$1.3 billion bid OK'd by Town & Country

Morgan Stanley, Onex pursue apartments REIT

Town & Country agrees to $1.3 billion bid

December 22, 2005|By LORRAINE MIRABELLA | LORRAINE MIRABELLA,SUN REPORTER

Baltimore-based apartment owner Town & Country Trust has agreed to be acquired by a joint venture of Morgan Stanley Real Estate and Onex Real Estate for $1.3 billion in cash.

Under the agreement, which includes assumption of debt, Town & Country shareholders would be paid $33.90 a share, a 13.8 percent premium over the stock's closing price Monday. The company would continue to pay regular quarterly dividends at a rate of 43 cents per share and per partnership unit through the closing of the sale, expected during the first quarter of next year.

Town & Country, successor to Town & Country Management Corp., was started by Alfred Lerner, a wealthy Cleveland businessman and power in Baltimore banking. It owns and operates 39 apartment complexes with 13,330 units in the Mid-Atlantic, including 18 in the Baltimore area.

The sale is subject to approval by two-thirds of Town & Country's common shareholders. The deal has been approved by the real estate investment trust's board of trustees. Entities controlled by the family of Lerner, who was chairman until his death in 2002, company executive officers and directors that together own about 9 percent of the outstanding shares and 96 percent of the outstanding limited partnership units have pledged to vote in favor of the sale.

Harvey Schulweis, chairman and chief executive of Town & Country, said the company decided to sell because the offer was too attractive to pass up. He said he expects the change in ownership to be seamless. "Anybody sells something when the price offered is so attractive, and I think this was one of those," Schulweis said.

A spokesman for Onex Corp., a Canadian company with operating companies in the service, manufacturing and technology industries, did not return phone calls yesterday.

Onex formed Onex Real Estate in January to invest in real estate assets in North America and has capital commitments of about $240 million, the company said in a statement.

Schulweis said he did not know what changes, if any, the new owners plan.

"The buyer is a financial institution, not an apartment operator, and that would suggest you have an operating company and that operating company would remain intact," Schulweis said.

About 35 people work at the company's corporate headquarters at 300 E. Lombard St., he said.

Schulweis has been president since the company went public in 1993 as a REIT, a company that invests in real estate assets and must distribute at least 90 percent of its annual taxable income, excluding capital gains, as dividends to shareholders.

Schulweis has been affiliated with Town & Country as an owner since the company started in 1979, when Lerner and other investors bought from Monumental Corp. 11,000 apartment units in 27 locations in Maryland, Pennsylvania and Washington. Lerner was the largest investor with a 50 percent share in the venture, Town & Country Management Corp., and headed it as president and chief executive.

A self-made multimillionaire who rose from a job as furniture salesman in the late 1950s to the 270th-richest person in the country in 1989, according to Forbes magazine, Lerner went on to help shape the banking landscape in the Baltimore area.

As the largest stockholder and chairman of Equitable Bancorp, Lerner sold Equitable to MNC Financial in 1989, then stepped in to lead that financially strapped company as its chairman and chief executive in 1990. When MBNA became a separate company, after MNC Financial split it off through an initial public offering of stock engineered by Lerner and other executives, Lerner became chairman of the credit-card giant.

Lerner, who was a part-owner of the Cleveland Browns, was also involved in high-profile efforts to return an NFL team to Balti- more.

Schulweis said he did not expect to continue playing a role in Town & Country after it is sold.

Schulweis also owns a high-profile parcel on Pratt Street at the Inner Harbor, the site of the old Baltimore News American newspaper building, which was demolished and now is a parking lot. He has proposed building an apartment and condominium building at that site, but yesterday he would not comment on the status of those plans.

Shares of Town & Country closed yesterday at $33.82, up 7 cents.

lorraine.mirabella@baltsun.com

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