Starwood Loses Monmouth Bid in ‘Highly Disappointing’ Loss to Sam Zell

reprints


Sam Zell 1, Barry Sternlicht 0. 

After making an unsolicited offer for industrial giant Monmouth Real Estate Investment Corporation, Starwood Capital Group has come up empty-handed and full of feedback. 

SEE ALSO: Sunday Summary: Office Is Back — You Can Google It!

Starwood, spearheaded by CEO Sternlicht, offered an all-cash deal of $18.70 per Monmouth share in exchange for 100 percent of the company’s outstanding equity earlier this month. Later, Starwood amended its proposal, upping the ante to offer $18.88 per share — an offer contingent upon Monmouth terminating its already existing merger with Zell’s Equity Commonwealth (EQC). 

After deliberating with financial and legal advisors and assessing the implications of a Starwood buyout, the Monmouth board ultimately decided to keep the original agreement with EQC. 

“We ran an exhaustive strategic alternatives process, and carefully considered Starwood Capital’s all-cash proposal, among a number of other strategic alternatives,” Brian Haimm, lead independent director of real estate investment trust Monmouth, said in a statement. “Ultimately, the Board unanimously concluded — and has now unanimously reaffirmed — that the EQC transaction is the best path forward for Monmouth stockholders.” 

In May, Zell’s EQC announced a $3.4 billion all-stock deal to acquire the New Jersey-based Monmouth, giving Zell a large foothold in the red-hot industrial market. Monmouth’s portfolio consists of 24.5 million square feet spread across 120 properties in 31 states.

Access to EQC’s financial resources, opportunities for long-term growth and the expertise of leaders Zell and CEO David Helfand contributed to Monmouth’s decision to follow through on its May agreement with EQC.

Still, Monmouth’s decision to stay put was met with backlash, which was as unsolicited as Starwood’s original proposal. 

“This latest decision of the Monmouth board to recommend the EQC stock offer is highly disappointing and we firmly believe it is not in the best interests of all of Monmouth’s shareholders,” Starwood said in a press release. The statement reiterated that the Starwood proposal offered an excess of $100 million in value compared to the implied results of the EQC transaction.  

“We stand ready to execute our fully financed, fully actionable all-cash offer,” the statement said.

Anna Staropoli can be reached at astaropoli@commercialobserver.com.