The information in this joint proxy statement/prospectus is not complete and may be changed. Equity Commonwealth may not sell the securities offered by this joint proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities nor should it be considered a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY—SUBJECT TO COMPLETION, DATED AUGUST 20, 2021
JOINT PROXY STATEMENT/PROSPECTUS
To the Shareholders of Equity Commonwealth and Monmouth Real Estate Investment Corporation:
The board of trustees of Equity Commonwealth, which we refer to as EQC, and the board of directors of Monmouth Real Estate Investment Corporation, which we refer to as MNR, have each unanimously approved an Amended and Restated Agreement and Plan of Merger, dated as of August 15, 2021, as it may be amended from time to time, which we refer to as the amended merger agreement, by and among EQC, MNR, and EQC Maple Industrial LLC (f/k/a RS18 LLC), a subsidiary of EQC, which we refer to as Merger Sub. The amended merger agreement amends and restates the Agreement and Plan of Merger, dated as of May 4, 2021, by and among EQC, MNR and Merger Sub, which we refer to as the original merger agreement. Pursuant to the amended merger agreement, EQC will acquire MNR through a merger of MNR with and into Merger Sub, which we refer to as the merger, with Merger Sub surviving the merger as the surviving entity. The combined company after the merger, which we refer to as the Combined Company, will retain the name Equity Commonwealth and will continue to trade on the New York Stock Exchange, under the symbol “EQC.” The executive officers of EQC immediately prior to the effective time of the merger will continue to serve as the executive officers of the Combined Company, with David Helfand continuing to serve as the President and Chief Executive Officer of the Combined Company. Sam Zell will continue to serve as the Chairman of the board of trustees of the Combined Company. The obligations of EQC and MNR to effect the merger are subject to the satisfaction or waiver of certain customary conditions set forth in the amended merger agreement (including the applicable approvals of each company’s shareholders).
If the merger is completed pursuant to the amended merger agreement, each share of MNR common stock, which we refer to as MNR common shares, outstanding immediately prior to the effective time of the merger will convert into the right to receive, at the election of the holder of such share, (i) $19.00 per share in cash, or (ii) 0.713 of a newly issued share of EQC’s common shares of beneficial interest, which we refer to as EQC common shares, with cash paid in lieu of any fractional shares, subject in each case to pro rata cutbacks described in the joint proxy statement/prospectus to the extent cash or stock is oversubscribed. The cash and EQC common shares to be received by MNR common shareholders in the merger, together with any cash paid in lieu of the issuance of fractional shares, are referred to collectively as the “common merger consideration.” Any holder of MNR common shares who does not make a valid and timely election will be deemed to have made an election to receive EQC common shares as the common merger consideration with respect to all MNR common shares held by such holder. The aggregate amount of cash to be paid to MNR common shareholders as part of the common merger consideration will be $641 million and the aggregate amount of EQC common shares to be issued to MNR common shareholders as part of the common merger consideration will be approximately 46.2 million shares. Upon completion of the merger and after giving effect to the issuance of EQC common shares in connection therewith, we estimate that continuing EQC shareholders will own approximately 73% of the issued and outstanding common shares of the Combined Company, and former MNR shareholders will own approximately 27% of the issued and outstanding common shares of the Combined Company.
Additionally, if the merger is completed pursuant to the amended merger agreement, (i) each share of 6.125% Series C Cumulative Redeemable Preferred Stock of MNR, which we refer to as MNR Series C preferred stock, will convert into the right to receive an amount in cash equal to $25.00 per share plus accumulated and unpaid dividend, (ii) each outstanding option to purchase MNR common shares granted under a MNR equity plan, whether vested or unvested, which we refer to as a MNR stock option, will be canceled and converted into the right to receive the stock consideration in respect of each net option share (calculated pursuant to the amended merger agreement to take into account the exercise price of the MNR stock option and applicable withholding taxes) covered by such stock option, and (iii) each outstanding unvested restricted stock award issued pursuant to a MNR incentive plan, which we refer to as a MNR restricted stock award, will be canceled and the holder thereof will then become entitled to receive the common merger consideration in respect of each net share covered by such restricted stock award (subject to the election procedures in the joint proxy statement/prospectus).
In connection with the proposed merger, EQC and MNR will each hold a special meeting of their respective shareholders. At the EQC special meeting, EQC shareholders will be asked to consider and vote on (i) a proposal to approve the issuance of EQC common shares in connection with the merger, which we refer to as the EQC Issuance Proposal, and (ii) a proposal to approve one or more adjournments of the EQC special meeting to another date, time, place, or format, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the issuance of EQC common shares in connection with the merger, which we refer to as the EQC Adjournment Proposal. At the MNR special meeting, MNR shareholders will be asked to consider and vote on (i) a proposal to approve the merger and the transactions contemplated by the amended merger agreement, which we refer to as the MNR Merger Proposal, (ii) a proposal to approve, by advisory (nonbinding) vote, certain compensation that may be paid or become payable to MNR’s five executive officers in connection with the amended merger agreement and the transactions contemplated thereby, which we refer to as the MNR Compensation Proposal, and (iii) a proposal to approve one or more adjournments of the MNR special meeting to another date, time, place, or format, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to approve the merger and the other transactions contemplated by the amended merger agreement, which we refer to as the MNR Adjournment Proposal.
The record date for determining the shareholders entitled to receive notice of, and to vote at, the EQC special meeting and the MNR special meeting will remain August 2, 2021. The merger cannot be completed unless, among other matters, (i) EQC shareholders approve the EQC Issuance Proposal by the affirmative vote of at least a majority of the votes cast on the proposal, and (ii) MNR shareholders approve the MNR Merger Proposal by the affirmative vote of at least two-thirds of the outstanding MNR common shares.
The EQC board of trustees has unanimously (i) determined that the amended merger agreement and the merger, including the issuance of EQC common shares and the payment of cash consideration in connection with the merger, are advisable and in the best interests of EQC and its shareholders, (ii) authorized and approved the amended merger agreement, the merger and the other transactions contemplated by the amended merger agreement, including the issuance of EQC common shares and the payment of cash consideration in connection with the merger, and (iii) resolved to recommend approval of the issuance of EQC common shares in connection with the merger by the EQC shareholders and that such approval be submitted for consideration at the EQC special meeting. The EQC board of trustees unanimously recommends that EQC shareholders vote FOR the EQC Issuance Proposal and FOR the EQC Adjournment Proposal.
The MNR board of directors has unanimously (i) determined that the merger is advisable and in the best interests of MNR, (ii) approved the amended merger agreement and the transactions contemplated thereby, including the merger, upon the terms and subject to the conditions set forth therein, and (iii) authorized the execution and delivery by MNR of the amended merger agreement. The MNR board of directors unanimously recommends that MNR shareholders vote FOR the MNR Merger Proposal, FOR the MNR Compensation Proposal, and FOR the MNR Adjournment Proposal.
This joint proxy statement/prospectus contains important information about EQC, MNR, the merger, the amended merger agreement, and the special meetings. This document is also a prospectus for EQC common shares that will be issued to MNR shareholders pursuant to the amended merger agreement.
We encourage you to read this joint proxy statement/prospectus carefully before voting, including the section entitled “Risk Factors” beginning on page 26.
Your vote is very important, regardless of the number of EQC common shares or MNR common shares you own. Whether or not you plan to attend the EQC special meeting and/or the MNR special meeting, as applicable, please submit a proxy to vote your shares as promptly as possible to make sure that your EQC common shares and/or MNR common shares, as applicable, are represented at the applicable special meeting. Please review this joint proxy statement/prospectus for more complete information regarding the merger and the EQC special meeting and the MNR special meeting, as applicable.
Sincerely,
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Sam Zell
Chairman of the Board of Trustees
Equity Commonwealth
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Eugene W. Landy
Chairman of the Board of Directors
Monmouth Real Estate Investment Corporation
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Neither the Securities and Exchange Commission, nor any state securities regulatory authority has approved or disapproved of the merger or the securities to be issued under this joint proxy statement/prospectus or has passed upon the adequacy or accuracy of the disclosure in this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated August [•], 2021.