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GREAT NECK, NY-Mercury Real Estate Advisors LLC sent a letter Monday morning to Lawrence Feldman, chairman and CEO of Feldman Mall Properties Inc., to request the company procure an investment bank to sell or liquidate the REIT. Mercury, an affiliate of Greenwich, CT-based Mercury Partners LLC, owns about 1.3 million shares of Feldman Mall Properties’ roughly 13 million shares of stock.

The letter asks for a sale or liquidation inclusion to the next proxy statement to shareholders for the next annual meeting. “We believe that a sale of the corporation is in the best interests of stockholders and should be pursued immediately,” said Malcolm MacLean, president of Mercury, in the letter.

Mercury goes on to outline four reasons it would be advisable to sell or liquidate the company. First, the company has been unable to match returns. “Since going public on Dec. 15, 2004, the corporation has posted a total return of negative 4.79%. The MSCI US REIT Index has achieved a total return of positive 55.77% over this same period. This reflects substantial underperformance of 60.56%,” the letter said.

Secondly, the REIT is too small to work well as a public company. According to Feldman Mall’s website, the company owns seven malls in seven different states. The REIT also has properties in Arizona, Florida, Illinois, New York, Ohio, Pennsylvania and Texas. “In our view, shareholders’ equity is being wasted on general and administrative expenses that are not commensurate with the size of the company.”

Mercury’s third reason is the “earnings misses and downward revisions to guidance,” which the company began seeing in November 2005, almost a year after going public. The letter goes on to say, “In our view, management has lost credibility with investors as a result of being overly optimistic and not realistic on a number of occasions.”

Lastly, Mercury says the company not valued in the public market as much as it would as part of a national mall operating company. “While we believe that the corporation is too small to generate economies of scale with its widely dispersed portfolio, several of the national or regional owner/operators could achieve operating synergies through an acquisition of the corporation.”

Feldman has a market value of $153.2 million, according to New York Stock Exchange numbers Monday afternoon. Shares rose by about $0.45, or 4% to $11.68 in Monday trading. Feldman spokespeople did not respond to GlobeSt.com in time for publication.

The move toward better valuation in the private market has been played out in all property types in recent months. Yesterday Trammell Crow Co. shareholders voted in favor of the merger with CB Richard Ellis. Last month, Equity Office Properties Trust agreed to be purchased by Blackstone Group and Lexington Corporate Properties Trust shareholders agreed to the merger with Newkirk Realty Trust Inc.

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