BALTIMORE - MCB Real Estate, a prominent commercial real estate developer and investment firm, has publicly disclosed its dissatisfaction with the Whitestone REIT (NYSE: NYSE:WSR) board's rejection of its acquisition proposal. MCB's offer to purchase Whitestone for $15.00 per share in cash was designed to provide a 14.5% premium over the share price before the initial proposal on June 3, 2024, and a 61.8% premium before the rumored Fortress proposal on October 26, 2023.
Despite the premium and multiple attempts to engage over the past months, MCB reports that the Whitestone board has consistently refused to consider the all-cash proposal. MCB has criticized the board for selecting a timeframe for total shareholder return that is influenced by acquisition rumors and proposals, as well as MCB's own purchase of 4,690,000 Whitestone shares.
MCB has urged the Whitestone board to answer critical questions regarding its refusal to engage in discussions or explore strategic alternatives, which MCB believes is inconsistent with board duties and indicative of entrenchment. The questions MCB wants addressed include inquiries about Whitestone's net asset value, internal forecasts, and reasons for not sharing financial forecasts with potential buyers.
Additionally, MCB is questioning the credit given to Whitestone's management for the 60% total shareholder returns since their appointment, highlighting that returns prior to takeover interest were nearly zero. MCB also raises concerns about Whitestone's share price maintenance, engagement with independent advisors, and justification for not engaging with potential acquirers like Fortress and MCB.
Whitestone shareholders were encouraged by MCB to participate in Whitestone's Third Quarter 2024 earnings conference call to hear the management team's responses to these questions. MCB's Managing Partner, P. David Bramble, intended to join the call and ask a question but expected to be rebuffed based on previous interactions.
MCB, headquartered in Baltimore with a $3 billion portfolio, has engaged Vinson & Elkins LLP as lead counsel and Wells Fargo as financial advisor for the transaction. Additional information about the proposal can be found at www.MaximizingWhitestoneValue.com.
This article is based on a press release statement from MCB Real Estate.
In other recent news, Whitestone REIT has rejected MCB Real Estate's $15 per share buyout offer, stating that the proposal undervalued the company. Whitestone's decision was based on several valuation methods, including Net Asset Value assessments and a Discounted Cash Flow analysis. The company pointed to its strong financial position, including an 11% year-over-year growth target for its 2024 Core FFO per share estimate and a 4.9% year-to-date Same Store NOI growth.
Meanwhile, MCB Real Estate has increased its bid to acquire Whitestone REIT, offering shareholders an all-cash transaction of $15 per share. B.Riley, in its analysis, has adjusted Whitestone REIT's stock target to $15, maintaining a neutral rating. The firm cited Whitestone REIT's robust rent and occupancy growth and potential long-term growth drivers as reasons for the adjustment.
In addition to the buyout offer, Whitestone REIT has also reported strong growth in the second quarter of 2024, with significant increases in leasing spreads, same-store net operating income, and occupancy rates. The company also plans to strengthen its board of trustees with two new independent members and is executing a capital recycling plan, with acquisitions expected to outpace dispositions by approximately $20-25 million for the year.
InvestingPro Insights
As the acquisition drama unfolds, Whitestone REIT's financial metrics offer additional context to MCB Real Estate's proposal. According to InvestingPro data, Whitestone's market capitalization stands at $712.53 million, with the stock trading near its 52-week high at 96.63% of that peak. This aligns with MCB's assertion of a significant premium in their offer.
InvestingPro Tips reveal that Whitestone has maintained dividend payments for 15 consecutive years, with a current dividend yield of 3.52%. This consistent payout history may be a factor in the board's reluctance to entertain acquisition offers, as they might believe in the company's long-term value proposition.
The company's P/E ratio of 43.43 suggests a high earnings multiple, which could be interpreted as investor confidence in future growth or, conversely, as an overvaluation that MCB aims to capitalize on. Whitestone's revenue growth of 4.33% over the last twelve months and a gross profit margin of 69.5% indicate a stable, if not spectacular, financial performance.
These insights provide shareholders with additional metrics to consider when evaluating MCB's offer and the Whitestone board's position. For a more comprehensive analysis, InvestingPro offers 6 additional tips that could further illuminate Whitestone's financial standing and prospects.
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