Monogram Residential Trust Explores a Sale

High-end apartment owner Monogram Residential Trust Inc. is weighing a sale amid a wave of real estate mergers, according to people familiar with the matter.

The Plano, Texas, real-estate investment trust has recently sounded out potential buyers, one of the people said. Deal talks are in early stages, this person added, and may not lead to a deal.

Monogram had a market value of $1.7 billion Monday afternoon and with a typical deal premium could be valued at more than $2 billion.

Monogram's portfolio includes investments in 53 apartment communities in 10 states including California and Florida. The portfolio has more than 15,000 apartment units, according to the company's website. Many of Monogram's properties are located in coastal communities such as San Francisco and Miami. In the second quarter, Monogram reported sales of $68.6 million, a 16% increase from the same period in 2015, and a small loss.

In March, activist hedge fund Snow Park Capital Partners called for Monogram to explore strategic alternatives including a sale of the company, amid unrest on its board and a wave of real-estate transactions.

The company in March issued a filing with the Securities and Exchange Commission that said majority of its nine-member board had formed an executive committee that excludes the two directors from Behringer Investments. The board cited "conflicts of interests" of the Texas investment firm's board members.

At the time, Behringer said: "We think that making this controversy public is aiming at both stifling dissenting voices on the board of directors and taking attention from the ongoing litigation over fees." Behringer in 2015 sued Monogram alleging contract breaches over fees. Monogram denied the charges and countersued.

REITs are companies that own and usually operate income-producing real estate. They are a popular way for investors to get exposure to the property market through assets like apartment and office buildings, shopping malls and hotels.

If a Monogram deal were to be struck, it would come on the heels of others in the real-estate industry, including a merger between Post Properties Inc. and MAA. Last month, the two multifamily apartment REITs agreed to combine in a $4 billion acquisition.

Real estate ranks as the second-busiest sector for deals globally this year, according to Dealogic, with more than $254 billion of activity. There have been over $57 billion of REIT deals alone, the data show.

Real-estate companies recently got their own dedicated group in the S&P 500, a recognition of growth in the sector. The new classification is drawing even more investor attention to REITs.

Write to Craig Karmin at [e-mail] and Dana Mattioli at [e-mail]

(END) Dow Jones Newswires

September 26, 2016 16:35 ET (20:35 GMT)

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