The surety of execution that ISS believed was given precedence over unitholder value was seen as a plus in a Glass Lewis report recommending a vote for the Starwood Capital deal. “The purchase price represents a compelling value at which Milestone unitholders can cash out their investment in the REIT and immediately realize an assured value, in cash, at a meaningful premium,” according to the proxy advisory firm's report, also issued in February.

On Wednesday, Milestone said that institutional unitholders—including 1832 Asset Management LP; Connor, Clark & Lunn Investment Management Ltd.; Manulife Asset Management and Vestcor Investment Management Corp.—all had agreed to support the revised transaction and have signed voting and support agreements to vote their trust units in favor of it. Combined, the institutions own about 16% of the REIT's voting trust units. A special meeting of unitholders is set for March 28 in Toronto.

In connection with Starwood Capital's slightly sweetened offer, Milestone senior management have agreed to certain financial concessions and commitments totaling more than US$7 million. These include waiving certain previously disclosed severance and transaction bonus payments and guaranteeing certain working capital amounts as of closing. In addition, all members of Milestone's management team who hold the REIT's non-voting class B units have agreed to forego approximately US$1 million of proceeds as a result of agreeing not to receive the increased transaction price for their class B units.

When the deal closes, it will add 78 multifamily garden-style residential properties, comprising 24,061 apartment units across 16 major metropolitan markets throughout the Southeast and Southwest, to Starwood Capital's portfolio. The Greenwich, CT-based asset management firm already controls 67,000 units across the Sunbelt.

TORONTO and DALLAS—Following pushback from institutional unitholders and a thumbs-down from one of the leading proxy advisory firms, Starwood Capital Group has slightly increased its offer for Milestone Apartments Real Estate Investment Trust. Unitholders in the Dallas-based REIT, which trades on the Toronto Stock Exchange, will now receive US$16.25 per trust unit, up from US$16.15.

GlobeSt.com reported in January that Starwood Capital, which already has substantial holdings in the multifamily sector, proposed to take Milestone private for $1.3 billion in cash. The deal as originally structured had an enterprise value of $2.85 billion including the assumption of debt.

A few days after the deal was announced, Bloomberg Business reported that institutional unitholders in Milestone, including Manulife Asset Management, believed that Starwood Capital's offer was too low. ““They're really giving it away, in my opinion,” Steve Belisle, senior portfolio manager at Manulife Asset Management, told Bloomberg. “Investors should expect to get a better offer at some point. If we present a united front, we can stop the transaction.” Belisle's firm owns about 4% of Milestone's units.

Reuters reported in February that Institutional Shareholder Services was recommending that Milestone unitholders vote against the transaction. “The fact pattern in the transaction indicates speed and certainty were prioritized over price, apparently out of concerns that cyclical factors will put pressure on REIT valuations,” ISS said in its Feb. 22 report.

The surety of execution that ISS believed was given precedence over unitholder value was seen as a plus in a Glass Lewis report recommending a vote for the Starwood Capital deal. “The purchase price represents a compelling value at which Milestone unitholders can cash out their investment in the REIT and immediately realize an assured value, in cash, at a meaningful premium,” according to the proxy advisory firm's report, also issued in February.

On Wednesday, Milestone said that institutional unitholders—including 1832 Asset Management LP; Connor, Clark & Lunn Investment Management Ltd.; Manulife Asset Management and Vestcor Investment Management Corp.—all had agreed to support the revised transaction and have signed voting and support agreements to vote their trust units in favor of it. Combined, the institutions own about 16% of the REIT's voting trust units. A special meeting of unitholders is set for March 28 in Toronto.

In connection with Starwood Capital's slightly sweetened offer, Milestone senior management have agreed to certain financial concessions and commitments totaling more than US$7 million. These include waiving certain previously disclosed severance and transaction bonus payments and guaranteeing certain working capital amounts as of closing. In addition, all members of Milestone's management team who hold the REIT's non-voting class B units have agreed to forego approximately US$1 million of proceeds as a result of agreeing not to receive the increased transaction price for their class B units.

When the deal closes, it will add 78 multifamily garden-style residential properties, comprising 24,061 apartment units across 16 major metropolitan markets throughout the Southeast and Southwest, to Starwood Capital's portfolio. The Greenwich, CT-based asset management firm already controls 67,000 units across the Sunbelt.