Monmouth Shareholders Reject EQC Merger Following Competing Offer from Starwood REIT
Monmouth Real Estate Investment Corporation (NYSE: MNR), a publicly traded real estate investment trust, reported that its shareholders rejected the previously announced merger with Equity Commonwealth.
Monmouth Real Estate Investment Corporation (NYSE: MNR), a publicly traded real estate investment trust, reported that its shareholders rejected the previously announced merger with Equity Commonwealth (NYSE: EQC), based on a preliminary vote count at the company’s special meeting of stockholders.
Starwood Real Estate Income Trust, a non-traded REIT, recently submitted a competing cash offer to buy Monmouth for $19.20 per share after their original offer of $18.88 was rejected by the board.
Equity Commonwealth was offering to pay shareholders $19.00 in cash or 0.713 shares of Equity Commonwealth for each Monmouth share they own. The total consideration for the transaction was $3.4 billion, including the assumption of $857 million of mortgage debt, and the repayment of the $550 million of Monmouth’s 6.125% Series C Redeemable Preferred Stock, and Monmouth’s outstanding line of credit and term loan.
Although it is unclear at this time if Monmouth will pursue a transaction with Starwood REIT, Monmouth said in a statement yesterday that it “remains open to all available options to maximize long-term stockholder value and realize the full potential of the company’s high quality industrial portfolio.”
Glass, Lewis & Co. and Institutional Shareholder Services, two independent proxy advisory firms, both recommended that Monmouth shareholders reject the Equity Commonwealth merger. Glass Lewis said that it believes that Monmouth shareholders would be “better served” by pursuing Starwood REIT’s competing offer.
“Maximizing value is our top priority at Monmouth, and stockholders’ views play an important role in how we run our business and execute our strategy,” said Michael Landy, president and chief executive officer of Monmouth. “While we recognize that stockholders have a wide range of views and differing time-horizons and tax considerations, we are disappointed in the outcome of [yesterday’s] vote. We continue to believe in the merits of a transaction that offers Monmouth stockholders the opportunity to continue to participate in the growth of the industrial real estate sector.”
Monmouth shares closed at $18.98 on Tuesday, an increase of $0.15 (0.80 percent) from the previous close.
Monmouth was founded in 1968 and owns a portfolio of 122 industrial properties totaling 24.9 million rentable square feet across 32 states. The occupancy rate is 99.7 percent.
Starwood REIT, which invests in stabilized real estate across the United States and Europe, raised $3.9 billion in its initial public offering from December 2017 to June 2021. Its $10 billion follow-on offering was declared effective in early June 2021 and raised $1.1 billion, as of mid-August 2021. As of July 31, 2021, the REIT’s aggregate NAV was $4.7 billion. Starwood REIT’s real estate investments totaled $8.1 billion as of July 2021, and its real estate debt investments totaled $983 million.
