On November 18, 2024, MCB Real Estate (“MCB”) – a leading commercial real estate developer and investment management firm with a diverse nationwide portfolio and approximately $3 billion in AUM – withdrew the revised proposal to acquire all outstanding shares of Whitestone REIT (NYSE: WSR) (“Whitestone”) for $15.00 per share in cash that MCB made on October 9, 2024.
Read the letter MCB sent to the Whitestone Board regarding the revised proposal
We attempted on numerous occasions to engage with the Whitestone Board and management team to work toward a transaction that would maximize value for Whitestone shareholders. While we continue to believe our proposal is the best path forward for shareholders, our attempts to engage have been rebuffed at every turn.
Whitestone Board’s refusal to grant due diligence, engage in any meaningful discussions, or commence a strategic alternatives process is not consistent with its duties and indicates a boardroom culture of entrenchment.
We are focused on maximizing shareholder value, and will consider all options available to MCB and other Whitestone shareholders to ensure that the Board upholds its responsibilities.
Read the letter MCB sent to the Whitestone Board regarding its withdrawal of the revised proposal
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Whitestone’s current 13.4x consensus NTM FFO multiple is 2.3 multiple turns lower than Peers, compared to 0.5x lower than Peers at the time of the initial proposal.
This large discount to Peers is consistent with the long-term historical average and is reflective of Whitestone’s small capitalization and trading float, limited growth prospects and weaker overall asset quality relative to the Peer group.
Whitestone is burdened with a cost of capital disadvantage relative to its public and private peers.
The expensive cost of equity and cost of borrowing make it a challenge for Whitestone to raise any new capital to fund acquisitions, developments or redevelopments, or tenant buyouts and asset repositioning.
To preserve capital for growth initiatives, Whitestone cut its dividend in April 2020 and has a lower dividend yield than the majority of Peers.