Morgan Stanley Real Estate, the real estate investment arm of the New York-based financial services giant, has acquired San Mateo, California-based Glenborough Realty Trust for $1.9 billion (€1.5 billion), including debt.
Morgan Stanley will pay $26 per share for all of Glenborough’s outstanding common stock, an 8.2 percent premium over the REIT’s August 18 closing price. The transaction has been approved by Glenborough’s board of directors and is expected to close during the fourth quarter, pending shareholder approval.
“Glenborough’s high-quality office properties are located in some of the country’s most desirable and supply-constrained office markets,” said Michael Franco, managing director of Morgan Stanley Real Estate, in a statement. He called the portfolio “well-diversified.”
Glenborough’s properties are concentrated in Washington DC, Northern and Southern California, Northern New Jersey, and Boston. As of June 30, the company’s portfolio encompassed approximately 8 million square feet of office space.
Buyouts of office-focused REITs have been on the rise as rents go up and occupancy rates fall in the sector. Private equity giant The Blackstone Group and Brookfield Properties Corp. bought Trizec Properties, one of the largest commercial landlords in the US, and its Canadian affiliate for $8.9 billion in June. The deal was the second largest takeover of a REIT to date, according to Bloomberg.
Morgan Stanley Real Estate currently manages $50.9 billion in real estate assets. The acquisition of Glenborough is its third acquisition of a REIT this year that tops the $1 billion mark.
Earlier this year, Morgan Stanley partnered with Canada-based Onex Real Estate and Maryland- and Massachusetts-based Sawyer Realty Holdings to buy The Town and Country Trust for $1.5 billion, including debt, gaining a portfolio of 37 multi-family properties in Florida and the mid-Atlantic. In February, Morgan Stanley’s Prime Property Fund, which focuses on core properties, closed on its acquisition of AMLI Residential Properties Trust for $2.1 billion.