SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only (as
permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Regency Realty Corporation
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Preliminary Copy
Regency Realty Corporation
_______________
NOTICE AND PROXY STATEMENT
_______________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1998
TO THE HOLDERS OF COMMON STOCK:
PLEASE TAKE NOTICE that the annual meeting of shareholders of Regency
Realty Corporation (the "Company") will be held on Tuesday, May 26, 1998,
at 11:00 A.M., local time, at the Omni Jacksonville Hotel, 245 Water
Street, Jacksonville, Florida.
The meeting will be held for the following purposes:
1. To elect one Class III Director, one Class I Director and four
Class II Directors to serve terms expiring at the annual meeting
of shareholders to be held in 1999, 2000 and 2001, respectively,
and until their successors have been elected and qualified.
2. To consider and vote on a proposed amendment to the Company's
Articles of Incorporation that would apply to the Company's
major beneficial shareholder, Security Capital U.S. Realty and
its subsidiary (collectively, "SC-USREALTY"), the same transfer
restrictions that currently apply to all other Non-U.S. Persons
(as defined in the Articles of Incorporation).
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The shareholders of record at the close of business on April 8, 1998
will be entitled to vote at the annual meeting.
It is hoped you will be able to attend the meeting, but in any event
we would appreciate your dating, signing and returning the enclosed proxy
as promptly as possible. If you are able to be present at the meeting,
you may revoke your proxy and vote in person.
By Order of the Board of Directors,
J. Christian Leavitt
Vice President, Secretary
and Treasurer
Dated: April ___, 1998
TABLE OF CONTENTS
Page
VOTING SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Standstill . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PROPOSAL 1: ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . 6
Compensation Committee Report on Executive Compensation . . . . 14
Annual Component . . . . . . . . . . . . . . . . . . . . . . . . 15
Long-Term Component . . . . . . . . . . . . . . . . . . . . . . 15
Comparative Stock Performance . . . . . . . . . . . . . . . . . 17
Executive Compensation . . . . . . . . . . . . . . . . . . . . . 18
Compensation Committee Interlocks and Insider Participation . . 21
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . 21
PROPOSAL 2: TO AMEND ARTICLES OF INCORPORATION
TO FACILITATE CONTINUED QUALIFICATION AS A
DOMESTICALLY CONTROLLED REIT . . . . . . . . . . . . . . . 24
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . 26
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . 26
ANNUAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
EXPENSES OF SOLICITATION . . . . . . . . . . . . . . . . . . . . . . 26
APPENDIX A
Regency Realty Corporation
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
_______________
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 26, 1998
This Proxy Statement and the enclosed form of proxy are first being
sent to shareholders of Regency Realty Corporation on or about April ___,
1998 in connection with the solicitation by the Company's Board of
Directors of proxies to be used at the 1998 annual meeting of shareholders
of the Company. The meeting will be held on Tuesday, May 26, 1998, at
11:00 A.M., local time, at the Omni Jacksonville Hotel, 245 Water Street,
Jacksonville, Florida.
The Board of Directors has designated Martin E. Stein, Jr. and Bruce
M. Johnson, and each or either of them, as proxies to vote the shares of
Common Stock solicited on its behalf. If the enclosed form of proxy is
executed and returned, it may nevertheless be revoked at any time insofar
as it has not been exercised by (i) giving written notice to the Secretary
of the Company, (ii) delivery of a later dated proxy, or (iii) attending
the meeting and voting in person. The shares represented by the proxy
will be voted unless the proxy is mutilated or otherwise received in such
form or at such time as to render it not votable.
If necessary, the holders of the proxies may vote in favor of a
proposal to adjourn the meeting to permit further solicitation of proxies
in order to obtain sufficient votes to approve any of the matters being
considered at the meeting. If the meeting is adjourned for any reason, at
any subsequent reconvening of the meeting all proxies may be voted in the
same manner as such proxies would have been voted at the original
convening of the meeting (except for any proxies that have heretofore
effectively been revoked or withdrawn).
VOTING SECURITIES
The record of shareholders entitled to vote was taken at the close of
business on April 8, 1998. At such date, the Company had outstanding and
entitled to vote 24,865,205 shares of Common Stock, $.01 par value. Each
share of Common Stock entitles the holder to one vote. Holders of a
majority of the outstanding Common Stock must be present in person or
represented by proxy to constitute a quorum at the annual meeting.
The Company is a Florida corporation the principal shareholders of
which consist of members of the Stein family, who founded the Company, and
the Company's major investor, Security Capital U.S. Realty ("SC-
USREALTY"). The following table shows certain information relating to the
beneficial ownership as of April 8, 1998 of (i) each person known to the
Company to be the beneficial owner of more than 5% of the Company's Common
Stock, which is the only outstanding class of voting securities of the
Company, (ii) each Director and nominee, (iii) each of the named executive
officers shown in the Summary Compensation Table elsewhere in this proxy
statement, and (iv) all Directors and executive officers as a group.
Except as otherwise indicated, the shareholders listed exercise sole
voting and dispositive power over the shares.
Percent
Amount and Nature of of Voting
Beneficial Owner(1) Beneficial Ownership Securities(2)
------------------- -------------------- -------------
Security Capital U.S. 11,284,439 45.4%
Realty(3) (SC-USREALTY)
LaSalle Advisors Limited 1,804,730 7.3%
Partnership(4)
Joan W. Stein(5) 589,090(6)(7) )
Martin E. Stein, Jr.(5) 762,783(6)(8)(9) ) 3.1%(10)
Richard W. Stein(11) 578,627(6)(12) )
Edward L. Baker 14,672(13) *
Raymond L. Bank 1,611(13) *
A.R. Carpenter 12,928(13) *
J. Dix Druce, Jr. 30,919(13) *
Albert Ernest, Jr. 13,696(13) *
Douglas S. Luke 14,504(13) *
J. Alexander Branch III 152,201(14) *
Mary Lou Rogers 833 *
Jonathan L. Smith 686 *
Lee S. Wielansky 45,459(16) *
Bruce M. Johnson 93,217(9)(17) *
Robert C. Gillander, Jr. 89,080(17) *
James D. Thompson 79,504(17) *
All Directors, nominees 1,183,373(18) 4.8%
for Director and executive
officers as a group (a
total of 16 persons)
______________________________
Footnotes appear on page 3.
________________________
* Less than one percent.
(1) Information presented in this table and related notes has been
obtained from the beneficial owner and from reports filed by the
beneficial owner with the Securities and Exchange Commission
pursuant to Section 13 of the Securities Act of 1934.
(2) The percentages shown on the above table do not take into account
the shares of Common Stock issuable upon conversion of the Company's
Class B Non-Voting Stock (the "Class B Stock"). The Company has
outstanding a total of 2,500,000 shares of Class B Stock held by a
single institutional investor which are convertible into Common
Stock at the holder's option beginning December 20, 1998, subject to
certain numerical limitations, including a requirement that
conversion not result in the holder being the beneficial owner of
more than 4.9% of the Company's outstanding Common Stock. The Class
B Stock will be immediately convertible into Common Stock in full
upon the occurrence of certain extraordinary events or defaults,
including certain changes in management. A total of 2,975,468
shares of Common Stock are issuable upon conversion of the Class B
Stock. Based on the number of shares of Common Stock outstanding on
the record date for the annual meeting (and assuming no other
changes), the 2,975,468 shares of Common Stock issuable upon
conversion of the Class B Stock would constitute approximately 10.7%
of the Common Stock outstanding immediately following conversion.
(3) The business address of Security Capital U.S. Realty is 69, route
d'Esch, L-1470 Luxembourg.
(4) The business address of LaSalle Advisors Limited Partnership is 11
South LaSalle Street, Chicago, Illinois 60603.
(5) The business address of Joan W. Stein and Martin E. Stein, Jr. is
121 West Forsyth Street, Suite 200, Jacksonville, Florida 32202.
(6) Includes 160,263 shares held through The Regency Group, Inc. The
named individual is deemed to have shared voting and investment
power over these shares by virtue of testamentary trusts and a
voting trust of which the Steins and John D. Baker, II are trustees,
which trusts own 100% of the voting stock of The Regency Group, Inc.
Also includes: 307,147 shares and 108,235 shares owned through two
family partnerships, The Regency Group II and Regency Square II,
respectively. The general partners of The Regency Group II and
Regency Square II are the Steins and a testamentary trust of which
the Steins and Mr. Baker are trustees.
(7) Also includes 13,445 shares owned individually by Joan W. Stein.
(8) Also includes 187,138 shares owned by Martin E. Stein, Jr. and
34,444 shares subject to presently exercisable options.
(9) Excludes 46,691 shares held by the Company's 401(k) plan, of which
Messrs. Martin E. Stein, Jr. and Johnson are trustees. The trustees
have shared voting power over these shares.
(10) The 762,783 shares over which Martin E. Stein, Jr. has sole or
shared voting and investment power as described in notes (6) and (8)
represent, in the aggregate, 3.1% of the outstanding voting
securities of the Company. Percentages are omitted for the other
members of the Stein family to avoid double counting.
(11) The business address of Richard W. Stein is 76 S. Laura Street,
Suite 1400, Jacksonville, Florida 32201.
(12) Also includes 2,982 shares owned individually by Richard W. Stein.
(13) Includes the following shares covered by presently exercisable
options: Mr. Baker, 5,000 shares; Mr. Branch, 2,000 shares; Mr.
Carpenter, 5,000 shares; Mr. Druce, 5,000 shares; Mr. Ernest, 5,000
shares; and Mr. Luke, 5,000 shares.
(14) Includes 81,033 shares issuable upon redemption of limited
partnership units held by Mr. Branch and 2,228 shares issuable upon
redemption of limited partnership units held by Mr. Branch's wife as
trustee for the benefit of their children.
(15) Nominee for Director.
(16) Represents units of limited partnership interest in Regency Centers,
L.P. which may be redeemed at any time for a like number of shares
of the Company's Common Stock.
(17) Includes the following shares covered by presently exercisable
options: Mr. Johnson, 11,802 shares; Mr. Gillander, 11,802 shares;
and Mr. Thompson, 10,143 shares.
(18) Includes 95,191 shares subject to presently exercisable options.
Standstill
SC-USREALTY has agreed to a five-year "standstill" (renewable for
additional one-year terms) in its Stockholders Agreement with the Company,
as amended. A "standstill" is an agreement by a shareholder to refrain
from changing its position, most frequently involving an agreement not to
acquire additional shares and/or not to take certain actions relating to
management or control, such as replacing one or more members of the board
of Directors. Under the terms of SC-USREALTY's standstill, SC-USREALTY
may not, among other things, (i) acquire more than 45% of the Company's
outstanding Common Stock on a fully diluted basis, (ii) transfer shares in
a negotiated transaction that would result in any transferee beneficially
owning more than 9.8% of the Company's capital stock unless the Company
approves the transfer, in its sole discretion, (iii) act in concert with
any third parties as part of a 13D group, or (iv) seek to change the
composition or size of the Board of Directors (except as provided in the
Stockholders Agreement with respect to SC-USREALTY's representation on the
Board). During the standstill term, SC-USREALTY is generally required to
vote its shares of Common Stock in accordance with the recommendation of
the Company's Board of Directors or proportionally in accordance with the
vote of the other holders of the Common Stock except with respect to the
election of SC-USREALTY's nominees to the Company's Board (as to which SC-
USREALTY can vote its shares in its sole discretion) and with respect to
any amendment to the Company's Articles of Incorporation or Bylaws that
would reasonably be expected to materially adversely affect SC-USREALTY
and certain extraordinary matters (as to which SC-USREALTY may vote Common
Stock owned by it, not to exceed 40% of the outstanding shares, in its
sole discretion).
SC-USREALTY's standstill requires it to vote at the annual meeting
for the Board of Directors' nominees (other than SC-USREALTY's
representatives) or vote proportionally for such nominees in accordance
with the vote of the other shareholders.
SC-USREALTY's standstill provides for automatic termination prior to
the end of its stated term upon the occurrence of certain events,
including the acquisition by another person or group of 9.8% or more of
the voting power of the Company's outstanding voting securities. In June
1997, Opportunity Capital Partners II Limited Partnership, a Maryland
limited partnership ("OCP"), acquired beneficial ownership of more than
9.8% of the Common Stock following its exercise of certain redemption
rights. SC-USREALTY agreed that the standstill will not be terminated by
OCP's exercise of redemption rights so long as the shares acquired by OCP
are held directly and beneficially by OCP. The waiver of the termination
of the standstill also extends to (i) 225,930 shares beneficially owned
for various managed accounts by ABKB/LaSalle Securities Limited, an
affiliate of OCP's general partner ("ABKB/LaSalle") (including 32,200
shares held in a discretionary account for the benefit of OCP's limited
partner), but only to the extent that such shares are continuously held in
each such account, and (ii) up to 4.9% of the outstanding Common Stock
beneficially owned as a result of the conversion of Class B Stock, which
is beneficially owned by an affiliate of ABKB/LaSalle for another client.
However, the waiver will terminate as to all the shares described above if
OCP, ABKB/LaSalle, any other affiliate of OCP, or any member of a group of
which OCP is a member acquires beneficial ownership of any additional
voting securities of the Company or takes any other actions that would
otherwise result in the termination of the standstill.
During the standstill period, OCP has agreed with the Company that
OCP will not, and OCP and ABKB/LaSalle have agreed that they will not,
cause other managed accounts for OCP's limited partner (collectively with
OCP, the "OCP Accounts") to acquire additional shares (i) so long as OCP
continues to beneficially own more than 9.8% of the Common Stock, on a
diluted basis, or (ii) thereafter if, after giving effect to the
acquisitions, the OCP Accounts would own more than 9.8% of the Common
Stock, on a diluted basis. However, neither ABKB/LaSalle nor any of its
affiliates is so bound with respect to any of their other clients or
accounts. Accordingly, if ABKB/LaSalle becomes the beneficial owner of
any shares that are not exempted from the standstill waiver as described
above (or if any of the exempted shares are transferred between
ABKB/LaSalle affiliates even though their aggregate beneficial ownership
does not increase), then all shares beneficially owned by OCP,
ABKB/LaSalle and their affiliates will be counted in determining whether
SC-USREALTY's standstill has terminated. If after any such event such
persons then beneficially own more than 9.8% of the outstanding Common
Stock, the standstill will terminate, and SC-USREALTY will not be
restricted in the voting of the shares that it owns or in any other action
that it might take as a shareholder of the Company.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Amended and Restated Articles of Incorporation divide
the Board of Directors into three classes, as nearly equal as possible.
At the meeting, one Class I Director will be elected to serve for a term
of two years and until his successor is elected and qualified, one Class
III Director will be elected to serve for a term of one year and until his
successor is elected and qualified; and four Class II Directors will be
elected to serve for a term of three years and until their successors are
elected and qualified. The Board of Directors has nominated Lee S.
Wielansky, who was recently elected to the Board in connection with the
acquisition of the real estate assets of the Midland Group, and Jonathan
L. Smith, who was recently elected to the seat of the Board vacated by
Robert S. Underhill, to stand for election as Class I and Class III
Directors, respectively. The Board of Directors also has nominated Martin
E. Stein, Jr., Raymond L. Bank, A.R. Carpenter, and J. Dix Druce, Jr., to
stand for election as Class II Directors. Directors will be elected by a
plurality of votes cast by shares entitled to vote at the meeting.
The accompanying proxy will be voted, if authority to do so is not
withheld, for the election as Directors of each of the Board's nominees.
Each nominee is presently available for election. If any nominee should
become unavailable, which is not now anticipated, the persons voting the
accompanying proxy may in their discretion vote for a substitute.
Information concerning all incumbent Directors and all nominees for
Director, based on data furnished by them, is set forth below. Martin E.
Stein, Jr. and Richard W. Stein are brothers, and Joan W. Stein is their
mother. Mr. Smith and Ms. Rogers have been designated by SC-USREALTY as
its representatives to the Company's Board of Directors pursuant to a
Stockholders Agreement between the Company and SC-USREALTY, which gives
SC-USREALTY the right, under certain circumstances, to nominate for
election by shareholders its proportionate share of the members of the
Board (but generally not fewer than two, nor more than 49% of the
Directors). Mr. Bank has been designated by OCP as its representative to
the Company's Board of Directors. OCP will retain the right to nominate
one member of the Board so long as it retains the shares of Common Stock
received in connection with the acquisition of assets of Branch
Properties, L.P.
The Board of Directors of the Company recommends a vote "for"
the election of each of its nominees. Proxies solicited by the Board will
be so voted unless shareholders specify in their proxies a contrary
choice.
Shares of
Company
Year Common Stock
Class/ Positions with the First Owned
Current Company; Principal Became Beneficially as of
Term Occupations During Director March 1, 1998
Name Expires Past Five Years; Other of the (% of
Age (1) Directorships Company Class)(2)
---- ------- ---------------------- -------- -------------------
Joan W. Stein Class Director of the 1993 589,090(3)
(69) III Company; retired as (2.4%)
1999 Chairman of the
Company in 1997;
Chairman since 1968 of
The Regency Group,
Inc. ("TRG"), which
transferred
substantially all the
assets of its real
estate division to the
Company upon the
closing of the
Company's initial
public offering in
November 1993; retired
as a Director of
Barnett Bank of
Jacksonville, N.A. in
1995.
Martin E. Class Chairman of the Board 1993 762,783(3)(4)
Stein, Jr.*# II since June 1997, (3.1%)
(45) 1998 President, Chief
Executive Officer and
Director of the
Company since 1993;
President and Chief
Executive Officer of
TRG since 1988 and
President of TRG's
real estate division
since 1981; Director
of FRP Properties,
Inc., a publicly held
transportation and
real estate company.
Richard W. Class I President and Chief 578,627(3)
Stein 2000 Executive Officer of (2.3%)
(42) Palmer & Cay of
Florida, Inc., an
insurance agency,
since 1993; Executive
Vice President and
Director of TRG, 1989
to present.
Douglas S. Class I Director of the 1993 14,504(5)
Luke! 2000 Company; President and
(56) Chief Executive
Officer since 1991 of
WLD Enterprises, Inc.,
a Ft. Lauderdale,
Florida based
diversified private
investment and
management company
with interests in
securities, real
estate and operating
businesses; Managing
Director of Rothschild
Inc./Rothschild
Ventures from 1987 to
1990; Director of
Orbital Sciences
Corporation, a space
systems company, and
Westvaco Corporation,
a diversified paper
and chemicals manu-
facturing company.
Mary Lou Class I Managing Director of 1997 833
Rogers-# 2000 SC-USREALTY Strategic
(46) Group Incorporated, an
affiliate of SC-
USREALTY, since March
1997, responsible for
developing retail
operating systems for
retailing-related
initiatives for SC-
USREALTY Strategic
Group Incorporated's
clients; Senior Vice
President, Director of
Stores-New England,
for Macy's
East/Federated
Department Stores from
1994 to March 1997;
Senior Vice President,
Director of Stores for
Henri Bendels from
1993 to 1994; Senior
Vice President,
Regional Director of
Stores for the
Burdines Division of
Federated Department
Stores, from 1991 to
1993.
Lee S. Class I Director of the 1998 45,459
Wielansky nominee Company; Managing
(47) (for Director - Midwestern
term Investment Group of
expiring the Company; President
2000) and Chief Executive
Officer of Midland
Development Group from
1983 to 1998 until its
assets were acquired
by the Company;
Director of Allegiant
Bancorp, Inc. since
1990.
Raymond L. Class Director of the 1997 1,611
Bank II Company; President and
(44) 1998 Chief Operating
Officer of Merchant
Development
Corporation, a venture
capital and buy-out
firm focusing on
consumer retail,
direct marketing, and
service companies
since 1994; President,
Raymond L. Bank
Associates, Inc., a
consulting firm
serving a diverse
clientele in corporate
development, retail,
and direct marketing
strategies, since
1991; Director,
OfficeMax, Inc., since
1994.
A. R. Class Director of the 1993 12,928(5)
Carpenter-# II Company; President and
(56) 1998 Chief Executive
Officer (since January
1992) of CSX
Transportation, Inc.,
with which he has held
a variety of positions
since 1962, including
Executive Vice
President-Sales and
Marketing (from 1989
to 1992); Director of
NationsBank Corp.
since January 1998,
Florida Rock
Industries, Inc.,
Stein Mart, Inc., a
Jacksonville based
discount retailer, and
American Heritage Life
Insurance Company,
Director of Barnett
Banks, Inc., a
Jacksonville based
bank holding company,
and its affiliate,
Barnett Bank of
Jacksonville, N.A.,
prior to its
acquisition by
NationsBank Corp.
J. Dix Druce, Class Director of the 1993 30,919(5)
Jr.! II Company; President and
(50) 1998 Chairman of the Board
of Life Service Corp.,
Inc., a life insurance
management company,
since 1988; President
and Director of
American Merchants
Life Insurance Company
and its parent, AML
Acquisition Company,
since October 1992;
President and Director
(Chairman from May
1989 to July 1991) of
National Farmers Union
Life Insurance Company
from 1987 to 1991;
President and Director
of Loyalty Life
Insurance Company and
NFU Acquisition
Company from 1987 to
1991; Director of
American National Bank
of Florida.
Edward L. Class Director of the 1993 14,672(5)
Baker-# III Company; Chairman of
(63) 1999 the Board of Florida
Rock Industries, Inc.,
a publicly held
construction materials
company listed on the
New York Stock
Exchange, and its
affiliate, FRP
Properties, Inc.,
since May 1989 and
President from 1967 to
May 1989; Director of
American Heritage Life
Insurance Company,
based in Jacksonville,
Florida, and Flowers
Industries, a producer
of baked goods located
in Thomasville,
Georgia.
J. Alexander Class Founder, Chairman and 1997 68,940
Branch III III Chief Executive
(56) 1999 Officer for more than
five years of Branch
Properties, L.P. and
predecessors, prior to
the transfer by it of
substantially all its
assets to a
partnership controlled
by the Company.
Albert Ernest, Class Director of the 1993 13,696(5)
Jr.-# III Company; President of
(67) 1999 Albert Ernest
Enterprises, a
consulting and
investment firm;
Director of Barnett
Banks, Inc., from 1982
until 1991, President
and Chief Operating
Officer from November
1988 until his
retirement in 1991,
and Vice Chairman from
1984 to 1988; Director
of Florida Rock
Industries, Inc., and
its affiliate, FRP
Properties, Inc.,
Stein Mart, Inc., a
publicly held discount
apparel chain based in
Jacksonville, Florida,
Emerald Funds and
Wickes Lumber Co., a
publicly held retailer
and distributor of
building materials.
Jonathan L. Class Director of the 1998 686
Smith! III Company; Senior Vice
(45) nominee President, SC-USREALTY
(for Global Strategic Group
term since June, 1997,
expiring where he is
2001) responsible for
overseeing strategic
investments in retail
companies such as the
Regency Realty,
Pacific Retail Trust,
Urban Growth Property
Trust, and City Center
Retail Trust; Managing
Director of Citicorp
Real Estate, Inc.
overseeing remedial
management of the US
Commercial Real Estate
business from 1990 to
1997.
_________________________
* Member of the Executive Committee, any meeting of which also must
include any one of the outside Directors, and one of the Directors
representing SC-USREALTY.
! Member of the Audit Committee.
- Member of the Compensation Committee.
# Member of the Nominating Committee.
(1) The Company's Amended and Restated Articles of Incorporation divide
the Board of Directors into three classes, as nearly equal in number
as possible, with Directors elected for three-year terms.
(2) Where percentage is not indicated, amount is less than 0.1% of total
outstanding Common Stock. Unless otherwise noted, all shares are
owned directly, with sole voting and dispositive powers.
(3) Includes 160,263 shares held through The Regency Group, Inc. The
named individual is deemed to have shared voting and investment
power over these shares by virtue of testamentary trusts and a
voting trust of which the Steins and John D. Baker, II are trustees,
which trusts own 100% of the voting stock of The Regency Group, Inc.
Also includes 307,147 shares and 108,235 shares held through two
family partnerships, The Regency Group II and Regency Square II,
respectively. The general partners of The Regency Group II and
Regency Square II are the Steins, and a testamentary trust of which
the Steins and Mr. Baker are trustees.
(4) Includes 34,444 shares subject to presently exercisable options.
(5) Includes 5,000 shares subject to presently exercisable options.
Board of Directors and Standing Committees. Regular meetings of the
Board of Directors are held five times a year. The Board held five
regular meetings and six special meetings during 1997. All Directors
attended at least 75% of all meetings of the Board and Board committees on
which they served during 1997.
The Board of Directors has established four standing committees: an
Executive Committee, an Audit Committee, a Compensation Committee and a
Nominating Committee, which are described below. Members of these
committees will be elected annually at the regular Board meeting held in
conjunction with the annual shareholders' meeting.
Executive Committee. The Executive Committee presently is comprised
of Martin E. Stein, Jr. (Chairman) and one independent non-SC-USREALTY
Director, plus any one outside Director who is a Director nominee of SC-
USREALTY. The Executive Committee did not meet during 1997. The
Executive Committee is authorized by the resolutions establishing the
committee to handle ministerial matters requiring Board approval. The
Executive Committee may not exercise functions reserved under Florida law
for the full Board of Directors and, in addition, may not declare
dividends.
Audit Committee. The Audit Committee presently is comprised of
Messrs. Druce, Luke and Smith, none of whom is an officer of the Company.
Regular meetings of the Audit Committee are held twice a year. The Audit
Committee met twice during 1997. The principal responsibilities of and
functions generally performed by the Audit Committee are reviewing the
Company's internal controls and the objectivity of its financial
reporting, making recommendations regarding the Company's employment of
independent auditors, and reviewing the annual audit with the auditors.
Nominating Committee. The Nominating Committee presently is
comprised of Albert Ernest, Jr. (Chairman), Martin E. Stein, Jr., Edward
L. Baker, A.R. Carpenter and Mary Lou Rogers. The Nominating Committee,
which makes nominations for election of Directors, also has responsibility
for accepting nominations from shareholders. The Nominating Committee met
twice during 1997. The Company's Bylaws require that any nominations by
shareholders be delivered to the Company no later than the deadline for
submitting shareholder proposals. See "Shareholder Proposals."
Compensation Committee. The Compensation Committee presently is
comprised of Messrs. Ernest (Chairman), Baker, Carpenter and Ms. Rogers.
The Compensation Committee held three meetings during 1997 to review 1996
performance and to review and approve changes to the Company's current
executive compensation plans. This Committee has the responsibility of
approving the compensation arrangements for senior management of the
Company, including annual bonus and long term compensation. It also
recommends to the Board of Directors adoption of any compensation plans in
which officers and Directors of the Company are eligible to participate,
as well as makes grants of employee stock options and other stock awards
under the Company's Long Term Omnibus Plan.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") is responsible for evaluating and establishing appropriate
levels of executive compensation and other benefit plans of the Company.
The Committee is comprised entirely of non-employee Directors.
Compensation Philosophy. The Company's executive compensation
program is incentive based, and has been designed to attract, motivate,
reward and retain key executives who are result-oriented and capable of
achieving the Company's key objectives. The Committee recognizes that the
interests of the shareholders are best served by allowing key executives
the opportunity to participate in the appreciation of the Company through
the granting of stock awards and stock options.
The Committee evaluates and establishes the Company's executive
compensation program based upon current market information including data
from the REIT Executive Compensation Survey prepared annually by the
National Association of Real Estate Investment Trusts, and comparative
executive compensation data provided by Arthur Andersen and its peers.
The program is comprised of an annual component and a long-term incentive
component. Both of these forms of incentive compensation are primarily
variable in nature, and designed to effectuate a pay-for-performance
philosophy which considers management's ability to consistently generate
total shareholder returns above industry coverages, grow Funds from
Operations per share (FFO is the most widely-accepted measure of
performance for real estate investment trusts), strengthen the Company's
capital structure, and build a premier operating company.
The Company exceeded all of its 1997 key goals and objectives.
Significant accomplishments included increasing FFO per share by 18.3%;
growing the platform of quality neighborhood shopping centers by $422
million invested in 40 properties; commencement of $134 million of
customer-driven developments; increasing the total market capitalization
to $1.04 billion; achievement of investment grade ratings from Moody's and
S&P; and three-year compounded annual shareholder return of 25%.
Annual Component
Base salaries for all executives are reviewed by the Committee on an
annual basis. In determining appropriate base salaries, the Committee
considers external competitiveness in relation to the Company's current
financial condition and capital resources, the roles and responsibilities
of the individual, the contributions of the individual to the Company's
business, an analysis of job requirements and the individual's prior
experience and accomplishments.
To provide additional incentive to achieve outstanding performance,
the Committee also makes cash bonus awards based on corporate and
individual performance. The compensation plan established by the Committee
in 1997 establishes target cash bonuses based on achievement of financial
and operational goals for the Company and, where appropriate, those
activities of the Company managed by the executive officer. The Committee
has the discretion to increase the annual bonus in any given year to take
into account what it deems to be extraordinary events.
Long-Term Component
Stock Purchase Plan. The Committee strongly believes that providing
key employees with an opportunity to increase their ownership of common
stock, aligns their interests with and best serves the stockholders.
Therefore, the Committee has structured a stock purchase plan ("SPP")
whereby the Company may make loans to executive officers and other key
employees to acquire common stock at fair market value at date of grant.
These full recourse loans are secured by the stock purchased. The terms
and amounts of existing SPP loans are further described under the summary
of Executive Compensation included elsewhere in this Proxy Statement.
Certain SPP loans originated during 1993 and 1996 provide for loan
forgiveness awards based upon growth in FFO per share and total
shareholder return. In 1997, the Company exceeded the performance targets
that provide loan forgiveness by achieving per share FFO growth of 18.3%,
and compounded annual shareholder return since the measurement date of
37%. Forgiveness amounts are reported in the Summary Compensation Table
as SPP Loan Awards. SPP loans originated after 1996 have no forgiveness
provisions.
Stock Options. The Company grants stock options to employees as part
of their annual performance review ("Annual Options"), and also as part of
the SPP program ("SPP Matching Options") that provide incentives to SPP
participants to purchase and maintain a long-term investment in the
Company of at least 5 years following an SPP grant. Annual Options and
SPP Matching Options vest over 5 years, subject to SPP ownership
requirements.
Performance Stock Plan. In 1995, The Company established a one-time
performance stock program whereby executive officers could earn a
specified number of shares of restricted stock as a result of achieving a
compounded annual total return to shareholders of 15% over a three-year
period beginning with the average closing price of the fourth quarter of
1994. At December 31, 1997, the three-year compounded annual shareholder
return as determined by the plan was 25%, and accordingly, remaining
unissued performance shares were issued. Currently, issued shares are 33%
vested, and become fully vested by January, 2000. The issuance of
performance shares are included in the Summary Compensation Table as
Restricted Stock Awards.
CEO Compensation. The Committee's policies for determining the CEO's
compensation are the same as the other executive officers. For 1998, the
CEO's base compensation was not increased, and in accordance with the
Company's incentive compensation program, the CEO received a bonus of
$197,500, as well as, SPP stock loan forgiveness of $186,338 related to
1997 performance. In January, 1997, the CEO was granted the right to
purchase 79,200 SPP shares, 158,400 SPP matching Options, and 32,700
Annual Options at $25.25 per share, the fair market value on the date of
grant. The CEO continues to serve under a rolling three-year employment
agreement.
REGENCY REALTY CORPORATION
COMPENSATION COMMITTEE
Albert Ernest, Jr., Chairman
Edward L. Baker
R. Carpenter
Mary Lou Rogers
Comparative Stock Performance
The following graph compares the cumulative total shareholder return
on the Company's Common Stock with the cumulative total return of the S&P
500 Index and the NAREIT All Equity Index (excluding health care REITs)
since October 29, 1993, the first date on which the Common Stock began
trading on the New York Stock Exchange following the Company's initial
public offering, assuming the reinvestment of any dividends and assuming
the investment of $100 in each.
10/29/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
REGENCY REALTY CORP. 100.00 86.36 94.35 106.74 179.84 202.02
NAREIT EQUITY INDEX* 100.00 94.83 97.67 111.55 152.16 183.39
S&P 500 INDEX 100.00 100.25 101.57 139.75 171.83 229.16
Executive Compensation
The following table summarizes the compensation paid or accrued by
the Company for services rendered during fiscal 1997, 1996 and 1995 to the
Company's Chief Executive Officer and to the Company's three Managing
Directors, the only other executive officers whose total salary and bonus
exceeded $100,000 during the year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------- ------------
Performance Securities
Name & Principal Stock Underlying SPP Loan All Other
Position Year Salary(1) Bonus(2) Awards(3) Options/SARs(4) Awards(5) Compensation(6)
---------------- ---- --------- -------- ----------- --------------- --------- ---------------
Martin E. Stein, Jr. 1997 $275,000 $197,500 $265,800 270,300 $186,338 $30,325
Chairman and Chief 1996 252,391 225,000 $168,000 0 186,338 47,535
Executive Officer 1995 240,000 144,400 0 0 103,950 35,931
Bruce M. Johnson 1997 180,000 104,400 132,900 139,600 84,083 27,343
Managing Director 1996 145,076 115,000 84,000 0 84,083 28,556
and Chief Financial 1995 135,000 71,400 0 0 41,580 22,542
Officer
Robert C. Gillander, 1997 175,000 100,000 116,288 139,600 80,502 25,480
Jr. 1996 137,500 108,900 73,500 0 80,502 26,766
Managing Director 1995 125,000 60,000 0 0 41,580 21,175
Investment Group
James D. Thompson 1997 175,000 100,000 107,981 139,600 71,185 25,795
Managing Director 1996 129,826 103,000 68,250 0 71,185 26,122
Operations Group 1995 121,000 62,100 0 0 36,383 20,770
_________________________
(1) Includes amounts deferred under the 401(k) feature of the Company's
profit sharing plan.
(2) Bonuses for the year ended December 31, 1997 were paid 100% in cash;
for the year ended December 31, 1996 bonuses were paid 45% in cash
and 55% in stock; and for the year ended December 31, 1995 bonuses
were paid 40% in cash and 60% in stock.
(3) Consists of the fair market value of restricted stock awards on
December 31, 1997 and December 31, 1996, the date of grants. Awards
were earned by cumulative annual shareholder return exceeding 15%
beginning January 1, 1995, when the program was implemented. Awards
vest 34%, 33% and 33% on the first, second and third anniversary
date of the grant provided that the executive is employed by the
Company or any affiliate on the date of vesting. The executive is
entitled to dividends and voting rights on unvested shares. Shares
representing the full amount of the awards listed above, held by the
named executives are as follows: Mr. Stein, 16,000 shares; Mr.
Johnson, 8,000 shares; Mr. Gillander, 7,000 shares; and Mr.
Thompson, 6,500 shares. There is currently no additional restricted
stock available for management.
(4) Stock options granted for previous years performance that vest over
5 years (Annual Options), and stock options granted related to the
Company's Stock Purchase Plan (SPP Shares and SPP Matching Options),
that vest over 1 and 9 years depending upon shares owned by the
executive after 5 years, and certain financial performance measures
see Stock Purchase Plan included in the Executive Compensation
section for specifics related to options granted and vesting terms.
(5) Represents amounts earned by the named executive officers in the
form of loan forgiveness in accordance with the terms of the Stock
Purchase Plan that is part of the Company's 1993 Long Term Omnibus
Plan, based upon FFO growth greater than 7%, annual shareholder
return of 15% or more, cumulative return of 20% or more since
January 1, 1996, and length of service.
(6) Includes contributions in the form of stock to the Company's profit
sharing and 401(k) plan, the non-401(k) portion of which was based
on the attainment of predetermined levels of funds from operations
per share. 401(k) contribution amounts for each executive officer
was $13,750 in 1997 and 1996, and $11,448 in 1995 and 1994. Also
includes: (a) perc allowance equal to 6% of the first $100,000 of
base salary, and 4% of base salary amounts in excess of $100,000;
(b) annual employee bonus of $1,000, and (c) excess term life
insurance premiums.
Employment Agreements. The Company has entered into a three-year
employment agreement with Martin E. Stein, Jr., the Company's President
and Chief Executive Officer, providing for an annual base salary and
participation in the Company's executive compensation plans on the same
terms as other executive officers. The agreement, which was effective in
October 1993, will be renewed automatically for an additional year on each
anniversary date thereof so that the remaining term will be three years,
unless either party gives written notice of non-renewal. The agreement
provides for Mr. Stein to receive base salary and incentive compensation
for the remainder of the term of the agreement in the event that he is
terminated, his responsibilities are materially reduced or the Company's
headquarters are relocated from Jacksonville, Florida as a result of a
sale, merger or other change of control of the Company. The Company has
entered into agreements with Messrs. Johnson, Gillander and Thompson that
provide for the payment of salary and benefits for a specified period in
the event of a change of control only. A change of control is defined to
include a change in at least one-third of the Directors (unless
recommended by a majority of the continuing Directors), the acquisition by
any person of at least 30% of the combined voting power of the Company's
outstanding securities unless pursuant to transactions approved by a
majority of the continuing Directors, certain mergers, and a sale of
substantially all of the Company's assets.
Stock Purchase Plan. To align the interest of management with the
Company's shareholders, the Company has implemented a stock purchase plan
("SPP") as part of its Long-Term Omnibus Plan to encourage stock ownership
by management. Management purchased 226,000 shares under this program
during 1993 and 1996 at fair market value at the time of purchase. The
stock purchases were funded by SPP loans from the Company (averaging 92%
of the purchase price) and cash provided directly from management. These
SPP loans are fully secured by a portion of the stock purchased, have full
recourse to management, are interest only (due quarterly) with fixed rates
of interest of 7.34% to 7.79%, and mature in 10 years. As part of the
program, a portion of the loans may be forgiven annually based on annual
per share FFO growth of greater than 7%, total annual shareholder return
of at least 15%, and cumulative total annual shareholder return of 20% or
more since January 1, 1996.
In 1997, the Company granted the executive officers the option for 2
years to purchase approximately 198,000 shares ("SPP Shares") at $25.25
per share, the stock price on the grant date, 65,300 of which are subject
to certain financial performance goals. The Company will loan the
participants 95% of the purchase price at an interest rate equal to the
lower of 6% or the dividend rate. The loans will be secured by stock,
will be full recourse to the employee, and will mature in 10 years. On
January 12, 1998, the executive officers exercised 132,700 SPP Shares.
The 1997 SPP loan does not provide for loan forgiveness.
In 1997, the Company granted the executive officers 396,000 SPP
Matching Options, which expire in 10 years. These options are vested
after 9 years. The vesting may be accelerated if the executive exercises
the options to purchase the SPP Shares and then holds those shares in
accordance with the plan over 5 years. The Company also granted 95,100
options to the executive officers in 1997 based upon 1996 performance
(Annual Options). Annual Options vest over 5 years and expire after 10
years. The SPP Matching Options and the Annual Options have an exercise
price equal to $25.25 per share, the stock price on the grant date.
Annual options accrue dividends, based on the average dividend yield of
the S&P 500 adjusted annually, which are converted into Company Common
Stock. These dividend equivalent shares vest over 5 years.
The following table sets forth as of March 1, 1998, the amounts
outstanding under the SPP loan program due from each of the Company's
executive officers.
Largest Balance
SPP Loan During Fiscal
Balance Year Ended
March 1, December 31,
Executive Officer 1998 1997
----------------- -------- ---------------
Martin E. Stein, Jr. $1,511,180 $651,662
Bruce M. Johnson 943,114 314,767
Robert C. Gillander, Jr. 926,406 294,479
James D. Thompson 903,140 261,896
Stock Options. The following table sets forth information concerning
the value of unexercised options as of December 31, 1997 held by the
executive officers named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES DURING FISCAL 1997
AND OPTION YEAR-END VALUES TABLE
Value of
Number of Number of Unexercised
Shares Unexercised In-the-Money
Acquired Value Options at Options at
Upon Realized December 31, 1997 December 31, 1997
Exercise Upon Exercisable/ Exercisable/
Name of Options Exercise Unexercisable Unexercisable
---- ---------- -------- ----------------- -----------------
Martin E. Stein, Jr. 5,556 $149,328 78,044 (E) / $289,933 (E) /
226,700 (U) $552,581 (U)
Bruce M. Johnson 4,198 $112,812 41,502 (E) / $ 91,171 (E) /
109,900 (U) $267,881 (U)
Robert C. Gillander, 4,198 $112,812 41,502 (E) / $ 89,652 (E) /
Jr. 109,900 (U) $267,881 (U)
James D. Thompson 3,857 $103,662 39,843 (E) / $ 83,723 (E) /
109,900 (U) $267,881 (U)
The following table sets forth information with respect to option grants
to the executive officers named in the Summary Compensation Table above
during 1997 and the potential realizable value of such option grants. See
Stock Purchase Plan for discussion of stock options granted during 1997.
OPTION GRANTS DURING FISCAL 1997
% of Total
Number of Options Exercise Hypothetical
Options Granted Price Expiration Value at
Executive Officer Granted during 1997 ($/share) Date Grant Date
----------------- --------- ----------- --------- ---------- ------------
Martin E. Stein, Jr. 270,300 21.6% $25.25 1-13-2007 $842,610
Bruce M. Johnson 139,600 11.2% $25.25 1-13-2007 435,814
Robert L. Gillander, Jr. 139,600 11.2% $25.25 1-13-2007 435,814
James D. Thompson 139,600 11.2% $25.25 1-13-2007 435,814
(1) The estimated present value at grant date of options granted during
1997 has been calculated using the Black-Scholes option pricing model,
based upon the following assumptions: estimated time until exercise of
5.7 years; a risk-free interest rate of 6.3%; a volatility rate of
21%; and a dividend yield of 6.3%. The approach used in developing
the assumptions upon which the Black-Scholes valuation was calculated
is consistent with the requirements of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensa-
tion." The actual value of the options may be significantly
different, and the value actually realized, if any, will depend upon
the excess of the market value of the Common Stock over the option
exercise price at the time of exercise.
Compensation of Directors. In 1997, the Company paid an annual fee
of $17,000 to each of its non-employee Directors, plus $2,500 per year for
service on a Board committee ($3,000 per year for chairing a committee).
Directors' fees are currently paid in shares of Common Stock, unless the
Director elects to receive all or any portion of the fees in cash. Non-
employee Directors also receive non-qualified options to purchase 1,000
shares of Common Stock at the end of each year and may elect to
participate in a stock purchase matching program that provides for a total
stock value match of up to $10,000 per year. The options vest one year
after grant and have a term of ten years and an exercise price equal to
the greater of the fair market value of the Common Stock on the date of
grant or the average trading price of the Common Stock on the 20 business
days preceding the date of grant.
Compensation Committee Interlocks
and Insider Participation
During the year ended December 31, 1997, Martin E. Stein, Chairman
and Chief Executive Officer of the Company, served on the board of
Directors of FRP Properties, Inc. Edward L. Baker, Chairman of the Board
of FRP Properties, Inc. is a member of the Company's Compensation
Committee.
Certain Transactions
The Audit Committee of the Board of Directors is responsible for
evaluating the appropriateness of all related-party transactions.
Company Option on TRG Properties. TRG and Joan W. Stein, Martin E.
Stein, Jr. and Richard W. Stein (who are Directors of the Company, and
together with Robert L. Stein, the "Steins") have retained interests in
properties that were determined not to be appropriate for ownership by the
Company initially because their transfer is restricted or because they
lack cash flow or are of a type presently inconsistent with the Company's
investment objectives. Upon consummation of the Company's initial public
offering in 1993, TRG granted options to the Company for all of the
properties (the "Option Properties") that TRG has the right to option and
that are likely to become suitable for Company investment, e.g., land that
can be developed into shopping centers. At January 1, 1998, all options
on the Option Properties expired except for a 19-story downtown office
building in Fort Lauderdale, Florida ("BBP"), as to which the Company has
been granted a right of first refusal. The expired Option Properties
consisted of land in Florida that did not meet the Company's investment
objectives.
Management Services for TRG and its Affiliates. The Company, through
its affiliate Regency Realty Group, Inc. (the "Management Company"),
provides management and leasing services for BBP, and also will receive
brokerage fees for arranging the sale of any of the Option Properties, and
development fees for providing development services for the Option
Properties that consist of land held for sale. These arrangements are
intended to give the Company the economic benefit from the management,
leasing, brokerage and development activities with respect to such
properties. All of such services are provided on terms and conditions no
less favorable to the Management Company than the terms and conditions on
which the Management Company provides similar services to third parties.
The Audit Committee of the Board of Directors is required to review
annually the terms and conditions on which such services are provided.
During the year ended December 31, 1997, TRG paid the Management Company
an aggregate of $419,982 for such services.
Cost Sharing Arrangement with Management Company. The Company
manages, leases and develops its own properties under employee and cost
sharing arrangements with the Management Company. TRG owns 93% of the
voting common stock of the Management Company, and the Company, directly
and through its investment in Regency Centers, L.P., owns 100% of the
Management Company's non-voting preferred stock and 7% of its voting
common stock. The cost sharing arrangements are based on allocations of
management time and general overhead made on an arm's-length basis and in
compliance with applicable regulations of the Internal Revenue Service.
All such cost sharing arrangements must be reviewed annually by the Audit
Committee of the Board of Directors, and any changes in such arrangements
must be approved by a majority of the Company's independent Directors.
Under generally accepted accounting principles, all items of income and
expense of the Management Company are consolidated with the Company and
included in the Company's financial statements, net of inter-company
transactions.
Limited Partnership Agreement with WLD Enterprises, Inc. The
Company, through its former subsidiary RRC JV One, Inc., is a party to a
limited partnership with WLD Realty, Ltd. known as Regency Ocean East
Partnership, Ltd. in which Regency Centers, L.P., a limited partnership
controlled by the Company, as general partner, owns a twenty-five percent
(25%) interest and WLD Realty, Ltd., as limited partner, owns a
seventy-five percent (75%) interest. Douglas S. Luke, a Director of the
Company, is President and Chief Executive Officer of WLD Enterprises, Inc.
("WLD"), an affiliate of WLD Realty, Ltd., and also owns a 3.85% interest
in WLD Realty, Ltd. The purpose of the partnership is to operate Ocean
East, a Florida shopping center. Each partner has contributed their pro
rata share of capital to the partnership. Future distributions from the
operations of the shopping center will be made pro rata until each partner
has achieved a cumulative internal rate of return of 12%, then
distributions will be 50% to each partner. In the event of sale or
refinancing, distributions to each partner after return of capital will be
pro rata and after an IRR of 18% will be 50% to each partner. In the
opinion of the Board of Directors, the terms of the partnership agreement
are at least as favorable as those that could be obtained from entering
into a partnership with an unrelated party.
Consulting Services from SC-USREALTY Affiliate. SC-USREALTY
Investment Research, Inc.("SCII"), an affiliate of SC-USREALTY, provides
consulting services from time to time on an as-needed basis to the various
entities in which SC-USREALTY has invested. During the year ended
December 31, 1997, the Company paid consulting fees of $95,000 to SCII
related to due diligence assistance in connection with its acquisition of
assets from Branch.
Other. Richard W. Stein, a Director and the son and brother,
respectively, of Joan W. Stein, a Director, and Martin E. Stein, Jr., the
Company's Chairman and a Director, is President and Chief Executive
Officer, and a Director of Palmer & Cay/Carswell, Inc., an independent
insurance agency. During the year ended December 31, 1997, the Company
obtained insurance through Palmer & Cay/Carswell for which Palmer &
Cay/Carswell received commissions in the aggregate amount of approximately
$114,000.
PROPOSAL 2: TO AMEND ARTICLES OF INCORPORATION
TO FACILITATE CONTINUED QUALIFICATION AS A
DOMESTICALLY CONTROLLED REIT
The Company's Board of Directors has approved and recommends approval
by shareholders of an amendment to Section 5.14 of the Company's Amended
and Restated Articles of Incorporation (the "Charter") to facilitate the
Company's continued qualification as a domestically controlled REIT for
federal income tax purposes. Set forth below is a summary of the proposed
amendment. The full text of Section 5.14, as proposed to be amended, is
attached as Appendix A.
Reasons For and Possible Effects of the Amendment
Background. Security Capital U.S. Realty (together with its wholly
owned subsidiary, Security Capital Holdings S.A., "SC-USREALTY") is a
Luxembourg corporation that presently owns 11,284,439 shares of Common
Stock, constituting approximately 45.4% of the outstanding Common Stock.
SC-USREALTY is a research-driven, growth-oriented real estate operating
management company focused on taking significant strategic investment
positions in value-added real estate operating companies based in the
United States. SC-USREALTY's primary capital deployment objective is to
take a pro-active ownership role in businesses that it believes can
potentially generate above average rates of return. Pursuant to its
strategic alliance with the Company, SC-USREALTY has participation rights
that grant it the right to purchase additional equity whenever the Company
sells additional shares of capital stock or options or other rights to
acquire capital stock.
When SC-USREALTY became a major shareholder of the Company in 1996,
at SC-USREALTY's request, the Charter was amended to prevent any Non-U.S.
Person other than SC-USREALTY and its affiliates from acquiring additional
shares of the Company's capital stock if, as a result of such acquisition,
the Company would fail to qualify as a domestically controlled REIT under
the Internal Revenue Code (assuming for this purpose, among other things,
that SC-USREALTY and its affiliates are Non-U.S. Persons and own 45% of
the outstanding Common Stock on a fully diluted basis). A domestically
controlled REIT is a REIT more than 50% of the value of the capital stock
of which is held by U.S. Persons. Non-U.S. Persons who hold more than 5%
of a domestically controlled REIT are entitled to certain tax advantages
depending on the foreign jurisdiction in which they are domiciled.
Current Provision. Under Section 5.14 of the Charter as currently in
effect, if any shareholder purports to transfer shares of the Company's
capital stock to a Non-U.S. Person (other than SC-USREALTY and its
affiliates) and the transfer would result in the Company's failing to
qualify as a domestically controlled REIT (assuming for this purpose,
among other things, that SC-USREALTY and its affiliates are Non-U.S.
Persons and own 45% of the outstanding Common Stock on a fully diluted
basis), the purported transfer will be considered null and void, and the
intended transferee will be deemed not to have acquired any rights in such
shares. In addition, if any Non-U.S. Person (other than SC-USREALTY and
its affiliates) acquires shares of the Company's capital stock in
violation of the foregoing provision, such person will be deemed to hold
the shares that exceed the 50% limitation in trust for the Company, will
not receive dividends or distributions with respect to such excess shares
and will not be entitled to vote such excess shares. Such person also
will be required, at the Board's election, either (i) to have the excess
shares be redeemed by the Company for a price equal to the lesser of the
amount paid for the shares or the average closing price for the 10 trading
days before the sale, or (ii) to sell the excess shares at the direction
of the Company, with any proceeds in excess of the amount paid by the
holder of the excess shares and any expenses of the Company incurred in
connection with such sale being paid to the Company.
Proposed Amendment. In order to assist the Company to continue to
qualify as a domestically controlled REIT under the Internal Revenue Code,
the proposed amendment to Section 5.14 of the Charter would void the
transfer of shares to SC-USREALTY as well as to any other Non-U.S. Person
to the extent that any such transfer would result in the fair market value
of the capital stock of the Company owned directly or indirectly by Non-
U.S. Persons (including SC-USREALTY and its affiliates) comprising 50% or
more of the fair market value of the issued and outstanding capital stock
of the Company. Consistent with the existing presumption that SC-USREALTY
owns 45% of the Company's Common Stock on a fully diluted basis, the
proposed amendment also would void the transfer of shares to a Non-U.S.
Person if the transfer would result in the fair market value of the shares
of capital stock of the Company owned directly or indirectly by Non-U.S.
Persons (other than SC-USREALTY and its affiliates) comprising five
percent (5%) or more of the fair market value of the issued and
outstanding shares of capital stock of the Company. Under the proposed
amendment, SC-USREALTY will have the ability to waive, alter or revise the
applicability of the transfer restrictions in Section 5.14 to itself as
well as to any other person, in its sole discretion, upon delivery of
written notice to the Company's Board of Directors.
Possible Effects of Proposed Amendment. Qualification as a REIT does
not depend on the extent to which the REIT's capital stock is owned by
U.S. Persons. However, loss of status as a domestically controlled REIT
would adversely affect SC-USREALTY. The Company is not aware of any other
Non-U.S. Person who would be affected in any way by the amendment. The
proposed amendment merely applies the same restrictions to SC-USREALTY
that currently apply to all other Non-U.S. Persons.
With or without the amendment, the acquisition of Common Stock in the
future may not be a suitable investment for Non-U.S. investors other than
SC-USREALTY.
Required Vote
The affirmative vote of a majority of the total votes cast by
shareholders with respect to the proposed amendment is required for
approval thereof. For this purpose, broker non-votes and abstentions will
not be counted.
The Company's Board of Directors voted unanimously in favor of the
proposed amendment to Section 5.14 of the Charter and recommends that
shareholders vote in favor thereof. Proxies will be voted in favor of the
proposed amendment unless shareholders specify in their proxies a contrary
choice.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP
to serve as the independent certified public accountants for the Company
for the current fiscal year ending December 31, 1998. That firm has
served as the auditors for the Company since 1993. Representatives of
KPMG Peat Marwick LLP are expected to be present at the annual meeting of
shareholders and will be accorded the opportunity to make a statement, if
they so desire, and to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any other matters to come
before the meeting; however, if any other matters properly come before the
meeting, it is the intention of the persons designated as proxy to vote in
accordance with their best judgment on such matters. If any other matter
should come before the meeting, action on such matter will be approved if
the number of votes cast in favor of the matter exceeds the number
opposed.
SHAREHOLDER PROPOSALS
Regulations of the Securities and Exchange Commission require proxy
statements to disclose the date by which shareholder proposals must be
received by the Company in order to be included in the Company's proxy
materials for the next annual meeting. In accordance with these
regulations, shareholders are hereby notified that if they wish a proposal
to be included in the Company's proxy statement and form of proxy relating
to the 1999 annual meeting, a written copy of their proposal must be
received at the principal executive offices of the Company no later than
February 12, 1999. To ensure prompt receipt by the Company, proposals
should be sent certified mail return receipt requested. Proposals must
comply with the proxy rules relating to shareholder proposals in order to
be included in the Company's proxy materials.
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended December 31,
1997 accompanies this Proxy Statement. Additional copies may be obtained
by writing to Lesley Stocker, at the Company's principal executive
offices, at 121 West Forsyth Street, Suite 200, Jacksonville, Florida
32202.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. The
Company does not expect to pay any compensation for the solicitation of
proxies but may reimburse brokers and other persons holding stock in their
names, or in the names of nominees, for their expenses for sending proxy
material to principals and obtaining their proxies.
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS
BEEN PROVIDED. YOUR PROMPT RESPONSE WILL BE APPRECIATED.
APPENDIX A
This corporation was incorporated on July 8, 1993 effective July 9,
1993 under the name Regency Realty Corporation. Pursuant to Sections
607.1001, 607.1003, 607.1004 and 607.1006, Florida Business Corporation
Act, amendments to Section 5.14 of the Articles of Incorporation, as
restated on November 4, 1996, were approved by the Board of Directors at a
meeting held on December 5, 1997 and adopted by the shareholders of the
corporation on May 26, 1998. The only voting group entitled to vote on
the adoption of the amendment to Section 5.14 of the Articles of
Incorporation consists of the holders of the corporation's common stock.
The number of votes cast by such voting group was sufficient for approval
by that voting group. Section 5.14 of the Restated Articles of
Incorporation of the Company is hereby amended in its entirety to read as
follows:
"Section 5.14 Certain Transfers to Non-U.S. Persons Void.
Any Transfer of shares of Capital Stock of the Corporation to
any Person on or after the effective date of this Amendment
shall be void ab initio to the fullest extent permitted under
applicable law and the intended transferee shall be deemed never
to have had an interest therein if the Transfer:
1. occurs prior to the 15% Termination Date and
results in the fair market value of the shares of Capital
Stock of the Corporation owned directly or indirectly by
Non-U.S. Persons (other than a Special Shareholder who is a
Non-U.S. Person) comprising five percent (5%) or more of
the fair market value of the issued and outstanding shares
of Capital Stock of the Corporation; or
2. results in the fair market value of the shares of
Capital Stock of the Corporation owned directly or
indirectly by Non-U.S. Persons (including Special
Shareholders who are Non-U.S. Persons) comprising fifty
percent (50%) or more of the fair market value of the
issued and outstanding shares of Capital Stock of the
Corporation.
If either of the foregoing provisions is determined to be void
or invalid by virtue of any legal decision, statute, rule or
regulation, then the shares held or purported to be held by the
transferee shall, automatically and without the necessity of any
action by the Board of Directors or otherwise:
(i) be prohibited from being voted at any time such
securities result in the fair market value of the shares of
Capital Stock of the Corporation owned directly or
indirectly by Non-U.S. Persons (other than Special
Shareholders who are Non-U.S. Persons) or by Non-U.S.
Persons (including Special Shareholders who are Non-U.S.
Persons) comprising five percent (5%) or more or fifty
percent (50%) or more, respectively, of the fair market
value of the issued and outstanding shares of Capital Stock
of the Corporation;
(ii) not be entitled to dividends with respect
thereto;
(iii) be considered held in trust by the
transferee for the benefit of the Corporation and shall be
subject to the provisions of Section 5.3(c) as if such
shares of Capital Stock were the subject of a Transfer that
violates Section 5.2; and
(iv) not be considered outstanding for the purpose of
determining a quorum at any meeting of shareholders.
The Special Shareholders may, in their sole discretion, with
prior notice to the Board of Directors, waive, alter or revise
in writing all or any portion of the Transfer restrictions set
forth in this Section 5.14 from and after the date on which such
notice is given, on such terms and conditions as they in their
sole discretion determine."
IN WITNESS WHEREOF, the undersigned Chairman of this corporation has
executed these Articles of Amendment this ____ day of __________________,
1998.
______________________________________
Martin E. Stein, Jr., Chairman and CEO
Preliminary Copy
REGENCY REALTY CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1998
The undersigned, having received the Notice of Annual Meeting of
Shareholders and Proxy Statement, appoints Martin E. Stein, Jr. and Bruce
M. Johnson, and each or either of them, as proxies, with full power of
substitution and resubstitution, to represent the undersigned and to vote
all shares of Common Stock of Regency Realty Corporation which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of
the Company to be held on May 26, 1998, and any and all adjournments
thereof, in the manner specified.
1. Election of Directors nominated by the Board of Directors-Class I:
Lee S. Wielansky; Class II: Martin E. Stein, Jr., Raymond L. Bank,
A.R. Carpenter and J. Dix Druce, Jr.; Class III: Jonathan L. Smith.
[_] FOR all nominees [_] WITHHOLD INSTRUCTION: To withhold authority
listed (except as AUTHORITY to vote for any individual nominee,
marked to the to vote for write that nominee's name on the
contrary to all nominees space provided below.)
the right). to the right.
___________________________________
2. Amendment to Section 5.14 of Articles of Incorporation to make
applicable to the Company's major beneficial shareholder, Security
Capital U.S. Realty, the same transfer restrictions which currently
apply to all other Non-U.S. Persons.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be SIGNED and dated on the reverse side.)
(Continued from reverse side)
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" EACH PROPOSAL.
Should any other matters requiring a vote of the shareholders arise,
the above named proxies are authorized to vote the same in accordance
with their best judgment in the interest of the Company. The Board
of Directors is not aware of any matter which is to be presented for
action at the meeting other than the matters set forth herein.
Dated:_______________________________________________________, 1998
____________________________________________________________ (SEAL)
____________________________________________________________ (SEAL)
(Please sign exactly as name or names appear hereon. Executors,
administrators, trustees or other representatives should so indicate
when signing.)
