PS Business Park Agrees to $7.6 B Blackstone Deal, Higher Rents May Follow

  • Apr 25, 2022
  • Scott Peters
  • PS Business Parks agreed to be acquired by affiliates of Blackstone for $7.6 billion. Public Storage, the largest shareholder, has approved the deal. Blackstone has ramped up its acquisition of real estate properties in the last two years as the pandemic reshapes home and work life.

    PS Business Parks, Inc agreed to be acquired by affiliates of Blackstone Real Estate for $187.50 a share or $7.6 billion including transaction cost. 

    The deal hinges on the assumption that the commercial rents will recover after taking a beating during the two-year global Covid-19 pandemic. 

    The purchase price represents a premium of approximately 15% to the volume weighted average share price over e the last 60 days.

    The real estate development and management company primarily owns and manages industrial, business parks and trading multi-office properties suitable for small and medium size businesses. 

    The deal will cover a 27 million square feet portfolio of properties located primarily in California, Texas, Northern Virginia and Miami, Florida.  

    One of the prime properties in the portfolio is Miami International Commerce Center with 3.5 million square feet of space and home to 350 businesses in the City of Doral, Florida.   

    The deal is expected to be completed in third-quarter of 2022 subject to shareholder approval. 

    PSB has a 30-day go-shop period to look for a superior offer and has a right to terminate the definite merger subject to a termination fee. 

    Public Storage, traded on the New York Stock Exchange, which holds approximately 25.9% of the outstanding shares of PSB common stock, has agreed to vote its shares in favor of the transaction. 

    PSB stock jumped 12% to $188.17 and Public Storage stock fell 1.3% to $397.26. 

    Last week, Blackstone agreed to acquire student housing real estate firm American Campus Communities for $13 billion. 

    Following real estate mergers, generally the acquiring company hikes rents after about 18 months of completion of the transaction. 

Annual Returns

Company Ticker 2022 2021 2020
PS Business Parks Inc PSB 2% 39% -19%
The Blackstone Group L P BX -14% 100% 16%
Public Storage PSA -13% 62% 9%

Press Release