June 15th, 2012
Dear ATA Investor,
We have formed a committee of stockholders (the “Committee”) to address what we believe to be the continuing mismanagement of Apartment Trust of America, Inc. (“ATA”). In our view, the ATA board is not acting in the best interests of the ATA stockholders. At this point it is imperative that the stockholders become much more active in the affairs of ATA in order to protect our collective investments.
The current board has demonstrated an extreme lack of sensitivity to the needs of both the ATA stockholders and of ATA. The board and its officers have engaged in self-serving policies and actions and have made deeply flawed business decisions which have had serious negative impacts on ATA’s profitability, its ability to raise capital and its ability to make adequate investor distributions.
As an example, during the stockholder conference call on April 25, 2012, several issues were raised which the Chairman and CEO Stanley J. Olander, Jr. did not satisfactorily address. One was the reasoning behind the board’s reduction of the distributions from 6% to 3% in March 2011 and the continuation of the reduced distributions into the foreseeable future, despite experiencing annual revenue increases of 4% over 2011 and 2012 and the 95% occupancy rates in all of ATA’s markets which are, as Mr. Olander stated, due to the tight supply of rental housing coupled with very strong demand in these markets.
Additionally, several of the executive officers have ongoing conflicts of interest with ATA. Specifically, according to ATA’s most recent 10-K, Messrs. Olander, Carneal and Remppies are the owners of ROC REIT Advisors, LLC, and while they have disclosed their conflict of interest, their disclosure does not change that they personally and directly benefit from ROC REIT’s relationship with ATA.
Another issue is why Mr. Olander did not fully address the litigation surrounding the failed acquisition of the eight Mission Rock Ridge properties, including the botched settlement and the allegations of tortuous interference with the contractual relationship between the trusts and the trust beneficiaries related to ATA’s actions in the Mission Rock Ridge transaction. The litigation in Illinois and Virginia brought by the subject property investors exposes ATA to potential punitive damages, which could be much greater than any actual damages proven by the Mission Rock investors, not to mention the litigation costs of over $1,300,000 already expended by ATA. The question still remains: why did the board approve, and the executives pursue, a purchase of the Mission Rock Ridge property that embroiled ATA in a lawsuit?
Furthermore even if the current lawsuit is resolved, which is doubtful at this juncture, ATA is unlikely to obtain funding for any additional projects which could contribute to increased distributions to its stockholders. Of course, while the investors have suffered a substantial reduction in income, it is very unlikely that Messrs. Olander, Carneal and Remppies have sacrificed any of their income from ATA advisor ROC REIT Advisors, LLC.
To send a message to the Board that the status quo at ATA is unacceptable, the Committee proposes that the ATA stockholders block the Board’s attempt to re-elect themselves at the upcoming June 26, 2012 Annual Stockholder Meeting by preventing a quorum at the meeting. If you have not yet given your proxy to the Company for the Annual Meeting, we urge you NOT to do so. If you own your ATA shares “of record” and have already returned your proxy card to the Company, we urge you to revoke it by immediately delivering a written notice of revocation to the ATA Secretary at 4901 Dickens Road, Suite 101, Richmond, Virginia 23230. If you hold your ATA shares in “street name” through a broker you will need to contact the institution that holds your shares and follow its instructions for revoking a proxy. You should instruct your broker that you do not want your shares to be represented at the Annual Meeting, even if they are not voted. DO NOT ATTEND THE ANNUAL MEETING, in person or by proxy. If you need help in revoking your proxy, please contact Todd Kiehnau at Sovereign Capital at (619) 294-8989 or by email at firstname.lastname@example.org.
Please join us in sending this message to the Board that it must not be allowed to continue its business as usual to the detriment of the ATA stockholders. We will continue to press for change at ATA, for the benefit of all of our fellow ATA investors.
Very truly yours,
Committee to Protect ATA Investors
About Sovereign Capital Management Group, Inc. Headquartered in San Diego, CA, Sovereign Capital Management Group, Inc. and it’s closely held affiliates have grown to include nationwide asset management, property management, advisory services, private equity syndications and various property holdings across the United States. Operating with the mission of providing value and long-term stability through real estate investment, Sovereign has been directly involved in the successful development and management of multi-family units, attached single family condominiums, medical office buildings, general office, flex-industrial properties, retail properties and specialized use buildings. For more information, visit www.sovcapital.com or contact Todd Kiehnau at email@example.com or (619) 294-8989.