Greystar-Led Fund To Get Monogram Residential for $3 Billion

CEO Bob Faith hof Greystar Real Estate Partners is adding another 49 multifamily properties to his growing portfolio.
CEO Bob Faith hof Greystar Realty Partners is including another 49 multifamily homes to his growing portfolio. Monogram Residential Trust, Inc. (NYSE: MORE), an owner, operator and developer of high-end home communities in select coastal markets, agreed to be acquired by a recently formed perpetual life fund, Greystar Growth and Income Fund, led by Greystar Realty Partners in a deal valued at $3 billion, including debt to be presumed or re-financed.

Establishing investors in the fund consist of capital partners: Dutch pension fund APG Asset Management NV, Singapore-based global investment company GIC; and Quebec-based CRE financier IvanhoƩ Cambridge,

Plano, TX-based Monogram owns a portfolio that consists of financial investments in 49 multifamily communities in 10 states totaling 13,674 apartment or condo homes.

The National Multifamily Housing Council’s 2017 rankings noted Charleston, SC-based Greystar as 19th biggest owner of apartment or condos in the United States with 44,037 units and the biggest manager of apartment or condos with 415,634 units under management.

Under the terms of the merger arrangement, which was all authorized by Monogram’s board, shareholders will receive $12 per share in cash. This represents a premium of 22% to Monogram’s closing stock cost of $9.80 on July 3.

The $3 billion worth includes Monogram’s share of its two institutional co-investment joint endeavors with PGGM and NPS. The PGGM joint endeavor will be restructured, and the joint venture interests held by NPS will be purchased by Greystar pursuant to a separate assignable purchase and sale contract for roughly $500 million.

“Through this deal, Monogram will transition from being an openly traded REIT to an independently held company and a part of the Greystar organization,” Mark T. Alfieri, CEO of Monogram wrote to employees the other day announcing the news. “Our company believe this deal offers our investors with instant and compelling value for their financial investment, and reflects the effort and commitment of all the workers at Monogram.”

“We are excited to add Monogram’s high quality assets in a few of the very best markets in the country as the seed portfolio for Greystar Development and Income Fund, LP, our flagship core-plus continuous life lorry,” said Bob Faith, the creator and chairman of Greystar.

The transaction is not contingent on invoice of funding by Greystar. JPMorgan Chase Bank, N.A. has actually offered a commitment letter to Greystar Development and Earnings Fund for $2 billion in financial obligation financing for the transaction.

Home REIT assessments stand near all-time highs, leading some investors to question if they ought to rotate from the subsector, especially in the face of supply that stays a near term headwind, according to initial analysis of the deal by Morgan Stanley Research study.

“We believe the transaction continues to illustrate that personal financiers are looking past near term supply headwinds and are more optimistic about the longer term outlook provided encouraging principles,” Morgan Stanley Research reported.

Morgan Stanley & & Co. LLC is working as special financial advisor and Goodwin Procter LLP is acting as legal advisor to Monogram. J.P. Morgan Securities LLC is functioning as exclusive monetary advisor and Jones Day is functioning as legal advisor to Greystar.

The deal, which is expected to close in the second half of 2017, is subject to approval by Monogram’s stockholders and other traditional closing conditions.

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