Merger in the REIT space

Equity Commonwealth to acquire Monmouth Real Estate for $3.4B

Equity Commonwealth (EQC) and Monmouth Real Estate (MNR) announced that they have entered into a definitive merger agreement by which Equity Commonwealth will acquire Monmouth in an all-stock transaction, valued at approximately $3.4B, including the assumption of debt.

The combined company is expected to have a pro forma equity market capitalization of approximately $5.5B.

Under the terms of the agreement, Monmouth shareholders will receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth stock they own.

Based on the closing price for Equity Commonwealth on May 4, this represents approximately $19.40 per Monmouth share.

The merger agreement provides for Monmouth to declare and pay one additional regular quarterly common stock dividend of 18c per share without Equity Commonwealth paying a corresponding common dividend to its shareholders.

Accordingly, the total consideration to be received by the Monmouth shareholders in the transaction is $19.58 per Monmouth share.

Equity Commonwealth and Monmouth shareholders are expected to own approximately 65% and 35%, respectively, of the pro forma company following the close of the transaction.

Monmouth’s portfolio is comprised of 120 properties totaling 24.5M square feet. In addition, Monmouth has six properties totaling 1.8M square feet under contract and leased to investment grade tenants.

Closings for these acquisitions are expected in 2021 and 2022.

The company will continue to be led by president and CEO David Helfand and the existing senior management team.

Upon closing, the number of trustees on Equity Commonwealth’s board will be expanded to 10, with two individuals designated by Monmouth’s board.

Sam Zell will remain the chairman of the board of trustees.

The transaction is expected to close during the second half of 2021, subject to customary closing conditions, including approval by the common shareholders of both Equity Commonwealth and Monmouth.

Sam Zell to become Chairman of the new company

The board of trustees of Equity Commonwealth and the board of directors of Monmouth Real Estate have each unanimously approved the transaction.

Equity Commonwealth ( EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC’s same property portfolio is comprised of 4 properties and 1.5 million square feet.

Monmouth Real Estate Investment specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth Real Estate is a fully integrated and self-managed real estate company, whose property portfolio consists of 121 properties, containing a total of approximately 24.5 million rentable square feet, geographically diversified across 31 states. 

STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Leave a Reply

Your email address will not be published. Required fields are marked *