MCB Blasts Whitestone Board's 'Intransigence, Entrenchment' As It Withdraws Acquisition Proposal

MCB Real Estate withdrew its “attractive, fully-financed” proposal to acquire Houston-based shopping center owner Whitestone REIT after Whitestone’s board refused to engage, MCB announced Monday.

The Baltimore-based institutional investment management firm with $3B in assets under management said its proposal would have maximized value to Whitestone’s shareholders. It came at a 14.5% premium to Whitestone’s share price prior to MCB’s initial acquisition proposal on June 3, MCB said.

MCB first offered $14 per share, or $700M in equity, for the acquisition in June, which Whitestone rejected. In October, it upped its offer to $15 per share, or $782M in equity for a total offer of $1.45B, but Whitestone REIT’s board remained firm that it didn't believe the offer represented an “appropriate valuation” of the REIT.

“We are aware that MCB has withdrawn its proposal, which substantially undervalued the company,” Whitestone REIT said in an emailed statement Monday morning. “The Whitestone Board is committed to acting in the best interests of all shareholders.”

MCB disagrees, it said in a withdrawal letter to Whitestone’s board.

Despite MCB believing its proposal would be the best path forward for its shareholders, it said it would back out as attempts to engage have “been rebuffed at every turn.”

“We are disappointed and disturbed at the Board's intransigence, entrenchment and apparent self-interest,” MCB said in the letter. “The Company's recent public comments make it painfully clear that the Board is not open-minded or even willing to give real consideration to opportunities to advance shareholders' best interests.”

This isn’t Whitestone’s first rebuff of a buyout offer. It reportedly turned down Fortress Investment Group’s acquisition attempt in October 2023, Bloomberg reported, citing anonymous sources. Whitestone declined to address the reported offer at the time, saying it “does not comment on market rumors or speculation.”

Shortly thereafter, Whitestone entered a proxy contest with activist investor Erez Asset Management, which claimed it was concerned about the Whitestone board’s “independence and lack of transparency.”

Shareholders have told MCB that they are “supportive of a potential transaction and share our frustration with the Whitestone Board,” MCB said in the letter.

Whitestone this month added two independent trustees, Kristian Gathright and Donald Miller, to its board. In its letter to the board, MCB said it hoped the trustees would bring fresh perspectives and ensure Whitestone acts in accordance with its fiduciary duties.

Whitestone owns and operates more than 50 properties in Chicago, Phoenix, Dallas, Houston, San Antonio and Austin. The properties had an average occupancy of more than 94% at the end of the third quarter, while the company reported $634.6M in debt.

Whitestone has faced multiple legal battles since it fired its former CEO for cause in 2022, including a $25M wrongful termination lawsuit. A Harris County judge dismissed that lawsuit late last year, though Whitestone remained locked in other lawsuits with Pillarstone Capital REIT, of which the former CEO is a trustee.

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's National Newsletters
Related Stories

Why Hines Is Restarting Its Development Engine

After Departing Trump Admin, HUD's Former Philly Head Joins Local Planning Commission

Cross Ocean Partners, Fuller Realty Acquire 829K SF Houston Office Campus

How Integrated Infrastructure Can Help AI Data Centers Deploy Faster, Build Smarter

Nvidia Buys Stake In Data Center Power Company

Trammell Crow Starts Phase Of 2M SF Industrial Park: The Houston Deal Sheet

Invesco Cuts Fees, Adds Incentives To Quell Fund Redemption Requests

Investors Anchor Big Capital Into Marinas, Betting On Shallow Supply

Developers Eyeing Dallas' 50-Mile Trails Loop For Uptown-Like Opportunities

Oncology Company Expands Footprint At Hines' Life Sciences Campus

Nike Closes 15 Stores Amid Tumultuous Year

Large Commercial Real Estate Sales Up 30% Despite Economic Headwinds