{"id":1004109073,"date":"2014-12-09T07:20:38","date_gmt":"2014-12-09T15:20:38","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004109073"},"modified":"2022-12-08T05:53:59","modified_gmt":"2022-12-08T13:53:59","slug":"hudson-pacific-properties-to-buy-3-5b-blackstone-office-portfolio","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/hudson-pacific-properties-to-buy-3-5b-blackstone-office-portfolio\/","title":{"rendered":"Hudson Pacific Properties to Buy $3.5B Blackstone Office Portfolio"},"content":{"rendered":"

By Scott Baltic, Contributing Editor<\/i><\/p>\n

\"Skyport<\/a>

Skyport Plaza, San Jose<\/p><\/div>\n

In a stock-and-cash transaction valued at $3.5 billion, Hudson Pacific Properties Inc., of Los Angeles, has agreed to acquire Equity Office Properties\u2019 approximately 8.2 million-square-foot San Francisco Peninsula and Silicon Valley office portfolio from Blackstone Real Estate Partners V and VI, Hudson announced Monday.<\/p>\n

The off-market transaction will effectively double Hudson\u2019s size and result in Hudson having an equity market capitalization of $3.7 billion and total enterprise value of approximately $6.5 billion. It will reportedly also nail down the company\u2019s position as the leading West Coast office REIT, expanding Hudson\u2019s portfolio to 53 properties totaling 14.6 million square feet in Northern and Southern California and the Pacific Northwest.<\/p>\n

Per the acquisition agreement, Hudson will fund the purchase with $1.75 billion in cash and approximately 63.5 million Hudson common shares and operating partnership units issued to Blackstone. Hudson reportedly has obtained $1.75 billion of committed bridge financing, but is exploring alternatives to fund the cash portion of the transaction, including existing asset sales and joint ventures and new secured or unsecured financing, potentially coinciding with pursuit of an investment-grade credit rating.<\/p>\n

After closing, which is expected in the first half of next year, pre-transaction Hudson equity holders will own about 52 percent of the company\u2019s common equity on a fully diluted basis, and Blackstone funds will own the remaining approximately 48 percent.<\/p>\n

Hudson\u2019s existing management team, led by chairman & CEO Victor Coleman, will continue to lead the company, while Blackstone will appoint three of 12 members to Hudson\u2019s board of directors.<\/p>\n

\u201cHudson has long targeted these two Northern California regions for expansion, and while we expect the transaction to be immediately accretive to FFO, we also intend to move quickly to employ our leasing, repositioning and development expertise to extract additional value for our stockholders,\u201d Coleman said in a release.<\/p>\n

Among the transaction\u2019s benefits, Hudson\u2019s announcement touted the value-add opportunities. The portfolio\u2019s occupancy and rents are currently about 10 percent and 15 percent below market, respectively, with about 60 percent of leased square footage expiring by the end of 2017, affording opportunity for substantial embedded NOI growth, according to Hudson.<\/p>\n

The transaction is subject to customary closing conditions, including Hudson stockholder approval of the proposed equity issuance.<\/p>\n

As of press time, Hudson had not responded to Commercial Property Executive<\/i>\u2019s request for further information.<\/p>\n

The Eastdil Secured group of Wells Fargo Securities L.L.C. is Hudson\u2019s lead financial advisor, with BofA Merrill Lynch and Houlihan Lokey also acting as financial advisors on the transaction. Latham & Watkins L.L.P. and Gibson, Dunn & Crutcher L.L.P. are Hudson\u2019s legal counsel.<\/p>\n

Goldman, Sachs & Co. is Blackstone\u2019s financial advisor, and Simpson Thacher & Bartlett L.L.P. and Pircher, Nichols & Meeks are acting as its legal counsel.<\/p>\n

The portfolio consists of 75 buildings in 26 developments (number of buildings in parentheses):<\/p>\n

    \n
  • \u00b7 San Francisco Peninsula submarket: Bayhill Office Center, Redwood City (2); One Bay Plaza, Burlingame (1); Bay Park Plaza, Burlingame (2); Metro Center, Foster City (3); Peninsula Office Park, San Mateo (7).<\/li>\n
  • \u00b7 Redwood Shores submarket: Shorebreeze (2), 333 Twin Dolphin Plaza (1), 555 Twin Dolphin Plaza (1), Towers at Shores Center (2), Skyway Landing (2).<\/li>\n
  • \u00b7 Palo Alto submarket: 2180 Sand Hill Road, Menlo Park (1), and (remainder Palo Alto) Embarcadero Place (4), Palo Alto Square (6), Clocktower Square (4), Page Mill Center (4), Lockheed (1), 3400 Hillview (5), Foothill Research Center (4).<\/li>\n
  • \u00b7 Silicon Valley submarket: Campus Center, Milpitas (3); Techmart Commerce Center, Santa Clara (1); Patrick Henry Drive, Santa Clara (1).<\/li>\n
  • \u00b7 San Jose Airport submarket: Gateway (5), Metro Plaza (3), 1740 Technology (1), Concourse (7), Skyport Plaza (2).<\/li>\n<\/ul>\n

    Two development parcels in Bay Area submarkets round out the portfolio.<\/p>\n","protected":false},"excerpt":{"rendered":"

    In a stock-and-cash transaction valued at $3.5 billion, Hudson Pacific Properties has agreed to acquire Equity Office Properties\u2019 approximately 8.2 million-square-foot San Francisco Peninsula and Silicon Valley office portfolio from Blackstone Real Estate Partners V and VI.<\/p>\n","protected":false},"author":882,"featured_media":1004109075,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21783,21742,21747,15],"tags":[],"class_list":["post-1004109073","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-investment","category-latest","category-office","category-west"],"acf":[],"yoast_head":"\nHudson Pacific Properties to Buy $3.5B Blackstone Office Portfolio - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/hudson-pacific-properties-to-buy-3-5b-blackstone-office-portfolio\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hudson Pacific Properties to Buy $3.5B Blackstone Office Portfolio\" \/>\n<meta property=\"og:description\" content=\"In a stock-and-cash transaction valued at $3.5 billion, Hudson Pacific Properties has agreed to acquire Equity Office Properties\u2019 approximately 8.2 million-square-foot San Francisco Peninsula and Silicon Valley office portfolio from Blackstone Real Estate Partners V and VI.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/hudson-pacific-properties-to-buy-3-5b-blackstone-office-portfolio\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2014-12-09T15:20:38+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-08T13:53:59+00:00\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/12\/HUDSON.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/hudson-pacific-properties-to-buy-3-5b-blackstone-office-portfolio\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/hudson-pacific-properties-to-buy-3-5b-blackstone-office-portfolio\/\",\"name\":\"Hudson Pacific Properties to Buy $3.5B Blackstone Office Portfolio - 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