Commercial real estate owner Hudson Pacific Properties Inc. said Monday it would acquire a portfolio of California office buildings from an affiliate of Blackstone Group LP (BX) in a cash and stock deal valued at $3.5 billion.
Terms of the deal call for Los Angeles-based Hudson to pay $1.75 billion in cash and issue about 63.5 million of its shares to Blackstone in return for Equity Office Properties Trust' San Francisco peninsula and Silicon Valley portfolios. The assets to be acquired include 26 office buildings with 8.2 million square feet and two development parcels in prime Bay Area locations.
Post-deal Hudson Pacific would own 53 properties totaling 14.6 million square feet spread across northern and southern California and the Pacific Northwest. The company estimated that post deal it would have an equity market capitalization of about $3.7 billion and a total enterprise value of about $6.5 billion.
Hudson Pacific chairman and CEO Victor J. Coleman in a statement said that his REIT had targeted the Bay Area for expansion.
"The acquisition of the [Equity Office Properties] northern California Portfolio perfectly aligns with our strategy to acquire high-quality office properties in West Coast markets poised for continued growth through off-market transactions," Coleman said.
Post-deal existing Hudson owners would own about 52% on a fully-diluted basis, with Blackstone funds owning the remaining 48%. The buyer said that affiliates of Farallon Capital Management LLC, current owner of about 15% of Hudson's shares, have entered into a voting agreement to support the transaction.