Chambers Street, Gramercy to Create Industrial/Office Net Lease Giant

Chambers Street Properties and Gramercy Property Trust are making a deal, a big deal.
Gordon DuGan

Gordon DuGan, Gramercy

Chambers Street Properties and Gramercy Property Trust Inc. said today they plan to merge in an all-stock deal and create the largest industrial and office net lease REIT with an enterprise value of approximately $5.7 billion.

The Board of Trustees of Chambers Street and the Board of Directors have unanimously approved the merger agreement and the transaction. Shareholders of both companies need to approve the deal, which is expected to close in the fourth quarter.

Under the terms of the agreement, Gramercy shareholders will receive 3.1898 shares of Chambers Street for each share of Gramercy common stock they own. Once the deal closes, Chambers Street shareholders would own about 56 percent and Gramercy shareholders about 44 percent of the combined company. The stock-for-stock transaction is expected to be tax-free for shareholders.

The combined company would keep the Gramercy name and trade under the Gramercy ticker symbol, GPT, on the New York Stock Exchange. The Gramercy team will lead the combined company with current Gramercy CEO Gordon DuGan as the CEO of the new company along with Benjamin Harris as president and Jon Clark as CFO. Martin Reid, Chambers Street’s interim president/CEO and CFO, will be Head of Transition at the combined company.

It will have a 10-person board consisting of five trustees each to be designated by Chambers Street and Gramercy. Charles Black, currently chairman of the Chambers Street board, will be the non-executive board chairman. DuGan will also be a director.

The combined portfolio would have 288 properties and 52 million square feet of space in major markets throughout the United States and Europe. A slide presentation prepared by the two REITs said the combined company would have 131 industrial properties with 37.3 million square feet and 131 properties describes as office/banking centers with 12.3 million square feet of space. The remaining properties are classified as specialty industrial, specialty retail and data centers. The entire portfolio would have occupancy of 99.2 percent.

“We are pleased to have the opportunity to combine two complementary portfolios and joint with the Gramercy management team whom we are confident will continue to drive market-leading returns for shareholders,” Black said in a news release.

DuGan called it a “logical step for Gramercy in creating a best-in-class net lease REIT.”

“We expect that combining with Chambers Street will create a market leader with greater scale, broader tenant and geographic diversification across the United States and Europe, and additional financial flexibility,” DuGan said in the prepared statement.