Feldman Mall Properties
(NYSE:FMP) shares rose $0.21, or 1.87%, to $11.29 today after Mercury
Real Estate Advisors disclosed a 9.5% stake in the company and demanded
that the company immediately engage a financial advisor to assist the
board in putting the company up for sale.
The Connecticut-based
hedge fund insisted that the company continues to trade at a deep
discount to its liquidation value, which is being eroded by an
ineffective management team that has delivered a total return of only
1.9% for shareholders since the company's IPO. Moreover, the company's
G&A expenses are far too high a percentage of revenues to justify
the company remaining public - that is to say, significant cost savings
could be achieved by any buyer simply by taking the company private or
leveraging economies of scale.
Mercury also noted that the
company has failed repeatedly to meet routine SEC reporting timetables,
repeatedly disappointed on earnings and cash flow projections and
recently completed a dilutive financing. These failures are especially
embarrassing given the company's relatively straightforward business
operations, which entail owning a mere seven retail properties!
Consequently, the hedge fund requested a meeting with the board of
directors to discuss this dire situation and recommend that the company
hire and investment banker to explore a possible sale of the company.
Unfortunately,
the board of directors has not been so open to these suggestions to
date. In fact, this is the third time that Mercury has sent a letter to
the board of directors via a Schedule 13D filing - the other two times
being in
January and
March.
Apparently, the company's board and management are more concerned about
protecting their own jobs than unlocking value for shareholders - a
stance which is not uncommon in today's world. Mercury may be forced to
threaten a proxy fight or take further action before any kind of a
response can be solicited from the company or board. Regardless, this
is definitely a stock to keep an eye on as any sale would come at a
substantial premium to the current market price!
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