REAL ESTATE - A bidding war has broken out for the rights to acquire Town & Country (TCT), the Baltimore, Maryland-based apartment REIT that owns 13,000 units on the eastern US seaboard.

A third bidder entered the fray last week when investment firm Berkshire Property Advisors proposed to acquire TCT for $37 a share. The informal offer topped earlier offers by investment joint ventures Magazine Acquisitions and Oriole Partnership.

TCT had originally agreed to a $1.3bn, $33.90 per share offer made last December by Magazine, a partnership between Morgan Stanley Real Estate and Canadian firm Onex Real Estate.

A month later Oriole trumped that offer with a non-binding $36 per share proposal. Oriole - which includes California-based residential REIT Essex Property Trust, along with units of UBS Wealth Management and AEW Capital Management--submitted a definitive $36 per share cash offer for TCT late last week, hours before the Berkshire bid.

While TCT has already accepted the Magazine bid, the REIT has indicated that it will engage in discussions with both Oriole and Berkshire. Under the earlier deal, Magazine can match any superior third-party offers for TCT. The already agreed deal carries a $20m break-up fee.

For Essex, the offer for Baltimore-based TCT is part of its strategy of targeting supply-constrained markets.

However, the offer raised some eyebrows among analysts. JP Morgan analyst Tony Paolone suggested in a note that for Essex “diversifying away from the west coast could be a marginal negative for its trading multiple if its role in the [joint venture] is significant". Oriole Partnership did not break down the stakes of its members.

Essex's book of properties includes interests in 127 apartment complexes with 27,000 units in US west coast states.

Other analysts have said that TCT’s portfolio, while relatively old, is situated in good locations around Washington, DC, Baltimore, Pennsylvania and Florida. Investors might be eyeing demolition of existing structures and reconstruction of new apartments on those sites, they said.