EREZ NOMINATES TWO CANDIDATES FOR WHITESTONE REIT BOARD OF TRUSTEES
The Company has a track record of poor capital allocation and ineffective governance
Urges
This morning,
In particular, Erez encourages
- It has been reported that
Whitestone received an indication of interest to take the Company private fromFortress Investment Group LLC ("Fortress"), a well-regarded and well-financed investment manager.1 We understand the proposed price was a significant premium to the market price. Reports suggest you "rebuffed" the offer.2 Presumably, management and the Board feel the intrinsic value of the Company is even higher than the price at which Fortress was prepared to transact. If that is the case, why haven't you prioritized investing the Company's capital, or your personal capital, intoWhitestone's undervalued stock? - "Buy low, sell high" is a surefire way to make money. The opposite is true too. You have continuously bought properties (at prices that then became the basis for NAV) and then sold equity in the Company, and by extension, in those properties, well below NAV. Worse, you then use the capital raised at a discount to NAV to engage in the same value-destructive "buy high, sell low" strategy. We estimate approximately
$75-80 million in shareholder equity value has been destroyed due to equity issuances below NAV over the years. Why are you selling portions of Whitestone's asset base at prices well below NAV? - Being a public company has unavoidable costs. If the cash flows in the core business are large enough, these costs are de minimis. But
Whitestone is not large, and its public company costs are a substantial drag on cash flow and earnings. Why shouldWhitestone remain an independent public company, with all the attendant costs, when "excess" G&A expenses (public company and standalone corporate costs well above other shopping center REITs) are, we estimate, approximately$7-8 million per year and drag earnings down by roughly 15% per year? - At
Whitestone's current debt levels (close to 8x debt/EBITDA last quarter), many long-only REIT investors will not invest. How willWhitestone ever attract enthusiastic real estate investors at current debt levels, or do you plan on further dilutive equity raises or value-destructive asset sales to reduce leverage? What mistake got you into this capital structure? - If you were organizing a shopping center REIT like
Whitestone today and picking a group of trustees to oversee the strategy and execution of such a business, would you again select a lawyer, a PR professional, an energy executive, an investment banker who specializes in bankruptcy and a former politician? Why wouldn't you want at least a few people who have substantial experience owning and operating a portfolio of shopping centers and/or managing a public REIT among those trustees? Do you think there is a connection betweenWhitestone's chronic underperformance, poor capital allocation decisions, subscale platform and massive NAV discount, and the fact thatWhitestone has no trustees with any shopping center or REIT capital markets experience?
Erez's two exceptional and experienced trustee candidates –
Erez intends to file and mail proxy materials to
About
Contacts
Media:
(212) 257-4170
erez@gasthalter.com
Investors:
212-750-5833
DISCLAIMER
This material does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in any state to any person. In addition, the discussions and opinions in this press release and the material contained herein are for general information only, and are not intended to provide investment advice. All statements contained in this press release that are not clearly historical in nature or that necessarily depend on future events are "forward-looking statements," which are not guarantees of future performance or results, and the words "may," "might," "could," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology are generally intended to identify forward-looking statements. Any such forward-looking statements contained herein are based on current assumptions, estimates and expectations, but are subject to a number of known and unknown risks and significant business, economic and competitive uncertainties that may cause actual results to differ materially from expectations. Any forward-looking statements should be considered in light of those risk factors. The Participants (as defined below) caution readers not to rely on any such forward-looking statements, which speak only as of the date they are made. Certain information included in this press release is based on data obtained from sources considered to be reliable. No representation is made with respect to the accuracy or completeness of such data, and any analyses provided to assist the recipient of this press release in evaluating the matters described herein may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, any analyses should also not be viewed as factual and also should not be relied upon as an accurate prediction of future results. Any figures are unaudited estimates and subject to revision without notice. The Participants disclaim any intent or obligation to publicly update or revise any such forward-looking statements to reflect any change in expectations or future events, conditions or circumstances on which any such forward-looking statements may be based, or that may affect the likelihood that actual results may differ from those set forth in such forward-looking statements.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
EREZ STRONGLY ADVISES ALL SHAREHOLDERS OF THE TRUST TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS, INCLUDING A PROXY CARD, AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE
The participants in the proxy solicitation are expected to be Erez Opportunities,
As of the date hereof, Erez Opportunities directly beneficially owned 270,000 common shares, par value
1 See "Fortress Approached Whitestone REIT About a Takeover," Bloomberg,
2 Id.
View original content:https://www.prnewswire.com/news-releases/erez-nominates-two-candidates-for-whitestone-reit-board-of-trustees-302082897.html
SOURCE