Exclusive: Whitestone REIT ‘carefully considering’ MCB’s $15/share takeover offer

Investing.com — Whitestone REIT (NYSE:) “will carefully consider” the $15-per-share offer officially made by MCB Real Estate earlier this week, which values the shopping mall operator at around $1.45 billion, the company told Investing.com exclusively.

“As a fiduciary, our Board will carefully consider the proposal we received from MCB Real Estate to determine if it is in the best interests of our company and shareholders,” the company added. “We will continue to stay focused on executing our long-term value creation strategy throughout the evaluation process.”

But as WSR evaluates MCB’s sweetened proposal, the debate about the company’s near and mid-term outlook, as well as its fair valuation, remains an issue.

Earlier today, Investing.com also spoke exclusively to Bruce Schanzer, Chairman of Erez Asset Management, one of the company’s most active shareholders, who said the $15-dollars-a-share offer represents WSR’s fair valuation in his view.

According to the active investor, “MCB’s revised offer of $15 per share is compelling enough that it would behoove the Whitestone board to engage with MCB to see if there’s a transaction to be done at or around this level.”

He also added that “Dave Bramble [MCB’s managing partner] is a highly credible investor in addition to being the largest active shareholder of Whitestone. Thus, his offer should be taken very seriously.”

Other sources familiar with the matter consulted by Investing.com have also agreed with Mr. Schanzer’s view, citing WSR’s real estate assets as worth between $15-18 dollar a share. 

“Discounting transaction costs, which would be at around $0.50- $0.75-share, probably closer to the latter, plus other discounts, that would bring the midway price-point to around a $1.50 to $2 discount,” they added. “Considering $17 a share as the midpoint price for WSR’s real estate assets, the implied per-share price would fall right between $15-$15.50,” they added. 

However, indepented analysts covering WSR, cite the company’s projected 11% FFO per share growth this year and the improving macroeconomic environment are as clear signals of Whitestone’s growth prospects. In fact, five-of-the six analysts covering the company have issued buy rating on the stock.

Should a negotiation between the two parties in fact occur, sources familiar with the buying side’s thinking have said the margin for upping the price might be restricted to around $0.25 to $0.50, which would represent “a nearly irrelevant share of the total transaction price.” “If it comes down to this, I highly doubt this would be a deal-breaker,” they told Investing.com exclusively.

Sources have also said they would not discard running a proxy campaign against WSR’s board should the real estate operate refuse to sit down to talk. They cite David Bramble, Managing Partner at MCB Real Estate, as more inclined to pursue that route should WSR’s board follow the same path from the original $14 a share, all-cash offer made by MCB in early June.

Back then, the Real Estate fund promptly declined MCB’s offer via a letter, saying the “indicated price does not represent a fair valuation,” according to the rejection letter.

However, other sources heard by Investing.com dismissed that perception, saying that WSR’s Board had engaged with David Bramble multiple times but decided that the offer did not represent the company’s interest back then.