Apartment real estate investment trust (REIT) Monogram Residential Trust (NYSE: MORE) was trading about 22% higher as of 11 a.m. EDT today after it was announced that the company would be taken private by Greystar Real Estate Partners, the largest U.S. apartment manager. In a note to employees, Monogram's CEO Mark T. Alfieri said, "We believe this transaction provides our stockholders with immediate and compelling value for their investment, and reflects the hard work and dedication of all the employees at Monogram."
The reason for the price spike is the terms of the agreement. Monogram's stock closed at $9.80 per share on the previous trading day, and shareholders will receive $12 per share in cash when the deal closes, which is expected to occur in the second half of 2017.
One important point is that shares rose almost to the exact level of the acquisition price following the announcement. As I type this, Monogram trades for $11.98 per share, just $0.02 shy of the offer price, which indicates that the market believes the deal is highly likely to go through. Monarch is entitled to a $202.1 million termination fee if it doesn't, and this could be a big reason investors are so confident.
While there are still a few things that need to happen before the acquisition can be finalized, this looks like a done deal. Monogram most likely will be taken private, and its shareholders will need to find somewhere else to invest their $12 per share.
Fortunately, there are some other publicly traded residential REITs that make excellent investments. Apartment REIT AvalonBay Communities (NYSE:AVB) is one that deserves a look. The company invests in apartment communities in high-barrier urban and suburban markets, such as New York City and Southern California, and its scale and financial flexibility gives it a strong competitive advantage.