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 (Amendment No. 2)
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.
Preliminary Copy, Subject to Completion
Dated July 27, 2001
VININGS INVESTMENT PROPERTIES TRUST
2839 PACES FERRY ROAD, SUITE 1170
ATLANTA, GA 30339
(770) 984-9500
August __, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders
of Vinings Investment Properties Trust to be held on ________, __________, 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, (2) the approval of amendments to the Certificate
of Designation relating to the terms of the preferred shares, (3) 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 (4) 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 July 27, 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, "FOR" the proposal to approve 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
Preliminary Copy, Subject to Completion
Dated July 27, 2001
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 _________, _______________, 2001
--------------
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders of
Vinings Investment Properties Trust will be held on _______, ____________, 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;
2. The approval of amendments to the Certificate of Designation relating
to the terms of the preferred shares;
3. 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
4. Such other business as may properly come before the meeting or any
adjournments or postponements thereof.
The implementation of each of Proposal 1 and Proposal 2 is conditioned upon
receipt of shareholder approval for both proposals.
Under the provisions of Vinings' Third Amended and Restated Declaration of
Trust, as amended, the Board of Trustees has fixed the close of business on July
27, 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
AUGUST __, 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.
Preliminary Copy, Subject to Completion
Dated July 27, 2001
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 ________, ____________, 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 Vinings' 2001
Annual Meeting of Shareholders to be held on _________, __________, 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;
2. The approval of amendments to the Certificate of Designation relating
to the terms of the preferred shares, which approval is a condition to
the implementation of the reverse share split;
3. 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
4. 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 August __, 2001 in
connection with the solicitation of proxies for the annual meeting. The Board of
Trustees has fixed the close of business on July 27, 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 July 27, 2001, there
were [1,100,487] common shares and 1,988,235 preferred shares outstanding and
entitled to vote at the annual meeting. Each common share outstanding as of the
close of business on the record date entitles the holder of the share to one
vote on each matter properly submitted at the annual meeting. Each preferred
share outstanding as of the close of business on the record date entitles the
holder of the share to one vote on each of Proposals 1 and 2 only.
The Annual Report on Form 10-K 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 OR PROPOSAL 2, 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.
SUMMARY TERM SHEET
------------------
The material terms of the reverse share split transaction are as follows:
o The Board of Trustees has authorized 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 recommends that all
shareholders vote to ratify the decision of the Board to effect the reverse
share split. See also the information under the caption "Proposal
1--Special Factors--Background of Reverse Share Split Proposal" in this
Proxy Statement.
o A special committee of the Board of Trustees comprised solely of
non-employee trustees who are disinterested in the reverse share split, as
well as the full Board of Trustees, voted unanimously in favor of the
reverse share split. See also the information under the caption "Proposal
1--Special Factors--Fairness of Reverse Share Split Proposal" in this Proxy
Statement.
o The Board of Trustees retained Ronald Whitman Weiss to serve as its
financial advisor and to render a fairness opinion in connection with the
reverse share split. See also the information under the caption "Proposal
1--Special Factors--Fairness of Reverse Share Split Proposal" in this Proxy
Statement.
o The Board of Trustees has deemed advisable and unanimously approved
amendments 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 current dividend
rights and liquidation preference of the preferred shares after giving
effect to the reverse share split. The approval of the First Amendment to
the Certificate of Designation is a condition to the implementation of the
reverse share split and will only become effective in the event Vinings'
shareholders ratify the reverse share split. See also the information under
the caption "Proposal 2--Amendments to the Certificate of Designation
Relating to the Series A Convertible Preferred Shares" in this Proxy
Statement.
o The reverse share split will not become effective until the proposals to
ratify the Board's decision to effect the reverse share split and to
approve the First Amendment to the Certificate of Designation are approved
by the requisite number of Vinings' shareholders and until the First
Amendment to the Certificate of Designation has been filed with the
Secretary of State of The Commonwealth of Massachusetts and the Clerk of
the City of Boston. See also the information under the caption "General
Information--Voting" in this Proxy Statement.
o Once the reverse share split becomes effective, shareholders will receive
one new common share or preferred share for each 1,000 common shares or
preferred shares, respectively, that they may own at that time.
Shareholders who hold fewer than 1,000 common shares or who do not hold
common shares in an even multiple of 1,000 will receive a cash payment for
those shares which would otherwise be combined into a fraction of a share
based on a pre-split valuation of $3.20 per share. Shareholders who do not
hold preferred shares in an even multiple of 1,000 will receive a fraction
of a new preferred share. See also the information under the caption
"Proposal 1--Structure of Reverse Share Split" in this Proxy Statement.
o The reverse share split is not expected to affect Vinings' current business
plan or operations, except for the anticipated cost savings resulting from
the cessation of reporting under the Securities Exchange Act of 1934. See
also the information under the captions "Proposal 1--Special
Factors--Purpose and Reasons for Reverse Share Split Proposal" and
"Proposal 1--Conduct of Vinings' Business after Reverse Share Split" in
this Proxy Statement.
o If the reverse share split is ratified and implemented, Vinings expects to
cease public registration of its common shares and to cease filing periodic
reports with the SEC. However, the Board has reserved the right to maintain
registration, even after implementing the reverse share split, if it deems
that continued registration is in the best interests of Vinings and its
shareholders at that time. See also the information under the caption
"Proposal 1--Intention to Terminate Public Registration" in this Proxy
Statement.
o Vinings expects that the reverse share split will be treated as a tax-free
"recapitalization" of Vinings for federal income tax purposes. However,
those holders who receive a cash payment in lieu of fractional common
shares or who are deemed to have received a distribution will recognize
income. See the information under the caption "Proposal 1--Material Federal
Income Tax Consequences" in this Proxy Statement.
o There are no appraisal rights for any shareholder who dissents from
ratifying the reverse share split under Vinings' governance documents or
under the statute governing Massachusetts business trusts. See also the
information under the caption "Proposal 1--Dissenters' Rights; Escheat
Laws" in this Proxy Statement.
GENERAL INFORMATION
VOTING
- ------
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote at the annual meeting is necessary to
provide a quorum at the annual meeting. Each share outstanding on the record
date is entitled to one vote on each proposal on which it is entitled to be
cast.
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 effectiveness of the reverse share split and the effectiveness of
the proposed amendments to the Certificate of Designation are conditioned upon
the approval by Vinings' shareholders of both proposals 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 both proposals are ratified by Vinings' shareholders, the reverse share
split will become effective only 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.
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 and there is no cumulative
voting.
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 Proposals 1 and 2, abstentions and broker non-votes will have the same effect
as votes against the proposals. 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, President and Chief
Executive Officer of Vinings, and an entity that Mr. Anzo controls are the
owners of a majority of Vinings' outstanding common shares, holding
approximately 59% as of the date of this Proxy Statement. Mr. Anzo does not
currently own any preferred shares. Mr. Anzo has stated that he intends to be
present at the annual meeting and to vote in favor of each of the proposals as
recommended by the Board of Trustees. Because only the holders of common shares
are entitled to vote on Proposal 3 and because Mr. Anzo is the owner of a
majority of the common shares, all of the nominees for election to the Board of
Trustee will be elected.
The members of the Board of Trustees and executive officers (other than Mr.
Anzo) of Vinings own an aggregate of approximately 32% of the outstanding
preferred shares. Each has expressed an intention to vote in favor of Proposal 1
and Proposal 2.
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 in the proxies.
If instructions are not given on a properly executed proxy card, proxies will be
voted "FOR" the ratification of the reverse share split described in Proposal 1,
"FOR" the amendments to the Certificate of Designation described in Proposal 2
and "FOR" the election of the five nominees for trustees set forth in Proposal
3. Vinings does not anticipate that any matters other than those set forth in
this Proxy Statement will be presented at the annual meeting. If other matters
are presented at the meeting for which notice was not received by the Trust a
reasonable period of time prior to the mailing of this Proxy Statement, then
proxies will be voted on those matters 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 and letter and in person.
FORWARD-LOOKING STATEMENTS
- --------------------------
This Proxy Statement contains forward-looking statements. These
forward-looking statements include discussions of expectations concerning future
operations, profitability, liquidity and capital resources and the expected
effects on Vinings and its shareholders if the reverse share split is
implemented. You can identify these forward-looking statements by our use of the
words "expects," "estimates," "believes," "plans," "anticipates" or similar
expressions. Vinings' actual results could differ materially from those
expressed or implied by the forward-looking statements as a result of known and
unknown risks, uncertainties and other factors. Factors that might cause such a
difference include the following: uncertainties as to the cost savings to be
realized after ceasing public registration of the common shares; limited
marketability of the securities after ceasing public registration of the common
shares; 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
in Georgia, Mississippi and the surrounding southeastern states in particular;
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.
Vinings notes, however, that the safe harbor for forward-looking statements
provided by Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act is not available for forward-looking statements made in connection
with the reverse share split proposal because that proposal is a "going private
transaction" under the rules issued under those acts.
PROPOSAL 1:
REVERSE SHARE SPLIT
SPECIAL FACTORS
- ---------------
BACKGROUND OF REVERSE SHARE SPLIT PROPOSAL
Prior to February 1996, Vinings was a publicly-traded 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. In February 1996, with the prior
board'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. Management intended to take advantage of the
benefits of the public markets in order to raise capital to finance acquisitions
of additional assets. While Vinings has had some limited success in its
expansion strategy, beginning in 1998 the market conditions for public real
estate investment trusts limited Vinings' ability to raise equity and since then
the Trust has not achieved the growth or returns that it originally planned.
Vinings has continued, however, to incur the costs associated with being a
public company. Therefore in early 1999, the Board of Trustees instructed
management to reduce Vinings' corporate overhead costs by all reasonable
measures.
Management began focusing on ways to decrease recurring corporate overhead
expenses. For example, by year-end 1999, Vinings had (1) replaced its
independent public accountants, which reduced audit fees by approximately
$32,000 in fiscal year 2000, (2) reduced corporate communications expense by
replacing formal annual reports with a printed copy of the Trust's annual report
on Form 10-K, saving approximately $22,000 in fiscal year 2000, (3) implemented
cost cutting measures to reduce general administrative and office expense by
approximately $19,000 in fiscal year 2000, and (4) reduced trustee meeting
expenses (e.g., travel related expenses) by conducting more of the meetings
telephonically, thereby saving $17,000 in fiscal year 2000.
Because of the Trust's inability to raise public equity, the Board also
began to consider alternative means to enhance shareholder value. One
alternative was to continue acquisitions by raising equity through private
offerings. However, in attempting to raise the necessary equity to finance
acquisitions and following discussions with private investors, it soon became
evident that many private investors did not want to invest in a public company
due to the many disclosure and other legal requirements imposed on public
companies. While Vinings intends to continue its operations and expansion
strategy by raising private debt and equity from time to time, the Board
believes that continued growth will be slow as long as Vinings remains a public
company.
The Board also authorized management to explore sale and merger
possibilities with other real estate companies. Mr. Anzo talked informally with
a number of companies in the real estate industry to determine the level of
interest regarding possible business combinations with the Trust. After numerous
contacts, further discussions materialized with only one small real estate
investment trust, and in September 1999 Mr. Anzo and two other trustees met with
that company to discuss a possible transaction. However, after only preliminary
discussions, the other company informed Vinings that it did not want to continue
discussions with Vinings at that time.
The Board also considered a possible liquidation of the Trust and reviewed
analyses reflecting estimated valuations of Vinings' real estate assets. The
Board agreed that by selling individual assets the Trust would be likely to
incur substantially higher sales costs than if the communities were sold
together as a portfolio. However, the Board also believed that any potential
investor looking at the portfolio in a liquidation scenario would offer a below
fair market value price. The Board felt that due to the uncertainty of the time
necessary to complete a liquidation, as well as the uncertainty as to the
ultimate costs involved and proceeds to be received in a liquidation, the
shareholders would not likely receive the highest value for their shares. The
Board believed that a higher value would likely be realized if Vinings were to
engage in a business combination involving the Trust as a whole rather than to
sell the underlying assets.
At the May 1, 2000 Board meeting, Mr. Anzo informed the Board that he had
spoken with a number of industry professionals regarding their possible interest
in a transaction with Vinings. Based on those preliminary discussions and the
limited interest expressed by third parties, the Board concluded that it was not
likely that an acceptable transaction involving the Trust could be completed at
that time. However, the Board encouraged Mr. Anzo to hold discussions in the
future with any interested parties.
At the June 6, 2000 Board meeting, the Board reviewed Vinings' revised
operating budget. Mr. Anzo explained to the Board that, while management was
continuing to implement as many cost savings measures as possible, a large
portion of Vinings' corporate overhead was associated with the SEC's periodic
reporting requirements for public companies. At the meeting, management reviewed
with the Board a general summary of the requirements for a company to effect a
"going private transaction," which would enable Vinings to cease public
registration of its common shares and the associated SEC reporting requirements.
Members of management explained that in order to "go private" and eliminate
these costs, the Trust would have to reduce the number of common shareholders of
record to fewer than 300. The Board instructed management to further investigate
the process required to effect a "going private transaction."
The Board next met on June 14, 2000. At that meeting, the Board discussed
the various means of accomplishing a "going private transaction," including a
tender offer, merger, reverse share split and recapitalization, and the
processes associated with effecting those types of transactions. Because Vinings
had previously explored possible business combinations, the possibility of
engaging in a merger or similar transaction was not considered likely. The Board
also discussed the possibility of a tender offer. Management reviewed the
process by which the February 1996 tender offer was accomplished and the costs
associated with that tender offer.
The Board then discussed the possibility of a reverse share split.
Management explained that a specified number of outstanding shares (e.g., 1,000)
would be combined into a lesser number of shares (e.g., one) and cash would be
paid in lieu of issuing fractional common shares that would otherwise result
from the combination. The split ratio would be set so that following the split
there would remain fewer than 300 common shareholders of record. The Board also
discussed the fact that Vinings' Declaration of Trust authorizes the Board of
Trustees to effect a reverse share split without shareholder approval. The Board
agreed, however, that if it determined to pursue any type of a going private
transaction, it would prefer to hold a shareholders meeting in order to ensure
that shareholders receive an opportunity to voice their opinions on the
transaction.
Based on the discussions held at that meeting, the Board concluded that the
costs of effecting a tender offer would be several times higher than the costs
of effecting a reverse share split. In addition, after incurring the increased
costs of a tender offer, Vinings could not be assured that a sufficient number
of shareholders would tender their shares so that the remaining number of
shareholders of record would be fewer than 300. The Board then discussed the
various methods of valuing the price at which the fractional common shares
resulting from the reverse share split would be purchased, including obtaining
an independent fairness opinion, using an average of the trading value of the
shares over a selected number of days and appraisals of the underlying assets.
Management agreed to obtain an estimate of the cost of an independent fairness
opinion as well as additional information on the mechanics of implementing a
reverse share split. The Board also discussed estimated cost savings.
The Board met again on June 26, 2000 to resume discussions regarding the
possibility of a reverse share split. Stephanie A. Reed, the Vice President and
a trustee of Vinings, reviewed an analysis of the Trust's shareholders of record
and the securities position listing as of May 26, 2000. The Board discussed the
number of shares that would need to be combined in a reverse share split to
ensure that fewer than 300 shareholders of record would remain after the split.
The Board also discussed a proposal received from a financial advisory firm
regarding the possibility of rendering a fairness opinion in connection with a
going private transaction and the costs associated with rendering the opinion.
In addition, Mr. Anzo stated that he had spoken with several other firms
regarding the cost of obtaining a fairness opinion and had received rough
estimates ranging from $100,000 to $250,000. The trustees agreed that while they
were unsure as to the necessity of obtaining a fairness opinion and its
relationship to the value of Vinings and the underlying assets, they did not
feel that the costs were justifiable at that time for a company of Vinings'
size.
The Board met again on July 18, 2000. Mr. Anzo discussed advice from
counsel regarding the necessity and advisability of obtaining a fairness opinion
in connection with a going private transaction and the necessity and
advisability of appointing a special committee of disinterested trustees to
review the transaction. Mr. Anzo explained that while obtaining a fairness
opinion was advisable, one was not required in connection with a reverse share
split. He also explained that it would be advisable to appoint a special
committee comprised solely of disinterested trustees to review the fairness of
the transaction and to make a recommendation to the Board.
Mr. Anzo also informed the Board at the July 18, 2000 meeting that he had
received another proposal from a financial advisory firm to provide a fairness
opinion for the Trust at a cost of approximately $80,000. While the Board felt
this fee was more reasonable than others it previously received, it still
believed that these costs were excessive for Vinings and agreed to temporarily
postpone a decision regarding a fairness opinion or any other matters regarding
a possible reverse share split until further investigation was completed.
Following the July 18, 2000 Board meeting, Mr. Anzo continued to
confidentially discuss Vinings with associates in the industry and in late
September 2000, while attending a National Multi Housing Council meeting, he
discussed Vinings with a colleague from a national real estate company that had
recently completed a going private transaction. This colleague informed Mr. Anzo
that his company had retained Ronald Whitman Weiss to render a fairness opinion
in connection with his company's going private transaction. He recommended Mr.
Weiss and suggested that Mr. Anzo contact Mr. Weiss regarding Vinings.
In October 2000, Mr. Anzo contacted Mr. Weiss, reviewed his credentials and
received a proposal from Mr. Weiss to provide a fairness opinion for Vinings at
a cost of $50,000. Mr. Anzo contacted the Board members regarding this new
proposal. The Board agreed that the amount of this fee was more reasonable in
light of the size of the Trust and the type of transaction that the Board was
considering. The Board also agreed that obtaining a fairness opinion was
advisable in connection with any of the alternatives being considered by
Vinings.
On November 1, 2000, Vinings engaged Ronald W. Weiss to serve as financial
advisor to Vinings in connection with a possible transaction and to render an
opinion to the Board as to the fairness, from a financial point of view, of the
consideration to be paid in that transaction.
Between November 1, 2000 and December 15, 2000, Mr. Weiss compiled and
reviewed information regarding the Trust that he believed was necessary in order
to render the opinion. Mr. Weiss then rendered a fairness opinion as of December
15, 2000 and submitted the opinion to the Board of Trustees, which stated that
the estimated fair value of the common shares was $3.25 per share. Management
requested that Goodwin Procter LLP, Vinings' securities counsel, advise them as
to the filing requirements and timing issues involved if the Trust were to move
forward with a going private transaction by means of a reverse share split.
On February 8, 2001, the Board of Trustees once again discussed the
anticipated effects and benefits of a possible reverse share split of Vinings'
common shares and preferred shares. Because the preferred shares are convertible
into common shares on a one-for-one basis, the trustees agreed that any reverse
share split should be made with respect to both the common and preferred shares.
Mr. Anzo recommended that it would be prudent to appoint a special committee
comprised solely of non-employee trustees to review a possible reverse share
split and to recommend to the full Board of Trustees whether the transaction
would be fair to and in the best interests of all the shareholders. The Board
then appointed John A. Christy and Phill D. Greenblatt to serve as members of
the special committee to evaluate the transaction.
The Board discussed the process for implementing a reverse share split as
it had been described to management by Goodwin Procter LLP. Ms. Reed once again
reviewed with the Board the existing list of shareholders of record. She stated
that a more recent shareholder list and a non-objecting beneficial owner list
had been requested in order to better determine the number of shares that would
need to be combined in a reverse share split to result in Vinings having fewer
than 300 common shareholders of record. Ms. Reed explained that once the special
committee reviewed the information relating to the transaction and made a
recommendation to the Board, the Board would vote on the transaction. If the
transaction was approved, a proxy statement and a Schedule 13E-3 would be
drafted and filed with the SEC. The Board discussed the disclosures that would
be required in these SEC filings. The Board also discussed the fact that the
proposed transaction, if approved, could be presented at the 2001 annual meeting
and included in the proxy statement relating to that meeting, thereby saving the
cost of holding a special shareholders meeting.
The special committee requested that management compile additional
information for its review, including revisions of the estimates of value for
the real estate portfolio and estimates of the associated legal, accounting and
financial advisory costs that would likely be incurred in connection with
implementing a reverse share split. The special committee also requested that
Mr. Weiss update his fairness opinion for any events or conditions occurring
since December 15, 2000.
Mr. Anzo contacted Mr. Weiss regarding an updated opinion and Mr. Weiss
agreed to render an updated fairness opinion for $5,000. Because December 31,
2000 year-end financial statements were not available at the time Mr. Weiss
rendered his original fairness opinion as of December 15, 2000, his review was
based in some part on estimates and budgets. Audited December 31, 2000
information was subsequently forwarded to Mr. Weiss, as well as revised
valuation estimates based on financial information as of December 31, 2000.
Based on his review of the additional information, RWW revised his original
December 15, 2000 estimate of per share value of $3.25 to a lower range of $2.66
to $3.25 per share. This produced an average per share value of approximately
$3.00 as of December 31, 2000. RWW concluded that $3.00 per share was a fair and
reasonable value for the Trust's common shares based upon his analyses, which
are described in "Proposal 1--Special Factors--Fairness of Reverse Share Split
Proposal--Fairness Opinion."
After careful review of all of the information, which is more fully
described in "Proposal 1--Special Factors--Fairness of Reverse Share Split
Proposal," on April 26, 2001 the special committee unanimously approved a
1-for-1,000 reverse share split of the Trust's common shares and preferred
shares, and on May 4, 2001 recommended the reverse share split to the full
Board. The committee also recommended that $3.20 per share be the pre-split
value to be paid for the fractional common shares resulting from the reverse
share split.
At the May 4, 2001 Board meeting, the special committee reviewed with the
Board the analyses provided in the fairness opinion and by management. The Board
discussed the historical and current trading prices of Vinings' shares. They
reviewed revised estimated valuation analyses based on actual operations,
including recent valuations as of April 30, 2001. The Board concluded that due
to declining occupancies in some markets, the valuations had in fact not
increased but had decreased as indicated by the revised fairness opinion dated
as of March 8, 2001. Notwithstanding the decrease and because the reverse share
split was a going private transaction, the special committee and the Board
believed that the value selected should be near the high end of the range of
values derived for the Trust. Accordingly, the special committee and the Board
selected $3.20 per common share as the pre-split value to be paid for the
fractional common shares resulting from the reverse share split. The special
committee reviewed with the Board the shareholder analyses used to determine the
ratio of shares that should be combined in order to have the smallest possible
number of common shareholders of record after the reverse share split. They
reviewed again the projected cost savings associated with the termination of its
public reporting requirements as well as the costs associated with the going
private transaction. The Board also discussed the source of funds to pay for the
costs of the transaction and determined that there would be sufficient proceeds
from the refinancing of the existing mortgage loan on one of Vinings'
communities after paying in full the balance due on the existing mortgage loan
and all costs of the refinancing. The source of funds for the payment of cash in
lieu of fractional common shares is more fully described in "Proposal 1--Source
of Funds."
Management then outlined the specific items that would be included in the
proxy statement, including amendments to the Certificate of Designation relating
to the terms of the preferred shares. Management explained that the amendments
to the Certificate of Designation would have the effect of preserving all of the
economic and other rights of the holders of preferred shares after giving effect
to the reverse share split and would therefore be a condition to implementing
the reverse share split. Likewise, the amendments to the Certificate of
Designation would only become effective if the reverse share split is ratified
by Vinings' shareholders. Because the preferred shares are not publicly
registered or traded, and because of the rights, preferences and privileges of
the preferred shares, the Board decided that Vinings should issue fractional
preferred shares, as necessary, after giving effect to the reverse share split.
After all discussions regarding the proposal, the full Board 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 because it believed that the reverse share split was advisable and
in the best interests of the Trust and its affiliated and unaffiliated
shareholders.
The Board of Trustees is seeking the ratification of its decision to effect
the reverse share split. If the shareholders ratify the reverse share split and
approve the amendments to the Certificate of Designation, the reverse share
split is expected to 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 date
of the filing of the First Amendment will be determined in the sole discretion
of the Board of Trustees. Please note that we refer herein to our shareholders
whose shares are registered in their own names as registered shareholders.
The reverse share split is structured to be 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. In connection with the reverse
share split proposal, Vinings and Peter D. Anzo, who is an affiliated
shareholder who owns 59% of the outstanding common shares of the Trust, have
jointly filed with the SEC a Schedule 13E-3 in accordance with Rule 13e-3 under
the Exchange Act.
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 and thereby 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, because of the limited public float of the
common shares and the Trust's recent performance, the Board does not believe
that the common shares' pricing trends and trading volume will improve
significantly in the near term. In addition, the Board believes that management
has reduced corporate overhead as much as possible and the majority of the
corporate costs remaining are those associated with being a public company.
These costs will only continue to increase. The Board believes it has
appropriately examined all other reasonable alternatives available to the Trust
and as a result is proposing the reverse share split at this time. Accordingly,
the Board recommends that Vinings' shareholders ratify the reverse share split
to achieve this purpose for these reasons and the reasons set forth below. For
the reasons cited above, Mr. Anzo, in his individual capacity as a shareholder
of the Trust, also believes that undertaking the proposed reverse share split is
appropriate at this time.
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 may elect to cease registration of its common shares
under the Exchange Act.
Vinings incurs direct and indirect costs associated with the filing and
reporting requirements imposed on public companies by the Exchange Act. Examples
of anticipated direct cost savings from terminating registration of the common
shares include the elimination of costs for a registrar and transfer agent for
Vinings' shares, substantially less complicated 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' direct costs associated with routine SEC filing and reporting
requirements were approximately $160,000 or 41% of Vinings' corporate overhead
expense in 2000. These expenses consisted of the following:
Audit Fees $ 35,000
Securities Counsel 40,000
Director & Officers Insurance 52,000
Corporate Communications 15,000
Transfer Agent Fees 13,000
SEC Filing Fees & Miscellaneous 5,000
---------
$160,000
=========
Although the direct costs associated with SEC filing and reporting
requirements have been higher than $160,000 in years prior to 2000, the Trust
believes that the costs incurred in 2000 are a reasonable estimate for the
recurring annual cost savings that should result from the reverse share split
and the subsequent termination of public registration. Estimates of the annual
savings to be realized if the reverse share split is implemented are based upon
(1) the actual costs to the Trust of the services and disbursements in each of
the above categories that are reflected in its recent historical financial
statements and (2) management's estimates of the portion of the expenses and
disbursements in each category believed to be solely or primarily attributable
to the Trust's public company status. In some instances management's estimates
are based on information provided by third parties or upon verifiable
assumptions. For example, the Trust's auditors have informed the Trust that
there will likely be a reduction in auditing fees if the Trust ceases to be
public, legal reviews of SEC filings will not be needed if the Trust no longer
files reports with the SEC and transfer agent fees will be eliminated because
the Trust will perform transfer agent duties on its own. Other estimates were
more subjective. For example, Vinings expects lower printing and mailing costs
as a result of less complicated disclosure required by its private status, fewer
trustees' meetings (and the resulting reduction in outside trustees' fees and
expenses), and the reduction in direct miscellaneous clerical and other expenses
and elimination of the charges of brokers and banks in forwarding materials to
beneficial holders.
The amounts set forth above, however, are only estimates, and the actual
savings to be realized by Vinings following the reverse share split may be
higher or lower than these estimates. Vinings expects that the majority of its
estimated savings will not be realized until after the fiscal year ending
December 31, 2001.
Vinings also considered and will continue to consider the need to protect
the confidentiality of its 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. Vinings anticipates that ceasing
registration of the common shares will reduce or eliminate these costs.
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 and liquidating Vinings' assets, 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. For a discussion of those other alternatives, see "Proposal
1--Special Factors--Background of Reverse Share Split Proposal" above.
FAIRNESS OF REVERSE SHARE SPLIT PROPOSAL
General
-------
The special committee and the full Board of Trustees believe that the
reverse share split proposal, taken as a whole, is fair to and in the best
interests of Vinings and its affiliated and unaffiliated shareholders, including
those shareholders who will receive only the cash payment in lieu of fractional
common shares and those shareholders who will receive new common shares or
preferred shares. The special committee and the full Board also believe that the
process by which the reverse share split is to be approved is fair. Peter D.
Anzo, in his individual capacity, also believes that the reverse share split
proposal is substantively and procedurally fair to Vinings' affiliated and
unaffiliated shareholders, and he considered all of the same factors and
conducted all of the same analyses as the Board of Trustees in reaching that
conclusion. All references in this Proxy Statement to factors considered by,
analyses performed by and conclusions of the Board of Trustees with respect to
the substantive and procedural fairness of the reverse share split also apply to
Mr. Anzo in his individual capacity. Neither the special committee, the full
Board, nor Mr. Anzo (in his individual capacity) adopted the analyses or
conclusions of any third party in determining that the reverse share split is
substantively and procedurally fair to Vinings' affiliated and unaffiliated
shareholders.
The special committee and the full Board believe that the reverse share
split is fair despite the absence of statutory safeguards identified by the SEC,
namely that (A) the special committee of the Board did not retain an
unaffiliated representative to act solely on behalf of the unaffiliated
shareholders, including those shareholders who will receive only cash in lieu of
fractional shares, for the purpose of negotiating the terms of the reverse share
split or preparing a report covering the fairness of the reverse share split,
and (B) the reverse share split is not structured so that approval of at least a
majority of unaffiliated shareholders is required.
Despite the absence of an SEC requirement to do so, Vinings obtained an
opinion from an unaffiliated third party relating to the fairness of the cash
consideration to be paid to shareholders in lieu of receiving fractional common
shares. As a result of obtaining an independent fairness opinion, the special
committee and the full Board determined that the cost of obtaining an additional
fairness opinion or appraisal from an unaffiliated representative for the
purpose of negotiating the terms of the reverse share split on behalf of the
unaffiliated shareholders would be costly and would not provide any meaningful
additional benefit. In addition, the special committee and the Board have not
conditioned the reverse share split on the approval of unaffiliated shareholders
for the reasons described under "Procedural Fairness" below.
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.
Substantive fairness
--------------------
In determining that the reverse share split proposal, taken as a whole, is
substantively fair to all affiliated and unaffiliated shareholders despite the
absence of the statutory safeguards described above, the special committee and
the full Board considered the following supporting factors:
o The special committee and the full Board determined in good faith,
based in part upon the opinion of Ronald Whitman Weiss, that the cash
payment to be made in lieu of issuing fractional common shares
represents a fair valuation of the common shares and constitutes a
premium above the common shares' recent market trading prices.
o 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.
o 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 addition, despite the absence of the statutory safeguards described
above, the special committee and the Board of Trustees believe that the reverse
share split is substantively fair to all affiliated and unaffiliated
shareholders holding 1,000 or more common shares because the affiliated and
unaffiliated shareholders will retain an ownership interest in Vinings and will
receive cash in lieu of fractional common shares in an amount (based on a
pre-split value of $3.20 per share) that the special committee and the Board
believe represents a fair valuation and that constitutes a premium above the
recent market prices for the shares that could not otherwise be obtained by the
shareholders if they attempted to sell their common shares on the open market.
On the other hand, the special committee and the full Board considered the fact
that the reverse share split may be perceived by these shareholders to be
substantively unfair because, following the reverse share split and the
cessation of public registration of the common shares, there will be limited
public information regarding Vinings available to the shareholders, there will
be limited liquidity in their remaining common shares, and the value of the
fractional shares otherwise issuable will be limited at $3.20 per share.
The special committee and the Board of Trustees also believe that, despite
the absence of the statutory safeguards described above, the reverse share split
is substantively fair to all unaffiliated shareholders holding fewer than 1,000
common shares because the unaffiliated shareholders will receive cash in lieu of
fractional common shares in an amount (based on a pre-split value of $3.20 per
share) that the special committee and the Board believe represents a fair
valuation and that constitutes a premium above the recent market prices for the
shares that could not otherwise be obtained by the shareholders if they
attempted to sell their common shares on the open market. The reverse share
split would also protect these shareholders from possible future decreases in
the market trading price of the common shares. On the other hand, the special
committee and the full Board considered the fact that the reverse share split
may be perceived by these shareholders to be substantively unfair because they
will be obligated to relinquish their ownership interests in Vinings, even if
they desire to retain their ownership interests, unless they acquire more than
1,000 common shares prior to the reverse share split.
In concluding that the reverse share split is substantively fair, the
special committee and the Board considered the following factors in determining
a pre-split value of $3.20 per common share to be used in making cash payments
in lieu of issuing fractional common shares. The special committee and the Board
did not assign any specific weights to the factors listed below. Although the
greatest relative weight was given to the fairness opinion rendered by Ronald
Whitman Weiss, the special committee and the Board made the final determination
of the amount of consideration to be paid in lieu of issuing fractional common
shares based on all of the factors considered and they did not adopt the
analyses or conclusions of any third party.
CURRENT MARKET PRICES. The special committee and the full Board gave
limited weight to this factor because they did not feel that the current market
price of the common shares necessarily reflects the true value of the common
shares as 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, small transactions can affect the market price a great
deal 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 (on a pre-split basis),
exceeded the range of the sale prices during that time period. In addition, they
noted that Vinings' shares have not traded at 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 they 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, maintaining 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 the 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.
GOING CONCERN VALUE. A going concern valuation is an attempt to establish
the present value of future earnings of a company in the context of the returns
an investor could expect to receive on his or her investment over a future
period. Two factors in using this methodology valuation are establishing a
reasonably accurate forecast of earnings and identifying an appropriate discount
rate to establish the present value of future earnings. Management did not
prepare a valuation using this methodology because the Trust's earnings have
been negative over recent years, the Trust has not paid any dividends since
December 1999 and the amounts of future earnings, if any, are very difficult to
predict. Accordingly, management believed that any going concern valuation would
involve subjective assumptions and be too speculative to be relied upon, and
therefore management recommended that the special committee and the full Board
give no consideration to this factor.
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. The special committee and the Board believe that
net asset value is a more appropriate valuation for a real estate company than
for many other public companies because valuing the underlying assets based on
their estimated market value more closely reflects what could be obtained
through a liquidation of the assets. In lieu of appraisals for each of the
individual properties, a capitalization rate of 9.5% of net property operating
income was used to derive a valuation for the real estate. Net property
operating income typically reflects all property generated revenues and
operating expenses, including a reserve for capital replacements and excluding
depreciation, amortization, debt service and any corporate overhead. The
capitalization of net property operating income is a common valuation method
used by both buyers and sellers of income producing real estate which derives a
value by dividing net property operating income by the capitalization rate.
Management's valuations based on capitalized net operating income, which were
prepared based on financial statements at September 30, 2000 and 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, after including the transaction
costs that would likely be incurred in a multi-sale liquidation, shareholders
would not likely receive more than the $3.20 value ascribed to the common shares
for purposes of making the cash payment in lieu of issuing fractional common
shares. In addition, the special committee and the full Board believe that the
ability to sell real estate depends, in some cases, on the availability of
financing to buyers on favorable terms and that the sellers of assets must often
establish reserves to cover potential indemnifiable losses suffered by the
buyers. As a result, the special committee and the full Board believe that a
liquidation of the Trust's assets would involve significant uncertainty as to
the amounts and timing of any liquidating distributions to 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. A copy of the fairness
opinion is attached as Appendix A to this Proxy Statement. As discussed below,
the estimate of a per share value ranged from $2.66 to $3.25, which resulted in
an average per share value of approximately $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 another public real estate company that
completed a similar going private transaction. There is no affiliation between
RWW, or any of his 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. Vinings has paid RWW $55,000 for serving as
the Trust's financial advisor and for rendering the fairness opinion in
connection with the reverse share split. This amount represents the total fee
payable to RWW and payment of the fee is not contingent upon the completion of
the reverse share split.
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:
o 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.
o Historical and pro forma financial and operating information,
furnished by Vinings.
o Publicly available information concerning other companies and
transactions which were deemed relevant.
o Discussions with management regarding the current and historical
operating results of Vinings, as well as its prospects.
o Recent market price and dividend information.
o The financial statements of Vinings.
o Internal financial statements and forecasts prepared by Vinings'
management.
o 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.
The analysis conducted by RWW in arriving at his opinion involved numerous
macroeconomic, operating and financial assumptions and involved the application
of 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 fair value of Vinings' common shares was rendered on
March 8, 2001 and included the following analyses and conclusions:
o ANALYSIS OF PUBLICLY TRADED SHARE PRICES AND DIVIDENDS. RWW believes
that, generally, 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.
o 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 for most other publicly owned
companies because the assets themselves are income producing as
compared to service oriented companies or manufacturing companies.
This is particularly true in Vinings' case because Vinings does not
derive any earnings from other activities such as third party
management or development. Using Vinings' shareholders' equity as of
December 31, 1999 and adding back accumulated depreciation and
amortization, the net share value approximated $3.25.
o 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 typically an appropriate, accurate or representative measure for
valuing a real estate company's shares because of the depreciation and
amortization associated with the income producing real estate. While
generally accepted accounting principles dictate that depreciation and
amortization be accrued as an expense, real estate does not typically
depreciate over time, but rather appreciates. Therefore, net income
per share does not always reflect the true value of the company's real
estate operations. In addition, Vinings has reported a net loss per
share in recent years. Even if depreciation and amortization were
added back to provide an adjusted net income per share, RWW believes
that this is not a reasonable or viable representation of the true
value of Vinings because of the negative earnings per share.
Therefore, no weight was given to this measure of value.
o ANALYSIS OF CASH FLOW AND ADJUSTED FUNDS FROM OPERATIONS. RWW
considered the use of cash flow and adjusted funds from operations
("AFFO") as a more appropriate valuation methodology for Vinings than
a methodology using earnings per share or a price/earnings ratio. AFFO
is an accepted industry - defined indicator of earnings for real
estate companies because it adds back the depreciation and
amortization expense referred to above, and share price as a multiple
of AFFO is commonly used in the industry as a valuation technique.
Typically, AFFO multiples for multifamily real estate investment
trusts range from a low of approximately 7.5x to a high of
approximately 12x. The companies used for comparison purposes included
Amli Residential Properties Trust, Camden Property Trust, Town &
Country Trust and United Dominion Realty Trust. Average 2000 AFFO
multiples for these companies were derived from analyses published in
Realty Stock Review and adjusted to take into account variances such
as company size, public float and trading volume as compared to
Vinings. Based on Vinings' estimated December 31, 2000 AFFO of $0.37
per share, an analysis using these adjusted comparable AFFO multiples
indicates that an appropriate fair market value would be in the range
of between $2.90 and $3.25.
o 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.
This valuation method would approximate the proceeds received if all
real estate assets were sold. In lieu of appraisals for each of the
individual properties, a capitalization rate of 9.5% of net property
operating income was used to derive a valuation for the real estate.
Net property operating income typically reflects all property
generated revenues and operating expenses, including a reserve for
capital replacements and excluding depreciation, amortization, debt
service and any corporate overhead. The capitalization of net property
operating income is a common valuation method used by both buyers and
sellers of income producing real estate which derives a value by
dividing net property operating income by the capitalization rate.
Based on Vinings' actual net property operations at December 31, 2000,
this valuation method 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 above analyses considered in the aggregate, RWW concluded that $3.00
per share was a fair and reasonable value for the common shares. 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 March 8, 2001 opinion as to the fair value of the shares was
revised using information as of December 31, 2000, the special committee and the
Board reviewed RWW's opinion in light of 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 updated opinion were
still fair and reasonable as of May 4, 2001, the date of the Board's approval of
the transaction.
OTHER OFFERS. Vinings and its affiliates are not aware of any firm offers
that have been made by any unaffiliated person during the past two years for (1)
the merger or consolidation of Vinings with another company, (2) the sale or
other transfer of all or any substantial part of Vinings' assets, or (3) a
purchase of Vinings' securities that would enable the holder to exercise control
of Vinings. Consequently, the special committee and the full Board did not
consider other offers in determining the value of the common shares to be paid
in lieu of issuing fractional common shares.
Therefore, after consideration of the various valuation methods described
above, the special committee and the full Board determined that, because the
reverse share split was a going private transaction, the value selected as the
basis for making the cash payments in lieu of issuing fractional common shares
should be at the high end of the range of derived values. The special committee
and the Board noted that the highest value of $3.25 per share as reflected in
the original fairness opinion was based on December 31, 1999 financial
statements and net asset valuations using estimated financial results for
December 31, 2000. They also noted that the per share fair value was revised
downward by Ronald Whitman Weiss to $3.00 per share after review of actual
December 31, 2000 financial statements and valuations in the revised March 8,
2001 fairness opinion. In addition, although management's net asset valuation
produced a range of values between $2.66 and $3.25 per share, the $3.25 per
share was based on estimated December 31, 2000 financial information while the
$2.66 per share was based on actual December 31, 2000 financial information.
Moreover, the special committee and the full Board believed a liquidation of the
Trust's assets would involve significant uncertainty as to the amounts and
timing of any liquidating distributions to the shareholders. Therefore, while
believing that the per share value should be at the high end of the range of
derived values, the special committee and the Board selected a value slightly
below the highest valuation and determined the pre-split price of $3.20 per
common share as the value that would be the basis for making the cash payment in
lieu of issuing fractional common shares.
The special committee and the Board believe 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
amendments 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.
The special committee and 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 special
committee and 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 special committee and the Board
instructed management to implement the reverse share split proposal and
termination of registration of the common shares as soon as practicable. (See
"Proposal 1--Special Factors--Purpose and Reasons for Reverse Share Split
Proposal" for further discussion of the expenses of registration.)
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 substantively fair to the shareholders of Vinings.
Procedural fairness
-------------------
Despite the absence of the statutory safeguards described above, the
special committee and the full Board believe that the reverse share split is
procedurally fair to all affiliated and unaffiliated shareholders because the
reverse share split is being effected in accordance with all applicable
requirements of Massachusetts law and Vinings' Declaration of Trust. Vinings'
Declaration of Trust provides that the trustees may combine Vinings' outstanding
shares by way of reverse share split and provide for the payment of cash in lieu
of any fractional interest in a combined share, and that the mechanics
authorized by the trustees to implement the combination shall be binding upon
all the shareholders. Despite having this authority to effect a reverse share
split without shareholder approval, the Board of Trustees appointed a special
committee of non-employee, disinterested trustees to review the terms of the
reverse share split and has conditioned the reverse share split on prior
approval of the holders of both common shares and preferred shares. In addition,
the special committee and the full Board of Trustees determined that it is fair
and advisable that Vinings preserve the current economic rights of the preferred
shareholders upon the occurrence of the reverse share split. Consequently, the
Board of Trustees has conditioned the effectiveness of the reverse share split
upon the approval by Vinings' shareholders of the amendments to the Certificate
of Designation described in this Proxy Statement under Proposal 2. Finally, the
special committee and the full Board of Trustees considered the fact that
between the date of this Proxy Statement and the effective date of the reverse
share split, shareholders owning fewer than 1,000 common shares will have an
opportunity to increase the number of common shares owned by them to greater
than 1,000 so that they can maintain an equity interest in Vinings' common
shares following the reverse share split, and shareholders owning 1,000 or more
common shares will have an opportunity to reduce their existing holdings to
fewer than 1,000 in order to receive solely cash following the reverse share
split. After consideration of all the facts, all of the trustees, including
those who are not employees of Vinings, have determined that the proposed
reverse share split is procedurally fair to all affiliated and unaffiliated
shareholders.
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 and the First Amendment to the
Certificate of Designation is approved at the annual meeting, then 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 with the Secretary of State of The Commonwealth of Massachusetts and
the Clerk of the City of Boston. If implemented, the reverse share split will
have the following effects:
o Common Shareholders Owning 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. You will not have to pay any service
charges or brokerage commissions in connection with the reverse share split or
the cash payments.
o Common Shareholders Owning 1,000 or more Shares.
If you are a record holder of 1,000 or more common shares at the effective
time of the reverse share split, we will combine your shares into one
one-thousandth (1/1,000th) of the number of shares you held immediately prior to
the reverse split, and you 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 immediately prior to the effective
time, your shares will be combined into 10 common shares and you will receive a
cash payment equal to $1,600 (i.e., 500 pre-split shares multiplied by $3.20).
o Preferred Shareholders
If you are a record holder of preferred shares at the effective time of the
reverse share split, we will combine your shares into one one-thousandth
(1/1000th) of the number of shares you held immediately prior to the reverse
share split, and you will be entitled to receive fractional shares. For example,
if you are a registered holder of 10,500 preferred shares immediately prior to
the effective time, your shares will be combined into 10.5 new preferred shares.
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.
o Waiver of Ownership Limit.
Under the terms of Vinings' Declaration of Trust, shareholders may not
directly or indirectly acquire ownership of more than 9.8% of the outstanding
shares of the Trust unless the Board of Trustees grants an exemption from such
limit. In accordance with its authority under the Declaration of Trust, the
Board of Trustees has adopted a resolution exempting from the ownership limit
all shares owned in excess of the limit solely as a result of the reverse share
split. The ownership limit will otherwise remain in effect in all respects.
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
common 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 of the reverse share split, each 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
and/or certificates representing new common shares or new preferred shares (or a
fraction thereof).
BENEFITS AND DETRIMENTS OF THE REVERSE SHARE SPLIT TO THE TRUST
Although the special committee and the Board of Trustees acknowledge that
there are benefits and detriments of the reverse share split to the Trust, they
believe that the reverse share split is advisable and in the best interests of
the Trust.
The Board has no present intention to raise capital through sales of
securities in a public offering. Accordingly, the Trust is not likely to make
use of any advantage that its status as a public reporting company may offer for
raising capital although it could utilize common or preferred shares to
facilitate acquisitions of additional apartment communities or other assets in
the future even though the Trust will not be a public company.
Vinings incurs direct and indirect costs associated with compliance with
the SEC's filing and reporting requirements for public companies. The Trust also
incurs substantial indirect costs as a result of, among other things, the time
expended by executives to prepare and review such filings. As discussed under
"Proposal 1-- Special Factors--Purpose and Reasons for Reverse Share Split
Proposal" above, Vinings expects to realize an estimated $160,000 of recurring
annual cost savings as a result of the termination of its SEC filing and
reporting obligations, as well as the indirect costs associated with the
management time necessary to prepare these filings.
The reverse share split will also have detrimental effects on the Trust,
however, including a loss of liquidity for its common shares. In addition,
Vinings expects to incur the following estimated one-time expenses in connection
with implementing the reverse share split:
o aggregate cash payments for fractional common shares - $168,000 to
$436,750;
o fees and expenses of legal counsel - $150,000;
o fees of financial advisor - $55,000;
o fees and expenses of exchange agent - $20,000;
o printing and postage - $5,000; and
o miscellaneous costs - $500.
These amounts are only estimates, and the actual costs incurred in connection
with the reverse share split may be higher or lower than those indicated above.
For example, the actual amount of aggregate cash payments to be made for
fractional common shares is uncertain because the Trust cannot reasonably
predict the number of shareholders who hold common shares through a bank, broker
or other nominee that will instruct their nominee to transfer their shares into
a record account. The low end of the range of cash payments provided above
assumes that no transfers to record accounts will occur, while the high end of
the range assumes that all non-objecting beneficial owners of common shares will
request transfers of their shares to record accounts. The only consideration to
be paid in the transaction will be the cash payment for shares that would
otherwise be combined into fractional common shares.
BENEFITS AND DETRIMENTS OF THE REVERSE SHARE SPLIT TO AFFILIATED AND
UNAFFILIATED SHAREHOLDERS
The special committee and the Board of Trustees acknowledge that there are
benefits and detriments of the reverse share split on the Trust's affiliated and
unaffiliated shareholders. The material benefits and detriments are described
below. The Board believes, however, that the overall benefits of the reverse
share split to affiliated and unaffiliated shareholders of the Trust outweigh
the detriments of the reverse share split.
o Effect on Rights, Preferences and Limitations on Outstanding Shares.
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 voting and other rights that
presently characterize the shares will not be altered by the reverse share
split.
In addition, the reverse share split will have no effect on the total
number of shares that Vinings has the authority to issue. Although Vinings has
no current plans to issue additional common shares, it has the right to do so at
any time and from time to time at prices and on terms the Board determines to be
in the best interests of Vinings and its shareholders. Persons who continue as
shareholders following the effectiveness 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 those rights are currently
specifically granted to that shareholder.
o Financial Effect on Shareholders.
COMMON SHAREHOLDERS. If the reverse share split is implemented, Vinings
believes that fewer than 50 registered shareholders of common shares will remain
outstanding (based on Vinings' current registered shareholder records).
Affiliated and unaffiliated common shareholders who remain common shareholders
after the implementation of the reverse share split will benefit by an increase
in their percentage ownership of the Trust's common shares. 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, respectively, after
the reverse share split. As a result, control of the Trust will not change, but
will become more concentrated following the reverse share split.
It is expected that after giving effect to the reverse share split the
aggregate percentage of ownership of common shares of the Trust currently held
by Mr. Anzo and the entity he controls will increase from approximately 59% to
approximately 68%. However, because both the net book value and the net earnings
of the Trust are negative, Mr. Anzo will have a greater interest in these
negative amounts. It is expected that (1) Mr. Anzo's interest in the book value
of the Trust as of March 31, 2001 will increase from a negative of approximately
($786,900) to a negative of approximately ($897,500) and (2) Mr. Anzo's interest
in the net earnings of the Trust as of March 31, 2001 will increase from a
negative of approximately ($319,300) to a negative of approximately ($364,200).
The reverse share split will also provide those registered shareholders
with fewer than 1,000 common shares with a cost-effective way to cash out their
investments, because the Trust will pay all transaction costs in connection with
the reverse share split proposal. In addition, these shareholders will receive a
premium over the trading price which they otherwise could realize if they sell
their shares on the open market.
Potential detriments to affiliated and unaffiliated common shareholders who
remain as shareholders after effecting the reverse share split and termination
of registration under the Exchange Act include decreased liquidity and decreased
access to information about Vinings. 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. In addition, Vinings will no longer be
subject to the periodic reporting requirements and the proxy rules of the
Exchange Act. However, Vinings currently intends to deliver financial statements
to its shareholders on an annual basis.
Other potential detriments to common shareholders who are completely cashed
out or receive cash in lieu of a fractional shares in the reverse share split
include the tax consequences described under "Proposal 1--Material Federal
Income Tax Consequences" below.
PREFERRED SHAREHOLDERS. Because preferred shareholders will be entitled to
receive fractional shares, the reverse share split will not affect the
percentage ownership of any of the preferred shareholders or their proportionate
interests in the net book value or the net earnings of the Trust. In addition,
with the approval of the proposed amendments to the Certificate of Designation,
all of the preferred shareholders will retain their preferred returns and
liquidation preferences.
Mr. Anzo does not currently own any preferred shares. However, pursuant to
the terms and conditions of a Units Purchase and Sale Agreement dated March 1,
2000, Mr. Anzo has agreed to acquire 470,588 preferred shares from Watts Agent,
L.P. on the earlier of March 1, 2002 or the acceleration of the maturity of the
Margin Loan Note. The Units Purchase and Sale Agreement and the Margin Loan Note
were previously filed as exhibits to Amendment 4 to Schedule 13D for Mr. Anzo
and have been filed as exhibits to Amendment No. 1 to the Schedule 13E-3 jointly
filed by the Trust and Mr. Anzo. Other members of the Board of Trustees and
executive officers currently own an aggregate of 32% of the outstanding
preferred shares.
o 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 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 the exemption
contained in Section 3(a)(9) of the Securities Act. Upon completion of the
reverse share split, the new common shares are expected to be freely
transferable under the Securities Act by those shareholders of Vinings not
deemed to be "affiliates" of Vinings (generally executive officers, trustees and
direct and indirect beneficial owners of 10% or more of the outstanding common
shares). For purposes of determining whether a person is an "affiliate," common
shares issuable upon conversion of preferred shares are treated as beneficially
owned by the preferred shareholder. All new preferred shares, and all new common
shares that are acquired by persons who are "affiliates" of Vinings, will be
restricted securities under the Securities Act and may only be resold under a
registration statement or an available exemption under the Securities Act.
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
Securities 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.
o 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.
Immediately following the reverse share split, 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.
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:
o a merger or liquidation;
o the sale or transfer of any material amount of its assets;
o a change in its Board or management;
o a material change in its indebtedness or capitalization; or
o 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 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 "Proposal 1--Special Factors--Purpose
and Reasons for Reverse Share Split Proposal" for further discussion.)
SOURCE OF FUNDS
On June 1, 2001 Vinings refinanced the existing mortgage loan on one of its
apartment communities. The original principal amount of the new mortgage loan is
$8,080,000, with a fixed interest rate of 6.99% per annum. 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 loan matures on June 1, 2011. After
paying in full the balance due on the mortgage loan in effect prior to the
refinancing and all costs associated with the new mortgage loan, approximately
$1,600,000 in excess proceeds from the refinancing was used to reduce Vinings'
revolving line of credit. Vinings anticipates using funds from its line of
credit to make the cash payments for the fractional common shares resulting from
the reverse share split. Interest payments on the line of credit will continue
to be made from Vinings' operating cash flow.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
We summarize below the material federal income tax consequences to Vinings
and its 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 additional 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:
o a citizen or resident of the United States;
o a corporation or other entity taxable as a corporation created or
organized under U.S. law (federal or state);
o an estate the income of which is subject to U.S. federal income
taxation regardless of its sources;
o 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
o 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 shares 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 (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 Trust 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 your 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.
The material federal income tax consequences described above resulting from
the reverse share split are applicable to all affiliated and unaffiliated
shareholders of Vinings.
DISSENTERS' RIGHTS; ESCHEAT LAWS
Vinings' Third Amended and Restated Declaration of Trust does not contain
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. Furthermore, there is no 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
certain stockholder-approved corporate actions, including mergers, 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. This view was based on a 1975 case in which the Supreme Judicial
Court of Massachusetts 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." In 1991, however, the Court distinguished its
decision in that case by holding that common law appraisal rights similar to
those described in the Massachusetts Business Corporation Law would be 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 Court
noted that the Massachusetts trust company statutes do provide statutory
appraisal rights for stockholders of a trust company as to mergers and
consolidations, but not as to the reduction of capital stock. In contrast, the
Massachusetts business trust statute is silent as to appraisal rights in all
circumstances.
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. Nor are there any prescribed
procedures for attempting to assert common law appraisal rights in
Massachusetts. In view of the foregoing Massachusetts case law and because
Goodwin Procter LLP, counsel to the Trust, is not aware of any subsequent
Massachusetts court rulings relating to common law appraisal rights, Goodwin
Procter LLP has advised the Trust that Vinings' dissenting shareholders are not
likely to be entitled to common law rights of appraisal in connection with the
reverse share split. Accordingly, it is Vinings' position that appraisal rights
are not available in connection with the reverse share split and Vinings
currently anticipates that it would assert this position in the event that any
shareholder seeks to dissent from the approval of the reverse share split and
petition a court for appraisal rights.
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 implementation of
the reverse share split absent any significant changes that would result in the
Board determining that the advantages of continued registration would outweigh
the disadvantages. 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.
VOTE REQUIRED FOR APPROVAL
A quorum being present, the affirmative vote of a majority of the votes
entitled to be cast by (1) common shareholders of record, and (2) preferred
shareholders of record, voting as a separate class, is required to ratify the
reverse share split. The reverse share split will become effective only if the
amendments to the Certificate of Designation relating to the preferred shares,
which are described under Proposal 2 of this Proxy Statement, are also approved
by the shareholders.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE REVERSE SHARE SPLIT. PROXIES
SOLICITED BY THE BOARD WILL BE VOTED FOR THIS REVERSE SHARE SPLIT PROPOSAL,
UNLESS YOU SPECIFY OTHERWISE IN YOUR PROXY.
PROPOSAL 2:
AMENDMENTS TO THE CERTIFICATE OF DESIGNATION
RELATING TO THE SERIES A CONVERTIBLE PREFERRED SHARES
DESCRIPTIONS OF THE AMENDMENTS
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,
a copy of which is attached as Appendix B, 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 if Vinings'
shareholders ratify the reverse share split, and the approval of the First
Amendment is a condition to the implementation of the reverse share split. The
following are descriptions of the amendments:
1. The following 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 are
not adopted concurrently 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 reverse
share split is conditioned upon the approval by Vinings' shareholders of the
amendments to the Certificate of Designation described under this Proposal 2.
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.
VOTE REQUIRED FOR APPROVAL
A quorum being present, the affirmative vote of a majority of the votes
entitled to be cast by (1) common shareholders of record, and (2) preferred
shareholders of record, voting as a separate class, is required to approve the
amendments to the Certificate of Designation. The amendments to the Certificate
of Designation will become effective only if the reverse share split proposal,
which is described under Proposal 1 of this Proxy Statement, is also ratified by
the shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT VININGS' SHAREHOLDERS VOTE "FOR" THE
AMENDMENTS TO THE CERTIFICATE OF DESIGNATION. PROXIES SOLICITED BY THE BOARD
WILL BE VOTED FOR THE AMENDMENTS TO THE CERTIFICATE OF DESIGNATION, UNLESS YOU
SPECIFY OTHERWISE IN YOUR PROXY.
PROPOSAL 3:
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, has agreed to
serve if elected as a trustee and has consented to being named in this Proxy
Statement. 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 each of the nominees for election
as trustees. Because only the holders of common shares are entitled to vote on
Proposal 3, all of the nominees for election to the Board of Trustees will be
elected.
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 $100,000
during fiscal year 2000.
Annual Compensation Long Term Compensation
---------------------------------------- ----------------------------------
Awards Payouts
-------- ------ ----------- ------------ ------------------------------------ --------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Restricted Underlying All
Other Annual Stock Warrants/ LTIP Other
Salary Bonus Compensation Award Options Payouts Compensation
Name Year ($) ($) ($) ($) (#) ($) ($)
- ---------------------------- -------- ------ ----------- ------------ ------------ -------------- --------- ---------------
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 underlying 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 "NAREIT Equity 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
Name and Address of Beneficial Percent of
of Beneficial Owner 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........................................ 684,638 (8) 40.34%
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 VIP
Management, LLC, an entity 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 Kinder Gelt, L.P., 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
(as calculated in accordance with Rule 13d-3 under the Exchange Act) 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 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
Promissory Note executed by Mr. Anzo in favor of 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 common 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 and the Schedule 13E-3 filed jointly by Mr. Anzo and
Vinings concurrently with this Proxy Statement, (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.
An aggregate of 100,000 of the 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.
In September 2000, Gilbert H. Watts, Jr., Watts Agent, L.P. and certain of
their affiliates initiated a lawsuit against Mr. Anzo and certain other
defendants in the Superior Court of Fulton County, Georgia alleging, among other
claims, that Mr. Anzo breached the terms of the Promissory Note and the Margin
Stock Pledge Agreement by failing to timely deliver all of the pledged common
shares to Watts Agent, L.P. and failing to deliver certain financial statements.
The Trust is not a party to the lawsuit. The plaintiffs are seeking monetary
damages against Mr. Anzo consisting of the accelerated payment of the principal
balance of the Promissory Note, accrued interest, attorneys fees and other
costs. Because Mr. Anzo's common shares of the Trust continue to secure his
obligations under the Promissory Note, if the plaintiffs are successful on this
default claim and Mr. Anzo fails to pay the secured debt, then the plaintiffs
may force a sale of the pledged shares. Such a forced sale would result in a
change of control of the Trust. Mr. Anzo believes the complaint is without merit
and is vigorously defending against the suit.
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
- ---------------------------------------------------------------
In the event the reverse share split is not ratified or, if ratified, the
Board of Trustees determines it is not in the best interests of the Trust to
terminate the registration of the common shares under the Exchange Act, then
shareholders may submit proposals for consideration at the 2002 annual meeting
of shareholders under Rule 14a-8 of the Exchange Act. Shareholder proposals
submitted pursuant to Exchange Act Rule 14a-8 for inclusion in Vinings' proxy
statement and form of proxy must be received by Vinings on or before
[______________________], 2002 in order to be considered for inclusion in
Vinings' proxy statement for that meeting. However, if the date of the 2002
annual meeting is more than 30 days before or after the date of the 2001 annual
meeting, then the deadline is a reasonable time before Vinings begins to print
and mail its proxy materials. 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
appropriate 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 was 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
o STOCK QUOTATION
Vinings' common shares of beneficial interest are currently traded on the
over-the-counter Bulletin Board under the symbol "VIPIS." On April 9, 2001, the
last trading day prior to Vinings' announcement of its intention to effect a
reverse share split, the closing sale price for Vinings' common shares, as
reported on the over-the-counter Bulletin Board, was $2.11 per share. On June
26, 2001 the closing sale price for Vinings' common shares was $3.00.
o 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 2.38 1.94 5.00 3.38 4.31 3.50
June 30 3.00 2.01 3.50 2.50 4.38 3.56
September 30 - - 3.00 1.88 4.38 4.00
December 31 - - 2.50 1.94 4.63 4.00
o 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 Company'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
Company'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"). 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 95% 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 Units outstanding 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 10, 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 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 ("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 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 all
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 Vinings' line of credit was fully drawn. For more
information regarding the Trust's line of credit, see Note 6 to Vinings' March
31, 2001 Consolidated Financial Statements. However, Vinings continues its
efforts to increase revenues as well as decrease its general and administrative
expenses. In addition, management has explored financing alternatives, as well
as 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 the Trust's operations.
PROPOSED REVERSE SHARE SPLIT
On May 10, 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 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.
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.
Appendix A
RONALD WHITMAN WEISS
737 PARK AVENUE
NEW YORK, NEW YORK 10021
(212) 535-2077
March 8, 2001
Board of Directors
Vinings Investment Properties Trust
2839 Paces Ferry Road
Atlanta, GA 30339-5704
Gentlemen:
We have been asked to up-date our evaluations of the value of Vinings'
share price, as of the year ending December 31, 2000. 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 in this instance, it
is still indicative of the value that these shares would command if liquidation
took place. The market price of Vinings' stock had shown wide fluctuations
during the past twelve-month period, and during the latter part of December,
VIPIS shares traded at their lowest point, below $2.00 per share. Therefore, we
concluded that a fair market price valuation would be in a range between $2.00
and $2.25 per share.
Although, 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 trust, than
most other publicly owned companies. In this instance, after an allowance for
accumulated depreciation, the net share value can still be approximated at
$3.25.
Earnings per share and price earnings ratios, are not viable methods for
estimating a share value for a real estate owning company, for the reasons
stated. Cash flow and/or Adjusted Funds from Operations, is a much truer
approximation. An analysis of comparable AFFO multiples, from other real estate
investment trusts in Vinings' peer group, indicates that an appropriate fair
market value based upon AFFO Multiples, would still be in a range between $2.90
and $3.25 per share.
Finally, an estimate based upon net value of the underlying real estate
owned by Vinings, is another excellent indication for the fair per share market
value for the Vinings stock. In lieu of appraisals for each of the individual
properties, we previously used a capitalized net operating income model, based
upon the gross income for the latest verified twelve month period, which we had
prior to year end December 31, 2000. The actual year end rent and expense
numbers, reported to us at this time by the company, showed that gross possible
rents and net operating income, had both been over-stated in our original
evaluation, and reduced by the year end.
Therefore, as indicated in the attached valuation, including the joint
venture equity, a capitalization of the actual year-end net operating income
would indicate a lower revised approximate per share value of $2.66.
All of these factors indicate that we should revise our estimate of per
share value to a lower range than our original December 15, 2000, opinion of
$3.25, to a range between $2.66 and $3.25 per share. This produces an average
per share value of approximately $3.00 per share, as of the year-end, December
31, 2000.
We hereby consent to the inclusion of the fairness opinion and its
description and the report to the Board of Trustees in all required filings with
the Securities and Exchange Commission, including without limitation a Proxy
Statement and Schedule 13E-3 relating to the transaction.
Very truly yours,
/s/ Ronald Whitman Weiss
------------------------
Ronald Whitman Weiss
Appendix B
FIRST AMENDMENT TO CERTIFICATE OF DESIGNATION
CLASSIFYING AND DESIGNATING A SERIES OF PREFERRED SHARES AS
SERIES A CONVERTIBLE PREFERRED SHARES
OF VININGS INVESTMENT PROPERTIES TRUST
Vinings Investment Properties Trust, a Massachusetts Business Trust (the
"Trust"), hereby certifies as follows:
FIRST: That the Certificate of Designation Classifying and Designating the
Series A Convertible Preferred Shares of the Trust (the "Certificate of
Designation") is hereby amended by:
(A) inserting the following sentence immediately after the first sentence
of Section 3(a):
"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."
(B) inserting the following sentence immediately after the first sentence
of Section 4(a):
"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."
SECOND: This First Amendment to the Certificate of Designation of the Trust
was duly approved by the Board of Trustees of the Trust on May 4, 2001 and was
duly approved by the shareholders of the Trust at the 2001 Annual Meeting of
Shareholders held on June 27, 2001.
In witness whereof, this First Amendment to Certificate of Designation has
been executed on behalf of the Trust by its President and attested by its
Secretary on the __ day of _______, 2001.
VININGS INVESTMENT PROPERTIES TRUST,
a Massachusetts Business Trust
By:
------------------------
Name: Peter D. Anzo
Title: President
By:
---------------------------
Name: Stephanie A. Reed
Title: Secretary
Preliminary Copy, Subject to Completion
Dated July 27, 2001
PROXY
(COMMON SHARES)
VININGS INVESTMENT PROPERTIES TRUST
PROXY FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
to be held on ______, 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 July 27, 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 _________, ________,
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 PROPOSALS SET FORTH IN PROPOSAL 1 AND PROPOSAL 2 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 Series A Convertible
Preferred Shares of beneficial interest.
-------- -------- -------
FOR AGAINST ABSTAIN
-------- -------- -------
PROPOSAL 2. To approve the First Amendment to the Certificate of
Designation Classifying and Designating a Series of Preferred Shares as Series A
Convertible Preferred Shares of Vinings.
-------- -------- -------
FOR AGAINST ABSTAIN
-------- -------- -------
PROPOSAL 3. 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 ALL -------
FOR AGAINST 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? ______________________________________________
______________________________________________
Preliminary Copy, Subject to Completion
Dated July 27, 2001
PROXY
(SERIES A CONVERTIBLE PREFERRED SHARES)
VININGS INVESTMENT PROPERTIES TRUST
PROXY FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
to be held on _____, 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 July 27, 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 _________,
_______, 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" PROPOSAL 1 AND "FOR" PROPOSAL 2. 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 Series A Convertible
Preferred Shares of beneficial interest.
-------- -------- -------
FOR AGAINST ABSTAIN
-------- -------- -------
PROPOSAL 2. To approve the First Amendment to the Certificate of
Designation Classifying and Designating a Series of Preferred Shares as Series A
Convertible Preferred Shares of Vinings.
-------- -------- -------
FOR AGAINST ABSTAIN
-------- -------- -------
PLEASE BE SURE TO SIGN AND DATE THIS PROXY
DATE: ______________________________________________
SIGNATURE(S): ______________________________________________
______________________________________________
CHANGE OF ______________________________________________
ADDRESS? ______________________________________________
______________________________________________