Crestline Capital Corporation Makes Split Decisions
By Kori Riley

Crestline Capital Corp (NYSE:CLJ) has provided a cost-effective and convenient way to expand the Company's repurchase program. They announced on May 18th that the Company would be doing a reverse and a forward stock split as approved by the majority of the shareholders.

Why would a Company do both? The reasoning is actually very ingenious.

Crestline currently has over 25,000 individual shareholders and some 22,000 of them own less than one round lot, or 100 shares. Their goal is to sharply reduce that number, in order to cut administrative costs for the company as well as transaction fees for shareholders who want to cash in those odd-lot shares.

As permitted by Maryland State law, shareholders with less than one share of common stock can receive cash payments equal to fair market value of the fractional interests held. By doing a reverse split of 1-for-100, the Company will have approximately 22,000 shareholders that will own less than one share. This is a very convenient way for the Company to cash out shareholders that currently own less than 100 shares. Those shareholders will not incur any brokerage or service fees from these transactions.

After the shareholders of record on June 23,2000 are compensated for their fractional shares, Crestline will do a forward split of 100-for-1 to adjust their stock back to its current properties without affecting the value of the stock.

Shareholders currently holding more than 100 shares or who purchase more shares before the record date, making their total more than 100 shares, will not be affected by these dealings. If Shareholders hold shares through a nominee (such as a bank, broker or other nominee) they will not be affected either.

Crestline was created as a spin-off from Host Marriott Corporation in late 1998, when Host Marriott converted to a Real Estate Investment Trust. The Company manages hotels, resorts and convention centers, as well as senior living properties. As a result of the spin-off, thousands of shareholders received a small number of shares in the original distribution of one share of Crestline for every ten shares of Host Marriott. The group of 22,000 shareholders represent only 2 percent of the total number of outstanding shares of Crestline.

The Company is doing the reverse and forward splits to maximize shareholder value and capitalize on the stock's under-valuation. They expect to save $280,000 annually in administration costs from this move.

Currently, the stock is trading at $16.88 and has held near that level for approximately two months. Yesterday's announcement is an extension of the Company's plan to increase stock price through an ongoing share buyback program. As of May 3rd, the Company announced that they had repurchased approximately 25% of the initial shares issued and they plan to repurchase 3 million more. Approximately 17 million shares of Crestline are currently outstanding.