Ares Agrees to $1.7B Deal To Acquire Whitestone REIT and Expand Open Air Retail
Ares Management Corporation has agreed to acquire Whitestone REIT for $1.7 billion under a merger that would expand the buying firm's retail presence across key Sunbelt markets.
The deal represents a 12.2 percent premium to Whitestone's closing stock price on Wednesday. It's been known since Reuters reported in March that the REIT was entertaining a sale.
As of March 31, Whitestone's portfolio included 56 retail properties that focus on open-air centers, offering "high quality" and "convenience," according to a statement from the two companies. The roughly 4.9 million square foot portfolio spans across Houston, Austin, Phoenix, Dallas-Fort Worth and San Antonio. Ares refers to these Texas and Arizona retail markets as "supply-constrained, high-demand" metros.
Ares, which manages $623 billion in global assets, already had a real estate presence in Austin, Dallas and Houston before the deal. In addition, it is involved in other major U.S. markets, including New York, Los Angeles, Chicago, Seattle and Denver, according to the investment manager.
"We believe Whitestone has shown the value of high-return smaller spaces occupied by a well-diversified mix of tenants,' said Dave Holeman, Whitestone CEO.
"Our investment strategy is designed to allow businesses to fuel connection and convenience within thriving, dynamic communities. We believe this transaction with Ares is a testament to the value that strategy has created for our business and, ultimately, for our shareholders."
While economic and geopolitical uncertainty is at the forefront of everyone's mind, the wealthy consumer continues to show resilience. A recent forecast from the National Retail Federation projects sales will climb 4.4% to reach $5.6 trillion in 2026, which would outpace last year's growth.
The merger is anticipated to close during the third quarter, which is subject to conditions including the approval from Whitestone's shareholders. Already, the Board of Trustees has approved the deal.
BofA Securities and JLL are serving as financial advisors on the merger, with Bass Berry & Sims representing Whitestone on the legal front.
Source: GlobeSt/ALM