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. )

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))

/ / Definitive Additional Materials

/ / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12

Nooney Realty Trust, Inc.
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No Fee required

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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/ / Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:

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(4) Date Filed:

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2
NOONEY REALTY TRUST, INC.
7701 FORSYTH BOULEVARD
ST. LOUIS, MISSOURI 63105

June 3, 1997

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 10:00 A.M. on Thursday, July 3, 1997, at the Pierre Laclede Conference
Center, 7733 Forsyth Boulevard, 2nd Floor, in Clayton, Missouri. Information
regarding business to be conducted at the meeting is set forth in the
accompanying Notice of Annual Meeting and Proxy Statement.

We cannot stress enough the importance of the vote of every shareholder,
regardless of the number of shares owned. THEREFORE, EVEN IF YOU ARE PLANNING TO
ATTEND THE MEETING, WE URGE YOU TO COMPLETE AND RETURN THE ENCLOSED PROXY TO
ENSURE THAT YOUR SHARES WILL BE REPRESENTED. A postage-paid envelope is enclosed
for your convenience. Should you later decide to attend the meeting, you may
revoke your proxy at any time and vote your shares personally at the meeting.

We look forward to seeing many shareholders at the meeting.

Sincerely,

/s/ Gregory J. Nooney, Jr.

GREGORY J. NOONEY, JR.
Chairman of the Board and
Chief Executive Officer
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NOONEY REALTY TRUST, INC.
7701 FORSYTH BOULEVARD
ST. LOUIS, MISSOURI 63105

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, JULY 3, 1997

To the Shareholders of
Nooney Realty Trust, Inc.:

You are hereby notified that the Annual Meeting of Shareholders of Nooney
Realty Trust, Inc. (the "Trust") will be held at 10:00 A.M. on Thursday, July
3, 1997, at the Pierre Laclede Conference Center, 7733 Forsyth Boulevard, 2nd
floor, in Clayton, Missouri, for the following purposes:

A. To consider and vote upon a proposal to amend, in certain respects,
certain restrictions contained in Article VIII of the Trust's Bylaws
relating to the ability of a person or entity to acquire shares of the
Trust representing an amount greater than 9.8% of the total value of the
issued and outstanding shares.

1. To elect seven directors to hold office until the next Annual Meeting of
Shareholders and until their successors are elected and qualify.

2. To consider and vote upon a proposal to amend, in certain respects, the
investment policy of the Trust as contained in Article VI of the Trust's
Bylaws, which amendment would, among other things, eliminate the Trust's
self liquidating policy and allow the Trust to reinvest proceeds from the
sale, financing or refinancing of its properties.

3. To vote upon a proposal to adjourn the Annual Meeting of Shareholders to
allow for additional solicitation of shareholder proxies or votes in the
event that the number of proxies or votes sufficient to obtain a quorum
or to approve Proposals A, 1 and/or 2 have not been received by the date
of the Annual Meeting of Shareholders.

4. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.

The Trust's Board of Directors has fixed the close of business on June 2,
1997, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting.

BY ORDER OF THE BOARD OF DIRECTORS

PATRICIA A. NOONEY
Secretary

June 3, 1997
St. Louis, Missouri

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NOONEY REALTY TRUST, INC.
7701 FORSYTH BOULEVARD
ST. LOUIS, MISSOURI 63105

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 3, 1997

The enclosed proxy is solicited on behalf of the Board of Directors of
Nooney Realty Trust, Inc., a Missouri corporation, for use at the Annual Meeting
of Shareholders to be held at 10:00 A.M. on Thursday, July 3, 1997, at the
Pierre Laclede Conference Center, 7733 Forsyth Boulevard, 2nd Floor, in Clayton,
Missouri, or any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. This proxy statement and
the enclosed form of proxy are being first mailed to shareholders on or about
June 3, 1997.

The close of business on June 2, 1997, has been fixed by the Board of
Directors as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting. On June 2, 1997, there were
issued and outstanding and entitled to vote 866,624 shares of the Trust's common
stock, par value $1.00 per share.

If a shareholder is a participant in the Trust's Dividend Reinvestment Plan,
the proxy card represents the number of full shares in the dividend reinvestment
plan account, as well as shares registered in the participant's name. All
proxies in the accompanying form will be voted in accordance with the
instructions given in the proxy. Shareholders are entitled to vote cumulatively
for the election of directors. Each shareholder is entitled to a number of votes
for the election of directors equal to the number of shares held by the
shareholder multiplied by the number of directors to be elected (7), and a
shareholder may cast all votes for one nominee or distribute the votes among the
nominees as preferred. If cumulative voting rights are exercised by any
shareholder, the proxies may be voted cumulatively for less than all of the
Trust's nominees in the discretion of the persons voting such proxies. On all
other matters, shareholders will be entitled to one vote per share. A
shareholder may revoke his proxy at any time before it is voted by delivering to
the Trust another proxy bearing a later date, by submitting written notice to
the Secretary of such revocation, or by appearing in person at the Annual
Meeting and casting a contrary vote.

Proposal A as described herein will be the first proposal voted on at the
Annual Meeting. The affirmative vote of 62.0% of the issued and outstanding
shares of the Trust (which represents a majority of the issued and outstanding
shares of the Trust plus an amount in excess of the 98,895 shares which may have
been purchased by PICO Holdings, Inc., or its affiliates and subsidiaries, in
violation of the Trust's Bylaws in the manner described in Proposal A below)
will be required to amend the Bylaws as described in Proposal A. Although an
amendment to the Trust's Bylaws only requires the affirmative vote of a majority
of the issued and outstanding shares of the Trust, the Board of Directors of the
Trust has elected to require the greater percentage described above with respect
to the matters described in Proposal A in order to negate the voting power of
shares which may be ineligible to vote with respect to the matters described in
Proposal A.

The affirmative vote of a majority of the issued and outstanding shares of
the Trust is required to amend the Bylaws as described in Proposal 2. The
affirmative vote of the holders of a majority of the shares which are present in
person or represented by proxy at the Annual Meeting is required to elect
directors, to adjourn the Annual Meeting to allow for additional

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solicitation of proxies or votes and to act on any other matters properly
brought before the Meeting. Shares represented by proxies which are marked
"withhold authority" with respect to the election of any one or more nominees
for election as directors, proxies which are marked "abstain" on the
amendments of the Bylaws or any proposal to adjourn the Annual Meeting to allow
for additional solicitation of proxies or votes and proxies which are marked to
deny discretionary authority on other matters will be counted for the purpose of
determining the number of shares represented by proxy at the Meeting. Such
proxies will have the same effect as if the shares represented thereby were
voted against such nominee or nominees, against the amendments to the Bylaws,
against any proposal to adjourn the Annual Meeting to allow for additional
solicitation of proxies or votes and against such other matters, respectively.
Shares not voted on proxies returned by brokers will have the same effect as
shares voted against the amendments to the Bylaws and will be treated as not
represented at the Meeting with respect to the election of directors, any
proposal to adjourn the Annual Meeting to allow for additional solicitation of
proxies or votes and other matters.

The Trust will pay all costs of preparing and soliciting proxies for the
Annual Meeting. In addition to solicitation by mail, the Trust may solicit
proxies from shareholders personally, or by telephone. The Trust will retain
MacKenzie Partners, Inc. to assist in soliciting proxies for a fee of
approximately $7,500 plus reasonable expenses and costs. The Trust will also
reimburse brokerage firms, banks and other nominees for their reasonable costs
incurred in forwarding proxy materials for shares held of record by them to the
beneficial owners of such shares.

THE TRUST WILL FURNISH TO SHAREHOLDERS A COPY OF ITS 1996 ANNUAL REPORT ON
FORM 10-K (WITHOUT CHARGE), UPON WRITTEN REQUEST ADDRESSED TO PATRICIA A.
NOONEY, SECRETARY, NOONEY REALTY TRUST, INC., 7701 FORSYTH BOULEVARD, ST. LOUIS,
MISSOURI 63105.

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PROPOSAL 1

ELECTION OF DIRECTORS

The Board of Directors proposes the election of the seven nominees listed
below to serve as directors of the Trust until the next Annual Meeting of
Shareholders and until their successors have been elected and qualify, or until
their earlier death, resignation or removal. If any vacancy in the list of
nominees shall occur for any reason, the Board of Directors will select a
substitute nominee to be voted upon at the Annual Meeting.

POSITIONS OR OFFICES
NAME AGE WITH THE TRUST
---- --- --------------------

Gregory J. Nooney, Jr......................... 66 Chairman of the Board, Chief Executive Officer
and Director
Patricia A. Nooney............................ 40 President, Secretary, Treasurer and Director
Robert E. Kresko.............................. 62 Director
Gene K. Beare................................. 81 Director<F*>
Bruce P. Hayden............................... 81 Director<F*>
James P. Ingram............................... 56 Director<F*>
Richard H. Sharpe............................. 41 Nominee for Director<F*>

<FN>
- - -------

<F*>Independent Director as defined in the Trust's Bylaws.

Mr. Nooney, Mr. Kresko, Mr. Beare, Mr. Hayden and Mr. Ingram have served as
directors of the Trust since its formation in June 1984. Ms. Nooney has served
as a director since August 1992. John R. Hart, 37, a current director of the
Trust whose term as a director will terminate on the day his successor is
elected and qualified (which is expected to be the day of the Annual Meeting),
is not a nominee for director this year. Mr. Hart is the President and Chief
Executive Officer of PICO Holdings, Inc., an insurance holding company ("PICO
Holdings"). See Proposal A below for a detailed discussion of the relationship
of PICO Holdings to the Trust.

The following is a brief summary of the business experience during the past
five years of each of the nominees for election as directors of the Trust,
including, where applicable, information regarding other directorships held by
each nominee:

Gregory J. Nooney, Jr. has served as Chairman of the Board and Chief
Executive Officer of Nooney Company since May 1983. Mr. Nooney joined Nooney
Company in 1954 and served as President from 1969 to May 1983. Nooney Company,
which was founded in 1945, is a diversified real estate investment management
company.

During 1993 Lindbergh Boulevard Partners, L.P. filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code. Gregory J. Nooney, Jr. is
the general partner of Nooney Ltd. II, L.P., which in turn is the general
partner of Nooney Development Partners, L.P., which in turn is the general
partner of Nooney-Hazelwood Associates, L.P. which is the general partner of
Lindbergh Boulevard Partners, L.P. Lindbergh Boulevard Partners, L.P. emerged
from bankruptcy on May 17, 1994 when its Plan of Reorganization was confirmed.

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Patricia A. Nooney is Senior Vice President and Chief Financial Officer of
Nooney Krombach Company, a wholly-owned subsidiary of Nooney Company, and has
served as an executive officer for more than five years.

Robert E. Kresko is a private investor. Mr. Kresko is a member of the
Management Board of Trammel Crow Company, Dallas, Texas, a national real estate
development firm where he was employed until December 31, 1989.

Gene K. Beare is a corporate consultant. Mr. Beare served as a director of
American Maize-Products Company, Stamford, Connecticut until May 1992. Mr. Beare
also served as a director of Emerson Electric Co., St. Louis, Missouri, from
1972 until 1987, and of Westvaco Corporation, New York, New York, from 1968
until 1988.

Bruce P. Hayden is Chairman of Hayden Associates, Inc., Bloomfield,
Connecticut, a real estate investment advisory, counseling and brokerage firm
founded by Mr. Hayden in 1972. Mr. Hayden was a Trustee and a member of the
Investment Company of Corporate Property Investors, a real estate investment
trust, from 1972 to March 1992.

James P. Ingram is President of Cambridge Savings Bank, Cambridge,
Massachusetts. From 1986 through 1987 Mr. Ingram was a partner in McManus,
Wakeman & Ingram, Inc., Boston, Massachusetts, a real estate consulting and
development firm. From 1965 until December 1985, Mr. Ingram was employed by
R. M. Bradley & Co., Inc., Boston, Massachusetts, a full service commercial
real estate investment and management company, most recently as Senior Vice
President. While with R. M. Bradley & Co., Inc., Mr. Ingram was primarily
involved in management of the Bradley Real Estate Trust, a real estate
investment trust, and in office, retail and commercial brokerage.

Richard H. Sharpe is Chief Operating Officer of PICO Holdings. He also
serves in various capacities with subsidiaries and affiliate corporations,
including Physicians Insurance Company of Ohio, Chief Operating Officer;
American Physicians Life Insurance Company, President, Chief Executive Officer
and Director; and Sequoia Insurance Company and Citation Insurance Company,
Director. He joined the PICO group in 1977. Mr. Sharpe is also the current
President of the Association of Ohio Life Insurance Companies. See Proposal A
below for a detailed discussion of the relationship of PICO Holdings to the
Trust.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE NOMINEES FOR DIRECTORS OF
---
THE TRUST.

COMMITTEES OF THE BOARD

The Board of Directors of the Trust met five times during 1996, four times
at regularly scheduled meetings and one time at a special meeting via telephone
conference. All of the directors attended at least seventy-five percent of the
meetings of the Board of Directors and meetings held by those committees of the
Board on which they served except Mr. Kresko who was unable to attend two
regularly scheduled meetings of the Board of Directors.

Among the standing committees of the Board of Directors are the Executive
Committee and the Audit Committee. The Trust does not have standing nominating
or compensation committees.

The Executive Committee is comprised of Gregory J. Nooney, Jr., Gene K.
Beare and James P. Ingram. The Executive Committee is empowered to exercise,
between regular meetings of the Board of Directors, all of the authority of the
Board of Directors in the management of the Trust. The Executive Committee did
not meet during 1996.

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The Audit Committee is comprised of James P. Ingram, Gene K. Beare and Bruce
P. Hayden. The functions of the Audit Committee are to recommend to the Board of
Directors the accounting firm to serve as the independent auditor of the Trust,
to monitor and review with the independent auditor the Trust's financial
reporting and accounting procedures and policies, to supervise the adequacy of
the Trust's financial, accounting and operating controls and to review the scope
of any audits conducted by the independent auditor. The Audit Committee met two
times during 1996.

CERTAIN BUSINESS RELATIONSHIPS

Gregory J. Nooney, Jr. serves as a general partner of Nooney Advisors Ltd.,
L.P., the Advisor to the Trust. Nooney Advisors Ltd., L.P. is entitled to
receive regular monthly compensation from the Trust for rendering advisory
services to the Trust. During 1996 the Trust paid advisory fees of $117,864 to
Nooney Advisors Ltd., L.P. The Board of Directors has renewed the Advisory
Agreement between the Trust and Nooney Advisors Ltd., L.P. for the period April
1, 1997 to March 31, 1998.

Gregory J. Nooney, Jr. and Patricia A. Nooney, who are father and daughter,
are directors of Nooney Krombach Company, a wholly-owned subsidiary of Nooney
Company, which serves as manager of the Trust's properties. Nooney Krombach
Company is entitled to receive monthly compensation from the Trust for property
management and leasing services, plus reimbursement of expenses. During 1996 the
Trust paid property management and leasing fees of $148,728 to Nooney Krombach
Company.

Robert E. Kresko is a director of Nooney Krombach Company.

See Proposal A below for a detailed discussion of the relationship of PICO
Holdings to the Trust.

EXECUTIVE COMPENSATION

The officers of the Trust do not receive any direct compensation from the
Trust for their services as officers of the Trust.

DIRECTORS' COMPENSATION

Pursuant to the Trust's Bylaws, Gregory J. Nooney, Jr. and Patricia A.
Nooney do not receive any direct compensation from the Trust for their services
as directors of the Trust. (See the section above entitled "Certain Business
Relationships.")

The other directors were entitled to receive the following fees during 1996:
(a) $500 for each meeting attended in person, (b) $250 for each meeting
conducted by telephone conference at which a vote was taken and (c) an annual
fee of $1,000. In the case of Robert E. Kresko, who is not an Independent
Director, as defined in the Trust's Bylaws, such fees were paid by Nooney
Company. In addition, the Independent Directors were reimbursed by the Trust for
their travel expenses and other out-of-pocket expenses incurred in connection
with attending meetings of the Trust and carrying on the business of the Trust.

Except as stated above, the directors of the Trust did not receive any fees
from the Trust pursuant to any other plans of compensation.

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PERFORMANCE GRAPH

The following graph shows a five-year comparison of cumulative total returns
(change in stock price plus reinvested dividends) for Nooney Realty Trust, Inc.
("N.R. Trust"), the NASDAQ Stock Market Total Return Index ("NASDAQ") and
the National Association of Real Estate Investment Trusts ("NAREIT") Total
Return Index.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
NOONEY REALTY TRUST, NASDAQ STOCK MARKET TOTAL RETURN INDEX
AND NAREIT TOTAL RETURN INDEX

[GRAPH]
NOONEY REALTY TRUST

Assumes $100 invested on December 31, 1991 in Nooney Realty Trust, Inc.
Common Stock, NASDAQ Stock Market Index and NAREIT Index

DECEMBER 31,
--------------------------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----

NASDAQ............................................ $186.87 $214.51 $209.69 $296.30 $364.71
NAREIT............................................ $152.20 $180.43 $181.88 $215.18 $292.12
N.R. Trust........................................ $ 60.96 $ 65.57 $ 95.09 $116.11 $161.26

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PROPOSAL 2

PROPOSAL TO APPROVE AN AMENDMENT TO
ARTICLE VI OF THE TRUST'S BYLAWS

The Investment Policy of the Trust as contained in its Bylaws contains a so
called "self-liquidating" provision, which states that the net proceeds of the
sale, financing or refinancing of the Trust's investment properties will not be
reinvested, but will either be distributed to the shareholders or applied to
such capital improvements to, or the payment of indebtedness with respect to,
existing properties of the Trust or the payment of any other expenses or the
establishment of any reserves, all as may be deemed necessary and appropriate by
the Board of Directors of the Trust. In accordance with the Bylaws, these
proceeds may also be used to purchase the land underlying any of the Trust's
investment properties in cases where the Trust is not already the owner. This
self-liquidating policy essentially precludes the Trust from reinvesting the
proceeds from the disposition, financing or refinancing of its properties into
new assets, including other real property investments.

The Investment Policy of the Trust also restricts the ability of the Trust
to take certain actions, including, among other things, investing in the equity
of any other real estate investment trusts or exchanging its own common stock
for any real estate investments.

The Board of Directors proposes to adopt an amendment to the Trust's Bylaws
that would:

(i) eliminate the Company's self-liquidating policy;

(ii) eliminate the restriction relating to the Trust's ability to invest in
the equity of other real estate investment trusts; and

(iii) eliminate the restriction relating to the Trust's ability to exchange
common stock in the Company for any real estate investments.

The Board of Directors believes that providing management of the Trust with
the flexibility to reinvest property sale, financing or refinancing proceeds in
one or more new investment opportunities, including new properties, to purchase
the equity securities of other real estate investment trusts, and/or to use its
own common stock in connection with new real estate investment opportunities
will help achieve the Trust's goal of increasing the Trust's value and
maximizing the return to shareholders. In addition, if new common shares are
issued, then there should be an increase in the number of shareholders and
related trading activity. At this time, the Trust has no plans to sell, finance
or refinance any of its properties or purchase any new properties, to purchase
the equity securities of other real estate investment trusts, or to exchange its
common stock for other real estate investments. Moreover, there can be no
assurance that the Trust will pursue any of these courses of action should the
amendment to the Bylaws as described in this Proxy Statement be adopted.

The Trust's self-liquidating policy is contained in Article VI, Section 6.1
of the Trust's Bylaws. The relevant portion of the text is as follows:

"The Trust is intended to be "self-liquidating." Accordingly, it is
the policy of the Trustees that the net proceeds of the sale, financing or
refinancing of each investment property, except as provided below, will not
be reinvested, but will either be distributed to the Shareholders or applied
to such capital improvements to, or the payment of indebtedness with respect
to, existing properties of the Trust or the payment of any other expenses or
the establishment of any reserves, all as the Trustees deem necessary and
appropriate. In addition, the Trust may utilize the net proceeds of any
sale, financing or refinancing of an investment property to purchase the
land underlying any of the Trust's investment properties in cases where the
Trust is not already the owner. Also, if, within five (5) years from the
effective date of the Trust's registration statement in connection with its
initial public

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offering of Shares, the Trust sells, finances or refinances an investment
property, the Trust may reinvest, during such time period, the proceeds of
such sale, financing or refinancing. The disposition of a property back to
the original seller or an Affiliate thereof, whether in the form of a
recission, exchange or resale or pursuant to an option or similar
arrangement entered into at or prior to the time of taking title to such
property, shall not be deemed a sale, financing or refinancing for the
purposes of the self-liquidating aspect of the investment policy of the
Trustees."

The Board of Directors believes it would be in the best interest of the
shareholders to amend the Trust's self-liquidating policy to allow for the
reinvestment of proceeds from the sale, financing or refinancing of its
properties. As a result, the Board of Directors has proposed that Article VI,
Section 6.1 of the Trust's Bylaws be amended to delete the foregoing paragraph
in its entirety.

The restriction relating to the ability of the Trust to invest in the equity
securities of other real estate investment trusts is contained in Article VI,
Section 6.2 (d). The relevant portion of the text is as follows:

"The Trust shall not: . . .

(d) Invest in any equity Security, including the shares of other REITs;
. . .."

The Board of Directors believes it would be in the best interests of the
shareholders to amend the Bylaws to permit the Trust to invest in the equity
securities of other real estate investment trusts. As a result, the Board of
Directors has proposed that Article VI, Section 6.2(d) of the Trust's Bylaws be
amended to delete the foregoing paragraph (d) in its entirety and replace it
with the following:

"(d) Invest in any equity Security other than the shares of other REITs
. . .."

The restriction relating to the ability of the Trust to exchange its own
common stock for any real estate investment is contained in Article VI, Section
6.2(i). The relevant portion of the text is as follows:

"The Trust shall not: . . .

(i) Exchange Shares for any real estate investment; . . .."

The Board of Directors believes it would be in the best interests of the
shareholders to amend the Trust's Bylaws to permit the Trust to exchange its own
common stock in connection with real estate investment opportunities. Therefore,
the Board of Directors has proposed that Article VI, Section 6.2(i) of the
Trust's Bylaws be amended to delete the foregoing paragraph (i) in its entirety
and replace it with the following:

"(i) [Reserved]; . . ."

The Trust has no current plans to (i) sell, finance or refinance or purchase
any real property, (ii) purchase the equity securities of any other real estate
investment trust or (iii) exchange its common stock for any real estate
investment upon the approval of the above amendment to the Trust's Bylaws as
described in this Proxy Statement. The Trust intends to take any one or more of
the foregoing actions only when any such action is believed to be in the best
interests of the shareholders and in order to achieve the Trust's goal of
maximizing the Trust's value and the return to shareholders. The Trust does not
believe that this amendment to the Bylaws will impact the Trust's current
dividend policy or status as a real estate investment trust.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE DESCRIBED AMENDMENT TO
---
THE TRUST'S BYLAWS.

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PROPOSAL 3

PROPOSAL TO APPROVE ANY ADJOURNMENT OF THE ANNUAL MEETING

A vote (i) in person by a shareholder for adjournment of the Annual Meeting
of Shareholders, or (ii) for Proposal 3 on the proxy card authorizing the named
proxies on the proxy card to vote the shares covered by such proxy to adjourn
the Annual Meeting of Shareholders, would allow for additional solicitation of
shareholder proxies or votes in order to obtain a quorum or in order to obtain
more proxies or votes in favor of Proposals A, 1 and/or 2. Consequently, it is
not likely to be in the interest of shareholders who intend to vote against
Proposals A, 1 and/or 2 to vote in person to adjourn the Annual Meeting of
Shareholders or to vote for Proposal 3 on the proxy card.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ANY PROPOSAL TO ADJOURN THE ANNUAL
---
MEETING TO ALLOW FOR ADDITIONAL SOLICITATION OF SHAREHOLDER PROXIES OR VOTES.

PROPOSAL A

PROPOSAL TO APPROVE AN AMENDMENT TO
ARTICLE VIII OF THE TRUST'S BYLAWS

The Internal Revenue Code of 1986, as amended (the "Code") contains
several ownership tests which an entity must meet in order to qualify as a
"real estate investment trust" or "REIT" for federal income tax purposes.
Pursuant to one of those ownership tests, at all times during the second half of
the Trust's taxable year, no more than 50% in value of the Trust's shares may be
owned, directly or indirectly, by five or fewer individuals (the so-called
"closely held test"). If the closely held test is violated, the Trust would
lose its REIT status for five years (including the year of violation).

In addition, there are various income tests which an entity must meet in
order to qualify as a REIT. As a practical matter, under those income tests, the
Trust must not, among other things, derive more than 5% of its income from the
rents paid by one or more tenants in which the Trust owns, directly or
indirectly, a 10% or greater interest (the so-called "tenant owned test").
Under the tenant owned test, the Trust will be deemed to own an interest in a
tenant owned by any shareholder of the Trust who owns, directly or indirectly,
10% or more of the value of the outstanding shares of the Trust. A violation of
the tenant owned test does not necessarily result in loss of REIT tax status
since there are several relief provisions which may (or may not) be applicable.
Such relief provisions, however, could cause tax to be payable by the Trust.

The Trust's Bylaws place certain restrictions on the accumulation of shares
by the Trust's shareholders in order to guard against the concentration of
ownership of shares to an extent which is contrary to the closely held test and
tenant owned test. Specifically, Section 8.8(a) of the Bylaws provides that no
person may acquire, directly or indirectly, in excess of 9.8% of the outstanding
shares of the Trust.

Section 8.8(b) of the Trust's Bylaws provides that any acquisition of shares
in excess of 9.8% shall be null and void with respect to the shares that are
acquired in excess of the 9.8% limitation. Section 8.8(b) further provides that
any such excess shares (i) shall be considered to have been acquired by and held
on behalf of the Trust, (ii) shall not be considered outstanding for quorum or
voting purposes and (iii) shall not be entitled to receive dividends, interest
or any other distribution.

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Section 8.8 of the Bylaws is set forth below in its entirety:

"(a) In order to guard against the concentration of ownership of Shares
and warrants or similar rights to purchase Shares to an extent which is
contrary to the requirements of the REIT Provisions of the Internal
Revenue Code, no Person may at any time subsequent to the Trust's
commencement of business operations acquire ownership of or own, directly or
indirectly, as determined pursuant to both (i) Section 318 and (ii) Sections
542(a) and 544 of the Internal Revenue Code, (A) a number of Shares in
excess of 9.8% of the outstanding Shares of the Trust, or (B) an aggregate
number of Shares and warrants and similar rights to purchase Shares in
excess of 9.8% of the aggregate number of outstanding Shares and warrants
and similar rights to purchase Shares. In addition, no Shares shall be
transferred (or issued, for example, upon the exercise of warrants) and no
warrants shall be transferred to any Person if, following such transfer,
such Person's direct or indirect ownership of Shares and warrants and
similar rights to purchase Shares would exceed these limits.

(b) If Shares or warrants or similar rights to purchase Shares are
acquired by any Person in violation of this Section 8.8, such acquisition
shall be valid only to the extent it does not result in a violation of this
Section 8.8, and such acquisition shall be null and void with respect to the
excess ("Excess Shares" and/or "Excess Warrants"). Excess Shares shall
be deemed to have been acquired and to be held on behalf of the Trust, and,
as the equivalent of treasury shares for such purpose, shall not be
considered to be outstanding for quorum or voting purposes, and shall not be
entitled to receive dividends, interest or any other distribution. Excess
warrants shall be deemed to be void.

(c) The Trust shall, if deemed necessary or desirable to implement the
provisions of this Section 8.8, include on the face or back of each Share or
warrant certificate issued by the Trust an appropriate legend referring the
holder of such certificate to the restrictions contained in this Section 8.8
and stating that the complete text of this Section 8.8 is on file with the
Secretary of the Trust at the Trust's registered office.

(e) If any provision of this Section 8.8 or any application of any such
provision is determined to be invalid by any federal or state court having
jurisdiction over the issue, the validity of the remaining provisions shall
not be affected and the other applications of such provisions shall be
affected only to the extent necessary to comply with the determination of
such court."

For the reasons described below, the Board of Directors proposes to adopt an
amendment to Article VIII of the Trust's Bylaws that would:

(i) clarify that the calculation of the 9.8% ownership threshold is to be
made in conformity with the provisions of the Code related to real estate
investment trusts;

(ii) suspend application and enforcement of Section 8.8(b) of the Bylaws for
all periods on or prior to April 23, 1997;

(iii) enable the Independent Directors to waive or modify periodically any
provisions of Section 8.8 of the Bylaws with respect to any shares acquired in
excess of the 9.8% ownership threshold, provided that such Independent Directors
are satisfied that (aa) any such acquisition will not result in the
disqualification of the Trust as a real estate investment trust or otherwise
subject the Trust to tax and (bb) that the waiver is in the best interest of the
Trust;

12
14
(iv) clarify that neither the Trust nor the officers and directors of the
Trust are responsible for making determinations with respect to the number of
shares that any person shall be deemed to own for purposes of Section 8.8;

(v) provide that the Bylaws may be amended by a vote of a majority of the
Independent Directors if the Independent Directors determine that such amendment
is necessary or advisable to protect the status of the Trust as a real estate
investment trust or otherwise minimize the risk that the Trust may become
subject to federal income tax payable by the Trust; and

(vi) eliminate certain references in Section 8.8 of the Bylaws to warrants
to purchase additional Trust shares.

Section 8.8, if amended in the foregoing manner, would read in its entirety
as follows:

(a) Except as otherwise provided in this Section 8.8, in order to guard
against the concentration of ownership of Shares to an extent which is
contrary to the requirements of the REIT Provisions of the Internal Revenue
Code (including, but not limited to, Sections 856(a)(6) and 856(d)(2)(B), or
successor provisions, of the Internal Revenue Code), no Person may at any
time subsequent to the Trust's commencement of business operations acquire
ownership of or own directly or indirectly by application of the pertinent
indirect ownership rules of the Internal Revenue Code (including, but not
limited to, Sections 318, 542(a), 544, 856(d)(5) and 856(h), or successor
provisions, of the Internal Revenue Code) in excess of 9.8% of the value of
the outstanding Shares of the Trust (the "9.8% Limit"). In addition, no
Shares shall be transferred (or issued) to any Person if, following such
transfer (or issuance), such Person's direct or indirect ownership of Shares
would exceed the 9.8% Limit. If Shares are acquired by any Person in
violation of the 9.8% Limit, such acquisition shall be valid only to the
extent it does not result in a violation of the 9.8% Limit, and such
acquisition shall be null and void with respect to the excess ("Excess
Shares"). Excess Shares shall be deemed to have been acquired by, and to be
held on behalf of, the Trust, and, as the equivalent of treasury shares for
such purpose, shall not be considered to be outstanding for quorum or voting
purposes, and shall not be entitled to receive dividends, interest or any
other distribution. Notwithstanding anything to the contrary contained in
these By-laws, the Trust shall not be required to make any payment to any
Person in respect of Excess Shares, such Excess Shares shall be forfeited to
the Trust without compensation, and the Trust shall automatically become the
record and beneficial owner of the Excess Shares.

(b) The provisions of Section 8.8(a) shall not (before or after April
23, 1997) be applicable with respect to any Excess Shares acquired by any
Person on or prior to April 23, 1997 (the "Exempt Shares") provided,
however, that any person who owns or owned any Exempt Shares on or prior to
April 23, 1997 shall not acquire ownership of or own, directly or
indirectly, any additional Shares subsequent to such date if all Shares
owned, directly or indirectly, by such Person after such acquisition exceeds
the 9.8% Limit and, if such new Shares are in fact acquired, such new Shares
shall be treated as Excess Shares.

(c) The Trust shall, if deemed necessary or advisable to implement the
provisions of this Section 8.8, include on the face or back of each Share
certificate issued by the Trust an appropriate legend referring the holder
of such certificate to the restrictions contained in this Section 8.8 and
stating that the complete text of this Section 8.8 is on file with the
Secretary of the Trust at the Trust's registered office.

13
15
a REIT under the Internal Revenue Code or otherwise minimize the risk that
the Trust may become subject to federal income tax payable by the Trust.

(f) Notwithstanding anything to the contrary contained in Article XI,
the Independent Directors may waive or modify any provisions of this Section
8.8, subject to such conditions as the Independent Directors may impose in
their sole and absolute discretion, with respect to any Excess Shares owned,
directly or indirectly, by any Person after April 23, 1997, if the
Independent Directors shall have received an opinion of counsel,
satisfactory to the Independent Directors, from the Person owning, directly
or indirectly, the Excess Shares that the ownership of such Excess Shares
would not cause the Trust to be in violation of the REIT Provisions of the
Internal Revenue Code or otherwise subject the Trust to federal income tax.

(g) Except as expressly required by the REIT Provisions of the Internal
Revenue Code, nothing contained in these By-laws shall in any manner be read
or understood to obligate or make the Trust, the Trustees or the officers of
the Trust, responsible for making determinations relating to the number of
Shares deemed to be owned by any Person for purposes of this Section 8.8.

(h) Notwithstanding anything to the contrary contained in Article XI,
these Bylaws may be amended from time to time upon a vote of the majority of
the Independent Directors, and without the approval of the Shareholders, if
said majority of the Independent Directors determine that an amendment is
necessary or advisable to protect the status of the Trust as a REIT under
the REIT Provisions of the Code or otherwise minimize the federal income tax
payable by the Trust.

The following version of Section 8.8 shows the proposed additions to Section
8.8 as italicized and the proposed deletions as struck through:

[(a) In] (a) Except as otherwise provided in this Section 8.8, in order
--------------------------------------------------------
to guard against the concentration of ownership of Shares [and warrants or
similar rights to purchase Shares] to an extent which is contrary to the
requirements of the REIT Provisions of the Internal Revenue Code (including,
-----------
but not limited to, Sections 856(a)(6) and 856(d)(2)(B), or successor
---------------------------------------------------------------------
provisions, of the Internal Revenue Code), no Person may at any time
------------------------------------------
subsequent to the Trust's commencement of business operations acquire
ownership of or own[, directly or indirectly, as determined pursuant to both
(i) Section 318 and (ii) Sections 542(a) and 544] directly or indirectly by
-------------------------
application of the pertinent indirect ownership rules of the Internal
-----------------------------------------------------
Revenue Code[, (A) a number of Shares] (including, but not limited to,
-------------------------------
Sections 318, 542(a), 544, 856(d)(5) and 856(h), or successor provisions, of
----------------------------------------------------------------------------
the Internal Revenue Code) in excess of 9.8% of the value of the outstanding
-------------------------- ------------
Shares of the Trust[, or (B) an aggregate number of Shares and warrants and
similar rights to purchase Shares in excess of 9.8% of the aggregate number
of outstanding Shares and warrants and similar rights to purchase Shares]
(the "9.8% Limit"). In addition, no Shares shall be transferred (or
-------------------
issued[, for example, upon the exercise of warrants) and no warrants shall
be transferred]) to any Person if, following such transfer (or issuance),
--------------
such Person's direct or [indirect] indirect ownership of Shares would exceed
-------- ------------
the 9.8% Limit. If [and warrants and similar rights to purchase Shares would
---------------
exceed these limits.]

14
16
[(b) If Shares or warrants or similar rights to purchase] Shares are
acquired by any Person in violation of [this Section 8.8] the 9.8% Limit,
---------------
such acquisition shall be valid only to the extent it does not result in a
violation of [this Section 8.8] the 9.8% Limit, and such acquisition shall
---------------
be null and void with respect to the excess ("Excess Shares" [and/or "Excess
Warrants")]). Excess Shares shall be deemed to have been acquired by, and to
---
be held on behalf of, the Trust, and, as the equivalent of treasury shares
for such purpose, shall not be considered to be outstanding for quorum or
voting purposes, and shall not be entitled to receive dividends, interest or
any other distribution. [Excess warrants shall be deemed to be void]
Notwithstanding anything to the contrary contained in these By-laws, the
------------------------------------------------------------------------
Trust shall not be required to make any payment to any Person in respect of
---------------------------------------------------------------------------
Excess Shares, such Excess Shares shall be forfeited to the Trust without
-------------------------------------------------------------------------
compensation, and the Trust shall automatically become the record and
---------------------------------------------------------------------
beneficial owner of the Excess Shares.
--------------------------------------

(b) The provisions of Section 8.8(a) shall not (before or after April
---------------------------------------------------------------------
23, 1997) be applicable with respect to any Excess Shares acquired by any
-------------------------------------------------------------------------
Person on or prior to April 23, 1997 (the "Exempt Shares") provided,
--------------------------------------------------------------------
however, that any person who owns or owned any Exempt Shares on or prior to
---------------------------------------------------------------------------
April 23, 1997 shall not acquire ownership of or own, directly or
-----------------------------------------------------------------
indirectly, any additional Shares subsequent to such date if all Shares
-----------------------------------------------------------------------
owned, directly or indirectly, by such Person after such acquisition exceeds
----------------------------------------------------------------------------
the 9.8% Limit and, if such new Shares are in fact acquired, such new Shares
----------------------------------------------------------------------------
shall be treated as Excess Shares.
----------------------------------

(c) The Trust shall, if deemed necessary or [desirable] advisable to
---------
implement the provisions of this Section 8.8, include on the face or back of
each Share [or warrant] certificate issued by the Trust an appropriate
legend referring the holder of such certificate to the restrictions
contained in this Section 8.8 and stating that the complete text of this
Section 8.8 is on file with the Secretary of the Trust at the Trust's
registered office.

(d) Nothing herein contained shall limit the ability of the Trustees to
impose or to seek judicial or other imposition of additional restrictions if
deemed necessary or advisable to protect the Trust and the interests of its
Shareholders by preservation of the Trust's status as a REIT under the
Internal Revenue Code or otherwise minimize the risk that the Trust may
-------------------------------------------------
become subject to federal income tax payable by the Trust.
----------------------------------------------------------

(f) Notwithstanding anything to the contrary contained in Article XI,
---------------------------------------------------------------------
the Independent Directors may waive or modify any provisions of this Section
----------------------------------------------------------------------------
8.8, subject to such conditions as the Independent Directors may impose in
--------------------------------------------------------------------------
their sole and absolute discretion, with respect to any Excess Shares owned,
----------------------------------------------------------------------------
directly or indirectly, by any Person after April 23, 1997, if the
------------------------------------------------------------------
Independent Directors shall have received an opinion of counsel,
----------------------------------------------------------------
satisfactory to the Independent Directors, from the Person owning, directly
---------------------------------------------------------------------------
or indirectly, the Excess Shares that the ownership of such Excess Shares
-------------------------------------------------------------------------
would not cause the Trust to be in violation of the REIT Provisions of the
--------------------------------------------------------------------------
Internal Revenue Code or otherwise subject the Trust to federal income tax.
---------------------------------------------------------------------------

(g) Except as expressly required by the REIT Provisions of the Internal
-----------------------------------------------------------------------
Revenue Code, nothing contained in these By-laws shall in any manner be read
----------------------------------------------------------------------------
or understood to obligate or make the Trust, the Trustees or the officers of
----------------------------------------------------------------------------
the Trust, responsible for making determinations relating to the number of
--------------------------------------------------------------------------
Shares deemed to be owned by any Person for purposes of this Section 8.8.
-------------------------------------------------------------------------

17
(h) Notwithstanding anything to the contrary contained in Article XI,
---------------------------------------------------------------------
these Bylaws may be amended from time to time upon a vote of the majority of
----------------------------------------------------------------------------
the Independent Directors, and without the approval of the Shareholders, if
---------------------------------------------------------------------------
said majority of the Independent Directors determine that an amendment is
-------------------------------------------------------------------------
necessary or advisable to protect the status of the Trust as a REIT under
-------------------------------------------------------------------------
the REIT Provisions of the Code or otherwise minimize the federal income tax
----------------------------------------------------------------------------
payable by the Trust.
---------------------

As of December 31, 1995, Physicians Insurance Company of Ohio, Inc. , a
subsidiary of PICO Holdings ("PICO", and together with PICO Holdings and their
affiliates and subsidiaries, the "PICO Group") reported direct ownership of
9.11% of the Trust shares. This information was contained in Amendment No. 1 to
Schedule 13G dated as of December 31, 1995, as filed by PICO with the Securities
and Exchange Commission ("SEC"). The Trust relies on such statements filed
with the SEC for information relating to the PICO Group's stock ownership
positions in the Trust since all of the PICO Group's stock holdings in the Trust
are held through Cede & Co., a nominee of Depository Trust Co., a depository for
securities held in brokerage accounts. Many of the Trust's other shareholders
also hold their shares through this nominee. As of April 25, 1997, 434,828
shares (approximately 50% of the issued and outstanding shares) of the Trust
were held of record by Cede & Co. Moreover, for purposes of Section 8.8 of the
Trust's Bylaws, a person "owns" not only the shares that person directly owns,
but also those shares that person is deemed to own by application of highly
technical attribution rules imposed by the REIT Provisions of the Code.
Therefore, from a practical standpoint, it is virtually impossible for the Trust
to determine the direct and indirect ownership of any person in its shares at
any given time, without attempting to obtain such information directly from any
such shareholder. Moreover, because of these highly technical attribution rules
imposed by the Code, shareholders in the Trust may or may not be able to
determine exactly how many shares they are deemed to own indirectly for purposes
of Section 8.8.

In May, 1996, the Trust received a letter from PICO dated May 1, 1996,
advising the Trust that the PICO Group beneficially owned directly 14.29% of the
Trust's outstanding shares. On June 17, 1996, the Trust sent PICO a letter
advising that, as a result of the increase in the PICO Group's direct ownership
position in the Trust from 9.11% to 14.29%, the PICO Group's direct share
ownership exceeded the 9.8% level permitted by the Trust's Bylaws. The Trust
also suggested in its letter that PICO seek legal counsel with respect to this
matter.

In December, 1996, the Trust learned of a further increase in the PICO
Group's ownership position in the Trust upon the filing of a Form 3 with the SEC
by John R. Hart, President and Chief Executive Officer of PICO Holdings,
following Mr. Hart's election to the Board of Directors of the Trust to fill a
vacancy created by the death of R. Michael O'Brien, Jr. in September, 1996. Mr.
Hart's Form 3 disclosed that PICO owned 20.75% of the Trust's shares as of
November 15, 1996. In February, 1997, the Trust received a copy of Amendment No.
2 to Schedule 13G filed with the SEC by PICO Holdings disclosing that the PICO
Group beneficially owned 202,061 (approximately 23.3%) of the Trust's shares as
of December 31, 1996. According to this Amendment No. 2 to Schedule 13G, of
these 202,061 shares, 18,200 shares (approximately 2.1% of the Trust shares)
were beneficially owned by Summit Global Management, Inc., a wholly-owned
subsidiary of PICO ("Summit"). PICO has represented that Summit is an
investment manager of numerous investment advisory accounts that own Trust
shares and that Summit merely holds dispositive power over any Trust shares
owned by these accounts. The PICO Group has informed the Trust that the
beneficiaries of the accounts retain the right to vote the shares, the right to
receive dividends on the shares, and the benefits (and risk) of any increase (or
decrease) in the value of the shares. Accordingly, counsel to the PICO Group has
advised the Trust that the beneficiaries of the accounts, and not Summit, should
be deemed to own these shares for purposes of Section 8.8 of the Bylaws.

16
18
It should be noted that Schedule 13G is filed pursuant to Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Form
3 is filed pursuant to Section 16(a) of the Exchange Act. The rules and forms
under these sections have different reporting thresholds and different
definitions of "beneficial owner." For purposes of Section 13(d), a beneficial
owner of securities is a person who has or shares voting power and/or investment
(or dispositive) power, i.e., the power to vote or direct the voting and/or the
power to dispose or direct the disposition of such securities, while for
purposes of Section 16(a) a beneficial owner of securities is a person who has
or shares a pecuniary interest in such securities, i.e., the opportunity to
profit from a transaction in such securities. Shares beneficially owned as
reported pursuant to Section 13(d) are not necessarily the same as shares
beneficially owned as reported pursuant to Section 16(a). Moreover, the REIT
Provisions of the Code use different, and sometimes broader rules, to determine
who is deemed to be the indirect owner of shares.

On March 11, 1997, the Trust began receiving correspondence from a
shareholder in the Trust making certain allegations and demands regarding the
PICO Group's ownership position in the Trust. Among other things, this
shareholder demanded that the Board of Directors of the Trust enforce the
provisions of the Bylaws and treat any shares owned by the PICO Group in excess
of 9.8% in the manner provided in Section 8.8(b) of Article VIII of the Bylaws.
The Trust advised the PICO Group of the shareholder's demands. The PICO Group
subsequently informed the Trust that as of March 19, 1997, the PICO Group had
sold its interest in 98,895 shares, 11.4% of the Trust's shares, to numerous
investment advisory accounts managed by Summit. Therefore, according to the PICO
Group, the investment advisory accounts managed by Summit should be deemed to
own a total of 117,095 Trust shares (98,895 shares plus the 18,200 shares
described above as previously owned by Summit), or approximately 13.5% of the
Trust shares, for purposes of Section 8.8 of the Bylaws. Moreover, according to
the PICO Group, as of March 19, 1997, the PICO Group directly owned 9.8% of the
Trust's shares for purposes of Section 8.8 of the Bylaws and was in compliance
with that section (assuming that said 9.8% direct ownership is not increased by
any additional shares the PICO Group is deemed to own indirectly on account of
the attribution rules of the Code). The information provided to the Trust by the
PICO Group in regards to its sale of the 98,895 shares to Summit is consistent
with the information contained in Amendment No. 3 to Schedule 13G filed by PICO
Holdings as of March 19, 1997. For more detailed information regarding Amendment
No. 3 to Schedule 13G, please see the discussion under the heading "Security
Ownership of Certain Beneficial Owners and Management" on page 19.

In response to the demands of the shareholder described above, the Trust
called a special meeting of the Board of Directors to discuss the matters raised
by the shareholder and wrote to the shareholder to advise it of such meeting and
of the fact that the PICO Group had informed the Trust that it had disposed of
its interest in 11.4% of the Trust's shares. However, despite the disposition of
11.4% of the Trust's shares by the PICO Group, this shareholder has continued to
demand, among other things, that the Trust treat any shares that are or were
owned at any time by the PICO Group in excess of 9.8% of the Trust's issued and
outstanding shares (the "Excess Shares") as null and void. Moreover, this
shareholder has suggested that it may bring a lawsuit against the Board of
Directors for a breach of fiduciary duty if the Board of Directors fails to take
action to enforce the Bylaws in the manner requested by the shareholder and/or
seek to bring a lawsuit against the PICO Group in the name of, and on behalf of,
the Trust for certain relief in connection with the Excess Shares. In addition,
the PICO Group has informed the Trust that this shareholder has made a written
offer to the PICO Group to buy some or all of the PICO Group's shares in the
Trust.

The Trust believes that this shareholder would like the Trust to (i) refuse
to pay dividends on the Excess Shares, (ii) refuse to allow the Excess Shares to
vote, and (iii) file a lawsuit to cancel

17
19
the Excess Shares, recover, if applicable, the proceeds of the PICO Group's sale
of shares and any dividends already paid on the Excess Shares. The sale price
for the Trust's shares as reported on June 2, 1997, was $9.50 per share.
Therefore, assuming that the PICO Group exceeded the 9.8% limitation in the
Trust's Bylaws by 98,895 shares, the Trust may have a claim against the PICO
Group for (i) the cancellation of all such Excess Shares, which cancellation may
result in the return to the Trust's treasury of shares valued at approximately
$939,503 (based on the June 2, 1997 sale price described above) and (ii) the
recovery of the amount of dividends that have been paid to the PICO Group with
respect to the Excess Shares. Dividends were paid on all shares in all four
quarters of 1996 and in the first quarter of 1997. At the request of the Trust,
the PICO Group has estimated that approximately $56,000 in dividends have been
paid to the PICO Group with respect to the Excess Shares.

The Board of Directors held its special meeting on April 23, 1997 to
consider, among other things, the appropriate response to the demands of the
shareholder that are described above. After review of the facts and in
consideration of the factors described below, the Board concluded in the
exercise of its business judgment that, to the extent the shareholder was
demanding litigation against the PICO Group, such action would not be in the
best interests of the Trust and its shareholders.

In connection with its decision not to pursue litigation against the PICO
Group, the Board also decided to seek shareholder approval of the
above-described amendment to Article VIII of the Trust's Bylaws. As stated
above, this amendment would, among other things, suspend application and
enforcement of Section 8.8(b) of the Trust's Bylaws with respect to any
ownership of shares in excess of 9.8% on or prior to April 23, 1997 (including
that of the PICO Group). The Board of Directors unanimously voted in favor of
not pursuing litigation against the PICO Group and in favor of recommending that
the shareholders approve the proposed amendment to Section 8.8 of the Trust's
Bylaws. Mr. Hart was absent from the deliberations and voting with respect to
these proposals because of his relationship with PICO Holdings, and Mr. Kresko
did not vote on these matters because he was required to leave the meeting early
as a result of a prior engagement.

These Board decisions were based on consideration of several factors: (i)
the language of Section 8.8(b) of the Bylaws does not provide a specific
mechanism or procedure for enforcement of the provisions of that section with
respect to the PICO Group, particularly in light of the fact that the PICO Group
has transferred the economic interest of all shares in excess of 9.8% to the
investment accounts of third parties not known to the Trust; (ii) the primary
purpose of the Bylaws is to protect the Trust's status as a real estate
investment trust and the Trust believes that such status has not been impaired
as a result of the PICO Group's share ownership (such belief is based, in part,
on an opinion of the PICO Group's counsel as described below); (iii) the
principles of equity and other provisions of the Bylaws may require that the
Trust pay the PICO Group or other third parties, as applicable, for the fair
market value of any Trust shares currently owned by such parties that are deemed
Excess Shares by the Trust; (iv) in light of the foregoing and other factors,
the enforcement of Section 8.8(b) would involve extensive and costly litigation
that may or may not be successful in recovering the amounts set forth above; (v)
any such litigation would likely cast a cloud of uncertainty over the
marketability of Trust shares in light of the fact that third parties may not be
able to determine whether shares they are proposing to purchase may once have
been Excess Shares that have been canceled; and (vi) the potential disruption of
the Trust's business as a result of the time and effort that management and the
Directors of the Trust would be required to devote to such litigation.

The Board of Directors of the Trust has received an opinion letter from
counsel to the PICO Group, subject to various assumptions and qualifications, to
the effect that the ownership by the

18
20
PICO Group of Trust shares in excess of the 9.8% limitation did not at any time
cause the Trust to violate either the closely held test or the tenant owned
test.

The Board of Directors believes that the amendment to the Bylaws as
described above is in the best interests of the shareholders. The Board believes
that a more desirable degree of certainty would result from an amendment to the
Bylaws that clarifies that the calculation of the 9.8% ownership threshold is to
be in conformity with the provisions of the Code related to REITs. The Board
also believes that suspending application and enforcement of Section 8.8(b) for
all periods on or prior to April 23, 1997 would remove possible doubt as to the
marketability of any of the Trust's shares and would enable management of the
Trust to devote more of its attention to the real estate business of the Trust.
Furthermore, enabling the Independent Directors to waive or modify any
provisions of Section 8.8 of the Bylaws with respect to the 9.8% ownership
threshold in the future under certain conditions would permit management a
certain degree of flexibility in its strategic planning for the Trust. In light
of the administrative complexities that are involved in determining how many
Trust shares are owned by any given person for purposes of Section 8.8 of the
Bylaws, which complexities are largely the result of the nominee ownership
system, the Board believes that it is proper to clarify that neither the Trust,
nor the Board nor the officers of the Trust are responsible for making such
determinations. Next, the Board of Directors believes that providing the
Independent Directors with a right to amend, without shareholder approval, the
Bylaws to protect the Trust's REIT status or otherwise minimize the Trust's
federal income tax is consistent with the discretion and flexibility otherwise
provided to the Independent Directors with respect to issues related to Section
8.8 of the Trust's Bylaws. Finally, the references in Section 8.8 to warrants to
purchase additional Trust shares are no longer necessary since all warrants
previously outstanding have expired.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE DESCRIBED AMENDMENT TO
---
THE TRUST'S BYLAWS.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The Board of Directors has made certain forward-looking statements in this
Proxy Statement that are subject to risks and uncertainties. Forward-looking
statements include those statements preceded by, followed by or that include the
words "believes," "expects," "anticipates" or similar expressions. For
those statements, the Board of Directors claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

On or about March 19, 1997, an Amendment No. 3 to Schedule 13G setting forth
the following information was filed with the SEC by PICO Holdings, its
wholly-owned subsidiary, PICO, and various of their other subsidiaries. The
Amendment No. 3 to Schedule 13G indicates that PICO Holdings and its
subsidiaries are collectively the beneficial owners of 202,061 shares of the
Trust's common stock, or 23.3% of the total outstanding shares, have sole
dispositive power with respect to all of such shares, sole voting power with
respect to 84,966 of the shares and no voting power with respect to 117,095
shares. The principal business address of PICO Holdings is 875 Prospect Street,
Suite 301, La Jolla, California 92037. Refer to the discussion of Proposal A for
additional information with respect to the ownership of the Trust's shares by
the PICO Group.

No other person or group is known by the Trust to be the beneficial owner of
more than 5% of the outstanding shares of the Trust's common stock.

19
21
The table below sets forth information as of April 1, 1997, regarding the
number of shares of the Trust beneficially owned by each of the directors,
nominees for director and executive officers of the Trust and by all directors,
nominees and officers as a group:

NUMBER OF SHARES
NAME OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED<F2> CLASS<F4>
---------------- ---------------- ----------

Gregory J. Nooney, Jr...................................................... 7,900<F3> *

Patricia A. Nooney......................................................... 4,957 *

Robert E. Kresko........................................................... 100 *

Gene K. Beare<F1>.......................................................... 6,750 *

Bruce P. Hayden<F1>........................................................ 100 *

James P. Ingram<F1>........................................................ 50 *

John R. Hart<F1><F5>....................................................... 0 *

Richard H. Sharpe<F1><F5>.................................................. 0 *

Directors and officers as a group.......................................... 19,857 2.3%

<FN>
- - -------

<F1> Independent Director as defined in the Trust's Bylaws.

<F2> Under the rules of the Securities and Exchange Commission, persons who have
power to vote or dispose of securities, either alone or jointly with
others, are deemed to be the beneficial owners of such securities.
Accordingly, shares owned separately by spouses or other family members are
not included. Except as described in the footnotes below, the nominee has
both sole voting power and sole investment power with respect to the shares
set forth in the table.

<F3> Includes 2,909 shares owned by Nooney Company, of which Gregory J. Nooney,
Jr. is a director and shareholder. Includes 3,535 shares held as co-trustee
of a trust, as to which Mr. Nooney shares voting and investment power.

<F4> An asterisk indicates that the number of shares beneficially owned does not
exceed one percent of the Trust's common stock issued and outstanding.

<F5> Mr. Hart and Mr. Sharpe each disclaim any beneficial ownership interest in
the shares owned by PICO Holdings, Inc. as described above.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Trust's officers and
directors, and persons who own more than ten percent of the Trust's common
stock, to file reports of ownership and changes in ownership with the SEC.
Officers, directors and greater than ten percent shareholders are required by
SEC regulation to furnish the Trust with copies of all Section 16(a) forms they
file.

Based primarily on its review of the copies of such reports received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Trust believes that, during fiscal 1996, all
filing requirements applicable to its officers, directors, and greater than
ten-percent beneficial owners were complied with, except that (a) the PICO
Group, a greater than ten-percent beneficial owner of the Trust, filed late its
initial report on Form 3 and filed late a report on Form 4 with respect to
fifteen transactions which should have been previously reported on six separate
reports on Form 4, and (b) John Hart, a director of the Trust and an officer,
director and shareholder of various entities in the PICO
20
22
Group, while disclaiming any and all beneficial ownership of the Trust's equity
securities, filed late a report on Form 4 with respect to six transactions
which should have been previously filed on three separate reports were Mr. Hart
to be deemed a beneficial owner of such securities.

OTHER MATTERS

INDEPENDENT AUDITORS

The public accounting firm of Deloitte & Touche LLP served as the
independent auditor of the Trust for the fiscal year ended December 31, 1996. At
the recommendation of the Audit Committee, the Board of Directors has selected
Deloitte & Touche LLP to serve as independent auditor of the Trust for the
fiscal year ending December 31, 1997. Representatives of Deloitte & Touche LLP
will be present at the Annual Meeting, will have an opportunity to make a
statement if they desire to do so, and will be available to answer questions for
the shareholders.

OTHER BUSINESS

Other than those items set forth herein, the Board of Directors knows of no
other business to be presented for consideration at the Annual Meeting. Should
any other matters properly come before the Annual Meeting or any adjournment
thereof, it is the intention of the persons named in the proxies to vote such
proxies in accordance with their best judgment on such matters.

SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS

In accordance with Rule 14a-8 under the Exchange Act, shareholder proposals
intended to be presented at the 1998 Annual Meeting of Shareholders of Nooney
Realty Trust, Inc. must be received by the Trust for inclusion in the proxy
statement and form of proxy relating to such meeting by no later than December
8, 1997. Shareholder proposals should be submitted to the Secretary of the Trust
at the Trust's principal executive offices, 7701 Forsyth Boulevard, St. Louis,
Missouri 63105.

BY ORDER OF THE BOARD OF DIRECTORS

PATRICIA A. NOONEY
Secretary

June 3, 1997
St. Louis, Missouri

23
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PROXY NOONEY REALTY TRUST, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned does hereby appoint Gregory J. Nooney, Jr., Patricia A.
Nooney and Gene K. Beare and each of them, the true and lawful attorneys-in-fact
and proxies of the undersigned (acting by a majority hereunder), with full power
of substitution, to vote all common shares of the undersigned in Nooney Realty
Trust, Inc. at the Annual Meeting of Shareholders to be held on Thursday, July
3, 1997, commencing at 10:00 A.M. at the Pierre Laclede Conference Center, 7733
Forsyth Boulevard, 2nd floor, in Clayton, Missouri, and at any adjournment
thereof, upon all matters described in the Proxy Statement furnished herewith,
subject to any directions indicated on the reverse side of this proxy. This
proxy revokes all prior proxies given by the undersigned.

With respect to the election of directors (Proposal 1), where no vote is
specified or where a vote for all nominees is marked, the cumulative votes
represented by a proxy will be cast, unless contrary instructions are given, at
the discretion of the proxies named herein in order to elect as many nominees as
believed possible under the then prevailing circumstances. Unless indicated to
the contrary, if the undersigned withholds the undersigned's vote for a nominee,
all of the undersigned's cumulative votes will be distributed among the
remaining nominees at the discretion of the proxies.

------------------------------------------------
Date

------------------------------------------------
Signature

------------------------------------------------
Signature if held jointly

24
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING:
---

A. AMENDMENT TO ARTICLE VIII OF THE TRUST'S BYLAWS

FOR / / AGAINST / / ABSTAIN / /

1. ELECTION OF DIRECTORS

FOR ALL NOMINEES LISTED BELOW (except as WITHHOLD AUTHORITY to vote
marked to the contrary below) / / for all nominees listed below / /

(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the line below.)

Gregory J. Nooney, Jr.; Patricia A. Nooney; Robert E. Kresko; Gene K. Beare;
James P. Ingram; Bruce P. Hayden; Richard H. Sharpe

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

2. AMENDMENT TO ARTICLE VI OF THE TRUST'S BYLAWS

FOR / / AGAINST / / ABSTAIN / /

3. ADJOURNMENT of the meeting to allow for additional solicitation of proxies if
necessary to establish a quorum or to obtain additional votes in favor of the
foregoing Proposals A, 1 and/or 2.

FOR / / AGAINST / / ABSTAIN / /

4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.

THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS A, 1, 2 AND 3.

IT IS IMPORTANT THAT YOU VOTE, SIGN AND RETURN THE ENCLOSED PROXY AS SOON AS
POSSIBLE. BY DOING SO, YOU MAY SAVE THE TRUST THE EXPENSE OF ADDITIONAL
SOLICITATION.

25
APPENDIX

1. Page 8 of the printed proxy contains a performance graph. The
information in the graph is set forth in the table immediately following
the graph.

2. Pages 14, 15 and 16 of the printed proxy contains italicized
text and text that is stricken. For purposes of electronically filing this
definitive Proxy Statement with the Securities and Exchange Commission EDGAR
System, it was necessary to indicate the proposed deletions as bracketed ([])
text and the proposed additions as underlined [_] text. The Proxy Statement
that will be distributed to Shareholders will indicate the proposed deletions
as struck through text and the proposed additions as italicized text.