Snow Park Capital Sends Letter to Board of Monogram Residential Trust

Snow Park calls on Monogram Board to immediately engage an investment bank and explore strategic alternatives in order to unlock value for all shareholders

Encouraged by recent 13D filing by Madison International Realty, but believes Monogram Board must ensure process is equitable and open to a broad range of buyers and simultaneously solicit entity level bids

Snow Park believes Monogram Residential Trust’s net asset value is approximately $13 per share, over 40% above the current trading price

Snow Park reserves all shareholder rights, including the nomination of directors

NEW YORK--(BUSINESS WIRE)-- Snow Park Capital Partners, LP (“Snow Park”), owner of 2.3M shares of Monogram Residential Trust (NYSE: MORE), (“Monogram”) (the “Company”) today publicly released the following letter to the Board of Directors of Monogram:

March 3, 2016

The Board of DirectorsMonogram Residential Trust5800 Granite Pkwy Suite 1000Plano, TX 75024Attn: E. Alan Patton, Chairman of the Board

Dear Alan and Members of the Board,

We are encouraged by the recent 13D filing by fellow shareholder Madison International Realty (“Madison”), and we expect that the Board will engage with them for the benefit of all shareholders. However, we also recognize the inherent conflicts that may arise with a large 13D filing shareholder that is simultaneously engaged in the potential purchase of Company assets. For the benefit and protection of all shareholders, we believe that any sales process or access that the Board provides to Madison should also include a wide range of private buyers to ensure value is maximized for all shareholders1. This process should also allow and encourage potential private buyers to make bids on an entity level.

Since its listing in November 2014, Monogram Residential Trust (“Monogram”) has traded at a wide and persistent discount to its net asset value, which we estimate to be approximately $13/share2, over 50% greater than the unaffected share price3 before Madison filed its 13D. This NAV is not only supported by our asset level diligence but also by direct statements management has made to certain market participants.4 This discount is well highlighted by the following facts:

• The Company currently trades below the cost basis5 of its core multi-family real estate that was largely purchased at the depths of the last real estate cycle6
• Current implied trading cap rate of 6.4%7 which is wide of 2009 & 2010 distressed private market value of comparable assets8

The Company has had over six years to cultivate a retail investor base that was given the opportunity to buy or sell post listing, and now well over a year to cultivate an institutional shareholder base. With the persistent discount to NAV we believe that the private markets are likely more efficient owners of Monogram’s real estate than are public markets and we urge the Board to take the following actions immediately:

• Clarify Madison’s role in its asset disposition program and steps it is taking to protect minority shareholders
• Engage an investment bank to explore all strategic alternatives to unlock value for all shareholders, including the active solicitation of entity level transactions from a wide array of potential buyers
• Form a special committee of the Board to oversee these processes that does not include any management members of the Board in order to remove any conflicts of interest9

In the coming weeks, Snow Park plans to reach out to the independent Board of Directors to gain clarity on the process that it is currently undertaking with Madison to ensure protections are in place for Monogram’s minority shareholders. While we believe that certain members of the Board are well aligned with shareholder returns10, we reserve all our rights as shareholders including the nomination of directors at the annual meeting or a special meeting.

Best Regards,

Jeffrey Pierce, Managing Partner

About Snow Park

Snow Park Capital Partners, LP (“Snow Park”) is an investment advisor that focuses on publicly traded real estate securities.

1		Page 7 of the March 1st Real Estate Alert, Madison International publicized that Monogram Residential has made it an equity partner
2		NAV range of $12.00 to $13.40 using a 4.5% to 5.0% cap rate on NTM NOI using 4Q annualized NOI with 5% forward growth and a 50% haircut to provide “total potential value creation.” Supporting data taken from page 44 of Monogram’s Q4 Supplemental “Roadmap to NAV”.
3		MORE trading price of $8.62 at the time Madison filed its 13D on 2/19/2016.
4		CEO stated at a June 2015 NAREIT group meeting that the Company’s assets could be strategically sold for a 4.5% to 4.7% cap rate
5		Estimated $9.47 per share (book value of equity plus cumulative depreciation and amortization plus cumulative distributions)
6		November Investor Presentation page 7
7		NTM NOI from footnote 1 divided by the sum of the market cap and liabilities listed on the “Roadmap to NAV” less development pipeline at cost excluding half of the total potential value creation as listed in page 44 of the Q4 Supplemental Financial Information
8		Year end 2009 CBRE cap rate survey
9		Stock ownership of CEO is approximately 394k shares, while 2014 annual compensation was nearly $1.8M (4/22/2015 proxy)
10		Behringer Harvard, the former sponsor, restructured its listing promote into the Series A Preferred which matures at 12/31/2016 and currently would be in the money with the stock above $11/share (Morgan Stanley research report 9/24/2015). Above that level, Behringer receives 17.25% of the outperformance above the 7% hurdle return rate to shareholders. (Page F-24 of the 2015 10K). Behringer currently holds two board seats.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160303005860/en/

Sloane & Company
Dan Zacchei / Jaimee Pavia, 212-486-9500

Source: Snow Park Capital Partners, LP

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Subsea7 awarded contract offshore US
• Ecora Royalties PLC Announces Half Year Results
• KKR Expands Global Credit & Markets Platform with Senior Hires