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Real Estate

Blackstone to take Gramercy REIT private in $7.6 billion deal

Updated with correction.

Blackstone Group is taking Gramercy Property Trust — an industrial real estate investment trust — private for a transaction valued at $7.6 billion, said Ashley M. Mancuso, vice president of investor relations and capital markets at Gramercy.

Under the agreement with Gramercy Property Trust, announced Monday, Blackstone Real Estate Partners VIII will pay $27.50 a share in an all-cash transaction. The purchase price is a premium to Gramercy portfolio's net asset value, which is 86% industrial real estate and the rest in net lease office and specialty properties, Ms. Mancuso said. Shares of the REIT closed trading at $23.82 on May 4.

The deal is expected to close in the second half of 2018. If the deal fails to close by Oct. 15, Blackstone will pay late fees for every day after that date until closing.

This is Blackstone's second transaction in which it plans to take a REIT private in 2018, said sources close to the situation. Earlier this year, Blackstone and Ivanhoe Cambridge announced they were buying Canadian warehouse REIT Pure Industrial Real Estate Investment Trust for C$2.48 billion ($1.93 billion). That transaction has not yet closed.

Gramercy has traded in the public equity markets like a net lease landlord rather than an owner of industrial, according to Ms. Mancuso. With the strong private market demand, the portfolio will realize its full potential, she said.

The REIT had previously had trouble raising capital.

Blackstone spokeswoman Paula Chirhart declined to comment.