Deals

Blackstone JV ties up $9b Trizec buyout

Through its partnership with New York-based Brookfield Properties, the private equity giant has taken one of North America’s largest office landlords private and intends to expand its CarrAmerica platform on the West Coast.

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A joint venture between The Blackstone Group and Brookfield Properties Corp. has closed the acquisition of Trizec Properties, one of North America’s largest commercial landlords, in deal valued at $7.2 billion (€5.7 billion). The portfolio acquired by the joint venture includes 26 million square feet of office space in New York, Washington DC, Los Angeles, Houston and San Diego.

In recent weeks, Trizec sold a total of 13 properties and 13.3 million square feet of office space in Atlanta, Charlotte, Chicago, Dallas and Minneapolis to affiliates of Blackstone for approximately $1.8 billion (€1.4 billion) in a separate transaction. Seperately, Brookfield will acquire Trizec’s Canadian operations.

Blackstone is reportedly already in talks to flip some of the properties in Atlanta, Chicago and Dallas—which could earn the New York based-firm more than  $300 million (€238 million).

The transaction will also allow Blackstone to expand its CarrAmerica platform on the West Coast, according to a statement. Blackstone took the office REIT private in a $5.6 billion (€4.4 billion) transaction earlier this year.

In addition to CarrAmerica, Blackstone’s real estate group has taken three hospitality companies private in multi-billion transactions over the past two years: REIT MeriStar Hospitality and hotel chains LaQuinta and Wyndham International.

The deal comes at time when many private equity real estate firms, including Blackstone, are re-evaluating whether taking publicly traded real estate companies private will continue to generate the kind of returns it has in the past.

Jonathan Gray, a Blackstone managing director who is also co-head of the real estate group told a conference earlier this year: “I think the REIT market and the lodging market have woken up to what’s going on…so there’s not nearly the arbitrage that has existed in the past between public and private values.”

Blackstone, which closed the largest private equity real fund ever raised on $5.25 billion in June, has raised a total of $13 billion for real estate investments across sectors.