Whitestone Seeks to Distract Shareholders from
its Board and Management's Many Failings and Scandals by Promoting
a False Narrative About Erez's Intentions
Urgent Change is Desperately Needed at
Whitestone, with New Trustees that
Bring Relevant REIT Capital Markets and Shopping Center Experience,
to Create Long-Term Value for Shareholders
Encourages Whitestone Shareholders to Vote
"FOR" Catherine Clark and
Bruce Schanzer and to
"WITHHOLD" from David Taylor
and Nandita Berry Using the BLUE Proxy Card
NEW
ROCHELLE, N.Y., May 8, 2024
/PRNewswire/ -- Erez Asset Management, LLC ("Erez"), a shareholder
of Whitestone REIT (NYSE: WSR) ("Whitestone" or the "Company") which has
nominated two candidates for election at Whitestone's upcoming 2024 Annual Meeting of
Shareholders, today sent a letter to the Company's
shareholders.
The full text of the letter is below:
Dear Fellow Whitestone REIT Shareholders,
Ask yourselves:
Why is Whitestone's Board of
Trustees so vehemently opposed to the addition of Erez's two
nominees, each of whom have significant REIT capital markets and
shopping center experience, when the current Board has no such
experience?
Whitestone is squandering
significant capital to keep our nominees off the Board, thereby
increasing G&A, when these monies could be better invested in
growing the value of the Company. Why is the Company doing
something that so clearly is not in the best interest of
shareholders?
The reason: Whitestone's Board
is entrenched, insular, and does not have the best interests of
shareholders as its highest value.
In our communications with you, we have raised serious, urgent
concerns about Whitestone's poor
capital allocation, corporate management, and governance practices
that we believe can be most effectively addressed with the input of
new trustees with subject matter expertise. Specifically, we have
outlined in detail how Whitestone's current Board is responsible
for:
1) Major governance and disclosure failures that
have deprived shareholders of a truly independent Board and have
disenfranchised shareholders;
2) Unfathomable capital allocation decisions, such as below-NAV
equity offerings that were immediately followed by distributions of
the just-raised capital back to shareholders as dividends, that
continue to destroy hundreds of millions of dollars in shareholder
value; and
3) Poor corporate management and weak oversight of management
resulting in both short-term and long-term guidance misses,
creating a crisis of confidence in Whitestone among the REIT
investment community and the capital markets.
These are the reasons that Whitestone continues to trade at the largest
discount to net asset value (NAV) and at the lowest earnings
multiple of any of the shopping center REITs it cites as its
peers.
Yet rather than address these failings, the Whitestone Board continues to distract
shareholders by promoting a false and irrelevant narrative: that
Erez solely wants Whitestone to be
sold and, more recently, that Erez secretly intends to buy
Whitestone.
Let's address the latter point first: Erez has no secret plan to
acquire Whitestone. To be clear, Erez is not capitalized to
buy Whitestone, is not seeking to
raise capital to acquire Whitestone, and has no intention of acquiring
Whitestone. The Whitestone Board has disingenuously pointed to
an outdated presentation of a strategy that Erez never pursued as
evidence of "deception." There is simply none to be found.
As for whether Erez wants Whitestone to be sold, while any responsible
board should be open to a value maximizing sale, we have repeatedly
articulated our plans for Whitestone. As trustees, we would seek to:
1) Improve corporate governance in order to
improve board independence and accountability;
2) Improve capital allocation decision making in order to avoid
further value destruction; and
3) Improve management oversight in order to provide more reliable
guidance and deliver more consistent performance.
These near-term confidence-rebuilding priorities are important,
as Mr. Taylor and Ms. Berry – the trustees who we are seeking to
replace – were at the center of the many scandals that Whitestone has faced in recent years and the
"tone at the top" has clearly not been one of rigorousness and
accountability.
Mr. Taylor was the secret attorney to Jim Mastandrea, Whitestone's former CEO, on the Pillarstone
transaction which has become a source of embarrassment for
Whitestone, cost many millions of
dollars in legal fees, and could result in a significant impairment
due to Pillarstone's bankruptcy filing. Mr. Taylor joined
Whitestone's Board and
compensation committee after his work on Pillarstone, and one of
his first acts as a trustee was to ratify a significant raise for
Mr. Mastandrea.
Ms. Berry, who was a law firm colleague of Mr. Taylor and who
now serves as Chair of Whitestone's Nominating and Corporate
Governance Committee, is responsible for all of the disclosure
failures that plague the Company, including its failure to disclose
Mr. Taylor's secret relationship with Mr. Mastandrea and its
business relationships with Amy Feng
and Julia Buthman before they both
joined the Board, as well as the misleading disclosure regarding
Najeed Khan, the former Whitestone trustee currently in prison for one
of the largest check-kiting schemes in US history.
It is important to appreciate that practically nothing has
changed at Whitestone with the
departure of Jim
Mastandrea. David Holeman, Whitestone's CEO, was the CFO during the
entire time the many mistakes we are seeking to remedy were made.
As noted above, the management issues which the Board should be
better overseeing are twofold:
1) Value destructive capital allocation; and
2) Poor corporate management – specifically related to missing
guidance and providing inaccurate projections to the Board and the
street.
These issues fell within the domain of Whitestone's then-CFO, Dave Holeman, before he was recently appointed
CEO, and it is not credible for him to distance himself from
them.
We are deeply disheartened by the recent conduct of the
Whitestone Board, which is
concocting stories that are observably false and otherwise
irrelevant for the sole purpose of keeping two qualified executives
out of their boardroom and breaking up their insular culture.
The behavior of the Board over the last few days has only made
it clearer to us, and hopefully to all of you, that change is
urgently needed at Whitestone. Trustees who are truly
independent, and who bring much-needed subject-matter expertise,
must be added to the Board to better oversee management and serve
the interests of Whitestone's
shareholders.
We respectfully ask that you support our two nominees for the
Whitestone Board – Catherine Clark and Bruce Schanzer – at the Company's 2024 Annual
Meeting on Tuesday, May 14. Now is
the time for you to cast your vote for desperately needed change
that will help improve Whitestone
for the benefit of all shareholders.
Sincerely,
Bruce Schanzer
Chairman, Erez Asset Management
To ensure the election of Catherine
Clark and Bruce Schanzer,
Erez encourages all Whitestone
shareholders to vote "FOR" Catherine Clark and Bruce Schanzer and "WITHHOLD" from
David Taylor and Nandita Berry using the BLUE proxy
card.
If you have any
questions or require assistance in voting your BLUE
universal proxy card,
please contact our
proxy solicitor, Innisfree M&A
Incorporated at:
Shareholders may
call toll-free: (877) 456-3422
Banks and brokers
call: (212) 750-5833
|
About Erez Asset Management, LLC
Erez Asset Management, LLC is an investment management
firm focused on undervalued small market cap REITs. Erez was
founded in 2022 by Bruce Schanzer, former CEO of Cedar Realty
Trust, a shopping center REIT, after the successful monetization of
Cedar. Erez seeks to acquire meaningful stakes in REITs in which it
believes it can work collaboratively with the management team and
the board to help catalyze improved performance and share price
appreciation by pursuing operational initiatives and strategic
alternatives intended to benefit all stakeholders.
Contacts
Media:
Mark Semer / Iain Hughes
Gasthalter & Co.
(212) 257-4170
erez@gasthalter.com
Investors:
Jonathan Salzberger / Scott Winter
Innisfree M&A Incorporated
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 REIT Opportunities LP, Erez Asset Management LLC,
Bruce Schanzer and Catherine Clark (collectively, the
"Participants") are participants in the solicitation of proxies
from the shareholders of the Company for the 2024 Annual Meeting of
Shareholders (the "Annual Meeting"). On April 5, 2024, the Participants filed with the
U.S. Securities and Exchange Commission (the "SEC") their
definitive proxy statement and accompanying BLUE Proxy Card in
connection with their solicitation of proxies from the shareholders
of the Company for the Annual Meeting. ALL SHAREHOLDERS OF THE
COMPANY ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT, THE
ACCOMPANYING BLUE PROXY CARD AND OTHER DOCUMENTS RELATED TO THE
SOLICITATION OF PROXIES BY THE PARTICIPANTS, AS THEY CONTAIN
IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO
THE PARTICIPANTS AND THEIR DIRECT OR INDIRECT INTERESTS IN THE
COMPANY, BY SECURITY HOLDINGS OR OTHERWISE.
The definitive proxy statement and an accompanying BLUE proxy
card has been furnished to some or all of the Company's
shareholders and are, along with other relevant documents, publicly
available at no charge on the SEC's website at http://www.sec.gov/.
In addition, the Participants will provide copies of the definitive
proxy statement without charge, when available, upon request.
Requests for copies should be directed to Innisfree M&A
Incorporated at the contact information above.
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SOURCE Erez Asset Management, LLC