Chambers Street Properties (CSG) and Gramercy Property Trust Inc. (GPT) announced that they have entered into a definitive agreement to merge, creating the largest industrial and office net lease real estate investment trust or REIT, with an expected enterprise value of approximately $5.7 billion.
The Board of Directors of both the companies have unanimously approved the merger agreement and the transaction.
As per terms of the agreement, Gramercy shareholders will receive 3.1898 shares of Chambers Street for each share of Gramercy common stock they own. Upon closing, Chambers Street shareholders will own approximately 56% and Gramercy shareholders will own approximately 44% of the combined company. The stock-for-stock transaction is expected to be tax-free to shareholders.
The combined company is expected to have larger size and scale, broader tenant diversification, increased financial flexibility, and a more efficient operating platform to drive growth. The Gramercy management team will lead the combined company, with Gordon DuGan as Chief Executive Officer, Benjamin Harris as President and Jon Clark as Chief Financial Officer. Martin Reid, Chambers Street's Interim President and Interim Chief Executive Officer, and Chief Financial Officer, will be Head of Transition of the combined company.
Each company intends to continue its current dividend policy until the close of the transaction. Following the close of the transaction, the new company expects its dividend payout ratio to be lower than the current Chambers Street payout ratio and higher than the current Gramercy payout ratio.
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