GlobeSt.com UPDATE: Berkshire Ups Ante After Oriole TCT Bid

The Essex-led JV, Oriole Partnership, includes UBS Wealth Management–North American Property Fund Limited and AEW Oriole Co-Investment LLC. The JV has offered to acquire all the outstanding common shares and limited partnership units of the Baltimore-based Town and Country Trust for $36 apiece plus a pro-rata payment in respect of TCT's regularly issued $0.43 quarterly dividend. Berkshire Property Investors bid, which is not yet a firm offer, is for $37 per share.

Both offers top the $33.90-per-share offer by a joint venture Morgan Stanley Real Estate and Onex Real Estate merger agreement that Town and Country's board of trustees formally approved last month and continues to recommend to shareholders, who are scheduled to vote on the merger in early March. Town and Country Trust has about 17.5 million shares outstanding plus an additional 19.9 million partnership units, according to SEC filings. Including debt assumption, all three deals are valued between $1.3 billion and $1.4 billion.

In response to the Essex-led offer, Town and Country's board of trustees earlier this week provided non-public information to Oriole Partnership and will enter into discussions with the JV regarding the proposal. However, Town and Country's board of trustees also said it would continue to recommend the existing transaction with Magazine Acquisition. The same situation applies to the Berkshire Property's proposed offer as well.

Town and Country shareholders are scheduled to vote on the Magazine Acquisition merger agreement March 9. As a defense against such competing offers, the merger agreement allows Magazine Acquisition to match any higher proposal before Town and Country's board of trustees could change its recommendation or terminate the merger agreement in favor of a better one. The Morgan Stanley-Onex JV issued a statement Tuesday, saying "We are currently reviewing our options, and we expect to make further announcements as appropriate."

Morgan's $1.3-billion offer is comprised of $750 million in equity and $440 million for the assumption of mortgage debt, plus about another $100 million for convertible notes. Neither Berkshire nor Oriole Partnership is detailing their competing offers yet, but both are believed to be nearly identical to the Magazine Acquisition agreement--save for the higher per-share price. Oriole Partnership's offer will remain open for acceptance by Town and Country until 1 p.m. on Feb. 8. If the offer is accepted by TCT, it is anticipated that the proposed transaction will close in the first quarter of 2006. Berkshire Property's offer has not yet been formalized.

Banc of America Securities LLC and UBS Investment Bank LLC are acting as financial advisors to Oriole Partnership and Willkie Farr & Gallagher LLP is acting as legal counsel. Town and Country's board of trustees says it will evaluate the offer with the assistance of its investment bankers, Lazard Freres & Co. LLC together with its outside counsel, Skadden, Arps, Slate, Meagher & Flom LLP, Venable LLP and Squire, Sanders & Dempsey LLP.