SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Mid-Atlantic Realty Trust
-------------------------
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MID-ATLANTIC REALTY TRUST
170 West Ridgely Road, Suite 300
Lutherville, Maryland 21093
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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March 30, 1999
To the Shareholders of Mid-Atlantic Realty Trust:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
MID-ATLANTIC REALTY TRUST ("MART") will be held at the Renaissance Harborplace
Hotel in Baltimore, Maryland on May 14, 1999, at 11:00 a.m., prevailing local
time, for the following purposes:
1. To elect eight Trustees to serve for the ensuing year and until the
election and qualification of their successors;
2. To consider and vote upon the selection of independent certified public
accountants to audit the books and accounts of MART for calendar year 1999;
and
3. To transact such other business as may properly be brought before the
meeting or any adjournments thereof.
Only the shareholders of record of MART at the close of business on
March 19, 1999 will be entitled to notice of and to vote at the meeting.
By Order of the Board of Trustees,
PAUL F. ROBINSON
Secretary
IMPORTANT - YOUR PROXY IS ENCLOSED
Shareholders who do not plan to attend the meeting are requested to
complete, date, sign and return promptly the enclosed proxy in the enclosed
envelope. No postage is required for mailing in the United States.
MID-ATLANTIC REALTY TRUST
170 West Ridgely Road, Suite 300
Lutherville, Maryland 21093
(410) 684-2000
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Trustees of
MID-ATLANTIC REALTY TRUST ("MART") in connection with the Annual Meeting of the
Shareholders of MART to be held on May 14, 1999, and any adjournments or
postponements thereof. The approximate date this Proxy Statement and proxy are
being sent to shareholders is March 30, 1999. The proxy is revocable at any time
before exercise by written notice to Paul F. Robinson, Secretary of MART, at the
principal office of MART.
Only holders of record of MART's common shares of beneficial interest,
par value $.01 per share (the "Shares"), at the close of business on March 19,
1999 (the "Record Date") are entitled to notice of and to vote at the meeting.
As of the Record Date, 14,361,858 Shares were outstanding and entitled to vote
at the meeting, with each Share entitled to one vote.
BENEFICIAL OWNERSHIP
The following table reflects the names and addresses of the only
persons known to MART to be the beneficial owners of 5% or more of the Shares.
For purposes of calculating beneficial ownership, Rule 13d-3 of the Securities
Exchange Act requires inclusion of Shares that may be acquired within 60 days,
such as upon the conversion of MART's Convertible Debentures held by each such
person (assuming those Debentures and no other Debentures are converted). The
following information is based on data contained in Schedules 13G filed with the
Securities and Exchange Commission:
Name and Address Shares Beneficially Percent
of Beneficial Owner Owned of Class
------------------- ----- --------
Morgan Stanley Dean Witter & Co. 826,847 5.8%
1585 Broadway
New York, New York 10036
Palisade Capital Management 1,449,027 9.9%
1 Bridge Plaza
Fort Lee, New Jersey 07024
ELECTION OF TRUSTEES
A Board of Trustees of eight persons is to be elected by the
shareholders. All of the nominees will be elected as Trustees to serve until the
2000 Annual Meeting of Shareholders and until their respective successors have
been elected and qualify. Under MART's Declaration of Trust and Maryland law,
Trustees are elected by a plurality vote, which means the affirmative vote of
holders of a majority of the Shares present (in person or by proxy) and voted at
the meeting. Consequently, withholding of votes, abstentions and broker
non-votes will have no effect on the outcome of this vote.
Unless authority to vote is withheld, the enclosed proxy will be voted
in favor of the election as Trustees of the following nominees. The Board of
Trustees does not know of any nominee who will be unable to serve, but if any of
them becomes unable to serve, the proxies may be voted with discretionary
authority for the election of other persons as Trustees.
Principal Occupation Trustee
Name During the Last Five Years Age Since
- ---- -------------------------- --- -----
David F. Benson............. President of Meditrust (a publicly owned real estate 50 1993
investment trust)
Marc P. Blum ............... Chief Executive Officer of World Total Return Fund 56 1993
Limited Partnership and U.S.A. Fund Limited
Partnership (private investment funds); Chief
Executive Officer of Coles Colonial Limited Partnership
(operator of Drexel-Heritage furniture stores); Of
Counsel to Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC
Robert A. Frank ............ Executive Vice President, Director of Research and Co- 49 1993
Head of Capital Markets of Legg Mason Wood Walker,
Inc. (a publicly owned investment banking firm) from
September, 1996; Prior thereto, Managing Director and
Group Head of the Real Estate Securities Research
Department of Alex. Brown & Sons Incorporated (a
publicly owned investment banking firm now known as
BT Alex Brown)
LeRoy E. Hoffberger ........ Chairman of the Board of MART; President of CPC, Inc. 73 1993
(real estate investments); Vice President of Merchants
Terminal Corp. (warehouse company); Of Counsel to
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
F. Patrick Hughes .......... President and Chief Executive Officer of MART 51 1993
M. Ronald Lipman ........... Member - Lipman, Frizzell & Mitchell, L.L.C. (real estate 60 1993
consultants)
Jack H. Pechter............. Deputy Chairman of the Board; Chairman of Tri-Star 63 1997
Management (private real estate owners and developers)
Daniel S. Stone ............ President of Stone & Associates, Inc. (real estate developers 54 1993
and consultants)
Messrs. Blum and Hoffberger are also directors of nine funds in the
Davis Fund complex, which are investment companies registered under the
Investment Company Act of 1940. Mr. Benson is also a trustee of Meditrust, a
public real estate investment trust.
In 1998, the Board of Trustees held eight meetings. During that year,
each Trustee attended, in the aggregate, at least 75% of the meetings of the
Board of Trustees and committees on which he served.
Committees of the Board of Trustees
The Board of Trustees has an Executive Compensation Committee, an Audit
Committee, an Investment Committee and a Nominating Committee.
2
The Audit Committee consists of Messrs. Blum, Frank and Lipman and
recommends to the Board the selection of the independent public accountants,
reviews with such accountants and management financial statements, other results
of the audit, and internal accounting procedures and controls. The Audit
Committee also reviews and considers proposed related party transactions, if
any. The Audit Committee held three meetings in 1998.
The Executive Compensation Committee consists of Messrs. Benson, Blum,
Frank, and Pechter and makes recommendations to the Board regarding compensation
of Trustees and executive officers, executive compensation generally, and
benefit plans for management to be considered by the Board. The Executive
Compensation Committee held two meetings in 1998.
The Investment Committee consists of Messrs. Lipman, Pechter, Stone and
Hoffberger, with Mr. Hughes serving as a member ex officio. The Investment
Committee, which held five meetings in 1998, reviews the performance of MART's
properties and evaluates redevelopment and acquisition opportunities.
The Nominating Committee, which consists of Messrs. Blum, Benson and
Stone, makes recommendations regarding nominations for Trustees and officers.
The Nominating Committee would consider nominees recommended by shareholders
upon timely written notice given to MART. The time period during which this
notice must be given is specified at the end of this proxy statement under the
caption "Submission of Shareholder Proposals to be Considered at the May 2000
Annual Meeting." The Nominating Committee held one meeting in 1998.
Trustee Compensation
MART paid its Trustees (other than Mr. Hughes, who is employed as
President and Chief Executive Officer of MART) a retainer of $12,000 per annum,
$1,000 per meeting for each Board and committee meeting attended in person, and
$500 for meetings attended by telephone. In lieu of cash, Trustees have the
option of taking their fees in MART Shares.
Under MART's 1995 Stock Option Plan, each person serving as a Trustee
on November 14, 1997 who was not an employee of MART was granted an option to
purchase 10,000 Shares at a price of $13.375 per Share, the market price of the
Shares on the date the option was granted. The options are exercisable in
increments of 3,333 Shares annually on November 14, 1997, 1998 and 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that
MART's Trustees and executive officers and each person who owns more than 10% of
MART's Shares, file with the Securities and Exchange Commission an initial
report of beneficial ownership and subsequent reports of changes in beneficial
ownership of the Shares. To MART's knowledge, all reports required to be so
filed by such persons have been filed on a timely basis. MART believes that all
of its Trustees and executive officers, and all persons owning beneficially more
than 10% of the Shares, complied with all filing requirements applicable to them
with respect to transactions during the fiscal year ended December 31, 1998.
3
INFORMATION REGARDING SHARE OWNERSHIP OF MANAGEMENT
The following table reflects, as of the Record Date, the number of
Shares owned by each Trustee and executive officer, each nominee to become a
Trustee and by all Trustees and executive officers as a group. Share ownership
of Trustees and executive officers is calculated in accordance with Regulation
13D under the Securities Exchange Act of 1934, which includes Shares that a
person has the right to acquire within 60 days, including upon exercise of
options and conversion of Debentures.
Name of Shares Percent
Beneficial Owner Beneficially Owned (1) of Class
- -------------------------- ------------------ ---------
David F. Benson 24,776 0.2%
Marc P. Blum 68,458 (2) 0.5%
Robert A. Frank 25,832 0.2%
LeRoy E. Hoffberger 191,513 (3) 1.3%
F. Patrick Hughes 359,308 2.5%
M. Ronald Lipman 67,921 0.5%
Jack H. Pechter 196,232 (4) 1.4%
Daniel S. Stone 31,066 0.2%
Paul F. Robinson 216,133 1.5%
All Trustees and Executive Officers
as a Group (9 persons included) 1,181,239 8.0%(5)
- --------------------
(1) Includes 22,666 Shares, 22,666 Shares, 22,666 Shares, 42,666 Shares,
122,000 Shares, 18,666 Shares, 13,332 Shares, 22,666 Shares, and 76,534
Shares subject to immediately exercisable options granted pursuant to
the Company's 1993 Omnibus Share Plan and the 1995 Stock Option Plan to
each of Messrs. Benson, Blum, Frank, Hoffberger, Hughes, Lipman,
Pechter, Stone and Robinson, respectively.
(2) Includes 67,681 Shares held by World Total Return Fund Limited
Partnership and by U.S.A. Fund Limited Partnership, investment funds of
which Mr. Blum is the President and CEO of the General Partner and in
which he holds a substantial interest.
(3) Excludes 134,624 Shares owned by the Hoffberger Foundation, Inc., a
charitable foundation of which Mr. Hoffberger is an officer and
director. The number of Shares in the above table includes 95,000 Shares
owned by CPC, Inc., a corporation of which Mr. Hoffberger is a director,
stockholder and executive officer and includes 2,517 Shares registered
in the name of Mr. Hoffberger as co-trustee under a trust agreement.
(4) Includes 182,900 Shares held by the Pechter Family Limited Partnership
and excludes 1,168,981 Shares issuable upon conversion into Shares of
units of partnership interest in MART Limited Partnership by Mr.
Pechter, his wife, the Pechter Family Limited Partnership and Tripec
Associates Limited Partnership.
(5) The total of all Shares attributable to all Trustees, members of
management and their respective affiliates (whether or not included in a
Regulation 13D calculation), including Shares that may be acquired in
the future pursuant to the exercise of outstanding options and the
exchange of Units of MART Limited Partnership, represents approximately
14.8% of all outstanding Shares of MART.
4
EXECUTIVE COMPENSATION
The following table reflects, with respect to the chief executive
officer and each executive officer of MART whose annual compensation exceeded
$100,000 in 1998, the aggregate amounts paid to or accrued for such officers as
compensation in 1998, 1997 and 1996.
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Other Annual Restricted Stock LTIP All Other
Principal Position Year Salary Bonus($) Compensation($)(1) Award($)(2) Options Payouts Compensation($)(3)
- ------------------ ---- ------ -------- ------------ ----- ------- ------- ------------
F. Patrick Hughes 1998 $230,000 (4) 12,165 --- --- --- 807
President and 1997 $210,000 105,000 7,800 2,675,000 75,000 --- 807
Chief Executive Officer 1996 $200,000 100,000 2,800 --- --- --- 885
Paul F. Robinson 1998 $160,000 (4) 9,801 --- --- --- 1,264
Executive Vice President, 1997 $140,000 70,000 6,874 1,783,329 50,000 --- 1,571
Secretary, and 1996 $130,000 60,000 10,400 --- --- --- 1,230
General Counsel
- -------------------
(1) Consists of car allowance and amounts reimbursed under MART's executive
medical reimbursement plan.
(2) Reflects grants of restricted stock that were made pursuant to the 1997
Restricted Share Plan adopted by the Board of Trustees on November 14,
1997. Pursuant to the plan, MART has reserved 400,000 Shares for
issuance to Trustees, officers and employees, subject to certain
restrictions and risk of forfeiture. Mr. Hughes and Mr. Robinson
received grants of 200,000 and 133,333 Shares, respectively, valued at
$13.375 per Share as of November 14, 1997, the date of grant. With
respect to each grant, the Shares vested and/or vest as follows: 15%
vested on January 1, 1998; 8.5% vested on January 1, 1999; 76.5% vest
at a rate of 8.5% on each January 1 of 2000 through 2008. The Shares
are subject to a risk of forfeiture in the event of termination of
employment (other than in a change in control of MART), and are
restricted as to transfer prior to vesting. Mr. Hughes and Mr. Robinson
have the right to vote and receive dividends on the Shares. The value
of all of the shares, vested and unvested, on December 31, 1998 was
$2,462,500 for Mr. Hughes and $1,641,663 for Mr. Robinson.
(3) Consists of premiums paid by MART on term life insurance policies on
the lives of Messrs. Hughes and Robinson which are payable to their
respective heirs or estates.
(4) The sum of $277,327 was accrued by MART for company-wide bonuses for
1998; however, no bonus allocation has, as of the date of this proxy
statement, been made for that fiscal year except as otherwise reflected
in the table.
The following table reflects certain information regarding options
exercised during and held as of the end of the last fiscal year. No options were
granted during the last fiscal year.
5
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY End at FY End
----------------- ---------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
F. Patrick Hughes $122,000/25,000 $135,000/-0-
Paul F. Robinson $76,534/16,666 $81,000/-0-
Executive Employment Agreements
MART has Executive Employment Agreements ("Agreements") with F. Patrick
Hughes and Paul F. Robinson. Under the Agreements, the annual base salary for
each of Messrs. Hughes and Robinson for this last fiscal year was $230,000 and
$160,000 respectively. The Agreements provide annual increases of at least
one-half of the annual increase in the Consumer Price Index. The term of each
Agreement is at all times two years. In the event of the termination of
employment due to a change of control in MART, all compensation payable to the
executive for the remainder of the employment period becomes immediately due and
payable. At the election of the executive, such compensation may be payable in a
lump sum, discounted to present value.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee consists of Messrs. Benson, Blum,
Frank, and Pechter. Mr. Blum and Mr. Hoffberger are of counsel to the law firm
of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, Baltimore, Maryland,
which is principal counsel to MART. During 1998, MART paid legal fees to that
firm for services rendered in the amount of $321,393. In addition, Mr. Pechter
was a principal owner of a portfolio of properties purchased by MART in 1997
pursuant to a Contribution Agreement dated April 1, 1997, among MART Limited
Partnership (of which MART is the general partner) and the Pechter Group. Mr.
Pechter has agreed to indemnify MART with respect to certain matters arising out
of the Contribution Agreement.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The compensation of members of management of MART is determined by the
Board of Trustees based upon the recommendation of the Executive Compensation
Committee (the "Committee"). The Committee is comprised of independent Trustees,
who are responsible for developing and implementing a comprehensive compensation
program for management.
Compensation Philosophy. The philosophy of the Committee is to ensure
that the interests of management and employees are identical to the interests of
MART's owners - the shareholders. To that end, the Committee has implemented and
will continue to implement a compensation strategy that includes base salary and
cash bonus, as well as incentive stock options and restricted stock grants which
will reward management and employees for adding shareholder value. Base salary
is established at levels which are necessary to attract and retain a high
caliber of management, and cash bonuses provide short-term rewards for current
accomplishments. Incentive stock options and restricted stock grants provide
6
management and employees with a long-term investment in MART, the value of which
is dependent upon their success in maximizing shareholder value.
The measure of performance for a real estate investment trust ("REIT")
is funds from operations, because most of the funds from operations are
distributed to shareholders as a dividend. To the extent management succeeds at
increasing funds from operations and dividends, share prices and shareholder
value should be increased. Creating long-term shareholder value, however, is not
always consistent with increased short-term distributions. To properly reward
management for achieving a well balanced result, the Committee believes that
both short-term results as well as long-term values must be considered and
separately recognized.
The Committee also recognizes the individual functions of each employee
and provides for individual goals to be attained by each person. While the
favorable performance of MART as a whole is the basis for any reward, the
performance by each employee is the most significant factor in determining
awards. The compensation of Mr. Hughes as the chief executive officer of MART,
however, is based upon the foregoing factors as well as the overall performance
of MART and its management. As CEO, Mr. Hughes is responsible for the overall
condition of the company and its resources, and his performance is evaluated by
the Committee, in its discretion, on that basis as well as on objective criteria
based on reaching certain financial and other benchmarks.
Base Salary. Base salary for senior management for fiscal year 1998 was
based upon salaries paid to such personnel in the preceding year, with
appropriate adjustments. It is the intention of the Committee to review MART's
executive compensation structure to insure that MART has the continued ability
to attract and retain the high caliber executive talent. To that end, the
Committee will take into account salaries of senior management of comparable
companies within the REIT industry. The base salary for Mr. Hughes will be
consistent with the base salaries of chief executive officers of peer companies.
Incentive Bonuses. The Committee has implemented a discretionary cash
bonus program for management and employees. The program makes available a cash
bonus pool consisting of a percentage of the amount by which MART's funds from
operations for the year exceeds a specified increase over the preceding year.
The Committee has also adopted a bonus program for operating personnel for
exceeding annual goals. For example, personnel engaged in development and
redevelopment of properties would be rewarded for achieving returns at or above
specified levels. Management personnel may participate in such bonus pools. The
purpose of this program is to closely align the interests of management and
employees with the interests of MART's shareholders on a year to year basis. The
performance of the chief executive officer will also be tied to the overall
performance of MART and its management.
In 1997, the Committee implemented an annual cash bonus program
potentially equal to 100% of base salary for senior management, consisting of
Mr. Hughes, as Chief Executive Officer, and Mr. Robinson, as Executive Vice
President. Under the program, cash incentive compensation equal to 50% of base
salary is available upon attainment of certain objectives. The other half is
payable in whole or in part at the discretion of the Committee for company
performance including, among other things, achieving significant total return
and/or for exceptional performance relating to development, redevelopment and
acquisition criteria.
Long-Term Incentive Compensation Plans. To promote the best long-term
benefits to MART and its shareholders and to provide incentives for MART's
Trustees, officers and employees, MART has a Restricted Share Plan, an Omnibus
Share Plan and a Stock Option Plan.
7
Restricted Share Plan. In 1997, the Committee recommended, and the
Board of Trustees approved, a Restricted Share Plan. The Committee believes that
the grant of restricted share awards ("Restricted Shares") provides a long-term
incentive to such persons who contribute to the growth of MART and establishes a
direct link between compensation and shareholder return. Shares awarded are
subject to such terms, conditions and restrictions as may be determined by the
Committee, subject to the provisions of the Restricted Share Plan. The
restrictions may include stock transfer restrictions and forfeiture provisions
designed to facilitate the achievement by participants of MART's Share ownership
goals. The Committee may vary the grants of Restricted Shares based on a
subjective assessment of MART's overall performance in relation to long-term
goals and plans. In determining the individuals to whom awards will be made and
the amounts of the grants, the Committee considers the relative position and
responsibilities of each executive officer, past performance of each officer to
MART, total shareholder return relative to peer companies, growth in funds from
operations over time and a review of competitive compensation for executive
officers of similar rank in peer companies. In 1997, Mr. Hughes received a grant
of Restricted Shares in reward for his efforts since 1993 in the formation of
MART and merger with BTR Realty, Inc., effecting a successful initial public
offering, effecting a successful follow-on public offering in 1997, and
achieving significant growth in MART from 1993-1997 including growth in asset
size as well as funds from operations and significant total return. For more
information relating to recent grants of Restricted Shares to executive
officers, reference is made to the tables set forth in this proxy statement
under the caption "Executive Compensation."
Stock Option Plans. The Committee determines stock option grants under
MART's Omnibus Share Plan and 1995 Stock Option Plan. The purpose of these plans
is to provide equity-based incentive compensation based on the long-term
appreciation in value of MART's Shares and to promote the interests of MART and
its shareholders by encouraging greater management ownership of MART's Shares.
Because the value of stock options granted to an executive is directly related
to MART's success in enhancing its market value over time, the Committee feels
that its stock option plans have been very effective in aligning the interests
of management and shareholders.
Specific grants are determined taking into account an executive's
current responsibilities and historical performance, as well as the executive's
perceived contribution to MART's funds from operations. Options are also used to
provide incentives to newly-promoted officers at the time they are asked to
assume greater responsibilities. In evaluating option grants, the Committee
considers prior grants and Shares currently held, as well as the recipient's
success in meeting operational goals and the recipient's level of
responsibility. However, no fixed formula is utilized to determine particular
grants. The terms of the options, including vesting, exercisability and term,
are determined by the Committee, subject to the provisions of the plans. Most of
the awards granted or to be granted under these plans vest over a period of
several years, thereby providing a long-term incentive and encouraging a
long-term relationship with MART. Share options are typically granted at
prevailing market price, and therefore will only have value if MART's Share
price increases over the exercise price. The Committee believes that the
opportunity to acquire a significant equity interest in MART is a strong
motivation for executive officers to maximize long-term value for MART's
shareholders and promotes longevity and retention of key employees. Effective
November 14, 1997, the Omnibus Share Plan was amended to increase the aggregate
number of Shares available under the plan by 1,025,000 Shares and to provide
that the Omnibus Share Plan be amended from time to time so that the number of
Shares that may be issued equals 7% of the outstanding shares of MART. The
amendment affords MART the flexibility to make awards deemed necessary during
the coming years.
8
To keep the Omnibus Share Plan in line with benefits being provided by
other companies, it was also amended to permit limited transferability of
non-qualified stock options to the optionee's spouse, lineal ascendants, lineal
descendants or to duly established trust for the benefit of one or more such
individuals. The amendment also extended the exercise period upon the death or
disability of a participant from 180 days to one year. The amendment clarified
the terms under which incentive stock options may be granted and provided that
the exercise price of an option may, in the discretion of the Committee, be less
than 100% of the fair market value of the Shares on the date of grant. The
Omnibus Share Plan was amended to provide that an optionee may require MART to
withhold and deduct from the number of Shares deliverable upon exercise of an
option a number of Shares having an aggregate fair market value equal to the
amount of taxes and other charges that MART is obligated to withhold or deduct
from the amount payable to the optionee. Although the Omnibus Share Plan has
always permitted the award of stock bonuses, it now expressly provides for stock
bonuses. The Omnibus Share Plan was also amended to delete the requirement that
MART hold any certificates representing restricted stock granted to participants
until the end of the restricted period.
The Omnibus Share Plan was further amended to provide for accelerated
vesting of awards in the event of an "Extraordinary Event" resulting in a change
in control. An Extraordinary Event is defined as the commencement of a tender
offer (other than by MART) for any Shares or a sale or transfer, in one or a
series of transactions, of assets having a fair market value of 50% or more of
the fair market value of all assets of MART, or a merger, consolidation or share
exchange pursuant to which the Shares of MART are or may be exchanged for or
converted into cash, property or securities of another issuer, or the
liquidation of MART. Upon the occurrence of an Extraordinary Event, then (i)
regardless of whether or not the award has vested or become fully exercisable,
the award will immediately vest and become fully exercisable, and (ii) any
restrictions or forfeiture conditions applicable to any other awards granted
under the Omnibus Share Plan will lapse and terminate, any performance
conditions imposed with respect to any such awards will be deemed to be fully
achieved on and at all times after the Event Date, and such awards will be
deemed fully vested without restriction from and after the Event Date. The
"Event Date" is the date of the commencement of a tender offer, if the
Extraordinary Event is a tender offer, and in the case of any other
Extraordinary Event, the day proceeding the record date in respect of such
Extraordinary Event, or if no record date is fixed, the day preceding the day as
of which shareholders of record become entitled to the consideration payable in
respect of such Extraordinary Event. Notwithstanding the foregoing, the
immediate vesting of any award shall be conditioned upon the actual occurrence
and completion of the Extraordinary Event.
Awards under the Omnibus Share Plan and 1995 Stock Plan have been and
will continue to be made to employees who have demonstrated significant
management potential or who have the capacity for contributing in a substantial
measure to the successful performance of MART.
The foregoing report is submitted by the following Trustees of MART,
comprising all of the members of the Compensation Committee of the Board of
Trustees.
EXECUTIVE COMPENSATION COMMITTEE
Robert A. Frank, Chairman
David F. Benson
Marc P. Blum
Jack H. Pechter
9
PERFORMANCE GRAPH
The following graph tracks the cumulative total return for MART for
fiscal years 1994 through 1998, compared to the S&P 500 and the National
Association of Real Estate Investment Trusts ("NAREIT") Equity REIT Total Return
Index. The cumulative total return represents stock price appreciation and
assumes reinvestment of all dividends paid during the indicated period. The
graph assumes an investment of $100 on January 1, 1994.
[GRAPHIC OMITTED]
Period Ending
----------------------------------------------------------------------------------------------------
Index 01/01/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------
MART 100 86.71 100.45 143.44 202.34 183.52
S&P 500 100 102.89 141.39 173.86 231.88 298.15
EQUITY NAREIT 100 100.22 115.52 156.26 187.91 155.03
SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
On the recommendation of the Audit Committee, the Board of Trustees has
selected KPMG LLP, independent certified public accountants, to audit the books
and accounts of MART for calendar year 1999. The Board of Trustees considers
such accountants to be well qualified and recommends a vote in favor of their
selection.
Representatives of KPMG LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they so desire and to be
available to respond to appropriate questions.
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The Board of Trustees unanimously recommends that you vote FOR the
appointment of KPMG LLP as independent certified public accountants.
SUBMISSION OF SHAREHOLDER PROPOSALS TO BE CONSIDERED
AT THE MAY 2000 ANNUAL MEETING
Any shareholder desiring to present a proposal to be included in the
proxy statement and voted on by the shareholders at the Annual Meeting of
Shareholders to be held in May 2000 must submit in writing proposals, including
all supporting materials, to MART at its principal executive offices no later
than December 1, 1999.
Any shareholder desiring to present a proposal at the Annual Meeting of
Shareholders to be held in May 2000 should notify MART in writing of the
proposal, in reasonable detail, on or before December 1, 1999. If proper notice
is not so given, MART may exercise its discretionary authority to vote its
proxies with respect to the proposal in the manner it deems appropriate.
Pursuant to the relevant rules under the Securities Exchange Act of 1934, MART
may exercise discretionary authority to vote proxies on a matter not
specifically reflected in the proxy statement unless it has received timely
notice that a shareholder intends to present the matter at the meeting.
The relevant date for notice purposes is specified in MART's bylaws,
which require that a shareholder must notify MART of the intention to present
any matter at the Annual Meeting of Shareholders not later than 120 days before
the date on which MART first mailed its proxy materials for the prior year's
Annual Meeting of Shareholders nor earlier than 150 days prior to such date. If
such notice is given by that date, MART may describe the proposal in the proxy
statement and thereby retain its discretionary authority to vote on the
proposal.
OTHER MATTERS
The solicitation of proxies will be made by mail at MART's expense,
including charges and expenses of brokerage firms, banks and others for
forwarding solicitation material to shareholders.
The Board of Trustees of MART is not aware of any other matter which
may be presented for action at the meeting, but should any other matter
requiring a vote of the shareholders arise, it is intended that the proxies will
be voted with respect thereto in accordance with the best judgment of the person
or persons voting the proxies, discretionary authority to do so being included
in the proxy.
Shareholders who do not plan to attend the Annual Meeting are urged to
complete, date, sign and return the enclosed proxy in the enclosed envelope, to
which no postage need be affixed if mailed in the United States. Prompt response
is helpful and your cooperation will be appreciated.
By Order of the Board of Trustees,
PAUL F. ROBINSON
Secretary
Dated: March 30, 1999
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PROXY
MID-ATLANTIC REALTY TRUST
170 West Ridgely Road, Suite 300
Lutherville, Maryland 21093
This Proxy is Solicited on Behalf of the Board of Trustees of
Mid-Atlantic Realty Trust.
The undersigned hereby appoints LeRoy E. Hoffberger, F. Patrick Hughes
and Paul F. Robinson, and each of them, as proxies, each with the power of
substitution, to vote as designated below all of the shares the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held at the
Renaissance Harborplace Hotel in Baltimore, Maryland on May 14, 1999 at 11:00
a.m., prevailing local time, and any adjournments thereof.
1. ELECTION OF TRUSTEES: FOR all nominees listed below []
(except as set forth to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed below []
David F. Benson, Marc P. Blum, Robert A. Frank, LeRoy E. Hoffberger, F.
Patrick Hughes, M. Ronald Lipman, Jack H. Pechter, Daniel S. Stone
The terms of all Trustees expire at the next annual meeting at which their
successors are elected and qualify.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
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2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP as the independent
certified public accountants of MART for the fiscal year ending
December 31, 1999.
For [] Against [] Abstain []
3. In their discretion, the proxies are authorized to vote upon any other
business which properly comes before the meeting and any adjournments
thereof.
This proxy, when properly executed, will be voted in the manner directed hereby
by the undersigned shareholders. If no direction is made, this proxy will be
voted in favor of all nominees and for Proposal No. 2.
Please sign exactly as your name appears on your proxy card. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THE
CARD IN THE ENCLOSED ENVELOPE.
DATED: __________________________, 1999 Signature______________________________
DATED: __________________________, 1999 Signature______________________________
C76242.626 A
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