Blackstone Real Estate, an affiliate of real estate investment company Blackstone (NYSE: BX) is set to acquire real estate investment trust company PS Business Parks, Inc. (NYSE: PSB) in a deal that will expand its portfolio.
Pursuant to the deal Blackstone will acquire all outstanding shares of PS Business Parks for $187.50 per share in cash, valuing the deal at $7.6 billion inclusive of transaction expenses. The price represents a 15% premium to the volume weighted average over the last 60 days.
As part of the deal, Blackstone will acquire PSB’s “27 million square foot portfolio of industrial, business park, traditional office, and multifamily properties located primarily in California, Miami, Texas and Northern Virginia.”
“I am extremely proud of everything we have accomplished at PS Business Parks,” Stephen W. Wilson, President and Chief Executive Officer of PSB said in a press release. “This transaction is an exceptional outcome for our stockholders and a testament to the incredible company and portfolio of high-quality assets our team has built, acquired and enhanced over the years.”
The deal has a 31-day go-shop provision that will end on May 25.
“We are excited to add PS Business Parks business park, office and industrial assets to our portfolio and look forward to leveraging our expertise to provide the best possible service and experience for PSBs customers,” David Levine, Co-Head of Americas Acquisitions for Blackstone Real Estate, said in a press release.
Furthermore, PSB’s three outstanding preferred stock series and associated depositary shares will “remain outstanding in accordance with their terms following closing.” According to the filings, the companies intend to have the depositary shares representing their preferred stock “listed on the NYSE with public reporting as long as there is at least $75 million aggregate liquidation value of preferred stock outstanding.”
The deal has been unanimously approved by PSB’s Board of Directors. Public Storage (NYSE: PSA), which has approximately 25.9% of the outstanding PSB shares has agreed to vote its shares in favor of the transaction, pending an agreement between the three parties. The transaction also includes acquiring Public Storage’s “limited partner equity interests in PSB’s operating partnership at the same per unit price of $187.50.
The April 25 deal is expected to close in Q3 2022, subject to customary closing conditions and PSB stockholder approval.
PSB’s legal counsel is Wachtell, Lipton, Rosen & Katz; its financial advisor is J.P. Morgan Securities LLC and its real estate and co-financial advisor is Eastdil Secured Advisors LLC. Blackstone’s legal counsel is Simpson Thacher & Bartlett LLP.
Prior to the announcement, Blackstone’s stock was valued at $110.59 on April 22. When it was announced on April 25, stocks closed at $112.52. Two days later, on April 27, stocks closed at $107.47. Meanwhile, PSB’s stock was valued at $167.67 on April 22. When the deal was announced on April 25, its stock was valued at $187.50. Two days later, on April 27, its stock closed at $187.09.