04/25/2022 | by Sarah Borchersen-Keto

Blackstone Inc. will purchase PS Business Parks, Inc. (NYSE:PSB) in an all-cash deal valued at approximately $7.6 billion, the two companies announced April 25.

PS Business Parks owns a 27 million square foot portfolio of industrial, business park, traditional office, and multifamily properties located primarily in California, Miami, Texas, and Northern Virginia.

Under the terms of the deal, affiliates of Blackstone Real Estate will acquire all outstanding shares of PS Business Parks common stock for $187.50 per share, representing a premium of approximately 15% to the volume weighted average share price over the last 60 days.

Stephen Wilson, president and CEO of PS Business Parks, described the transaction as “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.”

Blaine Heck, senior real estate equity analyst at Wells Fargo Securities, said the transaction “is clearly bullish for industrial names. There had been concerns that industrial valuations had become overdone given strong performance in 2021, as well as the current interest rate environment.”

Heck added that PS Business Parks has “done a great job leasing and maintaining high occupancy figures in its flex/industrial portfolio and has a low leverage profile.” He also described the valuation level as fair. “The company has exposure to the struggling office sector,” he said, while its geographic exposure in metro Washington, D.C. “presents challenges, since current fundamentals are soft in the region.”

The transaction is expected to close in the third quarter of 2022. The merger agreement includes a “go-shop” period that will expire on May 25 . Public Storage (NYSE:PSA), which holds approximately 25.9% of PS Business Parks’ common stock, has agreed to vote in favor of the transaction.

It has been a busy period for Blackstone lately. Last week, Blackstone said it will purchase American Campus Communities, Inc. (NYSE: ACC) in a $12.8 billion all-cash transaction, including debt. In February, Blackstone agreed to buy Preferred Apartment Communities, Inc. (NYSE: APTS) in an all-cash transaction valued at approximately $5.8 billion. In December 2021, Blackstone agreed to acquire Bluerock Residential Growth REIT, Inc . (NYSE American: BRG) in an all-cash transaction valued at $3.6 billion.