Blackstone affiliates to buy Bluerock REIT in $3.6 bln deal

Signage is seen outside The Blackstone Group headquarters in Manhattan, New York, U.S., November 12, 2021. REUTERS/Andrew Kelly

Dec 20 (Reuters) – Bluerock Residential Growth REIT said on Monday affiliates of Blackstone Real Estate have offered a cash buyout deal valued at $3.6 billion, sending its shares soaring 77%.

Real estate companies have gained from record-low interest rates since the peak of the COVID-19 pandemic last year. The uptick in demand for homes due to low borrowing costs have pushed prices higher, boosting supplier’s profits.

As part of the deal, expected to close in the second quarter of next year, Blackstone will acquire all outstanding shares of the real estate investment trust (REIT) for $24.25 per share — a 57% premium to Bluerock’s last closing price of $15.44.

Shares of Bluerock, which manages diversified portfolio of residential properties across United States, were up at $27.30.

The offer also represents a premium of 123.5% to Bluerock’s Sept. 15 closing price, the last day of trading before Bloomberg News reported the REIT was looking at strategic options including a sale.

REITs are exchange-traded companies that own and operate income-producing real estate.

Blackstone will acquire 30 Bluerock’s multifamily properties comprising nearly 11,000 units and a loan book secured by 24 multifamily assets. Majority of the properties are located in Atlanta, Phoenix, Orlando, Denver and Austin.

The closing of the deal is, however, contingent upon the U.S.-based REIT spinning off its single-family rental business into Bluerock Homes Trust, to be managed by an affiliate of Bluerock Real Estate.

Earlier in August, Blackstone had entered another such deal with WPT Industrial Real Estate Investment Trust for about $1.86 billion, in a bid to capitalize on the e-commerce-driven boom in demand for logistics properties.

Morgan Stanley was among the lead financial advisers to Bluerock, while Barclays and Wells Fargo Securities advised Blackstone.

Reporting by Mehnaz Yasmin and Aishwarya Nair in Bengaluru; Additional reporting by Sohini Podder; Editing by Shinjini Ganguli and Uttaresh.V

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