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BOCA RATON, FL-A private equity partnership sponsored by New York City-based ING Clarion Partners has agreed to buy locally based Gables Residential Trust for approximately $2.8 billion in cash. The buyer, a US subsidiary of Amsterdam-based ING Groep NV, has a multifamily portfolio of approximately 10,000 apartment units. Multifamily specialists tell GlobeSt.com they agree with Gables' contention, expressed in a statement, that the transaction represents "the largest public to private REIT transaction in the multifamily sector."

"This is huge, and it's a complete surprise," Jack McCabe, CEO of McCabe Research & Consulting, a Deerfield Beach multifamily specialist, tells GlobeSt.com. "Yet, ING Clarion has been looking hard at Florida for awhile. Gables is an excellent, well-run, well-managed company. It doesn't surprise me that ING bought them, but I'm surprised Gables sold at this time, following a great first quarter. This gives them a war chest to possibly enter into other areas, and, at this price, possibly they are able to realize the best return on assets by selling the whole portfolio at once."

"There has been some recent rumbling of a potential sale," says Robert Given, first VP and multifamily specialist in the Miami office of CB Richard Ellis. "But no one ID'd where a buyer might come from. Those guys have set the standard for multifamily rental ownership and management," he says of Gables. "I would think this could give them a more flexible business model, such as the opportunity to enter into some internal condo conversions."

Under the agreement, expected to close by the end of third quarter, ING Clarion will acquire all of Gables' common stock for $43.50 a share, which represents a 14% premium over the closing price of $38.16 for GBP shares on the NYSE on June 6, and an 18% premium over the prior 10-day average share price. Immediately after the announcement, shares of GBP shot up nearly 14% to $43.42 a share, nearing ING Clarion's offer and nearly 14% over the 52-week high of $38.27 a share, also reached on June 6.

The acquisition includes the assumption and refinancing of approximately $1.2 billion of outstanding debt and several series of preferred shares, which have an aggregate liquidation preference of about $120 million. ING will make a $400-million equity investment, and the balance will come from equity capital arranged by Lehman Brothers Inc. and its affiliates, which acted as financial advisor to ING on this transaction. Wachovia Securities advised Gables.

According to a joint statement, ING Clarion will be a managing partner of the new partnership, offering "strategic oversight, fund governance and portfolio management skills to capture the benefits afforded by the private sector…[including] operating more opportunistically and with higher leverage, increasing development activities, entering new markets, and eliminating public company costs."

Calls to Gables were not returned by deadline. In the statement, David Fitch, Gables' CEO, says the transaction allows "us to continue to execute our real estate strategy on a go-forward basis in a private setting."

Chris Wheeler, executive chairman, adds the ING offer reflected the quality of the company and its assets. Asked for further clarification of the continuing role of Gables' management, an ING spokesman tells GlobeSt.com the statement "addresses this as fully as we can." A Gables conference call is scheduled for late afternoon Thursday, June 9.

Gables currently manages 41,750 units in 162 properties. It owns, or has an interest in 84 properties with an aggregate of 21,163 units, primarily in Atlanta, Houston, South Florida, Austin, Dallas, Washington, DC and San Diego/Inland Empire. In addition, it has 11 properties with an aggregate of 2,673 units under development or lease-up.

Instant Insights /

ING Clarion Takes Multifamily REIT for Nearly $3B

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