Blackstone Agrees to Acquire Data Center Giant QTS Realty Trust in $10B Deal
NEW YORK CITY AND OVERLAND PARK, KAN. — Blackstone (NYSE: BX) has entered into a definitive acquisition agreement with QTS Realty Trust (NYSE: QTS), a data center real estate investment trust, in an all-cash transaction valued at $10 billion. Upon completion of the transaction, the parties expect that QTS will continue to be led by its senior management team and maintain its corporate headquarters in Overland Park.
QTS has a diverse footprint spanning more than 7 million square feet of owned data centers across 28 markets in North America and Europe, including Atlanta, Chicago, Dallas-Fort Worth, Miami, the Netherlands, Northern Virginia, Overland Park, the Pacific Northwest, Phoenix and Southern California.
The decision by Blackstone follows several high-profile acquisitions in other niche real estate property sectors. Since January 2020, the New York City-based firm’s dealings have included a joint venture with Starwood Capital to buy hotelier Extended Stay America for $6 billion; the $3.4 billion acquisition of a life sciences portfolio in metro Boston; a joint venture with Hudson Pacific to develop movie studios and creative offices in Hollywood, Calif.; and a $4.6 billion partnership with MGM Growth Properties to buy the MGM Grand and Mandalay Bay casinos in Las Vegas.
“We are focused on investing in assets that are benefitting from strong, secular tailwinds, such as the rapid digitalization of data,” says Tyler Henritze, head of acquisitions for the Americas at Blackstone. “QTS is a leading provider of data center solutions with a portfolio of high-quality assets in desirable markets, positioning it well to capitalize on these powerful trends in the data center space. We believe the vast expertise across our business will enable the QTS platform to succeed over the long-term.”
Under the agreement, Blackstone Infrastructure Partners, Blackstone Real Estate Income Trust Inc. and other long-term perpetual capital vehicles managed by Blackstone will acquire all outstanding shares of common stock of QTS for $78 per share.
The purchase price represents a premium of 21 percent to QTS’ closing share price as of June 4 ($64.49 per share). The stock price for QTS closed on Monday, June 7 at $78.15 per share, up from $63.30 a year ago.
Following the acquisition, Blackstone Infrastructure Partners and Blackstone Real Estate Income Trust will jointly own QTS and take the publicly traded REIT private. The transaction is expected to close in the second half of 2021, subject to approval by QTS stockholders and fulfilling other customary closing conditions.
The definitive merger agreement includes a 40-day “go-shop” period that will expire on July 17. This arrangement permits QTS and its representatives to actively solicit and consider alternative acquisition proposals, as well as terminate the agreement with Blackstone to enter into a superior proposal.
Jefferies LLC and Morgan Stanley & Co. LLC are acting as financial advisors to QTS, and Hogan Lovells US LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal counsel to QTS.
Citigroup Global Markets Inc., Barclays, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as financial advisors to Blackstone, and Simpson Thacher & Bartlett LLP is acting as its legal counsel.
Blackstone has $649 billion in assets under management that include investment vehicles focused on private equity, real estate, public debt and equity, life sciences and other assets.
The firm’s stock price closed on Monday, June 7 at $93.29 per share, up from $59.45 a year ago, a roughly 57 percent jump.
— John Nelson