FOR INTERNAL USE ONLY
PaineWebber
Properties Incorporated
265 Franklin Street - 16th Floor
Boston, MA 02110
(617) 439-8118
PaineWebber
TO: Branch Managers and Investment Executives
FROM: PaineWebber Properties
DATE: August 22, 1996
RE: Retail Property Investors, Inc. ("RPI" or the "Company")
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As announced on May 21, 1996, Retail Property Investors, Inc. has entered into a
contract to sell substantially all of its real estate assets (the 22 shopping
centers) to Glimcher Realty Trust for an aggregate purchase price of
$197,000,000. The following questions and answers are intended to assist you.
PaineWebber Investment Executives may solicit proxies from the Shareholders.
Please refer to the enclosed sample proxy materials for details concerning the
proposed transaction (the "Transaction".)
1. Q When are proxy materials being mailed to clients?
A Proxy materials will be mailed Friday, August 23, 1996 to Shareholders of
record on August 21, 1996. Shareholders holding 2,000 or more shares will
receive proxy materials by FedEx for delivery Monday, August 26.
2. Q What are the proposals contained in the proxy statement?
A Shareholders will be asked to consider and to vote to approve and adopt the
Transaction, consisting of the sale of RPI's portfolio of 22 retail shopping
centers to Glimcher Realty Trust for an aggregate purchase price of
$197,000,000, and the complete and voluntary liquidation and dissolution of
the Company, in accordance with the terms of the Plan of Liquidation and
Dissolution of the Company (the "Plan".) Shareholders will also be asked to
extend their approval of proxies to vote upon other matters which may come
before the Special Meeting of Shareholders.
3. Q Assuming Shareholder approval of the Transaction, how much would
RPI distribute to its Shareholders?
A RPI's Board of Directors anticipates the Company will liquidate any
remaining assets and will distribute to its Shareholders an estimated amount
of $42,585,000 in the aggregate or approximately $8.50 per share. Such a
distribution to Shareholders represents the distribution of the net proceeds
of the sale of the Company's assets to Glimcher (the "Sale") and of any
disposition of any remaining assets of the Company plus accumulated cash
reserves, together with any interest thereon. It should be noted, however,
that these are estimates and represent the estimated liquidating
distributions as of the date of the proxy materials and that, pending
completion of the Transaction, such values could change.
4. Q How much have Shareholders received in distributions over the life of
the investment?
A Earliest Shareholders have received a total of $6.56 per share in
distributions.
5. Q Assuming Shareholder approval of the Transaction, when would RPI
distribute proceeds from the Transaction?
A RPI's Board of Directors anticipates that by December 31, 1996 the Company
will liquidate any remaining assets, pay or provide for the payment of all
remaining liabilities and distribute net proceeds of the Sale and of any
disposition of any remaining assets of the Company plus accumulated cash
reserves, together with any interest thereon, to the Shareholders.
6. Q What will happen in the event it is not possible or practical for the
Company to complete final liquidating distributions of cash to the
Shareholders by December 31, 1996?
A In the event it is not possible or practical for the Company to complete
final liquidating distributions of cash to the Shareholders by December 31,
1996, the Shareholders will also receive beneficial interests in a
liquidating trust, established to liquidate remaining assets and satisfy or
provide for remaining claims, in proportion to their respective holdings of
the outstanding shares of common stock of the Company.
7. Q When would RPI formally liquidate?
A The Board anticipates that RPI will liquidate after final distributions
have been made. Providing the Transaction goes forward as planned, RPI could
liquidate by December 31, 1996. In the event a liquidating trust is created,
the Board of Directors anticipates making, by December 31, 1996, (i) a
partial distribution of cash to the Shareholders representing a substantial
portion of the total anticipated distributions and (ii) a distribution of
beneficial interests in the liquidating trust representing the remainder of
the net assets of the Company. By its terms, the liquidating trust will
expire no later than the third anniversary of its creation.
8. Q What course of action should I recommend to clients?
A The Board believes that the Transaction is fair to and in the best interest
of the Company and its Shareholders. The Board has unanimously approved the
Transaction and unanimously recommends that the Shareholders vote FOR the
Transaction.
9. Q Why should clients vote "For" the proposed transaction?
A The primary factors that the Board considered in reaching its decision for
this proposed transaction can be found listed in brief in the Summary section
of the proxy statement and include:
o the Board's belief that ownership of the existing portfolio represented a
continued risk to Shareholders, given the historical financial
performance, condition and business operations of the Company.
o the Board's belief that the possible Wal-Mart relocations resulting from
strategic changes in Wal-Mart's corporate growth plans threatened the
future ability of the Company to be profitable.
o the refinancing risk to which the Company has been and would remain
subject in the event that it continued to hold its properties for
long-term investment purposes.
o the information relating to current industry, economic and market
conditions in general, the challenging condition of the retail market, in
general, and the Company's credit exposure to its retailing tenants, in
particular.
o the Board's belief that there appeared to be no feasible alternatives
available to the Company that were as likely in the near-term to provide
significant market value appreciation.
o the Board's belief, based in part on the formal bidding process and
analyses conducted by Lehman Brothers Inc., the Company's financial
advisor, that the Sale to Glimcher was the best offer reasonably available
for the Shareholders.
o the likelihood that the undiversified portfolio of the Company would
command a higher aggregate price if sold in bulk rather than on an
individual basis.
o the terms of the Plan, the Sale Agreement and the structure of the Sale,
including its fixed price and the closing of the Sale into escrow.
o the opinion of Lehman Brothers, Inc. to the effect that the
consideration to be received by the Company in the Sale was fair to
the Company from a financial point of view.
10. Q What potentially negative factors surrounding the Transaction
were considered by the Board?
A The Board considered several potentially negative factors in its
deliberation concerning the approval of the Transaction which are more
fully described in the proxy statement and include:
o the reduction in the initial purchase price from $203,000,000 to
$197,000,000;
o the conditions to Glimcher's obligations to close;
o the use of letters of credit for the initial deposit and escrowed portion
of the purchase price;
o restrictions under the Sale Agreement on solicitation of other proposals;
o the possibility the Company might be required to pay Glimcher a
termination fee of $4,000,000 in certain circumstances;
o the risk that the anticipated benefits of the Sale to the Shareholders may
not be realized as a result of the uncertainty of the amount and timing of
actual final liquidating distributions;
o the possibility the Company may seek to reduce its reporting obligations;
and
o the potential liability of Shareholders to return distributions made to
them under certain circumstances in the event that the Company would be
insolvent after any such distribution.
The Board concluded that these negative factors were not sufficient to outweigh
the positive factors considered by the Board and listed in part above.
11. Q What reasons may prevent the proposed transaction from occurring?
A Approval of the Transaction requires a two-thirds affirmative vote of all
outstanding shares. Both the Company and Glimcher have a right to terminate
the Sale Agreement if no vote of RPI Shareholders has occurred on or before
October 31, 1996, or if any United States or federal or state court or any
other governmental entity issues a final and non-appealable order, decree or
ruling or takes any other final and non-appealable action restraining or
prohibiting consummation of the Transaction. The Sale Agreement may also
terminate by mutual agreement or in the event of bankruptcy, receivership or
other similar event of the Company or of Glimcher.
12. Q Assuming the Transaction is not approved by Shareholders, or does
not close for other reasons, what strategy will RPI take next?
A In the event that the Transaction is not consummated for any reason, the
Company intends to continue to pursue its business objectives of maximizing
shareholder value. In addition, the Company may seek another strategic
combination or a sale, in one transaction or a series of transactions, of
substantially all of its assets; however, the Board believes there are no
feasible alternatives to the Sale available to the Company at the present
time that are likely to result in greater shareholder value.
13. Q Is it anticipated that a quarterly dividend will be reinstated in
the near future?
A No. If the transaction is not approved by more than two-thirds of all
outstanding shares, the Board does not anticipate that the Company will be
able to reinstate the regularly payment of quarterly dividends in the
foreseeable future.
14. Q When will the PaineWebber Secondary Sales Desk re-open for
RPI secondary market trading?
A Trading will resume Tuesday, September 3, 1996, to allow for the
dissemination of proxy materials to Shareholders.
15. Q How will the final distribution and liquidation of RPI be affected by
the PaineWebber Direct Investments Class Action suit?
A The final distribution and liquidation of RPI, including the amount and
timing of liquidating distributions to Shareholders, will not be affected by
the PaineWebber Direct Investments Class Action suit. The Company is not a
defendant in the Class Action. PaineWebber has waived any right it may have
to indemnification by the Company in connection with the Class Action and any
other action or class action that has been asserted by or on behalf of
purchasers of securities offered by the Company relating to conduct prior to
April 1, 1996. As a result, the Company will not be making any cash payments
or other contributions to fund the settlement of the Class Action.
16.Q Assuming an affirmative vote and liquidation by the end of calendar year
1996, will Shareholders be able to take a loss on their 1996 tax returns or
will they need to report any gains?
A The Company believes that liquidating distributions to Shareholders
pursuant to the Plan will be treated as distributions in complete liquidation
of the Company; that is, they will not be treated as dividends, but rather as
if each Shareholder had sold his or her shares of Common Stock. Gain or loss
recognized by a Shareholder will be capital gain or loss, provided the shares
of Common Stock are held by the Shareholder as capital assets. Any losses may
be recognized by a Shareholder only after the Company has made its final
liquidating distribution or after the last substantial liquidating
distribution is determinable with reasonable certainty. However, it is
possible that pending litigation, to which the Company is not a party but
with respect to which the Shareholders are potential beneficiaries, may delay
the recognition of any losses. The Company estimates that Shareholders will
recognize a loss with respect to their shares of Common Stock, exclusive of
any recovery through the pending litigation, in the range of $5.89 to $6.73
per share.
17. Q Where can I refer clients who have further questions?
A Questions concerning the proposed Transaction should be directed to
PaineWebber Properties at (800) 225-1174. In addition, D. F. King & Co., Inc.
is assisting the Company in obtaining the Shareholder vote. If your clients
need assistance in voting their shares, they may also contact D. F. King at
(800) 290-6431.
18. Q Where can I call with questions about RPI and this proposed
Transaction?
A Meg Fitts of PaineWebber Properties has scheduled two broker conference
calls for Wednesday, September 4:
o The first call will be at 10:00 am Eastern time. The tie number is (719)
448-2018, confirmation 268604.
o The second call will be at 4:15 pm Eastern time. The tie number is (719)
448-2018, confirmation 268610.
Additional questions may be addressed to PaineWebber Properties at (800)
225-1174.
