In Another Buyout in REIT Sector, ING Clarion To Acquire Gables Residential Trust
A private equity partnership managed by ING Clarion said it will acquire multifamily REIT Gables Residential Trust (NYSE:GBP
) for about $1.6 billion, making Gables the second major real estate investment trust to disclose sale plans in the past two days and perhaps signaling a new round of consolidation in the REIT industry.
The ING Clarion partnership said it will acquire all of Gables' common stock for $43.50 a share in cash, a 14% premium over the closing price on June 6. The total consideration is about $2.8 billion, including the assumption and refinancing of $1.2 billion of debt and preferred shares. Holders of limited partnership interests in Gables' operating partnership will be given the choice of either receiving $43.50 in cash or participating through a limited partnership interest in an affiliate of the buyer.
Based in Boca Raton, FL, Gables is one of the largest apartment operators in the U.S. It currently manages 41,671 apartments in 161 communities, including the 81 communities it owns, concentrating in Atlanta, Houston, South Florida, Austin, Dallas, Washington, D.C., San Diego and the Inland Empire, CA.
ING Clarion is a real estate investment firm with about $22 billion under management, including a portfolio of around 10,000 apartments. ING said taking the REIT private will enable the multifamily firm to operate more "opportunistically and with higher leverage," enabling it to increase development activities, enter new markets, and eliminate public company costs. The transaction is being financed by $400 million of equity provided by ING with the balance of the debt and equity capital arranged by Lehman Brothers and its affiliates.
ING Clarion is a wholly owned subsidiary of ING Real Estate, a global real estate investment firm with $69 billion of assets under management that in turn is owned by ING, a global financial services firm specializing in insurance, banking and asset management.
Wachovia Securities acted as financial advisor to Gables and Goodwin Procter LLP provided legal advice. King & Spalding LLP provided legal counsel to ING Clarion and Hogan & Hartson LLP, Weil Gotshal & Manges LLP, and Cadwalader, Wickersham & Taft provided legal counsel to Lehman Brothers.
The ING-Gables agreement is the second major merger in as many days. On Monday, warehouse-distribution network provider ProLogis (NYSE:PLD
) announced a deal to acquire Catellus (NYSE:CDX
) for cash and stock worth $3.6 billion.