SCHEDULE
14A
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of
1934
Filed
by
the Registrant o
Filed
by
a Party other than the Registrant x
Check
the
appropriate box:
| o |
Preliminary
Proxy Statement
|
| o |
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
| x |
Definitive
Proxy Statement
|
| o |
Definitive
Additional Materials
|
| o |
Soliciting
Material Pursuant to §240.14a-12
|
(Name
of Registrant as Specified in Its Charter)
Karpus
Management, Inc. d/b/a/ Karpus Investment Management
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
| o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1)
and
0-11.
|
|
|
(1) |
Title
of each class of securities to which transaction
applies:
|
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(2) |
Aggregate number of securities
to which
transaction applies: |
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(3) |
Per unit price or other underlying
value of
transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the
amount on which the filing fee is calculated and state how
it was
determined): |
| |
(4) |
Proposed maximum aggregate
value of
transaction: |
| o |
Fee
paid previously with preliminary
materials.
|
| o |
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.
|
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(1) |
Amount
Previously Paid:
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(2) |
Form,
Schedule or Registration Statement
No.:
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Karpus
Management, Inc. d/b/a/ Karpus Investment Management
183
Sully’s Trail
Pittsford,
New York 14534
2005
SPECIAL MEETING OF THE STOCKHOLDERS OF
REAL
ESTATE INCOME FUND INC.
This
Proxy Statement and the enclosed GREEN proxy card are being furnished to
you,
the stockholders of the Real Estate Income Fund Inc. a Maryland corporation
(hereinafter referred to as the “Fund” or “RIT”), in connection with the
solicitation of proxies by Karpus Management, Inc. d/b/a Karpus Investment
Management (“KIM”) for use at the 2005 special meeting of stockholders of the
Fund, including any adjournments or postponements thereof and any consequent
special meeting that may be called (the "Meeting").
KIM
is
soliciting proxies to take the following actions at the Meeting:
| 1. |
To
vote AGAINST approving a new
Management Agreement.
|
| 2. |
To
vote AGAINST approving a new
Subadvisory Agreement.
|
The
Fund
has announced that a special meeting of the stockholders of the Real Estate
Income Fund Inc. will be held at American Conference Centers, 780 Third Avenue,
New York, New York 10017 at 1:00 P.M. (E.S.T.) on Friday, October 21, 2005.
The
Fund has announced that the record date (the “Record Date”) for determining
stockholders entitled to notice of and to vote at the Meeting is August 22,
2005.
The
mailing address of the principal executive offices of the Fund is: 125 Broad
Street, 10th
Floor,
New York, New York 10004.
The
date
of this Proxy Statement is September 14, 2005. This Proxy Statement is first
being furnished to Fund stockholders on or about September 22,
2005.
KIM
on
the one hand, and Western Investment LLC, Western Investment Hedged Partners
L.P., Western Investment Activism Partners LLC, Western Investment Institutional
Partners LLC and Arthur D. Lipson (collectively, “Western”), on the other hand,
are members of a group formed in connection with this proxy solicitation
and are
deemed participants in this proxy solicitation (the “Group”). Additional
information concerning the foregoing group members is set forth under the
heading “Information Concerning the Participants in the
Solicitation.”
As
of
September 14, 2005, KIM was the beneficial owner of 110,002 shares of the
common
stock of RIT which represents 0.99% of the issued and outstanding common
stock
of the Fund and Western was the beneficial owner of 479,500 shares of the
common
stock of RIT, which represents 4.33% of the issued and outstanding common
stock
of the Fund.
The
enclosed GREEN proxy card may be executed by holders of record as of the
Record
Date. You are urged to sign and date the enclosed GREEN proxy card and return
it
in the enclosed envelope whether or not you plan to attend the
Meeting.
YOUR
LAST DATED PROXY IS THE ONLY ONE THAT COUNTS, SO RETURN THE GREEN PROXY CARD
EVEN IF YOU HAVE ALREADY DELIVERED A PRIOR PROXY. WE URGE YOU NOT TO RETURN
ANY
PROXY CARD SENT TO YOU BY THE FUND.
THIS
SOLICITATION IS BEING MADE BY KARPUS MANAGEMENT, INC.
d/b/a
KARPUS
INVESTMENT MANAGEMENT AND NOT ON BEHALF OF THE BOARD OF DIRECTORS OR MANAGEMENT
OF THE FUND.
If
you
have any questions concerning this Proxy Statement or need help in voting
your
shares, please contact:
Karpus
Investment Management
Cody
B.
Bartlett Jr., CFA, Investment Strategist
183
Sully's Trail
Pittsford,
New York 14534
(585)
586-4680 (ext. 235)
e-mail:
cody@karpus.com
Copies
of
the Fund’s most recent annual report and semi-annual report succeeding such
annual report, if any, are available without charge to the stockholders upon
request to the Fund at: 125 Broad Street, New York, New York 10004, or by
calling toll free at 1-800-451-2010.
INTRODUCTION
This
proxy solicitation comes to you for one very important reason. Your fund,
Real
Estate Income Fund Inc., is asking you to approve a new Management Agreement
which would take effect when the Fund’s investment manager, Citi Fund Management
Inc. (“CFM” or the “Advisor”) becomes a subsidiary of Legg Mason, Inc. ("Legg
Mason") pursuant to a deal between Legg Mason, Inc. and Citigroup Inc.
("Citigroup"). In addition, RIT is asking you to approve a new Subadvisory
Agreement with AEW Management & Advisors LP (“AEW”) which also would take
effect upon consummation of the deal with Legg Mason. As stockholders of
the
Fund you have the opportunity NOW to make Fund management sit-up and pay
attention!
| 1. |
We
advocate voting AGAINST
approving a new Management
Agreement.
|
| 2. |
We
advocate voting AGAINST
approving a new Subadvisory
Agreement.
|
The
Fund
is seeking your permission to approve a new Management Agreement and Subadvisory
Agreement to take effect after the Advisor becomes a subsidiary of Legg Mason.
The Advisor’s parent company, Citigroup, has made a deal with Legg Mason that
benefits Citigroup. Karpus Investment Management believes that before the
stockholders of the Fund approve a new Management Agreement and Subadvisory
Agreement that is part of Citigroup’s deal, we are entitled to have our concerns
about the Fund’s potential changes in management personnel and persistent
trading discount to net asset value addressed. In short, we believe that
shareholders of the Fund are also entitled to receive an economic benefit
at
this time, before the transaction would occur.
KIM
believes that the shareholders of the Fund are not receiving the economic
benefits that they should receive if the Fund is managed appropriately. KIM
believes that current management has a general fiduciary duty to protect
and
enhance shareholder value. As part of protecting and enhancing shareholder
value, management of the Fund should address the wide discount to net asset
value currently being experienced by the Fund. The Board should address this
loss of economic value prior to the approval of a new investment management
and
subadvisory contract.
We
believe the Fund’s current portfolio management team has performed well. There
is no assurance that personnel of the Advisor will not change or that other
managers within Legg Mason will not influence or take over management of
the
Fund after the Advisor is sold to Legg Mason. What consideration are
shareholders being offered to compensate for the risk of a change in investment
management? Presumably, Citigroup benefits from this deal. How do we, as
shareholders of the Fund, benefit from the proposed new Management Agreement
and
Subadvisory Agreement?
KIM
believes the current Fund management and the Board of Directors of the Fund
have
not taken adequate measures to close the discount to net asset value that
the
Fund has historically maintained. We believe a duty of the Board is to enhance
shareholder value and that the Board has failed to meet this duty by failing
to
take steps to mitigate the persistent trading discount.
The
following table illustrates the historic discount of the Fund since the Fund’s
inception. The source of the data is Bloomberg Inc.
|
Discount
History
Since
Inception in 2002
|
|
RIT
|
|
|
IPO
|
|
|
+6.00
|
%
|
|
6
Months After
|
|
|
+1.81
|
%
|
|
1
Year After
|
|
|
-5.22
|
%
|
|
Current
(07/31/05)
|
|
|
-13.93
|
%
|
UNLESS
WE PREVENT THE APPROVAL OF A NEW MANAGEMENT AGREEMENT AND SUBADVISORY AGREEMENT,
SHAREHOLDERS WHO HAVE NO CONFIDENCE IN THE PROPOSED TRANSACTION WILL HAVE
NO
BETTER OPTION THAN TO SELL THEIR SHARES.
If
large
shareholders believe they should sell their shares as a reaction to the new
Management Agreement and Subadvisory Agreement, their sales could potentially
depress the market price causing the discount to widen further. As can be
seen
from the table above, the investors that participated in the IPO of this
Fund
have experienced a tremendous loss of value due to the erosion of the Fund’s
premium and widening of the discount. The Fund was incepted in 2002 and now,
a
little more than three years later, it is being asked to migrate to Legg
Mason.
We believe that we need management that is concerned about narrowing the
trading
discount and we do not see anything in management’s proxy materials that
addresses this vital shareholder issue.
It
is
also the belief of KIM that any shareholder that has sold shares since the
period ending six months after the initial price offering has been economically
harmed because they sold their shares at a severe discount to the net asset
value of the Fund. KIM believes that the Board of Directors has a duty to
address and solve this problem now. It is time for action on this
issue.
We
are
not being asked to elect a new Board of Directors at this time. The present
Board that has failed to manage the discount of the Fund will remain with
the
Fund at this point.
AS
OUTLINED BELOW, SHAREHOLDERS OF THE FUND HAVE LIMITED OPPORTUNITIES TO MAKE
CHANGES IN THE BOARD OR EFFECT OTHER CHANGES IN CONTROL. OUR OPPORTUNITY
TO
ASSERT OURSELVES IS NOW.
The
Fund
has provisions in its articles of incorporation and bylaws which limit the
ability of other entities or persons to acquire control of the portfolio
or to
modify its structure. They include the following:
Tiered
Board Structure.
The
Board of Directors is classified into three classes, with terms of one, two,
and
three years initially and three years thereafter with only one class of
Directors standing for election in any year. This prevents replacement of
a
majority of Directors for up to a two year period. In effect, this means
that if
KIM wanted to propose new “Independent” Directors to the Fund, it would take at
least two years to install a majority of the Board.
Super-Majority
Voting Requirements to Remove Directors.
Directors can be removed only for cause and by a vote of 75% of the outstanding
shares entitled to vote on the matter.
Super-Majority
Voting Requirements to Take Certain Actions.
The
Fund cannot be converted from a closed-end to an open-end investment company
without the approval of 75% of the Fund’s Directors. In addition, unless 75% of
the Fund’s continuing Directors approve the transaction, the affirmative vote of
the holders of at least 75% of the shares will be required to authorize the
Fund’s portfolio’s conversion from a closed-end to an open-end investment
company or generally to authorize any of the following transactions: (i)
merge,
consolidate or share exchange the Fund’s portfolio with or into any other
corporation; (ii) dissolve or liquidate the Fund’s portfolio; (iii) sell, lease,
exchange or otherwise dispose of all or substantially all of the assets of
the
Fund’s portfolios; (iv) change the nature of the business of the Fund’s
portfolio so that it would cease to be an investment company registered under
the 1940 Act; or (v) sell, lease or exchange the Fund’s portfolio, in exchange
for securities of the portfolio, with any assets of any entity or person
(except
assets having an aggregate fair market value of less than $1,000,000). The
affirmative vote of at least 75% of the shares will be required to amend
the
articles of incorporation or bylaws to change any of the foregoing
provisions.
Due
to
the control provisions outlined above, it will be very hard for Shareholders
to
impose their will upon Fund management following approval of the proposed
new
Management Agreement and Subadvisory Agreement. This unique opportunity,
where
management must come to us, should not be allowed to pass. We urge all
shareholders to vote against the new Management Agreement and Subadvisory
Agreement proposals.
KIM
BELIEVES THAT BY NOT APPROVING THE NEW MANAGEMENT AND SUBADVISORY CONTRACTS,
STOCKHOLDERS OF THE FUNDS HAVE A UNIQUE OPPORTUNITY TO FORCE THE PRESENT
BOARD
OF DIRECTORS TO ADDRESS STOCKHOLDER EXPECTATIONS.
IT
IS THE OPINION OF KIM THAT THIS MAY BE THE ONLY CHANCE FOR STOCKHOLDERS TO
RECEIVE THE ECONOMIC BENEFIT THAT WILL RESULT FROM ACTIVE AND BETTER MANAGEMENT
OF THE DISCOUNT! TO DATE, THE BOARD HAS FAILED TO ADDRESS THE SIGNIFICANT
DISCOUNT TO NET ASSET VALUE.
Required
vote
To
become
effective, the new Management Agreement and Subadvisory Agreement must be
approved by a vote of a majority of the outstanding voting securities of
the
Fund. The “vote of a majority of the outstanding voting securities” is defined
in the Investment Company Act of 1940, as amended, as the lesser of the vote
of:
(a) 67% or more of the voting power of the voting securities of the Fund
that
are present at the Meeting or represented by proxy if holders of shares
representing more than 50% of the voting power of the outstanding voting
securities of the Fund are present or represented by proxy or (b) more than
50%
of the voting power of the outstanding voting securities of the
Fund.
Other
Matters
Other
than the proposals described above, we are not aware of any other matters
to be
brought before the Meeting that affects our Fund. Should other matters be
brought before the Meeting, the persons named as proxies in the enclosed
GREEN
proxy card will vote on such matters in their discretion.
VOTING
PROCEDURES
Voting
and Revocation of Proxies
For
the
proxy solicited hereby to be voted, the enclosed GREEN proxy card must be
signed, dated and returned to:
Karpus
Investment Management
c/o
Regan
& Associates, Inc.
505
Eight
Avenue, Floor 12A
New
York,
New York 10018
in
the
enclosed envelope, in time to be voted at the Meeting. If you wish to vote
in
accordance with our recommendations, you must submit the enclosed GREEN proxy
card and must NOT subsequently submit the Fund’s proxy card. IF
YOU HAVE ALREADY RETURNED THE FUND’S PROXY CARD, YOU HAVE THE RIGHT TO REVOKE IT
AND ALL MATTERS COVERED THEREBY AND MAY DO SO BY SUBSEQUENTLY SIGNING, DATING
AND MAILING THE ENCLOSED GREEN PROXY CARD. ONLY YOUR LATEST DATED PROXY WILL
COUNT AT THE MEETING. Execution
of a GREEN proxy card will not affect your right to attend the Meeting and
to
vote in person.
Any
proxy
may be revoked as to all matters covered thereby at any time prior to the
time a
vote is taken by: (i) submitting to the Fund or to us a later dated written
revocation or duly executed proxy; or (ii) attending and voting at the Meeting
in person (mere attendance at the Meeting will not in and of itself constitute
a
revocation).
Although
a revocation of a proxy solicited by the Fund will be effective only if
delivered to the Fund, we request that either the original or a copy of all
revocations be mailed to Karpus Investment Management, c/o Regan &
Associates, Inc., 505 Eight Avenue, Floor 12A, New York, New York 10018,
so that
we will be aware of all revocations and can more accurately determine if
and
when the requisite proxies have been received.
Shares
of
Common Stock represented by a valid unrevoked GREEN proxy card will be voted
as
specified. Shares represented by a GREEN proxy card where no specification
has
been made will be voted:
| 1. |
AGAINST
approving a new Management
Agreement.
|
| 2. |
AGAINST
approving a new Subadvisory
Agreement.
|
If
any of
your shares were held in the name of the brokerage firm, bank nominee, or
other
institution on the Record Date, only that institution can vote your shares
and
only upon receipt of your specific instructions. Accordingly, please promptly
contact the person responsible for your account at such institution and instruct
that person to execute and return the GREEN proxy card on your behalf. You
should also promptly sign, date, and mail the voting instructions form (or
GREEN
proxy card) that your broker or banker sends you. Please do this for each
account you maintain to ensure that all of your shares are voted. If any
of your
shares were held in the name of a brokerage firm, bank, bank nominee, or
other
institution on the Record Date, to revoke your proxy you will need to give
appropriate instructions to such institution. IF YOU DO NOT GIVE INSTRUCTIONS
TO
YOUR BROKER OR OTHER NOMINEE, YOUR SHARES WILL NOT BE VOTED.
Only
holders of record as of the close of business on the Record Date will be
entitled to vote at the Meeting. If you were a stockholder of record on the
Record Date, you will retain your voting rights for the Meeting even if you
sell
shares after the Record Date. Accordingly, it is important that you vote
the
shares you owned on the Record Date or grant a proxy to vote such shares,
even
if you sell some or all of your shares after the Record Date.
Based
on
publicly available information, the shares of Common and Preferred Stock
are the
only shares of capital stock of the Fund entitled to notice of, and to vote
at,
the Meeting. According to the Fund’s Annual Report for the period ending
December 31, 2004, there were 11,069,242 shares of Common Stock and 2,600
shares
of Preferred Stock issued and outstanding. Every holder of shares is entitled
to
one (1) vote for each share of Common or Preferred Stock held.
Shareholder
Approval.
In
accordance with the Fund’s Amended and Restated Bylaws, at the Meeting, the
presence in person or by proxy of stockholders entitled to cast (without
regard
to class) a majority of all the votes entitled to be cast at such meeting
on any
matter shall constitute a quorum. Shares represented by proxies that reflect
abstentions and Broker non-votes will be counted as shares that are present
and
entitled to vote for purposes of determining the presence of a quorum. “Broker
non-votes” occur when a broker has not received voting instructions from the
beneficial owner of the shares and either declines to exercise its discretionary
voting authority or is barred from doing so because the proposal is contested.
The
Broker non-votes will be counted for purposes of determining whether a quorum
is
present at the Meeting but cannot be voted on matters submitted to a vote
without direction of the beneficial owner.
SOLICITATION
OF PROXIES
In
connection with our solicitation of proxies for use at the Meeting, proxies
may
be solicited by mail, courier service, advertisement, telephone, telecopier,
or
other electronic means, and in person. Solicitations may be made in the manner
set forth in the Proxy Statement, by certain of the officers or employees
of
KIM, none of whom will receive additional compensation for such solicitations.
We may request banks, brokerage firms, and other custodians, nominees, and
fiduciaries to forward all of the solicitation material to the beneficial
owners
of the shares of the Common and Preferred Stock (if applicable) that they
hold
of record.
We
have
retained Regan & Associates, Inc. for solicitation and advisory services in
connection with the solicitation of proxies. KIM will pay a fee to be mutually
agreed upon between KIM and Regan & Associates, Inc. based on the services
provided.
All
expenses associated with any solicitation of proxies by KIM in connection
with
the Meeting will be borne directly by KIM and clients of KIM. KIM intends
to
seek reimbursement from Citigroup, the Advisor and the Board of Directors,
should the proposals be approved. We estimate that the costs incidental to
our
solicitation of proxies, including expenditures for advertising, printing,
postage, legal and related expenses, will be approximately $50,000. KIM
estimates that its costs incurred to date are approximately $8,000. KIM intends
to deliver a proxy statement and form of proxy to holders of at least the
percentage of the Fund’s voting shares required under applicable law to defeat
the proposal to approve the new management agreement.
INFORMATION
CONCERNING THE PARTICIPANTS IN THE SOLICITATION
Karpus
Investment Management was founded in 1986 by George Karpus and Jo Ann Van
Degriff. KIM is an independent registered Investment Adviser with slightly
over
1 billion dollars under management. KIM is employee owned.
KIM’s
founding goal is to achieve investment results in the top quartile of
professionally managed monies over a three-to-five year period based on each
client’s risk/return objective. KIM provides customized, conservative investment
management for high net worth individuals, pension plans, foundations,
endowments, trusts, estates, and Taft Hartley accounts. KIM is located in
Pittsford, New York (a suburb of Rochester, New York).
KIM
prides itself in independent research. One of the fundamental beliefs of
KIM is
that “street research” is tainted with conflicting motives. KIM is not
affiliated with any brokerage firm.
KIM
has
gained national recognition through rankings in as a “Worlds Best Money Manager”
according to Nelson Information.
Officers
and Key Employees of Karpus Management, Inc. d/b/a Karpus Investment
Management
SUMMARY
BIOGRAPHIES - KARPUS INVESTMENT MANAGEMENT
|
Karpus
Professional
|
|
Overall/Firm
|
|
Higher
Education
|
|
Other
Experience
|
|
George
W. Karpus *
CEO
& Chief Investment Officer
|
|
36/19
|
|
MS
BS
|
Rensselaer
Polytechnic Institute
St.
Lawrence University - Physics
|
|
Qualified
Consulting, Inc., Bache & Co.,
Marine
Midland, Shearson Hayden-Stone
|
|
Jo
Ann Van Degriff *
Executive
Vice President
|
|
36/19
|
|
BS
|
Elmira
College - Economics
|
|
Marine
Midland Bank -
Trust
Dept. Investment Services
|
|
Dana
R. Consler *
Senior
Vice President
|
|
29/11
|
|
MBA
BS
|
Boston
University
Rollins
College - Economics
|
|
Marine
Midland Bank -
Trust
Dept. Investment Services
|
|
Kathleen
F. Crane *
Chief
Financial Officer
|
|
19/19
|
|
BS
|
St.
Bonaventure
University
- Management Science
|
|
|
|
Sharon
L. Thornton *
Senior
Fixed Income Analyst/Portfolio Mgr.
|
|
31/15
|
|
BS
|
University
of Rochester - Economics
|
|
Marine
Midland, Cowen & Co.,
Sage
Rutty
|
|
Thomas
M. Duffy, Client Support/
Office
Support Manager *
|
|
14/13
|
|
BA
|
SUNY
Geneseo - Communications
|
|
Fleet
Bank -Client Services -
Mutual
Fund Areas
|
|
Cody
B. Bartlett, Jr., CFA
Investment
Strategist &
Senior
Fixed Income Analyst
|
|
7/7
|
|
CFA
MS
BA
|
Chartered
Financial Analyst
Rochester
Inst. of Technology - Finance
SUNY
Fredonia - Psychology
|
|
|
| |
|
|
|
|
|
|
Shares
of
the Real Estate Income Fund, Inc. beneficially owned by Officers/ Employees/
and
directly related accounts of such persons.
| |
|
Karpus
Share
Ownership
|
|
|
|
|
RIT
|
|
|
GEORGE
W. KARPUS
|
|
|
4900
|
|
|
KATHLEEN
KARPUS
|
|
|
100
|
|
|
DANA
CONSLER
|
|
|
160
|
|
|
*APOGEE
PARTNERS, L.P.
|
|
|
31,200
|
|
|
**GARNSEY
PARTNERS, L.P.
|
|
|
31,145
|
|
| |
|
|
|
|
|
|
* |
George
Karpus Owns 1.30%
|
|
|
**
|
George
Karpus Owns 5.51% and Karpus Management, Inc. is the
general
partner of the partnership with investment
control.
|
Arthur
D.
Lipson is the managing member of Western Investment LLC , a Delaware limited
liability company (“WILLC”). WILLC is the general partner and managing member of
Western Investment Hedged Partners L.P., a Delaware limited partnership
(“WIHP”), Western Investment Activism Partners LLC, a Delaware limited liability
company (“WIAP”), and Western Investment Institutional Partners LLC, a Delaware
limited liability company (“WIIP”). The principal occupation of Mr. Lipson is
acting as the managing member of WILLC. The principal business of WILLC is
acting as the general partner and managing member of WIHP, WIAP and WIIP.
The
principal business of WIHP, WIAP and WIIP is the business of acquiring, holding
and disposing of investments in various companies. The principal business
address of Mr. Lipson, WILLC, WIHP, WIAP and WIIP is 2855 East Cottonwood
Parkway, Suite 110, Salt Lake City, Utah 84121. As of the close of business
on
September 14, 2005, WIHP, WIAP and WIIP beneficially owned 289,900, 24,600
and
165,000 shares of common stock of the Fund, respectively, representing 2.62%,
0.22% and 1.49% of the shares outstanding. As the general partner or managing
member, as the case may be, of WIHP, WIAP and WIIP, WILLC may be deemed to
beneficially own the 479,500 shares beneficially owned in the aggregate by
WIHP,
WIAP and WIIP, representing 4.330% of the shares outstanding. As the managing
member of WILLC, Mr. Lipson may be deemed to beneficially own the 479,500
shares
beneficially owned by WILLC, representing 4.330% of the shares outstanding.
Each
of WILLC and Mr. Lipson is deemed to have sole voting and dispositive power
over
the shares reported as beneficially owned by WIHP, WIAP and WIIP by virtue
of
their respective positions described herein. Each of Mr. Lipson, WILLC, WIHP,
WIAP and WIIP disclaims beneficial ownership of the shares held by the other
participants in this solicitation.
On
September 14, 2005, KIM, WILLC, WIHP, WIAP, WIIP and Mr. Lipson entered into
a
Joint Filing and Solicitation Agreement in which, among other things, (a)
the
parties agreed to file individually statements on Schedule 13D, and any
necessary amendments thereto, with respect to the formation of the Group
and to
the extent required under applicable securities laws, (b) the parties agreed
not
to, directly or indirectly, sell, dispose of, transfer or hypothecate any
securities of the Fund without the prior written consent of each of the parties,
(c) the parties agreed to form a group for the purpose of soliciting proxies
in
opposition to the Fund’s proposals to approve a new Management Agreement and
Subadvisory Agreement for the Fund, and voting in against and soliciting
proxies
against such proposals, and (d) KIM and Western agreed to share all expenses
incurred in connection with the group’s activities in connection with the
solicitation based upon their respective ownership percentages in the Fund
as of
the date of the Meeting (or any adjourned meeting).
Other
than as set forth in this Proxy Statement, there are no contracts, arrangements,
or understandings entered into by any of the participants in the solicitation
or, to the participants’ knowledge, any of their respective associates within
the past year with any person with respect to any of the Fund’s securities,
including, but not limited to, joint ventures, loan or option arrangements,
puts
or calls, guarantees against loss or guarantees of profit, division or losses
or
profits, of the giving or withholding of proxies.
Except
as
set forth in the Proxy Statement, none of the participants in the solicitation
or, to the participants’ knowledge, any of their respective associates has
entered into any agreement or understanding with any person with respect
to: (i)
any future employment by the Fund or its affiliates; or (ii) any future
transactions to which the Fund or any of its affiliates will or may be a
party.
CERTAIN
INFORMATION ABOUT THE FUND
The
Fund
is a Maryland Corporations with their principal executive offices located
at:
125 Broad Street, 10th
Floor,
New York, New York 10004.
The
Fund
is subject to the informational requirements of the Exchange Act and the
Investment Company Act of 1940, as amended, and in accordance therewith files
reports, proxy statements, and other information with the SEC. Reports,
registration statements, proxy statements, and other information filed by
the
Fund with the SEC can be inspected and copied at the public reference facilities
maintained by the SEC at the Public Reference Room, 450 Fifth Street, N.W.
Room
1024, Washington, D.C. 20549. Documents filed electronically by the Funds
are
also available at the SEC’s Web site: http://www.sec.gov.
OTHER
MATTERS TO BE CONSIDERED AT THE MEETING
Except
as
set forth in the Proxy Statement, we are not aware of any matters affecting
the
Fund to be brought before the Meeting. Should other matters properly be brought
before the Meeting that KIM is unaware of a reasonable time before this
solicitation, the attached GREEN proxy card, when duly executed, will give
the
proxies named therein discretionary authority to vote on all such matters
and on
all matters incident to the conduct of the Meeting. Such discretionary authority
will include the ability to vote shares on any proposal to adjourn the Meeting.
Execution and delivery of a proxy by a record holder of shares of Common
Stock
or Preferred Stock (if applicable) will be presumed to be a proxy with respect
to all shares held by such record holder unless the proxy specifies
otherwise.
STOCKHOLDER
PROPOSALS FOR THE FUND’S ANNUAL MEETINGS
A
shareholder proposal intended to be presented at the Fund’s next annual meeting
of shareholders must be (or must have been) received at the offices of the
Fund,
125 Broad Street, 10th
Floor,
New York, New York 10004, not later than November 28, 2005 to be included
in the
proxy statement and the form of proxy relating to the meeting. The submission
by
a shareholder of a proposal for inclusion in the proxy statement does not
guarantee that it will be included in a proxy statement. Shareholder proposals
are subject to certain regulations under the federal securities
laws.
The
persons named as proxies for the Fund’s next annual meeting of the shareholders
will have discretionary authority to vote on any matter presented by a
shareholder for action at that meeting unless that Fund receives (or received)
notice of the matter between January 26, 2006 and February 25, 2006, in which
case these persons will not have discretionary voting authority except as
provided in the SEC’s rules governing shareholders proposals.
ADDITIONAL
INFORMATION
The
information concerning the Funds contained in this Proxy Statement has been
taken from, or is based upon, publicly available information. Although we
do not
have any information that would indicate that any information contained in
this
Proxy Statement concerning the Funds is inaccurate or incomplete, we do not
take
any responsibility for the accuracy or completeness of such information.
We
have
omitted from this Proxy Statement certain disclosure required by applicable
law
that is already included in the Fund’s Proxy Statement. This disclosure
includes, among other things, information concerning the transaction between
Citigroup and Legg Mason, a description of the existing Management Agreement
and
Subadvisory Agreement, and security ownership of management and persons who
beneficially own more than 5% of the shares.
The
address of Citi Fund Management Inc. is: 399 Park Avenue, New York, New York
10022.
Questions,
or requests for additional copies of the Proxy Statement, should be directed
to:
Karpus
Investment Management
Cody
B.
Bartlett Jr., CFA, Investment Strategist
183
Sully’s Trail
Pittsford,
New York 14534
(585)
586-4680 (ext. 235)
e-mail:
cody@karpus.com
REAL
ESTATE INCOME FUND INC.
PROXY
FOR
A SPECIAL MEETING OF SHAREHOLDERS
TO
BE
HELD OCTOBER 21, 2005
THIS
PROXY IS SOLICITED ON BEHALF OF
KARPUS
MANAGEMENT, INC. D/B/A KARPUS INVESTMENT MANAGEMENT
THE
BOARD
OF DIRECTORS OF REAL ESTATE INCOME FUND INC.
IS
NOT
SOLICITING THIS PROXY
The
undersigned, revoking prior proxies, hereby appoints Sharon L. Thornton,
and
Cody B. Bartlett, Jr., and each of them, Proxies with several powers of
substitution, to vote all of the shares of stock of Real Estate Income Fund
Inc.
owned by the undersigned and entitled to vote at the Special Meeting of
Shareholders of Real Estate Income Fund Inc. to be held at American Conference
Centers, 780 Third Avenue, New York, New York 10017 at 1:00 PM (E.S.T.) on
Friday, October 21, 2005, or at any postponement or adjournment thereof,
upon
the following matters as described in the Notice of Meeting and accompanying
Joint Proxy Statement, which have been received by the undersigned.
When
properly executed, this proxy will be voted in the manner directed herein
by the
undersigned shareholder. If no direction is given on these proposals, this
proxy
card will be voted “AGAINST” Item 1 and Item 2, and will be voted in accordance
with the proxy’s best judgment as to any other matters.
CONTROL
NUMBER: [insert control #]
Please
sign this proxy exactly as your name or names
appears
hereon. Joint owners should each sign personally.
Trustees
and other fiduciaries should indicate the capacity
In
which
they sign, and where more than one name appears,
a
majority must sign. If a corporation, this signature should
be
that
of an authorized officer who should state his or her
title.
________________________________________________
Signature
________________________________________________
Signature
of joint owner, if any
Date
___________________________________________
PLEASE
VOTE, SIGN AND DATE THIS GREEN PROXY AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. THIS MAY BE YOUR LAST CHANCE TO STOP THE BOARD OF DIRECTORS AND
MANAGEMENT OF THE REAL ESTATE INCOME FUND INC. (THE "FUND") FROM APPROVING
A NEW
MANAGEMENT AGREEMENT AND SUBADVISORY AGREEMENT. SHAREHOLDERS MUST MAKE THE
BOARD
OF DIRECTORS REALIZE THAT THEY HAVE NOT FULFILLED THEIR DUTY TO THE SHAREHOLDERS
BY NOT ADDRESSING THE PERSISTENT SEVERE DISCOUNT OF THE MARKET PRICE VERSUS
THE
NET ASSET VALUE OF THE FUND. AS A SHAREHOLDER, KARPUS INVESTMENT MANAGEMENT
WANTS THE ECONOMIC BENEFIT THAT THE SHAREHOLDERS SHOULD RECEIVE.
PLEASE
VOTE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO
VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK. Example [x]
Item
#1.
KARPUS
INVESTMENT MANAGEMENT RECOMMENDS THAT YOU VOTE "AGAINST" APPROVING A NEW
MANAGEMENT AGREEMENT FOR THE FUND.
ITEM
1
APPROVE
A NEW MANAGEMENT AGREEMENT
|
o
|
o
|
o
|
|
AGAINST
|
FOR
|
ABSTAIN
|
| |
|
|
Item
#2:
KARPUS
INVESTMENT MANAGEMENT RECOMMENDS THAT YOU VOTE “AGAINST”APPROVING
A NEW SUBADVISORY AGREEMENT.
ITEM
2
APPROVE
A NEW SUBADVISORY AGREEMENT
|
o
|
o
|
o
|
|
AGAINST
|
FOR
|
ABSTAIN
|
| |
|
|
Signed
proxies that are not checked will be voted by Karpus Investment Management
“AGAINST” Item #1 AND Item #2.