If you've ever had the burning desire to sit in on secret REIT board meetings where buyouts are complicated and privatization deals are brokered, than EDGAR is your access man. EDGAR, the Electronic Data-Gathering, Analysis, and Retrieval system at the U.S. Security and Exchange Commission acts as a clearing house for all electronic reporting required of public companies. One of those requirements is that firms involved in a privatization must file a “definitive merger proxy” statement that discloses a nearly day-by-day account of the meetings, parties, and motivating reasons behind a privatization.
In the “Background of the Merger” chapter of the proxy, these disclosures include juicy info such as whether a REIT was directly approached by a private equity firm or sought out a bidder in the larger market; any and all conversations the REIT has had in pursuing a deal; and the strategic alternatives to a sale the board is pondering.
Here's a quick hit of some of the background behind three key multifamily REIT privatizations over the past several years, pulled from these proxy statements. Full merger proxy documents are available via a REIT's investor relations department or online at the SEC's EDGAR Web site: www.sec.gov/edgar.shtml.
Gables Residential Trust On Oct. 6, 2004, Gables began a serious consideration of the sale of the company during a “special telephonic meeting” of the board of directors to discuss the implications of a proposed merger between two of their REIT rivals, Camden Properties Trust and Summit Properties. In accepting a $2.8 billion joint venture buy-out by ING Clarion and Lehman Bros., the document notes that “the merger allows our company to take advantage of strong demand for multifamily communities, including demand from condominium converters in some of our markets.”
AMLI Residential Trust In opting to pursue a privatization tack in 2005, AMLI notes that the company was seeking to “mitigate the costs and expenses of being a public company, to expand the breadth and reach of the AMLI brand, and to leverage the sizeable investments made in the company's technology platform,” which at that time included e-procurement and revenue management capabilities. Of the several reasons the company lists for the merger, the board of directors believed that cap rates would continue to compress, valuations of multifamily real estate would continue to increase, and AMLI shares would continue to trade “at a substantial discount to our net asset value.”
Archstone-Smith Trust In March 2006, Lehman Bros. made the first move to acquire Archstone, approaching CEO Scot Sellers and CFO Charles Mueller with an informal cash offer of $60 per share, according to the background section. The board opted to wait for a formal proposal, and in turn, contacted an unnamed advisory firm in March 2007 to explore the possibility of Archstone acquiring another multifamily REIT. That advisory firm instead made a bid to acquire Archstone, competing with the Lehman Bros. / Tishman Speyer JV as late as May 22, just one week before the execution of the merger.