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HOUSTON-In the continuing battle between a local REIT and its former parent, Whitestone REIT, previously Hartman Commercial Properties REIT, has won the first round in court. A preliminary injunction has been issued to prohibit Allen R. Hartman, former chairman and CEO, from continuing a proxy consent solicitation targeting removal of the current board and CEO.

Since the REIT’s split last fall from Hartman Management Inc., Allen Hartman has attempted to remove the board through proxy consent rather than a formal meeting. US District Judge Vanessa D. Gilmore for the Southern District of Texas in Houston has ruled, however, that Allen Hartman’s proxy solicitation was invalid under the company’s current bylaws and declaration of trust. The court has affirmed changes to the company’s bylaws in December 2006 were permissible under anti-takeover statutes for Maryland, where Whitestone is incorporated.

Whitestone chairman and interim CEO James C. Mastandrea expressed satisfaction at the outcome, but he believes the company will likely hear more from Allen Hartman. “It’s difficult to say what he’ll do,” Mastandrea says. On advice of legal counsel, Allen Hartman declined to be interviewed.

Mastandrea tells GlobeSt.com that he was confident his board was permitted to act under the new bylaws, but he was glad for the judge’s support. “The independent trustees spent a considerable amount of time without myself present to discuss the pros and cons of this and to reach the decision they did,” he adds. In the meantime, Mastandrea says his goal is to continue to move the company forward, create stability for the trust and enact the business plan developed late last year.

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