Plan C: Monmouth finds buyer after Zell, Sternlicht offers fall through

Industrial Properties Trust plans to offer $4B in all-cash deal

National /
Nov.November 08, 2021 02:15 PM
Monmouth Real Estate's Mike Landy and Industrial Logistics Properties Trust's John Murray (ACRE, Industrial Logistics Properties Trust)

Monmouth Real Estate’s Mike Landy and Industrial Logistics Properties Trust’s John Murray (ACRE, Industrial Logistics Properties Trust)

Monmouth Real Estate, the family-run firm whose 120 warehouses sparked a bruising bidding war between swashbuckling investors Sam Zell and Barry Sterlicht, opted for Plan C.

Monmouth, based in Holmdel, New Jersey, said after the market closed on Thursday that it’s being sold for $4 billion to Industrial Logistics Properties Trust, a Newton, Massachusetts company whose 294 properties cover 36.5 million leasable square feet. The all-cash deal works out to $21 a share, 11.5 percent above Thursday’s closing price.

While the offer has already been approved by Monmouth’s board, it still needs the approval of shareholders, a sticking point in previous failed sale attempts. Still, it does have the support of Monmouth’s most vocal investor, Blackwells Capital, which holds about 4 percent of the stock and led a proxy fight against Zell’s Equity Commonwealth.

“We believe Monmouth has made the right decision for all shareholders, and as such, we are today standing down from the proxy contest,” said Jason Aintabi, chief investment officer at Blackwells Capital, which will scrap its proposed slate of board nominees.

The acquisition would end a roller-coaster year for Monmouth, whose headquarters is about an hour outside New York.

In December, Blackwells Capital identified Monmouth as an underperforming REIT that was saddled with expensive debt and corporate governance concerns and made an all-cash offer of $16.75 per share. About two weeks later, Blackwells raised its offer to $18. Monmouth rejected both offers. The New York investment firm also said it wanted to replace four new board members tied to the Landy family, whose patriarch, Eugene, founded the company in 1968.

Then Zell came into the picture, betting that shareholders would prefer a mostly stock offer. In April, his firm offered $3.4 billion in stock and cash, or $19.40 a share. Sternlicht’s Starwood Capital followed up with an all-cash deal of up to $19.20 per share. Monmouth said no to that one as well.

The deal is expected to close in the first half of 2022. To finance the acquisition Industrial Logistics Property Trust said it would enter a joint venture with one or more institutional investors for equity investments between $430 million and $1.3 billion. The company doesn’t plan to sell shares in connection to the acquisition.





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