UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 4, 2021

(Exact name of registrant as specified in its charter)

(Registrant’s Telephone Number, Including Area Code) (732) 577-9996

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Merger Agreement

 

On May 4, 2021, Monmouth Real Estate Investment Corporation (“Monmouth”), a Maryland corporation, Equity Commonwealth (“EQC”), a Maryland real estate investment trust, and RS18 LLC (“Merger Sub”), a Maryland limited liability company and wholly owned subsidiary of EQC, entered into a definitive agreement and plan of merger (the “Merger Agreement”). Pursuant to, and subject to the terms and conditions of, the Merger Agreement, EQC will acquire Monmouth in an all-stock transaction (the “Merger”).

 

Transaction Structure

 

At the Effective Time, (i) each Monmouth stock option (a “Monmouth Option”) outstanding immediately prior to the Effective Time, whether vested or unvested, will be cancelled and the holder thereof will receive EQC Common Shares equal to the product of (x) the number of net option shares in respect of such Monmouth Option (calculated pursuant to the Merger Agreement to take into account the exercise price of the Monmouth Option and applicable withholding taxes) multiplied by (y) the Exchange Ratio, and (ii) each unvested restricted stock award issued pursuant to a Monmouth incentive plan (each, a “Monmouth Restricted Stock Award”) outstanding immediately prior to the Effective Time, will be cancelled and the holder thereof will receive EQC Common Shares equal to the product of (x) the number of net restricted stock shares in respect of such Monmouth Restricted Stock Award (calculated pursuant to the Merger Agreement to take into account applicable withholding taxes) multiplied by (y) the Exchange Ratio.

 

Under the Merger Agreement, until the closing occurs, Monmouth would be permitted to pay regular quarterly dividends on its common stock (up to $0.18 per share) and preferred stock (up to $0.3828125 per share) and would also be permitted to pay additional dividends on its common stock if necessary to maintain its status as a real estate investment trust.  EQC would be permitted to pay regularly dividends on its preferred stock (up to $0.40625 per share) but EQC would not be permitted to pay dividends on its common stock prior to the closing, except that EQC could pay a matching dividend to its common stockholders for any common stock dividends paid by Monmouth, other than Monmouth’s regular June and September quarterly common stock dividends, and EQC would be permitted to pay additional dividends on its common stock if necessary to maintain its status as a real estate investment trust.

 

The completion of the Merger is subject to certain customary closing conditions, including, without limitation: (i) approval by Monmouth stockholders holding 66-2/3% of Monmouth’s outstanding common shares of the Merger and approval by EQC stockholders holding a majority of EQC’s common shares of the issuance of EQC Common Shares to Monmouth stockholders in the Merger; (ii) approval from the New York Stock Exchange for the listing of the EQC Common Shares to be issued in the Merger; (iii) the absence of an injunction or law prohibiting the Merger; (iv) the absence of any pending, threatened or outstanding government investigation with respect to the Merger; (v) the accuracy of each party’s representations and warranties, subject in most cases to material adverse effect qualifications, and receipt by each party of a certificate to such effect from an officer of the other party; (vi) the absence of any material adverse effect with respect to either Monmouth or EQC; (vii) material compliance with each party’s covenants and agreements; (viii) receipt by Monmouth and by EQC of an opinion to the effect that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and of an opinion as to the qualification of EQC and Monmouth, respectively, as a real estate investment trust under the Code; and (ix) effectiveness of the registration statement that will be filed by EQC with the U.S. Securities and Exchange Commission (“SEC”) and will contain the joint proxy statement/prospectus to be sent to Monmouth’s common stockholders and EQC’s common stockholders.

 

No Offer or Solicitation

 

Additional Information and Where to Find It

 

In connection with the proposed Merger, Monmouth intends to file a joint proxy/solicitation statement with the SEC, which will be sent to the common stockholders of Monmouth seeking their approval of the Merger and the common stockholders of EQC seeking their approval of the issuance of EQC common stock in connection with the Merger (the “Solicitation Statement/Prospectus”).  Monmouth and EQC may also file other documents regarding the proposed Merger with the SEC. This communication is not intended to be, and is not, a substitute for such filings or for any other document that Monmouth and/or EQC may file with the SEC in connection with the Merger. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE ENTIRE SOLICITATION STATEMENT/PROSPECTUS, WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MONMOUTH, EQC, AND THE PROPOSED MERGER. Investors and security holders will be able to obtain free copies of the Solicitation Statement/Prospectus and other documents filed with the SEC by Monmouth, when they become available, through the website maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the Solicitation Statement/Prospectus and other documents filed with the SEC on Monmouth’s website at www.mreic.reit.

Participants in the Solicitation

 

Monmouth and certain of its directors and executive officers and other employees may be deemed to be participants in the solicitation of proxies from Monmouth’s stockholders in connection with the proposed Merger under the rules of the SEC. Investors may obtain information regarding the names, affiliations and interests of directors and executive officers of Monmouth in Monmouth’s Annual Report on Form 10-K for Monmouth’s fiscal year ended September 30, 2020, which was filed with the SEC on November 23, 2020, as well as in its other filings with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Solicitation Statement/Prospectus and other relevant materials to be filed with the SEC in respect of the proposed Merger when they become available.

Forward-Looking Statements

 

The forward-looking statements contained in this Current Report on Form 8-K reflect Monmouth’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances regarding Monmouth and EQC that may cause actual results to differ significantly from those expressed in any forward-looking statement, including, without limitation, (i) inability to complete the proposed Merger because, among other reasons, one or more conditions to the closing of the proposed Merger may not be satisfied or waived; (ii) uncertainty as to the timing of completion of the proposed Merger; (iii) potential adverse effects or changes to relationships with Monmouth’s and/or EQC’s tenants, employees, service providers or other parties resulting from the announcement or completion of the proposed Merger; (iv) the outcome of any legal proceedings that may be instituted against the parties and others related to the Merger Agreement; (v) possible disruptions from the proposed Merger that could harm Monmouth’s or EQC’s respective business, including current plans and operations; (vi) unexpected costs, charges or expenses resulting from the proposed Merger; (vii) uncertainty of the expected financial performance of EQC following completion of the proposed Merger, including the possibility that the benefits anticipated from the proposed Merger will not be realized or will not be realized within the expected time period; (viii) legislative, regulatory and economic developments; and (ix) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism, outbreak of war or hostilities and epidemics and pandemics, including COVID-19, as well as Monmouth’s or EQC’s management’s response to any of the aforementioned factors. Monmouth does not guarantee that the mergers and events described will happen as described (or that they will happen at all).  For a further discussion of other factors that could cause Monmouth’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in Monmouth’s most recent Annual Report on Form 10-K and in its Quarterly Reports on Form 10-Q for subsequent quarters.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.