Griffin Capital Co., a private investment firm and an alternative investment adviser, has announced that Griffin Capital Essential Asset REIT (GCEAR) and Griffin Capital Essential Asset REIT II (GCEAR II) have entered into a definitive agreement to merge in an all-stock transaction, creating a $4.75 billion, self-managed REIT, which will generate significant benefits for shareholders, including substantial cost savings, increased operating efficiencies, and immediate accretion to earnings and cash flow.
This merger combines two complementary portfolios with similar construction and investment mandates, significantly increasing the size, scale and diversification of the combined company.
In addition, GCEAR announced it is now self-administered following the contribution of Griffin Capital Real Estate Co. (GRECO) to GCEAR on Dec. 14, 2018. The self-administration transaction provides immediate benefits to GCEAR shareholders, including a considerable reduction in the operating expenses of GCEAR; these benefits will extend to the combined company following the completion of the merger of GCEAR into GCEAR II. Shortly following the closing of the merger, GCEAR II, as the surviving entity, intends to conduct a tender offer for all shareholders of at least $100 million.
“In addition to the significant value they immediately bring to shareholders, we believe the size, capitalization, and cost structure of the combined company positions it well for the future. REITs with enhanced scale and experienced internal management are viewed more favorably by institutional investors and lenders, enhancing the REIT’s potential liquidity optionality and value to shareholders,” said Michael J. Escalante, CEO and president of GCEAR and president of GCEAR II.
The transaction is expected to close in first half 2019, subject to certain closing conditions, including the approval of the merger by both GCEAR and GCEAR II shareholders.
