Blackwells Makes Bid to Buy Monmouth REIT

The transaction is valued at $3.8 billion, including the assumption of debt—but there are complications.

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Blackwells Capital LLC has made an offer to Monmouth Real Estate Investment Corp.’s board of directors to acquire the REIT for $18.00 per share in an all-cash deal. The alternative investment management firm is already one of Monmouth’s largest shareholders.

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Blackwells asserted that its offer “represents a 21.6 percent premium to the unaffected share price as of December 1, 2020….” The transaction reportedly is valued at about $3.8 billion, including the assumption of debt.

Blackwells Chief Investment Officer Jason Aintabi said in a prepared statement that “Monmouth has significantly underperformed comparable industrial REITs over the last five years, further exacerbated by the stock’s lack of liquidity.”

His company’s cash offer, Aintabi continued, “provides shareholders immediate liquidity at a 17 percent premium above consensus net asset value…. Our offer also represents a premium to unaffected price well above the average premium for completed REIT deals over the last five years.”

That’s the short version.

The longer version, with a little drama

Aintabi added that Blackwells made its first offer—privately—on Dec. 1, after which he “had a constructive dialog with [Monmouth’s] CEO Michael Landy, who expressed enthusiasm and a desire to engage.”

He asserts, however, that Michael’s father, Monmouth Chairman Eugene Landy, stepped in and stated that exploring the Blackwells offer would “not be in the best interests of the company.” Aintabi went on to call for the formation of a special committee of the Monmouth board, one that would exclude members and affiliates of the Landy family, to review Blackwells’ offer.

Later on Monday, Monmouth released its own statement, confirming receipt of both the Dec. 1 offer (for $16.75 per share) and the second offer. Monmouth characterized the latter as “highly conditional” and as reflecting “a 5.9 percent premium to the Company’s closing stock price on December 18, 2020,” in other words, not the 21.6 percent premium asserted by Blackwells.

Monmouth stated that its board and financial and legal advisors unanimously agreed that the original offer “did not reflect Monmouth’s strategic value or future prospects….” The REIT noted, however, that it will “carefully review and consider the revised proposal at its next meeting.”

Founded in 1968, Monmouth is one of the world’s oldest public equity REITs. It specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth’s property portfolio consists of 120 properties aggregating about 23.9 million rentable square feet, across 31 states.

A couple of recent deals exemplify Monmouth’s investment approach. In May, the company acquired a 286,281-square-foot industrial building in Whitsett, N.C., from SunCap Property Group for $47.6 million.

And earlier this month, Monmouth closed on its purchase of a brand-new industrial building in Plain City, Ohio, in metro Columbus. The 488,000-square foot was sold by 42 Real Estate for $73.3 million. Both properties are fully leased to FedEx.

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