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ANN ARBOR, MI-Institutional Shareholder Services, a proxy advisory firm, has recommended Captec stockholders vote in favor of the company’s proposed merger with Commercial Net Lease Realty Inc. at the company’s special meeting Nov. 19. In reaching its recommendation, Captec officials say ISS held separate meetings with both Captec management and the stockholder who opposes the merger, Phillip Goldstein, portfolio manager of Opportunity Partners L.P. of New York.

He owns more than 369,000 shares in the company. Goldstein alleges Captec’s CEOis giving out misinformation and is pocketing money on the deal.

According to Captec, the ISS said in a Nov. 2 report that it “believes that the board took the necessary steps in conducting a thorough and fair process to sell Captec, including its non-real estate assets. Furthermore, the CNLR merger appears to be a sound transaction for shareholders and maximizes shareholder value. The merger warrants shareholder support.”

Goldstein says instead of the merger, the company should consider either liquidation or a restructured merger with CNLR or another company, but with the excluded assets being placed in a liquidating trust.

However, ISS said in its report that “it may take several years before shareholders realize any potential value from those assets…As an alternative, the merger offers shareholders immediate cash value on those assets.”

Captec has said that as a result of the merger:

* CNLR will acquire all of Captec’s outstanding shares for a combination of cash and stock with an aggregate value of approximately $124 million, based on a value of $13.05 per share of Captec common stock, at the time the agreement was executed. The stock portion is expected to be tax-free to Captec stockholders and the transaction is expected to be completed during the fourth quarter of 2001.

* As a result of this merger, CNLR will have an enhanced portfolio of more than 377 properties in 40 states. After the merger, CNLR will have total gross leaseable area of approximately 7 million sf — approximately seven times Captec’s current total gross leaseable area.

CNLR’s tenant base will become even more diverse with 96 tenants in 27 different retail lines of trade.

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