Starwood

Starwood Increases Offer to Acquire Monmouth Real Estate Investment

Starwood Real Estate Income Trust, Inc, an affiliate of Starwood Capital Group, a leading global private investment firm focused on real estate and energy investments, today submitted an enhanced all-cash, fully financed, fully actionable proposal to acquire Monmouth Real Estate Investment Corporation for $19.93 per Monmouth share reduced by the termination fee owed to Equity Commonwealth of $72 million or $0.73 per share.

Starwood’s enhanced proposal would provide net consideration of $19.20 per share to Monmouth shareholders after payment of the EQC termination fee, which was increased by $10 million by the Monmouth Board on August 16, 2021. Starwood’s proposal offers Monmouth shareholders a premium to EQC’s revised offer with 100% cash-certain value (versus EQC’s offer, where approximately 35% of the aggregate consideration would be paid out in cash1), and does not subject Monmouth shareholders to the uncertain and unsubstantiated future value creation from the EQC transaction, which is already worth less to shareholders given the decline in EQC shares since its revised proposal was announced.

Ethan Bing, Managing Director of Starwood, said, “Our increased all-cash offer is superior to EQC’s revised proposal given the higher certain value that is not exposed to market risk or dependent upon unproven execution. The EQC offer requires Monmouth shareholders to forego the certainty of our higher cash offer in exchange for speculative value creation from a merged entity with no synergies and no obvious competitive advantages in the highly competitive industrial sector where EQC has not actively participated.”

“In consideration of [EQC]’s limited presence in industrial real estate, and the noticeable gap between EQC’s recent industrial acquisition history and the billions of dollars of acquisitions that are planned for the combined company, there remains substantial uncertainty that the combined company will be able to execute on the post-transaction opportunities touted by MNR’s board.”

Bing added, “The Monmouth Board, whose initial process was led by a strategic alternatives committee that ISS rightly criticized as ‘not fully independent,’ appears committed to the interests of Monmouth insiders rather than its fiduciary duty to maximize value for all Monmouth shareholders. The Monmouth Board’s decision to increase the termination fee for EQC, without having engaged in a single conversation with a committed all-cash bidder already at a significant premium to EQC, is yet another disappointing breach of faith to its shareholders – a clear effort to protect EQC from competing bidders willing to offer superior and more certain value to Monmouth shareholders. In contrast, Starwood has not raised its termination fee in connection with its revised offer.”

Bing concluded, “We stand ready to sign the already-negotiated merger agreement with Monmouth. We urge the Monmouth Board to act in the best interest of all its shareholders by immediately declaring our increased offer superior, foregoing any future actions which would deprive shareholders from realizing maximum value, and proceeding quickly to finalize our proposed transaction for the benefit all Monmouth shareholders.”

Eugene W. Landy, Chairman of the Board On behalf of Starwood Real Estate Income Trust, Inc said, “we are pleased to submit this enhanced all-cash, fully financed, fully actionable proposal to acquire all of the outstanding common shares of Monmouth Real Estate Investment Corporation. We are hereby increasing our purchase price to $19.93 per share in cash at closing, reduced by your increased termination fee owed to EQC of $0.73 per share, for a net cash consideration of $19.20 per share to Monmouth shareholders. All other terms of this proposal are consistent with the merger agreement that we previously submitted to you in July.

Specifically, this proposal allows Monmouth shareholders to continue receiving dividends through closing of a transaction with Starwood without any reduction to the merger consideration. Further, we are not increasing our termination fee from $62 million, despite the greater value that this proposal offers to Monmouth shareholders and your recent decision to divert more shareholder value to EQC in the form of a higher termination fee.

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