News Column

Inland Diversified shareholders: Question merger payments to insiders, says UNITE HERE

June 2, 2014

CHICAGO--(BUSINESS WIRE)-- UNITE HERE issued the following letter to Inland Diversified Real Estate Trust shareholders regarding the upcoming merger vote with Kite Realty:

Dear Inland Diversified Investor:

You have been charged $166 Million in fees and expenses by entities controlled by Inland insiders already. As part of the Kite Realty merger deal, you are about to pay millions more to these same insiders. This is in stark contrast to Inland’s no internalization fee promise at its other non-traded REITs.

The merger’s transaction costs are estimated to be more than $45 Million. Over a quarter of this amount will be paid by you and existing Kite investors to entities controlled by Inland insiders in the form of liquidity event and transition fees, a “Golden Parachute” for Diversified’s top executive, and other consulting and management agreements.

Before you vote on June 24th, you should ask:

  • Why are Diversified shareholders being treated differently than Inland’s other investors? In March, Inland American internalized for no fee. Inland has been marketing its latest non-traded REIT with no internalization fee as a major selling point. Meanwhile, you are being asked to pay up to $12 Million for a fee that terminates Diversified’s external management agreements.
  • Why are you being asked to pay a $10+ Million fee to the same entity that is headed by Diversified’s President? Mr. Barry Lazarus wears many hats: he’s not only Diversified’s top executive, COO and a director, he’s also president of Diversified’s Business Manager. In addition to the hefty fee for the Business Manager which is owned by Inland insiders, Mr. Lazarus will be personally rewarded with an $800,000 cash, “Golden Parachute” as part of this deal.
  • Haven’t you paid enough? You have been charged over $100 Million in offering costs, $50 Million in fees & expenses to the Business Manager and Property Managers, and $10 Million in other fees by entities controlled by Inland insiders. The Business Manager has regularly waived portions of its fee in the past. Why should you now have to pay to end these agreements?

    UNITE HERE is a union representing over 275,000 employees in the hotel, food service, and gaming industries. Its members are beneficiaries of pension funds with over $60 billion in assets. We believe investors and employees alike are better served by strong corporate governance practices. UNITE HERE Local 19 has a labor dispute at a hotel owned by Inland American.


    Mike French, 510-967-1673

    Source: UNITE HERE

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    Source: Business Wire

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