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Blackstone To Acquire Gramercy Property Trust for $7.6 Billion

Private Equity Giant Beefing Up Logistics Holdings
May 7, 2018
Gramercy Property Trust's Logistics Center at DFW International Airport




Continuing to view logistics as among the strongest sectors of commercial real estate, an affiliate of Blackstone Group agreed to acquire Gramercy Property Trust this morning for $7.6 billion. The affiliate, Blackstone Real Estate Partners VIII, will acquire all outstanding common shares of Gramercy for $27.50 per share in cash.

As of year-end 2017, Gramercy owned a portfolio of industrial, office and specialty retail properties totaling more than 82 million rentable square feet. The majority of that space, nearly 76 million square feet, is industrial. Just last week before the deal with Blackstone was announced, Gramercy changed its Global Industry Classification Standard, a standardized classification system used to sort business entities by sector and industry groups, from diversified to industrial.

The transaction has been unanimously approved by Gramercy's board of trustees and represents a premium of 23 percent over the 30-day volume-weighted average share price ending May 4 and a premium of 15 percent over the closing stock price on May 4.

"We believe this [deal] validates the quality of the portfolio and platform that we have built," said Gordon DuGan, Gramercy chief executive.

For Blackstone, the deal is representative of its mode of operating: when it has faith in the growth opportunities for a specific sector, it buys in a big way. Global logistics is one of the sectors Blackstone was talking up in its first quarter earnings conference call where the push into online shopping is leading to much faster growth.

This past March, the same Blackstone entity agreed to acquire 41 warehouses and two development from FRP Holdings for $360 million.

Completion of the Gramercy transaction is slated to occur in the second half of 2018, upon the satisfaction of customary closing conditions. Morgan Stanley & Co. is acting as exclusive financial advisor to Gramercy. Eastdil Secured is acting as real estate consultant to Gramercy. Wachtell, Lipton, Rosen & Katz is acting as Gramercy's legal advisor.

Citigroup Global Markets Inc. and Bank of America 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.

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