Blackstone’s $7.6B Deal Moves Forward

Image by Adrian Sulyok via Unsplash.com

Stockholders of PS Business Parks Inc. have voted in approval of the REIT’s acquisition by affiliates of Blackstone. The $7.6 billion deal was first announced back in April, with Blackstone set to execute an all-cash deal for PSB’s 27 million-square-foot portfolio of industrial, office and multifamily properties. The transaction is expected to finalize on or around July 20.

The properties comprising PSB’s portfolio are situated in California, Texas, Florida and Northern Virginia. According to CommercialEdge, the REIT owns more than 6.6 million square feet of office space and more than 20.6 million square feet of industrial assets. The list of large properties includes Hayward Business Park in Hayward, Calif., at more than 1 million square feet, as well as Port America Industrial Park in Dallas, at 717,735 square feet.

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PSB chose J.P. Morgan Securities as lead financial advisor, Eastdil Secured is acting as real estate advisor, while Wachtell, Rosen & Katz is providing legal advisory services.

Blackstone will pay $187.50 per share of PSB common stock, representing a 15 percent premium over the volume weighted average share price over the 60 days prior to the initial announcement in April. The PSB board also announced a prorated quarterly cash dividend on common stock, as well as a closing cash dividend of $5.25. The prorated and closing cash dividends are contingent upon the transaction finalizing on the July 20 date.

A good period for REITs

Port America. Image courtesy of PS Business Parks Inc.

The REIT Public Storage has a sizeable investment in PSB, holding a roughly 41 percent common equity interest through 7.2 million common shares and 7.3 million limited partnership units. According to an announcement published in April, Public Storage is set to receive $2.7 billion of cash proceeds and recognize a $2.3 billion tax gain on sale. Public Storage intends to distribute $2.3 billion in gains to its shareholders.

In an interview with Nareit, Blackstone REIT Chairman & CEO Frank Cohen pointed out that rising interest rates have led to an investing approach that seeks out assets where revenue can grow faster than inflation. According to Cohen, the REIT will never focus on a single sector within commercial real estate.

As one of the most prominent commercial real estate companies in the U.S., Blackstone has been busy lately, with several massive investments across sectors. Last year it announced the acquisition of WPT Industrial REIT for $3.2 billion, as well as the $10 billion acquisition of data center REIT QTS Realty Trust. Earlier this year, it agreed to pay $12.8 billion for student housing company American Campus Communities, and also announced a $3.7 billion deal for all of Resource REIT’s outstanding shares of common stock.