Private equity firm Blackstone has signed an agreement to acquire Canadian real estate trust company Dream Global Real Estate Investment Trust (REIT) for C$6.2bn (£3.7bn).
With the closing of the deal by the end of the year, Dream Global unit holders will each receive a cash consideration of C$16.79 (£10.18) per unit.
The cash consideration of C$16.79 per unit represents an 18.5% premium to the closing price of Dream Global units on the Toronto Stock Exchange (TSX) on 13 September and it represents a total return of 47% for the year.
In 2011, Dream created a business to invest in European real estate. The company identified an opportunity to acquire C$1bn (£606m) portfolio of 292 properties, which mostly included German post offices. The portfolio was funded in part through initial public offering (IPO) of C$470m of Dream Global, in which Dream invested C$120m.
After the IPO, Dream Global sold more than 200 of the original assets and transformed itself into a portfolio of Core+ office assets in Germany, Austria, Belgium and the Netherlands, as well as light industrial and development.
At present, Dream Global’s real estate portfolio comprises over 200 properties in more than 100 Western European cities.
Dream Global has served as an external asset manager. The REIT has been serving under an asset management agreement. After completion of the deal, Dream Global will be separated from the Dream Asset Management’s agreement.
As part of the deal, DAM will receive an aggregate of C$395.2m with respect to Dream Global’s obligations under the agreement.
The deal is subject to approval of 2/3rds of Dream Global unitholders
The transaction is subject to the approval of at least 66% (2/3) of the unit holders voting in favour of the deal and regulatory approvals and other customary conditions.
Dream Global’s board of trustees chairman Detlef Bierbaum said: “This Transaction is the culmination of the tremendous growth that Dream Global has achieved since its 2011 IPO. At a time when the Western European real estate market is becoming increasingly competitive, this transaction provides premium value to unitholders.
“Upon completion of the Transaction, Dream Global will have increased its equity market capitalization by nearly eight times and will have delivered total annualized returns of 15% to our unitholders, since inception, which exceed both the Canadian and European REIT benchmarks by approximately 60% and are competitive against the best managed real estate private equity funds and pension funds globally, over the same time period.”
Blackstone Real Estate Europe head James Seppala said: “We are delighted to be acquiring Dream Global, a high-quality and diversified portfolio of office and logistics assets in Western Europe, which has been created by Dream over the last eight years. This Transaction is an exciting opportunity for Blackstone to expand its existing office and logistics portfolios in some of the largest and most important markets in the region.”
