MCB Real Estate has offered to purchase shopping center landlord Whitestone REIT in a deal valued at $700M, according to public filings Tuesday.
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Real estate investment firm MCB is offering an all-cash deal that values the real estate investment trust sale at $14 per share, a 7.2% premium to Monday's closing price of $13.06, MarketWatch reported. MCB owns a more than 9% stake in Whitestone, the filing shows.
The proposal comes about a month after Whitestone successfully fended off an attempt by 1.3% owner Erez Asset Management to replace two board members, and mere hours after the real estate investment trust appointed two new independent members, though not the two Erez had championed.
Whitestone REIT is based in Houston and operates more than 50 shopping centers throughout five markets in the Southwest. Baltimore-based MCB has a stake in retail and other developments, including a $500M overhaul of its city’s Inner Harbor waterfront with backing from Mayor Brandon Scott. The firm is also proposing a redevelopment for potential business or educational real estate at Viva White Oak in Maryland.
In a proposal letter submitted with the filing, MCB said its goal was to stabilize Whitestone.
“The speed and certainty with which we are prepared to move forward to consummate the transaction would allow the Company’s shareholders to de-risk their investment and obtain immediate liquidity at a compelling valuation, ” MCB Managing Partner David Bramble wrote in the letter.
“We are keenly aware of the challenges facing the Company, such as access to growth capital, and believe that these challenges can best be addressed as a private company with a well-capitalized sponsor.”
At the time it was battling Erez, Whitestone CEO Dave Holeman said the REIT's occupancy was 93.6% at the end of the first quarter, and its average rent per SF was $23.83, up 7.2% from 2023.
But the company confirmed it was undertaking capital recycling efforts, an effort that kicked off in late 2022, the year the firm fired James Mastandrea, its longtime chief executive officer. In response, Mastandrea launched a $25M wrongful termination lawsuit, which was dismissed late last year. In the suit, he alleged that the firing took place because he was in discussions to sell the REIT.
“We are not opposed to selling the Company or exploring strategic alternatives if they lead to maximizing shareholder value,” the Whitestone board said in a statement last month. “But we also do not want to shortchange shareholders by running a hasty sale process at the wrong time, as the Dissident seems to be recommending.”
Law firm Vinson & Elkins is leading transaction efforts for MCB, the filing shows.
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