NEW YORK — Affiliates of Blackstone Real Estate Partners VIII have agreed to acquire Gramercy Property Trust (NYSE: GPT) for $7.6 billion in an all-cash transaction.
The sale is expected to close before the end of the year. Shortly after the announcement of the merger, shareholder rights law firm Johnson Fistel LLP launched an investigation into whether the board members of Gramercy breached their fiduciary duties in valuing the transaction at this level. One Wall Street analyst has set a price target of $33 per share for Gramercy’s common stock, the 52-week high of which was $31.26 per share.
Under the terms of the deal, Blackstone will acquire all outstanding shares of New York-based Gramercy’s common stock for $27.50 per share. This figure represents a 15 percent markup of Gramercy’s current stock price, which closed at $23.82 per share on Friday, May 4.
Shareholders of Gramercy will still be entitled to receive second-quarter dividends of 37.5 cents per share. Should the deal close after Oct. 15, shareholders will receive a per diem payment of approximately $.004 per share on each day between Oct. 15 and the closing date.
“We believe this transaction validates the quality of the portfolio and platform we have built,” says Gordon DuGan, trustee and CEO of Gramercy. “Entering into this transaction with Blackstone fulfills our mission to maximize shareholder value.”
Gramercy’s portfolio spans approximately 81 million square feet of mostly industrial space. The portfolio has an occupancy rate of 97.3 percent.
Morgan Stanley & Co. LLC is acting as exclusive financial advisor to Gramercy. Eastdil Secured LLC is acting as real estate consultant to Gramercy. Wachtell, Lipton, Rosen & Katz is acting as Gramercy’s legal advisor.
Citigroup Global Markets Inc. and BofA Merrill Lynch are acting as Blackstone’s financial advisors in connection with the transaction. Simpson Thacher & Bartlett LLP is acting as legal advisor to Blackstone.
The stock price of New York-based private equity and asset management firm The Blackstone Group LP, which is the parent company of the acquiring entity, closed at $31.81 per share on Friday, May 4, up from $30.12 per share a year ago. As of Sep. 30, 2017, Blackstone had approximately $120 billion in real estate assets under management.
Gramercy’s closing stock price of $23.82 per share on Friday, May 4 represents a decline from $27.72 per share in early May 2017.
— Taylor Williams