Pure Industrial Real Estate Trust (AAR-UN-T) announced Tuesday morning it will be acquired by an affiliate of Blackstone Property Partners (BX-N) in an all-cash transaction valued at $3.8 billion. 

PIRET will be acquired by Blackstone Property Partners in a $3.8 billion transaction.

The transaction price of $8.10 per share of PIRET represents a 21 per cent premium to the closing price of its shares on the TSX Monday and a 27 per cent premium to the current research consensus net asset value estimate of $6.40 per unit.

“The trust has accomplished tremendous growth in the 10 years since the initial public offering in August 2007. Since inception, we have generated a total return in excess of 345 per cent and we have built a platform that has made us a leader in the Canadian industrial REIT space,” Rick Turner, chairman of PIRET’s board of trustees, said in a release.

“The board of trustees believes that the all-cash transaction provides significant value for our unitholders and unanimously recommends that they vote in favour of the transaction.”

In morning trading on the TSX Tuesday, PIRET shares advanced more than 20 per cent, just topping the $8.10 mark.

“I am extremely proud of my team’s accomplishments over the past several years,” added Kevan Gorrie, president and CEO of the trust. “Blackstone is a highly reputable and strategic owner and one of the world’s most active investors in logistics real estate. We look forward to further building out our platform.”  

Transaction to close during Q2

New York-based Blackstone will be making this investment through Blackstone Property Partners, its core-plus real estate investment unit. BPP targets substantially stabilized office, industrial, multi-family, commercial and retail assets across Canada and the U.S.

“We are excited to be acquiring PIRET, one of the premier Canadian industrial REITs, as a continuation of our global strategy to acquire high-quality logistics assets in key urban markets. The management team has done an excellent job building the portfolio and we look forward to working together going forward,” Tyler Henritze, head of North America acquisitions for Blackstone Real Estate, said in a release.

Completion of the transaction is expected to occur in the second quarter of 2018 and is pending a vote by PIRET shareholders, court approval and regulatory approvals (Canadian Competition Act and Investment Canada Act).

PIRET’s history, holdings

As of August 2017, Vancouver-based PIRET owned 168 properties in seven Canadian provinces (British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick) as well as in seven U.S. states.

About 33 per cent of its 22.7 million feet of gross leasable space is in Ontario, while 32 per cent was in its American portfolio.

It has five offices across Canada.

PIRET’s distributions to shareholders have been very consistent since its inception a decade ago. From an initial monthly distribution of $0.025 per unit in 2007 ($0.300 annually), the company increased to $0.026 late in 2012 ($0.312 annually) and has maintained that rate through today’s announcement.

Alhough PIRET has been serious about its business, there is also a lighter side to its acronym. One might wonder how the stock symbol AAR relates to PIRET, but Pure provides a simple explanation on its website: “A Pirate says AAR!”

About PIRET, Blackstone

PIRET is an unincorporated, open-ended investment trust that owns and operates a diversified portfolio of income-producing industrial properties in leading markets across Canada and key distribution and logistics markets in the United States.

The trust is an internally managed REIT and is one of the largest publicly traded REITs in Canada that offers investors exposure to industrial real estate assets in Canada and the United States.

Blackstone is one of world’s leading investment firms, with 2,300 employees and 25 worldwide offices according to its website. Its real estate holdings include $111 billion under management in North America, Latin America, Asia and Europe. The portfolio includes office, retail, hotel, industrial and residential properties.

Major holdings include Hilton Worldwide (HLT-N), Invitation Homes (single family homes), Logicor (pan-European logistics), SCPG (Chinese shopping malls), and prime office buildings in the world’s major cities. Blackstone real estate also operates one of the leading real estate finance platforms, including Blackstone Mortgage Trust (BXMT-N). 

MORE TO COME: RENX will update this story with additional details as they become available.