DALLAS, May 31, 2000 (PRIMEZONE) -- American Realty Trust, Inc. (NYSE:ARB) Wednesday announced its board of directors recently approved a consulting and marketing agreement proposed by the Paul Bagley-led Stone Pine Companies and Matisse Partners, LLC, whereby they will assist in the management of the company and in arranging financing and equity transactions. Included in the agreement are the purchase of 714,000 shares of newly issued ART common stock (approximately 6.3 percent of ART's outstanding shares after the issuance) at $16.0625 per share (based on the April 13, 2000, closing price) and the right to designate three new directors to sit on the ART board. Bagley is chairman of the board and chief executive officer of ART.
Under the agreement, Matisse is paid a monthly retainer for 12 months, as well as additional fees for providing strategic planning, marketing and similar services in the financing of real estate, stock and assets. The consulting contract is automatically renewed for 12 months upon Matisse meeting certain performance guidelines stated in the agreement. The guidelines include successful funding of $100 million of new capital from investors in equity transactions and the refinancing of one-half of the outstanding loans on ART's land holdings.
Matisse's 714,000 ART shares will represent a 5 percent stake in American Realty Investors, Inc. ARI is the new holding company that will be formed upon the combination of ART and National Realty, L.P. (AMEX:NLP), expected to close by the end of the second quarter.
Matisse intends to designate the three new ART directors by June 30, 2000. After the combination, the ARI board will consist of the combined boards of ART and NRLP Management Corp., the general partner of National Realty. NRLP Management is a wholly owned subsidiary of ART.
The Matisse agreement also requires ART to use its best efforts to purchase from its advisor, Basic Capital Management, Inc. and its affiliates, management agreements, brokerage agreements and advisory contracts, among other assets.
"We welcome Paul Bagley and Matisse Partners to the ART team. As our financial consultants and as members of the ART board, they will provide a wider avenue to new capital markets, bring possible joint venture partners for our long-term projects and assist management in meeting our aggressive growth targets in a responsible manner," said Karl L. Blaha, president and board member of ART.
"My firsthand meetings at American Realty have reinforced my belief that the experience of this company's management aided by Matisse's capital sources give ART outstanding opportunities for success," said Paul Bagley, ART chairman and chief executive.
Paul Bagley's appointment as chairman and chief executive of ART was effective April 28, 2000. Bagley has had a 30-year investment banking career with E.F. Hutton Inc. and its successor, Shearson Lehman Hutton. He is a founding partner of The Stone Pine Companies, a private investment banking partnership with operations in New York and Denver, and serves as the chairman of FCM Fiduciary Capital Management Co., the advisor to a mezzanine and private equity fund. He also is on the board of Hamilton Lane Investment Advisors, the advisor to a major group of pension funds. Bagley's appointment created a chairmanship on ART's board, as well as a chief executive position with the company.
As previously announced in March, ART shareholders approved the reorganization and merger with National Realty, L.P. to combine, tax-free, the two real estate entities through the creation of a holding company structure named American Realty Investors, Inc. ARI will trade on the New York Stock Exchange under the ticker symbol "ARL" with trading to commence upon the closing.
Dallas-based American Realty Trust, Inc. owns a diverse portfolio of properties located across the United States, as well as interests in mortgage loans and stock holdings in real estate related entities. For more information on the company, go to the Investor Data page of its web site at www.amrealtytrust.com .