RAIT and Taberna Merge Into Single REIT

Betsy Z. Cohen is chairman and CEO of RAIT, and her son, Daniel G. Cohen, holds the same posts at Taberna. "We were going to call it Related Financial Trust," Betsy Cohen said during a conference call, "but decided against it." The merged firm will be named RAIT Financial Trust and continue to trade under the call letters RAS on the NYSE. In order to ensure "that our enthusiasm would not spill over," RAIT's Cohen said special committees were formed at each company to negotiate and value their firms. Different independent advisers advised both committees separately.

Betsy Cohen will be chairman and Daniel Cohen will be CEO. The approximate proportion of ownership is 54% RAIT and 46% Taberna. RAIT will nominate four independent directors and Taberna will nominate three.

The merged company will be a diversified real estate finance firm able to offer a broader range of financial products to real estate borrowers, REITs and real estate operating companies. It will have total assets of approximately $9.8 billion.

Taberna, founded in April 2005, has provided a shareholder return of about 37%. Since going public in January 1998, RAIT has delivered a 369% total return, "outperformaing all peer indices," Betsy Cohen notes. "We're committed to continuing to grow shareholder value and the highest dividend possible." Both companies have had zero defaults to date.

Enhanced shareholder value, both principals say, is the chief benefit of the planned merger. Other benefits are lower costs of funds based on the combined equity, increased scale and asset origination volume across a broader base of asset classes along with increased cash available for distribution. At noon, following the conference call on June 9, RAS traded at $26.24 a share, up 4.3% from the opening. The 52-week high of $31.72 a share occurred on Aug. 1, 2005, and the 52-week low was $24.71 a share on Oct. 12, 2005.