Greystar Growth and Income Fund LP has reached an agreement for the acquisition of Monogram Residential Trust for $3 billion. The newly formed fund of Greystar Real Estate Partners bid values Monogram at $12 a share, representing a 22% premium to July 3 closing price.
Texas-based Monogram is an operator and developer of luxury apartments. The company’s board has already approved the $3 billion bid awaiting shareholder approval. The $3 billion valuation includes Monogram’s share in co-investment joint ventures with PGGM and NPS.
Greystar has agreed to purchase the NPS joint venture pursuant to a separate agreement for about $0.5 billion. However, the transaction is subject to payment of the venture’s share debt, among other adjustments. PGGM joint venture, on the other hand, is to be restructured.
Greystar plans to finance the transaction with its own money in addition to funding from APG Asset Management, Singaporean wealth fund GIC and Ivanhoe Cambridge-based in Canada. The transactions should close in the second half of the year subject to satisfaction of customary closing conditions.
Morgan Stanley & Co LLC is acting as Monogram financial adviser in the transaction and Goodwin LLP as the legal adviser. JP Morgan Securities LLC is advising Greystar.
“We are pleased to have reached this agreement, which maximizes value at a substantial premium to our existing share price. We are confident that today’s announcement represents the best path forward for Monogram’s entire stockholder,” said Alan Patton Monogram’s Chairman.
Activist Investor Pressure
Monogram has been the subject of increased activist investor pressure in the recent past. Snow Park Partners LP has been pushing the real estate company to pursue strategic alternatives as a way of unlocking value on the company’s shares which are currently trading at a significant discount. Poor performance and substantial debt maturities have all but dented the company’s prospects in the market.
The acquisition marks yet another milestone for Greystar which has embarked on an aggressive expansion plan abroad. In addition to U.S investment, the firm is currently pursuing opportunities in China as part of its growth strategy. The company has also reiterated plans to own 10,000 apartments in London by 2021.
Separately, Monogram is expected to release its 2Q financial results early next month. The company will not hold an earnings call to discuss the financial results as it moves to close the Greystar transaction.