Mercury Supports Alesco - Sunset Merger
August 28 2006 - 10:45AM
PR Newswire (US)
GREENWICH, Conn., Aug. 28 /PRNewswire/ -- Mercury Real Estate
Advisors LLC, an affiliate of Mercury Partners LLC, a real estate
investment management company based in Greenwich, CT with offices
in Hong Kong and Singapore, sent the following letter today to
Sunset Financial Resources, Inc.'s (NYSE:SFO) Board of Directors as
well as Alesco Financial Trust's Board of Directors. MERCURY REAL
ESTATE ADVISORS LLC Three River Road Greenwich, Connecticut 06807
August 28, 2006 Alesco Financial Trust Board of Directors Cira
Centre 2929 Arch Street, 17th Floor Philadelphia, Pennsylvania
19104 Sunset Financial Resources, Inc. Board of Directors 10245
Centurion Parkway, 3rd Floor Jacksonville, Florida 32256 Dear
Boards: Mercury Real Estate Advisors LLC and its affiliates
("Mercury") is one of the largest shareholders of both Alesco
Financial Trust ("Alesco") and Sunset Financial Resources, Inc.
("Sunset") with ownership stakes of approximately 9.5% and 9.8% in
Alesco and Sunset, respectively. In light of the special meeting in
early October during which holders will vote on the suggested
transaction, we would like to express our unqualified support of
the proposed merger of the two companies and announce that we will
be voting in favor of the transaction for the following reasons:
(1) The merger of Alesco and Sunset will create a company that can
drive significant earnings momentum through its investment in
higher- yielding assets such as bank and insurance trust preferred
securities, middle-market leveraged loans and asset-backed
securities. In particular, the merged company will be able to
capitalize on the tremendous growth opportunities within the bank
and insurance trust preferred market given the attractiveness of
this financing option for potential issuers, which consists of over
4,500 small banks and thrifts as well as close to 500 insurance
companies. The rapid redeployment of Sunset's assets from the
highly competitive residential mortgage backed securities market
into the growing bank and insurance trust preferred market should
provide an uplift to the company's return on equity ("ROE") and
will further position the company as the leading investor with a
distinct competitive advantage in this nascent market segment. (2)
The hiring of Cohen Brothers Management LLC ("Cohen Brothers") as
the external manager will give stewardship of the new company's
assets to a proven manager with strong credit analysis resources, a
robust origination platform and seasoned executives with many years
of experience in the capital markets. Cohen Brothers is a market
leader in the origination and management of trust preferred
securities issued by banks, insurance companies and REITs with more
than $17 billion in assets under management. Investment vehicles
associated with the Cohen Brothers management team have also
provided outstanding returns for shareholders as evidenced by RAIT
Investment Trust's compound annual return since January 1998 of
over 20% and Taberna Realty Finance Trust's total return of more
than 50% since its initial 144A capital raise in April 2005. (3)
The merger will create significantly improved liquidity for both
Alesco and Sunset shareholders and will allow greater accessibility
to the capital markets, which is critical for future growth. With a
market capitalization of only $87 million, Sunset currently lacks
sufficient scale to be of interest to most institutional investors
and, as a result, suffers from poor liquidity. The merger, however,
will create a larger and well-capitalized company with an
aggressive growth strategy, a well-known and highly respected
manager and greatly improved share liquidity. In summary, we
believe shareholders of both companies will benefit from the
proposed merger as it will create a market-leading specialty
finance vehicle that will thrive under the leadership of Cohen
Brothers Management LLC. Sincerely yours, MERCURY REAL ESTATE
ADVISORS LLC David R. Jarvis Malcolm F. MacLean IV Chief Executive
Officer President DATASOURCE: Mercury Real Estate Advisors LLC
CONTACT: Malcolm F. MacLean IV, +1-203-769-2980 Web site:
http://www.mercuryrealestate.com/
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