Affiliates of real estate funds managed by Blackstone are to acquire all of Dream Global REIT’s subsidiaries and assets in an all-cash transaction valued at $6.2 billion.
“This transaction is the culmination of the tremendous growth that Dream Global has achieved since its 2011 IPO. At a time when the Western European real estate market is becoming increasingly competitive, this transaction provides premium value to unitholders. Upon completion of the transaction, Dream Global will have increased its equity market capitalization by nearly eight times and will have delivered total annualized returns of 15 percent to our unitholders, since inception, which exceed both the Canadian and European REIT benchmarks by approximately 60 percent and are competitive against the best managed real estate private equity funds and pension funds globally, over the same time period,” said Detlef Bierbaum, chairman of Dream Global’s board of trustees.
In 2011, Dream created a public business to invest in European real estate, during a time when the outlook for European real estate was viewed with concern by European real estate investors. Dream identified an opportunity to acquire a $1 billion portfolio of 292 properties, consisting mostly of German post offices, to establish a European platform. The portfolio was funded in part through the $470 million IPO of Dream Global, in which Dream invested $120 million. Since the IPO, Dream Global has sold over 200 of the original assets and transformed itself into a high-quality portfolio of core-plus office assets, as well as light industrial and development, in Germany, Austria, Belgium and the Netherlands.
The current real estate environment in Western Europe is extremely competitive, with exceptionally low interest rates and property valuations at record-setting levels. While Dream Global has made great progress building a European unitholder base over the last two years, the public REIT structure has resulted in a cost of capital for Dream Global that remains higher than some of its peers and impacts the REIT’s ability to continue on its growth trajectory. The transaction offers an opportunity to deliver a premium value to the REIT’s unitholders, closing the value gap and crystallizing returns to unitholders with certainty.
The transaction is expected to close in December 2019.
