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Mercury Requests Ownership Waiver From Maxus Realty Trust, Inc.
GREENWICH, Conn., Dec. 22 /PRNewswire/ -- Mercury Real Estate Advisors LLC, an
affiliate of Mercury Partners LLC, a real estate investment management company
based in Greenwich, CT, issued this press release today to Maxus Realty Trust,
Inc.'s (NASDAQ:MRTI) Board of Directors.
Mercury Real Estate Advisors LLC
100 Field Point Road
Greenwich, Connecticut 06830
December 22, 2004
Maxus Realty Trust, Inc.
Attn: The Board of Directors
104 Armour Road
North Kansas City, Missouri 64116
Gentlemen:
As you are aware from our Schedule 13-D filing made November 8, 2004 with the
Securities and Exchange Commission, Mercury Real Estate Advisors LLC, on behalf
of its affiliates, at that time was the beneficial owner of 7.1% of the shares
of common stock of Maxus Realty Trust, Inc. (the "Company"). We have
subsequently purchased additional shares of common stock so as to bring our
beneficial ownership of the Company to 7.59%, slightly below the ownership
limit of 7.6% artificially imposed by the Company.
We are hereby requesting a waiver to allow Mercury Real Estate Advisors LLC to
purchase up to 19.6% of the common shares of the Company, an identical
percentage to which David L. Johnson, the Chairman and Chief Executive Officer
of the Company, has the right to purchase. As our ownership entities are
limited partnerships which are "look through" vehicles for Federal tax
purposes, this will not trigger or jeopardize the "5 in 50" REIT qualification
test you used in the Proxy (as defined below) as your sole justification for
the 7.6% limit. Therefore, we assume you will extend to us the same, equal
ownership limit of 19.6% you afforded Mr. Johnson.
In your Schedule 14A Proxy Statement dated March 31, 2001 (the "Proxy"), the
Company solicited and recommended shareholder approval for an amendment to the
Company's Bylaws, which proposed the following change:
" ... (i) increases the stock ownership limitation for David L. Johnson,
Chairman of the Board and Chief Executive Officer of the [Company] from
9.8% to 19.6% and (ii) decreases the stock ownership limitation for all
other shareholders of the [Company] from 9.8% to 7.6%. The Board
believes the Bylaw amendment is in the best interests of the
shareholders because it allows Mr. Johnson to have a larger ownership
stake in the [Company], which would provide a greater incentive to Mr.
Johnson to increase the [Company's] performance and shareholder value.
One risk associated with the Bylaw Amendment is that it helps entrench
Mr. Johnson as Chairman of the Board and Chief Executive Officer because
he will have the ability to own almost twenty (20%) of the outstanding
shares of the [Company], which will make it much more difficult for the
remainder of the shareholders to gather the necessary votes to elect new
trustees or to remove management. The Bylaw Amendment has the effect of
an anti-takeover measure because it reduces even further the percentage
that other individual shareholders can acquire to mount a potential
takeover."
Specifically, in your Proxy section entitled Proposal One, you recommend the
following resolution, which was approved by the Company's shareholders on May
8, 2001:
"8.8 Limitation on Acquisition and Ownership of Shares and Warrants.
(a) In order to guard against the concentration of ownership of Shares
and warrants or similar rights to purchase Shares to an extent which is
contrary to the requirements of the REIT Provisions of the Internal
Revenue Code, no Person other than David L. Johnson may at any time
...acquire ownership of or own, directly or indirectly ... a number of
Shares in excess of 7.6% of the outstanding shares of the [Company] ..."
You later in that section define Person as "any individual, corporation,
partnership, trust or other entity."
The question is thus very simple. Will the Board of Directors waive the
ownership limit in a situation that does not threaten the sole stated
justification for the limit for an existing shareholder to the same extent it
did for another shareholder, Mr. Johnson? Or, was the Proxy correct in the
result of entrenching Mr. Johnson, even if the goal in the Proxy of maintaining
REIT status should perhaps instead be the goal of entrenching Mr. Johnson? In
other words, as you well know, it is possible to have certain owners own in
excess of the artificial limit without jeopardizing your REIT status.
We look forward to your prompt reply and approval.
Sincerely yours,
MERCURY REAL ESTATE ADVISORS LLC
David R. Jarvis Malcolm F. MacLean IV
Managing Member Managing Member
DATASOURCE: Mercury Real Estate Advisors LLC
CONTACT: Malcolm F. MacLean IV of Mercury Real Estate Advisors LLC,
+1-203-769-2980
Web site: http://www.mercuryrealestate.com/