"This internalization transaction is the result of a diligent and detailed process led by the Special Committee," said Howard McLure, Chair of the Special Committee. "We believe that the transaction has numerous positive benefits for the Company's stockholders, the most important of which are the substantial cash savings and alignment of management interests, as compared to the previous external management structure."
"The management team is very excited about this transition and the opportunity it provides us in our management of the Company," said Joel T. Murphy, the Company's Chief Executive Officer. "The entire PAC team remains deeply committed to our mission of growing stockholder value and believes this internalized format gives PAC an optimized platform to execute our business and financial objectives over the long term."
Potential benefits of the Internalization include:
Immediate Cost Savings; Economies of Scale with Growth – Estimated cash savings to the Company in 2020 of approximately $32 million. Fees related to management in an externally managed REIT structure scale directly with assets whereas an internally managed REIT structure allows for significantly lower incremental costs as the Company's assets grow.
Simplified Structure – The Internalization will simplify the Company's structure through the integration of all of its investment activity, corporate operations, and resources under a single, transparent corporate structure, and provide the Company with the ability to control key functions that are important to the growth of its business. Internalizing management will also mitigate perceived or actual existing conflicts of interest between the Company, on the one hand, and the Manager and the Sub-Manager, on the other hand, resulting from the previous external management structure.
Continuity– The Company's pre-Internalization management team and corporate staff remain employed by the Manager, which has become an indirect subsidiary of the Company, and will continue to lead the Company. This continuity in management will provide a seamless transition to future senior leadership.