After fee fight, latest Schorsch REIT merger OK’d

investmentnews.com:

After a dispute about fees between a leading corporate governance watchdog and REIT management, the merger of two real estate investment trusts controlled by Nicholas Schorsch’s AR Global appears to have been approved Friday, resulting in a $375 million “internalization” fee to AR Global.

The two AR Global REITs that are merging are Global Net Lease Inc. and Necessity Retail REIT Inc. The former said on Friday that preliminary results from a special meeting of stockholders indicated that two proposals key to the merger had passed.

AR Global is a privately held real estate company that manages 1,489 properties representing 69 million square feet of real estate. The former nontraded REIT czar Schorsch is the majority owner of AR Global, which a decade ago was the leading seller of nontraded REITs through dozens of independent broker-dealers. At the time, such REITs were criticized for high fees and commission and opaque management structures.

In REIT parlance, an internalization fee is commonly applied once a nontraded REIT takes over its own management and begins trading on an exchange.

The merger of Global Net Lease (GNL) and Necessity Retail REIT (RTL) was announced in May. Last Friday, Institutional Shareholder Services issued a report saying shareholders should vote against the merger as it was against the interest of Global Net Lease investors because the fee going to the manager, AR Global, was too high.

“Some shareholders may accept the transaction’s high price tag as a convenient means of owning a larger company with an internalized manager and improved governance,” according to ISS. “However, the deal structure as currently constituted appears to disproportionately favor all other parties involved, at the