SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE DEF14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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First Union Real Estate Equity and Mortgage Investments
-------------------------------------------------------
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): N/A
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1) Amount Previously Paid: N/A
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FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
NOTICE OF ANNUAL MEETING OF BENEFICIARIES
TO BE HELD ON MAY 10, 2005
NOTICE IS HEREBY GIVEN that the Annual Meeting of Beneficiaries (the
"Meeting") of FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS (the
"Trust"), an Ohio business trust, will be held at 11th Floor Conference Center
in the offices of Katten Muchin Zavis Rosenman, 575 Madison Avenue, New York,
New York 10022, on Tuesday, May 10, 2005 at 1:00 P.M., to consider and act upon
the following:
1. To elect six directors to serve for a term of one year and until
their respective successors shall be elected and shall qualify;
2. To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Trust for the 2005 fiscal year;
3. To consider an amendment to the Trust's Declaration of Trust to
change the Trust's name to "Winthrop Realty Trust"; and
4. To consider and act upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Only holders of common shares of beneficial interests ("Beneficiaries") of
record at the close of business on March 31, 2005 shall be entitled to receive
notice of, and to vote at, the Meeting, and at any adjournment or adjournments
thereof.
All Beneficiaries are cordially invited to attend the Meeting. Whether or
not you plan to attend the Meeting, please complete, date and sign the enclosed
proxy, which is solicited by the Board of Trustees of the Trust, and mail it
promptly in the enclosed envelope to make sure that your shares in the Trust are
represented at the Meeting. In the event you decide to attend the Meeting in
person, you may, if you desire, revoke your proxy and vote your shares in
person.
By order of the Board of Trustees,
/s/ Carolyn B. Tiffany
Carolyn B. Tiffany
Secretary
Boston, Massachusetts
April 6, 2005
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IMPORTANT: The prompt return of proxies will ensure that your shares will be
voted. A self-addressed envelope is enclosed for your convenience. No postage is
required if mailed within the United States.
- --------------------------------------------------------------------------------
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
PROXY STATEMENT
ANNUAL MEETING OF BENEFICIARIES
MAY 10, 2005
This Proxy Statement and the enclosed Proxy Card are being furnished in
connection with the solicitation of proxies by the Board of Trustees (the
"Board") of FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS (the
"Trust"), an Ohio business trust, to be voted at the Annual Meeting of
Beneficiaries of the Trust (the "Meeting") which will be held at 11th Floor
Conference Center in the offices of Katten Muchin Zavis Rosenman, 575 Madison
Avenue, New York, New York 10022, on Tuesday May 10, 2005 at 1:00 p.m., and at
any adjournment or adjournments thereof for the purposes set forth in the
accompanying Notice of Annual Meeting of Beneficiaries and in this Proxy
Statement.
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Trust and not revoked, will be voted in accordance with the
instructions contained therein and, in the absence of specific instructions,
will be voted (i) FOR the election, as Trustees, of the six persons who have
been nominated by the Board, (ii) FOR the ratification of the selection of
Deloitte & Touche LLP as independent auditors to audit and report upon the
consolidated financial statements of the Trust for the 2005 fiscal year, (iii)
FOR the amendment to the Trust's Declaration of Trust to change the Trust's name
to "Winthrop Realty Trust", and (iv) in accordance with the judgment of the
person or persons voting the proxies on any other matter that may be properly
brought before the Meeting. Each such Proxy granted may be revoked at any time
thereafter by writing to the Secretary of the Trust prior to the Meeting, or by
execution and delivery of a subsequent Proxy or by attendance and voting in
person at the Meeting, except as to any matter or matters upon which, prior to
such revocation, a vote shall have been cast pursuant to the authority conferred
by such Proxy.
Holders of record of the common interests of beneficial interest, par
value $1.00 per share (the "Common Shares"), of the Trust at the close of
business on March 31, 2005 (the "Record Date") will be entitled to notice of,
and to vote at, the Meeting or any adjournment or adjournments thereof. On the
Record Date, there were issued and outstanding 32,058,913 Common Shares. There
was no other class of voting securities outstanding at the Record Date. However,
pursuant to the terms of the Certificate of Designations pursuant to which the
Trust's Series B-1 Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest (the "Series B-1 Shares") were issued, the holders of the
Series B-1 Shares are entitled to elect one trustee to the Board of Trustees.
The Trustee elected by the holders of the Series B-1 Shares is not being voted
upon at the Meeting.
Each holder of Common Shares (each a "Beneficiary" and collectively,
"Beneficiaries") is entitled to one vote for each Common Share held by such
holder. The presence, in person or by proxy, of the holders of a majority of the
outstanding Common Shares is necessary to constitute a quorum at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by the person
appointed by the Trust to act as inspector of election for the Meeting. The six
nominees for election as Trustees who receive the greatest number of votes
properly cast for the election of Trustees shall be elected Trustees. The
affirmative vote of a majority of the votes in attendance at the Meeting (at
which a quorum is present), present in person or represented by proxy, that are
properly cast is necessary to approve the actions described in Proposal No. 2
below. The affirmative vote of a majority of the number of shares of Common
Shares outstanding on the Record Date that are properly cast is necessary to
approve the actions described in Proposal No. 3 below. Abstentions and broker
"non-votes" are included in the determination of the number of shares present at
the Meeting for quorum purposes but broker "non-votes" are not counted in the
tabulations of the votes cast on proposals presented to Beneficiaries. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner.
If any other matters are properly presented at the Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Meeting to another time or place, the persons named in the enclosed
Proxy Card and acting thereunder will have discretion to vote on those matters
in accordance with their best judgment to the same extent as the person signing
the Proxy Card would be entitled to vote. The Trust does not currently
anticipate that any other matters will be raised at the Meeting or that the
Meeting will be adjourned.
The principal executive offices of the Trust are located at 7 Bulfinch
Place, Suite 500, Boston, MA 02114. The approximate date on which this Proxy
Statement and the accompanying Proxy will be first sent or given to
Beneficiaries is April 6, 2005.
PROPOSAL NO. 1 - ELECTION OF TRUSTEES
The Board currently consists of seven members, six of which are elected by
the holders of Common Shares and one of which is elected by the holders of the
Series B-1 Shares. As a result of an amendment to the Trust's Declaration of
Trust which was approved at the 2004 Annual Meeting of Beneficiaries, the
staggered terms of the Trustees was eliminated. Accordingly, six persons, which
constitutes all of the members of the Board that are elected by the holders of
the Common Shares, will be elected at the Meeting to serve for a term of one
year and until their respective successors shall have been elected and shall
qualify. The Board of Trustees has nominated Michael L. Ashner, Bruce R.
Berkowitz, Arthur Blasberg, Jr., Peter Braverman, Talton Embry and Howard
Goldberg for re-election as Trustees. Mr. Blasberg has reached the mandatory
retirement age for Trustees under the Trust; however, the Nominating and
Corporate Governance Committee determined that it is in the best interest of the
Trust and its beneficiaries to make an exception to this policy for Mr. Blasberg
and to nominate him for re-election as a Trustee.
Beneficiaries of the Trust do not have cumulative voting rights with
respect to the election of Trustees. It is the intention of the persons named in
the enclosed Proxy Card to vote such proxy "FOR" the election of the named
nominees for Trustee unless authorization is withheld on the Proxy Card. Should
any nominee be unable or unwilling to serve as a Trustee, which is not
anticipated, it is intended that the named proxies will vote for the election of
such other person or persons as they, in their discretion, may choose.
Information as to Trustee Nominees
Set forth below is the business experience of, and certain other
information regarding, the current Trustees all of whom, other than Mr. Steven
Mandis, are nominees for re-election to the Board.
Name and month and year first
became a Trustee of the Trust Age Principal Occupation during the past Five Years
- ----------------------------- --- -----------------------------------------------
Michael L. Ashner 52 Mr. Ashner has been the Chief Executive Officer of the Trust since
April 2004 December 31, 2003 and Chairman since April 2004. Mr. Ashner serves
as the Chief Executive Officer of Winthrop Financial Associates, A
Limited Partnership and its affiliates ("WFA"), a position he has
held since January 1996, as well as the Chief Executive Officer of
Newkirk MLP Corp., the manager of the general partner of The Newkirk
Master Limited Partnership ("Newkirk"). Both WFA and Newkirk are
real estate companies with over $2 billion in assets owned and/or
managed. Mr. Ashner has also served as the Chief Executive Officer
of Shelbourne Properties I, Inc ("Shelbourne I"), Shelbourne
Properties II, Inc. ("Shelbourne II") and Shelbourne Properties III,
Inc. ("Shelbourne III"), three separate publicly traded real estate
investment trusts listed on the American Stock Exchange that were
recently liquidated. Since 1981, Mr. Ashner has been Chairman of
Exeter Capital Corporation, a firm that has organized and
administered real estate limited partnerships. Mr. Ashner also
currently serves on the Boards of Directors of the following
publicly traded companies: GB Holdings, Inc and Atlantic
Entertainment Holdings, Inc., a hotel and casino operator, and NBTY
Inc., a manufacturer, marketer and retailer of nutritional
supplements.
2
Bruce R. Berkowitz 46 Mr. Berkowitz has been the Managing Member of Fairholme Capital
December 2000 Management, L.L.C., a registered investment adviser, since June 1997
and President and Director of Fairholme Funds, Inc., a registered
investment company under the Investment Company Act of 1940, since
December 1999. Since December 2001, Mr. Berkowitz has also been a
Director and Deputy Chairman of Olympus Re Holdings, Ltd. and
Olympus Reinsurance Company, Ltd., both of Bermuda. Mr. Berkowitz
is a director of White Mountains Insurance Group, Ltd., a publicly
held property and casualty insurer. He served as a Managing
Director of Smith Barney, Inc., a subsidiary of The Travelers Inc.,
a diversified financial services holding company, from 1995 to May
1997.
Arthur Blasberg, Jr. 77 Mr. Blasberg's activities for the past five years include
December 2003 appointment by the Superior Court in Massachusetts to serve as a
receiver or trustee of various businesses (including real estate
investment companies, and other companies holding industrial and
residential real estate as well as undeveloped land). Also, Mr.
Blasberg has served as a special master in commercial disputes. He
serves as a director of several private companies and previously
served as the receiver and liquidating trustee of The March Trust,
Inc., a real estate investment firm which acted as the general
partner and/or limited partner in over 250 limited partnerships and
a director of each of Shelbourne I, Shelbourne II and Shelbourne III
prior to their liquidation. Mr. Blasberg is an attorney admitted to
practice in the Commonwealth of Massachusetts, served for five years
in the general counsel's office of the Securities and Exchange
Commission and was a partner in a large Boston, Massachusetts law
firm
Peter Braverman 53 Mr. Braverman has been the President of the Trust since August 4,
April 2004 2004 and was the Executive Vice President of the Trust from January
8, 2004 to such date. Mr. Braverman has served as the Executive
Vice President of WFA since January 1996. Mr. Braverman also serves
as the Executive Vice President of Newkirk and previously served as
Director and the Executive Vice President of Shelbourne I,
Shelbourne II and Shelbourne III.
Talton Embry 58 Mr. Embry has been the Chairman of Magten Asset Management Corp.
September 2000 ("Magten"), a private investment management company, since 1978. Mr.
Embry has been associated with Magten in various capacities since
1978. Mr. Embry is also a director of National Patent Development
and Orbimage, Inc.
Howard Goldberg 59 Mr. Goldberg has been a private investor and has provided consulting
December 2003 services to start-up companies since 1999. Mr. Goldberg presently
serves as a part-time consultant to Laser Lock Technologies, Inc., a
company in the security and advertising business, performing duties
consistent with that of a chief operating officer. From 1994
through 1998, Mr. Goldberg served as President and Chief Executive
Officer of Player's International, a public company in the gaming
business, prior to its being sold to Harrah's Entertainment Inc. In
addition, from 1995 to 2000, Mr. Goldberg served on the board of
directors of Imall Inc., a public company that provided on-line
shopping and which was ultimately sold to Excite-at-Home. Mr.
Goldberg has a law degree from New York University and was
previously the managing partner of a large New Jersey law firm. Mr.
Goldberg also served as a director of each of Shelbourne I,
Shelbourne II, and Shelbourne III. Mr. Goldberg also sits on the
Advisory Board of WinWin, a company specializing in foreign
charitable lotteries.
3
Steven G. Mandis 34 Mr. Mandis is currently the Vice Chairman and Chief Investment
February 2005 Officer of Halcyon Structured Asset Management L.P. ("Halcyon"), an
investment management firm based in New York City. Mr. Mandis joined
Halcyon in 2004. Prior to joining Halcyon, Mr. Mandis who had
worked at Goldman Sachs since 1992, acted as a portfolio manager in
it Special Situations Investing Group, a multi-billion dollar
proprietary investing area within Goldman Sachs' Fixed Income
Division. Before joining the Fixed Income Division, Mr. Mandis
worked in Goldman Sachs' Principal Investment Area and Mergers &
Acquisitions Department.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF MESSERS. ASHNER, BERKOWITZ, BLASBERG, BRAVERMAN, EMBRY AND GOLDBERG
TO THE BOARD OF TRUSTEES. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF
PROXY WILL BE VOTED FOR THE NOMINEES LISTED BELOW.
It is the policy of the Board to have all members of the Board in
attendance at the Annual Meeting of Beneficiaries, or if unavailable to attend
in person, to make arrangement, if possible, to participate by telephone or
video conference. All members of the Board attended, either in person or by
telephone conference call, the 2004 Annual Meeting of Beneficiaries.
Board Meetings and Committees
During 2004, the Board met or acted through written consent 17 times. Each
Trustee attended either in person or telephonically all of the meetings.
The Trust's By-laws give the Board the authority to delegate its powers to
a committee appointed by the Board. All committees are required to conduct
meetings and take action in accordance with the directions of the Board and the
provisions of the Trust's By-laws. The Board has appointed three standing
committees: an audit committee, a compensation committee and a nominating and
corporate governance committee. Certain of the committees' principal functions
are described below.
Audit Committee
The Audit Committee:
o reviews annual and quarterly consolidated financial statements with
the Trust's management and independent auditors;
o recommends the appointment and reviews the performance,
independence, and fees of the Trust's independent auditors and the
professional services they provide;
o oversees the Trust's system of internal accounting controls and the
internal audit function; and
o discharges such other responsibilities specified in the listing
standards of the New York Stock Exchange for audit committees.
The Board has adopted a written charter for the Trust's Audit Committee,
which is available at the Trust's website www.firstunion-reit.net, under the
link "Corporate Governance". A printed copy of the charter is also available to
any Beneficiary who requests it in writing to the Trust's Secretary at the
Trust's headquarters.
The Audit Committee consists of Arthur Blasberg, Jr. (Chairman), Bruce
Berkowitz and Howard Goldberg. The Audit Committee held six meetings during the
2004 fiscal year. All members of the Audit Committee attended either in person
or by telephone conference call all meetings of the Audit Committee. On March 2,
2005, the Audit Committee met with the independent auditors of the Trust to
discuss the Trust's 2004 combined financial statements.
4
For further information with respect to the Audit Committee, see "AUDIT
COMMITTEE REPORT" which beings on page 7 of this Proxy Statement.
Compensation Committee
The Compensation Committee:
o recommends to the Board the compensation policies and arrangements
for the Trust's officers and advisors and affiliates;
o ensures appropriate oversight of the Trust's executive compensation
programs and human resources policies;
o will, as appropriate, report to Beneficiaries on the Trust's
executive compensation policies and programs; and
o discharges such other responsibilities specified in the listing
standards of the New York Stock Exchange for compensation
committees.
The Board has adopted a written charter for the Trust's Compensation
Committee, which is available at the Trust's website www.firstunion-reit.net,
under the link "Corporate Governance". A printed copy of the charter is also
available to any Beneficiary who requests it in writing to the Trust's Secretary
at the Trust's headquarters.
During 2004, the Compensation Committee consisted of Talton Embry
(Chairman), Bruce Berkowitz, Arthur Blasberg, Jr. and Howard Goldberg. Mr.
Mandis joined the Compensation Committee upon his election to the Board in
February 2005. The Compensation Committee held three meetings during the 2004
fiscal year which were attended in person by all members of the Compensation
Committee.
For further information with respect to the Compensation Committee, see
"COMPENSATION COMMITTEE REPORT" which begins on page 8 of this Proxy Statement.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee:
o reviews the qualifications of current and potential Trustees
including determining whether they are "independent" under the
listing standards of the New York Stock Exchange;
o reviews each Trustee's continued service on the Board;
o reviews outside activities of Board members and resolves any issue
of possible conflict of interest;
o considers nominees for trustees of the Trust submitted in writing to
the Chairman of the Nominating Committee (along with other
information submitted in accordance with the Trust's By-laws and
Declaration of Trust), which are submitted by executive officers of
the Trust, current Trustees, search firms engaged by the Nominating
Committee, if any, by others in its discretion and, nominees for
trustee proposed by a Beneficiary in accordance with the terms of
the Trust's By-laws and Declaration of Trust;
o considers proposals submitted by Beneficiaries for inclusion in the
Trust's Annual General Meeting proxy statement if they are submitted
in writing to the Chairman of the Nominating Committee at the
principal address of the Trust in accordance with the provisions of
the Trust's By-laws and Declaration of Trust and so long as the
submitting Beneficiary meets the qualifications and complies with
the procedures provided in the proxy rules of the Securities and
Exchange Commission. All such proposals shall be accompanied by
information with respect to the submitting shareholder sufficient
for the committee to determine whether such qualifications are met;
o reviews any other Beneficiary communications intended for management
of the Trust or the Board of Trustees or an individual Trustee and
the Nominating Committee shall determine, in its discretion,
considering the identity of the submitting Beneficiary and the
materiality and appropriateness of the communication, whether, and
to whom within the Trust, to forward the communication;
5
o recommends nominations for members of the Board;
o reviews and assesses the adequacy of the Audit Committee's and
Compensation Committee's charters; and
o discharges such other responsibilities specified in the listing
standards of the New York Stock Exchange for nominating and
corporate governance committees.
The Board has adopted a written charter for the Trust's Corporate
Governance and Nominating Committee, which is available at the Trust's website
www.firstunion-reit.net, under the link "Corporate Governance". The Board has
also adopted Corporate Governance Guidelines which is also available at the
Trust's website www.firstunion-reit.net, under the link "Corporate Governance. A
printed copy of the charter and the guidelines are also available to any
Beneficiary who requests it in writing to the Trust's Secretary at the Trust's
headquarters.
The Nominating and Corporate Governance Committee consists of Bruce
Berkowitz (Chairman), Arthur Blasberg, Jr., Talton Embry and Howard Goldberg.
The Nominating and Corporate Governance Committee held three meetings during the
2004 fiscal year which were attended in person by all members of the
Compensation Committee.
Audit Committee Financial Expert
The Securities and Exchange Commission (the "SEC") has adopted rules
implementing Section 407 of the Sarbanes-Oxley Act of 2002, requiring public
companies to disclose information about "audit committee financial experts." The
Board has concluded that Mr. Blasberg, the chairman of the Audit Committee,
meets the SEC definition of "audit committee financial expert". The Trust is
currently in compliance with the listing requirements of the New York Stock
Exchange relating to audit committee qualification, and the Board has determined
that its Audit Committee possesses sufficient financial expertise to effectively
discharge its obligations.
Independence of Trustees
Pursuant to the Nominating and Corporate Governance Committee's Charter,
the Committee undertook its annual review of director independence in March
2005. During this review, the Committee considered transactions and
relationships between each Trustee or any member of his or her immediate family
and the Trust and its subsidiaries and affiliates, including those reported
under "Certain Relationships and Related Transactions" below. The Committee also
examined transactions and relationships between Trustees or their affiliates and
members of the Trust's senior management or their affiliates. The purpose of
this review was to determine whether any such relationships or transactions were
inconsistent with a determination that the Trustee is independent.
As a result of this review, the Board affirmatively determined that each
of Messrs. Berkowitz, Blasberg, Embry, Goldberg and Mandis are independent of
the Trust and its management in accordance with Sections 303.01(B)(2)(a) and (3)
of the listing standards of the New York Stock Exchange. Mr. Ashner and Mr.
Braverman are not considered independent because of their acting as executive
officers of the Trust as well as their ownership interest in FUR Advisors LLC
("FUR Advisors"), the Trust's outside advisor. See "Certain Relationships and
Related Transactions" below.
Compensation of Trustees
The Trust's current non-employee Trustees, Messrs. Berkowitz, Blasberg,
Embry, Goldberg and Mandis each receive $30,000 annually for their services as
Trustees. In addition, each member of the audit committee will receive $500 for
each committee meeting they attend and the chairman of the Audit Committee
receives an additional $25,000 annually. Trustees of the Trust who are also
officers of the Trust receive no compensation for serving on the Board. However,
all Trustees are reimbursed for travel expenses and other out-of-pocket expenses
incurred in connection with their service on the Board.
6
Communication with Trustees; Meetings of Non-Management Directors
Beneficiaries wishing to communicate with the Board may do so either in
person at the Meeting or by mail. Mail addressed to the Trustees can be sent to:
First Union Real Estate Equity and Mortgage Investments, 7 Bulfinch Place, Suite
500, P.O. Box 9507, Boston, Massachusetts 02114, Attn: Secretary, indicating it
to be a correspondence to a particular member(s) of the Board or the Board in
its entirety. All mail received will be opened and screened for security
purposes. The mail will then be logged in, and all mail other than mail
determined by the Trust's primary outside corporate counsel to be trivial or
obscene will be forwarded to the particular Trustee in question or to the Board
in its entirety, as requested in the beneficiary's correspondence in question.
Trivial items will be delivered to the Trustees at the next scheduled Board
meeting. Obscene items will not be forwarded.
Prior to or following every meeting of the Board, the Trust's
non-management Trustees meet without management present. There is not a
predetermined non-management Trustee who presides over all such meetings. At
each meeting, the non-management Trustees choose a presiding member for such
meeting, based upon the topics to be discussed. "Non-management" Trustees are
all those Trustees who are not executive officers, and may include Trustees who
are not considered to be independent under regulations issued by the SEC or the
New York Stock Exchange. The Trust's non-management Trustees are: Bruce
Berkowitz, Arthur Blasberg, Jr., Talton Embry, Howard Goldberg and Steven
Mandis.
AUDIT COMMITTEE REPORT
The following is the March 22, 2005 Audit Committee Report. The members of
the Audit Committee on the date of such report were Arthur Blasberg, Jr., Bruce
Berkowitz and Howard Goldberg.
The Audit Committee acts pursuant to the Audit Committee Charter, as
revised in January 2004, and is comprised of three members who were independent
within the meaning of Section 303A.02 of the listing standards of the New York
Stock Exchange. A copy of the Audit Committee Charter can be obtained upon
request from the Trust's Secretary and at the Trust's website
(www.firstunion-reit.net).
The Audit Committee is directly responsible for the appointment,
compensation, retention and oversight of the accounting firm engaged as the
Trust's independent auditors. Management is responsible for the Trust's internal
controls and financial reporting process. The independent auditors are
responsible for performing an independent audit of the Trust's combined
financial statements in accordance with generally accepted auditing standards
and for issuing a report thereon. The Audit Committee's responsibility is to
oversee these processes.
In carrying out these responsibilities, the Audit Committee, among other
things:
o monitors preparation of quarterly and annual financial reports by
the Trust's management;
o supervises the relationship between the Trust and its independent
auditors, including having direct responsibility for their
appointment, compensation and retention; reviewing the scope of
their audit services; approving non-audit services; and confirming
the independence of the independent auditors; and
o oversees management's implementation and maintenance of effective
systems of internal and disclosure controls, including review of the
Trust's policies relating to legal and regulatory compliance, ethics
and conflicts of interests and review of the Trust's internal
auditing program.
The Committee discussed and reviewed with Deloitte & Touche LLP, the
Trust's independent auditors for 2004, all matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees),
including the quality of the Trust's accounting principles, the reasonableness
of significant accounting judgments and the clarity of disclosures in the
financial statements. The Committee also discussed with Deloitte & Touche LLP
matters relating to its independence, including a review of audit and non-audit
fees and the written disclosures and letter from Deloitte & Touche LLP to the
Committee pursuant to Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), "Communication with Audit Committees". With
and without management present, the Audit Committee discussed and reviewed the
results of the independent auditors' examination of the Trust's financial
statements for the year ended December 31, 2004.
7
Based upon the Audit Committee's discussions with management and the
independent auditors and the Audit Committee's review of the representations of
management, and the report of the independent auditors to the Audit Committee,
the Audit Committee recommended that the Board of Directors include the audited
combined financial statements in the Trust's Annual Report on Form 10-K for the
year ended December 31, 2004, as filed with the Securities and Exchange
Commission. The Audit Committee believes that it has satisfied its
responsibilities under its charter.
For the Trust's 2005 fiscal year, the Audit Committee recommended Deloitte
& Touche LLP as the Trust's independent auditors for approval by the Board.
Members of the Audit Committee
Arthur Blasberg, Jr. - Chairman
Bruce Berkowitz
Howard Goldberg
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is the March 2, 2005 Compensation Committee Report on
Executive Compensation. The members of the Compensation Committee on the date of
such report were Bruce Berkowitz, Arthur Blasberg, Jr., Talton Embry and Howard
Goldberg.
The Compensation Committee acts pursuant to the Compensation Committee
Charter and is comprised of four members who were independent within the meaning
of Section 303A.02 of the listing standards of the New York Stock Exchange. A
copy of the Compensation Committee Charter is available upon request from the
Trust's Secretary and at the Trust's website (www.firstunion-reit.net).
Executive Compensation Principles
The Trust does not provide any remuneration to its executive officers. The
Trust has retained FUR Advisors to provide substantially all asset management,
accounting and investor services for the Trust. If the Trust were to retain its
executive officers directly, the Compensation Committee would, in making its
compensation recommendations to the Board consider (1) the potential holding
periods of the Trust's assets, (2) the number of assets owned by the Trust, (3)
the business plan with respect to such assets, the amount of asset management
required with respect to the assets, (4) the overall investment prospects of the
Trust and short and long-term business plan of the Trust, and (5) with respect
to a specific executive officer, such officer's specific responsibilities,
experience and overall performance. The Compensation Committee reviews annually
the terms of the Advisory Agreement with FUR Advisors to determine their
consistency with market terms and whether the retention of an outside advisor is
more favorable to the Trust than retaining direct employees of the Trust. Based
on its review , the Compensation Committee recommended to the Board that the
Advisory Agreement with FUR Advisors be renewed.
Policy with Respect to Qualifying Compensation for Deductibility
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), a publicly held company, such as the Trust, will not be entitled to a
Federal income tax deduction for compensation paid to the chief executive
officer or any one of the other four most highly compensated officers of the
Trust to the extent that compensation paid to such officer exceeds $1 million in
any fiscal year, unless such compensation is subject to certain exceptions set
forth in the Code for compensation that qualifies as performance based. If the
Trust were to compensate its executive officers directly, the Board and the
Compensation Committee would consider Section 162(m) in structuring compensation
for the Trust's executive officers; however, the Board or the Compensation
8
Committee may, where it deems appropriate, implement compensation arrangements
that do not satisfy the exceptions to Section 162(m).
Members of the Compensation Committee
Bruce Berkowitz
Arthur Blasberg, Jr.
Talton Embry
Howard Goldberg
EXECUTIVE OFFICERS
All officers serve at the discretion of the Board. Set forth below is
certain information regarding the executive officers and certain other officers
of the Trust at March 1, 2005 (biographical information with respect to Messrs.
Ashner and Braverman is set forth above on pages 2 and 3):
Name Age Current Position
- --------------------------- --- ---------------------------------------
Michael L. Ashner 52 Chairman and Chief Executive Officer
Peter Braverman 53 President
Carolyn Tiffany 38 Chief Operating Officer and Secretary
Thomas Staples 49 Chief Financial Officer
Ms. Tiffany has been the Chief Operating Officer and Secretary of the
Trust since January 8, 2004. Since December 1997, Ms. Tiffany has served as the
Chief Operating Officer of WFA. Ms. Tiffany also served as Vice President,
Treasurer, Secretary and Chief Financial Officer of Shelbourne I, Shelbourne II
and Shelbourne III. In addition, Ms. Tiffany is the Chief Operating Officer of
Newkirk.
Mr. Staples has been the Chief Financial Officer of the Trust since
January 8, 2004. Mr. Staples, has been with WFA since 1995 and has served as its
Chief Financial Officer since January 1999. Mr. Staples is also the Chief
Financial Officer of Newkirk. Since August 2002, Mr. Staples has also served as
Assistant Treasurer of Shelbourne I, Shelbourne II and Shelbourne III. Mr.
Staples is a certified public accountant.
EXECUTIVE COMPENSATION
The current executive officers receive no remuneration from the Trust.
Option Grants in Fiscal 2004
The Trust has a 1999 Long Term Incentive Performance Plan pursuant to
which the Board may, in its discretion, grant options exercisable for Common
Shares. Each of the Trustees eligible to receive options under this plan waived
their right to receive options. In addition, on March 2, 2005, the Board amended
the plan to provide for no further issuance of options under this plan. No
options were granted during the year ended December 31, 2004.
Compensation Committee Interlocks and Insider Participation
Neil Koenig, the Interim Chief Executive Officer and Interim Chief
Financial Officer during calendar 2003 and a Trustee of the Trust until April
15, 2004 is the managing member of Real Estate Systems Implementations Group,
LLC ("RE Systems"). During the years ended December 31, 2003 and 2002, RE
Systems provided substantially all of the asset management, accounting and other
services to the Trust and during the year ended December 31, 2004 provided
certain consulting services to the Trust. RE Systems received fees of $209,000,
$521,000, and $498,000 from the Trust and First Union Management Inc. ("FUMI"),
the Trust's sister company, for providing these services in each of the years
ended December 31, 2004, 2003 and 2002, respectively.
9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective December 31, 2003, the Trust entered into an Advisory Agreement
with FUR Advisors, an affiliate of the Chief Executive Officer of the Trust.
Pursuant to the terms of the Advisory Agreement, FUR Advisors is responsible for
providing, or arranging for the provision of, asset management services to the
Trust and coordinating with the Trust's property managers and shareholder
transfer agent. Pursuant to the terms of the Advisory Agreement, for providing
these services, FUR Advisors is entitled to the following fees: (i) an asset
management fee of 1% of the gross asset value of the Trust up to $100 million,
..75% of the gross asset value of the Trust between $100 million and $250
million, .625% of the gross asset value of the Trust between $250 million and
$500 million and .50% of the gross asset value of the Trust in excess of $500
million; (ii) property and construction management fees at commercially
reasonable rates as determined by the independent Trustees of the Board; (iii)
loan servicing fees not exceeding commercially reasonable rates (approved by a
majority of the independent Trustees) for providing administrative and clerical
services with respect to loans made by the Trust to third parties; and (iv) an
incentive fee equal to 20% of all distributions to holders of common shares
after December 31, 2003 in excess of (x) $71.3 million, increased by the net
issuance price of all shares issued after December 31, 2003, and decreased by
the redemption price of all shares redeemed after December 31, 2003, plus (y) a
return on the amount, as adjusted, set forth in (x) equal to 7% per annum
compounded annually. In addition, FUR Advisors is entitled to be reimbursed for
up to $100,000 per annum for the costs associated with the employment of one or
more asset managers. During the fourth quarter 2004, in light of the net-lease
nature of the portfolio acquired from Finova Capital Corporation, FUR Advisors
proposed to the Board of Trustees that the asset management fee be reduced for
the portion of the net lease portfolio that was subject to leverage to .25% of
the gross asset value. The Board of Trustees agreed to the reduction.
Effective February 1, 2004, Kestrel Management L.P., an affiliate of FUR
Advisors and the Trust's executive officers, assumed property management
responsibilities for Circle Tower. Pursuant to the terms of the property
management agreement, Kestrel Management receives a fee equal to 3% of the
monthly revenues of Circle Tower, which amount is less than the amount paid to
the prior property management company.
The following table sets forth the fees and reimbursements paid by the
Trust for the year ended December 31, 2004 to FUR Advisors and Kestrel
Management L.P. (in thousands):
Asset Management Fee (1) $ 1,420
Loan Servicing Fee (1) 9
Property Management (2) 42
Reimbursement (1) 100
(1) Paid to FUR Advisors
(2) Paid Kestrel Management L.P.
During the years ended December 31, 2004, 2003 and 2002, the Trust paid
fees of $209,000, $521,000 and $498,000, respectively, to the RE Systems for
financial reporting and advisory services. See "EXECUTIVE COMPENSATION -
Compensation Committee Interlocks and Insider Participation."
CODE OF ETHICS
The Trust has adopted a Code of Ethics, which are applicable to all
Trustees and executive officers of the Trust, including the principal executive
officer, the principal financial officer and the principal accounting officer,
as well as FUR Advisors, the Trust's outside advisor. The Code of Ethics can be
obtained upon request from the Trust's Secretary and at the Trust's website
www.firstunion-reit.net under the link "Corporate Governance".
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 1, 2005
(except as otherwise indicated) regarding the ownership of Common Shares by (i)
each person who is known to the Trust to be the beneficial owner of more than 5%
of the outstanding shares of Common Shares, (ii) each Trustee and nominee for
Trustee, (iii) each executive officer named in the Summary Compensation Table
contained herein, and (iv) all current executive officers and Trustees of the
Trust as a group. Except as otherwise indicated, each such Beneficiary has sole
voting and investment power with respect to the shares beneficially owned by
such Beneficiary.
Name and Address Position with Amount and Nature of Percent
of Beneficial Owner the Trust Beneficial Ownership(1) of Class
------------------- --------- ----------------------- --------
FUR Investors, LLC -- 10,000,000(3) 31.2%
FUR Holdings LLC
WEM-FUR Investors LLC
Two Jericho Plaza
Wing A, Suite 111
Jericho, NY 11753
Michael L. Ashner(2) Chairman and Chief 10,000,000(4) 31.2%
Executive Officer
Bruce R. Berkowitz Trustee 570,684(5) 1.8%
Fairholme Capital Management
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Arthur Blasberg, Jr. Trustee 100,000 *
c/o Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Peter Braverman(2) President and Trustee (6) (6)
Talton Embry Trustee 1,162,585(7) 3.6%
Magten Asset Management Corp.
410 Park Avenue
14th Floor
New York, New York 10022
Howard Goldberg Trustee 100,000 *
117 Cheltenham Avenue
Linwood, New Jersey 08221
Steven G. Mandis Trustee 0 0
Halcyon Management Company
477 Madison Avenue, 8th Floor
New York, New York 10022
Thomas Staples(8) Chief Financial (6) (6)
Officer
Carolyn Tiffany(8) Chief Operating (6) (6)
Officer and Secretary
All Trustees and executive officers as a 11,933,269 37.2%
group
Kensington Investment Group, Inc. (9) -- 3,394,750 10.6%
4 Orinda Way
Suite 200-C
Orinda, California 94563
11
*Less than 1%
(1) Unless otherwise indicated, shares are beneficially owned by indicated
holder.
(2) The address for each of Mr. Ashner and Mr. Braverman is Two Jericho Plaza,
Wing A, Suite 111, Jericho, NY 11753
(3) Based upon information contained in Amendment No. 1 to Schedule 13D as
filed by FUR Investors with the Securities and Exchange Commission on
January 7, 2004.
(4) Comprised of shares owned by FUR Investors. Mr. Ashner is the managing
member of WEM-FUR Investors LLC, the managing member of FUR Holdings, LLC,
the sole member of FUR Investors. As such, Mr. Ashner may be deemed to
beneficially own all shares owned by Investors.
(5) Mr. Berkowitz directly owns 36,600 shares of Common Shares and 534,084
shares of Common Shares are held by Fairholme Ventures II, L.L.C., an
entity in which Mr. Berkowitz is the managing member. In addition, an
additional 357,451 shares are held in investment accounts of clients of
Fairholme Capital Management, L.L.C., a registered investment advisor and
affiliate of Mr. Berkowitz. Mr. Berkowitz has disavowed management and
supervision responsibility for the shares owned by clients of the advisor
and therefore does not beneficially own such shares.
(6) Mr. Braverman, Mr. Staples and Ms. Tiffany are members of WEM-FUR
Investors LLC, the managing member of FUR Holdings, LLC, the sole member
of FUR Investors. Accordingly, Mr. Braverman, Mr. Staples and Ms. Tiffany
have an indirect pecuniary interest in approximately 246,000, 120,000 and
160,000 of the shares of Common Shares owned by FUR Investors. However,
Mr. Braverman, Mr. Staples and Ms. Tiffany do not exercise investment
control over the shares held by FUR Investors. Accordingly, Mr. Braverman,
Mr. Staples and Ms. Tiffany are not deemed to beneficially own any of such
shares under Section 13 or Section 16 of the Securities Exchange Act of
1934, as amended.
(7) The number of shares reported consists of (i) 31,264 shares held in an IRA
for the benefit of Mr. Embry, (ii) 31,073 shares held in an IRA for the
benefit of Mr. Embry's spouse, (iii) 44,458 shares held in a trust account
in which Mr. Embry is the trustee and which is for the benefit of Mr.
Embry's minor son and (iv) 1,055,790 shares are owned beneficially by
discretionary accounts managed by Mr. Embry. Mr. Embry disclaims any
beneficial ownership of the shares held in discretionary accounts managed
by Mr. Embry.
(8) The address for each of Mr. Staples and Ms. Tiffany is 7 Bulfinch Place,
Suite 500, Boston, MA 02114.
(9) Information is derived from the 13-G filing by Kensington Investment
Group, Inc. with the Securities and Exchange Commission on January 10,
2005.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Trust's executive officers, Trustees and persons
who beneficially own greater than 10% of a registered class of the Trust's
equity securities to file certain reports ("Section 16 Reports") with the
Securities and Exchange Commission with respect to ownership and changes in
ownership of the Common Shares and other equity securities of the Trust. Based
solely on the Trust's review of the Section 16 Reports furnished to the Trust
and written representations from certain reporting persons, except as indicated
below the Trusts officers, Trustees and greater than 10% beneficial owners have
been complied with all Section 16(a) requirements applicable to them.
Mr. Ashner filed late one Form 4 relating to preferred shares of
beneficial interest held by his children.
12
PERFORMANCE GRAPH
The following graph compares the cumulative return among the Common
Shares, a peer group index, and the Standard & Poor's 500 Stock Index, for the
periods shown. The peer group consists of REITs with a diversity and other
property focus and have a current market value as of March 4, 2005 of less than
$750M. The quarterly changes for the periods shown in the graph are based on the
assumption that $100 had been invested in the Common Shares and each index on
December 31, 1999.
[PERFORMANCE CHART]
[The Following table was depicted as a line chartin the printed material.]
Period Ending
------------------------------------------------------------------
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
- ---------------------------------------------------------------------------------------------------------
First Union RE Equity and Mortgage 100 75.42 70.05 57.03 69.20 120.79
S&P 500 100 91.20 80.42 62.64 80.62 89.47
First Union Peer Group 100 93.70 115.93 122.11 162.29 190.36
13
PROPOSAL NO. 2 - SELECTION OF INDEPENDENT AUDITORS
At the recommendation of the Audit Committee, the Board has selected
Deloitte & Touche LLP ("Deloitte") to serve as independent auditors of the Trust
for its fiscal year ending December 31, 2005.
Deloitte has served the Trust as independent auditors since March 9, 2004.
Upon completion of the Trust's financial statements for the year ended December
31, 2003, the Trust then solicited bids from three of the big 4 accounting firms
including KPMG LLP, the Trust's independent auditors for the years ended
December 31, 2003 and 2002, to serve as the Trust's independent auditors for the
year ended December 31, 2004. KPMG LLP elected not to submit a bid.
During the Trust's past two fiscal years, there were: (i) no disagreements
with either Deloitte or KPMG LLP on any matter of accounting principle or
practice, financial statement disclosure, or auditing scope or procedure which
disagreements, if not resolved to Deloitte and/or KPMG LLP's satisfaction, would
have caused them to make reference to the subject matter in connection with
their report on the Trust's financial statements for such year; and (ii) no
reportable events as defined in Item 304(a)(1)(v) of Regulation S-K promulgated
under the Securities Exchange Act of 1934, as amended. Further, neither
Deloitte's or KPMG LLP's report on the Registrant's combined financial
statements as of and for the years ended December 31, 2004 and 2003 contained
any adverse opinion or a disclaimer of opinion nor were they qualified or
modified as to uncertainty, audit scope, or accounting principles.
Although Beneficiary ratification of the Board's action in this respect is
not required, the Board considers it desirable for Beneficiaries to pass upon
the selection of independent auditors and, if the Beneficiaries disapprove of
the selection, intends to consider other firms for selection as the independent
auditors for the current fiscal year.
It is expected that representatives of Deloitte will be present either in
person or by telephone conference at the Meeting.
Aggregate fees billed to the Trust for the year ended December 31, 2004
represents fees billed by the Company's principal accounting firm, Deloitte.
Aggregate fees billed to the Trust for the fiscal year ended December 31, 2003
represents fees billed by the Trust's prior principal accounting firm, KPMG LLP:
Type of Fee Fiscal 2004 Fiscal 2003
----------- ----------- -----------
Audit Fee $ 69,000 $125,750
Audit Related Fees 120,000 --
Tax Fees 20,332 2,500
-------- --------
Total $209,332 $128,250
Audit fees for the years ended December 31, 2004 and 2003, respectively,
were for professional services rendered for the audits of the combined financial
statements of the Trust and statutory audits.
Audit Related fees for of the year ended December 31, 2004 were for
services related to 8K filings with respect to acquisitions and disposition by
the Trust ($90,700) and financial accounting and reporting consultations
($29,300).
Tax fees as of the years ended December 31, 2004 and 2003 were for
services related to tax compliance, tax planning and strategies, and state and
local tax advice.
14
Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditor
The Trust has a policy of requiring that the Audit Committee pre-approve
all audit and non-audit services provided to the Trust by the auditor of its
financial statements. During 2004, the Audit Committee approved all of the fees
paid to Deloitte by the Trust.
PROPOSAL NO. 3 - AMENDMENT TO DECLARATION OF TRUST TO CHANGE NAME TO
"WINTHROP REALTY TRUST"
The Board has elected to change the name of the Trust to "Winthrop Realty
Trust" pending the consent of a majority in interest of the Common Shares. The
change in the Trust's name will have no effect on the Trust whatsoever and the
Common Shares will continue to be listed on the New York Stock Exchange under
the symbol "FUR" until such time as the name change is affected, at which time
it is expected that the Common Shares will be listed on the New York Stock
Exchange under the symbol "WRC".
If adopted, the Board would be authorized to effect the change of the
Trust's name to "Winthrop Realty Trust" at any time prior to December 31, 2005.
If adopted, Section 1.1 of the Declaration of Trust would be amended at such
time as is determined by the Board to read in its entirety as follows:
Section 1.1. Name of the Trust.
The name of this Trust shall be: "Winthrop Realty Trust" and, so far as
may be practicable, the business of the Trust shall be conducted in that
name or such trade name as the Trustees may adopt in order to satisfy
governmental regulation. The Trustees may make and execute deeds,
mortgages, leases, contracts, and other instruments, acquire, mortgage,
lease, convey and transfer real or personal property, and sue and be sued
under any of the aforesaid names.
In order to adopt the foregoing amendment to the Declaration of Trust
("Proposal No. 3") a majority of the outstanding Common Shares needs to vote FOR
this proposal on the enclosed Proxy Card. The Board of Trustees recommends that
Beneficiaries vote FOR this proposal. The Board of Trustees, executive officers
of the Trust and their affiliates, which collectively hold approximately 37.2%
of the outstanding Common Shares have indicated that they intend to vote for
Proposal No. 3.
BENEFICIARY PROPOSALS
Any Beneficiary proposals intended to be presented at the 2006 Annual
Meeting of Beneficiaries must be received by the Trust for inclusion in the
Trust's proxy statement and form of proxy relating to that meeting on or before
January 11, 2006. In addition, under the Trust's By-laws, Beneficiaries must
comply with specified procedures to nominate persons for election as Trustees or
introduce an item of business at an annual meeting. Trustee nominations or an
item of business to be introduced at an annual meeting must be submitted in
writing and received by the Trust not less than 120 days in advance of an annual
meeting. To be in proper written form, a Beneficiary's notice must contain the
specific information required by the Trust's By-laws. A copy of the Trust's
By-laws, which specifies the advance notice procedures, can be obtained from the
Trust by request to the Secretary of the Trust. Any Beneficiary who wishes to
submit a Beneficiary proposal, should send it to the Secretary, First Union Real
Estate Equity and Mortgage Investments, 7 Bulfinch Place, Suite 500, Boston,
Massachusetts 02114.
ANNUAL REPORT
Copies of our Annual Report for the fiscal year ended December 31, 2004
are being mailed to Beneficiaries of record on the Record Date together with
this Proxy Statement.
15
MISCELLANEOUS
As of the date of this Proxy Statement, the Board does not know of any
other matter to be brought before the Meeting. However, if any other matters not
mentioned in the Proxy Statement are brought before the Meeting or any
adjournments thereof, the persons named in the enclosed Proxy or their
substitutes will have discretionary authority to vote proxies given in said form
or otherwise act, in respect of such matters, in accordance with their best
judgment.
The Trust has retained MacKenzie Partners, Inc. to aid in the solicitation
of proxies. MacKenzie Partners, Inc. will receive a fee not to exceed $10,000,
as well as reimbursement for certain out of pocket expenses incurred by them in
connection with their services, all of which will be paid by the Trust. All of
the costs and expenses in connection with the solicitation of proxies with
respect to the matters described herein will be borne by the Trust. In addition
to solicitation of proxies by use of the mails, Trustees, officers and employees
(who will receive no compensation therefor in addition to their regular
remuneration) of the Trust may solicit the return of proxies by telephone,
telegram or personal interview. The Trust will request banks, brokerage houses
and other custodians, nominees and fiduciaries to forward copies of the proxy
materials to their principals and to request instructions for voting the
proxies. The Trust may reimburse such banks, brokerage houses and other
custodians, nominees and fiduciaries for their expenses in connection therewith.
A copy of the Trust's annual report on form 10-K for the fiscal year ended
December 31, 2004 as filed with the SEC, excluding exhibits, may be obtained by
Beneficiaries without charge by written request addressed to: Carolyn Tiffany,
Secretary, First Union Real Estate Equity and Mortgage Investments, 7 Bulfinch
Place, Suite 500, Boston, MA 02114 or may be accessed on the Trust's website at
www.firstunion-reit.net under the link "SEC Filings".
It is important that proxies be returned promptly. Beneficiaries are,
therefore, urged to fill in, date, sign and return the Proxy immediately. No
postage need be affixed if mailed in the enclosed envelope in the United States.
By Order of the Board of Trustees
/s/ Carolyn B. Tiffany
Carolyn B. Tiffany
Secretary
April 6, 2005
16
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
PROXY FOR ANNUAL MEETING OF BENEFICIARIES
May 10, 2005
This Proxy Is Solicited On Behalf of the Board of Trustees
The undersigned hereby appoints Michael L. Ashner and Peter Braverman or
either of them, attorneys and proxies, with power of substitution and
revocation, to vote, as designated below, all beneficial shares of common
interest which the undersigned is entitled to vote, with all powers which the
undersigned would possess if personally present, at the Annual Meeting of
Beneficiaries (including all adjournments thereof) of FIRST UNION REAL ESTATE
EQUITY AND MORTGAGE INVESTMENTS to be held on Tuesday, May 10, 2005 at 1:00 P.M.
at the 11th Floor Conference Center in the offices of Katten Muchin Zavis
Rosenman, 575 Madison Avenue, New York, New York 10022. The Board of Trustees
recommends a vote FOR all proposals.
1. ELECTION OF TRUSTEES
|_| FOR all nominees |_| WITHHOLD AUTHORITY
to votefor all nominees
Michael L. Ashner Arthur Blasberg, Jr. Talton Embry
Bruce R. Berkowitz Peter Braverman Howard Goldberg
Beneficiaries may withhold authority to elect any of the Trustees by
writing the name of that Trustee in the space provided below.
- --------------------------------------------------------------------------------
2. APPROVAL of the appointment of auditors as set forth in the accompanying
Proxy Statement.
|_| FOR |_| AGAINST |_|ABSTAIN
3. APPROVAL of the change of the Trust's name to "WINTHROP REALTY TRUST" at
any time prior to December 31, 2005, at the election of the Board.
|_| FOR |_| AGAINST |_|ABSTAIN
- --------------------------------------------------------------------------------
The proxy is authorized to transact such other business as may properly
come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned Beneficiary. If no direction is given, this proxy will
be voted FOR items 1 and 2 in the discretion of said proxy on any other matter
which may come before the meeting or any adjournments thereof.
Dated: ____________, 2005 __________________________
Print Name
__________________________
Signature
NOTE: When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, custodian, guardian or corporate
officer, please give your full title as such. If a corporation, please sign full
corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.