Columbia Property Trust is to be acquired by funds managed by Pacific Investment Management Company (PIMCO), a global investment management firm, for $3.9 billion.
The deal includes Columbia’s proportionate share of consolidated and unconsolidated debt. Under the terms of the agreement, PIMCO will acquire all of the outstanding shares of Columbia common stock for $19.30 per share in cash. This represents a premium of approximately 27 percent over Columbia’s unaffected closing share price on Friday, March 12, 2021. During this time period the high barrier office sector has traded down 5%.1
This transaction with PIMCO is the culmination of a strategic review process undertaken by Columbia’s Board of Directors which was publicly announced in the spring of this year. As part of this process, Columbia’s Board and advisors invited nearly 90 potential counterparties to participate, including strategic acquirers, private equity firms and other investment management firms.
Constance Moore, Chair of the Columbia Board of Directors, said, “The Board of Directors is pleased to have reached this definitive agreement with PIMCO. This transaction provides Columbia shareholders with immediate and certain cash value at a significant premium to the Company’s public market valuation, and we are confident it represents the best outcome for all Columbia shareholders.”
Nelson Mills, President and Chief Executive Officer of Columbia, said, “Today’s announcement represents the result of a comprehensive strategic review process and demonstrates the value and stability of Columbia’s portfolio, the resiliency of our platform, and the capabilities of our team.”
“We continue to believe that high-quality office buildings in major U.S. cities offer long-term value for our clients and Columbia has assembled a modernized, well-located portfolio of assets that we expect will perform well in the years ahead,” said John Murray, PIMCO Global Head of Private Commercial Real Estate.
Francois Trausch, PIMCO Managing Director and Chief Executive Officer of Allianz Real Estate, added, “This is an exciting transaction and a great example of the strength of relationships within PIMCO’s global real estate platform.”
The transaction is expected to close as early as year-end, subject to approval by Columbia’s shareholders and the satisfaction of other customary closing conditions. Upon completion of the transaction, Columbia’s common stock will no longer be listed on the New York Stock Exchange.
Columbia shareholders will be entitled to receive the previously announced third quarter dividend of $0.21 per share payable on September 15, 2021. Thereafter, Columbia will not pay additional quarterly dividends during the pendency of the transaction.
Due to the pending acquisition, Columbia will not be holding a conference call for its third quarter 2021 business results after it releases earnings information.
Morgan Stanley & Co. LLC is serving as lead financial advisor to Columbia and Wachtell, Lipton, Rosen & Katz is serving as legal advisor. Eastdil Secured LLC and J.P. Morgan are also acting as financial advisors to Columbia.
Goldman Sachs & Co. LLC is serving as lead financial advisor to PIMCO and Latham & Watkins LLP and Milbank LLP are serving as legal advisors. Deutsche Bank Securities Inc. is also acting as a financial advisor to PIMCO. Cushman & Wakefield is acting as a real estate consultant to PIMCO.
Columbia owns, operates and develops Class-A office buildings in gateway U.S. markets – primarily New York, San Francisco, Washington, D.C., and Boston. Its seven million square feet portfolio includes a stake in the Terminal Warehouse in West Chelsea, and the boutique office building at 149 Madison where WeWork terminated its full-building lease last summer.
The deal with PIMCO comes after the company rejected an earlier offer from a group of investors including Arkhouse Partners LLC, The Sapir Organization, and 8F Investment Partners who offered $2.2 billion. Despite the impact of the COVID-19 pandemic on the REIT, Columbia said its strong rent collections were evidence of a stable portfolio with a runway for full recovery.
