3 filed by the Registrant on May 21, 2001.
VININGS INVESTMENT PROPERTIES TRUST
2839 Paces Ferry Road
Suite 1170
Atlanta, GA 30339
(770) 984-9500
June __, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders
of Vinings Investment Properties Trust to be held on Wednesday, June 27, 2001,
at 10:00 a.m., local time, at 2839 Paces Ferry Road, Suite 1170, Atlanta, GA
30339.
The annual meeting has been called for the purpose of considering and
voting upon (1) the ratification of a 1-for-1,000 reverse share split of
Vinings' common shares of beneficial interest and Series A Convertible Preferred
Shares of beneficial interest and related amendments to the Certificate of
Designation relating to the terms of the preferred shares, which are described
in the enclosed Proxy Statement, (2) the election of five trustees, each to
serve for a one year term and until the election and qualification of his or her
successor, and (3) such other business as may properly come before the meeting
or any adjournments or postponements thereof. The reverse share split should
provide Vinings the option to terminate its reporting requirements under the
Securities Exchange Act of 1934.
The Board of Trustees has fixed the close of business on May 21, 2001 as
the record date for determining shareholders entitled to receive notice of and
to vote at the annual meeting and any adjournments or postponements thereof.
The Board of Trustees recommends that you vote "FOR" the proposal to ratify
the reverse share split and the transactions contemplated thereby, including the
amendments to the Certificate of Designation relating to the terms of the
preferred shares, and "FOR" the election of the five nominees of the Board of
Trustees as trustees.
It is important that your shares be represented at the annual meeting.
Whether or not you plan to attend the annual meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed envelope
which requires no postage if mailed in the United States. If you attend the
annual meeting, you may vote in person if you wish, even if you have previously
returned your proxy card.
Sincerely,
PETER D. ANZO
President and Chief Executive Officer
VININGS INVESTMENT PROPERTIES TRUST
2839 Paces Ferry Road
Suite 1170
Atlanta, GA 30339
(770) 984-9500
--------------
NOTICE OF
2001 ANNUAL MEETING OF SHAREHOLDERS
To be Held on Wednesday, June 27, 2001
--------------
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders of
Vinings Investment Properties Trust will be held on Wednesday, June 27, 2001, at
10:00 a.m., local time, at 2839 Paces Ferry Road, Suite 1170, Atlanta, Georgia
30339, for the purpose of considering and voting upon:
1. The ratification of a 1-for-1,000 reverse share split of Vinings'
common shares of beneficial interest, without par value, and Series A
Convertible Preferred Shares of beneficial interest, par value $.01
per share, and related amendments to the Certificate of Designation
relating to the terms of the preferred shares described in the
accompanying Proxy Statement;
2. The election of five trustees, each to serve for a one year term and
until the election and qualification of his or her successor; and
3. Such other business as may properly come before the meeting or any
adjournments or postponements thereof.
Under the provisions of Vinings' Third Amended and Restated Declaration of
Trust, the Board of Trustees has fixed the close of business on May 21, 2001 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the annual meeting and any adjournments or postponements
thereof. Only holders of record of common shares and preferred shares of Vinings
at the close of business on that date will be entitled to receive notice of and
to vote at the annual meeting and any adjournments or postponements thereof.
By Order of the Board of Trustees,
STEPHANIE A. REED
Secretary
June __, 2001
Whether or not you plan to attend the annual meeting in person, you are
requested to complete, date, sign and return the enclosed proxy card in the
enclosed envelope, which requires no postage if mailed in the United States. If
you attend the annual meeting, you may vote in person if you wish, even if you
have previously returned your proxy card.
VININGS INVESTMENT PROPERTIES TRUST
2839 Paces Ferry Road
Suite 1170
Atlanta, GA 30339
(770) 984-9500
--------------
PROXY STATEMENT
--------------
2001 ANNUAL MEETING OF SHAREHOLDERS
To be Held on Wednesday, June 27, 2001
This Proxy Statement and the enclosed proxy card are being furnished in
connection with the solicitation of proxies by the Board of Trustees of Vinings
Investment Properties Trust ("Vinings" or the "Trust") for use at the 2001
Annual Meeting of Shareholders of Vinings Investment Properties Trust to be held
on Wednesday, June 27, 2001, at 10:00 a.m., local time, at 2839 Paces Ferry
Road, Suite 1170, Atlanta, Georgia 30339, and any adjournments or postponements
thereof.
At the annual meeting, the shareholders of Vinings will be asked to
consider and vote upon the following matters:
1. The ratification of a 1-for-1,000 reverse share split of Vinings'
common shares of beneficial interest, without par value, and Series A
Convertible Preferred Shares of beneficial interest, par value $.01
per share, and related amendments to the Certificate of Designation
relating to the terms of the preferred shares described elsewhere in
this Proxy Statement;
2. The election of five trustees, each to serve for a one year term and
until the election and qualification of his or her successor; and
3. Such other business as may properly come before the meeting or any
adjournments or postponements thereof.
The Notice of Annual Meeting, Proxy Statement and proxy card are first
being mailed to shareholders of Vinings on or about June __, 2001 in connection
with the solicitation of proxies for the annual meeting. The Board of Trustees
has fixed the close of business on May 21, 2001 as the record date for the
determination of shareholders entitled to receive notice of and to vote at the
annual meeting. Only holders of record of common shares and preferred shares of
Vinings at the close of business on the record date will be entitled to receive
notice of and to vote at the annual meeting. As of May 21, 2001, there were
1,100,487 common shares and 1,988,235 preferred shares outstanding and entitled
to vote at the annual meeting. Each share outstanding as of the close of
business on the record date entitles the holder thereof to one vote on each
matter properly submitted at the annual meeting.
The Annual Report of Vinings, including financial statements for the fiscal
year ended December 31, 2000, is being mailed to shareholders of Vinings
concurrently with this Proxy Statement.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the transactions discussed in Proposal
1, passed upon the merits or fairness of the transactions, or determined that
this Proxy Statement is truthful or complete. It is illegal for any person to
tell you otherwise.
Voting
- ------
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
annual meeting. Each share outstanding on the record date is entitled to one
vote. Under the power given to the Board of Trustees by Section 6.1 of Vinings'
Declaration of Trust, the Board voted to approve the reverse share split of
Vinings' common shares of beneficial interest and Series A Convertible Preferred
Shares. The reverse share split and the proposed amendments to the Certificate
of Designation will only become effective upon the ratification, once a quorum
is present, by the following votes of the shareholders:
o the affirmative vote of a majority of the votes entitled to be cast by
common shareholders of record at the annual meeting; and
o the affirmative vote of a majority of the votes entitled to be cast by
preferred shareholders of record at the annual meeting, voting as a
separate class.
If ratified by Vinings' shareholders, the reverse share split will become
effective upon the filing of the First Amendment to the Certificate of
Designation Classifying and Designating a Series of Preferred Shares as Series A
Convertible Preferred Shares of Vinings with the Secretary of State of The
Commonwealth of Massachusetts and the Clerk of the City of Boston.
In addition, the affirmative vote of a majority of the votes cast at the
annual meeting is required to elect trustees. Holders of preferred shares are
not entitled to vote on the election of trustees. Shares that reflect
abstentions or "broker non-votes" (i.e., shares represented at the meeting held
by brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote those shares and the broker or
nominee does not have discretionary voting power to vote those shares) will be
counted for purposes of determining whether a quorum is present for the
transaction of business at the meeting. With respect to Proposal 1, abstentions
and broker non-votes will have the same effect as votes against the approval of
that proposal. With respect to the election of trustees, votes may be cast in
favor of or withheld from each nominee. Therefore, abstentions and broker
non-votes will have no effect on the election of trustees.
Peter D. Anzo, Chairman of the Board of Trustees and President of Vinings,
is the owner of a majority of Vinings' common shares, holding 59% as of the date
of this Proxy Statement. Mr. Anzo has stated that he intends to vote in favor of
both proposals as recommended by the Board of Trustees. Because only the holders
of common shares are entitled to vote on Proposal 2, Vinings expects that
Proposal 2 will be approved.
Proxies; Revocation of Proxies
- ------------------------------
Shareholders of Vinings are requested to complete, date, sign and return
the accompanying proxy card in the enclosed envelope. Shares represented by
properly executed proxies received by Vinings and not revoked will be voted at
the annual meeting in accordance with the instructions contained therein. If
instructions are not given on a properly executed proxy card, proxies will be
voted "FOR" the ratification of the reverse share split and the related
amendments to the Certificate of Designation described in Proposal 1 and "FOR"
the election of the five nominees for trustees set forth in Proposal 2. It is
not anticipated that any matters other than those set forth in this Proxy
Statement will be presented at the annual meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
Any properly completed proxy may be revoked at any time before it is voted
(without, however, affecting any vote taken prior to the revocation) by giving
written notice of the revocation to the Secretary of Vinings, or by signing and
duly delivering a proxy bearing a later date, or by attending the annual meeting
and voting in person. Attendance at the annual meeting will not, by itself,
revoke a proxy.
Expenses of Solicitation
- ------------------------
Vinings will bear all expenses of this solicitation. Vinings requested
brokerage firms, nominees, fiduciaries and other custodians to forward proxy
solicitation materials to the beneficial owners of shares held of record by
them, and Vinings will reimburse these brokerage firms, nominees, fiduciaries
and other custodians for reasonable out-of-pocket expenses incurred by them in
connection with the solicitation. In addition to solicitation of proxies by
mail, trustees, officers and employees of Vinings, without receiving additional
compensation for doing so, may solicit proxies from shareholders of Vinings by
telephone, facsimile, letter, in person or by other means.
PROPOSAL 1: REVERSE SHARE SPLIT
Summary of Reverse Share Split Proposal
- ---------------------------------------
On February 8, 2001, the Board of Trustees discussed the anticipated
effects and benefits of a possible reverse share split of Vinings' common shares
and preferred shares. A special committee of the Board, comprised solely of
non-employee, disinterested trustees, was established to evaluate the
transaction. On April 26, 2001, the special committee unanimously approved the
reverse share split and on May 4, 2001 the special committee recommended the
reverse share split to the full Board. After discussions regarding the proposal,
the Board then adopted a resolution to effect a 1-for-1,000 reverse share split
of Vinings' common shares and preferred shares, and approved the First Amendment
to the Certificate of Designation Classifying and Designating a Series of
Preferred Shares as Series A Convertible Preferred Shares of Vinings. The
amendments to the Certificate of Designation will have the effect of maintaining
all of the economic and other rights of the holders of preferred shares after
giving effect to the reverse share split.
The Board of Trustees is seeking the ratification of its decision to effect
the reverse share split. Ratification of the reverse share split and the
transactions contemplated thereby, including the First Amendment to the
Certificate of Designation relating to the preferred shares, requires the
affirmative vote of a majority of the votes entitled to be cast by common
shareholders of record at the annual meeting and the affirmative vote of a
majority of the votes entitled to be cast by preferred shareholders of record at
the annual meeting, voting as a separate class. If the shareholders ratify the
reverse share split, the reverse share split will become effective as soon as
practicable following the date of the annual meeting upon the filing of the
First Amendment to the Certificate of Designation relating to the preferred
shares with the Secretary of State of the Commonwealth of Massachusetts and the
Clerk of the City of Boston. The shareholders may not rescind their vote even if
the timing of the reverse share split may adversely affect any particular
shareholder. Please note that we refer herein to our shareholders whose shares
are registered in their own names as registered shareholders.
With respect to the common shares, in lieu of the issuance of any
fractional shares after giving effect to the reverse share split, Vinings will
pay the fair value for those common shares that would otherwise be combined into
fractional shares as a result of the reverse share split. Based on the advice of
Ronald Whitman Weiss, Vinings' independent financial advisor, a special
committee of the Board of Trustees and the full Board of Trustees have
determined that the fair value of the common shares prior to giving effect to
the reverse share split is $3.20 per common share. With respect to the preferred
shares, Vinings will issue a fraction of a new preferred share, as necessary,
after giving effect to the reverse share split. Cash payments in lieu of the
issuance of fractional common shares will be made promptly after receipt of a
properly completed letter of transmittal and certificates representing common
shares (see also the information under the caption "Exchange of Share
Certificates and Payment of Fractional Shares" contained in this Proxy
Statement).
There will be no service charge payable by shareholders in connection with
the exchange of certificates or in connection with the payment of cash in lieu
of the issuance of a fractional share.
Background
- ---------
At a meeting of the Board of Trustees on February 8, 2001, management
presented a proposal to effect a reverse share split as a strategy for reducing
the number of registered common shareholders below 300, which would provide
Vinings the option to terminate its reporting requirements under the Securities
Exchange Act of 1934, as amended. The Board discussed the advantages and
disadvantages of ceasing public registration of its common shares. The Board
appointed a special committee comprised solely of non-employee, disinterested
trustees, which subsequently evaluated the transaction and made a recommendation
to the full Board to the effect that the 1-for-1,000 reverse share split was
fair to and in the best interests of Vinings and its shareholders. After
discussions regarding the proposal, the Board then approved the 1-for-1,000
reverse share split on May 4, 2001.
The reverse share split is structured to be a "going private" transaction
within the meaning of Rule 13e-3 promulgated under the Exchange Act because it
is intended to, and, if completed, will likely result in the termination of
Vinings' reporting requirements under the Exchange Act. In connection with the
reverse share split proposal, Vinings has filed with the SEC a Schedule 13E-3
pursuant to Rule 13e-3 under the Exchange Act.
SPECIAL FACTORS
Purpose and Reasons for Reverse Share Split Proposal
- ----------------------------------------------------
The purpose of the reverse share split is to attempt to maximize
shareholder value by providing Vinings the option to terminate its reporting
requirements under the Exchange Act in an effort to reduce expenses. There are
many advantages to being a publicly-traded company, including security liquidity
and use of company securities to raise capital or make acquisitions. In the
judgment of the Board, however, the pricing trends and trading volume of the
common shares have not allowed Vinings to effectively take advantage of these
benefits, at least to the extent of justifying the continuing direct and
indirect costs of public registration. Furthermore, the Board does not believe
that the common shares' pricing trends and trading volume will improve
significantly in the near term. As a result, the Board recommends that Vinings'
shareholders approve the reverse share split proposal to achieve this purpose
for these reasons and the reasons set forth below.
As a registered company, Vinings is subject to the periodic reporting and
proxy solicitation requirements of the Exchange Act. Vinings anticipates that
the purchase of the fractional common shares following the reverse share split
will reduce the number of registered holders of common shares to fewer than 300.
If this occurs, Vinings will be in a position to elect to cease registration of
its common shares under the Exchange Act.
As part of its Exchange Act registration, Vinings incurs direct and
indirect costs associated with compliance with the filing and reporting
requirements imposed on public companies. Examples of anticipated direct costs
savings from terminating registration of the common shares include the
elimination of costs for a registrar and transfer agent for Vinings' shares,
substantially less disclosure, reduced professional and advisory fees, reduced
auditing fees, reduced insurance costs, reduced printing and mailing costs for
corporate communications, and reduced miscellaneous, clerical and other expenses
(e.g., the word processing, specialized software and electronic filings
associated with SEC filings).
Vinings also incurs substantial indirect costs due to Exchange Act
registration as a result of the executive time expended to prepare and review
required filings. Vinings anticipates that ceasing registration of the common
shares will reduce or eliminate these costs.
Based on its experience in prior years, Vinings' direct costs, which
include the fees and expenses of independent auditors, legal counsel, insurance
premiums, corporate communications costs, printing, mailing, and SEC filing fees
are estimated at approximately $160,000 annually, or 41% of Vinings' corporate
overhead expense. This amount, however, is just an estimate, and the actual
savings to be realized by Vinings may be higher or lower than this estimate. It
is expected that the majority of the estimated savings will not be realized
until after the fiscal year ending December 31, 2001.
Additionally, the Board believes that the current per share price of the
common shares has limited the effective marketability of the common shares
because of the reluctance of many brokerage firms and institutional investors to
recommend lower-priced securities to their clients or to hold them in their own
portfolios. Some policies and practices of the securities industry may tend to
discourage individual brokers within those firms from dealing in lower-priced
and less liquid securities. Some of those policies and practices involve
time-consuming procedures that make the handling of lower priced securities
economically unattractive. The brokerage commission on a sale of lower-priced
securities may also represent a higher percentage of the sale price than the
brokerage commission on a higher priced issue. Shareholders should note that any
decision by the Board to terminate Exchange Act registration after giving effect
to the reverse share split does not require shareholder approval and will not be
presented for a vote. While Vinings intends to cease public registration of its
common shares following the reverse share split, the Board may choose not to
implement this strategy if it determines that it is not then in the best
interests of Vinings and its shareholders given the then existing market
conditions.
In making the decision to effect the reverse share split, the Board
considered other means of maximizing shareholder value, such as mergers,
acquisitions, liquidating Vinings' assets and making privately or publicly
negotiated purchases of the outstanding common shares, but either rejected or
failed to pursue these alternatives because the Board believed that the reverse
share split would be simpler, more cost effective and would result in a higher
value per share for the shareholders for the reasons discussed in this Proxy
Statement.
Fairness of Reverse Share Split Proposal
- ----------------------------------------
The Board believes that the reverse share split proposal, taken as a whole,
is fair to and in the best interests of Vinings and its shareholders, including
those shareholders who will receive the cash payment in lieu of fractional
shares and those shareholders who will receive common shares or preferred
shares. The Board also believes that the process by which the reverse share
split is to be approved is fair. A special committee of the Board and the full
Board unanimously approved the reverse share split proposal, and the Board
recommends that the shareholders ratify the proposal. Each member of the Board
who owns common shares or preferred shares has expressed his or her intention to
vote in favor of the reverse share split proposal, including the Board members
who are not employees of Vinings.
In determining that the reverse share split proposal, taken as a whole, is
substantively fair to all shareholders, the special committee and the Board
considered the following supporting factors:
* The special committee and the Board determined in good faith that the
cash payment to be paid in lieu of the issuance of fractional shares
represents a fair valuation of the common shares and constitutes a
significant premium above the common shares' current market trading
price.
* The reverse share split will not change the rights, preferences or
limitations of shareholders except to equitably adjust the preferred
dividends and the liquidation preference relating to the preferred
shares.
* The special committee and the Board ascertained to their satisfaction
that this transaction was not the typical Rule 13e-3 "going private"
transaction, which often involves the involuntary or threat of
involuntary purchase of all of the ownership interests of the
unaffiliated shareholders.
In determining that the reverse share split is fair, the special committee
and the Board considered the following factors:
CURRENT MARKET PRICES. The special committee and the full Board gave
limited weight to this factor because it did not feel that the current market
price of the common shares accurately reflects the current value of the common
shares due to the fact that there is very little public float and very little
trading volume of Vinings' common shares. In addition, Vinings has remained
relatively small compared to other real estate companies and has not
aggressively marketed itself to its market makers. Consequently, demand for
Vinings' common shares has remained low. Therefore, the smallest single
transaction can affect the market pricing and may not reflect the true fair
value of the shares. The market price of the common shares has shown wide
fluctuations during the last twelve months ranging from a high of $3.19 in June
2000 to a low of $1.87 in August 2000. During the first four months of 2001 the
high sales price was $2.38 and the low was $1.94. The special committee and the
Board noted that the value upon which they agreed for the cash payment, $3.20
per share, exceeded the range of the sales price during that time period. In
addition they noted that Vinings' shares have not traded for a price in excess
of $3.20 since April 2000.
HISTORICAL MARKET PRICES. The special committee and the full Board gave
limited weight to this factor because it did not feel that historical market
pricing accurately reflected the current value of the common shares for the same
reasons described in the foregoing paragraph. In addition, prior to February
1996, Vinings was a mortgage real estate investment trust whose original plan
was to liquidate within approximately ten years. The trustees at that time
proceeded with the orderly liquidation and distribution of proceeds to the
shareholders. Therefore, the historical market pricing for periods prior to and
including the liquidation bears no relation to Vinings as it operates today. In
February 1996, with the previous management's approval, current management of
Vinings completed a tender offer to acquire control of Vinings in order to
rebuild its assets by expanding into the multifamily real estate markets. Since
the tender offer, there has been very little public float and consequently the
trading volume of the common shares has remained low.
NET BOOK VALUE. Management recommended that the special committee and the
full Board give no weight to this factor because it maintained that book value
is not an appropriate measure for establishing the fair value of the common
shares because it is an accounting methodology that is based on the historical
depreciated cost of Vinings' assets and therefore does not reflect current
value. In addition, because Vinings was previously a real estate investment
trust, that was required to distribute 95% of its earnings, and as a result of
liquidating distributions discussed above, virtually all of the original common
shareholders' equity and accumulated earnings have been returned to the
shareholders. Therefore, Vinings' net book value per common share as of March
31, 2001 is a negative ($1.20). The special committee and the Board concurred
with management's recommendation and did not give any weight to this factor.
However, the special committee and the Board noted that the agreed upon value of
$3.20 per common share for the cash payment significantly exceeded the net book
value per common share at that time.
NET ASSET VALUE/LIQUIDATION VALUE. The special committee and the Board gave
some weight to this factor and reviewed liquidation as an alternative to the
proposed reverse share split. Net asset value is a more appropriate valuation
for a real estate company than many other public companies because by valuing
the underlying assets based on the estimated market value, it more closely
reflects what could be obtained through liquidation of the assets. Valuations
based on capitalized net operating income from September 31, 2000 through
December 31, 2000 ranged from $2.66 per share to $3.25 per share. This valuation
method was also examined by Ronald Whitman Weiss in rendering his fairness
opinion. The special committee and the Board determined that the current
liquidation value after all costs associated with a liquidation would be no more
than the $3.20 value ascribed to the common shares for purposes of making the
cash payment in lieu of issuance of fractional shares. In addition, a
liquidation would be more costly and entail much more uncertainty as to timing
and ultimate values realized by the shareholders.
FAIRNESS OPINION. The special committee and the Board gave substantial
weight to the fairness opinion rendered by Ronald Whitman Weiss, the preparation
of which analyzed a number of valuation alternatives. As discussed below, the
estimate of a per share value ranged from $2.66 to $3.25, which produced an
average per share value of $3.00. Because the fairness opinion was rendered by
an independent third party who has no affiliation with Vinings, the special
committee and the Board believed that this valuation method was of very high
significance in determining a fair value for the common shares and chose a value
at the high end of the range at $3.20 per share.
Ronald Whitman Weiss is an investment banker and investment advisor engaged
on a regular basis to provide a range of investment banking, investment and
financial advisory services, including, but not limited to, the valuation of
businesses and their securities in connection with mergers and acquisitions,
buy-sell agreements, tender offers and refinancings.
Ronald Whitman Weiss has spent his career in real estate finance,
investment banking and as a senior real estate analyst at major Wall Street
firms. Prior to becoming a portfolio manager and investment advisor, Mr. Weiss
was Senior Vice President and Senior REIT Analyst at First Albany Corporation.
At Shearson Lehman Brothers, and predecessor firms, he was founder, Chairman and
CEO of Shearson Lehman Real Estate Corporation, Managing Director & Executive
Vice President of Shearson Lehman Brothers, Inc., as well as a member of the
Board of Directors of 34 Shearson Lehman subsidiaries. He received a Bachelor of
Science in Economics from the Wharton School of the University of Pennsylvania
and a Juris Doctorate degree from the Columbia University School of Law. He is a
Registered Principal with the National Association of Securities Dealers and
admitted to practice law before the New York State Bar.
RWW was selected by Vinings on the basis of his background, experience and
reputation, and at the recommendation of other public real estate companies that
have completed similar going private transactions. There is no affiliation
between RWW, or any of its affiliates and Vinings or any of its officers,
trustees or affiliates. Vinings received proposals for fairness opinions from
several investment banking firms, of which RWW was one. RWW was chosen by
Vinings not only because of his reputation in the industry, as stated above, but
also because his fee structure was more reasonable in light of Vinings' size and
the size of the proposed transaction.
As financial advisor to Vinings, RWW was asked to render a fairness opinion
relating to the valuation of the common shares of Vinings in connection with
this reverse share split. In rendering its opinion, RWW reviewed and analyzed,
among other things, the following:
* Public information concerning Vinings contained in its Schedule 14A,
Proxy Statement, dated June 9, 2000, and its Quarterly Report on Form
10-Q, for the quarter ended September 30, 2000, and its Annual Report
on Form 10-K, for the fiscal years ended December 31, 1999 and 2000.
* Historical and pro forma financial and operating information,
furnished by Vinings.
* Publicly available information concerning other companies and
transactions which were deemed relevant.
* Discussions with management regarding the current and historical
operating results of Vinings, as well as its prospects.
* Recent market price and dividend information.
* The financial statements of Vinings.
* Internal financial statements and forecasts prepared by Vinings'
management.
* Appraisals or estimates of value of individual or groups of property.
In addition, RWW conducted other financial studies, analyses,
investigations and interviews as were deemed appropriate and held discussions
and interviewed members of senior management, regarding the past, current and
future projected operations, financial conditions, and future prospects for
Vinings. During his review, RWW requested financial information that was made
available to him by management. He also took into account an assessment of
general economic market and financial conditions as well as his experience in
similar transactions.
RWW reviewed the financial performance of a group of selected publicly
traded companies and reviewed selected recent transactions involving purchase,
repurchase or tender offers. The companies and transactions analyzed were deemed
to be reasonably comparable in several relevant respects for the purpose of his
analysis.
The analysis conducted by RWW in arriving at his opinion involved numerous
macroeconomic, operating and financial assumptions and involved the application
of the complex methodologies and educated judgment. This analysis involves
complex considerations and judgments concerning differences in financial
operating characteristics of comparable companies and transactions and other
factors that could affect the valuations of the companies to which they are
being compared. RWW's evaluation of the value of Vinings share price was as of
March 8, 2001 and included the following analyses and conclusions:
* ANALYSIS OF PUBLICLY TRADED SHARE PRICES AND DIVIDENDS. RWW believes
that the best measure of share market value for any public company is
the currently traded price per share on the open market. Even when the
trading market is thin, as is the case with Vinings, it is still
indicative of the value that these shares would command if liquidation
took place. The price of Vinings shares has shown wide fluctuations
during the fiscal year 2000, and during the latter part of December
2000, the shares traded at their lowest point, below $2.00 per share.
Therefore, taking into consideration the fluctuation in value during
the year and the small float of stock availability, RWW estimated the
fair value of Vinings' shares under market pricing would range between
$2.00 and $2.25 per share.
* ANALYSIS OF BOOK VALUE PER SHARE, BALANCE SHEET AND SHAREHOLDERS
EQUITY. RWW believes that while book value or net asset value is not
always a good measure for a public company, it is more appropriate for
a real estate investment company than most other publicly owned
companies. In Vinings' case, using shareholders' equity as of December
31, 1999 and adding back accumulated depreciation and amortization,
the net share value approximated $3.25.
* ANALYSIS OF EARNINGS PER SHARE AND PRICE/EARNINGS RATIO. RWW believes
that net income per share or a multiple times net income per share is
not an appropriate, accurate or representative measure for valuing
Vinings' shares. Vinings has been reporting a net loss per share. Even
if depreciation and amortization were added back, RWW believes that
this is not a reasonable or viable representation of true stock value
for Vinings because of the negative earnings per share. Therefore no
weight was given to this measure of value.
* ANALYSIS OF CASH FLOW AND ADJUSTED FUNDS FROM OPERATIONS. RWW
considered cash flow and adjusted funds from operations ("AFFO") as a
more appropriate indication of Vinings' value. An analysis of
comparable AFFO multiples, for other multifamily real estate
investment companies in Vinings' peer group, indicates that an
appropriate fair market value based upon AFFO multiples would be in
the range of between $2.90 and $3.25.
* ANALYSIS OF NET ASSET VALUE BASED UPON ESTIMATED MARKET VALUE OF THE
PROPERTIES OWNED. RWW believes that an estimate based upon net value
of the underlying real estate owned by Vinings is another excellent
indication of the fair per share market value for Vinings' shares. In
lieu of appraisals for each of the individual properties, a
capitalization of actual net operating income at December 31, 2000
indicates an approximate per share value of $2.66.
In summary, RWW determined that an estimated value for Vinings' common
shares of beneficial interest would range between $2.66 and $3.25 per share, for
an average per share value of approximately $3.00 as of December 31, 2000. Based
upon the foregoing, RWW concluded that $3.00 per share was a fair and reasonable
value as indicated by the above analyses, as considered in the aggregate. In
reaching his conclusions, RWW considered all of the analyses described above.
RWW did not consider any single analysis as a threshold measurement for
rendering his opinion. In addition, RWW considered other factors, as discussed
above, including historical market and trading volume of the common stock and
Vinings' past and current business prospects.
Because RWW's opinion as to the fair value of the shares was as of March 8,
2001, the special committee and the Board reviewed the above valuation methods
using more recent information, including, but not limited to the market pricing
of the shares since January 1, 2001, the current financial operations of Vinings
and a valuation of the underlying net asset value of the properties owned as of
March 31, 2001. The Board determined that Vinings' operations had not changed
substantially since year end December 31, 2000, and believed that the values
reached in RWW's opinion were still fair and reasonable as of May 4, 2001, the
date of the Board's approval of the transaction.
Therefore, after careful consideration of all of the valuation methods, the
special committee and the full Board determined that a price of $3.20 per common
share was the fair value that would be the basis for making the cash payment for
fractional common shares.
The special committee and the Board believes that the reverse share split
will also be fair to the holders of preferred shares because (1) the preferred
shares, which are convertible into common shares on a one-for-one basis, will
maintain the originally intended conversion privilege and (2) the proposed
amendment to the Certificate of Designation will preserve the current economic
rights of the preferred shareholders so that they will receive the same per
annum return on their investment and the same liquidation preference as a
percentage of their investment as immediately before the reverse share split.
After consideration of all the foregoing factors, all of the trustees,
including those who are not employees of Vinings, determined that the reverse
share split proposal is procedurally and substantially fair to the shareholders
of Vinings.
The Board also considered the timing of implementation of the reverse share
split proposal and the intended termination of Vinings' Exchange Act
registration for the common shares. The Board concluded that the continued
monetary and human resource expense of public registration was unjustified given
Vinings' inability to effectively take advantage of many of the benefits of
public registration. To achieve the savings from termination, the Board
instructed management to implement the reverse share split proposal and
termination of registration of the common shares as soon as practicable. (See
"Purpose and Reasons for Reverse Share Split Proposal" for further discussion of
the expenses of registration.)
With respect to its intent to terminate Vinings' Exchange Act registration,
the Board considered the ability of common shareholders to buy and sell shares.
The Board also considered and will continue to consider whether the value of the
common shares is being fully recognized in the public market, and as a result,
whether Vinings can effectively take advantage of a public market for its
shares. The Board also considered and will continue to consider the need to
protect the confidentiality of Vinings' proprietary information, along with the
potential direct cost savings and savings related to the time and effort
currently required of management to comply with the reporting and other
requirements associated with a reporting company. After taking into account all
of the considerations and conclusions described herein with respect to the
benefits and disadvantages of registration of the common shares under the
Exchange Act at the present time, the Board has determined that it will
terminate registration of the common shares under the Exchange Act as soon as
practicable following the reverse share split absent any significant changes in
the foregoing considerations that would result in the Board determining that the
benefits of continued registration would outweigh the disadvantages. The Board
does not foresee any change in circumstance in the reasonably near future that
would likely result in the Board determining not to cease registration of the
shares. (See "Purpose and Reasons for Reverse Share Split Proposal" for further
discussion of the intended termination of Vinings' Exchange Act registration.)
Amendments to the Certificate of Designation Relating to the
Series A Convertible Preferred Shares
- -------------------------------------
The Board of Trustees has deemed advisable and unanimously approved the
First Amendment to the Certificate of Designation Classifying and Designating a
Series of Preferred Shares as Series A Convertible Preferred Shares of Vinings,
which will have the effect of preserving the dividend rights and the liquidation
preference of the preferred shareholders after giving effect to the reverse
share split. The First Amendment to the Certificate of Designation will only
become effective in the event Vinings' shareholders approve the reverse share
split. The following are descriptions of the amendments.
1. Thefollowing sentence would be inserted immediately after the first
sentence of Section 3(a) of the Certificate of Designation:
"In the event the Trust combines its outstanding Series A Convertible
Preferred Shares into a smaller number of Series A Convertible Preferred
Shares by way of a reverse share split and in connection therewith issues
the fractional Series A Convertible Preferred Shares resulting from the
combination in lieu of redeeming such fractional shares for cash or other
consideration, the per annum dividend rate in effect at the opening of
business on the day following the day on which such combination becomes
effective shall be adjusted so that the holder of any Series A Convertible
Preferred Shares shall be entitled to receive with respect to the Series A
Convertible Preferred Shares held immediately after such combination the
same aggregate amount of cash dividends payable with respect to the Series
A Convertible Preferred Shares held by such holder immediately prior to
such combination."
2. The following sentence would be inserted immediately after the first
sentence of Section 4(a) of the Certificate of Designation:
"In the event the Trust combines its outstanding Series A Convertible
Preferred Shares into a smaller number of Series A Convertible Preferred
Shares by way of a reverse share split and in connection therewith issues
the fractional Series A Convertible Preferred Shares resulting from the
combination in lieu of redeeming such fractional shares for cash or other
consideration, the Liquidation Preference per Series A Convertible
Preferred Share in effect at the opening of business on the day following
the day on which such combination becomes effective shall be adjusted so
that the holder of any Series A Convertible Preferred Shares shall be
entitled to receive with respect to the Series A Convertible Preferred
Shares held immediately after such combination the same aggregate
Liquidation Preference payable following a Triggering Event with respect to
the Series A Convertible Preferred Shares held by such holder immediately
prior to such combination."
Reasons for the Amendments to the Certificate of Designation
- ------------------------------------------------------------
The Certificate of Designation relating to the terms of the preferred
shares currently provides that the holders of preferred shares are entitled to
receive dividends at the per annum rate of $0.4675 per share. In addition, the
Certificate of Designation provides that upon the occurrence of specific
triggering events, the holders of the preferred shares are entitled to receive
out of the assets legally available for distribution, before any payments are
made to the holders of any shares ranking junior to the preferred shares, a
liquidation preference of $4.46 per share plus any accumulated and unpaid
distributions on the preferred shares.
There is currently no mechanism in the Certificate of Designation that
adjusts the specified per annum dividend rate or the liquidation preference in
the event of a reverse share split. As a result, if the proposed amendments were
not adopted in connection with the reverse share split, then following the
reverse share split the preferred shareholders would hold fewer shares, with
each share representing the right to receive the same per annum dividend and the
same liquidation preference as before the reverse share split. The holders of
preferred shares would effectively be entitled to receive less aggregate
dividends and would have a reduced aggregate liquidation preference. Because
this is not the intent of the Board in effecting the reverse share split, the
Board of Trustees believes it is fair and advisable to preserve the current
economic rights of the preferred shareholders upon the occurrence of the reverse
share split being proposed at the annual meeting. Consequently, the Board of
Trustees has structured the reverse share split to include the amendments to the
Certificate of Designation described in this Proxy Statement. The reverse share
split cannot become effective until the First Amendment has been filed with the
Secretary of State of the Commonwealth of Massachusetts and the Clerk of the
City of Boston.
Structure of Reverse Share Split
- --------------------------------
The reverse share split is of both the common shares and the preferred
shares. If the reverse share split is ratified at the annual meeting, the
reverse share split and the First Amendment to the Certificate of Designation
will become effective as soon as practicable following the date of the annual
meeting upon the filing of the First Amendment to the Certificate of Designation
with the Secretary of State of The Commonwealth of Massachusetts and the Clerk
of the City of Boston. If ratified, the reverse share split will have the
following effects:
o Shareholders with fewer than 1,000 shares.
If you are a record holder of fewer than 1,000 common shares at the
effective time of the reverse share split, you will be entitled to receive a
cash payment in lieu of receiving a fraction of a common share to which you
would otherwise be entitled. After the reverse share split, you will have no
further interest in the common shares. If you are a holder of fewer than 1,000
preferred shares at the effective time of the reverse share split, you will be
entitled to receive a fraction of a new preferred share. You will not have to
pay any service charges or brokerage commissions in connection with the reverse
share split or the cash payments.
o Shareholders with 1,000 or more shares.
If you are a record holder of 1,000 or more common shares or preferred
shares at the effective time of the reverse share split, we will combine your
shares into one one thousandth (1/1,000) of the number of shares you held
immediately prior to the reverse split, and common shareholders will be entitled
to receive a cash payment for any shares that would otherwise result in
fractional shares. For example, if you are a registered holder of 10,500 common
shares or preferred shares immediately prior to the effective time, your shares
will be converted to 10 common shares or preferred shares and you will receive a
cash payment equal to $1,600 (i.e., 500 pre-split shares multiplied by $3.20),
in the case of common shares, or a fraction of a new preferred share, in the
case of preferred shares, as applicable.
o Beneficial Owners of Vinings Common Shares or Preferred Shares.
Nominees (such as a bank or broker) may have required procedures, and
shareholders holding common shares or preferred shares in street name should
contact their nominees to determine how they will be affected by the reverse
share split. NOTE: If you are a beneficial owner of fewer than 1,000 common
shares or the beneficial owner of more than 1,000 common shares, but not in an
even multiple of 1,000, and you want to have the fractional share to which you
would otherwise be entitled following the reverse share split exchanged for a
cash payment, you should instruct your nominee to transfer your shares into a
record account in your name in a timely manner so that you will be considered a
holder of record immediately prior to the effective time of the reverse share
split.
In the event any certificate representing common shares or preferred shares
is not presented for exchange or for a cash payment, as applicable, upon request
by Vinings, the common shares or preferred shares you receive upon exchange or
the cash payment, as applicable, will be administered in accordance with the
relevant abandoned property laws. Until common shares or preferred shares or
cash payments have been delivered to the public official pursuant to the
abandoned property laws, the cash payments or certificates will be paid to the
holder thereof or its designee, without interest, when the share certificate has
been properly presented for exchange or cash payment.
Exchange of Share Certificates and Payment of Fractional Shares
- ---------------------------------------------------------------
EquiServe has been appointed the exchange agent to carry out the exchange
of old common share certificates for new common share certificates. Vinings will
act as the exchange agent to carry out the exchange of old preferred share
certificates for new preferred share certificates. Registered shareholders of
either common shares or preferred shares will receive a letter of transmittal
promptly after the reverse share split becomes effective. These shareholders
must complete and sign the letter of transmittal and return it with their share
certificate(s) to the appropriate exchange agent, depending on whether they own
common or preferred shares, before they can receive new share certificates
and/or the cash payment for those shares. You should not submit any certificates
until requested to do so.
If the reverse share split is effected, each shareholder who holds fewer
than 1,000 common shares immediately prior to the effectiveness of the reverse
share split will cease to have any rights with respect to those common shares
and will have only the right to receive the cash payment in lieu of fractional
shares to which that shareholder of record would otherwise be entitled. No
service charges will be payable by shareholders in connection with the exchange
of certificates or the issuance of new certificates or cash payments, all the
expenses of which will be borne by Vinings. Promptly following the effective
date, eash shareholder will be furnished with the necessary materials and
instructions to effect the exchange (and to receive the cash payment, if
applicable). Certificates representing common shares or preferred shares
subsequently presented for transfer to a third party will not be transferred on
the books and records of Vinings until the certificates representing the shares
have been exchanged for the cash payment or certificates representing new common
shares or new preferred shares (or a fraction thereof).
Potential Detriments of Reverse Share Split Proposal to Shareholders; Accretion
in Ownership and Control of Certain Shareholders
- ------------------------------------------------
The potential detriments to shareholders who remain holders of shares after
effecting the reverse share split and termination of registration under the
Exchange Act include decreased liquidity and decreased access to information
about Vinings. Upon termination of registration of the common shares, Vinings
will no longer be subject to the periodic reporting requirements and the proxy
rules of the Exchange Act. However, Vinings will continue to deliver financial
statements to its shareholders on an annual basis. Because there will no longer
be a public market for the purchase and sale of the common shares, the liquidity
of the common shares will be adversely affected.
If the proposed reverse share split is effected, Vinings believes that less
than fifty registered shareholders of common shares will remain outstanding
(based on Vinings' current registered shareholder records). In addition,
individuals who are members of the Board and executive officers of Vinings now
owning approximately 72% of the common shares and 32% of the preferred shares
will own approximately 82% of the common shares and 32% of the preferred shares
after the reverse share split.
Conduct of Vinings' Business after Reverse Share Split
- ------------------------------------------------------
Vinings expects its business and operations to continue as they are
currently being conducted and, except as disclosed below, the reverse share
split is not anticipated to have any effect upon the conduct of its business.
Other than as described in this Proxy Statement, neither Vinings nor its
management has any current plans or proposals to effect any of the following
extraordinary corporate transactions:
* a merger or liquidation;
* the sale or transfer of any material amount of its assets;
* a change in its Board or management;
* a material change in its indebtedness or capitalization; or
* to otherwise effect any material change in its corporate structure or
business.
However, if the reverse share split is approved, the Board of Trustees will
continue to review and evaluate, from time to time, Vinings' ongoing operations,
including, but not limited to its capitalization, its debt structure, its
current business structure and other issues to determine that its operations are
being conducted in the best interests of the shareholders. (See "Purpose and
Reasons for Reverse Share Split Proposal" for further discussion.)
Effects of Reverse Share Split Proposal on Vinings' Shareholders
- ----------------------------------------------------------------
* Rights, Preferences and Limitations.
Except for differences in the terms of the preferred shares resulting from
the provisions of the First Amendment to the Certificate of Designation relating
to the preferred shares, there are no material differences between the
respective rights, preferences or limitations of the existing common shares and
preferred shares and the "new" common shares and preferred shares that will be
issued following the reverse share split.
The reverse share split will have no effect on the total number of shares
that Vinings has the authority to issue. In addition, the voting and other
rights that presently characterize the shares will not be altered by the reverse
share split.
* Financial Effect.
The reverse share split and the expenditures for professional fees and
other expenses related to the transaction will not have a material effect on
Vinings' balance sheet, statement of income, or ratio of earnings to fixed
charges. The expenditures have been estimated as follows:
* aggregate cash payments for fractional shares - $436,750;
* fees and expenses of legal counsel - $150,000;
* fees and expenses of exchange agent - $20,000;
* printing and postage - $2,500;
* and miscellaneous - $300.
The only consideration to be paid will be the cash payment for shares that
would otherwise be combined into fractional common shares.
* Source of Funds.
Vinings has received a commitment from Berkshire Mortgage Finance Limited
Partnership to refinance the existing mortgage loan on one of the apartment
communities held by Vinings. The principal loan amount will be $8,080,000 with a
fixed interest rate of 6.99%. Monthly payments of principal and interest of
$53,702 will be made from the operating cash flow of the property securing the
mortgage loan. The term of the loan will be for ten years and the transaction is
expected to close no later than June 1, 2001. Vinings anticipates that there
will be excess proceeds after paying all costs and the existing mortgage
indebtedness. A portion of these proceeds is expected to be used to pay the cash
payment for the fractional common shares.
* Effect on Market for Shares.
Vinings estimates that the number of common shares outstanding after the
reverse share split, if effected, will be approximately 964 and that the number
of preferred shares outstanding after the reverse share split, if effected, will
be approximately 1,988.
The new common shares will continue to be traded on the over-the-counter
Bulletin Board under the symbol "VIPIS." However, if the Board terminates
registration of the new common shares under the Exchange Act, which is its
current intention, there will no longer be a public market for the new common
shares. (See "Termination of Exchange Act Registration of Common Shares.")
Vinings has no current plans to issue additional common shares, but
reserves the right to do so at any time and from time to time at the prices and
on the terms as the Board determines to be in the best interests of Vinings and
its shareholders. Persons who continue as shareholders following implementation
of the reverse share split will not have any preemptive or other preferential
rights to purchase any of Vinings' shares that may be issued in the future,
unless such rights are currently specifically granted to that shareholder.
* Securities Laws Relating to the New Common Shares and New Preferred
Shares.
Vinings has not filed with the SEC a registration statement under the
Securities Act of 1933 for the registration of the new common shares to be
issued and exchanged pursuant to the reverse share split proposal. Instead, the
new common shares and the new preferred shares will be issued in reliance on
exemptions contained in Section 3(a)(9) and Rule 145(a)(1) under the Act. Upon
consummation of the reverse share split, the new common shares and the new
preferred shares are expected to be freely transferable under the Act by those
shareholders of Vinings not deemed to be "affiliates" of Vinings. New common
shares and new preferred shares acquired by persons who are "affiliates" of
Vinings will be subject to the resale restrictions of Rule 144 under the Act.
* Termination of Exchange Act Registration of Common Shares.
The reverse share split proposal will affect the public registration of the
new common shares with the SEC under the Exchange Act, as Vinings intends to
terminate this registration as soon as practicable after approval of the reverse
share split proposal by the shareholders. Registration under the Exchange Act
may be terminated by Vinings if the common shares are no longer held by 300 or
more shareholders of record. Termination of registration of the common shares
under the Exchange Act would substantially reduce the information required to be
furnished by Vinings to its shareholders and to the SEC and would make a number
of provisions of the Exchange Act, such as proxy statement disclosure in
connection with shareholder meetings and the related requirement of an annual
report to shareholders, no longer applicable to Vinings.
With respect to the executive officers and trustees of Vinings, in the
event of the intended termination of registration of the common shares under the
Exchange Act: (a) executive officers, trustees and other affiliates would no
longer be subject to many of the reporting requirements and restrictions of the
Exchange Act, including without limitation the reporting and short-swing profit
provisions of Section 16 of the Exchange Act, and (b) executive officers,
trustees and other affiliates of Vinings may be deprived of the ability to
dispose of common shares and preferred shares pursuant to Rule 144 under the
Act. Upon termination of Exchange Act registration, Vinings will continue to be
subject to the general anti-fraud provisions of federal and applicable state
securities laws. (See "Securities Laws Relating to the New Common Shares and New
Preferred Shares.")
Material Federal Income Tax Consequences
- ----------------------------------------
We summarize below the material federal income tax consequences to Vinings
and shareholders resulting from the reverse share split proposal. This summary
is based on existing U.S. federal income tax law, which may change, even
retroactively. This summary is not binding on the Internal Revenue Service.
There can be no assurance and none is given that the IRS or the courts will not
adopt a position that is contrary to the statements contained in this summary.
This summary does not discuss all aspects of federal income taxation, which may
be important to you in light of your individual circumstances, and many
shareholders may be subject to annual tax rules. In addition, this summary does
not discuss any state, local, foreign, or other tax considerations. You should
consult your tax advisor as to the particular federal, state, local, foreign,
and other tax consequences in light of your specific circumstances.
This summary also assumes that you are one of the following:
* a citizen or resident of the United States;
* a corporation or other entity taxable as a corporation created or
organized under U.S. law (federal or state);
* an estate the income of which is subject to U.S. federal income
taxation regardless of its sources;
* a trust if a U.S. court is able to exercise primary supervision over
administration of the trust and one or more U.S. Persons have
authority to control all substantial decisions of the trust; or
* any other person whose worldwide income and gain is otherwise subject
to U.S. federal income taxation.
This summary also assumes that you have held and will continue to hold your
shares as capital assets for investment purposes under the Internal Revenue Code
of 1986, as amended.
We believe that the reverse share split proposal should be treated as a
tax-free "recapitalization" for federal income tax purposes. This should result
in no material federal income tax consequences to Vinings.
If you own fewer than 1,000 common shares you will receive only cash in the
reverse share split. This receipt of cash will generally result in the
recognition of gain or loss equal to the difference between the cash received
and your adjusted basis in the surrendered common shares. The gain or loss
recognized will be capital gain or loss, which will be long-term capital gain or
loss if your holding period for the common stock exceeds one year.
If you own a number of common shares that is evenly divisible by 1,000, you
will receive only common shares in the reverse share split. You will not
recognize gain or loss, will continue to hold your common shares with the same
adjusted tax basis, and will not commence a new holding period for your shares.
If you receive both common shares and cash in the reverse share split, the cash
received will be taxable to the extent of the gain realized, unless it is
determined that the reverse split of the common shares has the "effect of the
distribution of a dividend" under the Internal Revenue Code of 1986, as amended
(taking into account the constructive ownership rules). If it is determined that
the reverse share split has that effect, the cash received in lieu of fractional
common shares will be treated as a dividend to the extent of the shareholder's
ratable share of Vinings' undistributed earnings and profits, and the balance of
the cash will be treated as received in exchange for property in an amount equal
to the difference between the portion of the cash not treated as a dividend and
the shareholder's adjusted tax basis in the common shares exchanged for cash.
The Code provisions that dictate whether the cash received will have the "effect
of the distribution of a dividend" are complex and are beyond the scope of this
discussion.
A holder of preferred shares will receive only preferred shares in the
reverse share split. If you hold preferred shares, you will not recognize gain
or loss as a result of the reverse share split, unless you increase your
proportionate interest in the assets or earnings and profits of the corporation
as a result of the reverse share split. If you do increase your proportionate
interest, you will be treated as receiving a distribution up to a maximum of the
amount of dividends in arrears on the preferred stock. This distribution will be
taxable as ordinary income to the extent of the preferred shareholder's ratable
share of Vinings' earnings and profits, thereafter as a return of capital to the
extent of your adjusted basis in the preferred shares, and finally as gain from
sale of those shares.
Dissenter's Rights; Escheat Laws
- --------------------------------
Vinings' Third Amended and Restated Declaration of Trust contains no
provisions entitling any shareholder of Vinings who dissents from any action
taken pursuant to authorization of a majority or any other vote of shareholders
to receive an appraisal and payment of the fair value for the dissenting
shareholder's shares. Nor is there any statute in Massachusetts applicable to
business trusts that provides for appraisal rights comparable to the statutory
appraisal rights that the Massachusetts Business Corporation Law provides to
stockholders of Massachusetts business corporations who dissent from
stockholder-approved corporate actions, including the merger, sale of
substantially all corporate property and any charter amendment that adversely
affects the rights of the dissenting stockholder. Until 1991, it was widely
believed that there were no common law dissenters' appraisal rights in
Massachusetts. In 1991, however, the Supreme Judicial Court of Massachusetts
held that common law appraisal rights similar to those described in the
Massachusetts Business Corporation Law were available to dissenting minority
stockholders of a Massachusetts trust company (as to which the statutory rights
of the Massachusetts Business Corporation Law do not apply) in a case in which
an 85% controlling stockholder approved a 1-for-2,500 reverse stock split that
converted all minority share interests into an amount of cash that the trial
court determined was not fair and reasonable. The Supreme Judicial Court
acknowledged that, insofar as the stockholders of the trust company were
concerned, "it was, of course, not clear at the time of the reverse stock split
that such a [common law appraisal] right existed." The Court also distinguished
its decision in a 1975 case in which it had held that there was no common law
appraisal right for dissenting stockholders of a not-for-profit golf club
corporation that had sold all of its property and in which decision the Court
had stated that it is "very dubious whether such a right ever existed in the
absence of statute even with respect to business corporations."
Accordingly, it is not clear under what conditions or with respect to what
possible transactions, if any, common law appraisal rights in Massachusetts
might apply to a business trust such as Vinings. However, counsel to Vinings has
advised the trustees that Vinings' shareholders will not be entitled to
dissenters' rights of appraisal in connection with the reverse share split.
Shareholders whose shares are eliminated and whose addresses are unknown to
Vinings, or who do not return their share certificates and request payment,
generally have a specific number of years from the date of the reverse share
split to claim the cash payment payable to them. If no claim is made within this
period, state law generally provides that these payments are deemed abandoned
and forfeit to the state.
Intention to Terminate Public Registration
- ------------------------------------------
Vinings intends to terminate public registration of the common shares with
the SEC under the Exchange Act as soon as practicable after ratification of the
reverse share split proposal by the shareholders. Shareholders should note that
the decision by the Board to terminate Exchange Act registration does not
require shareholder approval and will not be voted on at the annual meeting.
Further, there is no assurance that the number of shareholders will be fewer
than 300 following the effective date. While Vinings intends to cease public
registration of its common shares following the reverse share split, the Board
may choose not to implement this strategy if the Board determines that it is not
then in the best interests of Vinings and its shareholders given the then
existing market conditions. (See "Fairness of Reverse Share Split Proposal.")
The Board recommends that you vote FOR the reverse share split and the
transactions contemplated thereby. Proxies solicited by the Board will be voted
FOR this reverse share split proposal, unless you specify otherwise in your
proxy.
PROPOSAL 2: ELECTION OF TRUSTEES
The Board of Trustees of Vinings currently consists of five members, each
of whom serves for a one year term and until the election and qualification of
his or her successor.
At the annual meeting, five trustees will be elected to serve until the
2002 annual meeting of shareholders and until the election and qualification of
his or her successor. The Board has nominated Peter D. Anzo, Stephanie A. Reed,
Phill D. Greenblatt, Henry Hirsch and John Christy, each of whom currently
serves as a trustee, for election as trustees. Information with respect to the
persons nominated by the Board of Trustees for election as trustees is shown
below under "Information Regarding Trustees." Unless otherwise specified in the
proxy, it is the intention of the proxy holders to vote the shares represented
by each properly executed proxy for the election as trustees of each of the
nominees. Each of the nominees has agreed to stand for election and to serve if
elected as a trustee. If any of the persons nominated by the Board fails to
stand for election or is unable to accept election, however, proxies not marked
to the contrary will be voted in favor of the election of such other person as
the Board may recommend.
Vote Required For Approval
- --------------------------
A quorum being present, the affirmative vote of a majority of the votes
cast at the annual meeting is necessary to elect a nominee as a trustee of
Vinings. Only the holders of common shares are entitled to vote in the election
of trustees.
Mr. Anzo is the beneficial owner of a majority of Vinings' common shares,
controlling approximately 59% as of the date of this Proxy Statement. Mr. Anzo
has stated that he intends to vote in favor of Proposal 2 as recommended by the
Board of Trustees. Therefore, Vinings expects that Proposal 2 will be approved.
The Board of Trustees of Vinings recommends that Vinings'
shareholders vote "FOR" the election of each of the five
nominees as trustees of Vinings.
INFORMATION REGARDING TRUSTEES
Meetings of Board of Trustees and Committees
- --------------------------------------------
During fiscal 2000, the Board of Trustees of Vinings held seven meetings.
Each trustee who is currently a trustee attended 100% of the total number of
meetings held by the Board of Trustees and meetings held by all committees of
the Board of Trustees on which that trustee served.
Audit Committee
- ---------------
The Audit Committee of the Board, which currently consists of Ms. Reed and
Mr. Hirsch did not meet during fiscal 2000, but did meet to review Vinings'
December 31, 2000 Annual Report on Form 10-K. Vinings' common shares trade on
the OTC (Over-the-Counter) Bulletin Board, and, accordingly, Vinings is not
subject to the rules of the Nasdaq Stock Market. During the last fiscal year,
the Audit Committee did not consist solely of members who are independent
directors within the meaning of Rule 4200(a)(14) of the Market Place Rules of
the Nasdaq Stock Market. Ms. Reed does not meet the independence requirements
under the meaning of the foregoing rule because she is an officer of Vinings.
However, the Board determined that it was in the best interests of Vinings for
Ms. Reed to be a member of the Audit Committee. While the Board has not adopted
a written charter for the Audit Committee, the functions of the Audit Committee
include, among others: reviewing the financial statements of Vinings and the
scope of the annual audit; monitoring Vinings' internal financial and accounting
controls; and recommending to the Board the appointment of independent public
accountants.
Compensation Committee
- ----------------------
With the resignation of Gilbert H. Watts, Jr. and James D. Ross as trustees
in March 2000, both of whom were members of the Compensation Committee, and
given that there are no executives other than Mr. Anzo, the President, Chief
Executive Officer and Chairman of the Board of Trustees and Ms. Reed, Vice
President, Secretary, Treasurer and a trustee, Vinings no longer has a formal
Compensation Committee. However, Mr. Anzo and Ms. Reed will make general
recommendations to and review with the Board of Trustees any compensation that
may be granted to anyone other than themselves.
Compensation of Trustees
- ------------------------
Trustees who are officers of Vinings do not receive compensation for
services as trustees. Trustees who are not officers of Vinings receive
compensation for their services as the Board may from time to time determine.
During fiscal 2000, the non-employee trustees did not receive any compensation
for their services.
In addition, the non-employee trustees are eligible to participate in
Vinings' 1997 Stock Option and Incentive Plan. No awards were made or granted
during fiscal 2000.
Information Regarding Trustees
- ------------------------------
Set forth below is information regarding the current five trustees of
Vinings.
Trustee
Name Since
---- -----
Peter D. Anzo 1996
Stephanie A. Reed 1996
John A. Christy 2000
Phill D. Greenblatt 1996
Henry Hirsch 1996
Peter D. Anzo, age 47, has been Chief Executive Officer, President and
Chairman of the Board of Trustees since 1996. He has also been Chief Executive
Officer and a director of The Vinings Group, Inc. and affiliates since 1987.
From 1990 through 1997 Mr. Anzo was Chief Executive Officer and a director of
A&P Investors, Inc. Mr. Anzo has been a delegate of the National Apartment
Association since 1995. He has been on the Legislative Committee of NAA since
1991 and is the current Chairman. He is also past Chairman of the Political
Action Committee of NAA. He has been past Co-Chairman of the Government Affairs
Committee since 1995, Co-Chairman of the Affordable Housing Task Force and was a
director from 1992 until 1998 of the Atlanta Apartment Association. He was a
director of the Georgia Apartment Association from 1993 to 1998. From 1983 until
1986, Mr. Anzo served as Vice President of Acquisitions of First Investment
Companies, where he was involved in the management and acquisition of commercial
apartment properties throughout the United States. Mr. Anzo was Vice President,
Dispositions of Balcor/American Express from 1981 until 1983, where he was
involved in the sale of apartment communities and commercial properties in the
United States. Prior to 1981, Mr. Anzo was involved in the management, leasing,
purchase and construction of real property with The Beaumont Company and
Linkletter Properties.
Stephanie A. Reed, age 43, has been Vice President, Secretary, Treasurer
and a trustee since 1996. Since 1991, Ms. Reed has been Vice President and a
director of The Vinings Group, Inc. and affiliates. From 1987 to 1991, Ms. Reed
was Vice President-Development of The Sterling Group, Inc., a multifamily
development company located in Atlanta, Georgia where she was responsible for
all phases of development for multifamily projects. Prior to 1987, she served as
Vice President-Finance of The Sterling Group, Inc., in the syndication and
management of multifamily projects. Prior to joining The Sterling Group, Inc.,
she was a certified public accountant for independent public accounting firms in
Atlanta, Georgia and Orlando, Florida.
John A. Christy, age 45, has been a trustee since May 1, 2000. Mr. Christy
is currently a partner of Schreeder, Wheeler & Flint, LLP, an Atlanta law firm,
where he focuses his law practice in the areas of real estate, litigation and
bankruptcy. He graduated from Duke University in 1977 and Emory University
School of Law in 1980. Mr. Christy is a member of the Atlanta Bar Association.
Phill D. Greenblatt, age 55, has been a trustee since 1996. Since 1975, Mr.
Greenblatt has been President of p.d.g. Real Estate Co., Inc., a real estate
brokerage and investment firm which invests in multifamily, retail and
industrial properties in Colorado, Arizona and Florida. From 1971 through 1974,
Mr. Greenblatt was a commercial sales associate with Heller-Mark Realty. He also
served as an investment banking officer for the First National Bank of Denver
from 1968 to 1971.
Henry Hirsch, age 64, has been a trustee since 1996. Mr. Hirsch is Chairman
of the Board of Engineered Concepts, Inc., ECI Management Corporation and ECI
Realty, and is President of ECI Properties, positions which he has held for over
ten years. Mr. Hirsch has been involved in the real estate business since 1968,
specializing in multifamily apartment development. He and his related entities
currently own and/or manage over 3,500 apartment units, as well as office
buildings. The construction arm of his related entities has completed over
$300,000,000 of new construction and rehabilitation. Mr. Hirsch is a Certified
Apartment Property Supervisor with the National Apartment Association. He has
served on the Hotpoint Builders Advisory Council and National Association of
Home Builders, and has served as a director and past President of the Atlanta
Apartment Association. He has also served as a Regional Vice President of the
National Apartment Association.
INFORMATION REGARDING EXECUTIVE OFFICERS
Listed below are the names of the executive officers of Vinings. The names
and ages of all executive officers of Vinings and principal occupation and
business experience during at least the last five years is discussed above in
"Information Regarding Trustees."
Name Position
----- ---------
Peter D. Anzo President, Chief Executive Officer and
Chairman of the Board of Trustees
Stephanie A. Reed Vice President, Secretary and Treasurer
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table shows for the fiscal years ended December 31, 2000,
1999 and 1998 the annual compensation paid by Vinings to the Chief Executive
Officer. Vinings had no executive officers who earned in excess of $100,000
during fiscal year 2000.
Annual Compensation Long Term Compensation
----------------------------------------- --------------------------------------
Awards Payouts
-------- ------ ----------- ------------- ------------------------ --------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Restricted Underlying All
Other Stock Award Warrants/ LTIP Other
Salary Bonus Annual Options Payouts Compensation
Compensation
Name Year ($) ($) ($) ($) (#) ($) ($)
- ---------------------------- -------- ------ ----------- ------------- -------------- -------------- --------- ---------------
Peter D. Anzo (1) 2000 - - - - - - -
President, Chief 1999 - - - - - - -
Executive Officer 1998 - 40,000(2) - - 35,000(3) - -
and Chairman of
the Board of Trustees
- ----------------------------
<FN>
(1) Mr. Anzo did not receive any salary compensation from Vinings for services
rendered in his capacity as President, Chief Executive Officer and Chairman
of the Board of Trustees of Vinings during the fiscal years ended December
31, 2000, 1999 or 1998.
(2) Represents a bonus in the form of 10,000 common shares that had an
aggregate market value as of July 1, 1998, the date of the grant, of
$40,000.
(3) Represents stock options granted pursuant to Vinings' 1997 Stock Option and
Incentive Plan.
</FN>
Option Grants in Last Fiscal Year
- ---------------------------------
No stock options were granted during fiscal 2000.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Values
- --------------------------------------------------------------------------
The following table sets forth the common shares acquired and the value
realized upon exercise of stock options during fiscal 2000 by the Chief
Executive Officer (who is the only executive officer named in the Summary
Compensation Table) and information concerning the number and value of
unexercised stock options. There are currently no outstanding SARs.
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Shares Acquired Value Underlying Unexercised In-the-Money Options/
Name on Exercise Realized Options/Warrants at FY-End(#) Warrants at FY-End (#) (1)
---- ----------- -------- ------------------------------ --------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
--- --- ----------- ------------- ----------- -------------
Peter D. Anzo - - 40,000 - - (1) -
<FN>
(1) As of December 31, 2000, Mr. Anzo's stock options were not in the money
because the market value of the shares was less than or equal to the
exercise price of the options.
</FN>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
With the resignation of Gilbert H. Watts, Jr. and James D. Ross as trustees
in March 2000, both of whom were members of the Compensation Committee, and
given that there are no executives other than Mr. Anzo, the President, Chief
Executive Officer and Chairman of the Board of Trustees and Ms. Reed, Vice
President, Secretary, Treasurer and a trustee, Vinings no longer has a formal
Compensation Committee. However, Mr. Anzo and Ms. Reed will make general
recommendations to and review with the Board of Trustees any compensation that
may be granted to anyone other than themselves.
Effective March 1, 2000, 628,927 common shares of Vinings were purchased in
a privately negotiated transaction by the officers of Vinings, one of their
affiliates and an affiliate of one of the trustees of Vinings from a limited
number of shareholders, which included three of the trustees and several of
their affiliates. In connection with the stock transaction, the three selling
trustees - James D. Ross, Martin H. Petersen and Gilbert H. Watts, Jr. -
resigned from the Board of Trustees.
On March 15, 2000, the Board of Trustees voted to waive the ownership
limitations in Vinings' Declaration of Trust with respect to shareholders
acquiring shares in the above transaction, as well as with respect to several
holders of preferred shares.
Audit Committee Report for the Fiscal Year ended December 31, 2000
- ------------------------------------------------------------------
The Audit Committee has reviewed and discussed the audited financial
statements of Vinings for the fiscal year ended December 31, 2000 with Vinings'
management. The Audit Committee has discussed with Habif, Arogeti & Wynne LLP,
Vinings independent public accountants, the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee has also received the written disclosures and the
letter from Habif, Arogeti & Wynne LLP required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and the Audit
Committee has discussed the independence of Habif, Arogeti & Wynne LLP with that
firm. The Audit Committee reviewed non-audit services provided by its
independent accountants for the last fiscal year, and determined that those
services did not impair the accountants' independence. The Audit Committee is
also responsible for handling disagreements with Vinings' independent
accountants or the termination of their engagement.
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that Vinings' audited
financial statements be included in Vinings' Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 for filing with the SEC. In addition, the
Audit Committee reviewed and recommended to the Board that Habif, Arogeti &
Wynne LLP be retained by Vinings for the fiscal year ended December 31, 2001.
Submitted by The Audit Committee
Stephanie A. Reed Henry Hirsch
Shareholder Return Performance Graph
- ------------------------------------
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on Vinings' common shares with the
cumulative total return of the National Association of Real Estate Investment
Trusts' ("NAREIT") Equity REIT Total Return Index (the "Equity REIT Index") and
companies on the Standard & Poor's (S&P) 500 Stock Index. The returns are based
on the market price of the shares and assume the reinvestment of dividends. The
calculation of total cumulative return assumes a $100 investment in the shares
on December 31, 1995. The comparisons in the table are historical and are not
intended to forecast or be indicative of possible future performance of Vinings'
common shares.
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Vinings Investment
Properties Trust 100 166 166 145 141 70
NAREIT Equity Index 100 135 163 134 128 162
S & P 500 Index 100 123 164 211 255 232
PRINCIPAL AND MANAGEMENT SHAREHOLDERS
The following table sets forth, to the best knowledge and belief of
Vinings, information regarding the beneficial ownership of Vinings shares as of
March 12, 2001 by (a) each person known by Vinings to be the beneficial owner of
more than 5% of the outstanding common shares, (b) each of the trustees, (c)
each of the executive officers of Vinings and (d) all of Vinings' executive
officers and trustees as a group. Unless otherwise indicated, the address for
those listed below is c/o Vinings Investment Properties Trust, 2839 Paces Ferry
Road, Suite 1170, Atlanta, GA 30339.
Amount and Nature
Trustees, Executive Officers of Beneficial Percent of
and 5% Shareholders Ownership (1) Class (2)
- ---------------------------- ----------------- ----------
Kinder Gelt, L.P......................................588,235 (3) 34.83%
2700 Delk Road
Suite 100
Marietta, GA 30067
Strico Vinings, LLC ..................................470,588 (3) 29.95%
6065 Roswell Road
Suite 800
Atlanta, GA 30328
Watts Agent, L.P......................................470,588 (3) 29.95%
1006 Trammel Street
Dalton, GA 30720
Lawrence E. Cooper....................................235,294 (3) 17.61%
1150 Lake Hearn Drive
Suite 650
Atlanta, GA 30342
Sylco, L.P............................................117,647 (3) 9.66%
1150 Lake Hearn Drive
Suite 650
Atlanta, GA 30342
VIP Management, LLC...................................100,000 9.09%
Hirsch Investments, LLC............................... 84,500 7.68%
2700 Delk Road
Suite 100
Marietta, GA 30067
Peter D. Anzo.........................................714,064 (4) 61.51%
Stephanie A. Reed..................................... 53,059 (5) 4.71%
John A. Christy....................................... 600 (6) *
Phill D. Greenblatt................................... 61,917 (7) 5.44%
Henry Hirsch..........................................676,274 (8) 39.85%
All Trustees and officers as a group (5 persons)...1,514,278 (9) 83.16%
- ----------------------
* Less than 1%
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended. Accordingly, a beneficial
owner of a security includes any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise
has or shares the power to vote that security or the power to dispose of
that security. The amounts set forth above as beneficially owned include
shares owned or controlled, if any, by spouses and relatives living in the
same home as to which beneficial ownership may be disclaimed. For purposes
of Rule 13d-3, a person is deemed to be the beneficial owner of a security
if that person has the right to acquire voting or investment power with
respect to that security within 60 days.
(2) Percentages are calculated on the basis of 1,100,487 common shares
outstanding as of March 12, 2001, together with applicable options or
convertible securities of each shareholder exercisable for common shares
within 60 days of March 12, 2001.
(3) The shares reported may be acquired within 60 days of March 12, 2001 upon
conversion of the preferred shares into common shares on a one-for-one
basis at the option of the shareholder, or at the election of Vinings into
an amount of cash equal to the fair market value of the common shares at
the time of the conversion.
(4) Mr. Anzo's holdings can be summarized as follows: (a) 553,625 common shares
held directly; (b) 100,000 common shares held indirectly through entities
that he currently controls; (c) 40,000 vested stock options; and (d) 20,439
common units of Vinings' operating partnership held directly. Mr. Anzo's
stock options and common units may be exercised or exchanged, respectively,
for common shares on a one-for-one basis within 60 days of March 12, 2001.
(5) Ms. Reed's holdings can be summarized as follows: (a) 27,718 common shares
held directly; (b) 12,500 vested stock options; (c) 11,765 preferred shares
held directly; and (d) 1,076 common units of Vinings' operating partnership
held directly. Ms. Reed's stock options and common units may be exercised
or exchanged, respectively, for common shares on a one-for-one basis within
60 days of the date of this report. Ms. Reed's preferred shares may be
converted into common shares on a one-for-one basis at her option, or at
the election of Vinings, into an amount of cash equal to the fair market
value of the common shares at the time of the conversion, within 60 days of
March 12, 2001.
(6) Mr. Christy disclaims beneficial ownership of the 600 common shares, as
these shares are owned by his wife.
(7) Mr. Greenblatt's holdings can be summarized as follows: (a) 24,005 common
shares held directly; (b) 8,500 vested stock options; and (c) 29,412
preferred shares held directly. Mr. Greenblatt's stock options may be
exercised within 60 days of the date of this report. Mr. Greenblatt's
preferred shares may be converted into common shares on a one-for-one basis
at his option, or at the election of Vinings, into an amount of cash equal
to the fair market value of the common shares at the time of the
conversion, within 60 days of March 12, 2001.
(8) Mr. Hirsch's holdings may be summarized as follows: (a) 60,012 common
shares held directly; (b) 8,500 vested stock options; (b) 588,235 preferred
shares held indirectly through an entity that he currently controls; (c)
15,889 common shares held indirectly through an entity that he currently
controls; and (d) 12,002 common shares held in trust for the benefit of
others, of which Mr. Hirsch's wife is a trustee. Mr. Hirsch may be deemed
to beneficially own the 12,002 common shares by virtue of the fact that his
wife is a co-trustee. Mr. Hirsch expressly disclaims beneficial ownership
of the 12,002 common shares held in trust and the filing of this Proxy
Statement shall not be deemed an admission that Mr. Hirsch is the
beneficial owner of these common shares. Mr. Hirsch's stock options may be
exercised within 60 days of the date of this Proxy Statement. Mr. Hirsch's
preferred shares may be converted into common shares on a one-for-one basis
at his option, or at the election of Vinings, into an amount of cash equal
to the fair market value of the common shares at the time of the conversion
within 60 days of March 12, 2001.
(9) The trustees' and officers' holdings, as a group, may be summarized as
follows: (a) 665,360 common shares held directly; (b) 128,491 common shares
held indirectly; (c) 69,500 vested stock options; (d) 21,515 common units
of Vinings' operating partnership held directly; (e) 41,177 preferred
shares held directly; and (f) 588,235 preferred shares held indirectly. The
Trustees' and officers' stock options, common units and preferred units may
be exercised or exchanged, respectively, for an equal number of common
shares within 60 days of March 12, 2001.
CHANGE OF CONTROL
Vinings has experienced a change of control since the beginning of fiscal
1999. As of January 1, 1999, Vinings had four significant beneficial owners of
its common shares: Financial & Investment Management Group, Ltd. - 28.24%, Peter
D. Anzo - 12.13%, Martin H. Petersen - 8.73% and Clifford K. Watts - 8.18%. As a
result of the transactions described below, Mr. Anzo now is the beneficial owner
of a majority of Vinings' common shares, holding 61.51% of the common shares as
of the date of this Proxy Statement. All information regarding share ownership
has been derived from the most recently filed Schedule 13D for that person.
Effective March 1, 2000, in a private transaction that was completed on or
about March 17, 2000, Mr. Anzo acquired beneficial ownership of an additional
547,982 common shares of Vinings.
Of the 547,982 common shares acquired by Mr. Anzo, 437,225 shares were
acquired directly by Mr. Anzo for an aggregate purchase price of $2,382,876. The
consideration for the purchase of the 437,225 shares was comprised of four
sources: (1) a personal loan to Mr. Anzo from Watts Agent, L.P. dated March 1,
2000 in the amount of $1,285,000, which is secured by a pledge of 566,966 of Mr.
Anzo's shares, evidenced by the Margin Stock Pledge Agreement and the Amendment
to the Margin Stock Pledge Agreement both dated as of March 1, 2000 and which
have been filed as exhibits to Mr. Anzo's Amendment No. 4 to Schedule 13D filed
on May 2, 2000, (2) a draw on a home-equity line of credit from Regions Bank in
the amount of $500,000 which has also been filed as an exhibit to Mr. Anzo's
Amendment No. 4 to Schedule 13D filed on May 2, 2000, (3) an exchange of
specific partnership interests and other economic interests held by Mr. Anzo in
specific real estate investments with one of the sellers of shares totaling
$400,003, and (4) personal funds of Mr. Anzo.
100,000 of these shares were acquired for an aggregate purchase price of
$545,000 by VIP Management, LLC ("VIP"), an affiliate of the officers of
Vinings. By virtue of his ownership interest in VIP, Mr. Anzo may be deemed the
beneficial owner of the securities over which VIP has voting and dispositive
power.
Mr. Anzo has the right to acquire the remaining 10,757 shares upon
conversion of an equal number of common units in the Operating Partnership. The
common units were acquired for an aggregate purchase price of $58,626. The
consideration for the purchase of the 10,757 common units was the exchange of
specific partnership interests and other economic interests held by Mr. Anzo in
specific real estate investments with the seller of the common units.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Vinings is a party to management agreements with VIP, an affiliate of Mr.
Anzo and Ms. Reed, to provide management services to the properties owned by
Vinings. A total of $484,794 in management and data processing fees was incurred
by Vinings during 2000. In addition, during 2000 VIP provided a number of
services to Vinings relating to administrative, acquisition and capital and
asset advisory services. Some direct costs paid on Vinings' behalf were
reimbursed to VIP and VIP has charged Vinings for overhead charges, including
Vinings pro-rata share of rent and administrative charges and a pro-rata portion
of salaries and benefits for the officers and other employees providing services
to Vinings.
Effective July 1, 2000, Vinings restructured its relationship with VIP,
which now administers Vinings for an advisory fee equal to 1 1/2% of gross
revenues, including revenues from properties held by a joint venture in which
Vinings holds a 20% interest and is the general partner. The advisory fee is in
lieu of reimbursing VIP for all overhead, salaries and other costs attributable
to Vinings' operations. The total paid to VIP for these services during 2000 was
$328,933. These payments to VIP represent greater than 5% of VIP's gross
revenues for its last full fiscal year. Mr. Anzo may be deemed to have an
indirect material interest in these transactions because he is a managing member
of VIP and currently owns 90% of its membership interests. Ms. Reed may also be
deemed to have an indirect material interest in these transactions because she
is also a managing member of VIP and currently owns the remaining 10% of VIP's
membership interests. Vinings expects that VIP will continue to provide
management and asset advisory services to Vinings in the current fiscal year.
In connection with Vinings' acquisition of eight multifamily communities in
Mississippi on May 1, 1999, MFI Realty, Inc., an affiliate of Mr. Anzo and Ms.
Reed, received an acquisition fee from Vinings totaling $400,276, which
represents greater than 5% of MFI's gross revenues for its last full fiscal
year. Mr. Anzo is an officer of MFI and may be deemed to have an indirect
material interest in this transaction as a result of his majority ownership
interest in the parent company that owns MFI. Ms. Reed is also an officer of MFI
and may be deemed to have an indirect material interest in this transaction as a
result of her minority ownership interest in the parent company that owns MFI.
Vinings does not expect to pay any additional fees to MFI in its current fiscal
year unless MFI presents Vinings with another acquisition opportunity.
Vinings believes that all of the above relationships and transactions are
fair and reasonable and are on terms at least as favorable to Vinings as those
which might have been obtained with unrelated third parties. A majority of the
disinterested trustees at the time approved all of the above transactions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Vinings' officers, trustees and beneficial owners of more than 10% of
Vinings' shares are required under Section 16(a) of the Exchange Act to file
reports of ownership and changes in ownership with the SEC. Copies of those
reports must also be furnished to Vinings. Based solely on a review of the
copies of reports and amendments thereto furnished to Vinings, Vinings believes
that during fiscal 2000, no person who was a Trustee, officer or greater than
10% beneficial owner of Vinings' shares failed to file on a timely basis any
report required by Section 16(a), except that the following had late filings
during fiscal 2000: Peter D. Anzo (Form 5 for the purchase of common units in
the Operating Partnership, and for the purchase of and disposition of common
shares); Phill D. Greenblatt (Form 5 for the purchase of preferred units in the
Operating Partnership); Henry Hirsch (Form 5 for the purchase of preferred units
in the Operating Partnership); Martin H. Petersen (Form 5 for purchase of common
units in the Operating Partnership and Form 4 for the disposition of common
units in the Operating Partnership and the disposition of common shares);
Stephanie Reed (Form 5 for the purchase of preferred units in the Operating
Partnership); Gilbert H. Watts, Jr. (Form 5 for the purchase of preferred units
in the Operating Partnership and Form 4 for the disposition of common shares);
and James D. Ross (Form 4 for the disposition of common shares). In addition,
because Vinings did not receive a Form 4 from each of Strico Vinings, LLC and
Lawrence Cooper, who are beneficial owners of more than 10% of Vinings' shares,
Vinings believes that they did not timely file these required reports,
disclosing the acquisition by each of them of preferred units, under Section
16(a) of the Exchange Act.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2002 annual meeting
of shareholders of Vinings must be received by Vinings on or before February 8,
2002 in order to be considered for inclusion in Vinings proxy statement for that
meeting. The proposal must also comply with the requirements as to form and
substance established by the SEC in order to be included in the proxy statement
and should be directed to: Secretary, Vinings Investment Properties Trust, 2839
Paces Ferry Road, Suite 1170, Atlanta, GA 30339.
INDEPENDENT ACCOUNTANTS
The Board of Trustees has selected the firm of Habif, Arogeti & Wynne LLP,
independent public accountants, as the auditors of the financial statements of
Vinings and its subsidiaries for its current fiscal year ending December 31,
2001. A member of Habif, Arogeti & Wynne LLP will be available at the annual
meeting and will be given the opportunity to make a statement and to answer any
questions any shareholder may have with respect to the financial statements of
Vinings for fiscal 2000.
Audit Fees
- ----------
Fees for the fiscal year 2000 audit and the review of Forms 10-Q total
$37,840, of which an aggregate amount of $7,840 has been billed through December
31, 2000.
Financial Information Systems Design and Implementation Fees
- ------------------------------------------------------------
Habif, Arogeti & Wynne LLP did not render any services related to financial
information systems design and implementation for the fiscal year ended December
31, 2000.
All Other Fees
- --------------
Aggregate fees billed for audit and tax services rendered to subsidiary
partnerships of Vinings by Habif, Arogeti & Wynne LLP for the fiscal year ended
December 31, 2000 total $43,750.
FINANCIAL AND OTHER INFORMATION
Market for Registrant's Common Shares of Beneficial Interest
- ------------------------------------------------------------
* Stock Quotation
Vinings' common shares of beneficial interest are currently traded on the
over-the-counter Bulletin Board under the symbol "VIPIS." On March 8, 2001, the
closing sale price for Vinings' common shares, as reported on the
over-the-counter Bulletin Board, was $ 2.375 per share.
* Market Information
The high and low sales prices for each quarterly period during fiscal 2001,
2000 and 1999, which reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions,
are as follows:
---------------- ------------------ -----------------
2001 2000 1999
---------------- ------------------ -----------------
Quarter Ended High Low High Low High Low
- ------------- ---- --- ---- --- ---- ---
March 31 2 3/8 1 15/16 5 3 3/8 4 5/16 3 1/2
June 30 - - 3 1/2 2 1/2 4 3/8 3 9/16
September 30 - - 3 1 7/8 4 3/8 4
December 31 - - 2 1/2 1 15/16 4 5/8 4
* Dividends
For fiscal year 1999, Vinings declared cash distributions per common share
as shown below. Vinings did not declare or pay any cash distributions on common
shares during fiscal 2000 or 2001. Vinings intends to pay distributions when
operating cash flow permits.
----------- ------------ ---------------
Record Date Payment Date Dividend Amount
----------- ------------ ---------------
8/16/99 9/1/99 $0.05
11/26/99 12/8/99 $0.05
Financial Information
- ---------------------
The following financial information and management's discussion and
analysis of financial condition and results of operations are taken from
Vinings' Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.
This information supplements the information contained in Vinings' Annual Report
on Form 10-K for the fiscal year ended December 31, 2000, including the
financial statements contained under the caption "Selected Financial Data" on
page 9 therein, which is enclosed with this Proxy Statement and which has been
filed with the SEC and is incorporated herein by reference. You may read and
copy any materials we file with the SEC at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a website at www.sec.gov that contains information that
we file electronically with the SEC.
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, December 31,
2001 2000
---------------- ----------------
Real estate assets:
Land $ 8,247,900 $8,247,900
Buildings and improvements 55,690,190 55,664,805
Furniture, fixtures & equipment 4,209,751 4,154,701
Less: accumulated depreciation (6,161,644) (5,593,555)
---------------- ----------------
Net real estate assets 61,986,197 62,473,851
Investment in unconsolidated Joint Venture 1,226,906 1,321,522
Cash and cash equivalents 369,592 813,975
Restricted cash 1,433,582 1,892,288
Receivable from Joint Venture 9,157 12,141
Receivables and other assets 373,285 286,407
Deferred financing costs, less accumulated amortization of $194,783 and
$183,307 at March 31, 2001 and December 31, 2000, respectively 94,782 82,258
Deferred leasing costs, less accumulated amortization of $81,559 and
$78,071 at March 31, 2001 and December 31, 2000, respectively 15,346 18,834
---------------- ----------------
Total assets $ 65,508,847 $66,901,276
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $ 54,654,583 $54,742,209
Line of credit 2,000,000 1,864,990
Accounts payable and accrued liabilities 1,367,282 1,913,845
Dividends payable to Preferred Shareholders 232,376 464,750
---------------- ----------------
Total liabilities 58,254,241 58,985,794
---------------- ----------------
Minority interests of unitholders in Operating Partnership: (288,033) (171,935)
---------------- ----------------
Shareholders' equity:
Series A convertible preferred shares of beneficial interest, (par value
$.01 per share) 2,050,000 authorized, 1,988,235 shares issued and
outstanding at March 31, 2001 and
December 31, 2000 8,867,529 8,867,529
Common shares of beneficial interest, without par or stated value,
25,000,000 authorized, 1,100,487 and 1,100,488 shares issued and
outstanding at March 31, 2001 and December 31, 2000, respectively - -
Additional paid in capital 3,288,851 3,295,966
Accumulated deficit (4,613,741) (4,076,078)
---------------- ----------------
Total shareholders' equity 7,542,639 8,087,417
---------------- ----------------
Total liabilities and shareholders' equity $ 65,508,847 $66,901,276
================ ================
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the three months ended March 31,
2001 2000
------------- --------------
REVENUES
Rental revenues $ 2,665,121 $ 2,718,309
Other property revenues 158,046 148,457
Other income 14,857 12,620
------------- --------------
2,838,024 2,879,386
------------- --------------
EXPENSES
Property operating and maintenance 1,169,170 1,103,341
Depreciation and amortization 571,577 563,408
Amortization of deferred financing costs 11,476 17,536
Interest expense 1,285,730 1,289,235
General and administrative 126,842 187,812
------------- --------------
3,164,795 3,161,332
Loss before equity in loss of unconsolidated
Joint Venture and minority interests (326,771) (281,946)
Equity in loss of unconsolidated Joint Venture (94,615) (63,707)
------------- --------------
Loss before minority interests (421,386) (345,653)
Less Minority interests in Operating Partnership:
Preferred partnership interests - 336,758
Common partnership interests (116,098) (123,240)
------------- --------------
Net loss (305,288) (559,171)
------------- --------------
Distributions to preferred shareholders 232,375 -
------------- --------------
Net loss available to common shareholders $(537,663) $(559,171)
============= ==============
NET LOSS PER SHARE - BASIC $ (0.49) $ (0.51)
============= ==============
NET LOSS PER SHARE - DILUTED $ (0.49) $ (0.51)
============= ==============
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 1,100,487 1,100,491
============= ==============
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 1,339,734 1,343,037
============= ==============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY For the three
months ended March 31, 2001
(unaudited)
Series A Common Shares Total
Convertible of beneficial Cumulative shareholders'
Preferred Shares interest earnings equity
---------------- -------------- -------------- --------------
BALANCE AT DECEMBER 31, 2000 8,867,529 3,295,966 (4,076,078) 8,087,417
Net Loss - - (537,663) (537,663)
Retirement of shares - (3) - (3)
Adjustment for redemption of minority interest
of unitholders in Operating Partnership - (7,112) - (7,112)
---------------- -------------- -------------- --------------
BALANCE AT MARCH 31, 2001 $ 8,867,529 $3,288,851 $ (4,613,741) $ 7,542,639
================ ============== ============== ==============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the three months ended March 31,
2001 2000
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(305,288) $ (559,171)
-------------- -------------
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 571,577 563,408
Amortization of deferred financing costs 11,476 17,536
Equity in loss of unconsolidated Joint Venture 94,615 63,707
Minority interests in Operating Partnership:
Preferred partnership interests - 336,758
Common partnership interests (116,098) (123,240)
Distributions to preferred unitholders - (464,750)
Changes in assets and liabilities, net of the effect
of real estate assets acquired
Restricted cash 458,706 367,817
Receivable from Joint Venture 2,984 7,650
Receivables and other assets (86,878) (15,551)
Accounts payable and accrued liabilities (546,563) (565,019)
-------------- -------------
Total adjustments 389,819 188,316
-------------- -------------
Net cash provided (used) by operating activities 84,531 (370,855)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (80,434) (37,779)
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred financing costs (24,000) (5,000)
Net proceeds from line of credit 135,010 150,000
Principal repayments on mortgage notes payable (87,626) (80,584)
Purchase of retired shares (3) (15)
Distributions to preferred shareholders (464,749) -
Redemption of minority interests of unitholders in Operating Partnership (7,112) -
-------------- -------------
Net cash provided (used) by financing activities (448,480) 64,401
-------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (444,383) (344,233)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 813,975 916,215
-------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 369,592 $571,982
============== =============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 2001
NOTE 1 - BUSINESS AND ORGANIZATION
Vinings Investment Properties Trust ("Vinings" or the "Trust") was
organized on December 7, 1984 as a mortgage real estate investment trust
("REIT") whose original plan was to liquidate within approximately ten
years. On February 28, 1996, Vinings Investment Properties, Inc. completed
a tender offer to acquire control of the Trust in order to rebuild Vinings
assets by expanding into the multifamily real estate markets through the
acquisition of garden style apartment communities that are leased to
middle-income residents. Effective July 1, 2000, Vinings no longer
qualifies as a REIT for federal income tax purposes and will be taxed as a
corporation (See Note 2).
Vinings currently conducts all of its operations through Vinings Investment
Properties, L.P., a Delaware limited partnership (the "Operating
Partnership"). As of March 31, 2001, the Trust was the sole 1% general
partner and a 91.81% limited partner in the Operating Partnership,
controlling 81.16% of the common partnership interests and 100% of the
preferred partnership interests (See Note 5).
Vinings currently owns, through wholly-owned subsidiaries, ten apartment
communities totaling 1,520 units and a 75,000 square foot, single story
business park. In addition, Vinings holds a 20% interest in and is the
general partner of an unconsolidated joint venture, which owns through
subsidiary partnerships five additional apartment communities totaling 968
units (See Note 4). At March 31, 2001, the average occupancy of Vinings'
portfolio, excluding the Joint Venture Properties, as hereinafter defined,
was 87%.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles and with the instructions to Form
10-Q and Article 10 of Regulation S-X.
The accompanying consolidated financial statements of Vinings include the
consolidated accounts of the Trust and its subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation. Vinings accounts for its investment in the unconsolidated
joint venture using the equity method of accounting. The term "Vinings" or
"Trust" hereinafter refers to Vinings Investment Properties Trust and its
subsidiaries, including the Operating Partnership.
The minority interests of the common unitholders in the Operating
Partnership (the "Common Units") reflected on the accompanying balance
sheets are calculated based on the common unitholders' minority interest
ownership percentage (17.84% as of March 31, 2001) multiplied by the
Operating Partnership's net assets. The Preferred Units were exchanged for
Preferred Shares effective April 1, 2000 and are reflected on the
accompanying balance sheet as the cash contributed and the accrued
liquidation preference of $0.21 per Preferred Share ($417,529 at March 31,
2001).
The minority interests of the common unitholders in the income or loss of
the Operating Partnership on the accompanying statements of operations is
calculated based on the weighted average minority interest ownership
percentage multiplied by income (loss) before minority interests after
subtracting income allocated to the preferred partnership interests. The
minority interests of the preferred unitholders on the statement of
operations for the three months ended March 31, 2000 ($336,758) represents
the accrued preferred 11% return on the Preferred Units and the accrued pro
rata liquidation preference of $0.21 per Preferred Unit.
Income Taxes
------------
Prior to June 30, 2000, Vinings had elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"). As a result,
Vinings was generally not subject to federal income taxation on that
portion of its income that qualified as REIT taxable income to the extent
that Vinings distributed at least 95% of its taxable income to its
shareholders and satisfied certain other requirements. Effective July 1,
2000, Vinings no longer qualifies as a REIT for federal income tax purposes
and will be taxed as a corporation. The Trust however is not currently
generating taxable income and, accordingly, no provisions for federal
income taxes and deferred income taxes have been included in the
accompanying consolidated financial statements.
Cash and Cash Equivalents
-------------------------
Vinings considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Restricted Cash
---------------
Restricted cash consists of real estate tax, insurance and replacement
reserve escrows held by mortgagees, which are funded monthly from property
operations and released solely for the purpose for which they were
established. Restricted cash also includes security deposits collected and
held on behalf of the residents and tenants.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Real Estate Assets
------------------
Real estate assets are stated at depreciated cost less reductions for
impairment, if any. In identifying potential impairment, management
considers such factors as declines in a property's operating performance or
market value, a change in use, or adverse changes in general market
conditions. In determining whether an asset is impaired, management
estimates the future cash flows expected to be generated from the asset's
use and its eventual disposition. If the sum of these estimated future cash
flows on an undiscounted basis is less than the asset's carrying cost, the
asset is written down to its fair value. In management's opinion, there has
been no impairment of Vinings' real estate assets as of March 31, 2001.
Ordinary repairs and maintenance are expensed as incurred. Major
improvements and replacements are capitalized and depreciated over their
estimated useful lives when they extend the useful life, increase capacity
or improve efficiency of the related asset. Depreciation is computed on a
straight-line basis over the useful lives of the real estate assets
(buildings and improvements, 5-40 years; furniture, fixtures and equipment,
3-10 years; and tenant improvements, generally over the life of the related
lease).
Revenue Recognition
-------------------
All leases are classified as operating leases and rental income is
recognized when earned, which materially approximates revenue recognition
on a straight-line basis.
Deferred Financing Costs and Amortization
------------------------------------------
Deferred financing costs include fees and costs incurred to obtain
financing and are capitalized and amortized over the term of the related
debt.
Net Loss Per Share
------------------
The following is a reconciliation of net loss available to the common
shareholders and the weighted average shares used in Vinings' basic and
diluted net loss per share computations:
For the three months
Ended March 31,
2001 2000
------------------------------
Net loss - basic $(305,288) $(559,171)
Minority interests in Operating Partnership:
Preferred partnership interests - -
Common partnership interests (123,240)
(116,098)
-----------------------------
Total minority interest (116,098) (123,240)
-----------------------------
Net loss - diluted $(421,386) $(682,411)
=============================
Weighted average shares - basic 1,100,487 1,100,491
Dilutive Securities
Weighted average Common Units 239,247 242,546
Weighted average Preferred Units/Shares - -
Share options - -
-----------------------------
Weighted average shares - diluted 1,339,734 1,343,037
=============================
Both common units and preferred units in the Operating Partnership held by
the minority unitholders and preferred shares of the Trust are redeemable
for common shares of beneficial interest of the Trust ("Shares") on a
one-for-one basis, or for cash, at the option of the Trust. For the three
months ended March 31, 2000 and 2001, options to purchase 108,750 shares
and 102,750 shares, respectively, were excluded as the impact of such
options was antidilutive. For the three months ended March 31, 2000
Preferred Units totaling 1,988,235 and for the three months ended March 31,
2001 Preferred Shares totaling 1,988,235 were also excluded as the impact
of such units was antidilutive.
Recent Accounting Pronouncement
-------------------------------
On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). FAS 133, as
amended by FAS 137, "Deferral of the Effective Date of FAS 133," is
effective for all fiscal quarters of all fiscal years beginning after June
15, 2000. FAS 133 requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as
part of a hedge transaction and, if it is the type of hedge transaction.
The adoption of FAS 133 did not have a significant effect on the Trust's
results of operations or its financial position.
On December 3, 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition, which
provides guidance on the recognition, presentation, and disclosure of
revenue in financial statements. SAB 101 was required to be implemented in
the fourth fiscal quarter of 2000. SAB 101 did not have a significant
effect on the Trust's results of operations or its financial position.
Reclassifications
-----------------
Certain 2000 financial statement amounts may have been reclassified to
conform to the current year presentation.
NOTE 3 - REAL ESTATE ASSETS
On May 1, 1999, Vinings, through its subsidiaries, acquired thirteen
multifamily communities totaling 1,064 units (collectively, the "Portfolio
Properties") from seventeen limited partnerships and limited liability
companies. Eight of the Portfolio Properties (the "Mississippi Properties")
were purchased through subsidiary partnerships of the Operating
Partnership. The remaining Portfolio Properties (the "Joint Venture
Properties") were purchased through a joint venture structure. (See Note
4.)
In addition, Vinings, through subsidiary partnerships of the Operating
Partnership, owns two additional multifamily communities in the
metropolitan Atlanta area with 456 units for a total of 1,520 units in ten
communities, as well as a 75,000 square foot business center. All of the
multifamily communities are encumbered by fixed rate mortgage financing and
the business center is security for the line of credit.
NOTE 4 - INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
On May 1, 1999, Vinings purchased, through a joint venture structure, five
apartment communities, totaling 968 units. The Joint Venture Properties
were purchased by nine individual partnerships in each of which Vinings
Holdings, Inc., a wholly owned subsidiary of the Trust, owns a .1% general
partnership interest and Vinings/CMS Master Partnership, L.P., a Delaware
limited partnership (the "Joint Venture"), owns a 99.9% limited partnership
interest. The Operating Partnership has a .1% general partner interest and
a 19.98% limited partner interest in the Joint Venture, for which it paid
$1,705,100. The remaining limited partnership interests in the Joint
Venture are held by an unaffiliated third party.
Vinings accounts for its investment in the Joint Venture using the equity
method of accounting. The following is a summary of the results of
operations of the Joint Venture and Vinings' share of the equity in the
loss from the Joint Venture for the three months ended March 31, 2001:
For the three
months ended
March 31, 2001
---------------
Revenues $1,507,278
------------
Expenses:
Property operating and maintenance 723,314
General and administrative 13,028
Depreciation and amortization 385,156
Interest expense 858,856
------------
Total Expenses 1,980,354
------------
Net loss (473,076)
Vinings' equity percentage 20%
------------
Vinings' equity in loss of unconsolidated
Joint Venture $ (94,615)
============
Distributions received by Vinings from
Joint Venture
-
============
Cash flows provided by operating activities $ (104,057)
============
Cash flows used in investing activities $ (41,690)
============
Cash flows used in financing activities $ (57,794)
============
The following summarizes the balance sheet of the Joint Venture as of March
31, 2001:
Real estates assets, net of accumulated depreciation $44,533,837
Cash and other assets 1,257,624
-----------
Total assets $45,791,461
===========
Mortgage notes payable $38,874,197
Other liabilities 783,131
-----------
Total liabilities 39,657,328
-----------
Capital - Vinings 1,226,907
Capital - Other 4,907,226
-----------
Total capital 6,134,133
-----------
Total liabilities and capital $45,791,461
===========
Mortgage notes payable held by the Joint Venture are non-recourse fixed
rate notes secured by the individual properties. All of the notes except
one are insured by the U.S. Department of Housing and Urban Development
("HUD") and, therefore, distributions from the properties are subject to
"surplus cash" as defined by HUD. The maturity dates of the notes payable
range from June 2007 to November 2037 and interest rates range from 8.00%
to 8.75%.
NOTE 5 - SHAREHOLDERS' EQUITY AND PREFERRED PARTNERSHIP INTERESTS
On April 29, 1999, the Operating Partnership offered, in a private
transaction pursuant to a Securities Purchase Agreement (the "Purchase
Agreement"), Series A Convertible Preferred Partnership interests (the
"Preferred Units"). A total of 1,988,235 Preferred Units were issued for an
aggregate purchase price of $8,450,000. The Operating Partnership used the
proceeds of the sale of the Preferred Units to pay the cash consideration
for the Operating Partnership's interests in the property partnerships that
acquired the Mississippi Properties, and its interest in the Joint Venture.
(See Notes 3 and 4.)
Effective April 1, 2000, 100% of the 1,988,235 Preferred Units were
exchanged for Series A Convertible Preferred Shares of the Trust (the
"Preferred Shares") having substantially the same rights, preferences and
privileges as the Preferred Units. The holders of Preferred Shares are
entitled to receive cumulative preferential cash distributions at the per
annum rate of $0.4675 per Preferred Share. Upon the occurrence of certain
triggering events, the holders of Preferred Shares are entitled to receive,
in addition to an amount equal to any accumulated and unpaid distributions
on such holder's Preferred Shares, a liquidation preference of $4.46 per
Preferred Share.
Under certain circumstances, the holders of Preferred Shares may convert
any part or all of such Preferred Shares into common shares. In lieu of
converting Preferred Shares into common shares, the Trust, in its sole
discretion, may satisfy its conversion obligations through certain cash
payments, as further set forth in the Certificate of Designation relating
to the terms of the Preferred Shares and the Declaration of Trust.
Generally, the holders of Preferred Shares do not have the right to vote on
any matter on which any of the holders of common shares may vote. The
holders of Preferred Shares do, however, have the right to vote as a
separate class of shareholders on certain transactions including, without
limitation, certain authorizations and issuances of preferred shares
designated as ranking senior to the Preferred Shares, certain amendments to
the Declaration of Trust, and certain sales or other dispositions of assets
of the Trust or the Operating Partnership, certain mergers or
consolidations of the Trust or the Operating Partnership, and transactions
that result in the liquidation of the Trust or the Operating Partnership.
As of March 31, 2001, a total of 1,988,235 Preferred Shares were
outstanding. In addition, as of March 31, 2001 a total of $417,529 had been
accrued as a liquidation preference on the Preferred Shares.
NOTE 6 - NOTES PAYABLE
Mortgage Notes Payable
----------------------
Mortgage notes payable were secured by the following apartment communities
at March 31, 2001 and December 31, 2000, as follows:
Fixed interest rate Balance as of: Balance as of:
Maturity as of 3/31/01 3/31/01 12/31/00
------------------------ -------------------- ---------------------- ---------------- -----------------
Cottonwood 10/01/2036 8.875% $ 4,661,965 $ 4,666,546
Delta Bluff 08/01/2036 9.25 % 6,176,860 6,182,456
Foxgate I 06/01/2037 8.50 % 6,566,448 6,573,142
Hampton House 08/01/2037 8.50 % 5,143,457 5,148,819
Heritage Place 10/01/2036 8.75 % 3,126,672 3,129,845
Northwood 06/01/2034 8.75 % 4,456,039 4,461,640
River Pointe 01/01/2037 8.625% 5,952,255 5,958,353
Trace Ridge 07/01/2036 8.50 % 5,302,002 5,307,867
The Thicket 07/01/2003 9.04 % 7,114,332 7,132,347
Windrush 07/01/2024 7.50 % 6,154,553 6,181,194
--------------- ------------------
Total $54,654,583 $54,742,209
=============== ==================
All of the notes except The Thicket are insured by HUD and, therefore,
distributions from the properties are subject to "surplus cash" as defined
by HUD.
Scheduled maturities of the mortgage notes payable as of March 31, 2001 are
as follows:
2001 $ 274,166
2002 393,425
2003 7,314,761
2004 367,596
2005 399,132
Thereafter 45,905,503
-------------
Total $54,654,583
=============
Line of Credit
--------------
On April 27, 1999 Vinings obtained a line of credit in the amount of
$2,000,000 from a financial institution. The line of credit is secured by
Peachtree Business Center. The interest rate on the line of credit is one
percent over prime as announced by the bank from time to time, which was
8.00% at March 31, 2001. The principal balance of the line of credit as of
March 31, 2001 and December 31, 2000 was $2,000,000 and $1,864,990,
respectively. The line of credit matured on April 30, 2001 and was renewed
until March 15, 2002.
NOTE 7 - RELATED PARTY TRANSACTIONS
Vinings has entered into management agreements with VIP Management, LLC
("VIP"), an affiliate of the officers, who are also Trustees of Vinings, to
provide property management services for a fee equal to 3.5% of gross
revenues, plus a fee for data processing on all of the multifamily
communities and 5% of gross revenues on the business center. In addition,
effective July 1, 2000, VIP has administered the Trust for an advisory fee
equal to 1 1/2% of gross revenues, including the revenues from the Joint
Venture Properties. The advisory fee is in lieu of reimbursing VIP for all
overhead, salaries and other indirect costs attributable to the Trust's
operations, which were paid prior to July 1, 2000.
The following table reflects payments made to VIP:
Three months ended
March 31,
-------------------------------
2001 2000
----------------- -------------
Vinings
Management fees $ 100,797 $ 103,286
Data processing fees 16,416 16,416
Overhead reimbursements - 94,921
Advisory fee 65,006 -
----------------- -------------
Total $182,219 $214,623
================= =============
Joint Venture
Management fees $ 32,146 $ 35,427
Data processing fees 14,520 14,520
----------------- -------------
Total $ 46,666 $ 61,625
================= =============
Effective March 1, 2000, 628,927 common shares of Vinings were purchased in
a privately negotiated transaction by the officers of Vinings, an affiliate
of the officers and an affiliate of one of the Trustees of Vinings from a
limited number of shareholders, which included three of the Trustees and
certain of their affiliates (the "Stock Transaction"). In connection with
the Stock Transaction, the three selling Trustees -- James D. Ross, Martin
H. Petersen and Gilbert H. Watts, Jr. -- resigned from the Board of
Trustees.
On March 15, 2000, the Board of Trustees voted to waive the ownership
limitations in Vinings' Declaration of Trust with respect to shareholders
acquiring shares in the Stock Transaction, as well as with respect to
certain holders of Preferred Shares.
NOTE 8 - DISTRIBUTIONS
Vinings did not declare or pay any dividends on its common shares during
the three months ended March 31, 2000 or 2001.
Effective April 1, 2000, Vinings exchanged all of the Preferred Units for
Preferred Shares. (See Note 5). The holders of Preferred Shares are
entitled to receive cumulative preferential cash dividends at the per annum
rate of $0.4675 per Preferred Share. For the three months ended March 31,
2001, Vinings paid dividends totaling $232,376 to Preferred Shareholders.
NOTE 9 - LEASING ACTIVITY
The following is a schedule of future minimum rents due under operating
leases that have initial or remaining noncancellable lease terms in excess
of one year as of March 31, 2001, at Peachtree:
2001 $380,184
2002 253,073
2002 45,018
----------
Total $678,275
==========
One tenant generated 78% of Peachtree's revenues for the period ended March
31, 2001. The same tenant accounts for 64% of the future minimum lease
payments.
NOTE 10 - CONTINGENCIES
Vinings is, from time to time, subject to various claims that arise in the
ordinary course of business. These matters are generally covered by
insurance. While the resolution of these matters cannot be predicted with
certainty, management believes that the final outcome of these matters will
not have a material adverse effect on the financial position or results of
operations of Vinings.
NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION
Vinings paid interest of $1,226,204 and $1,230,593 for the three months
ended March 31, 2001 and 2000, respectively.
NOTE 12 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Based on interest rates and other pertinent information available to
Vinings as of March 31, 2001 and December 31, 2000, the Trust estimates
that the carrying value of cash and cash equivalents, the mortgage notes
payable, the line of credit, and other liabilities approximate their fair
values when compared to instruments of similar type, terms and maturity.
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of March 31, 2001 and December 31,
2000. Although management is not aware of any factors that would
significantly affect its estimated fair value amounts, such amounts have
not been comprehensively revalued for purposes of these financial
statements since March 31, 2001.
NOTE 13 - 1997 STOCK OPTION AND INCENTIVE PLAN
Vinings' 1997 Stock Option and Incentive Plan (the "Plan") provides
incentives to officers, employees, Trustees, and other key persons
including the grant of share options, share appreciation rights, restricted
and unrestricted share awards, performance share awards, and dividend
equivalent rights. Under the Plan, the maximum number of shares that may be
reserved and available for issuance is 10% of the total number of
outstanding shares at any time plus 10% of the number of outstanding units
in the Operating Partnership at any time that are subject to redemption
rights. As of March 31, 2001, the total number of shares authorized for
issuance under the Plan was 132,305. Options granted under the Plan expire
ten years from the date of grant.
During 1998 and 1997, Vinings granted non-qualified share options to the
officers, Trustees and certain key persons. The options vested in full
after one year from the date of the grant. A total of 26,000 options were
granted in 1997, which have an exercise price of $5.00 per share as
compared to a fair value of $4.56 per share on the date of the grant. Of
the options granted in 1998, 75,250 have an exercise price of $4.00 per
share as compared to a fair value of $3.63 on the date of the grant and
1,500 have an exercise price of $4.75 per share, which was equal to the
fair value on the date of grant. There were no options granted during 1999,
2000 or 2001.
On July 1, 1998, Vinings awarded 20,000 shares of restricted stock to the
officers and certain trustees (the "Restricted Stock"), representing a
total value of $80,000 (based on the fair market value of a share of the
Trust on the award date) which was reflected in compensation expense and
shareholders' equity in 1998. The Restricted Stock was awarded as
compensation for services to the Trust provided by such officers and
Trustees as well as by The Vinings Group.
NOTE 14 - SUBSEQUENT EVENT
On May 14, 2001, the Board of Trustees of Vinings announced that it had
approved a proposal to effect a 1-for-1000 reverse share split of both its
common shares and Series A Convertible Preferred Shares. Each holder of
common shares who, as a result of the reverse share split, would otherwise
receive a fractional common share will be entitled to receive an equivalent
amount of cash based upon a pre-split price per common share of $3.20. The
Board arrived at this price after considering the advice of and a fairness
opinion from an independent financial advisor. Fractional preferred shares
will be issued as a result of the reverse share split.
The Board of Trustees approved the reverse share split as a strategy for
reducing the number of registered common shareholders below 300, which
would provide Vinings the option to cease public registration of its common
shares. The reverse share split is structured as a "going private"
transaction within the meaning of Rule 13e-3 under the Securities Exchange
Act of 1934 because it is intended to, and, if completed, will likely
result in the termination of Vinings' reporting requirements under the
Exchange Act. Vinings will be requesting that its shareholders ratify the
Board's decision at the 2001 Annual Meeting of Shareholders currently
scheduled for June 27, 2001.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
- --------
Vinings Investment Properties Trust was organized on December 7, 1984 as a
mortgage real estate investment trust whose original plan was to liquidate
within approximately ten years. On February 28, 1996, Vinings Investment
Properties, Inc. completed a tender offer to acquire control of the Trust in
order to rebuild Vinings' assets by expanding into the multifamily real estate
markets through the acquisition of garden style apartment communities that are
leased to middle-income residents. Effective July 1, 2000 Vinings no longer
qualifies as a REIT for federal income tax purposes and will be taxed as a
corporation. (See Note 2 to Vinings' March 31, 2001 consolidated financial
statements.)
Vinings currently conducts all of its operations through Vinings Investment
Properties, L.P., a Delaware limited partnership (the "Operating Partnership").
As of March 31, 2001, the Trust was the sole 1% general partner and an 91.81%
limited partner in the Operating Partnership, controlling 81.16% of the common
partnership interests and 100% of the preferred partnership interests (See Note
5 to Vinings' March 31, 2001 consolidated financial statements.)
The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the accompanying consolidated
financial statements of Vinings and the notes thereto.
Results of Operations
- ---------------------
Rental and other property revenues decreased $43,599 or 2%, from $2,866,766 for
the three months ended March 31, 2000 to $2,823,167 for the same period in 2001.
This decrease is due to a decline in certain market conditions in Mississippi,
which has resulted in a decrease in occupancy and revenues at three properties.
Other income increased $2,237 or 18%, from $12,620 for the three months ended
March 31, 2000 to $14,857 for the same period in 2001. This increase is solely
attributable to interest earned on cash balances.
Property operating and maintenance expenses increased $65,829 or 6%, from
$1,103,341 for the three months ended March 31, 2000 to $1,169,170 for the same
period in 2001. This is due primarily to the following: (1) increased utilities
expense at a number of properties; (2) increased property and liability
insurance for the entire portfolio; (3) increased maintenance and repairs at
Windrush, an older community; and (4) increased real estate taxes as the result
of a reassessment of property values in Long Beach, Mississippi.
Depreciation and amortization increased by $8,169, or 1%, from $563,408 for the
three months ended March 31, 2000 to $571,577 for the same period in 2001 due to
depreciation on additional capital expenditures.
Amortization of deferred financing costs decreased by $6,060, or 35%, from
$17,536 for the three months ended March 31, 2000 to $11,476 for the same period
in 2001 due to additional costs associated with the line of credit in 1999,
which were amortized through April 2000.
Interest expense decreased $3,505, or 0.3%, from $1,289,235 for the three months
ended March 31, 2000 to $1,285,730 for the same period in 2001. This decrease is
due to mortgage amortization, which was partially offset by rising interest
rates on the line of credit.
General and administrative expense decreased $60,970, or 32%, from $187,812 for
the three months ended March 31, 2000 to $126,842 for the same period in 2001.
This decrease consists of: (1) overhead allocations and advisory fees paid to
VIP totaling $29,915; (2) office expense totaling $16,764; (3) professional fees
totaling $10,450; (4) investor relations expense totaling $2,327; (5) travel
expense totaling $1,469.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities increased $455,386 from net cash used
by operating activities of $370,855 for the three months ended March 31, 2000 to
net cash provided by operating activities of $84,531 for the same period in
2001. This increase is due primarily to the conversion of all of the preferred
units to preferred shares. During the first quarter of 2000, distributions
totaling $464,750 were paid by the Operating Partnership to holders of preferred
units, thus reducing operating cash flow.
Net cash used in investing activities increased $42,655 from $37,779 for the
three months ended March 31, 2000 to $80,434 for the same period in 2001. This
increase is due to additional capital expenditures made in the first quarter of
2001.
Net cash used by financing activities increased $512,881 from net cash provided
by financing activities of $64,401 for the three months ended March 31, 2000 to
net cash used by financing activities of $448,480 for the same period in 2001.
This increase is due primarily to: (1) the conversion of the preferred units to
preferred shares and distributions paid on those shares totaling $464,749; (2)
deferred financing costs totaling $19,000; (3) principal payments made on
mortgage notes payable totaling $7,042; and (4) the redemption of minority
interests of unitholders in the Operating Partnership totaling $7,112. These
uses were offset by fewer borrowings on the line of credit, which totaled
$14,990.
The cash held by Vinings at March 31, 2001, plus the cash flow from Vinings'
assets, is expected to provide sources of liquidity to allow Vinings to meet
current operating obligations excluding the distributions on the Preferred
Shares. While Vinings has been able to pay currently the preferred
distributions, Vinings may not have sufficient cash flow from operations to make
future distributions on the preferred shares. This is due to a slight decline in
revenues and the less than anticipated distributions from the joint venture. In
addition, as of March 31, 2001 Vining' line of credit was fully drawn. For more
information regarding the Trus's line of credit, see Note 6 to Vinings' March
31, 2001 Consolidated Financial Statements. Vinings has also received a
commitment to refinance the existing mortgage loans on one of the apartment
communities. The principal loan amount will be $8,080,000 with a fixed interest
rate of 6.99%. The term of the loan will be for ten years and is expected to
close no later than June 1, 2001. However, there can be no assurance that the
transaction will close or will close with the stated terms. In addition,
management continues to explore financing alternatives as well as continues its
efforts to increase revenues and decrease its general and administrative
expenses.Vinings has also announced plans to have its shareholders ratify a
reverse share split in order to effect a going private transaction, which will
further reduce the Trust's administrative overhead expenses. There can be no
assurance, however, that sufficient cash flow will be generated from Vinings'
operations.
Proposed Reverse Share Split
- ----------------------------
On May 14, 2001, the Board of Trustees of Vinings announced that it had approved
a proposal to effect a 1-for-1000 reverse share split of both its common shares
and Series A Convertible Preferred Shares. Each holder of common shares who, as
a result of the reverse share split, would otherwise receive a fractional common
share will be entitled to receive an equivalent amount of cash based upon a
pre-split price per common share of $3.20. The Board arrived at this price after
considering the advice and a fairness opinion from an independent financial
advisor. Fractional preferred shares will be issued as a result of the reverse
share split.
The Board of Trustees approved the reverse share split as a strategy for
reducing the number of registered common shareholders below 300, which would
provide Vinings the option to terminate its reporting requirements under the
Exchange Act. The reverse share split is structured as a "going private"
transaction within the meaning of Rule 13e-3 under the Exchange Act because it
is intended to, and, if completed, will likely result in the termination of
Vinings' reporting requirements under the Exchange Act. Vinings will be
requesting that its shareholders ratify the Board's decision at the 2001 Annual
Meeting of Shareholders currently scheduled for June 27, 2001.
Other Matters
- -------------
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Vinings'
actual results could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause such a difference
include the following: the inability of Vinings to identify properties for
acquisition; the inability of Vinings to continue to acquire properties in the
future; the less than satisfactory performance of any property that might be
acquired by Vinings; the inability to access the capital markets in order to
fund Vinings' growth and expansion strategy; the cyclical nature of the real
estate market generally and locally in Georgia, Mississippi and the surrounding
southeastern states; the national economic climate; the local economic climate
in Georgia, Mississippi and the surrounding southeastern states; the local real
estate conditions and competition in Georgia, Mississippi and the surrounding
southeastern states; and the ability of Vinings to generate sufficient cash flow
to pay the entire preferred distribution. There can be no assurance that, as a
result of the foregoing factors, Vinings' growth and expansion strategy will be
successful or that the business and operations of Vinings will not be adversely
affected thereby.
Selected Quarterly Financial Information
- ----------------------------------------
---------------------- --------------------------- -------------------------- ----------------------------
For the three Net rental income Net operating income Net income (loss)
months ended: Total Per share Total Per share Total Per share
---------------------- ------------ ----------- ------------ ----------- ------------ -----------
March 31, 2001 $2,823,167 $2.11 $1,653,997 $1.23 $(537,663) $(0.49)
December 31, 2000 $2,906,374 $2.16 $1,768,816 $1.32 $(429,992) $(0.39)
September 30, 2000 $2,955,826 $2.20 $1,761,326 $1.31 $(407,009) $(0.37)
June 30, 2000 $2,972,445 $2.21 $1,867,640 $1.39 $(391,525) $(0.36)
March 31, 2000 $2,866,766 $2.13 $1,763,425 $1.31 $(559,171) $(0.51)
December 31, 1999 $2,933,495 $2.18 $1,737,527 $1.29 $(587,565) $(0.53)
September 30, 1999 $3,061,123 $2.28 $1,887,794 $1.41 $(456,822) $(0.42)
June 30, 1999 $2,275,826 $1.69 $1,429,293 $1.06 $(267,579) $(0.24)
March 31, 1999 $1,038,763 $0.77 $ 641,214 $0.48 $ 2,716 $ 0.00
OTHER MATTERS
The Board does not know of any matters other than those described in this
Proxy Statement that will be presented at the annual meeting. If other matters
are duly presented, proxies will be voted in accordance with the best judgment
of the proxy holders.
Whether or not you plan to attend the annual meeting in person, you are
requested to complete, date, sign and return the enclosed proxy card in the
enclosed envelope that requires no postage if mailed in the United States.
Proxy
(Common Shares)
VININGS INVESTMENT PROPERTIES TRUST
PROXY FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
to be held on June 27, 2001
The undersigned hereby constitutes and appoints Peter D. Anzo and Stephanie A.
Reed, and each of them singly, as Proxies of the undersigned, with full power to
appoint his or her substitute, and authorizes each of them to represent and vote
all common shares of beneficial interest of Vinings Investment Properties Trust
held of record as of the close of business on May 21, 2001, at the 2001 Annual
Meeting of Shareholders of Vinings to be held at 2839 Paces Ferry Road, Suite
1170, Atlanta, Georgia 30339, at 10:00 a.m. local time, on Wednesday, June 27,
2001, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is given, this proxy will be
voted "FOR" the proposal set forth in Proposal 1 and "FOR" the election of the
five nominees for trustees. In their discretion, the proxies are each authorized
to vote upon such other business as may properly come before the annual meeting
and any adjournments or postponements thereof. A shareholder wishing to vote in
accordance with the Board of Trustees' recommendation need only sign and date
this proxy and return it in the enclosed envelope.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Shareholders, the Proxy Statement and Vinings'
Annual Report to Shareholders and hereby revoke(s) any proxy or proxies
heretofore given. This proxy may be revoked at any time before it is exercised.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF
VININGS INVESTMENT PROPERTIES TRUST
Please vote and sign on the other side and return promptly in the
enclosed envelope.
Do not forget to date your proxy.
Please sign name exactly as shown. Where there is more than one holder, each
should sign. When signing as an attorney, administrator, guardian or trustee,
please add your title as such. If executed by a corporation or partnership, the
proxy should be signed by a duly authorized person, stating his or her title or
authority.
- --------
X Please mark vote
as in this example
- --------
COMMON SHARES
- -------------
PROPOSAL 1. To approve a proposal to ratify a 1-for-1,000 reverse share
split of Vinings' common shares of beneficial interest and preferred shares of
beneficial interest, and the transactions contemplated thereby, including the
First Amendment to the Certificate of Designation Classifying and Designating a
Series of Preferred Shares as Series A Convertible Preferred Shares of Vinings,
as described in the Proxy Statement.
-------- -------- -------
FOR AGAINST ABSTAIN
-------- -------- -------
PROPOSAL 2. Proposal to elect five trustees, each to serve for a one year
term until the election and qualification of his or her successor.
NOMINEES: Peter D. Anzo, Stephanie A. Reed, Phill D. Greenblatt, Henry
Hirsch and John Christy.
-------- -------- -------
FOR AGAINST FOR ALL EXCEPT
-------- -------- -------
If you do not wish your shares voted FOR a particular nominee, mark the FOR ALL
EXCEPT box and strike a line through that nominee's name. Your shares will be
voted for the remaining nominee(s).
Please be sure to sign and date this proxy
Date: ________________________________________
Signature(s): ________________________________________
CHANGE OF ________________________________________
ADDRESS? ________________________________________
Proxy
(Series A Convertible Preferred Shares)
VININGS INVESTMENT PROPERTIES TRUST
PROXY FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
to be held on June 27, 2001
The undersigned hereby constitutes and appoints Peter D. Anzo and Stephanie A.
Reed, and each of them singly, as Proxies of the undersigned, with full power to
appoint his or her substitute, and authorizes each of them to represent and vote
all preferred shares of beneficial interest of Vinings Investment Properties
Trust held of record as of the close of business on May 21, 2001, at the 2001
Annual Meeting of Shareholders of Vinings to be held at 2839 Paces Ferry Road,
Suite 1170, Atlanta, Georgia 30339, at 10:00 a.m. local time, on Wednesday, June
27, 2001, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is given, this proxy will be
voted "FOR" the proposal set forth in Proposal 1. In their discretion, the
proxies are each authorized to vote upon such other business as may properly
come before the annual meeting and any adjournments or postponements thereof. A
shareholder wishing to vote in accordance with the Board of Trustees'
recommendation need only sign and date this proxy and return it in the enclosed
envelope.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Shareholders, the Proxy Statement and Vinings'
Annual Report to Shareholders and hereby revoke(s) any proxy or proxies
heretofore given. This proxy may be revoked at any time before it is exercised.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF
VININGS INVESTMENT PROPERTIES TRUST
Please vote and sign on the other side and return
promptly in the enclosed envelope.
Do not forget to date your proxy.
Please sign name exactly as shown. Where there is more than one holder, each
should sign. When signing as an attorney, administrator, guardian or trustee,
please add your title as such. If executed by a corporation or partnership, the
proxy should be signed by a duly authorized person, stating his or her title or
authority.
- --------
X Please mark vote
as in this example
- --------
SERIES A CONVERTIBLE PREFERRED SHARES
- -------------------------------------
PROPOSAL 1. To approve a proposal to ratify a 1-for-1,000 reverse share
split of Vinings' common shares of beneficial interest and preferred shares of
beneficial interest, and the transactions contemplated thereby, including the
First Amendment to the Certificate of Designation Classifying and Designating a
Series of Preferred Shares as Series A Convertible Preferred Shares of Vinings,
as described in the Proxy Statement.
-------- -------- -------
FOR AGAINST ABSTAIN
-------- -------- -------
Please be sure to sign and date this proxy
Date: ________________________________________
Signature(s): ________________________________________
CHANGE OF ________________________________________
ADDRESS? ________________________________________