HAVERFORD, Pa., Nov. 5 /PRNewswire-USNewswire/ — The law firms of Chimicles & Tikellis LLP, Labaton Sucharow LLP and Wolf Haldenstein Adler Freeman & Herz LLP announce that a securities class action complaint has been filed in the United States District Court for the Northern District of Illinois charging Inland Western Retail Real Estate Trust, Inc. (“Inland REIT”), certain of its directors, officers and affiliates, and William Blair & Company, L.L.C. (“William Blair”) with violations of Sections 14(a) and 20 of the Securities Exchange Act of 1934, Rule 14a-9 promulgated thereunder, and/or state law claims.
Inland REIT, a real estate investment trust whose stock is not traded on a national stock exchange, is primarily engaged in the acquisition and ownership of commercial real estate properties. The Complaint was filed on behalf of a proposed class (“Class”) of Inland REIT’s shareholders who are entitled to vote on the Schedule 14A Proxy Statement (“Proxy”) that was filed with the Securities and Exchange Commission on September 10, 2007, which Proxy is alleged to be materially false and misleading. The Complaint also alleges that, by their conduct, defendants breached fiduciary duties owed to the shareholders. In addition, the Complaint includes derivative claims on behalf of Inland REIT for breaches of fiduciary duty and contract.
The Proxy seeks shareholder approval of the merger of Inland REIT with its Advisor and Property Managers for $375 million worth of Inland REIT’s stock (“Internalization”). These entities, which provide Inland REIT with property management services and act as its business manager and supervisor of daily operations, are wholly-owned directly or indirectly by officers, directors and affiliates of Inland REIT. Thus, the Internalization is a $375 million self-dealing, affiliated transaction that must receive the utmost scrutiny by the Class and Inland REIT. The Complaint charges that the Internalization does not stand up to that scrutiny.
The Complaint includes allegations that:
(a) Inland REIT paid fees to the Advisor and Property Managers that were not calculated in compliance with the terms of the applicable contracts. Consequently: (i) the Advisor was overpaid by more than $60 million in 2005 and 2006; (ii) the Advisor failed to reimburse Inland REIT over $20 million in 2005 and 2006; and (iii) the Property Managers were paid above-market and, thus, excessive, fees.
(b) Financial statements included in the Proxy, which purport to support the fees historically paid to the Advisor and Property Managers and their price in the Internalization, are false and misleading.
(c) Material departures from the contract terms governing fees paid to the Advisor and Property Managers artificially distorted their earnings and, therefore, their financial and operating results that were used to justify the $375 million price to be paid in the Internalization.
(d) The Internalization is timed to evade contractual provisions that were put in place to protect Inland REIT and its shareholders from overreaching by their fiduciaries in connection with the Internalization. If those provisions had been adhered to, in all likelihood the Advisor and Property Managers would have received as little as zero cash consideration for the same transaction now costing $375 million.
(e) Distorted and inflated values have been attributed to the Advisor and the Property Managers, thereby artificially and improperly inflating the amount of consideration paid in the Internalization.
(f) In formulating, negotiating and recommending the Internalization, Defendants were assisted by William Blair who served as a “financial advisor” and rendered an “opinion” that $375 million for the Internalization was fair, from a financial point of view to the shareholders. This opinion, which was included in the Proxy, was inherently flawed, misleading, and masked Defendants’ breaches of fiduciary duty.In sum, those, among other, material facts were not disclosed in the Proxy, and Inland REIT’s officers, directors and affiliates, who have already received millions in unearned fees from Inland REIT, have now entered into an improper transaction that constitutes a waste of Inland REIT’s assets.
If you are entitled to vote on the Proxy by virtue of your ownership of Inland REIT stock, you may, no later than January 4, 2008 apply to the United States District Court, Northern District of Illinois, to be appointed as a Lead Plaintiff in this proposed class action. A Lead Plaintiff is a representative, chosen by the Court, who acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs Courts to assume that the class member(s) with the “largest financial interest” in the outcome of the case will best serve the class in this capacity. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Chimicles & Tikellis LLP, Labaton Sucharow LLP, Wolf Haldenstein Adler Freeman & Herz LLP, or other counsel of your choice, to serve as your counsel in this Action.
If you wish to discuss this Action or have any questions concerning this Notice or your rights or interests, please contact plaintiff’s counsel Nicholas E. Chimicles or Kimberly M. Donaldson toll free at 1-888-805-7848 or via email at ">. For more detailed information about the action and the firm, please visit http://www.chimicles.com
Nicholas E. Chimicles
Kimberly M. Donaldson
CHIMICLES & TIKELLIS LLP
361 West Lancaster Avenue
Haverford, PA 19041
Lawrence A. Sucharow
LABATON SUCHAROW LLP
New York, New York 10005 Telephone: 212- 907-0700
Lawrence P. Kolker
WOLF HALDENSTEIN ADLER
FREEMAN & HERZ LLP
270 Madison Avenue
New York, New York 10016
Telephone: (212) 545-4600
SOURCE Chimicles & Tikellis LLP
© 2007 PR Newswire. All Rights Reserved.