Griffin Capital Essential Asset REITs To Merge In $4.8B Deal

The all-stock transaction will create a $4.75 billion, self-managed REIT.

A Griffin Capital Essential Asset REIT holding

Griffin Capital Co. is merging two of its investment trusts to create a $4.75 billion self-managed REIT in an all stock transaction.

The two companies are Griffin Capital Essential Asset REIT (GCEAR), which has just become self-administered, and Griffin Capital Essential Asset REIT II (GCEAR II), with GCEAR being merged into GCEAR II. Shortly following the closing of the merger, GCEAR II will conduct a tender offer for all shareholders of at least $100 million.

“REITs with enhanced scale and experienced internal management are viewed more favorably by institutional investors and lenders, enhancing the REIT’s potential liquidity optionality and value to shareholders,” said Michael J. Escalante, CEO and President of GCEAR and President of GCEAR II.

Griffin Capital Essential Asset REIT is focused on acquiring office, industrial and manufacturing assets that are 100% triple- or absolute- net leased to single, creditworthy tenants. Its portfolio, as of September 30, 2018, consisted of 76 office and industrial properties totaling 20.1 million rentable square feet, located in 20 states. It had a total REIT capitalization of approximately $3.3 billion.

Griffin Capital Essential Asset REIT II’s current portfolio has a total capitalization of approximately $1.2 billion. As of September 30, 2018, its portfolio consisted of 27 properties encompassing approximately 7.3 million square feet of space in 17 states.

The transaction is expected to close in the first half of 2019, subject to certain closing conditions, including the approval of the merger by both GCEAR and GCEAR II shareholders.

Robert A. Stanger & Co., Inc. and Bank of America Merrill Lynch are acting as financial advisors to GCEAR, and SunTrust Robinson Humphrey, Inc. is acting as financial advisor to GCEAR II’s special committee of the board of directors. Nelson Mullins Riley & Scarborough LLP is providing legal counsel to GCEAR, and Venable LLP is providing legal counsel to GCEAR’s special committee of the board of directors. Morris, Manning & Martin, LLP is providing legal counsel to GCEAR II’s special committee of the board of directors. Baker McKenzie is providing legal counsel to Griffin Capital.