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UPDATED: In Play? Two REITs Face Decisions as Suitors Come Knocking

BRE Properties Urged To Explore Strategic Alternatives; Global Income Trust Hires Sale Advisor
December 10, 2013
As investors expand their search for deals, perceived “underperforming” REITs are drawing more and more attention. That was the case this past week for BRE Properties and Global Income Trust.

Land and Buildings, an investment firm specializing in publicly traded real estate and real estate related securities, last week urged BRE Properties’ to explore a sale of the company in light of reports by Bloomberg on Dec. 4th that Essex Property Trust had offered to purchase BRE “for about $5 billion.”

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“BRE has chronically underperformed its closest comparables by a number of measures, including total returns, net operating income growth, FFO growth and dividend growth,” said Jonathan Litt, founder and CEO of Land and Buildings. “Selling the company to a best-in-class operator such as Essex would present an opportunity for BRE Properties’ shareholders to realize the potential of the company’s intrinsic value.

“We believe that our high level of frustration with the company’s poor track record is reflective of the views of many of BRE’s shareholders,” Litt continued “We have been engaged with BRE’s management for over a year and BRE’s board since August about ways to drive shareholder value, including full operational and strategic reviews.”

And BRE Properties announced this week that it would do so.

BRE said it has begun a comprehensive and thorough review of alternatives that include, among other things, a possible sale or merger of BRE.

BRE acknowledged that it received a non-binding proposal from Essex Property Trust and that now the two companies are currently engaged in discussions regarding this proposal and have agreed to an exclusivity period.

San Francisco-based BRE develops, acquires and manages apartment communities in the West's most sought-after markets. BRE directly owns 75 multifamily communities totaling 21,396 units and has a joint venture interest in an additional apartment community totaling 252 homes.

Global Income Trust

Global Income Trust Inc. hired SunTrust Robinson Humphrey Inc. to serve as its financial advisor as the company begins to explore strategic alternatives in connection with a potential sale or merger.

The non-traded REIT completed its public offering earlier this year in April from which it raised $84 million from investors. The Orlando-based firm owns a portfolio of nine properties in the U.S. and Germany, with approximately 1.3 million square feet leasable space, which are 99.8% leased. Its U.S. holdings include distribution centers and office buildings in Jacksonville, FL; and Fort Worth and Austin, TX.

The company is externally advised and managed by affiliates of CNL Financial Group LLC.

Last month, CMG Partners LLC launched an unsolicited offer to purchase up to 500,000 shares of common stock of Global Income Trust Inc. at a price of $3 per share in

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