Press Release Regarding Tax Indemnification Claim Between Atlantic Realty Trust and Ramco-Gershenson Properties Trust

Summary

Atlantic Realty Trust announced that it received notice from Ramco-Gershenson Properties Trust about a potential tax issue raised by the IRS for the years 1996 and 1997, which could affect both parties' status as real estate investment trusts (REITs). Ramco may seek indemnification from Atlantic Realty Trust under a 1996 tax agreement, but Atlantic Realty Trust's counsel believes there is no obligation to pay or indemnify Ramco for any tax, interest, or penalty related to the IRS claim. The outcome is uncertain, but no material liability is expected for Atlantic Realty Trust.

EX-1.1 2 e341117v2.txt PRESS RELEASE EXHIBIT 1.1 ATLANTIC REALTY TRUST 747 THIRD AVENUE NEW YORK, NEW YORK 10017 FOR IMMEDIATE RELEASE ATLANTIC REALTY TRUST ANNOUNCES TAX INDEMNIFICATION CLAIM NEW YORK, NY, MAY 11, 2005 - ATLANTIC REALTY TRUST, A REAL ESTATE INVESTMENT TRUST (THE "TRUST"), WHICH IS INCLUDED FOR QUOTATION ON THE NASDAQ SMALL CAP MARKET (ATLRS), TODAY ANNOUNCED THAT ON APRIL 22, 2005, THE TRUST RECEIVED A LETTER FROM RAMCO-GERSHENSON PROPERTIES TRUST (FORMERLY KNOWN AS RPS REALTY TRUST, "RAMCO") STATING THAT RAMCO HAD RECEIVED A 30-DAY LETTER (THE "30-DAY LETTER") FROM THE INTERNAL REVENUE SERVICE (THE "IRS") COVERING THE YEARS 1996 AND 1997. THE 30-DAY LETTER TAKES THE POSITION THAT RAMCO SHOULD BE DISQUALIFIED AS A REAL ESTATE INVESTMENT TRUST ("REIT") FOR 1996 AND 1997 AND DISALLOWS CERTAIN CLAIMED DEDUCTIONS OF RAMCO. BECAUSE THE TRUST IS A SUCCESSOR TO RAMCO FOR REIT TAX QUALIFICATION PURPOSES, THERE IS A RISK THAT IF THE IRS' POSITION IS SUSTAINED, THE TRUST'S STATUS AS A REIT COULD BE JEOPARDIZED. THE FACTS PRESENTED RAISE COMPLEX ISSUES, MANY OF WHICH ARE ISSUES OF FIRST IMPRESSION AND THEREFORE THE OUTCOME CANNOT BE PREDICTED WITH CERTAINTY. WHILE THERE CAN BE NO ASSURANCE, OUTSIDE TAX COUNSEL HAS ADVISED THE TRUST THAT, BASED ON THE FACTS KNOWN TO DATE, THE IRS POSITION ON RAMCO'S REIT STATUS IS INCORRECT AND MOREOVER, THE POSSIBLE DISQUALIFICATION OF RAMCO AS A REIT SHOULD NOT RESULT IN ANY MATERIAL TAX LIABILITY FOR THE TRUST. THE LETTER FROM RAMCO ALSO STATED THAT RAMCO MIGHT SEEK INDEMNIFICATION FROM THE TRUST WITH REGARD TO THE 1996 YEAR PURSUANT TO THE TAX AGREEMENT DATED AS OF MAY 10, 1996 BY AND BETWEEN RAMCO AND THE TRUST. WHILE THERE CAN BE NO ASSURANCE, COUNSEL ADVISES THAT THE TRUST DOES NOT HAVE ANY OBLIGATION TO MAKE ANY PAYMENT TO OR INDEMNIFY RAMCO IN ANY MANNER FOR ANY TAX, INTEREST OR PENALTY SET FORTH IN THE 30-DAY LETTER. FOR FURTHER INFORMATION CONTACT EDWIN R. FRANKEL AT ###-###-####. EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, CERTAIN STATEMENTS SET FORTH HEREIN CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WORDS SUCH AS "EXPECTS," "ANTICIPATES," "INTENDS," "PLANS," "BELIEVES," "ESTIMATES," AND VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS THAT INDICATE FUTURE EVENTS AND TRENDS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, WHICH INVOLVE CERTAIN RISKS AND UNCERTAINTIES INCLUDING, WITHOUT LIMITATION, STATEMENTS RELATING TO THE ABOVE REFERENCED INCOME INDEMNIFICATION CLAIM FOR 1996. ALTHOUGH THE MANAGEMENT OF ATLANTIC REALTY TRUST BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, THE ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS.