HOUSTON - Whitestone REIT (NYSE: NYSE:WSR), a real estate investment trust, has officially declined the unsolicited purchase offer from MCB Real Estate, valuing the company at $15 per share. The Board of Trustees unanimously determined that the proposal undervalued the company and chose not to proceed with any negotiation.
The board's decision was informed by several valuation methods, including Net Asset Value (NAV) assessments and a Discounted Cash Flow (DCF) analysis based on the company's five-year internal forecast, which indicated that MCB's offer did not reflect the intrinsic value of the REIT. The board also cited the timing of the offer as opportunistic, potentially capitalizing on the company's momentum under new management and depriving shareholders of the full value of their investments.
Whitestone highlighted its strong financial position, pointing to a reiteration of its 2024 Core FFO (Funds from Operations) per share estimate, targeting an 11% year-over-year growth. The company also noted a year-to-date Same Store NOI (Net Operating Income) growth of 4.9% and an improved Debt/EBITDAre (Earnings Before Interest, Taxes, Depreciation, Amortization for Real Estate) ratio from the previous year.
The company's recent performance, including a 60% total shareholder return since the current management team took over in January 2022, was also a factor in the board's decision to reject the offer. Whitestone emphasized its strategic positioning for growth and accretive asset recycling, which positions the company for further expansion.
The board reaffirmed its commitment to acting in the best interests of all shareholders and to maximizing shareholder value. This decision comes as part of Whitestone's ongoing efforts to enhance its portfolio of open-air, retail centers in fast-growing markets such as Phoenix, Austin, Dallas-Fort Worth, Houston, and San Antonio.
This news is based on a press release statement from Whitestone REIT.
In other recent news, MCB Real Estate has increased its bid to acquire Whitestone REIT, offering shareholders an all-cash transaction of $15 per share. This revised proposal presents a considerable premium over previous share prices. MCB Real Estate, which currently holds a 9.4% stake in Whitestone, has confirmed that it has secured the necessary financing for the transaction.
Simultaneously, Whitestone REIT has demonstrated strong growth in the second quarter of 2024. Significant increases in leasing spreads, same-store net operating income (NOI), and occupancy rates were reported. B.Riley has adjusted Whitestone REIT's stock target to $15, maintaining a neutral rating, based on these recent developments.
B.Riley's analysis highlights Whitestone REIT's robust rent and occupancy growth and potential long-term growth drivers. These include the expected decrease in expenses due to the resolution of lawsuits related to former employees and potential developments at Pillarstone REIT.
Additionally, Whitestone REIT plans to strengthen its board of trustees with two new independent members. The company also financed $56 million of secured debt maturing in 2031 and plans to sell $20-30 million of properties this year. These strategic initiatives are part of Whitestone REIT's capital recycling plan, with acquisitions expected to outpace dispositions by approximately $20-25 million for the year.
InvestingPro Insights
Whitestone REIT's (NYSE: WSR) decision to reject the $15 per share offer from MCB Real Estate aligns with several key financial indicators and market trends. According to InvestingPro data, WSR's stock is currently trading near its 52-week high, with a price at 96.63% of its peak. This strong performance is further evidenced by the impressive 52.05% total return over the past year, suggesting that the company's management strategy has been well-received by the market.
The board's confidence in Whitestone's growth trajectory is supported by InvestingPro Tips, which highlight that the company has raised its dividend for three consecutive years and has maintained dividend payments for 15 consecutive years. This demonstrates a commitment to shareholder returns that aligns with the board's statement about maximizing value for investors.
Moreover, the company's revenue growth of 4.33% over the last twelve months and a quarterly growth of 6.19% in Q2 2024 indicate a positive trend in line with the company's projected Core FFO growth. The EBITDA growth of 3.35% further supports the company's financial health and potential for future expansion.
It's worth noting that while Whitestone is trading at a high earnings multiple with a P/E ratio of 43.43, analysts predict the company will remain profitable this year. This optimism is reflected in the market, with the stock experiencing a large price uptick over the last six months, as noted in the InvestingPro Tips.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Whitestone REIT, providing deeper insights into the company's financial position and market outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.