Affiliates of Blackstone Real Estate to Acquire PS Business Parks, Inc. for $7.6 Billion
GLENDALE, CA and NEW YORK (STL.News) PS Business Parks, Inc. (NYSE: PSB) (“PSB” or the “Company”) and Blackstone (NYSE: BX) announced that they have entered into a definitive agreement under which affiliates of Blackstone Real Estate (“Blackstone”) will acquire all outstanding shares of common stock of PSB for $187.50 per share in an all-cash transaction valued at approximately $7.6 billion, including transaction expenses. The purchase price represents a premium of approximately 15% to the volume-weighted average share price over the last 60 days.
Under the terms of the agreement, which has been unanimously approved by PSB’s Board of Directors, Blackstone will acquire PSB’s 27 million square foot portfolio of an industrial, business park, traditional office, and multifamily properties located primarily in California, Miami, Texas, and Northern Virginia.
“I am extremely proud of everything we have accomplished at PS Business Parks. This transaction is an exceptional outcome for our stockholders and a testament to the incredible company and portfolio of high-quality assets our team has built, acquired, and enhanced over the years,” said Stephen W. Wilson, President and Chief Executive Officer of PSB.
David Levine, Co-Head of Americas Acquisitions for Blackstone Real Estate, added, “We are excited to add PS Business Parks’ business park, office, and industrial assets to our portfolio and look forward to leveraging our expertise to provide the best possible service and experience for PSB’s customers.”
The transaction is expected to close in the third quarter of 2022, subject to approval by PSB’s stockholders and other customary closing conditions. The merger agreement includes a “go-shop” period that will expire 30 days from today, May 25, 2022, which permits PSB and its representatives to actively solicit and consider alternative acquisition proposals to acquire PSB. PSB has the right to terminate the definitive merger agreement with Blackstone to enter into a superior proposal, subject to the payment of a termination fee and certain other terms and conditions of the definitive merger agreement. There can be no assurance that this process will result in a superior proposal, and PSB does not intend to disclose developments with respect to the go-shop process unless and until it determines such disclosure is appropriate or is otherwise required.
PSB’s three outstanding series of preferred stock, and associated depositary shares, will remain outstanding in accordance with their terms following the closing. We intend to continue to have the depositary shares representing our preferred stock listed on the NYSE with public reporting so long as there is at least a $75 million aggregate liquidation value of preferred stock outstanding.
Public Storage (NYSE: PSA), which holds approximately 25.9% of the outstanding shares of PSB common stock, has agreed to vote its shares in favor of the transaction, subject to the terms of a support agreement between Public Storage, the Company, and an affiliate of Blackstone, which supports agreement will terminate automatically upon the termination of the merger agreement, including in connection with a termination of the merger agreement by PSB to enter into a superior proposal. The transaction will also include acquiring Public Storage’s limited partner equity interests in PSB’s operating partnership at the same per-unit price of $187.50.
From the date of the merger agreement through the closing of the transaction, PSB may declare and pay regular, quarterly cash distributions to holders of its common stock and holders of its operating partnership’s units in an amount of up to $1.05 per share or unit, including a pro-rata distribution in respect of any stub period. Additionally, PSB is permitted to declare and pay regular quarterly dividends on its shares of preferred stock.
As a result of today’s announcement, PSB does not expect to host a conference call and webcast to discuss its financial results for the quarter that ended March 31, 2022, which had previously been scheduled for May 3, 2022.