Starwood Capital Ups Its Bid Against Sam Zell for Monmouth Real Estate

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Barry Sternlicht’s Starwood Capital Group confirmed it was behind the unsolicited takeover bid for industrial real estate investment trust Monmouth Real Estate Investment Corporation and increased its proposal, hoping to derail the REIT’s earlier plans to be acquired by Sam Zell’s Equity Commonwealth.

Starwood upped its all-cash offer for Monmouth from $18.70 per share to $18.88, with Monmouth still needed on the hook for a $62.2 million breakup fee to Zell, Starwood announced on Wednesday morning.

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“Starwood Capital urges the Monmouth board of directors to immediately declare Starwood Capital’s proposal a superior proposal under the terms of its existing merger agreement with [Equity] and to act without delay to finalize a transaction with Starwood Capital,” Starwood said in a press release. “Starwood Capital has provided Monmouth with a merger agreement that Starwood Capital is ready to sign immediately.”

A spokesperson for Equity did not immediately respond to a request for comment. A spokesperson for Monmouth pointed to a press release from when Starwood first made its takeover bid that said it was “evaluating” the proposal and “has not made any determination as to what action to take.”

The New Jersey-based Monmouth’s portfolio consists of 24.5 million square feet spread across 120 properties in 31 states and will give whichever company takes it over a large foothold in the industrial market, which has been red-hot during the coronavirus pandemic, thanks to a boom in online shopping.

In May, Equity Commonwealth announced that it agreed to buy a 65 percent stake in the industrial REIT in an all-stock deal valued at about $3.4 billion that was set to close in the second half of this year.

That deal called for Monmouth investors to get .67 shares of Equity stock for each Monmouth share they own, which is currently trading at around $19 a share.

However, Sternlicht threw a wrench in Zell’s plans and submitted his own bid earlier this month for an all-cash complete takeover of Monmouth, which was welcome news to some Monmouth shareholders who previously called Zell’s offer “wholly inadequate,” Bloomberg reported.

Update: This story has been updated to clarify Starwood’s new bid.

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.