MCB Real Estate is still pushing to acquire Whitestone REIT, and it has made a new offer it hopes the Houston-based shopping center owner can't refuse.
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Baltimore-based MCB is now offering $1.45B to acquire Whitestone, Reuters first reported. The offer breaks down to $15 per share, an increase from its June offer of $14 per share, which Whitestone rejected.
In a letter to Whitestone on Wednesday, MCB Managing Partner David Bramble outlined the challenges he says the Houston-based REIT is facing, arguing a sale would bring Whitestone shareholders “far more value” than if the company stayed the course.
“Based on our knowledge of the industry and public data regarding your portfolio and financial performance, we are confident our improved $15.00 per share offer represents an extremely compelling proposal,” the letter says.
Whitestone is more burdened by the cost of capital than its peers, the letter continues, and its stock has also underperformed its peers over the past few months, remaining around the same as it was in June.
As for the offering value, the letter says the $15-per-share offer is an 11.4% premium to Whitestone’s last trading share price. It says Whitestone hasn't had a per-share price above $15 since 2016.
The acquisition would be all cash, funded through a combination of MCB equity and debt. The $1.45B offer consists of $782M in equity, up from $700M in the June offer. MCB said Wells Fargo has issued it a highly confident letter for the debt.
Whitestone owns and operates more than 50 properties across Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio that had an average occupancy of 93.5% as of the end of June. It had $666.7M in debt.
MCB, with $3B in assets under management, has made headlines in its hometown lately with its $500M mixed-use project planned at Baltimore’s Inner Harbor. It is also the developer behind the Viva White Oak mixed-use project in Maryland, approved for more than 12M SF on a 280-acre campus next to the Food and Drug Administration.
MCB owns a 9.4% stake in Whitestone, making it the REIT's third-largest shareholder, according to Reuters. Whitestone was trading at $14.32 per share Wednesday at 12:30 p.m. ET, up 6.43% from opening.
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