GE Real Estate, a division of General Electric ( GE), is acquiring Arden Realty ( ARI), one of Southern California's largest office landlords, for $4.8 billion. GE will pay $45.25 of cash for each Arden common share and assume the $1.6 billion of Arden debt. Arden shares fell $1.84, or 3.9%, in premarket trading to $45.15. Realty Stock Review, a trade publication, reported earlier this week that the deal would be $48 per share. In conjunction with the merger, Trizec Properties ( TRZ) is buying 13 of Arden's properties, totaling 4.1 million square feet, concentrated in West Los Angeles and San Diego, for about $1.6 billion. Pending the close of the transaction, Arden expects to continue to pay its quarterly dividend, which amounts to $2.02 annually. The transaction should close in the first quarter of 2006. The Arden deal continues a trend of REITs being acquired by financial buyers this year. Five other public REITs have been taken private in 2005, with private equity groups and pension fund money paying premiums for the stocks. Arden is seen as an attractive buy because of its portfolio centered around the Southern California office market, which has been on a
tear this year. "This transaction brings us not only a high-quality portfolio of real estate assets in the dynamic Southern California market, but also a great platform and infrastructure from which to grow," Michael Pralle, the president and CEO of GE Real Estate, said in a statement. "We are very excited about incorporating Arden's expertise and footprint in Southern California into our real estate business. This transaction also gives GE Real Estate the opportunity to work with Trizec, one of the nation's leading real estate investment trusts, to structure a transaction that creates positive results for all three parties." Arden CEO Richard Ziman said in a statement, "This merger cements the relationship between the global endeavors of GE Real Estate and the dominant regional leverage of Arden. It is a blending of corporate cultures that will produce a powerful new real estate entity in this region. This transaction also demonstrates the intrinsic value of the Arden portfolio, the Arden executives and employees and their ability to generate strong returns for our investors." Get Jim Cramer's picks for 2006.