NRDC Acquisition Corp. (stock symbol: [t]NAQ[/t]), which raised $414 million when it went public in October 2007, has announced that it intends to take steps that would allow it to continue its existence as a REIT.
NRDC Acquisition Corp. Announces Plan to Continue Business as a REIT
Press Release
Source: NRDC Acquisition Corp.
On Monday August 10, 2009, 8:30 am EDT
NEW YORK--(BUSINESS WIRE)--NRDC Acquisition Corp. (“NRDC Acquisition”) (NYSE Amex: NAQ), a public investment vehicle, announced today that it has signed a framework agreement with its sponsor, NRDC Capital Management, LLC (“NRDC Capital Management”), which sets forth the steps NRDC Acquisition will take to continue its business as a corporation that will qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, commencing with its taxable year ending December 31, 2010. NRDC Acquisition intends to invest in, acquire, own, lease, reposition and manage a diverse portfolio of necessity-based retail properties, including, primarily, well located community and neighborhood shopping centers, anchored by national or regional supermarkets and drugstores. NRDC Acquisition may also acquire other retail properties, including power centers, regional malls, lifestyle centers and single-tenant retail locations, that are leased to national, regional and local tenants. The transactions contemplated by the framework agreement are expected to be completed prior to October 23, 2009, pending approval by NRDC Acquisition’s stockholders and warrantholders and subject to certain closing conditions. It is anticipated that, subject to stockholder approval, NRDC Acquisition will change its name to Retail Opportunity Investments Corp.
Consummation of the transactions contemplated by the framework agreement are conditioned upon, among other things, the approval by NRDC Acquisition’s stockholders and warrantholders of certain amendments to NRDC Acquisition’s certificate of incorporation and warrants, respectively. NRDC Acquisition’s warrantholders will be asked to amend their respective warrants to, among other things, (i) increase the exercise price from $7.50 to $12.00 per share in exchange for extending the warrant expiration by three years to October 23, 2014, and (ii) increase the price at which NRDC Acquisition’s common stock must trade before NRDC Acquisition is able to redeem the warrants from $14.25 to $18.75, for warrants issued in NRDC Acquisition’s IPO, and $22.00, for warrants issued to NRDC Capital Management prior to the IPO. It is also contemplated that approximately 20% of the outstanding shares that is held by NRDC Acquisition’s directors and affiliates that were acquired prior to NRDC Acquisition’s 2007 IPO will be cancelled. In addition, NRDC Acquisition has agreed with the underwriters in the initial public offering to reduce a portion of the deferred underwriting commissions, which were originally an aggregate of $14,490,000, in exchange for certain rights to participate in future securities offerings by NRDC Acquisition.
“We believe that the current market environment presents an extraordinary opportunity to acquire retail properties at compelling yields and at values substantially below their replacement cost, offering us the potential to achieve attractive risk adjusted returns for our stockholders over time primarily through dividends and secondarily through capital appreciation,” said Richard A. Baker, Chief Executive Officer of NRDC Acquisition who will become Executive Chairman of NRDC Acquisition upon completion of the transaction. “Our perception is that in the current capital constrained environment, many retail property owners are severely limited in their ability to repay upcoming debt maturities and to deploy capital needed for tenant improvements and other non-recurring capital expenditures, which is restricting their ability to retain existing and attract new tenants,” Mr Baker added.
“I am excited by the prospect of working with NRDC Acquisition’s experienced management team and board of directors to create a sophisticated and diversified vehicle for investors to access the U.S. real estate market,” said Stuart Tanz, who has agreed to become NRDC Acquisition’s Chief Executive Officer. “Our view is that necessity-based retail properties will fare better than other types of retail real estate as consumers will continue to spend on necessity items while cutting back on luxury and other non-essential purchases,” added Mr. Tanz.
NRDC Acquisition’s Management and Investment Team
Mr. Tanz was the Chairman, Chief Executive Officer and President of Pan Pacific Retail Properties, Inc. during which period its total market capitalization increased by 795%, from $447 million to over $4 billion. Mr. Tanz oversaw and administered all aspects of Pan Pacific’s business, management, finance and personnel and led its $146 million initial public offering on the New York Stock Exchange and ultimately in the sale of the company for $4.1 billion to Kimco Realty Corp. (NYSE: KIM - News) in November 2006. In addition to Mr. Tanz, John B. Roche has agreed to become NRDC Acquisition’s Chief Financial Officer. Mr. Roche was the Executive Vice President and Chief Financial Officer of New Plan Excel Realty Trust, Inc. from 2000 to 2007 where his area of responsibility included accounting and finance, treasury, budgeting, IT, human resources and administration functions. It is also anticipated that Mark Burton will become a director. Mr. Burton has been the Chief Investment Officer of Real Estate Department at Abu Dhabi Investment Council since 2007.
NRDC Acquisition anticipates that William L. Mack, who currently serves as the Chairman of its board of directors, Robert C. Baker, who currently serves as the Vice-Chairman of its board of directors, and Lee S. Neibart, who currently serves as our President, will resign from their executive positions but will continue to serve as directors.
Clifford Chance US LLP is advising NRDC Acquisition.
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