Shares ofGramercy Property Trust (NYSE:GPT) had soared by more than 15% as of 12:03 p.m. EDT Monday on news that the real estate investment trust will be acquired byBlackstone Group’s(NYSE:BX) Blackstone Real Estate Partners VIII L.P fund in an all-cash transaction.
Blackstone apparently sees value in the REIT’s portfolio, which includes approximately 81 million square feet of industrial, office, and specialty retail space. Under the terms of the offer, Gramercy Property Trust shareholders will receive $27.50 per share, in addition to a previously declared dividend of $0.375 per share.
Image source: Gramercy Property Trust.
Industrial and warehouse REITs have been hot commodities of late. Last week, DCT Industrial announced it would be acquired by Prologis in a deal that valued it at roughly $8.4 billion.
Warehouses and distribution centers under long-term leases are attractive assets, as they offer years of predictable cash flows. Gramercy said in a recent presentation that its properties had a weighted-average lease term of 7.1 years as of March 31. Roughly one-third of Gramercy’s tenants have an investment-grade credit rating.
Wall Street seemingly views this deal as being as good as done. At their price of $27.51 per share around noon, Gramercy Property Trust shares are trading for about 1.3% less than the combined deal price and dividends that shareholders expect to receive between now and the expected closing in the second half.
That small, sub-2% spread implies that the market sees little risk of the deal falling through. Gramercy shareholders have to decide whether to hold on for a small dividend, or take their cash and run.