Starwood ups offer for Monmouth Real Estate amid pushback on Zell deal

Barry Sternlicht’s investment firm refuses to concede bidding war for NJ-based REIT

Equity Founder Sam Zell and Starwood CEO Barry Sternlicht (Getty)
Equity Founder Sam Zell and Starwood CEO Barry Sternlicht (Getty)

Even in the face of rejection, Barry Sternlicht’s Starwood Capital is nothing if not persistent.

In the latest salvo in an ongoing bidding war over Monmouth Real Estate, Starwood again upped its yet-unsuccessful takeover offer for the Holmdel, New Jersey-based REIT on Wednesday, offering a net consideration of $19.20 per share in cash.

Starwood’s proposed takeover of Monmouth appeared to be a thing of the past. Despite the investment firm’s last-second bid for the company months ago, Monmouth affirmed in July that it would be sold to Sam Zell’s Equity Commonwealth in an all-stock deal that valued Monmouth at around $2.7 billion, revised from $3.4 billion.

Starwood made a bid that was ultimately revised to around $2.8 billion, but Monmouth believed in the upside that came with Equity’s offer.

When Monmouth confirmed its decision, Starwood said it would remain at the ready to make a deal. Now, it’s upped the ante.

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“The Monmouth Board … appears committed to the interests of Monmouth insiders rather than its fiduciary duty to maximize value for all Monmouth shareholders,” said Starwood managing director Ethan Bing in a statement urging Monmouth to reconsider Equity’s offer Wednesday.

Earlier this week, Equity increased its own offer to around $19 per share, coming out to around $3.4 billion in total. But the new offer received pushback from Monmouth investor Blackwells Capital, which itself submitted a takeover bid for Monmouth earlier this year.

“The best answer for shareholders is to reject the proposed transaction, reconstitute the board and have a new strategic alternatives process that will maximize value,” Blackwells said of Equity’s new offer earlier this week, according to the Commercial Observer.

With increased pushback from investors and a new offer on the table, Monmouth’s board may once again be faced with a difficult decision on who will acquire its 120 industrial properties.

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