NEW YORK (TheStreet) -- Gramercy Property Trust (GPT) shares are falling 2.65% to $22.75 in early market trading on Wednesday after agreeing to be acquired by rival real estate investment trust Chambers Street Properties (CSG) in a deal that values Gramercy at $25.36 per share.
The deal will create a new real estate investment trust with an enterprise value of about $5.7 billion with the combined companies holding 288 mostly net-lease and industrial building properties in the U.S. and Europe.
Gramercy shareholders will receive 3.19 shares of Chambers Street for every share they own, the companies said.
Gramercy CEO Gordon DuGan will be CEO of the new company which will keep the Gramercy name.
Gramercy shares are down 2.01% to $22.88 in early market trading.
TheStreet Ratings team rates GRAMERCY PROPERTY TRUST INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate GRAMERCY PROPERTY TRUST INC (GPT) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GPT's very impressive revenue growth greatly exceeded the industry average of 8.5%. Since the same quarter one year prior, revenues leaped by 195.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 100.8% when compared to the same quarter one year prior, rising from -$0.50 million to $0.00 million.
- GRAMERCY PROPERTY TRUST INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GRAMERCY PROPERTY TRUST INC turned its bottom line around by earning $2.04 versus -$1.00 in the prior year. For the next year, the market is expecting a contraction of 95.1% in earnings ($0.10 versus $2.04).
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, GRAMERCY PROPERTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for GRAMERCY PROPERTY TRUST INC is rather low; currently it is at 15.45%. Regardless of GPT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, GPT's net profit margin of 0.00% is significantly lower than the industry average.
- You can view the full analysis from the report here: GPT Ratings Report