MCB Withdraws Proposal to Acquire Whitestone Due to Whitestone Board's Entrenchment and Refusal to Engage

Rhea-AI Summary

MCB Real Estate has withdrawn its proposal to acquire Whitestone REIT (NYSE: WSR) following the board's refusal to engage in meaningful discussions. MCB had offered $15 per share in an all-cash transaction, representing a 14.5% premium to Whitestone's share price before their initial June 3, 2024 proposal and a 61.8% premium to the price before the Fortress proposal. As Whitestone's largest actively managed shareholder with 9.4% ownership, MCB criticizes the board's entrenchment and lack of strategic review process. The company threatens potential board removal at the next annual meeting if the pattern of delay continues.

Positive

• MCB's offer represented a significant 61.8% premium to pre-Fortress proposal price
• Two new independent trustees (Kristian M. Gathright and Donald A. Miller) added to the board
• MCB maintains significant shareholding (9.4%) to influence future decisions

Negative

• Board's refusal to engage in acquisition talks or strategic review process
• Management's apparent entrenchment affecting shareholder value
• Potential corporate governance issues indicated by board's resistance to explore value-maximizing opportunities

News Market Reaction

+0.77%

1 alert

+0.77% News Effect

On the day this news was published, WSR gained 0.77%, reflecting a mild positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

Calls on Independent Trustees of Whitestone to Initiate Strategic Review Process to Maximize Value for Whitestone Shareholders

Reminds Trustees of the Whitestone Board's Fiduciary Duties

BALTIMORE, Nov. 18, 2024 /PRNewswire/ -- 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, today sent a letter to the Board of Trustees of Whitestone REIT (NYSE: WSR) ("Whitestone") withdrawing MCB's previously announced proposal to acquire the company.

MCB sent the following letter to the Whitestone Board:

November 18, 2024

Board of Trustees
C/O David K. Holeman
Whitestone REIT
2600 S. Gessner Rd, Suite 500
Houston, TX 77063

Dear Whitestone REIT Board of Trustees:

MCB Real Estate ("MCB" or "we") delivered an attractive, fully-financed proposal to the Whitestone Board to acquire Whitestone for $15 per share in an all-cash transaction. Our proposal would maximize value to Whitestone's shareholders, delivering immediate and certain value in the form of a 14.5% premium to Whitestone's share price prior to our initial proposal on June 3, 2024, and a 61.8% premium to Whitestone's unaffected share price prior to the rumored Fortress proposal on October 26, 2023. We have made repeated efforts to engage with the Whitestone Board over the last several months, but each of those attempts has been summarily rebuffed. The 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.

While we continue to believe our proposal is the best path forward for shareholders, our attempts to engage have been rebuffed at every turn, so we are withdrawing our proposal to acquire Whitestone at this time.

This is not a decision taken lightly. We are disappointed and disturbed at the Board's intransigence, entrenchment and apparent self-interest. The Company's recent public comments make it painfully clear that the Board is not open-minded or even willing to give real consideration to opportunities to advance shareholders' best interests.

Just a few weeks ago, Whitestone defended its entrenched position with unsupported and unrealistic claims of Whitestone's greater hypothetical "intrinsic value." Notably, however, that value was not actually provided, proven or even explained. Whitestone also attempted to rationalize the Board's refusal to consider alternatives by relying on a period of stock price outperformance that was driven by multiple acquisition rumors and proposals, including ours, that inflated Whitestone's share price.

When pressed on whether the Board is open to opportunities to enhance value on Whitestone's third quarter 2024 earnings call, Whitestone CEO David Holeman falsely asserted that the Board is actively looking at strategic options. Further, he seemingly didn't even understand what such a process to maximize value would actually entail. When asked, he said:

"I would tell you that our board reviews the best things for shareholders all the time. So we are actively looking at what are the best ways to add value, what are the best ways to produce a return to our shareholders. So I think we are actively doing that just like we should, and so I'm not sure I'm clear with your question."

Given the Board's refusal to engage with us regarding our proposal or conduct a process to explore whether other parties may have an interest in transacting with Whitestone, Mr. Holeman's comments are at best a naïve sidestep to the question, and at worst a downright lie to shareholders.

We have heard from a number of other shareholders that they are supportive of a potential transaction and share our frustration with the Whitestone Board. We believe some of these shareholders have reached out to Whitestone directly to demand answers. Unfortunately, it appears that the Whitestone Board has ignored these concerns and refused to engage with them, just as it has consistently refused to engage with MCB.

As Whitestone's largest actively managed shareholder, with ownership of 4,690,000 shares representing 9.4% of Whitestone's common shares, we note the addition of Kristian M. Gathright and Donald A. Miller to the Whitestone Board. Ms. Gathright and Mr. Miller are two new and well-regarded independent trustees whom we hope will bring fresh perspective to the Board and ensure that the Whitestone Board acts in accordance with its fiduciary duties, including taking appropriate steps to maximize value for Whitestone shareholders.

The reputations and careers of these professionals, as well as the rest of the Board, are on the line, and we call on them to act in shareholders' best interests. We believe the inherent disadvantages of Whitestone as a standalone company, and the upside for shareholders from a well-run strategic review process, are obvious.

As we have said from the onset of this process, our interests are aligned with other Whitestone shareholders. Whitestone shareholders deserve a board that is committed to considering all opportunities to maximize value. If the Whitestone Board continues its pattern of delay and entrenchment, MCB believes the entire Board should be removed at the next annual meeting of shareholders.

While we are withdrawing our proposal at this time, we remain a significant shareholder of the company and will continue to consider all options available to MCB and other Whitestone shareholders to ensure that the Board upholds its responsibilities.

Sincerely,

/s/ P. David Bramble
P. David Bramble, Managing Partner

Additional Materials
‍Additional materials regarding the proposed transaction, including a letter sent to Whitestone's Board on October 9, 2024 detailing MCB's enhanced proposal, are available at www.MaximizingWhitestoneValue.com.

‍Advisors
‍MCB has engaged Vinson & Elkins LLP as lead counsel and Wells Fargo is serving as financial advisor to MCB.

About MCB Real Estate
‍Founded in 2007, MCB Real Estate is a community-centric, privately held institutional investment management firm headquartered in Baltimore, Maryland. MCB boasts a nationwide portfolio of $3 Billion Assets Under Management totaling approximately 15 million square-feet. of industrial, office, retail, mixed-use, multi-family and life sciences properties with almost four million square-feet in its development pipeline. The firm offers a seamlessly integrated suite of commercial real estate investment services, including development, construction, property management, asset management, acquisitions, and legal expertise, thus ensuring comprehensive support throughout every stage of an asset's lifecycle. www.mcbrealestate.com.

‍Media Contacts
‍Andrew Siegel / Lucas Pers / Lyle Weston
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449

View original content to download multimedia:https://www.prnewswire.com/news-releases/mcb-withdraws-proposal-to-acquire-whitestone-due-to-whitestone-boards-entrenchment-and-refusal-to-engage-302308574.html

SOURCE MCB Real Estate

FAQ

Why did MCB withdraw its acquisition proposal for Whitestone REIT (WSR)?

MCB withdrew its proposal due to Whitestone's board's refusal to engage in meaningful discussions, grant due diligence access, or consider strategic alternatives.

What was MCB's offer price for Whitestone REIT (WSR)?

MCB offered $15 per share in an all-cash transaction, representing a 14.5% premium to the June 3, 2024 price and a 61.8% premium to the pre-Fortress proposal price.

What percentage of Whitestone REIT (WSR) does MCB own?

MCB owns 4,690,000 shares, representing 9.4% of Whitestone's common shares, making it the largest actively managed shareholder.

What actions might MCB take regarding Whitestone REIT (WSR) going forward?

MCB indicated it will continue to consider all options available and may seek to remove the entire Board at the next annual meeting if the pattern of delay and entrenchment continues.