Monmouth Real Estate board again affirms Equity merger

Starwood has made repeated unsolicited bids for New Jersey-based REIT

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

The drama over the future of Monmouth Real Estate continues, with the company’s board of directors once again affirming its choice for a merger with Sam Zell’s Equity Commonwealth.

The company announced the board’s unanimous support for the EQC bid in a press release on Monday, saying that the board consulted with financial and legal advisors before agreeing that Equity’s bid trumped that of Barry Sterlincht’s Starwood.

A primary reason cited for the board’s siding with EQC is the $19-per-share payout to Monmouth stockholders if the merger goes through. Starwood’s proposal, however, involved a net cash payout of $19.20 per share after adjusting for the termination fee of leaving the EQC agreement.

Other reasons cited by the Monmouth board included long-term upside, the track record of EQC executives like Zell and CEO David Helfand and access to EQC’s financial resources, including $2.5 billion in pro forma cash.

“We are confident that the EQC transaction will deliver greater long-term value, as well as optionality to address the preferences of our diverse shareholder base,” Brian Haimm, lead independent director of Monmouth, said in the release.

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Starwood responded to Monmouth’s decision on Tuesday, expressing disappointment and vowing to remain ready to pounce should a merger with EQC fail to pass a vote.

“Starwood stands ready to work with the Monmouth Board, sign the already-negotiated merger agreement it provided to Monmouth and proceed quickly to finalize our proposed transaction,” Starwood said in its release.

Last week, Starwood upped its takeover offer for the Holmdel, New Jersey-based REIT. Monmouth previously affirmed in July that it would be sold to EQC after a previous offer from Starwood was made unsolicited.

When Equity upped its own bid prior to Starwood’s previous salvo, Monmouth investor Blackwells Capital provided pushback to EQC’s acquisition. In total, 120 industrial properties are on the table in a successful acquisition.

A vote by Monmouth shareholders is scheduled for August 31.

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