In a statement made today, Mitchell E. Hersh, president and CEO of the Cranford, NJ-based REIT, notes that the firm has liquidated its stake in CarrAmerica, realizing a $15.06-million gain and a $902,400 dividend payment during the first quarter of 2006.

"As we previously stated," says Hersh, "we made an investment in CarrAmerica at a time when we thought the company's stock was significantly undervalued. We are pleased that our investment on behalf of our shareholders has paid off substantially."

From a bit more of a distance, other observers share Hersh's enthusiasm. "Based on our metrics, we believe shareholders are receiving full value," says financial services firm Stifel Nicolaus & Co. Inc.'s, John W. Guinee, who issued a report yesterday on CarrAmerica with colleagues David M. Fick and Eli N. Fleminger. The Washington, DC-based office REIT has holdings, interests and or operations in 285 office properties accounting for about 26.3 million sf in 12 markets across the country.

"Taking into consideration that the company probably could not cover the dividend until 2009, and faced a $60-million to $70-million shortfall in 2006, we think a takeout was the best-case scenario for shareholders." The deal, which has been signed off on by CarrAmerica's board of directors, entails Blackstone's purchase of all outstanding CarrAmerica common stock at a cash sum of $44.75 per share. Owners of common limited partnership interests in two of CarrAmerica's operating partnerships will receive $44.75 per share, and holders of common limited partnership interests will have a chance to choose between receiving cash in exchange for their shares or preferred units of limited partnership interest in the post-merger partnerships.

"In our opinion, the portfolio's institutional quality is what made it attractive to private buyers," Guinee continues. "The transaction looks to be a watershed event, in our opinion, in that unlike other office REITs that sold or merged [Prentiss and Arden], CRE's management had made it clear that it enjoyed operating as a public company. We think now that the precedent has been set for private market pricing essentially forcing a sale that we believe is in the best interest of shareholders. In our view, the floodgates could now swing open for similar deals."

Instant Insights /

UPDATE: Mack-Cali Liquidates Carr Investments; Analysts Laud Merger

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