Big Deal
Gables goes private. In early June, ING Clarion Partners initiated the biggest REIT-to-private company transition by buying Gables Residential Trust in Boca Raton, Fla., for $2.8 billion in debt and cash. New York-based ING will pay $43.50 per share in cash, or a 14 percent premium over Gables’ closing price the day before the transaction was announced.
The extraordinary return Gables earned was representative of the bigger real estate market, says Richard Anderson, senior real estate analyst at Maxcor Financial Group. “It put some reality and dollar figures on what we all know: The real estate market, and specifically the residential real estate market, is very hot,” he says. “It’s a fantastic time for owners to sell.”
Making the timing even more opportune for Gables is what was happening to the company at the time. Anderson says the company had promised to pay shareholders a regular dividend. But with shaky fundamentals making this difficult, it was selling properties to meet its dividend expectations. “They were running in place to cover that dividend, and here’s an opportunity for them to wash their hands of all of these problems and do the best they can for their shareholders,” Robinson says. “I saw this as a great time to sell for them.”
On top of this, the management at the company will remain in place. “The change provision was triggered, they got a high stock price, and they can keep their jobs,” says Louis Taylor, an analyst with Deutsche Bank Securities. “It doesn’t get much better than that.”
–Les Shaver