Sbaiti and Steckler help REIT Investors Protect Their Investment

On January 29, 2014, Mazin Sbaiti and his firm, Steckler LLP, petitioned the Dallas County Court of Law No. 5 for an order finally approving a derivative action on behalf of the shareholders of PMC Commercial Trust (NYSE: PCC). In July 2013, PMC’s management had approved a reverse merger with California-based private real estate investment trust CIM Urban LLC, a subsidiary of CIM Group, a $13 billion REIT. The Merger would offer PMC’s current shareholders $5.50 in cash and leave them with a highly diluted “stub” share of the merged entity. PMC’s two largest shareholders, REIT Redux and Hoak & Co.–which combined owned almost 13% of PMC’s outstanding shares–rejected the merger as it substantially undervalued PMC, and hired Sbaiti to block it if PMC and CIM could not better guarantee shareholder value.

The parties ultimately reached agreement regarding the Merger, with CIM group effectively guaranteeing that post-merger shares would either trade or could be bought out at $5 per share, bringing the total compensation to closer to $10.50 per share.

The case was Reit REDUX L.P. et al. v. PMC Commercial Trust et al., Case no. CC-13-05823-E, Dallas County Court of Law. No. 5.  The Plaintiffs were represented by Mazin Sbaiti and Bruce Steckler of Steckler LLP; PMC Commercial Trust and the Board were represented by Karl Dial of Fulbright & Jaworski, and CIM Group was represented by Bob Sacks of Sullivan & Cromwell and Dick Sayles of Sayles & Werbner.