Merger to Create US $5.5 billion REIT Powerhouse
The Equity Commonwealth Real Estate Investment Trust and Monmouth Real Estate Investment Corporation have entered into a definitive merger agreement that will see the former acquire Monmouth in an all-share transaction valued at approximately US $3.4 billion including assumed debt.
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, 2021, representing approximately US $19.40 per Monmouth share. The merger agreement provides for Monmouth to declare and pay one additional regular quarterly common stock dividend of US $0.18 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 US $19.58 per Monmouth share.
Equity Commonwealth and Monmouth shareholders are expected to own approximately 65 per cent and 35 per cent, respectively, of the pro forma company following the close of the transaction.
Announcing the acquisition, Sam Zell, Chairman of the Board of Equity Commonwealth, said: "The transaction provides Equity Commonwealth with a high-quality, net-leased industrial business with stable cash flows while preserving EQC’s balance sheet capacity for future acquisitions.
"Monmouth provides an attractive and scalable platform," adds David Helfand, President, Chief Executive Officer and Trustee of Equity Commonwealth. "With significant cash and balance sheet capacity, we have the ability to grow the platform and create long-term value for shareholders."
Monmouth’s portfolio is comprised of 120 properties totaling 24.5 million square feet.1 In addition, Monmouth has 6 properties totaling 1.8 million square feet under contract and leased to investment grade tenants. Closings for these acquisitions are expected in 2021 and 2022.
Michael Landy, President and CEO of Monmouth, added: "Our Board unanimously determined that the merger with Equity Commonwealth is the best outcome to maximize value for Monmouth stockholders.
"Our stockholders will benefit from Equity Commonwealth’s preeminent leadership team, which has an exceptional track record of delivering shareholder value, its strong balance sheet and its focused strategy to build on Monmouth’s over 50 years of success creating a market leading industrial REIT."
The combined company is expected to have a pro forma equity market capitalization of approximately US $5.5 billion.
Goldman Sachs & Co., LLC, is acting as financial advisor on the transaction, and Fried, Frank, Harris, Shriver and Jacobson LLP is serving as legal advisor to Equity Commonwealth. J.P. Morgan Securities LLC and CS Capital Advisors, LLC are acting as financial advisors and Stroock & Stroock & Lavan LLP is serving as legal advisor to Monmouth.