SAN DIEGO–(BUSINESS WIRE)–
Sovereign Capital Management Group, a San Diego-based leader in property
acquisition and management, today announced the formation of an ad hoc
committee to challenge, contest and postpone an upcoming election for
the Board of Directors following recent developments in the operations
of the Apartment Trust of America (“ATA”) Real Estate Investment Trust.
As one of the committee members, Sovereign Capital Management Group has
offered to provide additional information to the public and
institutional investors in the ATA REIT regarding recent legal events
that may have a significant impact on the cash distributions to
investors and the future viability of the ATA REIT. As such, an open
letter is being disseminated to all shareholders to advise them of their
options to acquire more information from the key managers of the ATA
June 14, 2012
Dear ATA Investor,
We have formed a committee of stockholders (the “Committee”) to address
what we believe to be the continuing mismanagement of Apartment Trust of
America, Inc. (“ATA”). In our view, the board is not acting in the best
interests of the ATA stockholders. At this point it is imperative that
the stockholders become much more active in the affairs of ATA in order
to protect our collective investments.
The current board has demonstrated an extreme lack of sensitivity to the
needs of both the ATA stockholders and of ATA. The board and its
officers have engaged in self-serving policies and actions and have made
deeply flawed business decisions which have had serious negative impacts
on ATA’s profitability, its ability to raise capital and its ability to
make adequate investor distributions.
As an example, during the stockholder conference call on April 25, 2012,
several issues were raised which the Chairman and CEO Stanley J.
Olander, Jr. did not satisfactorily address. One was the reasoning
behind the board’s reduction of the distributions from 6% to 3% in March
2011 and the continuation of the reduced distributions into the
foreseeable future, despite experiencing annual revenue increases of 4%
over 2011 and 2012 and the 95% occupancy rates in all of ATA’s markets
which are, as Mr. Olander stated, due to the tight supply of rental
housing coupled with very strong demand in these markets.
Additionally, several of the executive officers have ongoing conflicts
of interest with ATA. Specifically, according to ATA’s most recent 10-K,
Messrs. Olander, Carneal and Remppies are the owners of ROC REIT
Advisors, LLC, and while they have disclosed their conflict of interest,
their disclosure does not change that they personally and directly
benefit from ROC REIT’s relationship with ATA.
Another issue is why Mr. Olander did not fully address the litigation
surrounding the failed acquisition of the eight Mission Rock Ridge
properties, including the botched settlement and the allegations of
tortuous interference with the contractual relationship between the
trusts and the trust beneficiaries related to ATA’s actions in the
Mission Rock Ridge transaction. The litigation in Illinois and Virginia
brought by the subject property investors exposes ATA to potential
punitive damages, which could be much greater than any actual damages
proven by the Mission Rock investors, not to mention the litigation
costs of over $1,300,000 already expended by ATA. The question still
remains: why did the board approve, and the executives pursue, a
purchase of the Mission Rock Ridge property that embroiled ATA in a
One thing is clear, however. Until the lawsuit is resolved, ATA will
likely be unable to obtain funding for additional projects which could
contribute to an increase in its distributions to stockholders. Of
course, while the stockholders have suffered with reduced distributions,
it is very unlikely that Messrs. Olander, Carneal and Remppies have had
to sacrifice any of their income from ATA advisor ROC REIT.
To send a message to the Board that the status quo at ATA is
unacceptable, the Committee proposes that the ATA stockholders block the
Board’s attempt to re-elect themselves at the upcoming June 26, 2012
Annual Stockholder Meeting by preventing a quorum at the meeting. If you
have not yet given your proxy to the Company for the Annual Meeting, we
urge you NOT to do so. If you own your ATA
shares “of record” and have already returned your proxy card to the
Company, we urge you to revoke it by immediately delivering a written
notice of revocation to the ATA Secretary at 4901 Dickens Road, Suite
101, Richmond, Virginia 23230. If you hold your ATA shares in “street
name” through a broker you will need to contact the institution that
holds your shares and follow its instructions for revoking a proxy. You
should instruct your broker that you do not want your shares to be
represented at the Annual Meeting, even if they are not voted. DO NOT
ATTEND THE ANNUAL MEETING, in person or by proxy. If you need help in
revoking your proxy, please call us at (619) 294-8989.
Please join us in sending this message to the Board that it must not be
allowed to continue its business as usual to the detriment of the ATA
stockholders. We will continue to press for change at ATA, for the
benefit of all of our fellow ATA investors.
Very truly yours,
Committee to Protect ATA Investors
About Sovereign Capital Management Group, Inc.
Headquartered in San Diego, CA, Sovereign Capital Management Group, Inc.
and its closely held affiliates have grown to include nationwide asset
management, property management, advisory services, private equity
syndications and various property holdings across the United States.
Operating with the mission of providing value and long-term stability
through real estate investment, Sovereign has been directly involved in
the successful development and management of multi-family units,
attached single family condominiums, medical office buildings, general
office, flex-industrial properties, retail properties and specialized
use buildings. For more information, visit www.sovcapital.com
or contact Todd Kiehnau at email@example.com
or (619) 294-8989.