|
Non-listed REIT
Inland Western Retail Real Estate Trust, Inc.
City of St. Clair Shores General Employees Retirement System v. Inland Western Retail Real Estate Trust, Inc.
Complaints:
Press Releases:
Other:
On November 1, 2007, Chimicles & Tikellis LLP filed a Complaint in the United States District Court for the Northern District of Illinois (Case 07 C 6174) alleging violations of the federal securities laws and breaches of fiduciary duty by defendant Inland Western Retail Real Estate Trust, Inc. ("Inland REIT") and certain of its directors, officers and affiliates, and William Blair & Company, L.L.C. ("William Blair"), on behalf of a proposed class ("Class") of Inland REIT's shareholders who are entitled to vote on the Schedule 14A Proxy Statement ("Proxy") that was filed with the Securities and Exchange Commission on September 10, 2007, which Proxy is alleged to be materially false and misleading. The Complaint also includes derivative claims asserting wrongdoing on behalf of Inland REIT against certain defendants.
The Complaint charges defendants with violations of the federal securities laws, including Sections 14(a) and 20 of the Securities Exchange Act of 1934, Rule 14a-9 promulgated thereunder. In addition, by virtue of the defendants' conduct, the Complaint alleges that defendants have also breached their fiduciary duties owed to the proposed Class. The Proxy seeks shareholder approval to merge Inland REIT's affiliated Advisor and Property Managers into Inland REIT for $375 million worth of the Company's stock ("Internalization"). These entities, which provide Inland REIT with property management services and act as its business manager and supervisor of daily operations, are wholly-owned directly or indirectly by officers, directors and affiliates of Inland REIT. Thus, the Internalization is a $375 million self-dealing, affiliated transaction that must receive the utmost scrutiny by the Class and Inland REIT. The Complaint charges that the Internalization does not stand up to that scrutiny.
This Complaint seeks to remedy the wrongdoing that was, and continues to be, inflicted against the shareholders of Inland REIT who were asked to approve the self-dealing Internalization whereby the shareholders' fiduciaries improperly garnered millions in excessive and unjustifiable consideration. The Complaint includes allegations that:
- Inland REIT paid fees to the Advisor and Property Managers that were not calculated in compliance with the terms of the applicable contracts. Consequently: (i) the Advisor was overpaid by more than $60 million in 2005 and 2006; (ii) the Advisor failed to reimburse Inland REIT over $20 million in 2005 and 2006; and (iii) the Property Managers were paid above-market and, thus, excessive, fees.
- Financial statements included in the Proxy, which purport to support the fees historically paid to the Advisor and Property Managers and their price in the Internalization, are false and misleading.
- Material departures from the contract terms governing fees paid to the Advisor and Property Managers artificially distorted their earnings and, therefore, their financial and operating results that were used to justify the $375 million price to be paid in the Internalization.
- The Internalization is timed to evade contractual provisions that were put in place to protect Inland REIT and its shareholders from overreaching by their fiduciaries in connection with the Internalization. If those provisions had been adhered to, in all likelihood the Advisor and Property Managers would have received as little as zero cash consideration for the same transaction now costing $375 million.
- Distorted and inflated values have been attributed to the Advisor and the Property Managers, thereby artificially and improperly inflating the amount of consideration paid in the Internalization.
- In formulating, negotiating and recommending the Internalization, Defendants were assisted by William Blair who served as a "financial advisor" and rendered an "opinion" that $375 million for the Internalization was fair, from a financial point of view to the shareholders. This opinion, which was included in the Proxy, was inherently flawed, misleading, and masked Defendants' breaches of fiduciary duty.
If you are a former or current shareholder of Inland Western Retail Real Estate Trust, Inc., and wish to discuss this Action or have any questions concerning your rights or interests, please contact Co-Lead Counsel:
Nicholas E. Chimicles
Kimberly M. Donaldson -- E-mail: KimDonaldson@chimicles.com
Kimberly L. Kimmel
CHIMICLES & TIKELLIS LLP
361 West Lancaster Avenue
Haverford, PA 19041
Telephone: 610-642-8500
Toll Free: 866-399-2487
Fax: 610-649-3633
| 
