Shareholder advisers endorse $6 billion Reckson deal

Long Island Business News, Nov 17, 2006 by Dawn Wotapka Hardesty

It's a trifecta for Reckson: Three heavy-hitting shareholder advisery groups have given the thumbs-up to Reckson's sale to SL Green Realty Corp.

Institutional Shareholders Services, a venerable independent corporate watchdog, recommended that shareholders endorse the deal when they meet Nov. 22, as have Proxy Governance Inc. and Glass, Lewis & Co.

"This unanimous opinion is further confirmation that a combination with SL Green is in the best interest of our shareholders," said Scott Rechler, chief executive of Reckson Associates Realty Corp., which controls 101 properties totaling about 20.2 million square feet.

The endorsements are a boost for both Reckson and SL Green, whose leaders have been furiously meeting with investors to rally support for the $6 billion merger that also includes Reckson partnering with other investors to buy back suburban assets for $2.1 billion. If the deal closes early next year, as planned, SL Green will continue as a public company, while the scaled-down Reckson will be private.

The resale has sparked several shareholder lawsuits from investors who complain the suburban portfolio could have been more valuable if sold on the open market. One major investor, Arnhold and S. Bleichroeder Advisers LLC, which purchased a 1 percent share after the merger announcement this summer, said it does not support the deal.

In a public letter released earlier this month, two Reckson board members fired back that "these assets are not ours to remarket."

ISS has now entered the fray, pointing out that "the company's financial advisors have indicated that selling the company piecemeal would have resulted in higher [taxes]," eroding shareholder returns.

Proxy Governance agreed. "No broader shopping of the deal for the suburban assets is permissible within the constraints of the merger agreement with SL Green," it noted in its report. "We believe that the overall process to sell the company was thorough and fair."

Both Reckson, the Island's biggest Class A landlord, and SL Green, the industry's best performing office REIT in the last three years, are touting the endorsements, reminding shareholders to vote.

In a public letter Tuesday, Reckson said "we firmly believe that this transaction creates superior value for Reckson shareholders - and urge you to support it."

The letter almost resembled a campaign document, urging shareholders to "join us in voting in favor of the merger."

SL Green, meanwhile, penned its own letter. The brief statement, only three paragraphs long, promises to deliver once the deal is completed. "We will work hard on their behalf to achieve superior results," wrote Marc Holliday, SL Green's president and chief executive.