Key Takeaways
- • Blackstone Real Estate Partners VIII agreed to acquire Gramercy Property Trust for $27.50 per share in an all-cash transaction valued at $7.6 billion total enterprise value, with equity value of $4.42 billion.
- • The offer represents a 15% premium to Gramercy's May 4 closing price of $23.82 per share, with transaction completion expected in the second half of 2018.
- • Gramercy specializes in acquiring and managing income-producing industrial real estate across the United States, a sector experiencing strong market rent growth and sustained investor demand.
- • Analyst commentary characterizes the deal as validation of industrial REIT valuations and indicative of ongoing disconnect between private market valuations for industrial assets and public REIT stock prices.
Summary
Blackstone Group, through its Blackstone Real Estate Partners VIII fund, agreed on May 7, 2018 to acquire Gramercy Property Trust for $27.50 per share in an all-cash transaction. The total transaction value reaches $7.6 billion on an enterprise basis, with an equity value of $4.42 billion according to Reuters' calculations. The offer represents a 15% premium above Gramercy's May 4 closing share price of $23.82, and completion is currently expected in the second half of 2018.
Gramercy Property Trust, a publicly traded real estate investment trust listed on the NYSE under ticker GPT, specializes in acquiring and managing income-producing industrial real estate leased in growing population centers across the United States. Gordon DuGan, CEO of Gramercy, stated that the transaction "validates the quality of the portfolio and platform that we have built" and fulfills the Board of Trustees' mission to maximize shareholder value.
Tyler Henritze, head of U.S. real estate acquisitions for Blackstone, commented: "We are pleased to acquire Gramercy and its strong portfolio of assets." The acquisition reflects sustained institutional appetite for industrial real estate, with multiple analysts viewing the transaction favorably. Ki Bin Kim of SunTrust Robinson Humphrey described the offer as a "fair price," noting that "Industrial REITs remain highly sought after in the private/public markets as it is one of few real estate asset classes that is experiencing true market rent growth."
John Massocca of Ladenburg Thalmann characterized the transaction as "indicative of a continuing disconnect between private market valuations for industrial assets and stock prices of industrial-focused and single-tenant net lease REITs." Massocca noted that despite concerns about interest rate impacts on REIT valuations, strong underlying demand for industrial properties continues to drive acquisition activity, evidenced by comparable transactions such as Prologis's proposed acquisition of DCT Industrial Trust.
Gramercy Property Trust, a publicly traded real estate investment trust listed on the NYSE under ticker GPT, specializes in acquiring and managing income-producing industrial real estate leased in growing population centers across the United States. Gordon DuGan, CEO of Gramercy, stated that the transaction "validates the quality of the portfolio and platform that we have built" and fulfills the Board of Trustees' mission to maximize shareholder value.
Tyler Henritze, head of U.S. real estate acquisitions for Blackstone, commented: "We are pleased to acquire Gramercy and its strong portfolio of assets." The acquisition reflects sustained institutional appetite for industrial real estate, with multiple analysts viewing the transaction favorably. Ki Bin Kim of SunTrust Robinson Humphrey described the offer as a "fair price," noting that "Industrial REITs remain highly sought after in the private/public markets as it is one of few real estate asset classes that is experiencing true market rent growth."
John Massocca of Ladenburg Thalmann characterized the transaction as "indicative of a continuing disconnect between private market valuations for industrial assets and stock prices of industrial-focused and single-tenant net lease REITs." Massocca noted that despite concerns about interest rate impacts on REIT valuations, strong underlying demand for industrial properties continues to drive acquisition activity, evidenced by comparable transactions such as Prologis's proposed acquisition of DCT Industrial Trust.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.