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Catching heat; getting the green light

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Catching heat; getting the green light

S&P Global MarketIntelligence offers our top picks of U.S. real estate news stories and morepublished throughout the week. Please note that some entries may have links tothird-party sources that may require a subscription.

Catching heat

* Shareholder activist WW Investors stepped up its drawn-outcampaign for a slateof new independent directors on New York REIT's board, while voicing support for theboard's decision to approve the company's liquidation plan.

Michael Ashner, who co-owns WW Investors with StevenWitkoff, outlined in a Sept. 26 letter the shareholder group's frustrationswith what he said was the "self-interested and intransigent position ofthe Board which makes reconciliation of issues currently impossible."

And in a Sept. 29 letter, Ashner and Witkoff called out theREIT's retention of asearch firm to recruit new directors, noting that the REIT's board should givegreater consideration to the investor's own nominees. With respect to theREIT's plan to lookfor a new external manager, the investor said it will a proposal to fill that role inorder to save the REIT more than $50 million in costs under the currentexternal management contract.

New York REIT responded on Sept. 30, arguing that the investors'desire to both serve on the company's board and bid to become its externalmanager created a conflict of interest.

* InvestorsReal Estate Trust also came under pressure this week from anactivist shareholder. Land &Buildings Investment Management LLC's Jonathan Litt called on theREIT to reduce itsdividend by at least 50% as a result of rent declines in the REIT'senergy-sensitive North Dakota multifamily markets. "The perfect storm ofnegative catalysts we identified at IRET earlier this year has onlyintensified," Litt said in a Sept. 29 release. The investor also arguedthat given continued NAV deterioration, the REIT's shares still have to fall afurther 30% to reach fair value.

Getting the greenlight

* After a few bumps in the road that included and a mortgage debt-relatedissue, SBEEntertainment's pending takeover of Morgans Hotel Group Co. for $2.25 per share in cash ispotentially headed to a close. Morgans disclosed in a Sept. 26 filing that itsstockholders approvedthe deal at asame-day special meeting, which proceeded as planned after an initialscheduling delay.

More on the M&Afront

* A slew of other M&A deals in their early onset orfinal stages also led headlines during the week, including rumors thatMonogram Residential TrustInc. may be next in line to jump on the real estate bandwagon.According to a Sept. 26 report in TheWall Street Journal, the company is considering a sale and is in the early stages of talkswith potential acquirers. The rumored sale exploration comes months aftershareholder activist Snow Park Capital Partners urged the company to buyers.

* CousinsProperties Inc.'s stock-for-stock deal with Parkway Properties Inc. edged to completion, and is nowexpected to take place Oct. 6. Cousins' board also approved the correspondingplan to spin off both parties' Houston assets into a publicly traded REIT knownas Parkway Inc., which will be effected via a pro rata common share dividend,according to a Sept. 27 release.

A team of Stifel analysts downgraded Cousins to"sell" from "hold" based primarily on their projectedimplied cap rates for the stocks after the spinoff. Although they support themerger and spin transactions, the analysts foresee some areas of concern,including that the reported numbers for the remaining 2016 quarters will likelybe "very messy."

* The go-shop period stipulated in the deal between and expired Sept. 22 with no alternative buyout bids for thenontraded REIT, clearing the way for a possible fourth-quarter close for thetransaction,according to Sept. 26 statements.

* Finally, a possible merger agreement between nontraded REITs andMoody National REIT IIInc. is officially in the works. Moody National REIT I, which justcompleted a strategic review, disclosed in a Sept. 27 filing that it acceptedMoody National REIT II's nonbinding letter of intent to the company for a gross price of$11 per common share.

Cheaper by the dozen

* MedEquitiesRealty Trust Inc. hit the market this week, pricing its19,925,333-share IPOat the low end of its estimated range. At a price of , net proceeds areexpected to reach about $210.2 million, and the offering is anticipated to closeOct. 4.

Shakeups and layoffs

* NationalRetail Properties Inc. announced Sept. 29 that it President and COO JulianWhitehurst as its new CEO, and lead independent director Robert Legler as itschairman, effective April 28, 2017. Whitehurst and Legler will succeed CraigMacnab, who is retiring from the CEO post and resigning as chairman and a boardmember.

* Also on Sept. 29, Silver Bay Realty Trust Corp. said Christine Battistresigned as its CFO,effective immediately. The company accordingly shifted the finance functions toChief Accounting Officer Julie Ellis and Executive Vice President of FinanceGriffin Wetmore.

* GladstoneCommercial Corp. said Sept. 26 that it has begun a search for a newCFO to succeed Danielle Jones, who stepped down, effective Nov. 1.

* Meanwhile, Corrections Corp. of America revealed Sept. 27 that itwill lay off about12% of its headquarters workforce as it seeks to restructure its corporate operationsand potentially cut back on roughly $9.0 million in costs through 2017. TheJustice Department's plans to reduce the use of private prisons appears to beimpacting the company, with four of its facilities to be directly by the cutbacks.

Building up

* New York Gov. Andrew Cuomo announced Sept. 27 that a jointventure between Vornado RealtyTrust, Related Cos. and Skanska AB was selected to transform the James A. Farley Post Office inManhattan, N.Y., into a new mixed-use transportation hub that will be calledMoynihan Train Hall. The $1.6 billion project, which had been since 2005, is expectedto be completed by 2020.

* SL GreenRealty Corp. said Sept. 28 that it is forging ahead with itsOneVanderbilt tower in New York City after $1.5 billion in constructionfinancing for the 58-story development. The company also signed up Visiting NurseService of New York, which will occupy 308,115 square feet of space atThe NewsBuilding in Manhattan, N.Y.

Acquisition drive

* DouglasEmmett Inc. announced Sept. 27 that it $139.5 million to acquire aclass A office building in Santa Monica, Calif., which will be held in aconsolidated joint venture between the company, Qatar Investment Authority andother institutional investors. The REIT plans to cut its capital stake in theventure to 20% by selling a portion of its interest to another sovereign wealthfund investor.

* MedicalProperties Trust Inc. struck $1.25 billion worth of deals tobuy the real estatestakes in nine acute-care hospitals operated by Steward Health Care System LLC.The company said Sept. 26 that it will use proceeds from a newly launchedcommon stock offering to help fund the transactions, which also include a $50 millionequity investment in Steward.

Featured during theweek on S&P Global Market Intelligence

Real EstateRundown: MedEquities, starting small, aims to grow through hospitalbuys: Though most of the company's properties are linked to theskilled-nursing industry, it plans to follow its impending IPO by buyingacute-care hospitals, executives say.

Data Dispatch:REIT capital-raising activity up 14.2% YOY through mid-September:US REITs have raised the most capital via senior debt offerings year-to-datethrough Sept. 15.

Data Dispatch:September state of the housing market: Recent data showed the U.S.housing market remained on generally solid ground in August, albeit with new-and existing-home sales and housing starts declining from their July readings.