Summary: In the largest private equity buyout ever, Blackstone Group will purchase Sam Zell's Equity Office Properties Trust for about $20 billion. Equity Office shareholders are to receive $48.50 a share - a 8.5% premium over Friday's closing price. With demand for U.S. commercial real estate firm and underpriced leases up for renewal, Blackstone plans to add Equity Office to the ten other publicly traded real estate companies it has acquired in the past two years to extract further value from the sector. Blackstone in July raised a $15.6 billion fund, and is adding another $5 billion to finance the Equity Office deal. Equity Office shares have jumped 47% in 2006. Private equity firms have announced $600 billion of acquisitions so far this calendar year, up from $241 billion in 2005.
Related links: EOP/Blackstone press release • Media coverage: Wall St. Journal, New York Times, Reuters
Potentially impacted stocks and ETFs: • Equity Office (EOP), Reckson Associates (NYSE:RA) ETFs: iShares Dow Jones US Real Estate (NYSEARCA:IYR), Vanguard SF REIT (NYSEARCA:VNQ), iShares Cohen & Steers Realty Majors (NYSEARCA:ICF), PowerShares Listed Private Equity Portfolio (NYSEARCA:PSP)
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