Cousins Properties (NYSE: CUZ) and TIER REIT, Inc. (NYSE: TIER) said March 25 that they have agreed to merge in a 100 percent stock-for-stock transaction. The new company will have a combined portfolio of over 21 million square feet, an equity market capitalization of approximately $5.9 billion, and a total market capitalization of approximately $7.8 billion.
Under the terms of the agreement, Cousins will issue 2.98 shares of newly issued common stock in exchange for each share of TIER stock. Upon closing, Cousins and TIER stockholders will own approximately 72 percent and 28 percent of the combined company's stock, respectively.
Cousins President and CEO Colin Connolly said the combined company creates the “preeminent” Sun Belt office REIT, “with an unmatched portfolio of trophy office properties in the premier submarkets of Atlanta, Austin, Charlotte, Dallas, Phoenix, and Tampa." Connolly and Cousins' existing senior management team will continue to lead the combined company.
During a conference call, Connolly said the “highly complementary” merger will be accretive to net asset value (NAV) and funds from operations (FFO) on a long-term basis and accelerates many of Cousins’ key goals. He noted that TIER brings a “fantastic development pipeline,” 80 percent of which is pre-leased, as well as an attractive land bank.
Scott Fordham, CEO of TIER, said the alignment of high-quality properties and a common geographic footprint will create a “truly differentiated Sun Belt focused office platform.” He added that shareholders will be able to benefit from further value creation in Austin, Dallas, and Atlanta due to TIER's pipeline of over 5 million square feet of development and redevelopment opportunities. Fordham will become a board member of the newly combined company.