Investment website — Whitestone REIT (NYSE:) “will carefully consider” the $15-a-share offer that MCB Real Estate formally made earlier this week, the company told Investing.com exclusively.
“As a fiduciary, the Board of Directors will carefully consider the proposal we received from MCB Real Estate to determine whether it is in the best interests of our company and shareholders,” the company said. “We will continue to focus on executing our long-term value creation strategy throughout the evaluation process.”
But as WSR evaluates MCB’s enhanced proposal, which values the mall operator at about $1.45 billion, debate over the company’s near- and medium-term prospects, as well as its fair valuation, remains a major topic of discussion.
Earlier today, Investing.com spoke exclusively with Bruce Schanzer, Chairman of Erez Asset Management, one of the company’s most active shareholders, who said the $15 per share offer represents a fair valuation for WSR in his view.
According to the activist investor, “MCB’s revised offer of $15 per share is compelling enough that Whitestone’s board should engage with MCB to see if there is a deal to be done at or around that level.”
He also added that “Dave Bramble (MCB Managing Partner) is a highly credible investor as well as the largest active shareholder in Whitestone. Therefore, his offer should be taken seriously.”
Other sources familiar with the matter consulted by Investing.com also agreed with Mr. Schanzer’s view, citing WSR’s real estate assets being worth $15 to $18 per share.
“Discounting transaction costs, which would be about $0.50-$0.75 per share, probably closer to the latter, plus other discounts, would bring the average price point to about $1.50-$2,” they added. “Given $17 per share as the midpoint price for WSR’s real estate assets, the implied price per share would fall between $15 to $15.50,” they added.
On the other hand, independent analysts covering WSR point out that the company expects 11% growth in FFO per share this year and the improving macroeconomic environment as clear signals for Whitestone’s growth prospects. In fact, five of the six analysts covering the company have issued a buy rating on the stock.
If negotiations between the two parties actually take place, sources familiar with the buying side’s thinking said the mark-up margin could be limited to about $0.25 to $0.50, which would represent “an almost irrelevant share of the total deal price.” “If it comes to this, I highly doubt this will be a deal breaker,” they told Investing.com exclusively.
Sources familiar with the negotiations also said they would not neglect to run a proxy campaign against the WSR board if the real estate company refused to sit down to talk. They cite David Bramble, managing partner at MCB Real Estate, as being more inclined to go that route if WSR’s board follows the same path from the original $14 per share, all-cash offer MCB made in early June.
At the time, the real estate fund immediately rejected MCB’s offer via letter, saying that “the indicated price does not represent a fair valuation,” according to the rejection letter.
However, other sources heard by Investing.com rejected that perception, saying that WSR’s board had engaged with David Bramble several times but decided the offer did not represent the best interest of the company at the time.