Equity Commonwealth to Acquire Monmouth Real Estate for $3.4 Billion - Seite 2

Strategic and Financial Rationale

• Attractive entry point into a fast-growing sector with robust long-term fundamentals. The transaction provides the companies’ shareholders the opportunity to build a leading industrial business and participate in the long-term growth of the sector.

• Balance of scale, stability and growth. The income stability of the portfolio, coupled with Equity Commonwealth’s sponsorship and strong balance sheet, is expected to provide the combined company with stable recurring cash flows and significant dry powder for future acquisitions.

• High-quality properties. The portfolio consists of single tenant, net-leased industrial assets, geographically located across 31 states with a focus on the Eastern United States. Many properties are near airports, seaports, transportation hubs, and situated within or near major population centers, positioning the portfolio well to serve both the first and last mile of the supply chain. With a weighted average building age of 9.9 years, much of the portfolio consists of Class A logistics facilities, featuring modern specs and building features.

• Fully-funded growth strategy. Equity Commonwealth is well-positioned to execute on its growth strategy, which is not dependent on raising additional debt or equity capital. Upon closing of the acquisition, Equity Commonwealth is expected to have approximately $2.5 billion of pro forma cash on the balance sheet. Further, Equity Commonwealth plans to dispose of its four office properties totaling 1.5 million square feet and Monmouth’s portfolio of marketable securities over time and reinvest the proceeds in future acquisitions.

• Improved leverage. Post-merger shareholders are expected to benefit from an improved leverage profile. Equity Commonwealth expects to pay $25 per share plus accrued distributions to cash out Monmouth’s $550 million 6.125% Series C Redeemable Preferred Stock in connection with the merger. This is anticipated to create immediate savings of approximately $34 million per annum. Equity Commonwealth has a conservative financing strategy and anticipates long-term leverage targets to be in line with the industrial REIT sector.

• Increased diversification over time. For the three months ending March 31, 2021, Monmouth’s largest tenant accounts for 55% of Monmouth’s annual rent. Equity Commonwealth plans to diversify its tenant base and industry concentrations as the portfolio grows.

Leadership and Governance