Exclusive: Whitestone REIT ‘Carefully Considering’ MCB’s $15 Per Share Takeover Offer

Whitestone REIT (NYSE: WSR) has stated that it will “carefully consider” the $15-per-share offer made by MCB Real Estate earlier this week, which values the shopping mall operator at approximately $1.45 billion. The company affirmed its commitment to evaluating the proposal in the best interests of its shareholders while continuing to focus on its long-term value creation strategy.

As Whitestone assesses MCB’s enhanced offer, discussions regarding the company’s near and mid-term outlook, as well as its fair valuation, are ongoing. Bruce Schanzer, Chairman of Erez Asset Management and one of Whitestone’s key shareholders, expressed that he believes MCB’s $15-per-share proposal accurately reflects the company’s fair value.

Schanzer emphasized the importance of engaging with MCB, advising that the offer is strong enough to merit serious consideration from Whitestone’s board. He noted that Dave Bramble, MCB’s managing partner and the largest active shareholder of Whitestone, should be viewed as a credible investor whose proposal warrants serious discussion.

Additional sources familiar with the situation share Schanzer’s perspective, estimating that Whitestone’s real estate assets are valued between $15 and $18 per share. They pointed out that once transaction costs are factored in, potentially reducing the effective price, the value could reasonably fall between $15 and $15.50.

Despite these assessments, independent analysts monitoring Whitestone highlight the company’s projected 11% growth in funds from operations (FFO) per share this year and an improving economic environment as indicators of its growth potential. Currently, five out of six analysts covering Whitestone have issued buy ratings for the stock.

If negotiations between Whitestone and MCB take place, insiders suggest that there may be limited room for MCB to increase its offer—perhaps restricted to an additional $0.25 to $0.50 per share. This increment may not significantly alter the overall transaction value, with sources indicating that it would likely not jeopardize a potential deal.

There are indications that MCB may consider a proxy campaign against Whitestone’s board if the company refuses to engage in discussions. Sources have pointed out that Bramble would likely pursue this strategy if Whitestone’s leadership continues to dismiss MCB’s interest, reminiscent of the board’s initial rejection of MCB’s earlier all-cash offer of $14 per share.

At that time, Whitestone’s board declined the offer, suggesting it did not reflect a fair valuation. However, some sources contend that the board had engaged in multiple discussions with Bramble but ultimately felt that the initial offer did not align with the company’s interests.