Real estate investment trust WP Carey Inc will buy Corporate Property Associates 18 Global Inc in a $2.7 billion cash-and-stock deal, the companies said on Monday.
WP Carey, which manages a portfolio of more than 1,000 properties in commercial real estate, said the deal would add Corporate Property Associates’ self-storage assets, and also mark its exit from investment management.
Mergers and acquisition activity in the REIT sector reached a record high in 2021 as cheap capital from low interest rates, a robust U.S. housing market, and economic recovery from the pandemic buoyed the share performance of the trusts.
REIT M&A transaction volumes rose to $140 billion in 2021, up from $17 billion in the previous year, according to real estate services provider JLL.
WP Carey has offered Corporate Property Associates shareholders 0.0978 of its stock plus $3.00 of cash for each share held, or $10.59 per share based on WP Carey’s Friday close.
The target can still negotiate alternative proposals during the “go shop” period that is through March 30.
WP Carey expects to fund the deal, expected to close during the third quarter, with net proceeds from sale of certain Corporate Property Associates assets planned before the deal closing and existing liquidity.
WP Carey shareholders will own about 93% of the combined company.
BofA Securities was the lead financial adviser to WP Carey, while Morgan Stanley was the financial adviser to Corporate Property Associates’ Special Committee.
Source: Reuters.com