Investors Challenge Multibillion-Dollar Real Estate Merger Bid

BALTIMORE (CN) — The proposed $3 billion merger of Monogram Residential Trust and Greystar Real Estate Partners has prompted shareholders to file a federal class action.

Filed in Maryland on Aug. 4, the 15-page complaint comes exactly a month after the announcement that Greystar’s new fund, Greystar Growth and Income Fund LP, will acquire all of Monogram’s outstanding stock at $12 a share in an all-cash transaction.

Claiming that Monogram breached its fiduciary duty to shareholders, lead plaintiff Bradley Hertz says the company and its board of directors “issued materially incomplete and misleading disclosures in the Schedule 14A Definitive Proxy Statement filed with the United States Securities and Exchange Commission in connection with the proposed transaction.”

Dated July 28, the proxy “is rendered misleading by the omission of critical information concerning the company’s expected future value as a standalone entity as evidenced by the company’s financial projections, and the financial analysis underlying the fairness opinion provided by Morgan Stanley.”

Hertz says the filing was designed to convince shareholders to vote in favor of the deal.

As of June 30, 2017, Monogram had 167,031,843 shares of common stock outstanding. According to an announcement of the merger, Greystar’s $12-a-share offer represents a premium of approximately 22 percent to Monogram’s unaffected closing stock price on July 3, 2017 —the last trading day prior to the public announcement of the transaction.

With its principal executive offices in Plano, Texas, Monogram’s investment portfolio stretches across “49 multifamily communities in 10 states comprising 13,674 apartment homes,” according to the complaint.

Monogram has not responded to an email requesting for comment.

The class wants an injunction to keep the deal from closing. They are represented by Donald Enright with Levi & Korsinsky in Washington.

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