BRE Properties Inc.
) surged over 11% in the past 2 days following a report by
Bloomberg on Dec 4 that said
Essex Property Trust
) has offered to acquire BRE Properties for around $5 billion.
The stock closed at $59.30 yesterday, leading to a market
capitalization of $4.58 billion.
BRE PROPERTIES (BRE): Free Stock Analysis
ESSEX PPTY TR (ESS): Free Stock Analysis
INDEP REALTY TR (IRT): Free Stock Analysis
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Essex Property would pay for the deal through bank financing,
stock issuance and assets sale, as per that report. Notably, the
offer price is said to exceed the bid of $60 per share of BRE
Properties (or approximately $4.6 billion) furnished by the
investment firm Land & Buildings Investment Management LLC
earlier this year.
With this news doing the rounds in the market, the investment
firm Land & Buildings Investment Management LLC insisted BRE
Properties to consider this sale proposal. Further, Land &
Buildings, which holds a stake in BRE Properties, nominated 6
people to join BRE Properties' board. Their election would lead
to Land & Buildings to have a majority in the company's
As a matter of fact, San Francisco-based BRE Properties is
involved in developing, acquiring and managing communities
predominantly in the chief metropolitan markets of Southern and
Northern California and Seattle. The company has a direct
ownership in 75 multifamily communities and a joint venture stake
in an additional apartment community.
On the other hand, Essex Property that is engaged in multifamily
residential properties in select West Coast markets has ownership
interests in 163 apartment communities and a number of other
properties in its development pipeline.
Hence, the materialization of the sell-off will essentially lead
to the union of two West Coast apartment real estate investment
trusts (REITs) enjoying a solid property base in California. The
combined entity can effectively leverage on this attractive
market and reward shareholders accordingly. We believe any move
that maximizes shareholder value is welcome and look forward to
the market to see what the future beholds.
Both BRE Properties and Essex Property currently hold a Zacks
Rank #3 (Hold). Moreover, investors interested in the apartment
REIT industry may consider stocks like
Independence Realty Trust, Inc.
Spirit Realty Capital, Inc.
). Both these stocks carry a Zacks Rank #2 (Buy).