Monmouth REIT in $90M Merger

FREEHOLD, NJ-In what is essentially a merger of two sister companies, Monmouth Real Estate Investment Corp. and Monmouth Capital Corp. have agreed to merge into one company that will continue to bear the Mreic name. The two publicly traded companies share a headquarters here and have many of the same officers and board members.

"The combination enhances our prospects for continued growth and exposure in the marketplace through increased market capitalization and an expanded shareholder base," says Eugene Landy, president and chairman of Mreic, also known as "Monmouth REIT. "The core assets of the two companies are complementary and the consolidation will enable management to utilize existing capital and resources more efficiently while providing stockholders with a portfolio of assets with enhanced tenant and geographic diversification."

At the time of the agreement to merge, Monmouth REIT had a portfolio of 55 industrial properties in 22 states, all with long-term net-leases to investment grade tenants, as well as investments in REIT securities. Monmouth Capital's holdings amounted to 13 industrial properties in 11 states. Based on the closing market prices of March 23, the combined company would have an enterprise value of approximately $400.8 million.

Pending approval of stockholders, each share of Monmouth Capital's common stock will be converted into and exchanged for 0.66 shares of Monmouth REIT's common stock. Monmouth Capital's outstanding options and convertible debentures will remain outstanding and become exercisable or convertible. After the merger is done, Monmouth REIT's stockholders will own an estimated 84.5% of the combined company. The value of the transaction has been placed at $90.2 million.

"The transaction is expected to be accretive to Monmouth REIT's projected stand-alone FFO," says Landy, noting that the company will be headed by the management team that currently manages both companies. "An additional significant benefit will be the productivity savings achieved through managing a larger combined company."

Financial advisor to Monmouth REIT was Cohen & Steers Capital Advisors, and legal representation came from Venable LLP. Monmouth Capital's financial advisor was Ferris, Baker Watts, and the company's legal counsel was Stroock & Stroock & Lavan.